Podcast Summary: Consumer VC - Holiday Highlights: Steve Case (AOL.com, Revolution, Rise of the Rest)

Host: Mike Gelb
Guest: Steve Case (Co-founder of AOL, founder of Revolution & Rise of the Rest)
Date: December 27, 2022
Episode Theme:
A special holiday highlight episode focused on Steve Case’s journey as a legendary entrepreneur and investor, his experience building AOL outside Silicon Valley, and his mission to ignite startup ecosystems across America through “Rise of the Rest.” The episode draws from stories in Steve’s recent book and dives into the future of place, policy, and entrepreneurship beyond coastal tech hubs.

Main Theme & Purpose

The episode explores why geography and public policy are the next frontiers for innovation and venture capital. Steve Case shares his learnings about building globally significant companies in non-traditional tech centers, details what makes a thriving entrepreneurial city, and expresses a cautiously optimistic vision for America’s role in global innovation.

Key Discussion Points & Insights

1. Why Washington, D.C., Not Silicon Valley?

[01:30–03:14]

• Steve Case describes moving to D.C. by accident when joining a failed startup, then founding AOL in 1985 with local colleagues.
• The D.C. area was foundational for AOL because the internet (ARPANET) originated there, alongside significant government funding and early policy work essential to commercialization.
• Case highlights the initial lack of venture capital and startup culture in D.C., making AOL’s growth challenging but ultimately contributing to DC’s ecosystem.

“Even though I moved here a little bit by accident … it was a little harder to start and scale a company here … it has developed nicely since, as an example of what we call Rise of the Rest cities.”
— Steve Case, [02:56]

2. The Rising Importance of Place and Policy in Venture Capital

[03:14–05:07]

• Steve notes that the biggest trends for the next decade in VC are “place” and “policy”.
  • Place: Success is spreading to cities outside the usual tech hubs.
  • Policy: Major industries (healthcare, food, finance, etc.) are regulated, requiring policy navigation for disruption.
• Recent legislation (e.g., CHIPS and Science Act, Inflation Reduction Act) demonstrates the growing importance of policy for startup ecosystems.

“Venture investors will need to expand their periphery to include different places around the country … policy is going to matter more.”
— Steve Case, [03:45]

3. Shifting Economic Development – From Attraction to Cultivation

[05:07–06:36]

• Past economic development focused on luring large companies; today, supporting local startups is gaining traction.
• Case sees more politicians understanding that “homegrown” companies could become tomorrow’s Fortune 500 firms.

“The better strategy is to create a strong, thriving startup community so more new companies can get started … some of those could very well be the big companies of tomorrow.”
— Steve Case, [06:07]

4. What Makes a Thriving Startup City?

[06:36–09:10]

• Attributes for choosing “Rise of the Rest” cities:
  • Some momentum but not yet an “arrived” tech hub.
  • Presence of “tent pole” (anchor) companies: e.g., Exact Target in Indianapolis led to a local ecosystem.
  • Cities benefiting from successful companies seeding new founders and investment.

“That’s where you see this sort of network effect kicking in … their success begets more success for others.”
— Steve Case, [08:26]

5. Building and Sustaining Momentum in Ecosystems

[09:10–11:51]

• Rise of the Rest invests significant time before and after visits: six months of planning, followed by years of engagement.
• Bringing national attention catalyzes local stakeholders; sustained effort by local actors keeps momentum.
• “Momentum begets momentum”; ongoing community building and capital attract more talent and attention.

“It’s not about just showing up, it’s the work that happens before we’re there and the work that happens after we’re there.”
— Steve Case, [10:05]

6. The Power—and Challenge—of Collaboration & Storytelling

[12:00–13:14]

• Most overlooked factor: collaboration across silos.
• Cities often lack cohesive storytelling; even locals are unaware of startup growth in their own hometowns.
• The Rise of the Rest book itself is opening eyes—even for diaspora who now return.

“Something that’s less obvious is how critical collaboration is. And ... they’re generally not doing that good a job of telling their story.”
— Steve Case, [12:03]

7. Scaling Outside Silicon Valley—the Remote Work Shift

[13:14–15:16]

• Old wisdom: scale-ups had to move to the Valley for talent.
• Now, remote work and distributed teams let companies scale in place, tapping wider talent pools.
• Many companies are regionally distributed, not entirely remote, supporting local clusters.

