Steve Case

Chairman and CEO of Revolution, Former CEO of AOL

This is a time to really double down on innovation and entrepreneurship. If you’re somebody with an idea … now’s the time to get started.

Summary

As one of the founders of America Online, Steve Case played a major role in shaping the Internet as we know it today. Now the CEO of Revolution LLC and chair of the Smithsonian Institution, Steve joins Alan on “Leadership Matters” to discuss his latest efforts to empower entrepreneurs outside of the startup centers on the east and west coasts.

Through the course of his conversation with Alan, Steve discusses his early life in Hawaii, his time at the helm of AOL, his work to empower entrepreneurs through several mediums, and his latest book. Titled The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream, the book describes the innovative businesses Steve has encountered in cities across the country — Detroit, San Antonio, Indianapolis, and Chattanooga, to name a few — the challenges they have overcome, and the larger impact their success has had in their respective communities. In Steve’s mind, empowering these sorts of startups is more than just good business sense; they are creating opportunity and prosperity in places that need it the most. In turn, that prosperity has the potential to combat the hyperpartisanship that has become the norm in U.S. politics.

Mentions & Resources in this Episode

• The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream, by Steve Case

• Revolution LLC

• Virtual Smithsonian

• Punahou School

Guest Bio

Steve Case is one of America’s best-known and most accomplished entrepreneurs, and a pioneer in making the Internet part of everyday life.

For the past 15 years, Steve’s focus has been on starting and scaling Revolution, the Washington DC-based investment firm that now backs entrepreneurs at every stage of their development. Revolution Growth has invested nearly $1 billion in growth-stage companies including Sweetgreen, Tempus, Tala, DraftKings, and CLEAR. Revolution Ventures has backed more than two dozen venture-stage companies, including Framebridge, Policygenius, and Bloomscape. The Rise of the Rest Seed Fund has invested in more than 130 startups in over 70 U.S. cities, in partnership with many of America’s most successful entrepreneurs and investors.

Steve’s entrepreneurial career began in 1985 when he co-founded America Online (AOL). Under Steve’s leadership, AOL became the world’s largest and most valuable Internet company, helping to drive the worldwide adoption of a medium that has transformed business and society. AOL was the first Internet company to go public, and one of the best performing stocks of the 1990s, delivering a 11,616% return to shareholders. At its peak, nearly half of Internet users in the United States used AOL. In 2000, Steve negotiated the largest merger in business history, bringing together AOL and Time Warner in a transaction that gave AOL shareholders a majority stake in the combined company. To facilitate the merger, Steve agreed to step down as CEO when the merger closed.

Steve’s passion for helping entrepreneurs remains his driving force. He was the founding chair of the Startup America Partnership—an effort launched at the White House in 2011 to accelerate high-growth entrepreneurship throughout the nation. Steve also was the founding co-chair of the National Advisory Council on Innovation & Entrepreneurship, and a member of President Obama’s Council on Jobs and Competitiveness, where he chaired the subcommittee on entrepreneurship.

Steve has been a leading voice in shaping government policy on issues related to entrepreneurship, working across the aisle to advance public policies that expand access to capital and talent. He was instrumental in passing the JOBS (Jumpstart Our Business Startups) Act and the Investing in Opportunities Act, and is active in advocating on behalf of immigration reform and legislation that supports and accelerates the emergence of startup ecosystems in rising cities.

Steve also serves as the Chair of the Smithsonian Institution, the world’s largest museum and research complex. In this role, Steve leads the Board of Regents’ efforts to increase the Institution’s reach, impact and relevance.

Steve is also Chairman of the Case Foundation, which he established with his wife Jean in 1997. Together the Cases have invested in hundreds of organizations, initiatives and partnerships with a focus on leveraging the Internet and entrepreneurial approaches to strengthen the social sector.

In 2010, Steve and Jean joined The Giving Pledge, and publicly reaffirmed their commitment to give away the majority of their wealth to philanthropic causes.

Steve is also the author of the New York Times bestselling book, The Third Wave: An Entrepreneur’s Vision of the Future and the upcoming book, The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream.

Steve was born and raised in Hawaii and retains active ties to his home state, but has lived in the Washington D.C. area for more than 30 years.

Clips from this Episode

• Steve explains why entrepreneurship is a "team sport"

• Reflecting on the early days of AOL and its explosive growth

• Steve discusses the growth of tech cities around the country, away from Silicon Valley

Episode Transcription

Alan Fleischmann

My guest today is an investor, entrepreneur, technological pioneer, and a leader who has played a critical role in shaping the Internet as we know it today and really leading us on investments around the country.

Steve Case is the former chairman and CEO of AOL, the world’s first blue-chip internet company, which under Steve’s leadership paved the way for the modern Internet through its online and instant-messaging services. Today, Steve serves as chairman and CEO of Revolution, an investment company that is focused on building the next generation of transformative companies in geographies too often ignored by modern venture capitalism.

Steve has a remarkable ability to grow businesses and see around corners. He’s the author of several books, last month publishing The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream. During the Obama Administration, Steve was appointed as the founding chair of the White House’s Startup America Partnership and was a member of the president’s Council on Jobs and Competitiveness. He’s the founder and chairman of the Case Foundation, and serves as chair of the Smithsonian Institution. I am thrilled to welcome Steve on the show today to discuss his life, his extraordinary career, his most recent book, and the advice he has to offer to leaders — future and current ones — on encouraging innovation that includes everyone.

Steve, welcome to “Leadership Matters.” It is a pleasure to have you on today.

Steve Case

Great to be with you, Alan.

Alan Fleischmann

This is gonna be fun. So I understand — knowing you and knowing your extraordinary journey — that you’re a fourth-generation Hawaiian who was born and raised in Honolulu. I think you might be the only fourth-generation Hawaiian that I know. Your father was a well-regarded attorney, and your mother was a schoolteacher. Tell us a little bit about your early years — what was life like around the house?

Steve Case

Well, our family goes back 100 years in Hawaii. Interestingly, when I was born, Hawaii was not yet a state — it became a state on my first birthday. So a little a little historical trivia there.

It was a great place to grow up. It was obviously a wonderful place. I went to the same school from kindergarten through 12th grade, a school called Punahou. I lived near it, and it was a wonderful place to be. The first time I really experienced winter and snow is when I went off to college in Massachusetts. That was a little bit of a rude awakening for me, because as you know, in Hawaii the temperature tends to be about the same year-round. But it was it was a great experience growing up there.

