WEBVTT - Reigniting the Entrepreneurial Spirit 0:00:00.160 --> 0:00:04.160 This is Bloomberg Business Week with Carol Messer and Bloomberg 0:00:04.240 --> 0:00:08.119 Quick Takes Tim Stinovic on Bloomberg Radio. Well, the next 0:00:08.160 --> 0:00:11.000 guest a well known investor, innovator and author, Steve Cases, 0:00:11.039 --> 0:00:13.920 of course, the co founder of America Online, chairman as 0:00:13.960 --> 0:00:17.480 well and CEO of Revolution. His investment firm, It's backs 0:00:17.520 --> 0:00:20.160 all kinds of entrepreneurs at every stage of their development. 0:00:20.440 --> 0:00:23.160 His roughly one billion dollars investments in some growth stage 0:00:23.160 --> 0:00:26.000 companies you may know them Sweet Green, Draft, Kings, Clear 0:00:26.079 --> 0:00:28.200 and more. And he's got a new book out. The 0:00:28.240 --> 0:00:31.000 book is called Rise of the Rest, How entrepreneurs in 0:00:31.120 --> 0:00:35.480 surprising places are building the new American dream. Where pleased 0:00:35.479 --> 0:00:38.200 to have Steve with us this afternoon the Bloomberg Interactive 0:00:38.200 --> 0:00:41.199 Broker Studio. Steve, It's good to see you. You know, 0:00:41.200 --> 0:00:43.560 I was commenting to Carol a little earlier that I said, 0:00:43.760 --> 0:00:47.200 you know, every time I've interviewed you, basically from ten 0:00:47.320 --> 0:00:51.360 to twenty twenty, you were on a bush. And this 0:00:51.440 --> 0:00:53.240 is the this is the second time I've gotten to 0:00:53.280 --> 0:00:55.880 interview you where you haven't actually been on a bus. 0:00:56.520 --> 0:00:59.360 This book is about the bus tour. Yeah, it really 0:00:59.360 --> 0:01:01.800 doesn't mean being a better part of a decade traveling 0:01:01.800 --> 0:01:04.200 around the country trying to see what's happening in terms 0:01:04.240 --> 0:01:07.240 of innovation entrepreneurship in different parts of the country, meeting 0:01:07.360 --> 0:01:10.759 hundreds of entrepreneurs, visiting dozens of cities, now making investments 0:01:10.800 --> 0:01:13.360 in about a hundred cities. I was just so fascinated 0:01:13.360 --> 0:01:15.440 about what I saw and so frankly encouraged by what 0:01:15.520 --> 0:01:17.679 I saw. I said, I have to tell the story. 0:01:17.760 --> 0:01:19.800 I have to share these stories. And that's what led 0:01:19.800 --> 0:01:22.479 me to write the book, trying to really kind of 0:01:22.520 --> 0:01:25.039 help people understand what's happening, not just in a few 0:01:25.080 --> 0:01:27.640 places like Silicon Valley, but all over the country, which 0:01:27.680 --> 0:01:30.160 I think boats well for the next phase of innovation 0:01:30.240 --> 0:01:32.640 in this country. What are we missing by ignoring what's 0:01:32.640 --> 0:01:34.920 going on in the heart of the country, Steve Well 0:01:34.959 --> 0:01:37.160 A bunch of things. First of all, some of the 0:01:37.160 --> 0:01:40.360 biggest industries up for grabs in this next way, what 0:01:40.440 --> 0:01:43.039 I called the Internet third wave, like healthcare, some of 0:01:43.080 --> 0:01:45.119 the expertise you need, some of the partnerships you need 0:01:45.120 --> 0:01:47.960 are in the middle country. Mayo Clinic in Minnesota is important, 0:01:48.080 --> 0:01:50.680 Cleveland Clinic and Ohio is important. M Danders in Texas 0:01:50.760 --> 0:01:54.400 is important also for some industries, like the trucking and 0:01:54.400 --> 0:01:58.320 logistics industry, getting people who understand that business and are 0:01:58.400 --> 0:02:00.800 in those communities are important. Of the stories I talked 0:02:00.840 --> 0:02:04.240 about in Chattanooga is his company called Freight Waves kind 0:02:04.240 --> 0:02:07.120 of does Bloomberg for trucking and logistics. Well, guess what 0:02:07.200 --> 0:02:10.200 I didn't know. Still, we visited with our bus. But uh, 0:02:10.360 --> 0:02:12.320 some of the biggest trucking companies in America are based 0:02:12.320 --> 0:02:14.600 in Chattanooga, So it actually better place to be for 0:02:14.639 --> 0:02:17.639 that business than than New York City or another one 0:02:17.760 --> 0:02:21.680 acre trader in northwest