WEBVTT - Steve Case on Startup Entrepreneurship 0:00:02.000 --> 0:00:06.760 This is mesters in business with very results, on Bloomberg 0:00:06.880 --> 0:00:11.799 radio this week on the podcast. What can I say? 0:00:11.840 --> 0:00:16.520 Another great conversation with an extra special guest, Steve Case. 0:00:16.840 --> 0:00:23.200 It really is legendary in everything from putting America Online, 0:00:23.640 --> 0:00:27.720 full pun intended, uh, to being the first Internet company 0:00:27.720 --> 0:00:30.800 to go public, the largest merger in history with a 0:00:31.040 --> 0:00:34.000 l Time Warner. And you would think that's enough of 0:00:34.000 --> 0:00:38.080 a resume, but he didn't stop there. Uh. He basically 0:00:38.120 --> 0:00:41.600 set up a foundation, joined the giving pledge and became 0:00:41.760 --> 0:00:48.160 very active in both policy and entrepreneurship. Revolution is the 0:00:48.240 --> 0:00:52.560 outgrowth of his family office that does everything from seed 0:00:52.640 --> 0:00:57.400 to venture to growth investing. Uh. He was instrumental in 0:00:57.480 --> 0:01:02.440 getting a number of very positive policy actions passed over 0:01:02.480 --> 0:01:06.240 the past decade, and now he is taking his act 0:01:06.280 --> 0:01:10.080 on the road and revealing too much of America, how 0:01:10.160 --> 0:01:14.039 much energy and entrepreneurship there is away from the big 0:01:14.080 --> 0:01:16.880 money centers like New York and San Francisco, in the 0:01:16.880 --> 0:01:19.679 heartland of America, and his new book rise with the 0:01:19.720 --> 0:01:24.240 rest describes that experience. I found this conversation to be 0:01:24.280 --> 0:01:28.480 fascinating and if you are at all interested in technology, venture, 0:01:28.600 --> 0:01:32.920 startups entrepreneurship, I suspect you will also so, with no 0:01:32.959 --> 0:01:37.360 further ADO, my conversation with Steve Case. I've interviewed a 0:01:37.440 --> 0:01:40.240 number of people from revolution. I've spoken to your wife 0:01:40.240 --> 0:01:44.560 about the case foundation. But let's talk about your background. 0:01:44.640 --> 0:01:49.360 Your your entrepreneurial career really begins in when you co 0:01:49.560 --> 0:01:52.919 found America Online, which turned out to be the first 0:01:53.080 --> 0:01:56.320 Internet company to go public. Uh, tell us a little 0:01:56.320 --> 0:01:58.880 bit about the founding of a o L. where did 0:01:58.880 --> 0:02:02.840 this idea come from and what was that experience like? Well, 0:02:02.840 --> 0:02:05.960 it was an interesting journey. I actually stumbled onto the 0:02:06.040 --> 0:02:10.040 idea the Internet in U Nineteen seventy. I was a 0:02:10.120 --> 0:02:13.400 senior in college. I was hearing about these things called 0:02:13.480 --> 0:02:16.720 video tex and teletext, interactive TV, and the thing in 0:02:16.800 --> 0:02:20.400 Minitel in France and Prestel and UK, all these interactive 0:02:20.440 --> 0:02:22.560 service I was really intrigued and I read a book 0:02:22.600 --> 0:02:26.280 by Alvin Toffler, the futurists called the third wave, and 0:02:26.320 --> 0:02:29.680 he basically was talking about this coming kind of electronic frontier, 0:02:29.720 --> 0:02:32.440 electronic cottage, and I was I was smitten, I was mesmerized. 0:02:32.480 --> 0:02:34.040 So I knew I wanted to do that. When I 0:02:34.080 --> 0:02:36.800 graduated from college in Nineteen Eighty. UH, there were no 0:02:36.840 --> 0:02:38.919 internet companies to go to work for because it was 0:02:38.960 --> 0:02:42.000 more of an idea. Uh, and venture capital's back then 0:02:42.000 --> 0:02:44.239 weren't backing, you know, twenty one year olds coming out 0:02:44.240 --> 0:02:47.200 of college. So I decided to work for some big companies, 0:02:47.200 --> 0:02:49.880 for all, procter and gamble and then Pepsico. Then moved 0:02:49.919 --> 0:02:52.200 to the Washington D C area to join a startup 0:02:52.480 --> 0:02:55.440 that failed, but thankfully two of the people I met there, 0:02:55.520 --> 0:02:58.280 Jim Kimsey and Mark Saraff and I co founded America 0:02:58.280 --> 0:03:02.440 Online