from the New York Times


      December 27, 1998

      GRASS-ROOTS BUSINESS

Why Wall Street Is Losing Out to 40 Acres and a Modem

      By JOEL KOTKIN

   PARK CITY, Utah -- While his investment-banking peers brave crowded
   airports and pack into jets bound for long-awaited ski vacations,
   Saeed Abtahi isn't planning to do anything but walk out his front
   door. He doesn't have to: He lives here in the Wasatch Mountains -- at
   an elevation of almost 8,000 feet -- with ski slopes all around him.

photo credit:
                                         Tim Kelly for The New York Times

Photo caption:
        Life in a large urban financial center holds few charms for Saeed
         Abtahi, who uses electronic communications to run his investment
   banking firm from headquarters in a far different environment: the ski
                                                 town of Park City, Utah.
     _________________________________________________________________

   When, after 10 years at Bankers Trust in New York and London, Abtahi
   decided to strike out on his own in 1996, he couldn't think of a good
   reason for living or working in a big city, or even a suburb.

   Since then, his 11-person investment firm, Hunter Capital Group, has
   arranged $1.3 billion in private financings out of a low-rise office
   building in this ski resort of 12,000 people, a former mining town an
   hour's drive from Salt Lake City.

   With modern computer and communications technology, investment bankers
   like Abtahi are finding that they can do business successfully from
   almost anywhere.

   "We're a modem country now," Abtahi said. "This allows for a movement
   -- maybe 10 to 15 percent of the high-end people -- to operate
   anywhere they want, including places like Park City."

   The trend could have ominous implications for major financial centers.
   As manufacturers and financial back-office operations have deserted
   central cities, scholars like Saskia Sassen of Columbia University and
   many urban planners have maintained that urban core regions can still
   thrive by dominating so-called producer services like investment
   banking, money management and financial consulting.

   But the digitization of financial services -- Abtahi's "modem nation"
   -- threatens even that dynamic. Already, more than two-thirds of the
   leading on-line brokerage firms are based away from New York City, in
   places like New Jersey, California or Florida.

   Over time, according to David Krell, chief executive of the
   International Securities Exchange, the very idea of the trading floor
   and centralized financial markets will become as obsolete as vacuum
   tubes.

                                                                 [INLINE]
                                         Jim Evans for The New York Times

         To explain why the Data Broadcasting Corporation is based in the
    mountains near Jackson Hole, Wyo., rather than in the canyons of Wall
      Street, Alan J. Hirschfield emphasizes one factor: quality of life.
     _________________________________________________________________

   "We can provide the information, the order flow of a traditional
   market, but with the efficiency of an electronic marketplace," said
   Krell, whose firm, based in New York, is developing a screen-based
   options trading system that it hopes to put in service in January
   2000. "Our market-makers don't have to be in New York, San Francisco,
   Chicago or Philadelphia -- they can be in Sun Valley."

   With anywhere to choose from, many of the new breed of rural
   financiers are attracted to Jackson Hole, Wyo. The sprawling town,
   with a year-round population of just 6,400, is home to at least two
   important financial market players: the Brandywine mutual funds and
   the Data Broadcasting Corp., which supplies financial and market
   information to investors.

   The Brandywine funds, with more than $5 billion in assets, are run by
   Freiss Associates and the fund manager Foster S. Freiss from a
   two-story log cabin-style office building.

   Data Broadcasting, with 760 employees scattered around New York,
   California and Utah, is managed from the outskirts of Jackson Hole by
   two other Wall Street players, Allan R. Tessler and Alan J.
   Hirschfield, who was once a top executive with the Wall Street firm of
   Allen & Co. and is a former president of 20th Century Fox.

   "What's driving growth in places like this is not only technology, but
   the fact that people can now get both quality of life and do their
   business," Hirschfield said. "It's creating a new exodus from urban
   areas, particularly among younger married professionals."

   Indeed, places like Jackson Hole; Santa Fe, N.M.; the Colorado
   Rockies, and the New England coast are prime magnets for affluent baby
   boomers, according to William H. Frey, a demographer at the Population
   Studies Center of the University of Michigan.

   They are migrating in large-enough numbers to make places like Aspen
   and Snowmass among the most expensive in the nation, with median home
   prices often higher than in Beverly Hills.

   Many of these refugees are like Richard Jaycobs, who postponed having
   children until his late 30s and now is based on Nantucket.

   "There's a big generational thing playing out now," said Jaycobs,
   formerly a fund manager with the Computer Trading Corp., who grew up
   in Brooklyn but moved to Nantucket three years ago, at the age of 36.
   "I see people my age -- this is really about raising children -- and
   they don't want to stay in the city or do the long commutes," he said.
   "They have the contacts enough that they can make the life style
   choices."

                                                                 [INLINE]
                                       George Ruhe for The New York Times

     Richard Jaycobs wanted to live in a good place for raising children,
     but he did not want to face commuting a long distance to work. So he
              based his new financial risk-management consulting company,
                                       Acknowledge Systems, on Nantucket.
     _________________________________________________________________

   His new financial risk-management consulting firm, Acknowledge
   Systems, is based in Nantucket, though it still has a presence in New
   York. After all, some of the young finance experts and programmers it
   employs are not quite ready to settle down in a sleepy New England
   village. But as these people age and contemplate having families,
   Jaycobs believes, they will become more amenable to moving to the
   island.

   Urban cores, of course, still possess important advantages, notably
   elite business schools, unique agglomerations of specialized service
   providers and an exciting cultural environment that remains attractive
   to many young, skilled people. But their hold on the nation's
   financial elite is no longer unchallenged and may well fade.

   Abtahi, for one, is counting on it. He wants to entice three or four
   more Wall Street investment bankers up to the mountains.

   "Everyone complains about worrying about getting laid off, so it's
   easy to recruit," he said. "People who come here, they all have this
   incredible reaction: This is a great way to live."

   Copyright 1998 The New York Times Company


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