Arkansas and Fayetteville. The founder actually 0:02:21.680 --> 0:02:24.000 was working a head fund in San Francisco, decided to 0:02:24.040 --> 0:02:27.760 move to Arkansas because his business called is basically a 0:02:27.800 --> 0:02:30.600 platform to invest in farmland, and you need to get 0:02:30.639 --> 0:02:33.120 farmers to put their farms on the platform. Well, he 0:02:33.120 --> 0:02:34.919 thought it'd be better to be closer to the farmers 0:02:34.960 --> 0:02:37.120 and therefore in Arkansas. So a lot of these stories 0:02:37.200 --> 0:02:39.960 that that I think surprised people. It certainly surprised me, 0:02:39.960 --> 0:02:41.960 and I think people reading the book will will be 0:02:42.000 --> 0:02:44.680 equally surprised by how many things are happening in how 0:02:44.680 --> 0:02:46.960 many different places, most of which he's never visited. It's 0:02:46.960 --> 0:02:50.519 not just the eastern West. You know what's funny, Steve is. 0:02:50.560 --> 0:02:53.560 Twenty four hours ago, Andrew Ginther, the mayor of Columbus, Ohio, 0:02:53.680 --> 0:02:55.519 was sitting in the seat that you're sitting in right now, 0:02:55.560 --> 0:02:58.240 and he was basically saying the same thing, and he 0:02:58.240 --> 0:03:00.440 talked about the acceleration of what happened been during the 0:03:00.440 --> 0:03:02.200 pandemic and the way that people moved away from the 0:03:02.240 --> 0:03:03.920 coast to other parts of the country because they were 0:03:03.960 --> 0:03:06.600 able to work remotely. You've been doing this and looking 0:03:06.639 --> 0:03:08.160 at this for what the better part of a decade 0:03:08.160 --> 0:03:10.560 at this point, Um, How did the pandemic change the 0:03:10.600 --> 0:03:13.840 way that people thought about geographies when it came to innovation. Well, 0:03:13.840 --> 0:03:16.480 you're right, it was bubbling for most of the last decade. 0:03:16.480 --> 0:03:18.600 Every year, every time we did another tour, we would 0:03:18.600 --> 0:03:22.600 see more progress in more places. But the pandemic was 0:03:22.639 --> 0:03:25.040 a tipping point. It really was sort of when people 0:03:25.080 --> 0:03:27.400 took a step back and said where do I want 0:03:27.400 --> 0:03:28.919 to live and how do I want to live, and 0:03:28.960 --> 0:03:31.079 how do I want to work and kind of remote work, 0:03:31.160 --> 0:03:34.320 hybrid work, things like that led to some people decided 0:03:34.320 --> 0:03:36.520 to move someplace else and instead of just being in 0:03:36.720 --> 0:03:38.880 San Francisco, just being in New York or just being 0:03:38.920 --> 0:03:41.200 in Boston, which have been the historical, you know, kind 0:03:41.200 --> 0:03:43.280 of tech hubs. A lot of people moved to other 0:03:43.320 --> 0:03:46.280 parts of the country, and attracting that talent is critical 0:03:46.320 --> 0:03:49.280 to fuel those start up communities. Interestingly, over the last 0:03:49.320 --> 0:03:52.560 several decades, we've seen a brain train in this country. 0:03:52.760 --> 0:03:56.800 Most people in Silicon Valley over people in Selicon Valley 0:03:57.040 --> 0:03:59.040 are from someplace else. They didn't grow up there, that 0:03:59.040 --> 0:04:01.520 they didn't go to school there from someplace else. Uh, 0:04:01.600 --> 0:04:03.720 they went there because that's where the opportunity was, that's 0:04:03.720 --> 0:04:06.400 where the capital was. And I we're seeing a slow 0:04:06.680 --> 0:04:09.240 slowing of that brain drain of people leaving in different 0:04:09.240 --> 0:04:10.800 parts of the country and a little bit of a 0:04:10.800 --> 0:04:13.360 boomerang of people returning. In Columbus is a great example, 0:04:13.360 --> 0:04:15.000 a lot of moment in there. I feel like too, 0:04:15.000 --> 0:04:16.440 what we think about what's going on in the middle 0:04:16.440 --> 0:04:17.880 the country. I feel like that when I travel or 0:04:17.880 --> 0:04:20.279 re travel and we get to something other beyond the 0:04:20.320 --> 0:04:22.200 East and West coast, like we just get a different 0:04:22.200 --> 0:04:24.920 point of view, a different perspective. We talk about stress, 0:04:25.000 --> 0:04:28.640 the importance of diversity of in terms of ideas. How 0:04:28.680 --> 0:04:31.920 have you come across that totally entrepreneur at the core, 0:04:33.000 --> 0:04:37.479 see a problem they think should get solved, and start 0:04:37.520 --> 0:04:40.120 a company to solve that problem. And you're only gonna 0:04:40.200 --> 0:04:43.719 see problems based on your experience, and that will include 0:04:43.839 --> 0:04:46.360 where you're living, in the communities that you're interacting with. 0:04:46.640 --> 0:04:49.159 And a great example in the book as an Indianapolis, 0:04:49.200 --> 0:04:52.280 there's a mom and the suburb of Indianapolis that the 0:04:52.400 --> 0:04:54.839 number of years ago was concerned about water quality. This 0:04:54.920 --> 0:04:57.359 is after the Flint, Michigan water crisis. Funts not that 0:04:57.400 --> 0:05:00.440 far from from where she was. He said, I'm kind 0:05:00.440 --> 0:05:02.479 of worried that, you know, maybe my kids are drinking 0:05:02.560 --> 0:05:04.960 unsaved water. So she called the water utility, so I 0:05:05.000 --> 0:05:07.320 want to get my water tested. They said, we don't 0:05:07.360 --> 0:05:09.720 do that for consumers, and if you we could make 0:05:09.760 --> 0:05:11.320 an exception, but it costs you like three or four 0:05:11.360 --> 0:05:13.599 thousand dollars. You thought that was crazy. So she started 0:05:13.640 --> 0:05:16.560 a company called One Tent Water to test people's water, 0:05:16.680 --> 0:05:19.599 initially as just for consumers. Now she's actually selling that 0:05:19.680 --> 0:05:22.520 capability to cities, including San Francisco, to test their water. 0:05:22.760 --> 0:05:25.119 She would not have had that experience unless she happened 0:05:25.160 --> 0:05:27.240 to be there and happened to bump into that problem. 0:05:27.279 --> 0:05:28.919 And that's again this you know, the dozens of the 0:05:28.960 --> 0:05:31.400 stories in the book are people like that. They just 0:05:31.440 --> 0:05:33.440 saw something and said I'm gonna do something about it, 0:05:33.600 --> 0:05:35.120 and they did it from where they were. They didn't 0:05:35.160 --> 0:05:38.000 feel like because they weren't in one of the startup pubs, 0:05:38.040 --> 0:05:40.680 they couldn't really take a shot. Tim and knows, I'm 0:05:40.680 --> 0:05:43.159 obsessed with shark take right now. And it does have 0:05:43.240 --> 0:05:45.600 that quality of what you guys have done, You've done competition, 0:05:45.640 --> 0:05:48.119 and it just amazes meets people like that, either something 0:05:48.160 --> 0:05:50.159 happens to a family member, just something in their walk 0:05:50.160 --> 0:05:51.880 of life, and they're just like, we can figure out 0:05:51.880 --> 0:05:55.160 a solution to this, and there it goes. And one 0:05:55.200 --> 0:05:58.800 of my favorite examples is in Chicago, Er k Lefkowski 0:05:59.120 --> 0:06:01.320 started a company called Tempest. And the reason he started 0:06:01.360 --> 0:06:03.960 that was about seven years ago his wife was diagnosed 0:06:03.960 --> 0:06:06.839 with breast cancer and they talked a lot of people 0:06:06.960 --> 0:06:10.359 different hospitals and kept getting different opinions. So, as you know, 0:06:10.360 --> 0:06:13.119 wife's life was hanging in the balance and different people 0:06:13.120 --> 0:06:14.840 were saying you should do different things. He said, well, 0:06:14.839 --> 0:06:17.000 this is kind of a data problem. You need to 0:06:17.040 --> 0:06:20.120 be more precise and what exactly is going on with 0:06:20.160 --> 0:06:23.159 her situation and therefore what would be the best possible 0:06:23.440 --> 0:06:27.240 therapy to help her. And that company now has gone 0:06:27.279 --> 0:06:29.479 to hire more than a thousand people out of data 0:06:29.520 --> 0:06:33.160 sciences coming out of University Illinois, rates billion dollars. It's 0:06:33.160 --> 0:06:35.760 a really great company and it would would not never 0:06:35.800 --> 0:06:38.720 have happened if Eric didn't have a life that was 0:06:38.760 --> 0:06:42.479 struggling with with this disease and was getting differing opinions. 