[Congressional Record Volume 145, Number 76 (Tuesday, May 25, 1999)]
[Senate]
[Pages S5976-S5977]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           VIRGINIA CHAMBER OF COMMERCE CONGRESSIONAL DINNER

  Mr. ROBB. Mr. President, Richard D. Fairbank, Chairman and Chief 
Executive Officer of Capital One Financial Corporation, delivered 
remarks at the Virginia Chamber of Commerce Congressional Dinner last 
month. Capital One, headquartered in Falls Church, Virginia, is one of 
the fastest growing private employers in my state. Mr. Fairbank's 
remarks offered invaluable insight into the challenges and 
opportunities the technology revolution is producing in both the 
private and public sectors, and I ask that they be printed in the 
Record.
  The remarks follow:

     Remarks by Richard D. Fairbank, Virginia Chamber of Commerce 
                  Congressional Dinner, April 29, 1999

       Members of Congress, distinguished guests, ladies and 
     gentlemen. Let me first take the opportunity to thank the 
     Virginia Chamber for supporting Virginia's business 
     community. It is an honor to join you this evening to share a 
     bit of the Capital One story and give you my thoughts about 
     the challenges facing the Virginia business community as we 
     move into the 21st Century.
       First, a comment about Virginia. What a wonderful state we 
     live in! I am reminded of that everyday. The irony is, 
     Virginia was not where I was supposed to live. I grew up in 
     California, and thought I would always live in California. 
     When I graduated from business school, I applied only to 
     California firms, except for one company in D.C., and only 
     because they were just about to start a San Francisco office. 
     When my wife and I came out here, we fell in love with 
     Virginia, and never went to that San Francisco office. So now 
     we've been Virginians for 18 years, and we're here to stay. 
     My wife and I and our four children live right here in 
     Fairfax County.
       And our larger family--our COF family--now numbers 8,000 
     associates in Virginia--in Richmond, Chesterfield, 
     Fredericksburg and Northern Virginia. Virginians have a 
     wonderful blend of Southern charm and tradition mixed with a 
     very positive spirit that believes in possibility. It's a 
     magical combination. It's made Virginia a great home for COF. 
     Capital One's growth has at times surpassed our capacity to 
     hire here in Virginia, so we have expanded into Florida, 
     Texas, Washington State, Massachusetts and the UK. But our 
     first choice is always to grow as much as we can right here 
     at home. Just last year, we added 3,500 new jobs here in 
     Virginia. This year we've announced we're adding another 
     3,000 new jobs in Virginia, but truth be told, we'll probably 
     exceed that number significantly.
       Tonight I've been asked to talk about how the business 
     world is changing, using Capital One as an example. I think 
     the story of Capital One is a story of what happens when a 
     band of believers fixates on a vision of how the world is 
     changing, and pours everything they have into getting there. 
     Today, Capital One is one of the fastest growing companies in 
     the country. But it wasn't always that way. In fact if you 
     had asked anyone 12 years ago to bet even one dime on Nigel 
     Morris and myself and the dream we had, you wouldn't have 
     found many takers. I know that for a fact. Because we were 
     out there asking. And they weren't taking.
       Our dream was this. We believed information technology 
     could revolutionize the way marketing is done. The most basic 
     truth of marketing is that every person has unique needs and 
     wants. Yet from the beginning, companies have tended to 
     respond to those needs with a one-size fits-all approach, 
     because they can't accommodate the unique needs of thousands 
     or millions of customers. But we saw the possibility to 
     change all that. To use technology and scientific testing to 
     deliver the right product to the right customer at the right 
     time and at the right price--a strategy we call mass 
     customization. And we saw the credit card as a perfect 
     candidate for this strategy. Ten years ago, virtually every 
     credit card in the U.S. was priced at 19.8 percent interest 
     rate with a $20 fee. Yet people varied widely in their 
     default risk, their financial circumstances and their needs.
       Our dream was to build a high-tech information-based 
     marketing company to change all that. The problem was we had 
     no money and no experience in the credit card business. We 
     needed a sponsor. So, Nigel and I embarked on a national 
     journey to every financial institution that would talk to us. 
     The good news is that we got audiences with the top 
     management of 20 of the top 25 banks in America. The bad news 
     is that every one of them rejected it. But finally, a year 
     into our journey, we found a sponsor right here in our 
     backyard. Signet Bank in Richmond.
       And so Capital One was born. For years we worked to build 
     the business, to build the technology and operations to 
     customize decision-making at the individual account level. 
     Four years into it, we still had no success. Yet Signet never 
     lost faith, despite nearly going under themselves with real 
     estate loan problems. Finally, we cracked the code of mass 
     customizing credit cards. And in 1992 we launched credit 
     cards at dramatically lower prices for consumers with good 
     credit. And we've never looked back.
       Today we have thousands of product variations for our 
     customers. Including products like our Miles One card that 
     gives mileage credit on any airline, with no blackout period, 
     and with a 9.9 percent fixed interest rate. We can price this 
     low because we use technology and information to make sure 
     that our low-risk customers don't have to subsidize high-risk 
     customers. By 1994, we had grown to 6 million customers. 
     Signet Bank spun off Capital One, and we became a fully 
     independent company.
       But our dream was just beginning. Because we never defined 
     ourselves as a credit card company. We're a technology-based 
     marketing company. So, we have taken this very same strategy 
     and expanded into other financial products like deposits, 
     installment loans and auto loans. We've also taken our 
     strategy internationally to the UK and Canada so far. And, we 
     even entered the telecommunications industry, creating a 
     company called America One, where we are marketing wireless 
     phones. While everyone else markets wireless phones through 
     stores, we are selling direct, tailoring each offer to our 
     customers' needs. The strategy appears to be working. We are 
     now in 41 states. And America One is now the largest direct 
     marketer of wireless phones in the U.S. Our next frontier at 
     Capital One is the Internet, which is a perfect medium for 
     our strategy of information-based mass customization. We are 
     mobilizing a major effort to be a big player in the Internet. 
     So from credit cards to wireless phones, from the U.S. to the 
     UK, and from the mailbox to the Internet, we've been able to 
     keep the growth going at Capital One. We now have 18 million 
     customers, and are growing by 15,000 customers a day.
       Capital One's success in many ways has come simply from 
     understanding and embracing the inexorable implications of 
     the technology revolution. First, that marketing will be 
     revolutionized. And second, that technology is changing the 
     leverage of the human mind. This insight has massive 
     implications for human resources. One hundred years ago, in 
     factories and farms, the smartest or most educated workers 
     were not necessarily the most productive. But the computer 
     and the Internet can take the human

