Michael Glotz apologizes for being late for a scheduled telephone conference. A meeting to discuss his technology company’s next round of venture capital financing dragged on longer than expected, and he assumes an attitude of mea culpa. "It was a really long meeting but it was very exciting news," he hints suggestively.

If all goes well, Experient will raise the next round of venture funding, Glotz says, and it will hire a new CEO to succeed him. He has nurtured the business, which provides Internet software for distance learning, to the point where growth is ready to blast off. But as a former executive with Crestar bank and the old James River paper company, the affable, easy-going Glotz is the first to admit that he doesn’t have the background to take the company to the next level. "We’re looking for a world-class technology CEO," he says. He’s looking forward to the day, he quips, when he can assume the office of chairman and "warm up the golf clubs."

Glotz’ story epitomizes a subtle but marked change in Richmond’s corporate landscape. Throughout Central Virginia, many Old Economy executives are trading in their pinstriped suits for the khaki pants and polo shirts of the start-up entrepreneur. Ramping up a tech company requires different talents than running a traditional business. But Richmond’s entrepreneurs are learning – or recruiting – the skills they need to make things work. And in the process, they’re keeping job growth strong and unemployment low in an economy that’s seen more than its share of setbacks to traditional business.

Tobacco, smokestacks and Old Money still wield clout in conservative Richmond, but not as much as they used to. The Old Economy aristocracy of industrialists and bankers – the fabled mavens of "Main Street" epitomized by such names as Gottwald, Robins and Wheat – don’t run this town anymore. The 1990s witnessed tremendous churn in the city’s corporate leadership. The city endured the acquisition of its three largest banks by North Carolina rivals, and suffered the headquarters loss of three Fortune 500 companies, also through takeovers. The companies that have replaced them are more New Economy than Old. Capital One, which has supplanted Philip Morris as the region’s largest employer, didn’t exist 10 years ago. The company uses sophisticated data-mining techniques to market credit cards and other consumer products.

Meanwhile, a slew of fast-growing biotech and info-tech companies promise to generate another wave of employment growth. Venture capital is the fuel, says T.J. Daly, manager of Richmond venture capital firm Monument Capital. "Five years ago, when I was working with First Union Securities, we here in Richmond didn’t even know what venture capital was."

These are significant developments for Richmond, long viewed as an unsophisticated backwater and high-tech wannabe in comparison to Southern neighbors like Charlotte and Atlanta. Richmond has a ways to go before it overtakes those metropolises, but the rise of a new breed of technology entrepreneurs here betokens that changes are afoot. "There is a base of entrepreneurial technology companies in Richmond that wasn’t here in 1990. During the last three to four years we’ve seen an explosion in start-up technology companies. A critical mass is forming and Richmond is becoming a hotbed for new technologies," gushes Glotz.

Hyperbole? Perhaps. But the numbers show that something is happening that’s not widely recognized – even in Richmond itself. Between 1990 and 2000, according to the Greater Richmond Partnership, the region gained 68,000 jobs, boosting its employment base by 14.5 percent. That’s not as high as job growth in Charlotte, N.C., Richmond’s rival and nemesis, but it still was 50 percent faster than the national average.

What’s more, broad employment indices don’t begin to describe the churn beneath the surface. The numbers obscure the re-engineering at Philip Morris that trimmed 3,200 jobs, the dismantling of the old James River Corp., with its 700 headquarters jobs and the downsizing, to the tune of 1,400 jobs, at Reynolds Metals. Meanwhile, all of the city’s largest financial institutions – banks and brokerage firms alike – were acquired by North Carolina banks.

While change has decimated the ranks of Richmond’s old corporate leadership, it has been kinder to the rank and file. The four largest financial institutions employ roughly 11,000 people, about the same number their predecessor companies did 10 years ago. First Union, most notably, has invested heavily in upgrading the capabilities of its Richmond-based investment banking operations. Meanwhile, a number of banking executives, unwilling to relocate to Charlotte, have started their own boutique firms.

That was the path chosen by Brad Burke, who had clocked time with several established investment houses in Richmond. During the banking shakeout, Burke witnessed consolidation creating new opportunities. He helped launch Parata Capital, which has offices on Richmond’s Southside. "We saw the tremendous opportunities these mergers were creating to serve small companies. The banks succeeded in eliminating a lot of jobs functionally within their organizations, but they also created a lot of cracks in the floor, with clients falling through them," says Burke.

Capital One is the most successful spin-off of all. Started as a subsidiary of the former Signet Bank, Capital One has pioneered advanced data-mining techniques for marketing credit cards. Although the founders moved the corporate headquarters to Falls Church in Northern Virginia, they’ve kept the bulk of the operations in Richmond. Today, the company employs about 7,000 people and has announced plans, incredibly, to hire 7,000 more over the next several years. If it can achieve that objective, the company will employ more people than the entire banking sector did 10 years ago. "The fact that Capital One has supplanted Philip Morris as the No. 1 employer in the Greater Richmond area is probably the most telling sign of change in our regional economy," says John Woodward, director of the City of Richmond Department of Economic Development.

