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 November 19, 1999

2000 forecasts: Internet biggest factor

Everybody seems to have a mental image of the future — images that collectively form a blurry view from the information superhighway. The vision of 2000 and beyond, however, is daily taking on a more definitive shape in the minds of Boulder County’s business leaders.

The most touted paradigm shift remains the movement from brick-and-mortar establishments to Internet-based virtual companies.

“(It’s) not evolutionary, it’s revolutionary,´ said Boulder Technology Incubator President Jerry Donahue of the development of e-commerce. The non-profit Incubator now receives more references from the Internet than anywhere else, recently surpassing the number given by satisfied clients, according to Donahue. “It really is turning business upside down … leveling small vs. big,” explained Donahue.

Donahue sees a downside, however, to the dawn of the digital age. Further development of Internet security technology has been necessitated by e-commerce, he added, predicting a lot more “e-stealing” in coming years. In Donahue’s opinion, another drawback of the growing Internet economy is the increasing isolation of a segment of the work force. “It gives them a better excuse to not develop interpersonal skills,” he noted.

Theresa Szczurek possesses a post-millennial vision similar to that of Donahue.

“I see a dramatic increase in the use of the Internet in all aspects of business,” predicted Szczurek, president and chief executive of Technology Management and Communication, a Boulder-based consulting firm. Like Donahue, Szczurek elaborated on the unintended ramifications from an increasingly online existence: “Overwhelmed by voice mail, e-mail, faxes … we’re moving into overload” to the point that, 20 years or so down the road, a backlash will occur. “People are going to go back even more so to the basics,” she continued, in an effort to “increase meanings and values in people’s lives and careers.”

Bob Greenlee, former Boulder City Council member and local political stalwart, saw another potential negative trend stemming from growth in e-commerce: diminishing sales taxes for established retail hubs. “If it’s going to be negative or neutral remains to be seen,´ said Greenlee, who vacated his council seat this month.

With such dynamic optimism supporting e-commerce and the Internet, venture capital firms are among the companies that will guide the industry through its ongoing establishment. “The Internet is going to be a driving force, in terms of where venture capital is putting its money,” stated Tom Washing, managing director at Boulder venture capital firm Sequel Venture Partners. He also noted that the rapid growth of the Internet could hurt companies in other industries that already are having a hard time raising funds for projects that aren’t related to the World Wide Web.

Two other ongoing trends Washing believes will continue are the propagation of start-up companies in Boulder County and corporate consolidation on a more international scale. The economywide tendency of “weaker players being absorbed by major players,” Washing said, will likely continue.

Mergers and acquisitions frenzy in the national banking industry will extend into the next millennium, said Dave Gilman, president of the Bank in Boulder. He likened the eventual structure of the industry to a barbell, with the large national banks on one end and “small, community-oriented banks” on the other end, with “relatively little in between.”

Gilman noted that, while online banking is growing rapidly, most companies recognize the need for brick-and-mortar institutions as well. “I think what the industry is going to see is that the Internet is going to be a strong delivery channel, but a complimentary delivery channel,” he said, stressing the need for a balance between the Internet, ATMs and physical branches.

Two other industries with sizable interests in Boulder County — aerospace and telecommunications — see trends developing today that could guide them indefinitely.

For aerospace companies, “Government budgets are probably going to be stable at best, and not growing,´ said Sandy Bracken, vice president of public affairs at Boulder’s Ball Aerospace. Thus, aerospace will see growth only in the “commercial arena,” he said, pointing to the dynamic markets of remote sensing from space and “telecommunications-related areas.”

Similarly, the telecommunications industry, predicted Tom Sweeney of Louisville-based Level 3 Communications, will change in two key ways: Prices will be compressed and companies will tend to take an e-business approach or implement a Web-based customer service model to fuel growth. There are additional Internet-driven trends in the industry, he noted. “We certainly expect to see the DSL providers succeed on a larger scale,´ said Sweeney, adding, “There is an emerging market for the storage of data in centralized locations. We’re seeing that emerge very quickly.”

Likewise, the arena of commercial real estate has been impacted heavily by the Internet, a trend Boulder developer Stephen Tebo sees continuing well past the year 2000. “It seems about half of the people looking for office space are looking for T1 lines,” Tebo said of the current climate in Boulder County.

As far as the rest of the world is concerned, David Wolstenholme, president of Wolstenholme Partners, a Boulder-based supplier of forest products, sees the United States as a country that has “begrudgingly gone global.”

The reality of the future, in Wolstenholme’s mind, is: “You’re going to have this huge wave of new countries (which) are all going to look straight at the United States and say, ‘That’s the market.’ ” As a result, he said, margins will steadily drop. “Everybody’s coming of age,” he said. “There’s overproduction everywhere. We in America are going to have to survive on 3 percent to 4 percent margins.”

The U.S. primary education system needs to be revamped in order for the country to thrive in a global economy, warned Greenlee. “The big fear that I have is whether the educational system in this country is going to be able to keep up,´ said Greenlee, noting that the system was “desperate for change.” “I think we’re beginning to see some seed changes happen … but we need to make institutions accountable for results.”

The Bank in Boulder’s Gilman is of the opinion that solid overall planning is a key to a bright economic future for Boulder County. “(Developing tomorrow’s infrastructure) is going to be heavily dependent on regional cooperation, in terms of both the public and private sectors,” he said. “I think it’s possible — it’s just not going to happen overnight.”

Everybody seems to have a mental image of the future — images that collectively form a blurry view from the information superhighway. The vision of 2000 and beyond, however, is daily taking on a more definitive shape in the minds of Boulder County’s business leaders.

The most touted paradigm shift remains the movement from brick-and-mortar establishments to Internet-based virtual companies.

“(It’s) not evolutionary, it’s revolutionary,´ said Boulder Technology Incubator President Jerry Donahue of the development of e-commerce. The non-profit Incubator now receives more references from the Internet than anywhere else, recently surpassing the number given by satisfied clients, according to Donahue.…

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