February 06, 2001, 10:31 AM — SAN FRANCISCO -- Deep in the heart of Texas lies a town with a booming technology-driven economy far removed from the state's ranching and oil pumping heritage. In recent years, the five county area that makes up Austin has taken on the tag "Silicon Hills" due to the city's bustling technology industry and its place in the center of Texas' hill country. Companies like Dell Computer Corp., Texas Instruments Inc., Motorola Inc. and Advanced Micro Electronic Devices Inc. (AMD) have all been attracted to Austin.
As the capital of Texas, Austin historically functioned primarily as a government- and education-centered city. In the 1960's, however, the Texas Bureau of Business Research along with the University of Texas teamed to attract businesses, and managed to persuade both IBM Corp. and Texas Instruments to start up hardware manufacturing facilities.
"IBM and TI were the beginning of national companies coming to Austin," said Elizabeth Smith, Research Manager at the Austin Chamber of Commerce. "I think one of the most attractive things about Austin is that our cost of doing business is much lower than other regions and that companies have easy access to educated to people through the University of Texas."
The trend started by IBM and TI kicked off a wave of companies looking to take advantage of cheap real estate and loads of university talent. In the 1970s and 1980s, Motorola, AMD, Intel Corp., Lucent Technologies Inc. and 3M Co. joined the list of companies setting up shop in Austin.
"You have all this talent that came in from around the country when these guys came to Austin," Smith said. "When companies relocate, they bring in bright employees who often go on to start their own companies. By the time it really hit in the late 80s and early 90s, we started to have tremendous entrepreneurial success."
Dell Computer Corp. stands as perhaps the best example of Austin's technology success story. Michael Dell, chairman and chief executive officer at Dell, dropped out of the University of Texas to start what has become one of the technology world's most highly regarded success stories. Dell now employs more than 20,000 people in the Austin area and is indirectly thought to have created 50,000 jobs and US$5 billion in economic output for the central Texas region, according to the Chamber of Commerce.
In recent years, Austin, like several other hot spots in the U.S., built upon a solid foundation in order to attract the wealth of venture capital and along with it a bevy of startups.
Over the past decade Austin was the sixth fastest growing city in the US. The population surged over one third during that time and has been increasing at an even quicker clip with the arrival of dot-coms. Between 1998 and 1999, Austin took hold of the number 2 spot in US metropolitan area growth, according to the Chamber of Commerce's figures.
In addition, high-tech employment in the five county area surged 88 percent since 1990. There are now more than 2,500 technology-based companies employing 95,000. With all of this activity, venture capital poured into the city quadrupling in 1999 year-over-year. Austin now sits in second place just behind San Jose in Silicon Valley as the most attractive spot for venture capitalists.
