Steve Case | Vox

Peter Thiel is wrong about the cities spearheading startup success

2016-09-19T15:05:44-04:00

Peter Thiel, co-founder of PayPal, stands on stage prior to the start of the second day of the Republican National Convention on July 19, 2016 at the Quicken Loans Arena in Cleveland, Ohio. | Alex Wong / Getty

I grew up in Hawaii, far away from America’s Midwest. But today, I feel a strong solidarity with the people of Chicago and a need to defend them — and all the talented entrepreneurs in cities across the country — against comments Peter Thiel made last week at Roosevelt University in Chicago:

“If you are a very talented person, you have a choice: You either go to New York or you go to Silicon Valley.”

Peter is dead wrong. And I have 4,000 miles logged on a bus to prove it.

For the last two years, I have been getting out of my office and onto a bus to see what’s going on in startup ecosystems across the country. I’ve been to 19 cities on these Rise of the Rest tours, and next month I’ll head to Omaha, Lincoln, Denver, Salt Lake City, Provo, Albuquerque and Phoenix.

New centers of innovation will thrive, as entrepreneurs seeking to disrupt those sectors head to places where those industry ecosystems (not to mention more reasonable real estate markets and modest overhead) exist.

At each tour stop, I meet with entrepreneurs, local officials and other investors. I visit growing companies, listen to founders’ ideas, and then put my money where my mouth is and award $100,000 to a pitch competition winner in each city. We’ve found some great businesses on these tours, many with ideas I wish I had thought of myself. WealthForge — an online broker/dealer that connects entrepreneurs with accredited investors — in Richmond. 75F — the developer of technology that automatically adjusts temperature in commercial buildings — in Minneapolis. Artiphon — the maker of tech-enabled musical instruments — in Nashville.

These companies didn’t end up outside of Silicon Valley or New York by accident. They made deliberate decisions to start and grow their businesses in places that provided unique cultures, local expertise and supportive policies.

And contrary to Thiel’s remarks, it’s a trend that I fully expect to continue. In my book, “The Third Wave,” I posit that we have entered a new era where entrepreneurs will disrupt entrenched industries like health care, energy, education, food and transportation. New centers of innovation will thrive as entrepreneurs seeking to disrupt those sectors head to places where those industry ecosystems (not to mention more reasonable real estate markets and modest overhead) exist. For example, the Midwest — with cities in close proximity to farmland — may be a better place from which to transform agriculture than Manhattan or San Francisco.

But while I firmly believe entrepreneurial talent is evenly dispersed, opportunity to grow one’s enterprise is not: 78 percent of venture capital still flows to New York, Massachusetts and California. Because of this, many cities have created programs and policies to foster entrepreneurship and attract talent. And already there is evidence that the paradigm is shifting. The No. 1 city on the Kauffman Foundation’s Startup Index? Austin. The city experiencing the most growth in entrepreneurial activity this year? Washington, D.C. And the city that is home to the most profitable startups? None other than Chicago.

The hottest VR/AR startup, Magic Leap, is not in Silicon Valley or New York, but Florida. Uber is now betting its future on Pittsburgh as ground zero for its autonomous vehicle efforts.

And, let’s remember, Mr. Thiel, that the hottest VR/AR startup, Magic Leap, is not in Silicon Valley or New York, but Florida. Its $1.3 billion of funding comes from places like California (Google) and China (Alibaba), but the company is based in Fort Lauderdale. One more example: Uber, one of Silicon Valley’s hottest startups, is now betting its future on Pittsburgh. That’s ground zero for Uber’s autonomous vehicle efforts (indeed, just last week the company put its first driverless car on the road there). Uber launched in San Francisco, but it recognized the talent they needed was in the steel capital, a city renowned for making things, and the home of Carnegie Mellon, arguably the world’s finest robotics research university.

All of this isn’t to say that Silicon Valley or New York are not hugely important centers of entrepreneurial activity. They are, and they will continue to be. But to deny the existence of talent in other cities is to diminish the transformative innovation happening in every corner of this country. Innovation that brings with it enormous economic rewards (startups account for nearly all new net job creation in the U.S.), and, just as important, critical diversity of people and of perspectives. The rise of the rest means breaking the cycle of capital flowing to the same kinds of people for the same kinds of ideas.