0:06:42.480 --> 0:06:44.960 So this really is the story of entrepreneurship. It just 0:06:45.240 --> 0:06:47.320 partly to write the book is the stories for too 0:06:47.320 --> 0:06:50.720 long has been limited to a few places in Silicon Valley, 0:06:50.720 --> 0:06:54.599 Mark Zuckerberg, Elon Musk. There's a celebrated tech entrepreneur. They 0:06:54.640 --> 0:06:57.200 should be celebrated, but we need to also celebrate the 0:06:57.320 --> 0:07:00.000 entrepreneur all over the country that also are doing things 0:07:00.120 --> 0:07:02.279 in new ways. I mean, how about about your story 0:07:02.320 --> 0:07:04.520 starting a O. Well, you didn't start that in New 0:07:04.600 --> 0:07:07.120 York or San Francisco. Yeah, we were outside of Washingt 0:07:07.160 --> 0:07:09.200 d C. In northern Virginia. It was it was not 0:07:09.560 --> 0:07:11.840 by any stretch of startup pub There's no venture capital 0:07:11.880 --> 0:07:14.440 there as hard to get people from big companies to 0:07:14.520 --> 0:07:17.080 join the little little startup company. So it was a struggle. 0:07:17.120 --> 0:07:20.080 I think that helps inform my thinking around the rise 0:07:20.120 --> 0:07:22.720 to rest and maybe passion to make it easier for 0:07:22.720 --> 0:07:25.120 the next generation of entrepreneurs wherever they are in the 0:07:25.560 --> 0:07:27.400 in the country. But for the first decade it was 0:07:27.480 --> 0:07:29.120 it was a struggle and a couple of times we 0:07:29.120 --> 0:07:32.040 almost didn't make it. Finally we we broke through, and 0:07:32.040 --> 0:07:35.000 obviously it end up being a successful company. But many, 0:07:35.080 --> 0:07:37.240 many entrepreneurs in many parts of the country would never 0:07:37.280 --> 0:07:39.600 take that first step to start a company, or if 0:07:39.600 --> 0:07:41.520 they did, they wouldn't real able to raise the capital 0:07:41.600 --> 0:07:43.680 to to make it, you know, go of it, or 0:07:43.680 --> 0:07:45.720 wouldn't be able to hire the talent. We've got to 0:07:45.800 --> 0:07:48.560 change that, otherwise we're gonna have a even more divided 0:07:48.600 --> 0:07:51.240 country and probably run the risk of losing what it's 0:07:51.280 --> 0:07:54.160 now a global battle around innovation entrepreneurship UF seats at 0:07:54.160 --> 0:07:55.880 the table where you can help change that. I mean, 0:07:55.880 --> 0:07:57.440 what is it that needs to be changed. Is it 0:07:57.560 --> 0:08:00.200 something to do with incentives from the government in is 0:08:00.200 --> 0:08:02.040 it something that the private sector needs to do and 0:08:02.320 --> 0:08:04.040 wake up? I mean, what is it that needs to 0:08:04.120 --> 0:08:07.080 change that? There's more acknowledgement, most maybe resources going to this. 0:08:07.240 --> 0:08:09.400 Mostly I think the private sector. There are some things 0:08:09.400 --> 0:08:11.360 the government has done and and and then some other 0:08:11.360 --> 0:08:14.800 things government should do. Government. Decade ago I worked on 0:08:14.840 --> 0:08:17.920 the Jobs Act, legalized crowd funding, which helped to create 0:08:17.960 --> 0:08:21.280 some opportunities to raise capital. Just this summer, the Legislation 0:08:21.320 --> 0:08:24.679 of Hips and Science Act included UH funding of about 0:08:24.680 --> 0:08:27.240 ten billion dollars for regional hubs, which will help support 0:08:27.320 --> 0:08:29.920 the Rise of the Rest. So there are some things 0:08:29.920 --> 0:08:32.080 that happen at a national level, you know, the local 0:08:32.120 --> 0:08:35.040 and state level that I think are important, but ultimately 0:08:35.040 --> 0:08:37.240 it's it's the people standing up saying I'm gonna create 0:08:37.280 --> 0:08:39.720 a company. There's some something I want to do, some 0:08:39.760 --> 0:08:41.640 problem I want to solve them and create a company, 0:08:41.679 --> 0:08:44.400 and then getting investors to back that company. One encouraging 0:08:44.480 --> 0:08:46.480 data point, and we got this data the last year 0:08:46.520 --> 0:08:51.079 from a partnership Rise arrested with Pitchbook. In the last decade, 0:08:51.440 --> 0:08:56.199 fourteen hundred new venture capital firms were started in the 0:08:56.280 --> 0:08:58.840 Rise of the Rest cities, meaning outside of San Francists, 0:08:58.960 --> 0:09:01.880 outside of New York, outside of Boston. That bodes well 0:09:02.000 --> 0:09:04.800 for this next chapter because having some of that local 0:09:04.840 --> 0:09:08.199 capital is really helpful to these entrepreneurs. Why is that happening. 