The Rise of the Others: The Steve Case Interview

In September 2015, a shiny bus sat idle in the parking lot of Baltimore Museum of Industry. A well-coiffed technology director stepped out of the bus.

Inside the museum, crowds of entrepreneurs and the startup scene exchanged pleasantries. Hors d’oeuvres were distributed and homemade beer was drunk. The stage was set for a cohort of entrepreneurs to present their new business ventures. It was a startup pitch competition, an event format that emerged in 2010. The crowd of hundreds was part of a coalition led by this tech executive: Steve Casewho boasted the poise, confidence and gray hair of a movie star playing a politician.

The event was one stop from The Rise of the Others bus tour that channeled the growing focus of urban economic development on so-called “startup ecosystems.” After the shock of the Great Recession and decades of entrepreneurial decline, civic leaders became interested in the systems that support business creation and growth. For the past decade, Case has been among the true leaders of the movement, and this week he released a new book called “The Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream.”

“It’s not just happening in a few places. It’s a large-scale phenomenon, covering dozens and dozens of cities,” Case said in an interview with Technically.ly earlier this month. “It’s good for these cities and the nation.”

How Steve Case Became a Local Startup Champion

Case secured his entrepreneurial fame in the 1990s as co-founder and CEO of what became Aol — known as the first Internet company to go public, the best-performing stock of the decade and half of what became one of the biggest mergers in American business history. In 2005, he helped launch revolution, the D.C.-based investment firm. A critical part of Case’s story is that he developed his companies far from Silicon Valley, the cultural heart of the Internet economy.

For political and cultural reasons, some worry about Silicon Valley’s overreliance on innovation. Something had to be done. In 2011, Case was named founding chairman of the Partnership for Startup Americaan Obama-era White House effort to accelerate high-growth entrepreneurship across the country.

It was in this role that Case latched onto the “Rise of the Rest,” a concept first popularized to describe emerging economies in an increasingly globalized world. By 2013, Case was using the term to describe growing regional hubs of entrepreneurship, and his firm even trademarked the phrase. The focus dovetailed well with much of Technical.ly’s coverage of the growing identity of startup ecosystems; Across the country, a growing chorus of economic observers has been singing that increasingly serious founders are launching scalable companies outside of Silicon Valley.

If only someone had been paying attention, they would have said. That’s why Case and team launched a bus tour to invest in exactly these founders. I personally attended at least three of his various tour stops, and Technical.ly tracked down many more. It all felt like a validation of so much local community organizing. Yet for years, Case — like Technical.ly’s own coverage — faced an uncomfortable truth.

Despite years of organizing, events and training, very little has changed in a macroeconomic sense. Americans start fewer companies every year. in 2016 John Lettierithe co-founder of the DC-based Economic Innovation Groupsaid a US Senate subcommittee: “Millennials are on track to be the least entrepreneurial generation in recent history.”

Then the pandemic changed everything.

Analysts had initially expected entrepreneurship to collapse further, as it had in previous recessions. But the opposite happened. The rate of business incorporation jumped — and stayed high, reversing a decades-long trend.

“This is not a breakthrough,” one economist told Technical.ly. “Real, high-quality sustainable businesses started.”

Women, black and Latino founders have led business creation, bucking another trend, and spawned a bet that a decade of so-called inclusive investing in entrepreneurship is finally paying off, too.

“I think this is a real turning point. The real work has been going on for a decade, and in some places longer,” Case said. “It’s a ‘shake the snow globe’ moment.”

Can the rise have business goals and civic goals?

What a convenient backdrop for the release of his book, which features stories from dozens of entrepreneurs with inspiring stories from around the country. Most of the meetings followed a selection process between Revolution and local partners during the long-running, 47-stop Rise of the Rest bus tour, which his team says covered 11,000 miles.

“Yes, he does ride that bus for at least some of those miles,” said one of the partners of the Baltimore event in 2015. Case, that bus and his entrepreneurial message have become symbols of hope for beleaguered regional cities, that organizer said. Or, as one of the founders of Sisu Global Healthwho performed tonight, summed up the momentum she felt in her hometown: “It’s a testament to why we moved our company to Baltimore.”