That’s why I keep hitting the road. It’s why I can’t wait to visit Hudl, a company in Lincoln that provides sports teams with game tape; it raised a $72.5 million round last year. Or mobile-shopping app Ibotta, a company that raised another $40 million in 2015 and tripled its office space in downtown Denver. Or a street in Provo that is home to several software companies, each worth more than a billion dollars.

Believing that great companies can start and scale anywhere is our investment philosophy at Revolution, and it’s one we take seriously. Peter Thiel would be well advised to do the same, because if you don’t acknowledge the rise of the rest, you might just get left behind.

Steve Case is chairman and CEO of Revolution, a Washington, D.C.-based venture capital firm, co-founder of AOL, a member of the President’s Ambassadors for Global Entrepreneurship and chairman of the Case Foundation. Reach him @SteveCase.

This article originally appeared on Recode.net.

Immigration must be considered an opportunity for America, not a problem

2016-08-03T06:00:09-04:00

Kunal Bahl, the co-founder and CEO of Snapdeal, was forced to relocate when he couldn’t get a visa to stay in the U.S. By 2015, Snapdeal was worth $5 billion and employed more than 5,000 people — in India. | Money Sharma / AFP / Getty

I have devoted much of my life to starting, building and backing companies. And I have come to believe that there are only two kinds of companies that exist in this world: Ones that are growing, and ones that are declining. There is no in-between.

Countries — and regions within countries — work the same way. They are either open and growing — absorbing new ideas, people and ways of doing things — or they are closed and falling behind, trying to defend the status quo, exclude outsiders and shut out new thinking. This is why I have long believed immigration policy is not just a problem America needs to solve, but it is also an opportunity for us to seize.

On my Rise of the Rest startup bus tours, I have the opportunity to speak to thousands of entrepreneurs across the United States. I like to remind them that America itself is a startup, one that was founded some 250 years ago. And since our founding we have been the most innovative and entrepreneurial nation, in part because we’ve been an immigrant-friendly nation. But in recent years, we’ve made it harder to come here and stay here, and as a result we’ve started to lose talent to other countries.

Countries are either open and growing — absorbing new ideas, people and ways of doing things — or they are closed and falling behind, trying to defend the status quo, exclude outsiders and shut out new thinking.

This is a path to economic decline and entrepreneurial decay. According to a Kauffman Foundation study, one-fourth of U.S.-based startups were launched by foreign-born founders; in Silicon Valley, that number is closer to 50 percent. In 2005, these businesses accounted for $52 billion in revenue. Elon Musk, founder of Tesla, emigrated to the U.S. from South Africa; Sergey Brin, co-founder of Google, fled the Soviet Union; Steve Jobs, the visionary leader of Apple, was the son of a Syrian immigrant. Where would our country be without these immigrants and children of immigrants (among so many others)? Their journeys are the American story. A story that can only carry on if we continue to attract the best and train the best.

Many in the tech industry are focused on reforming the H-1B visa program, which provides a temporary stay for foreign workers employed in specialized fields. Making it easier to obtain these visas (while also including reforms to prevent abuses) will help companies compete for talent, grow and, as a result, create jobs for Americans. This should be part of comprehensive immigration reform, but it is not enough.

Elon Musk, founder of Tesla, emigrated from South Africa; Sergey Brin, co-founder of Google, fled the Soviet Union; Steve Jobs, the visionary leader of Apple, was the son of a Syrian immigrant.

As I argue in my book, “The Third Wave,” we also need to create a Startup Visa program, one that opens the door for immigrant entrepreneurs with a proven idea to launch their startups in the U.S. We should give talented young people educated in U.S. colleges and universities a green card to stay and help power our economic growth rather than turning them away.

Snapdeal, for example, was co-founded by a Wharton graduate, Kunal Bahl. Bahl was forced to relocate when he couldn’t get a visa to stay in the U.S. By 2015, Snapdeal was worth $5 billion and employed more than 5,000 people — in India. Those jobs and that economic growth could have stayed in the U.S. if we had a more flexible immigration system. It makes no sense for us to invite students to come to the U.S., train them to create economic value and then kick them out.

Although my focus (and expertise) tends to be on tech/innovation matters, I know that we need an approach to immigration reform that is broader than just our industry. Finding some path to citizenship for immigrants who are here now, as part of comprehensive immigration reform, is critically important, as well. I realize that we’re in the midst of a noisy political season and that immigration can be an emotionally charged issue for some, but I hope that, come January, we will engage in a constructive, collaborative and comprehensive fashion to address all facets of immigration, once and for all.