Capital One provides the template for how successful Richmond-area companies are adapting to the New Economy. Rather than creating wildly original new technologies, Richmond companies tend to apply someone else’s technologies to industries they already know. Just as Capital One employed IT tools to galvanize the mature credit-card industry, Tridium Inc. is using the Internet to add pizzazz to the traditional automated controls business."Industry in general is changing more rapidly than in the past, but the problem is a lot of corporations aren’t ready to change the way they’ve done things. That can be frustrating for their customers," says Jerry Frank, president and chief executive officer of the Richmond software company, which he bills as the "Cisco of energy automation systems."

Frank formerly worked for the Siebe Group (now Invensys), which manufactured industrial control and automation systems. Realizing early on that the Internet would allow companies to manage energy consumption in far-flung localities, he launched Tridium in 1995. The company’s Niagara Framework provides an open, Internet-based platform for managing "smart" devices and control systems. Receiving a $20 million round of venture capital in late 2000, the company is expanding rapidly.

Corporations are being forced to adapt or die, Frank notes, pointing to the recent struggles encountered by a pair of Richmond corporate legends: furniture retailer Heilig-Meyers Inc., which filed Chapter 11 bankruptcy in August, and Reynolds. "Both those companies were very successful in the past but were having a difficult time in a changing marketplace," he says. "Years ago big companies could just muddle through, but in today’s global climate that’s not an option. But the opportunity is there for smaller entrepreneurial companies."

While Richmond’s small companies have been taking up the slack, the woes of the big companies often have freed up the resources to allow them grow. When Circuit City suspended its Divx movie player two years ago, for instance, it proved a boon to East 3 Ltd., a Richmond start-up that employs advanced feedback technology in which users manipulate their brain waves to interact with computers. The Richmond marketplace was flooded with a host of highly skilled specialists: computer programmers, software writers and engineers. "We prospered when Circuit City dropped Divx," says company founder Tom Blue. "We have about a dozen people on our technology team, and I’d say about half of them hailed from the Divx program."

Another driving force in the new Richmond economy has been the semiconductor industry. Infineon, situated on a 210-acre campus in Sandston, employs about 1,700 people. The company operates a manufacturing plant, including wafer processing, testing functions and assembly of components. The presence of Infineon locally and Dominion Semiconductor in Manassas stimulated a wave of follow-up investment. "We’ve seen about 65 industry vendors and suppliers locate here," says Greg Wingfield, executive director of Greater Richmond Partnership Inc., the regional economic development agency. "That means more jobs, more disposable income. [It] spills over into other sectors like retail, which also is booming."

The Virginia Biotechnology Research Park, product of private-public partnership, had to win over skeptics who feared the project would be another boondoggle, similar to the under performing Sixth Street Marketplace mall. Detractors remain, but they are dwindling in number, says Robert T. Skunda, the park’s president and CEO. The park includes five buildings sitting on 34 acres near Virginia Commonwealth University and the Medical College of Virginia Hospitals. Its 35 tenants contribute nearly 900 new jobs to the region. Skunda projects as many as 3,000 new jobs could be generated when the park is fully built out. A satellite biotech park also is planned for Chesterfield County. "Richmond has a lot of characteristics considered important to the growth of the biotech industry," says Skunda, a former secretary of commerce and trade under Gov. George Allen. "VCU is an established research institution, we have the elements of a work force tied to the chemical, wood, paper and food products manufacturing and a relatively low cost of doing business."

The IT industry, serving Richmond’s large corporate community, has been another growth sector. Cavalier Telephone, which didn’t exist until 1998, recently closed a $88 million funding round to expand its services northward into Pennsylvania and Maryland. Cavalier expects to have more than 640 employees by the end of 2001. New IT companies are scattered in office parks from the West End to the Southside to Shockoe Slip downtown.

Some observers can’t help but wonder what "might have been" had Virginia’s legislature not been so slow to craft liberalized banking laws allowing the consolidation of intra-state banking. A more favorable regulatory environment in North Carolina gave Tar Heel banks several years’ lead in bulking up. When interstate banking opened up, the North Carolina banks were the predators and Virginia banks the prey. "I remember walking up Cary Street in the 1990s with a friend who pointed to the line of banks and asked ‘How many of those banks do you think will be here in 10 years?’ Of course I insisted Crestar would be here," laughs Christine Chmura, then a Crestar Bank economist and now head of Chmura Economics and Analytics.

Chmura believes Richmond’s rapid technology growth, while encouraging, shouldn’t distract people’s attention from the lost opportunity caused by repeated setbacks in traditional business sectors. Had Richmond been able to keep its core industries intact and augment them with technology jobs, it may have concocted a recipe for a boomtown.