Watch at 9:52 to see Steve Case, founder of AOL and Revolution CEO, highlight the great work that our ShearShare team is doing!
Thanks for the #ShearShare mention, @stevecase and our @riseofrest family! Together with some pretty intentional entrepreneurs, this group is determined to shine a spotlight on great companies and ideas outside of the traditional coastal hubs like #California and #NewYork, while at the same time jumpstarting economic #opportunity and #jobs in these areas. We’re happy to see #beauty and #barbeting highlighted!
Transcript:
Silicon Valley is the place to be for tech startups of course.
But that success has also helped cause brain drain from the heartland.
Tech entrepreneur Steve Case, best known for cofounding AOL and of course that disastrous merger with Time Warner is hoping to change all of that.
Together with J.D.
Vance, author of the bestselling memoir ‘Hillbilly Elegy, ‘ Case has launched the Rise of the Rest Seed Fund, an initiative hoping to jumpstart economic opportunities beyond the coastal hubs and he sat down with Walter Isaacson who is also on the board of that fund to discuss it.
Steve Case thank you for joining us.
Great to be with you.
Hey tell me about the Rise of the Rest Fund and your bus tours.
Why are you doing that?
Well we’re doing because we want a level playing field for everybody everywhere in the country has a real shot at the American Dream.
We entrepreneurs create companies that create jobs and obviously do a lot of innovative things, but last year 75 percent of the venture capital in this country went to just three states California, New York, Massachusetts, the other 47 states fight over the other 25 percent.
So we’re trying to get venture capitalists to pay attention to what’s happening with the entrepreneurs in Ohio and Pennsylvania and Wisconsin and other places not just what’s happening on the coast, places like California and New York.
So you shining the spotlight on towns and communities and cities that are having a sort of rise of entrepreneurship but don’t have the venture capital yet to get them started.
And don’t even have people understanding what’s happening.
Most of the place we visit so far in the last several years, we visited 38 cities, 10, 000 miles all across the country and there are interesting things happening in each of these cities.
Most people don’t know about it and most of the investors aren’t paying any attention to it.
So we’re just trying to change that paradigm and we really think that some of the breakout companies are the future not just going to come from Silicon Valley but are going to come from some of these cities in the middle of a country.
Why?
I mean you talk about it in the third wave your book that there’s a third wave that isn’t engineering driven.
The third wave is really the next logical step of the Internet.
Obviously the first wave is getting everybody online, getting America Online.
The second wave has been building apps, software, services on top of the Internet, things like Facebook and Google.
The third wave is really integrating the Internet and changing things like healthcare and our food systems and other things that are going to require partnerships and also require more domain expertise.
We really want to revolutionize healthcare, you kind of have to understand a little bit about how hospitals work and how doctors think.
We want a revolution and revolutionize farming with ag tech, having some sense of that culture of farming makes sense.
So I think ag tech innovation will happen not just on the coast but places like St. Louis where Monsanto is headquartered or Louisville or Lincoln, Nebraska, where there’s great expertise around farming and ag tech and so we really believe the entrepreneurs are there, the talent there, that creativity is there, the money’s not there, and as you know there is a growing divide in this country that really is a divide in part based on opportunity and so if we’re going to, and startups create most of the jobs, not the small businesses, not the big businesses, but the young, high growth startups, so we are going to create jobs in different communities and have more people feel optimistic about the future, we have to back entrepreneurs everywhere and they will have more of the domain expertise because they’re close to what’s happening.
For example a couple of months ago and when we were in Chattanooga, the winner of our Rise the Rest pitch competition was a company called Freight Waves, that’s kind of doing a Bloomberg data system for the trucking industry.
Which is sort of based in Chattanooga.
I didn’t know that some of the big trucking companies are in Chattanooga.
So you know if you start a company there to serve the trucking industry, you’ll have more expertise about what the needs are and more customer and more partners there if you’re in Chattanooga as opposed if you’re a New York City or Boston or San Francisco.
We’re seeing that all over the country, that’s where we think this next wave of of great entrepreneurs building great companies will be.
I love the fact that you pick Chattanooga, it’s one of my favorite cities and one of the things I don’t quite understand is how suddenly past 10 years, Chattanooga has blossomed as an entrepreneurial startup.
What makes a city like Chattanooga blossom when other cities might not.
It’s a mix of things, I’d say it’s growing quite quite remarkably but it’s still a lot to be done.
They’re still relatively, if you look a Tennessee last year, the whole state, not just Chattanooga was less than 1 percent of venture capital, Ohio less than 1 percent, Wisconsin less than 1 percent, Pennsylvania less than 1 percent, so we are making some progress on some of these cities but there’s still a lot of work to do.