Ronald Reagan painted a picture of America as a shining city on a hill — a picture that still inspires me and countless others. That city, he said, was one where “the walls had doors and the doors were open to anyone with the will and the heart to get here.” To maintain our position as a global leader in innovation, we must continue to build a system that rewards those wills and hearts with opportunity.

This op-ed is part of the Partnership for a New American Economy (NAE) #ReasonForReform campaign, providing opportunities for Americans to support immigration reform.

This article originally appeared on Recode.net.

The Future of Food Is Food

2019-03-06T05:01:50-05:00

I’ve seen the future of food, and with all due respect to my visionary colleagues in Silicon Valley, it is not Soylent.

It is not Schmoylent or Schmilk, either.

The future of food is not a powder mixed with water to create an engineered superfood. It is not a race to consume calories as quickly as possible so as not to disrupt the disrupting. It is not alleviating the “pain point” of having to “waste time” eating food with friends and family, in order to maximize time building the next app.

If you are unfamiliar with Soylent and its various competitors, it is powdered drink that, when mixed with water, enables you to “never worry about food again,” according to its marketing materials.

Soylent is a cleverly engineered product marketed as an “alternative to traditional food,” ostensibly enabling people to “live life and focus on what is important to them instead of worrying about the time, expense and complexity of maintaining a balanced diet.”

When I first saw the promotional video for Soylent, I thought it was an advertisement for a Hooli project led by Gavin Belson, the fictional CEO of the fictional corporation in the HBO show “Silicon Valley.”

My skepticism is not rooted in a belief that the food industry isn’t ripe for disruption — to the contrary, it’s a $5 trillion sector in need of innovative startups to challenge the way food is produced, distributed and consumed. The “Big Food” industry has put profits over health, pushing processed food over real food for the past half century.

We also need to make sure our kids eat better meals in schools, with healthier choices that are still tasty and filling. The idea of our children sitting in lunch rooms drinking powdered shakes is about as dystopian as continuing to feed them overly processed junk foods. Full disclosure: I’ve put my money where my mouth is and invested heavily in companies like Revolution Foods and Sweetgreen aiming to do just that.

But rather, it reflects a Babylonian belief of some in Silicon Valley that even the most basic, fundamental aspect of human life is a mere earthly constraint to be left behind.

Do we need healthier food and a cheaper way of sourcing and distributing that food? Absolutely. But that’s not a powder. It’s authentic, natural foods, locally sourced, sustainably grown, brought fresh to our tables.

Put another way: The future of food is food.

As an investor, I am always looking for large, addressable markets ripe for disruption. And it always struck me that while many products and services are widely used, some even used by most people, there was probably only one industry on Planet Earth that touched everyone: Food.

There are “foodpreneurs” who are attacking the fast-food industry by creating their fast casual concepts that emphasize healthy options. There are online ordering and delivery companies making access to food simpler. There are companies working to bring healthy, tasty meals to schools. The food sector has gotten hot, with venture funding pouring in to back these and other innovative startups.

It’s worth remembering that food isn’t just a source of energy, or a business opportunity. It’s much more than that.

Food is social, and the social element of breaking bread with family and friends remains fundamental. Our lives are busy, but are we so arrogant to think that our obsession with building the latest app justifies ignoring our loved ones? We should be putting our digital devices down more — not our forks. Some traditions are timeless and will prove themselves justifiably resistant to change. That’s why I don’t think Soylent is our food future, at least not for more than a handful of self-absorbed Valleyites.

When we were busy building AOL, yes, we skipped a few meals and ate too much take-out. But we always found time to eat. And we thrived.

Or let’s take Google. Google’s culture thrives on collaboration, which includes a buzzing and healthy in-house dining experience for everyone to mingle and relax. I doubt Google would dream of firing their chefs and replacing their buffet with powdered drinks.

In fact, some of the best ideas I have ever been part of have come over a shared meal. I remember having sushi with Steve Jobs when he was outlining his vision for the iPod, and being moved by a conversation I had with Nelson Mandela in his home after lunch about the rise of Africa. And not a week goes by when I’m not inspired by an up-and-coming entrepreneur, sharing his or her vision for a better world as we break bread.

Sure, there will be some that prefer powder over real food, and more time in front of a computer over more time with loved ones. Indeed, one advocate of powder over food recently told the New York Times, “I think engineers are ready to throw in the towel on the illusion that we’re having this family dinner … Let’s do away with all the marketing facade and get the calories as quickly as we can.”

