CapNet Rejects Merger With TechNet

Posted May 23, 2005 at 6:50pm

The board of CapNet, a Northern Virginia-based high-tech lobbying group, voted late last week to reject a proposed merger with TechNet, a tech lobbying group based in Silicon Valley, several sources on the CapNet board said.

One CapNet source said TechNet wanted to take over CapNet and use it as its affiliate in the Washington, D.C., and Northern Virginia area. But “CapNet flat out refused them,” this board member said.

A spokesman for TechNet said that Lezlee Westine, the group’s new president and chief executive, was unable to comment for this story.

Some CapNet board members said it actually had been their group that initially approached TechNet about a merger, because CapNet’s longtime executive director, Tim Hugo, had recently left the group. At the same time, TechNet was interested in beefing up its D.C. presence.

Another CapNet board member said that merger talks between CapNet and TechNet went on for about a month and were put forth to the board members as an option.

But the proposed deal ran aground amid concerns about the two groups’ differing styles.

This CapNet board member said TechNet “focuses on the above-the-clouds, 20,000-foot issues where CapNet is focused on day-to-day bills that are trying to get passed.”

“The most fascinating fact was that the people who led the fight against the merger were the companies that had joint membership in both” associations, the CapNet board member said.

According to the CapNet and TechNet Web sites, companies that have dual membership include VeriSign, Yahoo!, Hewlett-Packard, Intuit and Microsoft.

On the afternoon of May 19, the CapNet board met for a teleconference, during which some members cast their votes. Other members were able to continue voting through Friday by electronic voting, board members said.

A third board member said there had previously been a face-to-face meeting on May 17 at Microsoft’s Washington office, where members took up the issue of merging CapNet into TechNet.

CapNet has not yet replaced Hugo. Jason Flanary is serving as its interim leader.

Recently, Westine, formerly director of the White House’s Office of Public Liaison, took over TechNet as its president and chief executive. Westine’s location in D.C. marked a shift in the organization, which previously had prided itself in its California base.

The idea of merging technology trade associations has been a long running topic. Rhett Dawson, president of the Information Technology Industry Council, said that high-tech groups talk about merging often. “But there is very little evidence that there is a consolidation or merger effort under way.”

But Dawson said he sees it as inevitable. “There are too many, and our industry is converging,” he said. “I think it’s going to become clear that some groups are stronger than others.”

One CapNet board member said “as a CapNet board member, we’re always open to discussing the right kind of affiliation or partnership at the right time with any associations.”