0:09:08.200 --> 0:09:10.360 Are people just acknowledging what's going on in some of 0:09:10.360 --> 0:09:14.600 these hubs, or it's hard to compete on the coasts 0:09:14.800 --> 0:09:18.280 for a bunch of factors. But but the core is 0:09:18.320 --> 0:09:21.360 people recognize this next phase of innovation is going to 0:09:21.440 --> 0:09:23.320 be a little different than some of the cities around 0:09:23.320 --> 0:09:26.000 the country that weren't really part of the innovation eCOM 0:09:26.040 --> 0:09:27.520 in the last you know, a couple of decades, are 0:09:27.520 --> 0:09:31.400 well positioned and therefore there's great opportunities to back those companies, 0:09:31.400 --> 0:09:34.400 and investors want to capitalize on that, so that that's 0:09:34.440 --> 0:09:36.559 the main factor. It also helps that we're starting to 0:09:36.600 --> 0:09:39.719 see some real breakout successes. Company like mail Chimp was 0:09:39.760 --> 0:09:42.160 acquired in land A last year for twelve billion dollars. 0:09:42.240 --> 0:09:44.080 Through many there's there are a lot of these companding 0:09:44.120 --> 0:09:46.880 companies that are starting to scale around the country to 0:09:46.920 --> 0:09:51.559 go public or be acquired pretty pretty significant evaluations, which 0:09:51.679 --> 0:09:54.480 lead the investors say, huh, maybe maybe I should be 0:09:54.480 --> 0:09:56.880 paying more attention to some of these other places. Somebody 0:09:56.880 --> 0:09:58.800 out there is making a lot of money. Maybe I 0:09:58.800 --> 0:10:01.280 should do a little less and have a little more diversification. 0:10:01.320 --> 0:10:03.600 I have all my eggs in the Silicon Valley basket, 0:10:03.840 --> 0:10:07.280 have other investments around the country. Are wealth funds in general? 0:10:07.320 --> 0:10:09.320 Like Tim and I talked to so many different wealth 0:10:09.360 --> 0:10:11.600 managers and I feel like so much of their investments 0:10:11.640 --> 0:10:14.000 is looking for kind of some of these startups. Does 0:10:14.040 --> 0:10:17.000 that help fuel the momentum that's going on where it 0:10:17.040 --> 0:10:18.680 might be too pricey for them to get in on 0:10:18.800 --> 0:10:20.480 some of the deals that are typically led by some 0:10:20.559 --> 0:10:23.120 of the coastal firms, if you will, Is that part 0:10:23.120 --> 0:10:25.120 of it? I think it could be part of it. 0:10:25.160 --> 0:10:29.000 But a lot of the capital UH is still invested 0:10:29.040 --> 0:10:32.360 in funds and as a directly in companies, So getting 0:10:32.360 --> 0:10:34.679 more funds started in more places I think is is 0:10:34.720 --> 0:10:37.240 the best solution as a company's scale. Some of the 0:10:37.320 --> 0:10:40.960 investors in those funds also look for co investment opportunities 0:10:41.000 --> 0:10:42.960 in some of those companies, and we're starting to see 0:10:43.280 --> 0:10:45.959 more of that. But anything we can do to get 0:10:46.000 --> 0:10:48.880 more capital in the hands, the more entrepreneurs, and more 0:10:48.920 --> 0:10:51.959 places I think is supportive of this overall rise of 0:10:52.000 --> 0:10:55.079 the rest effort will also help in these communities create 0:10:55.080 --> 0:10:58.360 more jobs and an opportunity which also at least in 0:10:58.360 --> 0:11:01.720 a small way well could help United very divided country. 