Steve Case’s visit to Charleston on Wednesday coincided with National Small Business Week.
The early Internet-era pioneer couldn’t have timed his arrival any better to drive home his well-honed message about the importance of nurturing innovative new companies. Especially in parts of the country that the so-called smart money often overlooks. Places like Charleston.
“It is on the map,” the AOL co-founder-turned-business-financier said. “It’s a city that people talk about and want to visit. But the challenge, I think, is to continue to make it a competitive city in terms of startups and investment capital.”
Case rolled into town as part of his third “Rise of the Rest” capitalist roadshow, a barnstorming bus tour that last week made stops in five Southeast cities in as many days, from Richmond to New Orleans.
One of his key goals Wednesday, he said, was to get “more investors to pay attention to what’s happening in Charleston.” His celebrity status in the investment doesn’t hurt.
“We try to be a catalyst by putting a little bit of kerosene on the fire so it burns a little brighter and it accelerates a little bit faster to tell the story a little more broadly,” he said.
Case, an evangelist of entrepreneurship who puts his money where his mouth is through his venture capital fund Revolution, makes a persuasive pitch.
“I tell people the best way to have a strong community 25 years from now is to invest in the startups of today, some of which will be the big companies of tomorrow,” Case said. “Every large company starts as a startup. Fortune 500 companies don’t just pop up out of nowhere. They started with three or four people in a garage somewhere.”
Case is a case in point.
AOL, then known as America Online, was hatched 30 years ago in Tysons Corner, Va., just outside the nation’s capital. Case, now 56, was in marketing.
“We had like 15 people, and we had this idea: that the Internet could change the world,” he said.
At the time, only about 3 percent of the U.S. population had access to what some were calling the information superhighway.
“For like a decade my parents did not know what I was doing, and were pretty sure it wasn’t going to end well. ... We kept at it, and, finally, 20 years later, it was one of the most valuable companies in the world. We had 25 million people online. It took decades of nurturing that,” said Case, who merged AOL with Time Warner Inc. in a 2001 deal valued at $160 billion that ended up as a dot-com disaster.
Case, whose net worth is estimated by Forbes at $1.35 billion, doesn’t think AOL would have made it as far as it did had it been created in the nation’s next-big-thing-obsessed technology mecca, rather than the Washington, D.C., suburbs.
“That idea would have been hard to do in Silicon Valley,” he said. “We had some struggles. It was not an easy path. It was not overnight success. There were rounds of layoffs and other things. My guess is if that company had been in Palo Alto, it would have hard to sustain. People would have given up.”
Which helps explain why he launched Rise of the Rest tour — to shine a light on innovative companies in places like Charleston. It’s been enlightening, Case said.
“We see what happens to cities when they have the entrepreneurial momentum, and also, frankly, what happens when they lose it,” he said.
His cautionary tale is Detroit, a stop on his first bus tour. In its heyday, Motown was the equivalent of Silicon Valley, Case said.
“Detroit was the hottest entrepreneurial city, I think, in the world, because at the time the hottest technology was the automobile, and Detroit was the epicenter of that whole revolution. ... Then it kind of lost its entrepreneurial mojo. Competition globally accelerated, and people got a little cocky and complacent. As result, a lot of that business moved to other places,” he said.
Residents and businesses began to flee the city, triggering a downward spiral. The largest municipal bankruptcy filing in U.S. history followed in 2013.
“Now, it’s fighting its way back ... but it shows you it’s not just about ‘a’ company,” he said. “It’s about how you build that overall economy.”
Case also is disturbed that so much venture capital — a staggering 75 percent — flows to businesses in California, New York and Massachusetts.
“The other 47 states, including South Carolina, fight over the other 25 percent. It’s crazy,” he said. “While there are great entrepreneurs in those three states, there also are great entrepreneurs in the other 47. There are great entrepreneurs in Charleston. ... And frankly, it’s not just important to individual communities ... it’s also important to the country. We have to have capital more evenly dispersed in an innovation economy if we’re going remain the most innovative entrepreneurial nation in the world. That’s why we do this.”
Case, who said he has no interest in running for public office, is quick to add that his one-man road show isn’t nearly enough to turn the tide. Investors, executives and decision-makers at the state and local level must be more actively engaged to create momentum, whether by investing in, advising or throwing some business at their neighborhood startups, he said.
“It’s like the seed corn of the future economy, and therefore the future of your community,” Case said. “So it’s sort of a civic duty in my opinion to support these startups, and not just from a pure investment kind of mind-set.”
Contact John McDermott at 937-5572.