Alan Fleischmann

What were the lessons your parents taught you? Are there certain things that your mom and dad taught you? And how many brothers and sisters are you? I knew at least one of your brothers, Dan, but you’ve got other siblings as well?

Steve Case

Dan was older, my sister Karen was older, and my younger brother Jeff was about four years younger. There were four of us in a six-year period, so we were pretty tightly clustered.

In terms of my parents and some lessons, there were a lot around hard work. They had a pretty strong work ethic; if you commit to something, you deliver on it, so kind of a stick-to-this kind of dynamic. A lot around the community; they both were quite active and doing things in the community, so the lesson there was, if you have the opportunity to play a role, you need to step up and do your part.

So those were some of the basic lessons that I learned. It wasn’t necessarily a lot about entrepreneurship, because as you said, with my mom being a teacher and my dad being a lawyer, they weren’t necessarily inherently entrepreneurial. A lot of people viewed entrepreneurship as sort of risky.

Even when I was talking a number of years ago about technology and disruption with my mom, she said, “Why do you have to use the word disruption? It just seems so aggressive. Why don’t you talk about reimagining industries, not disrupting industries.”

So yeah, that was some of the perspective they brought. Which I understood, given their own their own their own experiences.

Alan Fleischmann

That makes a lot of sense. You developed, though, an entrepreneurial streak, and it sounds like it was with your brother Dan as well. You started a mail-order business called Case Enterprises.

Steve Case

What else are you gonna call it? That seemed like a good name for it.

Alan Fleischmann

Yeah, that’s a good name for it.

Steve Case

We had a bunch of different businesses, and I did enjoy it, working with my older brother — a little over a year older — on some of these businesses. I think it was fun. None of them really amounted to much, so it was more learning on the ground, trying different things, including some door-to-door sales of things like greeting cards, and later, cable television. Things like that.

So I think those were important lessons and helped for me, kind of light the spark around entrepreneurship. Just trying to break things and build things.

Alan Fleischmann

And disrupt things.

Steve Case

And disrupt things. Sorry, Mom.

Alan Fleischmann

What are the kinds of extracurricular things were you involved in? What other things we were doing growing up, outside of school?

Steve Case

Well, in high school I was editor of the high-school newspaper and was also quite involved in the music world — reviewing concerts and albums, and even doing some concert promotion later on when I was in college. So probably, if you’d talked to anybody, including me, when I was in high school, I probably was going to be more focused on the music industry.

But then, when I was in college, I fell in love with the idea of the Internet. I read a number of things around these new technologies that were being tested in different places in the late ’70s — things like video, text, teletext, and interactive TV, Bestel, and Minitel — all these things that seemed intriguing to me. So I kind of pivoted at that point and focused more on what became the Internet.

Alan Fleischmann

But before that, you attended Williams College. Which I think your dad went to too, if I’m not mistaken.

Steve Case

Yep. Probably the only reason they let me in, I had the legacy card.

Alan Fleischmann

I don’t know about that. You studied political science there — what drew you to study political science?

Steve Case

Well, it was not a particular interest in politics, actually. I was intrigued with it — as you know, Williams is a classic liberal arts college, and what you majored in mattered less than being exposed to different ideas, different perspectives. So it was not necessarily “I’m moving into politics” or something about political science that was intriguing to me.

Alan Fleischmann

Had you known, though, even while you were studying, that you were gonna go more the business route or the tech route?

Steve Case

Yeah, I always knew. I wasn’t quite sure what it would be, but I knew that I would end up doing something more, for sure, on the business side, and likely more on the entrepreneurial side.

Alan Fleischmann

Because I think you were at Procter & Gamble and Pizza Hut before you went and joined Control Video, which is an early computer game company.

Steve Case

Right.

Alan Fleischmann

So you went the more traditional route a little bit — if that’s traditional, P&G and Pizza Hut — and then got right into the tech world.

Steve Case

Well, I write about some of those the book, but it was not that I necessarily wanted to go the more traditional route — that was the only route available to me when I was graduating from college. I knew at the time that I wanted to do something that was focused on the Internet, but the Internet really didn’t exist in terms of being a business or even a consumer phenomena. It was still limited to educational institutions and government agencies. So graduating college and joining an internet company wasn’t an option.

And at that time, graduating and starting an internet company was not an option because venture capitalists weren’t backing 21-year-olds back then. So that kind of led me to say, “Well, I think I want to do that eventually, but I can’t do it now. So why don’t I at least go to some places where I can learn some things and build a little bit of a track record that might make it easier for me to find a job in something a little closer to the Internet? And also, build some credibility that might, over time, make it a little bit easier for me to raise some of the capital I would need?”

Alan Fleischmann

That’s cool. How did you get how did you get involved with Control Video? How did that happen?

Steve Case

A little bit by accident. I was doing some consulting for some companies on the side, a little bit of moonlighting, while I was working for… I think it was for Pizza Hut, which was a division of PepsiCo. My brother was investment banker and venture capitalist at a Silicon Valley firm called Hambrecht & Quist. They were looking at investing in this company called Control Video, so Dan asked me to take a look at it. I thought it was interesting; it had some positives to it, but also some risks to it. That led me to ultimately start consulting with them, and after about maybe six months, decided to join them full-time.

That’s when I moved to the Washington, DC area, in the summer of 1983.

Alan Fleischmann

Where were you living just before that?

Steve Case

Wichita, Kansas. Pizza Hut was based in Wichita. Before that, Procter & Gamble was in Cincinnati.

Alan Fleischmann

Had you been in DC much before you moved to Washington?

Steve Case

Not really. I had visited, but hadn’t really spent much time there. I really moved there to join this company, which I thought was intriguing startup. It turned out to be less intriguing, because a few months after I joined they were kind of in freefall and had to lay off 70% of the staff. So that was my wake-up call that the world of startups is not always up and to the right; sometimes, there’s some challenges.

Ultimately, that company did not succeed, but thankfully, two the people I met there — Jim Kimsey and Mark Seriff — and I ended up co-founding what became America Online two years later in 1985. And since we were already in the Northern Virginia area, in the Tyson’s Corner, Virginia area, that’s really where we started AOL.

