Startup Anywhere

Steve Case on Opportunity Outside Silicon Valley: 'There's Still Work to Be Done'

Ahead of his startup tour of the American West, the AOL co-founder talks about momentum outside major startup hubs.
Steve Case on Opportunity Outside Silicon Valley: 'There's Still Work to Be Done'

Steve Case

Image credit: Rise of the Rest
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If you found yourself surprised that self-driving Ubers launched in Pittsburgh and not San Francisco, it’s time to get wise. Not all our big ideas get started in Silicon Valley, after all, and Pittsburgh’s dominance in robotics make it a natural launchpad for futuristic tech.

Of course, too many aren’t clued into Pittsburgh’s reboot from its steel town roots, or the entrepreneurial evolution so many cities are making happen each day. Steve Case hopes to change that.

In 2014, the AOL co-founder and Revolution investor began a series of bus tours, known as Rise of the Rest, to bring visibility to unsung cities like Detroit and Buffalo in the midst of revitalization. The tours visit with entrepreneurs and local leaders, to showcase each city’s strengths and what’s possible there for entrepreneurs and innovators.

The tours also bring attention to the need for investment. (Most venture funding goes to just three states: California, New York and Massachusetts.) Through daily pitch competitions, judges award $100,000 to a company in each city. Since the tour began, the program has invested more than $2 million in 20 startups across the country.

This year, the tour will kick off on Oct. 3 and travel 2,100 miles through the American West. Next week’s itinerary includes a visit to startup capital Denver, as well as stops in cities such as Provo, Albuquerque and Omaha. Case says more than 500 startups applied to this year’s pitch competitions, nearly five times the response the tour received in its first year.  

We talked to Case ahead of this year’s tour to find out what he’s learned from the road. We discussed how visibility can shape opportunity and what’s surprised him. We also chat about the importance of networks, how they can drive momentum and where he sees the movement in ten years.

Entrepreneur: The bus tour launched in 2014. What changes have you seen for entrepreneurship since then?
 I think there is more awareness now. I think there is a little bit more investor attention in terms of companies outside of California, New York or Massachusetts. I think within these cities there is a little bit more optimism, a little more sense of possibility, a little bit more of a network effect. There is momentum. These things don’t happen overnight, but it does feel like there is more momentum. And within the cities people are really rallying together.  

Related: How to Build a Thriving Startup Ecosystem Anywhere

Entrepreneur: Entrepreneurship is trendier than ever. Does this make it harder or easier for companies outside Silicon Valley to succeed?
In some ways it’s like there are two Americas for entrepreneurs. If you’re in certain places and have certain networks, it has gotten easier. I think that’s a good thing. In many places, and for many people, they still don’t feel that sense. There’s still a lot of people in a lot of places who are struggling to raise capital to get attention. The discussions are different in New York and places like that than if you’re in Detroit or Des Moines. And also very different, frankly, if you’re talking to women or men or African Americans or Caucasians. There’s still a lot of work to be done.

Entrepreneur: What else needs to change?
At the national level, access to capital, to level the playing field, is a big one. As is getting the right investment incentives and the right regulatory policy.

On the local level, we need to create more of a network density in cities, more of a sense of collaboration, engagement, commitment and culture around celebrating startups. We need to make sure that these cities tell their stories so that it’s not just about helping any one company, it’s about helping the city rise, which then attracts more capital from other places and more talent. And lastly, cities have a particular expertise and a particular sector and a particular history in that sector, that helps them differentiate themselves. Each city has a different focus typically and building on that history, that perspective, is awesome.

Related: How 3 Companies Maximized Funding in Their Region

Entrepreneur: What’s surprised you from these tours?
Fifty years ago, when you wanted revitalize a community you tried to get artists to move in, like SoHo in New York. Now you try to get entrepreneurs to move in. My first job was in Cincinnati 35-plus years ago, and there was an area, Over the Rhine, that was a very challenged neighborhood. Nobody wanted to go there, and it was a scary place to be. And now it’s the hottest place to be in Cincinnati. Why? Because the entrepreneurs moved in, which then created jobs which then created housing and then created restaurants. It’s just one visible sign that the collective work of these entrepreneurs is not just building their individual companies but also essentially rebuilding communities.

Entrepreneur: Change is happening in cities across the countries, but change can be slow.  
: I use my own experience with AOL. In those first years, some people didn’t believe people would want to go online. It took us years to convince PC manufacturers to put the modem into computers, because their view was why would we add one to every computer when only a small number of people seem to care about getting online. It was hard. But eventually it broke through. What helped our team was believing that it was going to happen. That’s the same perspective I bring to Rise of the Rest. I am confident the rest will rise, and we just try to help it happen a little bit faster.

Related: The Story Behind the Explosion of the 'Startup Capital of the South'

Entrepreneur: Every city has advantages, but that’s still a surprise to some and these advantages aren’t always tapped. Why is that?
In any city, typically, there’s a dynamic where larger companies do their own things and don’t really pay attention to the startup world. It’s hard for entrepreneurs to get noticed by others in that city and create those partnerships. As more of those large organizations realize that entrepreneurs are strategic to them that gets easier. In all of these cities, there is capital, whether it’s from companies or families who have been in these cities for generations, but they’re not necessarily focused on investing in the entrepreneur until they realize there are really interesting opportunities right in sight. And as some do it, more do it. But the core is trying to get to a tipping point, to a network effect. This network density where momentum begets momentum. That’s part of what we’re doing with these tours, help create those connections.

Entrepreneur: How do you know you’re close to the tipping point?
Case: There are some specific things you can track. One of them is how investment capital is going to startups and showing progress at the seed level, at the venture level and the growth level. Eventually, you’ll start to see some breakout successes -- like Magic Leap, an augmented reality company which has raised $1.3 billion from Google and Alibaba and others -- that get national visibility and give people more of a sense of what’s possible and also educates the rest of the country about what’s happening in those cities. But the tipping points, you actually don’t see them until they happen. You can see some momentum building, you can see some points on the board, but it’s hard to predict exactly.

Entrepreneur: In 10 years, how do you hope Rise of the Rest will have evolved?
: I hope 10 years from now we don’t need a Rise of the Rest. The cities will have risen and the playing field will have levelled. It’s hard to predict the specific time, but I’m confident that over the next decade less capital as a percentage will flow to California, New York and Massachusetts and more as a percentage will flow to these Rise of the Rest cities. It’s a natural dynamic. All we’re trying to do is do what we can to accelerate it.  So 10 years from now I could imagine us doing more things globally. But I think the bus will be in a garage somewhere. We won’t need it.

This interview has been edited and condensed.
Edition: November 2016

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