Chattanooga specifically, it’s the business community has really rallied around the startups.
You know the mayor and others have really put a priority on the startups.
The university has done a better job of keeping talent.
We’ve seen an enormous brain drain over the last half century where people going to some of the great universities in our country then left those places to go to the coast because the money was in the coast, the opportunity was on the coast.
How do you slow the brain drain, how do you create a boomerang of talent, people wanting to come back and we’re starting to see that happen in Chattanooga and other Rise of the Rest cities.
You know that’s a wonderful phrase you just used about boomerang generation and boomerang people, people who return home.
That notion of returning home seems to be catching on and one of the leaders of that is your partner, JD Vance, who wrote you know Hillbilly Elegy, but that notion of OK, in this very troubled times we’re facing today, maybe we should all go home and tend our own garden a little bit.
He goes back to Columbus and you help do a Rise of the Rest run there right?
Yeah I think J.D.
is an example of what, in your experience too, that people have pursued their dreams, pursued their career and it’s taken them to various places but sometimes there’s a longing to come home.
Sometime the desire to raise a family where you grow up or maybe where you went to school, but the opportunity hasn’t been there in the last several decades and that’s what we’re trying to change.
JD, obviously Hillbilly Elegy was a huge success, he was a venture capitalist in Silicon Valley and he wrote that book was sort of to find a problem that people have in many parts of the country feeling kind of left out, feeling left behind, scared about the future and decided he wanted to be part of the solution and so he joined us at Revolution as the managing partner of Rise of the Rest because he wanted to kind of be part of that and as part of that he wanted to move back home to Ohio.
And so he goes back to Columbus and Columbus is now flourishing not just because J.D.
moved back but it’s become one of the great entrepreneurial cities.
Only less than 100 miles away is Dayton and it’s not coming back.
Why does a city, what makes a difference.
Why does a Columbus come back and a Dayton is still struggling?
It’s a very interesting question and we’ve seen this in other other cities.
Dayton’s lost half of its population last last half century.
Detroit’s lost half its population.
Detroit 100 years ago was kind of like Silicon Valley, it was the most innovative city in the country but it kind of lost its entrepreneurial mojo, lost its way.
It’s fighting its way back, but it kind of lost a lot of ground.
The difference between a city typically like Dayton and a city like Columbus is the ability to attract the talent, attract the capital that has been more difficult in Dayton to keep the people who wanna be part of the innovation economy.
People are more likely to be in Columbus.
They’re trying to change that and some of the most innovative and even computer companies like NCR were based in Dayton so it has a tradition of being an innovative city.
A lot of people left there and there is not yet that sense that it’s time to come back.
There is progress in Dayton, there’s reason to be optimistic about it but they’ve dug a big hole and basically everybody kind of, not everybody, but a lot of people felt like they had to leave to pursue opportunities elsewhere.
But you look at Chattanooga, Columbus, I’d even say New Orleans, Austin, Texas, what are the ingredients, if you had to say here five ingredients you have to have if you want to be rising with the rest.
It starts with talent and so how do you slow that brain drain, people leaving, how do you become a magnet for talent, a boomerang for talent.
Capital is very important, which is why we launched this fund to partner with regional venture capitalists.
We’re trying to help these regional venture capital raise more capital so they can back more companies, a connection to where there’s intellectual property, universities for example provide that you know, that connection to partnerships with big companies in those cities, provides that and sort of a sense of possibility, almost a fearlessness in terms of the culture.
There are a lot of communities around the country that are kind of cautious, kind of kind of risk averse and if you’re gonna be innovating, and this is one of the great things about Silicon Valley, it has a sense of anything is possible.
There is a fearlessness to that that city, how do we create more more of that in more parts of the country.
So you’d put a billboard in some of these cities that just says ‘be fearless.’. Be fearless and believe in yourself, believe in your community.
I remember when we were in Memphis recently, part of the reason people are trying to rally there, there’s obviously great companies, big company like FedEx that are headquartered there, but their startup community was not as developed as they wanted.
We kind of said well we can only believe in Memphis if you believe in Memphis.
The people in Memphis, the business leaders, the government leaders, the university leaders aren’t rallying together to support the startups, why do you think other people from other places will will join you as part of this?
Silicon Valley a hundred years ago was fruit orchards.
It wasn’t growing startups, it was growing fruit but it had the connection to the commuter revolution and obviously Stanford and other other universities there and that’s where venture capital got started and so it went from basically an agriculture valley to being Silicon Valley and so how do we create that dynamic in other places, not trying to replicate Silicon Valley but take some of the principles around innovation and that fearless spirit and backing the entrepreneurs and not just focusing on what might go wrong but also focusing on what might go right.