in the in the in the back then only 0:03:02.480 --> 0:03:05.359 three percent of people are online and those three percent 0:03:05.400 --> 0:03:07.840 we're only on an hour a week. So it's still 0:03:07.880 --> 0:03:10.079 pretty early days in terms of the Internet. But really 0:03:10.120 --> 0:03:12.799 believe that someday the Internet would be pervasive, that it 0:03:12.840 --> 0:03:15.560 would be a mainstream phenomenon, and we set out to 0:03:15.600 --> 0:03:18.520 try to get America Online. Yeah, this this Internet thing 0:03:18.639 --> 0:03:20.600 is going to be big one day. I think. I 0:03:20.639 --> 0:03:23.760 think you you were early in that assessment. So I 0:03:23.840 --> 0:03:26.639 was going to ask you why such a something, so 0:03:27.120 --> 0:03:31.440 fundamental block and tackling is access. But really the answer 0:03:31.520 --> 0:03:34.040 is there was no access back then, or other than 0:03:34.120 --> 0:03:37.800 mainframes at universities in the Department of Defense Very few 0:03:37.840 --> 0:03:40.520 people in the real world had. Actually, when we started, 0:03:41.160 --> 0:03:44.040 it was it was the Internet was restricted to government 0:03:44.080 --> 0:03:48.600 agencies and educational institutions. Actually was illegal for businesses or 0:03:48.720 --> 0:03:52.000 consumers to be on the Internet. In a few years later, 0:03:52.280 --> 0:03:56.160 Congress passed the telecom actor commercialize the Internet. Uh So, 0:03:56.200 --> 0:03:58.160 when we were getting started we had to create sort 0:03:58.160 --> 0:04:00.760 of this parallel world, our own kind of email systems, 0:04:00.760 --> 0:04:03.040 our own, you know, kind of servers, because we couldn't 0:04:03.080 --> 0:04:05.040 connect to the UH, the Internet. But we knew it 0:04:05.120 --> 0:04:07.280 was only a matter of time before those worlds would 0:04:07.520 --> 0:04:10.520 would blur together, merge together. Uh. And in our early 0:04:10.560 --> 0:04:12.800 days we really just tried to figure out, like many startups, 0:04:13.080 --> 0:04:15.520 how to get noticed. They a lie. Was Frankly harder 0:04:15.560 --> 0:04:18.279 because we were in the northern Virginia area outside of 0:04:18.279 --> 0:04:20.760 Washington D C. There was no venture capital, you know, there. 0:04:20.760 --> 0:04:23.320 We had to raise money from other places. Uh. People 0:04:23.360 --> 0:04:25.880 would reluctant to leave a big company to go to 0:04:25.920 --> 0:04:28.240 a small company. There are a lot of challenges that 0:04:28.279 --> 0:04:30.640 we face. Frankly, helps inspire some of the work we're 0:04:30.640 --> 0:04:32.200 now doing with the rise of the rest. How do 0:04:32.240 --> 0:04:35.279 we back entrepreneurs and places outside of Silicon Valley. I 0:04:35.279 --> 0:04:37.760 think my own experience building a o l in in 0:04:37.839 --> 0:04:41.440 one of those forgotten places, left behind places that people 0:04:41.480 --> 0:04:44.080 don't think of as startup, you know, kind of hubs, 0:04:44.360 --> 0:04:46.919 kind of helped inform some of that that work and 0:04:46.800 --> 0:04:49.359 it and it took us a while. The the eventually, 0:04:49.400 --> 0:04:51.919 in the mid nineties, the Internet became more of a 0:04:51.960 --> 0:04:55.080 mainstream phenomenon. Hit a tipping point, but for the better 0:04:55.080 --> 0:04:56.799 part of a decade it was it was a struggle 0:04:56.880 --> 0:04:58.680 or a couple of times we almost hit the wall. 0:04:58.760 --> 0:05:01.000 Had to go through some layoffs. It was not obvious 0:05:01.040 --> 0:05:03.600 to most people that the Internet would ever be something 0:05:03.640 --> 0:05:06.120 more than a niche kind of hobbyist kind of phenomenon. 0:05:06.640 --> 0:05:12.119 Even with public it was uh, you know, we raised 0:05:12.120 --> 0:05:14.600 a whopping ten million dollars in our I P o. 0:05:14.720 --> 0:05:18.560 The value of the company that day was seventy million dollars. Basically, 0:05:18.560 --> 0:05:20.200 nobody knew or cared what we were doing. You know, 0:05:20.360 --> 0:05:23.039 nobody really was that interested at the time and the Internet, 0:05:23.080 --> 0:05:25.120 we had been at it for coming on a decade. 