0:11:01.760 --> 0:11:03.640 Part of that divide, not all of it, but part 0:11:03.679 --> 0:11:05.880 of that is this opportunity gap where some people are 0:11:05.880 --> 0:11:07.840 doing well and a lot of people feel left out 0:11:07.880 --> 0:11:10.040 and left behind. How do we give those people more 0:11:10.080 --> 0:11:11.880 of a shot at the American dream. It's funny that 0:11:11.880 --> 0:11:13.440 you say that because we're talking with the author of 0:11:13.480 --> 0:11:15.920 a new book ATHLETs about the Proud Boys and just 0:11:16.080 --> 0:11:20.280 how they're predominantly white men in the United States were 0:11:20.280 --> 0:11:22.840 just so angry and feel like that they've been left behind. UH. 0:11:22.880 --> 0:11:24.520 And you look at some of the statistics, and when 0:11:24.520 --> 0:11:26.160 we talk about wealth creation, we know that there have 0:11:26.160 --> 0:11:29.080 been a lot of individuals left behind. And it goes 0:11:29.120 --> 0:11:31.480 back to even the core thesis of the Rise of 0:11:31.480 --> 0:11:34.120 the Rest book. If if seventy five percent venture capital 0:11:34.160 --> 0:11:36.280 goes to three states, which is what's happened over the 0:11:36.320 --> 0:11:39.240 last decade, UH, and a lot of other states are 0:11:39.320 --> 0:11:43.480 including big ones Texas, Florida, Illinois, Michigan. These are one 0:11:43.520 --> 0:11:47.440 or two percent um, then there's fewer new companies started, 0:11:47.679 --> 0:11:51.359 fewer new jobs being created. And some of the disruption 0:11:51.400 --> 0:11:54.319 on the coast place like Silicon Valley is actually because 0:11:54.360 --> 0:11:57.720 of automation productivity is actually destroying jobs in many of 0:11:57.720 --> 0:12:00.800 these communities. That's inevitable. It's gonna happen because of a 0:12:00.840 --> 0:12:03.480 new innovation. Hundred years ago of us worked on farms. 0:12:03.480 --> 0:12:06.360 Now it's two percent. That's because technology allowed you grow 0:12:06.400 --> 0:12:08.360 more food with fewer people, which is a good thing 0:12:08.400 --> 0:12:11.840 if you're trying to efficiently feed the world. The difference, though, 0:12:11.880 --> 0:12:15.079 is we followed that by backing new companies that created 0:12:15.160 --> 0:12:17.200 new jobs. And that's what we've missed out on, and 0:12:17.440 --> 0:12:18.880 that's what we have to address, and that's why I 0:12:18.920 --> 0:12:21.160 wrote the book. Hopefully that will lead more people to 0:12:21.160 --> 0:12:24.040 be inspired to start companies, more investors inspired to back 0:12:24.080 --> 0:12:27.400 those companies, more mayors and governors uh and focused on 0:12:27.640 --> 0:12:30.560 supporting those companies, and you'll see these startup pubs not 0:12:30.640 --> 0:12:33.040 just in one or two cities, but in dozens of cities. 0:12:33.120 --> 0:12:35.160 That's really what I think will happen. So, Steve, let's 0:12:35.160 --> 0:12:38.840 say a recent graduate or somebody in college right now 0:12:39.080 --> 0:12:42.079 is listening to this interview, and for years, recent college 0:12:42.080 --> 0:12:45.200 graduates have been told to you know, go west, go east, 0:12:45.400 --> 0:12:47.880 go to the big cities. That's where the opportunity is. 0:12:48.640 --> 0:12:51.480 Give us the top three places where you think this 0:12:51.559 --> 0:12:55.120 college graduate should consider to move. Well, I'm reluctant to 0:12:55.160 --> 0:12:57.360 pick cities because it's a little bit like asking who's 0:12:57.360 --> 0:13:02.480 your favorite child. Now be forty three, a hundred different 0:13:02.480 --> 0:13:05.000 cities we've invested in the course, we're championing all of them. 0:13:05.000 --> 0:13:07.040 But I think that's the simple answer. Depends what they 0:13:07.080 --> 0:13:09.720 want to do. It depends what industry they want to disrupt. 0:13:10.040 --> 0:13:12.960 But rather than presume they have to go someplace else, 0:13:13.120 --> 0:13:15.520 maybe they can stay where they are. We've seen the 0:13:15.600 --> 0:13:17.840 data in the last few years. It's been encouraging that 0:13:17.960 --> 0:13:21.559 graduates from say Carnegie Mellon, which a great university in Pittsburgh. 0:13:21.880 --> 0:13:24.160 A decade ago, most went to the coast. Now more 0:13:24.200 --> 0:13:26.960 are staying in Pittsburgh. We're also seeing that in an 0:13:27.520 --> 0:13:30.120 University of Michigan is also a great university. Many great 0:13:30.160 --> 0:13:33.280 universities around the country. So rather than presume once you 0:13:33.360 --> 0:13:36.560 graduate you have to leave, the opportunity is better somewhere else. 0:13:36.559 --> 0:13:39.640 The grass is greener somewhere else. Look at your own backyard. 