[[Page S5977]]

     mind to a quantum new level. In the technology age, the key 
     asset in a company is its knowledge capital.
       And to us, this meant that our greatest imperative is 
     recruiting and developing incredibly talented workers. If 
     there's one thing that is talked about the most and delivered 
     upon the least, it is this--recruiting the best people. At 
     Capital One, we have made it the number one corporate 
     imperative. In fact, I believe that the single biggest reason 
     for Capital One's success is a totally fanatical commitment 
     to recruiting. It is the most important job for every 
     executive and manager in the company. The average executive 
     at Capital One spends about one full day a week recruiting. 
     It's an incredible commitment. Our future depends on it.
       So that's the Capital One story. I believe that many of the 
     things I've said about Capital One have direct relevance to 
     Virginia and its challenges. Like Capital One, Virginia is 
     enjoying exceptional growth, fueled significantly by being a 
     leader in technology. The good news is that the entire 
     Commonwealth is benefiting from the booming economy. It seems 
     that economic expansions are announced every week in 
     Virginia. But Virginia cannot rest on its laurels. While 
     Virginia has done a good job at attracting high quality, high 
     salaried jobs providing unprecedented opportunities for all 
     Virginians, we continue to face many challenges that need 
     attention from both our political and business leaders. Let 
     me mention just a few . . .
       The greatest challenge for Virginia's rapidly growing 
     companies is to attract and retain the most talented 
     employees who have the technical skills to lead our 
     businesses into the 21st century. There are nearly 25,000 
     unfilled technology related jobs in Northern Virginia alone 
     and the Department of Commerce predicts that nearly every new 
     job created from now on will require some level of technology 
     expertise. This poses the greatest threat to Virginia's 
     economic growth.
       We must start with quality education. Virginia already has 
     world-class institutions of higher learning, and I am pleased 
     that Capital One is tapped into this talent. Many companies, 
     such as ours, are partnering with our university system to 
     help design curriculum and training for a multitude of jobs. 
     We also offer a full tuition reimbursement plan to every one 
     of our 11,000 associates to encourage them to seek continuing 
     education. Also, to help address our acute shortage of 
     technology workers, we offer our non-technical associates the 
     opportunity to be retrained and shifted into one of our many 
     unfilled technology jobs. I am pleased that many of our 
     associates have taken us up on these opportunities.
       But Capital One can't get there from here simply by 
     training and developing our associates. It certainly will not 
     meet our long-term needs. We need to recruit on a massive 
     scale. Simply put, Virginia's universities are not producing 
     enough technology graduates to meet the demands of companies 
     like Capital One. This forces companies to look elsewhere to 
     meet their needs for technology workers. And elsewhere 
     includes overseas. Nations like India and China are producing 
     many more engineering and technology degrees than the United 
     States. Many of the leading technology companies are building 
     massive programming shops in those countries, sending the 
     programming specifications from the US. We need to reverse 
     that trend and work with our universities to produce more 
     technology graduates here at home.
       However, this will not happen overnight. In the interim, in 
     order to meet our current needs, our immigration policies 
     must be flexible. Congress provided a small measure of help 
     last year by raising the cap on H1-B visas thereby allowing 
     more high tech workers from outside the United States to come 
     into the country. Clearly, this is a step in the right 
     direction. But, much more must be done if we are going to 
     meet the needs of Virginia's growing high-tech industry.
       Growing up in the San Francisco mid-peninsula, I witnessed 
     firsthand the development of Silicon Valley--now the 
     technology capital of the world. The same thing can happen 
     here. We are well underway. In fact, the Internet revolution 
     has its roots in Virginia. Virginia is already the home to 
     more than 2,500 technology businesses that employ more than 
     250,000 people. It includes AOL, UUNET, and P-S-I Net. With 
     more than half the Internet traffic flowing through Virginia, 
