I’ve had the privilege of working with manufacturing and industrial companies throughout my career, including dozens in the American Midwest. But despite the strength, resilience, and innovative spirit that define so many of these companies—they get very little attention.
This is something Steve Case, Chairman and CEO of Revolution—and the co-founder and former CEO and chairman of America Online (AOL)—knows well. And it was my great pleasure to trade ideas with him last month.
Steve’s new book, Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream, chronicles his decade of speaking with—and backing—entrepreneurs and businesses throughout the country that are fueling the next wave of American prosperity and competitiveness. But that—like the companies I’ve studied—aren’t getting nearly the attention they deserve.
I’m pleased to share with you my fascinating conversation with Steve, which explored his career journey, Revolution—his venture capital fund that invests in startups outside Silicon Valley—and the reason his eight Rise of the Rest bus tours and seed fund have made him more optimistic than ever about entrepreneurship, innovation, and the future of America.
Steve, thank you for joining me today. You began your career in 1985 with the founding of AOL. And you've had such an impressive track record since. What is it about entrepreneurship that keeps you going today, nearly 40 years later?
What got me going in 1985 was the idea of the internet. I became fascinated with what it could be. When we started AOL in 1985, only 3 percent of people were online and only for an average of one hour a week. We really believed that someday it would be ubiquitous. And we were right.
More recently, and it's the basis of my book, I'm focused on backing the next generation of entrepreneurs. But rather than invest where everybody else does—Silicon Valley, New York City or Boston—it’s important to me that we back entrepreneurs based all over the country. We've done bus tours to visit these cities, meet these entrepreneurs, and understand what's happening there. And it's remarkable what these entrepreneurs are building. They are creating jobs and revitalizing these cities.
We already had a growth and ventures fund at my firm Revolution, and to accelerate our efforts, we launched a seed fund called the Rise of Rest, and so far, we’ve invested in 200 companies in more than 100 different cities. I believe many of these companies in different parts of the country will be the Fortune 500 companies of tomorrow. So, that’s what keeps me going today.
Let’s take a minute to talk about your new book—I loved it. Can you tell me a little bit more about what inspired you to write it?
I've had a front row seat to what's been bubbling in terms of innovation and entrepreneurship throughout the country. When I talked to people about it, I would say, "Here's what's going on in Denver, or Detroit, or Chattanooga, or Indianapolis," and people had no clue. Seeing it firsthand and realizing it's a story that hasn't been told, I just had to write this book.
But it was actually hard to write. I talked about 43 cities in the book. I could have talked about 100. I talked about 40 entrepreneurs. I could’ve talked about hundreds of them. There are remarkable entrepreneurs building world-changing companies, and all have stories to tell.
The phrasing of "the rest" in the title of your book seems to suggest that there's an entire universe beyond the places that we traditionally think about in terms of innovation and investment. Part of the book also talks about the idea that place matters. Can you say more about this idea of how place matters?
I came to this effort a little over a decade ago when I was asked to co-chair The Startup America partnership, a White House initiative, and the National Advisory Council on Innovation and Entrepreneurship (NACIE) during the Obama Administration. NACIE came up with a strategic plan around regional entrepreneurship. I should note that the research compiled to inform those recommendations was done with the help of McKinsey. So, I'm quite grateful for that.
There were two findings that really opened my eyes and set me on this path. Number one, the role that new companies played in job creation was huge and not well-understood. And, number two, 75 percent of venture capital spending was going to just three states: California, New York, and Massachusetts. That propelled the Rise of the Rest road trips and then the Rise of the Rest Seed Fund.
To answer your question on place, there is value in being connected. There is value in clustering. It just doesn't have to cluster around three cities, in three states. Entrepreneurs outside Silicon Valley can be successful and can generate great investment returns while also having a positive impact on their communities, particularly in areas like job creation. So that's really been the news for me over the past decade: If you want more jobs, you need more new companies. If you want more new companies, you need to back more entrepreneurs in more places, not just the same people in the same places.
As you know, we just published a book called The Titanium Economy which talks about the future of industrial technology and particularly the role of medium-sized companies. As you’ve done your Rise of the Rest tours, do you have a perspective around resurgence of American manufacturing?
Absolutely. I totally agree with your thesis. I was just in Normal, Illinois, where Rivian, a truck maker, is building a new plant and utilizing robotic technology to create their products. In just ten years, they've gone from an idea to having 5,000 employees and a pretty significant valuation. They are also an example of how technology can create pretty compelling products, in this case trucks, and jobs. The general perception is that certain technologies—AI, robotics, things like that—are going be job destroyers. In some cases, that will happen. But they also can be job enablers. And Rivian is a good example of this.
People need to understand that innovation is not only possible but happening everywhere in the country. We just haven't matched it with the investment capital, the risk capital, the venture capital that early-stage companies need to start and scale.
You’ve mentioned the word "job creation" many times today. While reading the book, one gets the sense that an economy with more "rise of the rest"-type companies is inherently going to be more inclusive. Are there any observations there that you’d like to share?
First, when people think of job creation, it’s not just the jobs created within the companies, although, of course, those are important. But there’s also, the jobs around the companies—jobs in the communities. And data shows that for every job created in a startup, there are 4.7 other jobs created in the community.
The second thought is about diversity. We just talked about “place” and about 75 percent of venture capital going to three states, but location isn’t the only barrier. Women are 50 percent of our population; but female founders get less than 10 percent of venture capital. Latinos are nearly 20 percent of our population; the Latino founders get less than 2 percent of venture capital. Black Americans are 13 percent of our population; and Black founders get less than 1 percent of venture capital.
So, if you just look at the data, right now, it does matter where you live, and it does matter what you look like. When we talk about leveling the playing field, it has to be both around place, backing more entrepreneurs in more cities, and also people, backing diverse entrepreneurs. The good news is many of the cities we visit tend to be more diverse. Today, more than 40 percent of the 200 companies we've backed now have female founders or founders of color, which is still not what it should be but it's a lot better than you see in the venture capital industry more broadly.
Steve, it's been a fascinating conversation thus far. But I have to ask, when you look at the arc of the travel from the rise of the internet to the Rise of the Rest, what comes next? What's likely to be the title of your next book whenever it comes?
I think the next decade is really going to be about accelerating our efforts—not just what we're doing at Revolution, but hopefully creating a real movement—so it does level the playing field, it does help more entrepreneurs in more places, and it does create more jobs and opportunity for people.
And maybe, even at least in a small way, I hope it helps to unite a very divided country. We’re focused on trying to close an opportunity gap by making sure everybody in every part of this country can participate in the future and feel excited about it as opposed to left out and left behind.
We have a lot of work to do. And we'll put our heads down and get back on the bus to champion entrepreneurs, and champion this next chapter of America. Hopefully our work will build upon the last 250 years and America will continue to be the most innovative entrepreneurial nation in the world. But we’ll do it in a more inclusive way, bringing along more people and more places.
Steve Case’s book, Rise of the Rest: How Entrepreneurs in Surprising Places are Building the New American Dream, is available now and chronicles eight bus tours to 40+ cities where he and his team spoke with the entrepreneurs shaping America and our next wave of innovation and prosperity.
Asutosh Padhi is a senior partner and the managing partner for McKinsey in North America, leading the firm across the United States, Canada, and Mexico and serving as part of McKinsey’s 15-person global leadership team. He is also a member of McKinsey’s Shareholders Council, the firm’s equivalent to a board of directors.
He is also the co-author of The Titanium Economy, a new book that explores the industrial tech sector and the bright future that it can help create. It’s available now.
Mentions of organizations or individuals are not endorsements by McKinsey & Company.