0:13:39.760 --> 0:13:41.920 Chances are there are things happening that you can be 0:13:42.000 --> 0:13:44.520 part of that doesn't require you. If you choose to move, 0:13:44.640 --> 0:13:46.240 you know, so be it, but don't presume you have 0:13:46.360 --> 0:13:48.559 to move. That's what's changed in the last decade. I 0:13:48.559 --> 0:13:51.080 think anybody reading this book would would see that that's 0:13:51.120 --> 0:13:54.080 really happening everywhere. Well, in reading your book and just 0:13:54.120 --> 0:13:56.640 looking over it, it's you had said, it's not just 0:13:56.679 --> 0:13:59.240 about great ideas, and I'm just wondering, what is it 0:13:59.280 --> 0:14:02.600 as you travel around the country and travel through the heartline, 0:14:02.640 --> 0:14:04.960 what is it that says okay, that has potential, or 0:14:05.000 --> 0:14:08.559 that individual has potential, or that idea has potential. Well, 0:14:08.600 --> 0:14:11.480 some of it the ideas we're looking for are taking 0:14:11.520 --> 0:14:13.880 on some of the big aspects of our lives, big 0:14:13.920 --> 0:14:16.160 industries with a with a better way to do it, 0:14:16.360 --> 0:14:19.000 some some some new idea that is just a, you know, 0:14:19.440 --> 0:14:23.400 a better path forward. So that innovative idea is important. 0:14:23.560 --> 0:14:26.200 What's also important, though, is the team you assemble around 0:14:26.200 --> 0:14:28.920 the idea. Sometimes we celebrate the entrepreneur too much, and 0:14:28.960 --> 0:14:31.240 it's really a team sport. How do you get the 0:14:31.320 --> 0:14:32.880 right team? So we look at who else is on 0:14:32.920 --> 0:14:35.080 their team, and we look at for at least early 0:14:35.200 --> 0:14:38.440 evidence at this at the early siege stage, that there's 0:14:38.480 --> 0:14:40.800 sort of this product market fit. There actually is some 0:14:41.280 --> 0:14:44.520 enthusiasm about that that that idea. So there's a mix 0:14:44.560 --> 0:14:47.600 of factors, but it starts with having a big idea, 0:14:47.640 --> 0:14:50.320 but then having the team and and and a strategy 0:14:50.360 --> 0:14:53.560 to really capitalize on that idea. Give us an idea 0:14:53.560 --> 0:14:56.360 of um, I don't know something that you passed on 0:14:56.800 --> 0:14:58.920 in the process of this that has turned out to 0:14:58.960 --> 0:15:01.680 be really successful that you look back and say, I 0:15:01.720 --> 0:15:03.920 wish that was one we would have invested. Well, we've 0:15:03.960 --> 0:15:05.600 tasked on a lot of things, and not not just 0:15:05.720 --> 0:15:08.320 with rides. The rest. I'm not sure we want to 0:15:08.320 --> 0:15:11.240 do pitch competitions. There's about a hundred applicants in every 0:15:11.240 --> 0:15:14.520 city can end up pitching. We then invest in one. 0:15:14.920 --> 0:15:17.480 Sometimes we go back and invest in somebody, somebody that 0:15:17.520 --> 0:15:20.280 didn't win. I'll give you one example in Atlanta, company 0:15:20.320 --> 0:15:22.920 called Hermius was sort of one of the runners up, 0:15:22.960 --> 0:15:25.320 but we were quite taken with it. And basically it's 0:15:25.360 --> 0:15:28.680 a company focused on building Mack five engines and then 0:15:28.760 --> 0:15:32.280 jet jet planes. The air Force is now a customers 0:15:32.480 --> 0:15:35.720 have gone to raise significant capital, including from some some 0:15:35.760 --> 0:15:39.200 coastal investors. So even though we initially said no, and 0:15:39.320 --> 0:15:42.520 we turned around a month later and said we actually whoops, 0:15:42.680 --> 0:15:44.640 we want to get in, and so we did end 0:15:44.720 --> 0:15:46.600 up investing in that company. You know. One of the 0:15:46.680 --> 0:15:49.040 things I mean, I love talking with it with individuals 0:15:49.080 --> 0:15:51.160 like yourself who are in the VC space or in 0:15:51.160 --> 0:15:53.360 the investment space, and and just looking at kind of 0:15:53.560 --> 0:15:56.040 what are