Alan Fleischmann

That journey, though — what were the different roles that you had and the other two had at Control Video? And then, tell us a little bit about that journey that led to the vision that became AOL.

Steve Case

Well, I brought sort of the marketing sense and sort of a bias towards partnerships; trying to figure out ways to forge partnerships with companies that could enable us to get more traction than we could on our own. Mark Seriff was the technologist. He actually was part of the original team that ARPA that built the internet corollary technologies. And Jim Kimsey brought more of a business financial sense; he was a couple decades older and had some successful businesses in the DC area, so I think his track record in business gave some of the venture capitalists more confidence.

So it really required all three skill sets, I think. What I was able to bring from marketing, kind of seeing where we were going and trying to get us there, was important. But being able to build it, which is what Mark did, was also important, and being able to fund it, which is what Jim did, was obviously critical as well. So it’s a great example of entrepreneurship as a team sport, and that’s something I’ve learned, including with the companies we back with Revolution and Rise of the Rest. We focus not just on the entrepreneur, but also on the team around the entrepreneur, because that’s really what we’ve learned is the key to being successful.

Alan Fleischmann

That’s right.

You had different roles, and you eventually, obviously and famously, became the CEO of AOL a few years later, and you lead the company through explosive growth. I mean, when you kind of talked a minute ago about how you were intrigued by what the Internet was going to be and what the vision of it was, you actually defined it. Everyone’s got great memories of AOL; people’s first experience in emailing and texting all happened with AOL. How did you handle that transition, from a small digital pioneer into what became a publicly traded, blue-chip company?

Steve Case

Well, it was an evolution, because it really took us 10 years to really get traction. When we started the company in 1985, only 3% of people were online, and those 3% were online an average of one hour a week. So it was kind of early days in terms of the idea of the Internet.

It took us, as I said, the better part of a decade to convince most people that they had a reason to get on. It seems crazy now, but in the late ’80s and even the early ’90s, most people were skeptical that the normal people, beyond sort of a narrow computer-hobbyist market, would ever see the value of being online. So it took a while to get people to believe, and took a while to build the partnerships that were necessary and build the on-ramps and build out the content, services, and so forth. But eventually in the mid-’90s, that went from something that nobody knew about or cared about to suddenly, everybody wanted to get online and join the Internet. And that’s where AOL really was well-positioned.

At our peak, I think about half of all the internet traffic in the United States went through AOL. The reason we were able to be successful is, we really did focus on trying to create a service that was easy to use, useful, fun, and affordable. Pretty basic, but it turned out to be pivotal in terms of really breaking through and establishing a significant business.

When we went public in 1982 — so 30 years ago — we raised a whopping $10 million in our IPO and the market value of the company that day was $70 million. Then eight years later, when we merged with Time-Warner, it had gone from $70 million to $160 billion, which is why we were able to negotiate that deal.

So, the first decade was slow and a struggle, and a couple of times we almost hit the wall. And then the second decade, things really took off.

Alan Fleischmann

Was there favorite time during that journey? Was it the struggle, or the explosive growth?

Steve Case

Definitely the struggle; I think most entrepreneurs would say that. Of course, when you’re struggling for a while and you finally break through, you finally get traction, you finally get people to believe in what you’re doing — that’s gratifying. But those early days of really trying to figure it out is where I look back most fondly.

And that even informs a lot of the work I’ve been doing over the last decade, including backing entrepreneurs all around the country. It’s helping them at that early stage when they do need a boost, they do need some capital. But they also need some help in terms of encouragement, mentoring, opening doors to potential partnerships, helping shine a spotlight on what they’re doing.

Part of the reason I even wrote the book The Rise of the Rest was to spotlight those entrepreneurs, help them tell their stories, help them get more scale more quickly than they otherwise could have gotten. Because those early days for me, were a little lonely; it was a struggle. But the team we had really believed in the idea and stuck with it. And eventually, we were able to kind of move from surviving to thriving.

Alan Fleischmann

So after you left AOL-Time Warner, you founded Revolution with the aim you just described — kind of being both the access to capital, but also the access to mentors and bringing your own innovation to be the coach as well. And you have some pretty formidable companies that you’ve invested in over the years. Did you, already then, see a focus that was going to be on what became The Rise of the Rest and your work in the last seven years with your other books and your other missions — about bringing capital and disrupting outside of the East Coast-West Coast paradigm?

Steve Case

Well, it evolved. In the earliest days when Revolution got started, we were starting to make a number of investments. And at the time, it was still just my capital. And then after a few years, we said, “You know, this is kind of interesting and we’re seeing some great opportunities. Why don’t we also open up to have outside capital?” That was where we launched our first Revolution Growth and then Revolution Ventures funds, with outside, institutional limited partners as part of those. That’s really been most of the focus over the last 10 or 15 years, is those funds and backing companies you mentioned, like Sweetgreen, or Clear, or DraftKings, or Tempus, or many other companies that we’ve been, in most cases, the first institutional investor in.

The Rise of the Rest evolved, really, over the last decade. It goes back to your introduction. When I was asked to co-chair the National Advisory Council on Innovation & Entrepreneurship, then lead the White House’s Startup America Partnership effort, and then work on the Jobs and Competitiveness Council — that kind of opened my eyes to two things that I hadn’t really, fully understood. One was the central role entrepreneurs play in job creation. The data was pretty compelling that, while small business accounts for a lot of jobs and big business accounts for a lot of jobs, it’s actually new businesses, companies under five years old — essentially, startups — that account for most of the net job creation. That was kind of interesting.

The second was this point around venture capital; that most of the new companies that end up being the most successful job creators tend to raise venture capital. Yet, venture capital was overwhelmingly backing entrepreneurs in a few places. Over the last decade, 75% of venture capital has gone to just three states: California, New York, and Massachusetts. So I said, “Okay, that’s both a problem to solve — in terms of creating a more inclusive innovation economy, creating more jobs in more parts of the country — but it’s also a great opportunity, just from a purely investment standpoint.” It’s sort of classic supply-demand problem. There are great entrepreneurs everywhere. It’s harder for the entrepreneurs in these other US cities to raise capital. But as a result, valuations tend to be a little bit more moderate, so the opportunity to generate returns as investors is quite compelling.