That is sad. That is not what Silicon Valley disruption is about. What are we innovating for, who are we building the future for, if we don’t value human connection?

In my opinion, Michael Pollan had it right when he urged us all to eat “real food,” avoid “edible food-like substances” — and “don’t eat anything your great-grandmother wouldn’t recognize as food.”

Sometimes revolutions take us forward by taking us back.

Steve Case is chairman and CEO of Revolution, a Washington, D.C.-based venture capital firm, co-founder of AOL, chairman of Up Global, a member of the President’s Ambassadors for Global Entrepreneurship and chairman of the Case Foundation. Reach him @SteveCase.

This article originally appeared on Recode.net.

Want to Go Far? Go Together.

2019-03-06T06:22:08-05:00

The central idea of Walter Isaacson’s new book, “The Innovators,” is this: Innovation is a team sport.

Isaacson doesn’t waste any time making this point. He gets right to it in the first paragraph of the first page: “Most of the innovations of the digital age were done collaboratively.” He notes that there were “a lot of fascinating people,” and goes on to tell the stories of “these pioneers, hackers, investors and entrepreneurs” — but makes it clear early on that “The Innovators” is a “narrative of how they collaborated and why their ability to work as teams made them even more creative.”

Isaacson’s most recent book — the massive bestseller “Steve Jobs” — told the fascinating (and complex) tale of our generation’s most iconic entrepreneur. But the focus on Steve may have left a lot of budding entrepreneurs thinking the path to success was about what they might do. In fact, while passionate leadership is of course important — indeed, essential — ultimately, it is the work of teams that moves things forward.

I’m reminded of the African proverb: “If you want to go quickly, go alone — but if you want to go far, you must go together.” As Isaacson notes when he explains “how the technology revolution was fashioned,” the real progress came from “collaborative creativity” — people working together, building on each other’s ideas, and pushing innovation forward.

Isaacson devotes a chapter to the “Online” revolution, including the story of the evolution of AOL. He correctly notes that the central idea that animated AOL was community — people interacting with each other. These early adopters weren’t just consumers, they were contributors — and were the pioneers who helped pave the path forward. When we started the company in 1985, only three percent of people were online, and they were only online an hour a week. When we said we wanted to get America online, we were dead serious.

It took more than a decade before we got traction. Early on, it became clear that we couldn’t go it alone. We needed to assemble a tapestry of alliances to build the Internet and make it part of everyday life. We needed the PC manufacturers to develop consumer-friendly and affordable PCs. We needed them to build modems into PCs, so they would go from being a “peripheral” device to a central, compelling element that helped usher in a new era of connecting to the world. We needed communications networks to create new low-cost ways to connect, so user fees would drop from $10 per hour to less than 10 cents an hour. We needed software designers to create compelling graphical interfaces, to make the Internet accessible to the masses. We needed content companies to offer compelling services. (Ironically, I first met Isaacson more than 20 years ago, when he headed the new media efforts for Time Inc., and we struck a deal to bring Time Magazine onto AOL.)

The bottom line is that we all needed to do our part to usher in the Internet age.

But “The Innovators” is not just a tale of the past, it’s a road map for the future. This week, I’m taking a bus trip across middle America — starting in Madison, Wis., and ending in St. Louis, Mo., — to see how innovation is blossoming in places outside of Silicon Valley or New York. I call it the “Rise of the Rest Tour,” and it’s the second time I’ve made such a trip this year. (You can follow our tour at RiseOfTheRest.com). What I see in these places is something right out of Isaacson’s book: Innovation booming and communities blooming because of collaborative efforts between people with ideas, teams they assemble, local universities and colleges, budding accelerators and tech hubs, forward-thinking policy makers and more.

Yes, every now and then we find a company that truly is a one-person show. But the ones I feel the most excited about, the ones that have the best shot of going far, are collaborative efforts that have a great team and a great community behind them.

The lessons Isaacson conveys about the role of collaboration are not just important as history lessons, but as guideposts for today’s innovators — and an important guidebook for the next wave of entrepreneurs.

Steve Case is chairman and CEO of Revolution, a Washington, D.C.-based venture capital firm, co-founder of AOL, chairman of Up Global, a member of the President’s Ambassadors for Global Entrepreneurship, and chairman of the Case Foundation. Reach him @SteveCase.

This article originally appeared on Recode.net.