0:05:25.120 --> 0:05:27.960 It had only a couple hundred thousand customers. Uh. But 0:05:28.040 --> 0:05:31.280 thankfully the next decade things really accelerated in terms of 0:05:31.360 --> 0:05:33.400 the growth of the company and growth in the evaluation, 0:05:33.520 --> 0:05:35.520 things like that. But it's also, I think, a lesson 0:05:35.560 --> 0:05:37.560 for me I try to carry into the work we 0:05:37.600 --> 0:05:41.799 now do with revolution that sometimes revolutions happen in evolutionary ways. 0:05:41.880 --> 0:05:44.919 It's it's it's not an overnight success. There's a a 0:05:45.000 --> 0:05:47.960 slog before finally you build some momentum, and that was 0:05:48.040 --> 0:05:50.240 my experience with the well, the first decade was hard 0:05:50.279 --> 0:05:52.760 and slow. The second decade really you know, things really 0:05:52.800 --> 0:05:55.599 took off. So was d c just a coincidence of 0:05:55.640 --> 0:05:58.360 where you have to be located, or was that lack 0:05:58.440 --> 0:06:03.800 of Um legislative permission part of the reason? You had 0:06:03.800 --> 0:06:08.200 to locate close to Congress and push that forward? So 0:06:08.360 --> 0:06:11.239 they basically allowed the rest of us to get online. 0:06:11.400 --> 0:06:13.440 Now the reason I moved to D C was more 0:06:13.440 --> 0:06:16.200 of an accident. There was interesting company. I thought it 0:06:16.200 --> 0:06:20.320 was interesting company. They joined three that had a service 0:06:20.320 --> 0:06:23.000 called game line and at the time you might recall this, 0:06:23.120 --> 0:06:25.279 some of your listeners may not, but the very few 0:06:25.279 --> 0:06:27.320 people had home computers, but a lot of people had 0:06:27.320 --> 0:06:29.799 Atari game machines and so the idea of this product, 0:06:30.080 --> 0:06:33.600 as you plugged the game cartridge that had a communications 0:06:33.640 --> 0:06:36.279 capability a modem built in and you could download videogain's 0:06:36.279 --> 0:06:38.840 almost like having an in home arc, like a Netflix 0:06:38.880 --> 0:06:41.400 for for videos. So it's a modem and it looked 0:06:41.440 --> 0:06:44.200 like but you also you had a ad a phone connection, 0:06:44.240 --> 0:06:45.600 and so I thought this was a great way to 0:06:45.760 --> 0:06:47.880 kind of enter that world that I've been reading about 0:06:47.880 --> 0:06:51.000 and wanting to get into. But unfortunately, just as the 0:06:51.040 --> 0:06:54.160 product came to market, the whole Atari game market blew 0:06:54.240 --> 0:06:57.760 up and retailers didn't want any new products and suddenly 0:06:57.800 --> 0:07:01.479 things were looking pretty, pretty, pretty desperate. So that but 0:07:01.520 --> 0:07:03.120 that's why I moved to the area and then because 0:07:03.120 --> 0:07:05.520 I was already there and these two people I mentioned 0:07:05.520 --> 0:07:07.839 were also part of that company. You know, the three 0:07:07.880 --> 0:07:10.040 of us, you know, kind of CO founded America Online 0:07:10.040 --> 0:07:12.720 brought some of the team from that previous company with us. 0:07:12.760 --> 0:07:15.520 So it was accidental to be there, but it turned 0:07:15.520 --> 0:07:18.480 out to be an advantage because, as you say, one 0:07:18.520 --> 0:07:19.920 of the things that we had to spend a lot 0:07:19.960 --> 0:07:21.840 of time in the early days of the Internet was 0:07:22.160 --> 0:07:26.280 public policy, getting the regulations right, commercializing Internet, getting things 0:07:26.400 --> 0:07:28.600 right for e commerce, trying to keep the Internet safe 0:07:28.600 --> 0:07:31.200 for kids, things like that, and being in the in 0:07:31.280 --> 0:07:33.640 the WASHINGT D C area proved to be important and, frankly, 0:07:33.640 --> 0:07:35.920 it's proven to be important again now as we're investing, 0:07:36.280 --> 0:07:38.840 because policy is becoming much more of a front and 0:07:38.880 --> 0:07:41.360 center issue for more and more companies and health tech, 0:07:41.440 --> 0:07:44.680 sports tech, food and egg these are these are sectors 0:07:44.680 --> 0:07:47.880 where there's some regulations and entrepreneurs need to understand that, 0:07:47.920 --> 0:07:50.240 investors need to understand that. So I think we kind 0:07:50.240 --> 0:07:52.680 of have a kind of bit of Home Court advantage 0:07:52.720 --> 0:07:55.280 being located in Washington d C uh and having a 0:07:55.360 --> 0:07:58.360 front row seat in terms of understanding how Congress works. 