That’s really the mission we’ve been on it with Rise of the Rest for the past decade. It started with some bus tours traveling around the country, trying to see firsthand what was happening and doing pitch competitions. Then we formalized it about five years ago with the launch of a Rise of the Rest Seed Fund, we’ve now done two of those funds. And we now have 200 investments in 100 different cities. And after spending the better part of a decade traveling the country and seeing what’s happening in all these different cities, meeting all these different entrepreneurs, that’s when I said, “This is a great story. And most people have no idea what’s happening.” That allowed me to write the book, to really try to spotlight these entrepreneurs and also kind of showcase these the cities that are on the rise.

Most people who’ve read the book are equally surprised. They had no idea that it wasn’t just one or two or three cities on the rise. It’s actually several dozen cities. We actually profiled 30 cities in the book — we could have kept going, we just didn’t want the book to be too long.

So this is an interesting phenomenon that’s building around the country, where innovation, entrepreneurship, and job creation is starting to accelerate in different cities. But most of the capital and most of the attention is still on the usual suspects, particularly Silicon Valley. I think that’s going to change dramatically over the next decade. That’s gonna be helpful to these entrepreneurs, in terms of starting and scaling more companies, and helpful to those communities in terms of renewing them with more job creation, more economic growth. And also, perhaps, even helpful to the country, at least in some small way. It might help contribute to bridging what is obviously a very divided country that’s divided, as you well know, in many ways. But one way that I think we can help address is this opportunity gap, where some people in some places are doing really well and most people in most places are feeling kind of left out and left behind because they’re not part of the future. They’re not part of the new companies that are being created. They’re not part of the new industries being created. I think that can change over the next decade. Hopefully, this book will help accelerate that effort.

Alan Fleischmann

Now, I’m struck by the whole idea of the book and the journey that you’ve been on with your bus tours. I mean, when I think about the timing, I think about what’s happening in this country. How do you make capitalism work? We can’t make our democracy work if we don’t have a better capitalism. And the way you’re applying your capital and the way you’re describing where we need to go in the book, it really is a blueprint of how we do fix things: by having access to capital, access to mentors, access to opportunity, not just if you happen to be located near MIT or Stanford, but actually, in the heartland of America. That’s not been the case for too long, and if there isn’t going to be entrepreneurship in those places between those two coasts, we really can’t fix capitalism. So I kind of think your political science work at Williams…

Steve Case

Yeah, maybe it’s all coming back full circle.

I obviously agree with what you’re saying and appreciate what you’re saying. But it also is part of this broader dynamic. Because of the fact that, historically, there hasn’t been a lot of venture capital in the middle of country, as a result, there hasn’t been a lot of startup creation in the middle of the country. So there has been a brain drain in the middle of the country, where people growing up in some of these places… Including going to some of these great universities. Ohio State in Columbus, or University of Michigan in Ann Arbor, or Carnegie Mellon in Pittsburgh, I can name a couple dozen others — when they graduate, historically, they’ve gotten to the coast. They’ve left where they were because they didn’t think there was much opportunity there and they’ve gone to the coast. So we need to slow that brain drain and actually create a boomerang of people returning to those cities, which will help revitalize and renew those cities.

And that was starting to happen over the last decade — every year, we’ve kind of seen a little bit more progress. But the pandemic has certainly been a tipping point. If you’re looking for a silver lining in what’s been a tragic three-year period, it’s what’s happening with the rise of the rest. It has led some people to decide to move to another place. It has led to some of that boomeranging of talent, that dispersion of talent. It has led some of the venture capitalists on the coasts, because suddenly they were meeting entrepreneurs via Zoom, to figure out, you know, why not meet entrepreneurs via Zoom anywhere in the country as opposed to just in their own backyard. So that’s been helpful.

The other big insight — which is, again, part of the reason I decided to write the book — it’s not just that these cities have the potential to grow. There are strategic advantages to being in these cities in terms of cost of living and cost of operations. You raise a little bit of money, you can go two or three times faster in a lot of these Rise of the Rest cities as opposed to if you’re in a big superstar city like New York, or San Francisco. There’s also a lot of amenities, maybe some family reasons to be there. Increasingly, in this next era of innovation, domain expertise is going to matter more and partnerships are going to matter more. If you want to reimagine healthcare, for example, if not just the technology you build. It’s getting hospitals to integrate it, doctors and nurses to use it, and health plans to pay for it. There’s a bunch of things that need to happen to really create change in healthcare. The same is true in sectors like food and agriculture or financial services. It requires partnerships, it requires domain expertise. And guess what? Some of that domain expertise and some of those key anchor partners are in the middle of the country, if you look at many of these industries that are up for grabs and going to get disrupted. So I think that’s going to create a real boost for these cities if we can change the dynamic so they can really start and scale anywhere, raise capital anywhere, and attract the teams they need anywhere. So in the short run, I think people will be surprised by how many companies are advantaged.

I’ll give you just a couple quick examples. In Chattanooga, there’s a company we back called Freightways that built a data platform, kind of like a Bloomberg system, for the trucking and logistics industry. I didn’t notice that we were in Chattanooga on our bus, but some of the biggest trucking companies in the country are based in Chattanooga. So if you’re building Bloomberg for trucking, better to be in Chattanooga than to be in New York City or San Francisco.

Another example outside of Atlanta — there’s a company called Hermeus that’s doing Mach 5 engines and planes where you can fly from Atlanta to Europe in 90 minutes. The Air Force is a big customer of theirs. Atlanta, it turns out, is a great hub around aerospace, and Georgia Tech, the university there, has a whole program around it. So that’s actually the best place to be for a company like that.

There more and more examples of this. I think people reading the book really will be surprised by, and hopefully, inspired by a new generation of entrepreneurs that are building companies outside of the places that get all the attention and get most of the capital, like Silicon Valley.

Alan Fleischmann

How important are universities? I know that you don’t have to be a university student or graduate to be a great entrepreneur — we know that some of the best ones have been dropped out of universities — but the environments that they’re building at Ohio State University, as you mentioned, what they’re building with Columbus and having Intel go there… What does that mean to the greater community around entrepreneurship? I know you and I’ve met with and talked about what President Michael Crow is growing at Arizona State University, another great example. He’s created this Phoenix phenomenon. I mean, Phoenix is obviously thriving as well. But entrepreneurs go there, there’s a draw there. How much does the university element plays a role in all this, in the community and the culture?

