New Economy

The drivers of the new economy are not the usual suspects

Alan Greenspan has never met Dave Bell. If he had, he might think twice about clamping down on the economy by repeatedly raising interest rates. (Greenspan may be changing his tune anyway. In a June speech, and for the first time, he acknowledged that some recent economic gains, specifically in worker productivity, seemed permanent and appeared to be "largely driven by irreversible advances in technology and its application.")

Meanwhile, as Uncle Alan continues to pull the master levers from inside the marbled preserve of the Federal Reserve, Bell is hard at work in the bowels of this new economy, building his company. Nothing unusual about that, except that Bell is a senior at Nashua High School, in Nashua, N.H.

Four years ago, when he was 14, Bell started a game-development company, now called Chasma Inc., which has grown into an online network created by teens for teens ( It features the stuff that his peers really care about -- computer games, music, sports, entertainment, and the news, all created and interpreted from a teen perspective. At last count, Bell had 35 employees, most of them in Nashua but some scattered around the country and wired to the company. He was in the midst of raising $1.2 million and had leased 14,000 square feet of office space.

The only adults in sight are on Bell's board. "He has this incredible network of human resources on the high school level," says one board member, Todd Feinburg, managing director of 1590 Broadcasting Corp., which owns WSMN Radio, in Nashua. "This kind of work is no big deal to them. And it's easy for kids this young to come up with ideas."

Bell echoes that thought, saying, "This isn't a company but a revolution. A lot of kids have skills, but no one will give them a chance. We're giving them a chance to make a difference."

Feinburg believes that "these kids who have grown up with keyboards glued to their hands represent an untapped resource." And that "represents a shift of who's in control of the economy." The information economy, he believes, is far more "democratic" than anything that has come before it, suddenly offering 18-year-olds meaningful access. "All you need is brainpower and processing power -- and that's incredibly cheap. The talent is right here in the schools."

Bell got his first infusion of capital -- a little under $100,000 -- from the Breakfast Club, a local group of angels. "We invested because he's a young kid," says the Breakfast Club's Dick Morley. "We are in this for the adventure." Morley says his group hasn't really asked that much about the product or the technology. "We don't really care about that," he says.

What struck Morley were two things. First, when he initially corresponded with Bell through E-mail, he thought he was dealing with a 35-year-old. He was impressed by how Bell discussed such issues as value versus cost and that he mentioned an exit plan, which showed that he was mindful of providing a return on his investors' money. "I thought to myself, 'This kid really understands,' " Morley says. He comments that young people today not only know a lot about computers but also are financially savvy.

Morley, who recently cowrote The Technology Machine: How Manufacturing Will Work in the Year 2020 (Free Press, 1999), invested in Bell for a vital second reason -- "cultural bandwidth."

As technology advances it outstrips society's ability to adapt. And some cultures resist change more than others -- they have narrower bandwidths. Morley cites France and Japan, which he says often have xenophobic, knee-jerk reactions to external advances. Cultures with more bandwidth, according to Morley, are South Korea, Taiwan, Hong Kong, and the United States. He says that, historically, cultures with fewer physical resources, such as the Dutch and English in colonial times, postwar Japan, and New England, Silicon Valley, and Seattle today, have more bandwidth and are thus more receptive to new ideas, change, and progress.

And that brings Morley, who has funded about 70 companies, back to Bell. After all, he reasons, teenagers constantly experiment with fashion, music, and even identity -- what other group has more bandwidth? And in Morley's view, that makes a smart kid like Bell perfectly suited to today's economy. "This kid is fast," Morley says. "He's one of those small, smart, furry animals that likes dinosaur eggs."

In my travels I'm often asked which is the most interesting company I have written about. If interesting translates as fun, then certainly one of the most engaging stories I worked on was a 1992 piece on Southwest Airlines that featured its irrepressible cofounder and CEO, Herb Kelleher. I recently went back and looked at that story. Here is how it began:

Wreathed in a gauzy haze of cigarette smoke, Herb Kelleher paces his office like the trial lawyer he used to be. He recounts his airline's stormy advent, telling how the company finally got off the ground in 1971, flying four planes in varying states of emptiness between three Texas cities. Four years earlier, in 1967, when Kelleher had cofounded Southwest Airlines Co. and first applied for certification to fly, Braniff, Texas International, and, to a lesser extent, Continental had jumped all over the upstart, dragging it into court and claiming to any judge who would listen that the Texas market couldn't possibly support another carrier.

Three years of bitter legal skirmishes followed, culminating in Kelleher's pursuing the case all the way to the U.S. Supreme Court. By then Kelleher, Southwest's corporate counsel, was getting heat from cash-drained investors to throw in the towel, and he'd resorted to providing his legal services pro bono to the fight.

"Braniff and Texas International would later be indicted for trying to chase our investors out of the underwriting syndicates and boycotting our vendors," he says, disbelief rising in his voice. "I felt enraged by this. You know, anger can be a great motivator. For me, this became a cause. I was a crusader freeing Jerusalem from the Saracens."

Kelleher, a serious chain-smoker, throws himself into an overstuffed chair and fishes through a pack of smokes on the glass-topped coffee table before him. He is so enveloped in his recounting of Southwest's fiery baptism that he places the cigarette in his mouth backward and readies to light the filter before being warned off.

In looking back on Kelleher -- a man who on Halloween would dress up as Elvis -- through the Bell-Morley prism, I realized that all the earmarks were there in the Southwest story: scarce resources, playfulness, and a decided taste for dinosaur eggs.

What is really fueling this economy, and confounding the grand pooh-bahs of the old one, is that individuals, entrepreneurial players like Southwest's Herb Kelleher, are having a huge impact -- and having fun.

I think what is fueling this current economic boom and really confounding the grand pooh-bahs of the old economy is that players like Dave Bell, Dick Morley, and Herb Kelleher are having a disproportionate impact. They are also violating an unspoken tradition: namely, that work should be work, not fun. And they are having fun, because today it is easier to start a company, easier to fight the odds, easier to control your own destiny.

The economy is increasingly democratic and diffuse. More people have access to the system, and, like a healthy ecosystem, the more-diverse-than-ever economy can support more forms of life. Small furry animals like Bell can scurry around and scoop up dinosaur eggs. In another era they would have been rounded up, domesticated, and fed a daily ration in exchange for their obedience.

Another point: fun is of the spirit. It therefore stands in rather open defiance against the world of matter, which is the world that seems to inform much of Alan Greenspan's thinking. His ongoing obsession is controlling the prices of energy and raw materials; meanwhile high school kids like Bell are building companies using intellectual capital and increasingly inexpensive and more powerful technological tools. What does their economic activity have to do with matter?

It's hard to believe that Greenspan was once a fun-loving guy, but before he got sidetracked by reports on housing starts and gasoline inventories, the Fed chairman studied music at the Juilliard School and played clarinet and saxophone in a swing band. It's wonderfully ironic to compare the now-dour elder statesman playing by the book with his earlier incarnation as a spontaneous, imagination-based artist.

And that gets us back to Bell. He's really a kid who just wants to be a player. "If you have an ability that no one else has, it's your responsibility to use it," he says, sounding like a 35-year-old. "You never know who will benefit from that."

Indeed. In today's economy, kids like Bell are getting a shot at showing their stuff much earlier in life than their predecessors did, and that reality doesn't turn up in the government data. That's why the vitality and resilience of this economy confuse a lot of people far older and supposedly wiser than Dave Bell.

Edward O. Welles is a senior feature writer at Inc.

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