TCS Daily

James K. Glassman interviews David Hankin

By James K. Glassman - April 24, 2000 12:00 AM

This week, Jim interviewed David Hankin, President of the Digital Coast Roundtable, an organization of top new media and Internet executives in Los Angeles. Hankin, a former CEO of Hyundai Internet Technologies and Vice President of Sony Online Entertainment, thinks Los Angeles can become a new media entertainment capital to rival the old one assuming government policies dont interfere.

Glassman: So, David, tell me about your organization, Digital Coast.

Hankin: Absolutely. The Digital Coast Roundtable was founded about 2 1/2 years ago at the impetus of Mayor Riordan. Riordans staff was looking around and examining the economic picture of the Los Angeles area and identified 5 or 6 areas of what they predicted would be extreme growth in the area. New media over the Internet was one of them.

The mayors staff approached some people that they knew in the new media business and said Could you form an industry advisory group that could help us determine a policy agenda to help spread the growth of this industry?

So I was one of the original founders of 18 of what was then called the Los Angeles New Media Roundtable. And what really happened was the group took on a new life. It grew very quickly to about 30, 35 people representing companies, educational institutions, government interests and so on. And its since grown to about 80 companies, and we expect before the end of summer to be somewhere around 120.

Glassman: Wow, so have you taken policy positions?

Hankin: We have taken a few policy positions. We have taken some policy positions on some tax issues, and we have taken a policy position on the [cable] access issue here in Los Angeles.

Glassman: And exactly what was that position?

Hankin: Our position on the access issue was really kind of misrepresented in the press. Our issue was to basically advise the government not to do anything. We felt like if the city government was unprepared from an expertise point of view to really take a position, whether it was the forced access position or whether it was the open access position -- our position was, Look, you dont have the expertise, you dont have the knowledge, you havent gone out and found out what the critical issues are. Dont mess around.

Glassman: David, everybody is interested in whats happened lately in the stock market. What do you think is the reason for the decline in tech stocks?

Hankin: I think that at the end of the day those stocks and companies that are based on technologies that will ultimately have a future and thrive in this information revolution will continue to thrive. And I think that there is a correction in the evaluations of those. But what I think the market has done, it has reacted to a kind of hype that has driven our business for the last year and a half, two years. And it is starting to say, Look, you know there is probably some value here and we want to see real earnings, just like in traditional companies.

Glassman: Do you think that the market is reacting at all to what happened with Microsoft?

Hankin: Very little. I think that the market already absorbed that change. I think that it was predicted, that the market absorbed it.

Glassman: Do you think [the decline in NASDAQ] will have an impact on technology start-ups or raising capital going forward?

Hankin: Absolutely. I think that smart money will look a lot harder at the opportunities on a going-forward basis. I think in many respects youve seen the end to much of the B-to-C stuff for the moment. And I say for the moment, because I think there is going to be a new revolution of that stuff coming down the pipe later on, once the pipe opens up. But, I think that right now the focus on B-to-B is going to be short lived, in the sense that, the infrastructure just isnt there technically to accomplish many of the promised B-to-B solutions. And I think what you are going to see is the next generation of technology really evolve, as a result of much of this, and I think that there is going to be a much more serious effort in focusing on technology.

Having said that, I also think that content is kind of coming of age and you are going to see some entertainment content companies emerge from the fray as leaders as well, and start to get some traction. But I do not think that has anything to do with the stock market, I think that has to do with the fact that the market is now looking at the web in a different way than it has in the past.

Glassman: You said the infrastructure is not there now. Are you referring to the lack of essentially broadband access by most people and indeed businesses?

Hankin: I think it is a combination of not only broadband access but also the inner workings of the Internet to assure that not only do people have access, but that the content and information can move through the pipes in an efficient manner, so that given that you have access, you can actually get what you are supposed to receive.

Glassman: So essentially what you are saying is that you are worried, that maybe the Internet kind of got ahead of itself or that the entrepreneurs got a little bit ahead of the technology.

Hankin: I dont think these people have gotten ahead. I think it has peaked. I mean I think that it is at a certain stopping point where the technology needs to improve, or to improve the user experience. And you know it is from soup to nuts. Its not only from the access of receipt point but also the distribution point. So, I think we are exactly where we need to be right now, given the short history of the Internet. But, remember that the Internet is relying upon technology that was developed 20 and 30 years ago. And we are at the point were we just need to improve that.

Glassman: What to do you think government can do, if anything, to help the growth of the Internet or technology in general?

Hankin: I think it is a real complex question. And the reason I think it is very complex is because there are so many different layers of government that can have to contend with the by-product of this technology. I think from a regulatory standpoint, the Federal government needs to make sure as much as it possibly can that the state and local governments dont interfere with the development of the technology, whether that is passing laws that basically say, Let the free market reign, or whatever.

I mean I am not quite sure how they accomplish that, but it needs to happen. And I say it is a complex issue, because there will be times, for example, in the crimes area where local and state government has an obligation to its public to take action, to prevent harm from occurring from people who abuse the system or abuse the technology. But, nonetheless, I think that the free market will push this technology. I dont think that the government has a huge role in growing it other than to allow it to grow.

Glassman: Are you at all concerned the government seems to be taking more of a role in technology in a lot of different ways? One example being the Microsoft case, another at the local level being the open access issue and privacy and there are many more.

Hankin: Yeah, I am desperately concerned with the governments continued involvement. Typically its a dollar short and a day late. I think that leads to bad results. I dont think that the government has the wherewithal to maintain pace with the marketplace at this point in time. Nor do I think it necessarily ever will until the government can almost make itself a quasi-public private enterprise. But right now the private markets are moving so fast compared to how the government is moving that, you know, much of the government policy making is after-the-fact stuff, which I think is oftentimes short-sighted.

Glassman: And finally, something I should have asked you in the beginning: How big is the LA market for technology?

Hankin: The LA market is enormous. The LA market has been a technology leader, you know, pretty much since its inception. I think a lot of people kind of forget the fact that the aerospace business and the communications business basically were born here. The amount of technology-based companies that are here is overwhelming. But I think a lot of people forget about that, because they are so spread out, and there is such a focus on the Silicon Valley and places like Austin, Texas and so on.

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