Steve Case

It plays a huge role. And you mentioned some of the examples, like Ohio State or Arizona State, that really are playing a pivotal role in this next phase or evolution of their own communities. I was in Phoenix just a couple of weeks ago and the amount of construction happening there is really amazing. And a lot of it is focused on these new companies, these startups. ASU, actually, even built an entrepreneurship dorm that’s specifically focused on entrepreneurs. Other universities are also looking at things like that.

So that’s helpful. But I would also note that we’ve been to a lot of these rising cities that are on the move without, necessarily, the benefit of a great anchor research university. So it’s super helpful and can be catalytic, but there are many examples of cities, including some we cover in the book, where that was not one of the strategic advantages they had but they were able to build a strong kind of startup community nonetheless.

Even here in the greater Washington, DC area, there are obviously some strong places here — you know, George Mason, Georgetown, Virginia Tech, and others. But most would say it does not have the equivalent of a Stanford or MIT. But it has grown greatly over the last few decades since we started AOL. The fact that Amazon picked the Northern Virginia area as its second headquarters site, I think, is a testament to that. So that’s an example there.

Obviously, more investment in those universities is starting to pay off. But most people would not have said that the greater DC area is as well-positioned as Silicon Valley was — or even Austin was, because of having the University of Texas there to really kind of scale. But it’s now scaling, which is creating this network effect where the universities themselves are getting more entrepreneurial, getting more focused on software engineering and data science, things like that. All because of the fact that there are more companies here and they’re looking for more and more talent here.

Alan Fleischmann

And I would say that, you know, there are those who are entrepreneurial and there are those who are the entrepreneurs. The entrepreneurial people are, as you were describing the team, the ones that actually help that entrepreneur with his or her vision. If they’re in a university environment — and lots of talent is in that environment — then those entrepreneurial folks will find their way to the entrepreneurs, and vice versa.

Steve Case

Yeah. Just because of their nature, colleges and universities have always been a magnet for talent. That’s their business model — they graduate a new class every four years. People come there, they learn some things, then they graduate and they move on. The question is, how many of those people, once they graduate, can you keep in your community? As opposed to leave to go to some other community. That is the opportunity you create. That’s why having a strong startup community in more of these places ends up giving more people a reason to stay, and even some of the people who left more of a reason to return. Which then creates that kind of increasing returns, network-effect dynamic that results in an acceleration of these cities.

The other dynamic we’ve seen — I wrote about a number of examples in the book — is the benefit of a tentpole company, a company whose success begets success. We certainly saw that with my own company, AOL, in the Northern Virginia area. Dell in Austin, Microsoft in Seattle; more recently, ExactTarget in Indianapolis, Duo Security in Ann Arbor, MailChimp in Atlanta — for these companies, success basically leads to more of an understanding that these cities really can build some pretty significant companies. But also in the process, some of the employees, the early employees there, want to do something more entrepreneurial and have skills that can be transferred to some new idea. Also, many of them made money on stock options and want to either fund the next generation of entrepreneurs as angel investors, or maybe launch a venture fund, or do something else that really helps the community more broadly.

So you’ve seen that now in numerous cities, where the success of one company led to the creation of dozens of other companies. Then some of the success of those companies really creates even more of this virtuous cycle. That’s why I’m so optimistic about the rise of the rest.

In fact, the most common question I’ve gotten since the book came out on the book tour is, “Okay, it kind of kind of makes sense. Entrepreneurship could be anywhere and capital starts spreading and the pandemic was a little bit of a tipping point. But tell me, what are the two or three cities that are really on the rise?” And the reality is, as you saw reading the book, it’s two or three dozen cities on the rise. It’s really a much wider, more widespread phenomenon than most people realize.

Alan Fleischmann

That’s amazing. You do talk in the book about some amazing entrepreneurs. You mentioned a couple, but they are operating in cities all across the country — it’s not just the phenomena of Columbus or Phoenix only. What do you think are the keys to success for startups in cities that are off the beaten path a little bit?

Steve Case

Well, first of all, how do we get them more on the beaten path? That’s obviously what we’re trying to do with the book and the work we’re doing with the bus tours, investment funds, and things like that. But I’d say that, if you look at these different cities, they break into two groups. Some of the companies are companies that really make sense for that particular city, given the industry expertise and the domain expertise I was talking about before. It allows you to build on that particular expertise. In Indianapolis, for example, now there are a lot of successful enterprise software companies because one company, ExactTarget, was acquired by Salesforce. Salesforce now has 2,000 employees in Indianapolis, the second largest Salesforce office outside of San Francisco. And because of that — ExactTarget and then Salesforce focus on enterprise software — several dozen enterprise software companies have been birthed in the last five or six years in Indianapolis. So somebody is building on that particular area of expertise.

The other, which is interesting to see, are companies that really could be anywhere but choose to be somewhere. Two examples in Detroit, which I kicked the book off with, I think are striking. One is a company called Shinola, which makes watches; another is a company called StockX, which is a stock exchange for things where they do some authentication for sneakers and other kinds of products. Neither of those companies existed a decade ago, and now, both of those companies each have more than 1,000 employees in Detroit. Those are companies most people would assume are someplace else — Shinola, because it’s in the watch business, maybe that’s in New York City, or Stockx, which sounds like a stock exchange or a next-generation eBay, that’s probably in Silicon Valley. No, they’re in Detroit.

So that was one of the fascinating things to see. It wasn’t just the companies you’d expect to see, based on that particular city and the area where they’re particularly expert. There were a lot of examples of that, and I cover a number of them in the book. But there are also these companies that really could be could be anywhere — the entrepreneur just happened to be there, just happened to starting a company there, and then scaled it up and a pretty significant way.

Alan Fleischmann

Your book is doing a lot — thankfully it’s a best seller, so people are reading it. But the book is read a lot to kind of share that blueprint and spotlight what’s happening all across the country, to your point, so its not off the beaten path, but considered on the beaten path.

Are you seeing media? How do you get media? How do you get the other forms of spotlighting to tell these stories? Because the stories that you have in your book are fascinating, they’re actually inspirational. They really do tell the next entrepreneur who wants to build an innovative company that there are ways to do it and there are places to go to do it — it doesn’t have to be the traditional way in any way. But how do you get the media to focus on it too?