     we must continue to expand on our reputation as a technology 
     center and the Internet hub of the United States. Let's build 
     upon our fast start.
       While Virginia owns the infrastructure of the Internet, 
     with the exception of AOL and a few others, we do not have a 
     major presence in marketing e-commerce. That means more dot/
     com companies. YAHOO!, Amazon.com, EBAY, Charles Schwab and 
     most other leading e-commerce firms are not located here in 
     Virginia. These businesses are redefining retail channels--
     and we must make certain that Virginia cultivates and 
     attracts these types of companies. We need to be more than 
     the infrastructure backbone of the Internet. The growth of e-
     commerce is just beginning. And already, it is affecting 
     everyone, everywhere, everyday. Business will never be the 
     same again.
       And new economic realities lead to new political realities. 
     Our public policies must give this new technology and way of 
     doing business time to develop. For example, as the Internet 
     revolution is exploding, some have suggested that we create 
     taxes on Internet transactions. I believe that would be a big 
     mistake. I know that Governor Gilmore is currently leading a 
     Commission studying Internet taxation issues on the national 
     level. Their decisions can have a lot of impact on a rapidly 
     growing industry still in its infancy. With sound 
     legislation, such as the Internet Tax Freedom Act, companies 
     are better positioned to grow and attract consumers into this 
     new business channel.
       All these new technologies also bring a need to act 
     responsibly with our customers' information. Information is 
     the lifeblood of companies like Capital One, who use it to 
     tailor products for the individual consumer at the best 
     possible price. It's why we have been able to help bring down 
     the cost of credit cards and other products--and simplify the 
     process of obtaining them. The same is true for the Richmond-
     based grocery store UKROPS, Geico, EBAY and thousands of 
     other companies. We must find a balance between the clear 
     economic benefits that derive from access to information and 
     the responsibility we all owe to our customers to safeguard 
     their personal information. Companies need to lead the way. 
     Like many companies, Capital One has developed a 
     comprehensive privacy policy to ensure that our customers' 
     personal information is used appropriately with very clear 
     limitations. While we must be vigilant about consumers' 
     privacy, I believe that restrictive legislation in this area 
     would turn back the clock and actually hurt consumers.
       We also must be prepared to meet the basic day-to-day 
     demands that a fast-growing economy will place on Virginia 
     and its communities. While technology and e-commerce are 
     making the world a smaller place, the reality is that people 
     will still need to get to work. With a booming national 
     economy and low unemployment, our workers have choices. If 
     they cannot get to and from their places of employment, these 
     highly skilled individuals will relocate. You can read the 
     survey results or simply talk to your employees: 
     transportation is most often cited as the number one quality-
     of-life issue by most working people, especially here in 
     Northern Virginia. Thanks to the hard work of the Virginia 
     Delegation more Federal dollars are flowing to Virginia than 
     ever before for transportation. We must continue to work 
     together to address this issue.
       So those are a few of my thoughts of the biggest challenges 
     and opportunities we face as we move into the 21st century. 
     The world is changing so fast, it's hard to make sense of it 
     all, and to know where we all fit in. We can't predict the 
     future. But, I believe that one can identify a few trends 
     that are absolutely inexorable. The story of Capital One is 
     an example of doing that. The key for Capital One has been to 
     see a few of those inexorable trends and try to get there 
     first. No matter what it took. Whether or not we had the 
     skills or market portion to make it happen. Because we had 
     destiny on our side.
       Many people and many companies and many politicians don't 
     think this way. They tend to think incrementally. That's a 
     risky cause of action in a world that's changing so fast. 
     Virginia is in a great position to the lead the way into the 
     21st century. Let's make sure we think big and do what it 
     takes to get there. Thanks.




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