0:07:58.360 --> 0:08:01.040 And you know, things happened, which I think bodes well 0:08:01.080 --> 0:08:04.440 for this next phase of innovation where policy is is 0:08:04.520 --> 0:08:07.200 much more central. We're definitely going to talk about the 0:08:07.280 --> 0:08:09.840 jobs act and some of the public service you've done, 0:08:10.240 --> 0:08:13.440 but I want to stick with a O. L is 0:08:13.480 --> 0:08:17.560 the first Internet company to go public. Subsequently runs up 0:08:17.600 --> 0:08:22.080 eleven thousand six hundred and six. Not Too Shabby. Tell 0:08:22.200 --> 0:08:24.920 us what your experience was like being at the helm 0:08:24.960 --> 0:08:27.520 of a company as it as it went public? Well, 0:08:27.560 --> 0:08:29.960 the early days we're still a little slow, but then 0:08:29.960 --> 0:08:34.079 finally in the ninety seven, things really took off and 0:08:34.880 --> 0:08:38.120 our growth dramatically accelerated. Went from a couple hundred thousand 0:08:38.440 --> 0:08:41.800 customers to tens of millions of customers at market. Kappa 0:08:41.880 --> 0:08:44.280 mentioned when we went public of seventy million at a peak. 0:08:44.880 --> 0:08:47.920 Eight years later a hundred sixty billion dollars. So it 0:08:47.960 --> 0:08:50.240 really was quite a ride. And we went from having 0:08:50.920 --> 0:08:53.079 less than to our employees when we went public to 0:08:53.320 --> 0:08:55.760 eight years later having ten thousand employees and then we 0:08:55.840 --> 0:08:58.480 emerged with Time Warner or something. It was ninety thousand employees. 0:08:58.520 --> 0:09:00.480 So it was it was quite a you know, kind 0:09:00.520 --> 0:09:03.000 of a rocket ship and I recognized as I the 0:09:03.040 --> 0:09:06.200 company was scaling, I as the leader, as a CEO, 0:09:06.400 --> 0:09:09.320 needed to constantly rethink what my job should be, what 0:09:09.400 --> 0:09:13.199 I should focus on, constantly re rejigger things with the team, 0:09:13.280 --> 0:09:15.560 building the team for the business we'd have a couple 0:09:15.559 --> 0:09:17.320 of years from now, not from the business we had 0:09:17.320 --> 0:09:19.360 today or certainly the business we had in the in 0:09:19.400 --> 0:09:22.720 the past. So it was it was a rapid pace 0:09:22.800 --> 0:09:25.160 of of learning a lot in terms of being a 0:09:25.200 --> 0:09:28.560 public company growing, you know, so so rapidly, and also 0:09:28.600 --> 0:09:31.360 I recognized, because a o well was at the time 0:09:31.920 --> 0:09:34.040 the leader in the United States, that I had a 0:09:34.240 --> 0:09:36.760 role to play in not just running a company but 0:09:36.880 --> 0:09:40.480 being sort of an evangelist for the medium and advocate 0:09:40.520 --> 0:09:43.680 for the medium and try to weigh in on policy 0:09:43.720 --> 0:09:46.080 issues to try to make sure that the Internet really 0:09:46.080 --> 0:09:49.040 had a chance to flourish. You mentioned the a well 0:09:49.160 --> 0:09:52.600 Time Warner merger. At the time it was the largest 0:09:52.640 --> 0:09:56.520 merger in history and somehow you guys a o l 0:09:56.600 --> 0:10:00.040 shareholders ended up with a majority of the stock and 0:10:00.080 --> 0:10:04.000 the Time Warner was arguably a much larger, more established company. 0:10:04.040 --> 0:10:07.680 What was that process like of negotiations? Did you approach them? 0:10:07.679 --> 0:10:09.679 Did they come to you? Tell us how how that 0:10:09.720 --> 0:10:12.240 came about? Well, it came about because a o L 0:10:12.720 --> 0:10:15.160 had been growing rapidly and was a leader in what 0:10:15.280 --> 0:10:18.840 was then called the dial up era, the narrow band era, 0:10:18.880 --> 0:10:21.640 where you were connecting your computers to phone lines. But 0:10:21.720 --> 0:10:24.440 we needed a path to broadband and the Best Path 0:10:24.559 --> 0:10:27.880 was cable system which had high speed access. And so 0:10:28.040 --> 0:10:31.520 strategically it was a real value in emerging with Time Warner. 