Steve Case

Well, it’s part of the reason we did our bus tours. When we did our first one eight years ago, we got a bright red bus and started driving around cities like Detroit, Pittsburgh, Nashville, and Cincinnati. That was designed, in part, to create a little Americana road-trip theme that made it interesting for the media to cover, including national media. A few years ago, 60 Minutes followed us around and did a bit of story on it. But also, we were getting the attention of local media. In these rise of the rest cities, the local media is generally not paying enough attention to what’s happening among the startups. So again, being there by bus, traveling around town, having a pitch competition, doing a lot of interviews when I am in town — we’re highlighting the importance of entrepreneurship, the importance of startups, the importance of job creation, the importance of economic growth, and trying to get the local media to tell more of those stories.

The book came out a month or so ago, and part of the reason I’ve spent much of the last month traveling around the country to cities like Phoenix, Detroit, Milwaukee, San Antonio, and many others is, again, to tell the story. Not just about the book specifically, but about what’s happening in that particular community. So we’re trying to do everything we can to mobilize more attention for these companies and these entrepreneurs, but also these cities on the rise. And we’re trying to do that both by being on the ground in these cities and by using things like this book to tell a broader story around this next chapter of the American story.

Alan Fleischmann

I mean, people don’t realize that it’s the Phoenixes, the San Antonios, and the Columbuses that are growing. They don’t realize how big these cities are already. You think about LA, you think about Chicago, you think about New York and Miami, but you don’t necessarily think about these other rising cities that are ranked high in population.

Steve Case

And on the move. Phoenix is, as we discussed, a large city, the fastest-growing city. ASU, for eight years running, has been the most innovative university in the country. And as a result, you’re seeing dozens and dozens of startups flourish there. One, which I met when I was there a couple weeks ago that we had invested in, had 20 employees two years ago. Now, it’s 250 employees. That’s a company that’s on fire. And again, it’s not in Silicon Valley; it’s in Phoenix. There’s just so many of these stories that I find so inspirational.

And also, what’s happening in these cities seems so surprising when I come back and tell people about some of the places I visited. That really led to people saying, “Well, you got to write a book. You’ve got to tell these stories, everybody has to understand what’s happening all across the country.” And it’s not really a business book, even though it’s obviously focused on entrepreneurship and people think of it as a business book. There is this broader theme that we’ve touched on, which is ultimately about renewing these communities and strengthening our country. New companies are critical to job creation and economic vitality — the data there is really quite clear. I even kick off the book with the Detroit story: That, 100 years ago, Detroit was in many ways Silicon Valley. It was the innovative city when the car was the hot technology, and then lost 60% of its population over a half century. The year before we rolled in on our bus, the city of Detroit went bankrupt. So it was Silicon Valley; 100 years later, it’s bankrupt. Now it’s fighting its way back, because it’s recognizing the role new companies, startups, kind of play. It was booming for a while, then sort of lost its entrepreneurial mojo, got a little cocky and complacent, and was too focused on the big companies while not focused enough on the new companies. It really missed a lot of opportunity, and now it’s because of the role of startups — because of what entrepreneurs are doing in Detroit, including some of the companies I mentioned like StockX and Shinola, but also many others — that the city is again on the rise.

So if you want to renew your community, you have to focus on these new companies. Half of the Fortune 500 gets dropped every 25 years, it’s just a cycle of disruption that happens. Some of the big incumbents fall by the wayside, some new companies emerge. So if you care about your community, you need to be backing some of those new companies — some of which will fail, because startups are risky, but some of which will end up being the Fortune 500 companies of tomorrow. And if you care about your country, you need to create more opportunity, for more people, in more places. Give more people a reason to be optimistic about the future, as opposed to anxious and fearful of the future. Again, that’s building new companies that are creating new jobs.

Alan Fleischmann

You’re listening to “Leadership Matters” on SiriusXM and at leadershipmattersshow.com. I’m your host, Alan Fleischmann. I’m here with Steve Case: a businessman, investor, technologist, philanthropist, author, and a visionary friend. The book that he just published is amazing: The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream.

Let’s talk about that for a minute, because you just said it: Obviously, the country is polarized. Every election seems to be 50-50, and from local, statewide, national, it’s extraordinarily close. There’s a lot of tension, there are lot of people that feel completely out of the system of capitalism. But your book talks about how you can promote innovation that benefits everyone — this idea of inclusive capitalism. Tell us a little bit about what that means here. Because this idea that this can be for all, that this is kind of a recipe for how we rebuild our communities, how we rebuild our country by doing the right things and by investing in this innovation. Tell us a little bit about that and how we can promote innovation that does benefit everyone.

Steve Case

Well, it goes back to we were saying earlier. If you look at the data, it’s the new companies, the startups, that are the big net job creators. And so, how do you create an environment in your city that allows more of those companies to start and scale? If you’re able to do that, that’s going to result in more jobs being created.

The technology is… This sort of march of technological progress is unstoppable. As a result, we’ve seen progress. 100 years ago, 90% of people worked on farms. Now, it’s 2%. The reason is because technology made it possible for farmers to grow more food with fewer people, which is actually a good thing if you’re trying to feed the world. But also, it led to significant dislocation in terms of jobs in the agricultural sector. Thankfully, we were able to pivot from sort of that agricultural revolution that was dominating the country two hundred years ago to get more of the industrial revolution a century ago. We moved people from farms to factories and retrained them for these new jobs, these more manufacturing-oriented jobs. We have not been as effective in moving people out of that manufacturing sector into the technology world. And part of what we need to do more of is backing more companies that create more jobs. And not just coding jobs, though of course that’s important.

One great thing about companies like StockX in Detroit, which has 1,500 people —most of the people working there actually used to work in auto factories and were retrained to do some of the authentication that’s part of the StockX model. Similarly, Shinola has retrained factory workers to make watches. So there are different kinds of jobs, not just tech jobs, but a broader array of jobs in that community. And very importantly, the data is pretty compelling that, for every job in a startup, there are five other jobs in the community. Because when a city is on the rise, houses are being built, schools are being built, and restaurants are being built. There’s a broader impact in the community. So if you’re backing more of these new companies, you’re creating more jobs, not just tech jobs, but a broader array of jobs both within the company and around the company. And that’s where we need to focus.