Case delved into evangelizing entrepreneurship far and wide. Within the Revolution portfolio, his team in 2019 announced its second fund, Rise of the Rest, worth $150 million, focused on small bets in unknown markets. Case Foundation, which he and his wife Jean started, focuses its investments on inclusive entrepreneurship and impact investing. In 2016, before writing this new book, Case published “The Third Wave: An Entrepreneur’s Vision of the Future,” which argues that the next stage of economic growth will involve technological solutions to big, real-world problems—in new places.

“A lot of industries that fueled the nation were already spread out,” Case said. “The big companies are already distributed. Can we have the same with new and startups?”

Movements, like companies, begin as acts of faith. While Case is prominent, it’s just one of thousands of civic-minded startups in the country. After years of what seemed like empty chatter, the entrepreneurship advocates, counselors and meeting organizers who canvassed their cities across the country increasingly have real data to track progress.

The number of active private business investors located somewhere outside the Bay Area’s top-tier triad of New York and Boston tripled in the decade between 2011 and 2021, according to a joint analysis by Case’s team with Pitchbook. This includes the launch of more than 1,400 new institutional venture capital firms, itself a wave that uses lenses focused on gender and race.

“This is a huge opportunity for investors to look outside their networks — not just geography, but with a broader and more diverse mix of entrepreneurs who are closer to a wide range of problems,” Case said. In the fall of 2020, Revolution announced that it would direct $2 million to companies founded by black people.

Bay Area Investors Scatter (Chart from Revolution’s 2021 Beyond Silicon Valley Report)

Case is a venture capitalist who speaks with America First idealism. His advocacy of entrepreneurship is a blend of economic theory and civic strategy. If fewer entrepreneurs are women, black, or from, say, rural Appalachia, then you either assume they don’t exist or you assume they’re missing their chance. Case bets on the latter, an adaptation of The Lost Einstein’s study of inventors. Therefore, Rise of the Rest is not a charity, but an investment thesis.

“Steve really believes in it,” one associate told me. It’s also clear, though, that Case sees this as a civic project as well. Inevitably, a charismatic person traveling in a branded bus to visit entrepreneurs has all the trappings of a political campaign. Case often spoke of the American project.

“A lot of people feel disenchanted and left out and think the ‘innovation economy’ is about a few people on the coast doing things that can disrupt their lives and destroy them,” Case said. “If you offset that by supporting people and companies who can create jobs in their own communities, that can make a difference.”

He cited an indoor farming company Application Harvestingwhich was founded by Jonathan Webb in Eastern Kentucky, where hundreds of employees work today. It might sound like Case is selling apple pie. As one particularly eager startup founder told me via message, “What American is against starting a company?”

Will growth survive the pandemic?

Is this proliferation of start-ups weakening the so-called “agglomeration effects” of the most economically vital corners of the American economy? Isn’t the density of this region good for all of us?

“The rise of the rest does not mean the fall or decline of Silicon Valley,” Case said. “Silicon Valley will continue to be the leading startup ecosystem in the country and truly the pride of America and the envy of the world. It won’t go anywhere.

Remembering that startup pitch event at the Baltimore Museum of Industry so many years ago, it’s easy to compare the businesses in its collections to the startups on stage. Railroad and shipping industrialists had physical goods that had to live in physical space. The products on display can be built anywhere.

Do entrepreneurs and technologists who can work anywhere develop less of a connection to where they choose to live?

A few months ago, I met with a D.C.-based tech founder, just the kind of guy who would have visited one of Case’s bus stops years ago. Before the pandemic, the founder wanted to build the next big tech company in DC. Now he’s less sure. Case bus stops were filled with entrepreneurs with civic pride. The pandemic may have changed where these entrepreneurs live, but Case says that with the right support, they can grow great companies wherever they are. This is why cities should go after people, not companies. Case says that remains the way forward.

“That’s how we remain the most innovative, entrepreneurial nation in the world,” Case said. “We can make sure everyone everywhere has a shot at the American dream.”

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