0:10:31.520 --> 0:10:34.960 And we also believed as the Internet evolved and you 0:10:35.000 --> 0:10:38.000 had higher speed, you have more multimedia content and having 0:10:38.040 --> 0:10:40.760 some of the brands that the Warner Brothers studios and 0:10:40.800 --> 0:10:44.400 Warner Music and CNN and HBO and so forth, all 0:10:44.440 --> 0:10:46.880 part of this company would would advantage us. And similarly, 0:10:47.640 --> 0:10:50.240 Time Warner was a great company, been built through acquisitions 0:10:50.280 --> 0:10:52.559 over more than half a century, but they didn't really 0:10:52.600 --> 0:10:55.080 have a viable path to digital. They were trying a 0:10:55.080 --> 0:10:57.280 bunch of things, none of them worked out particularly well. 0:10:57.360 --> 0:10:59.840 So we both had a strategic need to come to 0:11:00.000 --> 0:11:03.920 other and also, frankly, from an all standpoint, are representing 0:11:03.920 --> 0:11:07.880 our shareholders. We recognized there was some value and diversification. 0:11:07.920 --> 0:11:12.800 Our stock had run up quite significantly and owning a 0:11:12.840 --> 0:11:15.280 share of a business that had a more diversified mix 0:11:15.320 --> 0:11:18.200 of things would make sense. So I did approach Jerry Levin, 0:11:18.280 --> 0:11:20.720 as the it was the CEO of Time Warner at 0:11:20.720 --> 0:11:22.920 the time, and basically said strategically, I think it makes 0:11:22.920 --> 0:11:25.080 a lot of sense if we put these companies together. 0:11:25.120 --> 0:11:27.360 We have an opportunity to really kind of lead in 0:11:27.360 --> 0:11:29.560 the future and in a lot of different ways, streaming 0:11:29.600 --> 0:11:32.560 and and and so forth. Um and and within the 0:11:32.559 --> 0:11:35.840 first minute or two of my my little pitch I said, 0:11:35.840 --> 0:11:37.760 and I'd be willing to step aside a CEO to 0:11:38.080 --> 0:11:40.280 allow you to be CEO The combined company, because I 0:11:40.640 --> 0:11:42.880 believe in this, in this idea, and that's what happened. Eventually. 0:11:42.880 --> 0:11:44.680 It took us a little while to put a deal together, 0:11:45.559 --> 0:11:47.480 but we didn't finally took a little while to get 0:11:47.480 --> 0:11:49.600 it approved, but finally it did get approved and I 0:11:49.600 --> 0:11:52.880 did step down as a CEO. So there's a theme 0:11:52.920 --> 0:11:55.840 I keep noticing, and lots of the things you've done, 0:11:56.400 --> 0:11:59.120 whether it was a well or the Time Warner merger, 0:11:59.160 --> 0:12:02.800 and we'll talk about revolution in a bit, but everything 0:12:02.840 --> 0:12:05.960 you seem to do seems to be both innovative and 0:12:06.160 --> 0:12:10.000 highly disruptive. Is this by design? Was that just a 0:12:10.080 --> 0:12:14.600 happy accident? Well, we're kind to say that. I like to, 0:12:16.320 --> 0:12:18.200 and I think a lot of entrepreneurs, to pick battles 0:12:18.240 --> 0:12:20.600 worth fighting, kind of mountains worth climbing. You know, I 0:12:20.640 --> 0:12:23.600 don't you know if it's easy. Uh, it's not that interesting. 0:12:23.640 --> 0:12:27.360 And in fact, what I get motivated by it. Again, 0:12:27.360 --> 0:12:29.560 this is true with many entrepreneurs. If, as somebody says, 0:12:30.360 --> 0:12:33.560 it can't be done, okay, let's you know, game on, 0:12:33.600 --> 0:12:37.160 we're gonna yeah, I I in the early days of 0:12:37.160 --> 0:12:39.200 the Internet, people say it can't be done. The Internet 0:12:39.280 --> 0:12:42.240 was never going to be a mainstream phenomenon. A decade ago, 0:12:42.280 --> 0:12:45.560 when we started working on rise arrest and said innovation 0:12:45.600 --> 0:12:47.000 is gonna happen all of the country, not just in 0:12:47.080 --> 0:12:49.559 Silicon Valley. Most people thought it was kind of laughable. 