Again, I’m not saying that the solution to all our problems in this country, in terms of hyper-partisan politics, comes down to startups. Obviously, there are many facets and it’s very complicated. But I do think that one area that we can and must focus on — we’re certainly trying to — is closing what is a pretty gaping opportunity gap. That means creating more new jobs, which means backing more new companies, and creating more hope and possibility in a lot of these places that do feel left out, left behind, and disrespected. So there is a role in terms of job creation to create more dignity for people, more hope for people. We can only do that if we’re backing companies everywhere, not just in a few places on the coasts.

Alan Fleischmann

What I was struck by in the book was, it leaves you feeling really recharged about the American Dream. It makes you believe that there really is an American Dream that needs to be reaffirmed, and it does leave you feeling optimistic, which we desperately need right now.

But also, optimistic that the American Dream is an inclusive dream, not an exclusive one. And you show that through The Rise of the Rest. Tell us a little bit about what the American dream means and why this really is the recipe for that. I don’t think you’re, as you said, suggesting this is the only way. But obviously, people’s economic welfare and their livelihood matters.

Steve Case

Well, people define the American Dream differently. But at the core, most people agree it’s a sense of possibility and hope that you can do well, and your kids and grandkids can do well. It’s sort of a march of progress and momentum. That has been a key part of the American story since this country got started nearly 250 years ago. And for a lot of people, that is no longer evident. There are a lot of people who don’t really feel that the American Dream is available, at least not to them. So, how do we create this sense of hope and possibility again? As I said before, some of that does go come down to job creation, lifting up people and places that have felt left out and left behind.

Alan Fleischmann

Encouraging entrepreneurship and putting your own dollars to work has been a theme of your professional life, but you’ve had an extraordinary philanthropic leadership journey as well — you founded the Case Foundation, as I mentioned. What are the main themes of the Case Foundation? Does the philanthropic side of your life complement The Rise of the Rest the same way that your investing side does, with Revolution?

Steve Case

Well, we started the Case Foundation about 25 years ago. My wife Jean has run it from day one and does a great job, really kind of leads the charge on all our philanthropic efforts. We’ve had different priorities over time. We’ve kind of think of our philanthropy a little bit like we think of venture capital — you invest in certain things for a certain period of time. But instead of just doing one thing forever, we change our priorities up from time to time.

Two areas of particular focus right now: Jean is the chair of the National Geographic Society and has been quite involved in that for more than a decade. And I am the chair of the Smithsonian Institution, as you mentioned in the intro. I’m really trying to work with that institution — the board, the management team — to move the Smithsonian in the future. It’s a 176-year-old organization that, obviously, is a core of America’s values around museums, research, and so forth. But we’re trying to be more collaborative, both within the Smithsonian and around the Smithsonian. We’re trying to be more agile and entrepreneurial so we can move more and more quickly. And we’re also trying to be more digital — we’re launching an effort we call the Virtual Smithsonian so we can take the Smithsonian to every home and every classroom.

So those are some of the core priorities. But obviously, with what we’ve been talking about with The Rise of the West, there’s a blurring between we think of as the role of policy, the role of business, and the role of philanthropy. The way we think about it is, what problem are you trying to solve? What opportunity are trying to seize? And how do you knit together all these different aspects to have the greatest impact? So when we launched the Startup America Partnership, it was launched at the White House but had philanthropic funding from the Case Foundation, Kauffman Foundation, and others. When we launched the Rise of the Rest Fund, it was a for-profit investment fund really designed to prove that you could generate top-tier returns by investing in these companies.

We also continue to have a role to play on the policy front. I’m, again, the co-chair of the National Advisory Council on Innovation & Entrepreneurship and working on identifying and accelerating the industries of the future, building out regional hubs. So it’s obviously a tie-in with the rise of the rest efforts. So we’ve tried to address this by using kind of every possible tool in a toolbox to maximize our impact.

Alan Fleischmann

I love that you’re bringing together things at the intersection of public life, the public sector, the private sector, and civil society — knowing that has to be integrated, there has to be real partnership, there has to be a joint mission for this to actually have scale. I love that you’re actually living your life and leadership in all three, frankly.

Are there incentives that government can play, or should play more of, that would draw more of the investing capital into certain communities, or more philanthropic dollars to certain communities?

Steve Case

I think some of it is sort of the showcasing role, which more and more mayors and governors are doing. Even when we were working on Startup America, President Obama agreed to do a startup day, a demo day, at the White House, which had never happened before. We had entrepreneurs from all around the country pitching the president United States, and that of course was broadcast on C-SPAN and inspired a new generation of entrepreneurs. So there are some things you can do on that front, which are more showcasing, symbolic.

There are policies a number of states have put in place, including tax incentives for investing in companies, angel tax credits, things like that. There’s also some things that were part of the legislation that passed this summer, including the CHIPS and Science Act, which authorized $10 billion to fund the acceleration of regional hubs — tying in very directly with this idea of the rise of rest. Treasury Secretary Janet Yellen, a few weeks ago, was talking about the need to have a more inclusive innovation economy that has more play space; which again, links with the work we’re doing on rise of the rest.

So there’s definitely a role to play, whether it be more at the local and state level or more at the federal level, to make sure America continues to lead the way as the most innovative, entrepreneurial nation in the world. And we do that in a more inclusive way so it does bring more people and more places along for the ride.

Alan Fleischmann

That’s great.

What advice would you give to business leaders, inventors, or entrepreneurs who want to fully leverage the tech innovation? Whether it’s innovation in healthcare or in education, there’s so many areas and companies that you cited in the book that have meaningful impact. What would you advise those who are saying, “Okay, I should either apply investment capital or invent and create a company?”

Steve Case

First would be recognizing this as a moment. This is a time to really double down on innovation and entrepreneurship. If you’re somebody with an idea — you’re either an entrepreneur or you have a desire to be an entrepreneur — now’s the time to get started. The good news — again, this is part of the reason I even wrote this book — is you can now do that from anywhere. Over the last decade 1,400 new regional venture capital firms have started in these rise of the rest cities. So that’s really quite encouraging.

If you’re a bigger company CEO, recognize the role these young companies play in your community and also could play in informing you around what’s happening next, so you can be a more agile company and leading in the future. So, partnering with these young companies is important to stay relevant if you’re a larger company. And I’d say to all of them… There’s this African proverb I love that says, “If you want to go quickly, you can go alone. But if you want to go far, you must go together.” This requires partnerships. This requires collaboration. This requires cross-sector kind of partnerships. We’ve talked about some examples of that, and I think that will really be pivotal for these entrepreneurs, for these CEOs of larger companies, for these communities themselves, and for the country itself as we head into this next era.