the trends and ideas that I don't know 0:15:56.040 --> 0:15:57.720 whether it's five years from now, ten years from now, 0:15:57.800 --> 0:15:59.800 or twenty years where you make the investment today and 0:15:59.840 --> 0:16:01.280 it's to be a big part of the world. How 0:16:01.320 --> 0:16:03.960 should we be thinking about that? What kind of catches 0:16:03.960 --> 0:16:05.800 your interest when you think about I think it is 0:16:05.840 --> 0:16:08.800 the most important aspects of our lives, which I think 0:16:08.800 --> 0:16:11.440 I think I wrote the book previous book, the Third Wave. 0:16:11.480 --> 0:16:13.760 It talked about the first wave getting everybody online. The 0:16:13.760 --> 0:16:15.840 second wave was soft on top of the Internet. The 0:16:15.840 --> 0:16:18.080 third wave was going to be the Internet meeting the 0:16:18.120 --> 0:16:20.560 real world. That's the phase we're now in. So are 0:16:20.560 --> 0:16:24.600 talked about head things like healthcare of food and agriculture, transportation, 0:16:25.000 --> 0:16:28.200 financial services, a lot of different things that that are 0:16:28.240 --> 0:16:31.640 being reimagined. So that's the first place to focus. And 0:16:31.680 --> 0:16:34.120 then recognize that some of the partners you need, some 0:16:34.200 --> 0:16:36.760 the expertise you need is not on the coast it 0:16:36.840 --> 0:16:39.680 is in these different parts of the country and either 0:16:39.800 --> 0:16:42.960 start there or or or move there to really capitalize 0:16:42.960 --> 0:16:45.720 on that expertise. There's a lot of examples of people 0:16:45.920 --> 0:16:47.880 deciding to move. One actually, if somebody who started in 0:16:47.880 --> 0:16:50.520 New York City a company called temper back weed backed. 0:16:50.640 --> 0:16:54.200 It's focused on sustainable packaging style foams terrible for the environment, 0:16:54.200 --> 0:16:56.160 but people have to keep stuff cold, whether it's food 0:16:56.200 --> 0:17:00.560 companies or farmer companies. They created a better packaging, uh, 0:17:00.600 --> 0:17:04.000 and they moved to Richmond, Virginia to launch that company. 0:17:04.040 --> 0:17:06.119 And just a few months ago Goldman Sachs led a 0:17:06.200 --> 0:17:08.719 hundred forty million dollar around to that company in Richmond, Virginia. 0:17:08.760 --> 0:17:10.879 So that's an example of looking for a better way 0:17:11.160 --> 0:17:13.080 and then saying even though they were in New York 0:17:13.200 --> 0:17:16.440 or the Acre Trader founder was in San Francisco, saying, 0:17:16.600 --> 0:17:18.879 is that the best place for me to launch that company? 0:17:18.960 --> 0:17:21.679 And more and more situations we're finding that's not the 0:17:21.760 --> 0:17:24.480 right answer, and entrepreneurs are going to other places too, 0:17:24.600 --> 0:17:26.840 and that's why the rise of the rest is accelerating. 0:17:26.960 --> 0:17:28.640 One word I didn't hear come out of your mouth 0:17:28.720 --> 0:17:30.920 yet has been crypto, and the reason I thought of 0:17:30.920 --> 0:17:32.320 it is because you talked about the first wave in 0:17:32.320 --> 0:17:33.640 the second wave, and I think a lot of people 0:17:33.760 --> 0:17:36.200 might hear that and think, okay, well, Web one, a 0:17:36.359 --> 0:17:40.080 oll Web two applications. On top of that, access to 0:17:40.119 --> 0:17:44.920 the Internet, Facebook, Phase three, Wave three, Web three, crypto, 0:17:44.960 --> 0:17:47.840 in the metaverse. It's interesting that you define that third 0:17:47.840 --> 0:17:52.040 wave as being something that's real, something that's physical, where 0:17:52.080 --> 0:17:54.760 the Internet actually meets the real world, not necessarily us 0:17:54.800 --> 0:17:58.480 being transformed into this sort of virtual world. Yeah. And 0:17:58.600 --> 0:18:01.000 I think there are a lot of interesting bubbling in 0:18:01.440 --> 0:18:05.840 Web three, which has become a rather large and very 0:18:05.960 --> 0:18:10.560 basket of things running from you know, crypto, bitcoin, blockchain, 0:18:10.920 --> 0:18:13.600 n f t S, metaverse, a lot of different things. Uh. 0:18:13.680 --> 0:18:16.320