0:12:49.600 --> 0:12:52.559 They didn't think that was really likely to happen. No, 0:12:53.120 --> 0:12:55.800 thankfully some of those views are are changing. But I 0:12:55.800 --> 0:12:58.680 think picking those challenges that that really, I think, have 0:12:58.760 --> 0:13:02.080 a positive impact on in the world and even though 0:13:02.120 --> 0:13:05.520 they are hard and in most cases, maybe in all cases, 0:13:05.559 --> 0:13:09.560 take ten, twenty years to achieve your your your goal. Uh. 0:13:09.720 --> 0:13:12.600 Those are the you know, the battles I like fighting, 0:13:13.160 --> 0:13:17.680 really quite quite intriguing. So let's talk about revolution. What 0:13:17.920 --> 0:13:20.600 is it? How did it begin? When did it start? Well, 0:13:20.640 --> 0:13:23.280 began a few years after I stepped down as CEO 0:13:23.240 --> 0:13:25.320 of a well and let's try. I figure out what 0:13:25.360 --> 0:13:27.839 my next act was going to be and rather than 0:13:27.920 --> 0:13:32.280 start a company again, I thought I'd start an investment 0:13:32.320 --> 0:13:36.400 firm that could back the next generation of of of entrepreneurs. 0:13:37.080 --> 0:13:40.760 Initially was started in two thousand five and it was 0:13:40.800 --> 0:13:44.240 called revolution, but it was just my capital. UH, at 0:13:44.240 --> 0:13:46.440 littlewer a decade ago we decided to open up to 0:13:46.480 --> 0:13:50.400 outside capital. So we have institutional investors across the platform. 0:13:50.480 --> 0:13:53.559 Now we have, you know, kind of three basic groups. 0:13:54.000 --> 0:13:56.920 One is revolution growth, which is our later stage, you 0:13:56.960 --> 0:14:01.199 know fund. We also have revolution ventures and more recently, 0:14:01.240 --> 0:14:03.320 about five years ago, we launched the rise of the 0:14:03.320 --> 0:14:05.840 rest seed funds. So now we're able to back entrepreneurs 0:14:05.880 --> 0:14:08.320 at every stage of their journey, whether it's really just 0:14:08.400 --> 0:14:10.360 a really early stage where they just need to see 0:14:10.440 --> 0:14:13.440 the seed funding, whether it's the next phase where they're 0:14:13.440 --> 0:14:15.920 starting to grow in the adventure funding, or if they're 0:14:16.240 --> 0:14:19.400 really starting to scale Um and need you need growth funding. 0:14:19.400 --> 0:14:21.400 That's really what revolutions about. And the other two things 0:14:21.400 --> 0:14:24.120 that make I think, interesting versus maybe other firms in 0:14:24.120 --> 0:14:26.800 the country, and we talked about a little bit earlier, 0:14:26.840 --> 0:14:29.360 but because we're based in Washington D C and because 0:14:29.400 --> 0:14:32.920 we've been working on policy issues for nearly four decades 0:14:33.240 --> 0:14:35.880 and we think the next wave of innovation policy is 0:14:35.880 --> 0:14:38.800 going to be front and center and in Revolution we're 0:14:38.800 --> 0:14:40.840 trying to position as the leading investment firm in the 0:14:40.840 --> 0:14:44.080 country that's focused on on on policy. And the second 0:14:44.160 --> 0:14:47.760 is I think we've been unusually focused on place. With 0:14:47.800 --> 0:14:49.920 the rise of the rest. We've now made two investments 0:14:49.960 --> 0:14:52.320 a hundred different cities. We've done these bus tours all 0:14:52.360 --> 0:14:54.840 across the country and even the reason I wrote the 0:14:54.840 --> 0:14:57.600 book on rise the rest is there's remarkable things happening 0:14:57.640 --> 0:15:00.560 all of their country, remarkable new companies being built, cities 0:15:00.600 --> 0:15:04.120 being renewed and revitalized, but most people aren't paying attention 0:15:04.160 --> 0:15:06.240 to it and I really wanted to tell those stories. 0:15:06.240 --> 0:15:09.520 And that's been a growing focus of revolution to as 0:15:09.600 --> 0:15:13.000 investment firm with outside investors at the seed, venture and 0:15:13.080 --> 0:15:17.080 growth stage, but with particular focus on policy and on place. 0:15:17.800 --> 0:15:19.640 And we're going to talk about place in a moment. 