Alan Fleischmann

I want to go back to something you just referred to a minute ago, which it fits into this. I think about what you’re doing here and what the book lays out, how we need work collectively across public, private, and civil societies, invest in our communities, build communities. But you also mentioned… With you being the chair of the Smithsonian’s board of regents, the culture matters here. This rich, diverse culture that makes America what it is needs to get through to our communities and become part of our communities as well.

Your vision for the Smithsonian is kind of opening it up. It is about creating more greater access. It is the digital elements of it as well. I know Lonnie Bunch — the secretary of the Smithsonian who works with you — cares a lot about that too. But is there more about the culture part that you see, that’s actually the secret ingredient? That is necessary for people to want to move, to want to invent, and want to build up communities around the country?

Steve Case

Well, one of the things I love about the Smithsonian — this also ties in with our work on Rise of the Rest — is these tend to be things that are nonpartisan. Everybody agrees that the Smithsonian plays a critical role. It has broad bipartisan support in Congress in terms of funding, to allow the museums to be free to the public. So it’s great to have in a world that is, sadly, so hyper-partisan an institution like the Smithsonian that has broad bipartisan support.

Similarly, the work I’ve done over the last decade — most recently with Rise of the Rest, but even a decade ago working on the Jumpstart Our Business Startups Act, or JOBS Act, that passed Congress a decade ago — were done in a bipartisan way. And some of the work this last summer, including on the CHIPS and Science Act on the regional hubs, had broad bipartisan support. So it’s great to be able to focus on some things that do unite us as a country. How do you figure out ways to continue to move them forward? The Smithsonian specifically, building on what I said earlier, does play a pivotal role in education. Not just when people come to visit us, but the programs we have working with a number of schools. How do we double down on that, triple down on that, and really make sure that the Smithsonian is all it possibly can be in terms of informing people and educating people on some of the history? And also, helping them better understand where we are and where we’re going as a nation — that can be helpful in terms of a dialogue that leads to a more constructive focus on solutions to move the country forward.

So it is nice to be able to work on some things that are kind of out of the hyper-partisan, tribal nature of our politics today. I feel, whether I’m spending time on Rise of the Rest or spending time on the Smithsonian, that those are examples of things that do unite us as opposed to things that divide us.

Alan Fleischmann

The cost of debt is more expensive today than it was just a few months ago. It’s a different environment than it was a few months ago on the economic side — although your book makes me feel really optimistic that things happen during good times and bad. I think the reality is, so many of these great entrepreneurial companies were born out of recessions or born in times that we’re not necessarily perfect business times.

I’m curious a little bit about that and the disruption that occurs. If you’re an entrepreneur, don’t wait for the right moment; just do it. My guess is you’d advise people to follow their gut and go after what they want to create. Just do it in the right places.

Steve Case

Yeah, in a difficult economic environment where people are concerned about inflation, a lot of big companies are looking to trim costs because they’re focused on near-term earnings and things like that. Often, what they end up doing — and we’ve already seen some evidence of this — is pull back on, and sometimes even shut down, some of their innovation initiatives, which are long-term investments that won’t pay out for five or 10 years and are costing a lot of money in the short run. So when that happens, that just creates more opening, more opportunity, more of a vacuum for entrepreneurs to fill those spaces and lead on some of those new technologies, new products, new services.

So I think this could be a golden age of American innovation and entrepreneurship the next 10 or 20 years. But part of the reason I’m so optimistic is having spent the better part of a decade traveling the country, seeing firsthand what’s happening in these different industries in these different cities, and realizing that we are at an interesting moment. One where the dominance of a few tech hubs like Silicon Valley, New York, and Boston is going to diminish and dozens of cities are going to rise up. That in of itself will create opportunity for more of these entrepreneurs, as well as more of these cities, these communities.

Alan Fleischmann

This is truly one of my favorite books I’ve read in many years; I think it’s an amazing book and I would urge all our listeners to read it, The Rise of the Rest, by Steve Case. It’s an amazing book. It makes you understand where we need to go, but it also makes you believe that the best days are ahead of us, which is not what you hear all the time.

You’ve had such a phenomenal career, Steve, as a businessman, as a technologist, as a philanthropist, and as a person who’s put the hours in — as you said, this has been a decade of you going on a bus and traveling around our country to see, hear, and then invest in the innovation of tomorrow. We’re wrapping up now because we’ve been on this for an hour — I could do another hour with you. But what would be your single piece of advice that you would give an emerging young person, or an emerging CEO, or leader, or entrepreneur, who might aspire to one day follow in your footsteps? Hard to do, but what would be the one bit of advice you’d give?

Steve Case

Just get started. At their core, entrepreneurs see problems that they think could be turned into opportunities. The book has dozens of examples of people that solved problems. Instead of just talking about the problem or admiring the problem, they rolled up their sleeves and started fixing the problem and, in the process, created a company that created a lot of jobs and a lot of value for them, their investors, and the community more broadly.

People who are out there listening to this who have been focused on something, saying, “Yeah, somebody should do something about that. That that could be done better,” and it strikes them as an interesting opportunity — Now’s the time to do it, and you can now do it no matter where you are. Don’t feel like, “Oh, I’m not in Silicon Valley. I don’t have access to all that venture capital. I’m just in Columbus, or Indianapolis, or Detroit, or Des Moines, or Minneapolis…” I can name dozens of other cities that are profiled in the book. No. You can start and scale now anywhere, you just have to focus on that idea, build the team, figure out ways to raise some of the initial capital you need, and then take that idea and run with it.

Alan Fleischmann

That’s great. You’ve been listening to “Leadership Matters” on SiriusXM and at leadershipmattersshow.com. I’ve been your host, Alan Fleischmann. We’ve been with Steve Case, who’s an extraordinary, visionary actor in both public, private, and civil society sectors as a leader. He is the author of The Rise of the Rest, a book that I urge everyone to read. He’s the founder of AOL, he’s the founder of Revolution, and I would argue he’s the founder of so many things we’re trying to do for this country right now, to really create a more inclusive society.

So Steve, thank you so much for joining us today. This has been a remarkable one hour.

Steve Case

Thank you, Alan. I really enjoyed it.