“We’re seeing more companies able to scale in these rise cities, not feeling like they need to move, and being able to tap into much more of a global talent pool.”
— Steve Case, [14:12]

8. America’s Innovation Edge—And Risks

[15:16–17:35]

• America is still the global innovation leader, but has lost ground—from over 90% to <50% of global venture capital.
• Global competition (notably China) and stricter immigration policy challenge U.S. magnetism for talent.
• Cautious optimism: “Eyes wide open” about threats; success stories drive hope and continued leadership.

“One of the great things about this country over the past couple hundred years is we’ve been this magnet for people and ideas ... we need to make sure we continue to maintain that new magnet position.”
— Steve Case, [16:32]

9. The Virtuous Cycle: Visible Success Inspires More

[17:35–19:08]

• Breakout companies (e.g., Mailchimp in Atlanta) inspire belief and new ventures locally.
• Historical analogies: breaking the four-minute mile, climbing Everest—once done, others follow.
• Local exits seed new networks—repeat entrepreneurship and investment.

“When people see that happening, then they suddenly believe it’s possible ... as we start seeing more of these companies that really do break out ... it leads other people to believe that they too have a shot, whether they be entrepreneurs or investors.”
— Steve Case, [18:08]

10. Advice to Bay Area- or NYC-Focused VCs

[19:08–21:50]

• Local investing is efficient, but limiting in today’s more distributed landscape.
• Many future greats will emerge outside the coasts, especially around top research universities (e.g., Michigan, Ohio State, Georgia Tech).
• History shows innovation is not tied to one geography—Silicon Valley’s dominance is a recent phenomenon.

“If you have a narrow aperture, you likely are going to miss out on some of the great opportunities in this next chapter.”
— Steve Case, [20:16]

11. Lessons from Concentration: Silicon Valley and Detroit

[21:50–23:08]

• America’s auto industry concentrated in Detroit—a cautionary tale.
• Silicon Valley will remain strong, but diversification is wise, as local issues (costs, retention, policy) make other regions attractive.

“Like many investment strategies, diversification is helpful … diversifying beyond Silicon Valley likely will be helpful if not essential for most venture capitalists in this next 10 or 20 years.”
— Steve Case, [22:54]

12. Investment Approach: Generalist & Collaborative

[23:08–25:40]

• Revolution has three strategies—growth, ventures, and seed (Rise of the Rest).
• Later-stage funds more thematic (e.g., sports tech, proptech); ROTR is sector-agnostic and focused on place.
• Co-invests with local firms, creating a distributed but interconnected network—a Silicon Valley-like density, spread across the U.S.

“How do you build a more interconnected network of investors, of entrepreneurs, of community builders, of mayors, of university presidents. So that’s really been the focus of Rise of the Rest.”
— Steve Case, [24:45]

Notable Quotes & Memorable Moments

• On why place matters:

  “The mega trends in the venture capital world in the next decade are around place and around policy. Place, I think, will matter more.”
  — Steve Case, [03:15]

• On catalytic cities:

  “Sometimes we get push back … why won’t you come to Austin? The answer was because Austin's doing pretty well and trying to identify the next Austin.”
  — Steve Case, [07:14]

• On optimism for America:

  “Anybody reading this book … it is an optimistic story. And I do believe America can and should continue to lead.”
  — Steve Case, [16:20]

• On Silicon Valley’s limitations:

  “Putting all your eggs in that basket … diversification is helpful and diversifying beyond Silicon Valley likely will be helpful if not essential for most venture capitalists in this next 10 or 20 years.”
  — Steve Case, [22:54]

Timeline of Key Segments

• 01:30 – Origins of AOL in Washington, D.C.
• 03:14 – The importance of place and policy in the next wave of VC
• 05:07 – Shifting from luring big companies to cultivating startups
• 06:36 – Attributes of rising startup cities and “Rise of the Rest”
• 09:10 – Catalyzing and sustaining local momentum
• 12:00 – Hidden challenges: collaboration and storytelling
• 13:14 – Scaling outside SV & impact of remote work
• 15:16 – U.S. innovation: global position and risks
• 17:35 – Success begets success: the local virtuous cycle
• 19:08 – Why VCs should look beyond their backyard
• 21:50 – Historical patterns: Detroit and Silicon Valley
• 23:08 – Steve’s investment approach and network effects

Tone and Language

Throughout, Steve Case is thoughtful, optimistic, and frank—acknowledging challenges but doubling down on a positive vision for distributed innovation in America. He’s inclusive, using real-world stories to encourage action from entrepreneurs, policymakers, and investors both inside and outside tech’s coastal hubs.

For more:

• Read Steve Case’s book: The Rise of the Rest
• Visit theconsumervc.com
• Follow Mike Gelb on Twitter: @mikegelb