0:15:19.680 --> 0:15:23.000 But just to put this in a little context, revolution 0:15:23.040 --> 0:15:27.080 has already had some big successes. Sweet Greens obviously a 0:15:27.120 --> 0:15:31.200 big hit. Draft kings another one. Uh. Do those date 0:15:31.240 --> 0:15:33.480 back to when it was a family office or was 0:15:33.560 --> 0:15:37.280 that seed or venture type investment? Those? Those are both 0:15:37.320 --> 0:15:40.320 growth stage investments. So we were the first, first institutional 0:15:40.360 --> 0:15:43.520 investors in in uh, in sweet green, probably seven or 0:15:43.520 --> 0:15:46.800 eight years ago. UH, draft kings probably five or six 0:15:46.880 --> 0:15:49.760 years ago. Also clear that you know the biometric company 0:15:50.200 --> 0:15:55.720 a lot of the recently or recently company in Chicago 0:15:55.760 --> 0:15:58.560 called tempests as used, has got a big data precision 0:15:58.560 --> 0:16:01.320 medicine to help people who are diagnosed with cancer. So 0:16:01.400 --> 0:16:04.120 your DC base, which has to give you a slightly 0:16:04.160 --> 0:16:07.600 different perspective from the folks in Silicon Valley. Before we 0:16:07.600 --> 0:16:11.400 start talking about the rest of the country, what advantages 0:16:11.480 --> 0:16:14.600 do you find being at the heart of the policy 0:16:14.640 --> 0:16:17.880 making apparatus in the United States? Well, our office, the 0:16:17.880 --> 0:16:19.720 Revolution Office, is a few blocks from the White House, 0:16:19.760 --> 0:16:23.000 not too far from the Capitol, and just having lived 0:16:23.000 --> 0:16:24.800 there now for a few decades and having a number 0:16:24.800 --> 0:16:27.280 of people involved in the firm who have been steeped 0:16:27.280 --> 0:16:30.280 in in policy work for government. One of the CO 0:16:30.400 --> 0:16:33.720 founders of Revolution Fifteen years ago as Ron Klain, who 0:16:33.760 --> 0:16:37.440 is now President Biden's chief of staff, John Delaney, joined us. 0:16:37.440 --> 0:16:40.080 Some more recently started two companies went public. That was 0:16:40.120 --> 0:16:42.400 in Congress and ran for president. So we've got some 0:16:42.440 --> 0:16:46.000 people that really understand policy and we've got a location 0:16:46.000 --> 0:16:48.920 that I think is interesting and, as I said, if 0:16:48.920 --> 0:16:51.160 you think about the way I look at the Internet 0:16:51.320 --> 0:16:54.280 is the first wave was getting over online. We talked 0:16:54.280 --> 0:16:56.880 about those early days of a well, went from an 0:16:56.920 --> 0:16:59.520 idea that nobody cared about this suddenly everybody needed to 0:16:59.520 --> 0:17:01.680 be connect and you had to, you know, build those 0:17:01.680 --> 0:17:04.600 on ramps, build all those servers out, build all that infrastructure, 0:17:04.640 --> 0:17:07.480 and that was the first twenty years or so. The 0:17:07.600 --> 0:17:10.280 last twenty years has really been the second wave, which 0:17:10.280 --> 0:17:12.440 has been about building on top of the Internet, building 0:17:12.480 --> 0:17:16.000 APPs and software and services on top of the Internet, facebook, Google, 0:17:16.560 --> 0:17:19.479 things like that. The third wave is when the Internet 0:17:19.520 --> 0:17:21.800 meets the real world and that means you're starting to 0:17:21.840 --> 0:17:24.399 deal with some of the most important aspects of our lives. 0:17:24.400 --> 0:17:26.160 How do we stay healthy? What do we eat? How 0:17:26.160 --> 0:17:28.400 do we learn? How do we invest? How do we 0:17:28.520 --> 0:17:31.560 move around in terms of transportation? And what's interesting about 0:17:31.600 --> 0:17:34.800 those businesses, uh, is they tend to be regulated, you know, 0:17:34.960 --> 0:17:37.600 because they're so important there there tends to be public 0:17:37.640 --> 0:17:42.120 policy focus on on those. So innovators need to understand 0:17:42.200 --> 0:17:45.120 it's a little bit different as in this third wave, uh, 0:17:45.160 --> 0:17:48.320 and that understanding the policy framework, both in terms of 0:17:48.320 --> 0:17:51.120 the go to market strategy and also what policies could 0:17:51.160 --> 0:17:53.960 get changed. The opened up, open up new opportunities. That 0:17:54.320 --> 0:17:57.680 when some of the health care legislation passed more in 0:17:57.720 --> 0:18:00.720 a decade ago, that opened up things like to care advantage. 