Let’s get specific about some of the successes you think you’ve had.
I know down in New Orleans one of the companies we invested in was Ready Responders.
Ready Responders is a good example of trying, instead of having to go to the emergency room, they’ll come to you, which is more convenient and also a cost effective way to deal with the health care system.
‘So you can skip the weighting and high bills of the emergency room.’
There’s a company in Texas called Shear Share that basically is allowing people who are stylists, barbers to basically rent out space and so they don’t have to necessarily affiliate with a particular salon.
In Baltimore we found a company called Catalyte that’s taking a lot of people who didn’t know that coding might be something they’re good at, they give them a test.
The people who pass that test go through a curriculum and get a much better paying job.
There’s a U.P.S.
driver that was driving trucks because when he was growing up nobody said you might be good at coding and went through this program and has now doubled the amount of money he’s making because of a program like that.
I do realize because I travel around a lot that most people in this country wake up in the morning anxious about the future, fearful of the future, they’re worried about the future.
The disruption we celebrate in places like Silicon Valley, they view as a threat.
They’re going to lose jobs because of that and that does happen, disruption does result in job loss.
You know two centuries ago 90 percent of us worked on farms.
Now it’s less than 2 percent because technology.
Basically you can farm more land and grow more food with fewer people.
So there’s going to be that kind of job loss.
The only question is can we offset the job loss with new jobs we create in these new industries of the future and we can only do that if we’re backing entrepreneurs everywhere, not just in a few places on the coast.
One of the things some of the cities that are successful have, Austin, Texas, Nashville, Tennessee, New Orleans I would say as well, is a creative economy i.e. everything from music to food to theater, creativity.
Is that part of the new mix too, connecting creativity to the startup world?
No question and we’re seeing this also in terms of place that you know half a century ago, if you wanted to revitalize a neighborhood, you try to get the artist to move in.
Soho here in New York for example.
Now you try to get the entrepreneurs to move in and that starts revitalizing that neighborhood then you start creating jobs and it kind of expands from that but there’s no question that this ultimately is a battle for talent.
As a country, we’re now in a global battle for talent.
Each city within our country is battling for talent.
How do you keep the best and brightest you have and how do you attract other people who want to be there and part of it is based on the opportunities but some of it’s based on the broader creative community and sense of possibility and the sense of inclusiveness that these cities are trying to build.
When you helped build AOL and you were the one who made it into a great company, it was based on a premise of community, of people who knew each other, bringing them together and it wasn’t really about just pushing out content.
Do you think we’ve moved away from that wonderful model of social media bringing there to create community and now social media is dividing us.
I think there some of that.
I’m surprised and disappointed by it.
I think it’s one of the unintended consequence of the Internet.
As you said when we got started with AOL 1985, only 3 percent of people were online.
They were only online an hour a week and we said we think the killer app of the Internet is going to be people, you know community, what’s now called you know social media.
So that really was the focus of AlOL’s effort.
More and half of our usage, our traffic was always these community functions and we thought that was a way to bring people together to spend.
You’d be able to connect to people you already knew and want to stay closer to and also connect the people you didn’t yet know but maybe should because you had some kind of shared interest and we have seen that dynamic kinda kick in.
At the same time particularly in the last few years it feels like social media has divided us.
We are in our own little filter bubbles paying attention to only certain voices, not really understanding the the other side of issues and it has had the impact of creating a more divisive kind of world which has had an impact in terms of politics.
There’s no question there are some downsides to it and one of them is the fact that you know that social media in particular and a diversity of voices which I think is a good thing also has this dynamic around fake news and not every voice is necessarily an accurate voice and a trusted voice and so we have to figure out as we go forward, how to strike the balance of creating that environment where every voice can be heard while at the same time having some distinction between what’s right and wrong.
In the world of technology and in the world of Rise of the Rest and of entrepreneurship around this country and especially in Silicon Valley, women, people of color, generally been left out of getting venture funding and whatever.
How bad is it and what can be done about it?
It’s really bad.
I talked about how the venture capital money goes to a few states, 75 percent going to you know three states.
It’s actually worse if you look at people.
Last year over 90 percent of venture capital went men, less than 10 percent to women, Less than 1 percent went to African-American.
So you know this is a great entrepreneur nation, we should be proud of it, but the data does suggest that it does matter where you live, does matter what you look like, does matter who you are now whether if you have an idea you can take it and build a company and really pursue the the American dream so we really need to be more inclusive.
We really need to level the playing field and so everybody everywhere really has a has that shot and there’s a lot of work to be done on that front.
Steve thanks for joining us.
Thanks Walter.