0:18:00.720 --> 0:18:04.040 That created an enormous investment opportunities. More recently, just the summer, 0:18:04.119 --> 0:18:07.320 there was legislation, including around climates it's going to create 0:18:07.400 --> 0:18:10.600 enormous opportunities to invest in that, in that in that sector. 0:18:10.680 --> 0:18:12.960 We saw one of our companies, draft kings, that we 0:18:13.000 --> 0:18:15.720 talked about earlier. There was a change actually Supreme Court 0:18:15.800 --> 0:18:18.960 ruling that allowed states to make different rules around, you know, 0:18:19.119 --> 0:18:22.320 essentially betting. That opened up a big opportunity and actually 0:18:22.359 --> 0:18:26.159 accelerated the growth of draftings. So policy can can you know, 0:18:26.240 --> 0:18:28.919 kind of be a strategic advantage for companies in this 0:18:29.040 --> 0:18:31.919 third wave and being in Washington, D C and having 0:18:31.960 --> 0:18:34.800 that kind of connectivity, I think that perspective in a 0:18:34.800 --> 0:18:37.760 lot of relationships with people on both sides of the aisle, 0:18:38.160 --> 0:18:42.040 I think gives revolution a unique platform and we're able 0:18:42.080 --> 0:18:44.920 to help the entrepreneurs Rey back in ways that other 0:18:45.000 --> 0:18:48.320 venture capitalists typically can. So you grow up in Hawaii, 0:18:48.640 --> 0:18:53.000 you end up relocating to D c. What led to 0:18:53.040 --> 0:18:58.280 the idea? Hey, there's a massive amount of innovation and 0:18:58.440 --> 0:19:02.959 Energy and entrepreneurship in between New York and Silicon Valley. 0:19:03.119 --> 0:19:05.280 How did you find your way to saying let's figure 0:19:05.280 --> 0:19:08.000 out a way to reach these folks, get them funded 0:19:08.160 --> 0:19:10.680 and give them a boost to launch their businesses? Well, 0:19:10.680 --> 0:19:12.679 the triggering event. I was asked a little over a 0:19:12.720 --> 0:19:16.280 decade ago to share a White House initiative called Startup 0:19:16.280 --> 0:19:20.160 America Partnership. That was, you know, launched with President Obama, 0:19:20.560 --> 0:19:22.600 and that got me traveling around the country because it 0:19:22.640 --> 0:19:25.679 was really trying to promote regional entrepreneurship. This is at 0:19:25.720 --> 0:19:27.560 the time when unemployment was high and there was a 0:19:27.560 --> 0:19:29.560 recognition that one way to deal with that was to 0:19:29.640 --> 0:19:31.640 create new jobs and one way to create new jobs 0:19:31.840 --> 0:19:34.719 to create new companies, uh, and so that led to 0:19:34.800 --> 0:19:38.240 a focus on regional entrepreneurship and as I traveled more 0:19:38.240 --> 0:19:41.440 and looked at more of the data, I found it surprising, 0:19:41.480 --> 0:19:45.080 almost shocking, uh, that even though these new companies are 0:19:45.080 --> 0:19:48.280 the major job Creator, uh, most of the venture capital 0:19:48.320 --> 0:19:50.800 to back these new companies is just in a few places. 0:19:51.040 --> 0:19:54.119 You know, of venture capital over the last decade has 0:19:54.119 --> 0:19:58.159 gone to just three states, California, New York and Massachusetts. 0:19:58.160 --> 0:20:01.280 So it even worse than three eight. It's really three cities, 0:20:01.480 --> 0:20:04.680 San Francisco, New York and Bulls. Yeah, within those states 0:20:04.720 --> 0:20:07.760 it's overwhelmingly three cities, as you said. So as a result, 0:20:08.280 --> 0:20:09.919 a lot of people in different parts of the country 0:20:09.920 --> 0:20:11.479 it felt like they have to be there. If they 0:20:11.520 --> 0:20:13.920 if they're not there, they really don't have a shot 0:20:13.960 --> 0:20:16.560 at raising the capital they need to start our scale 0:20:16.560 --> 0:20:18.880 a company. That's led to sort of a brain drain 0:20:18.960 --> 0:20:20.920 and lots of parts of the country people kind of 0:20:21.000 --> 0:20:23.160