Memphis emerging economy

Road Trip to Innovation — With a Stop in Memphis, Not Silicon Valley

The co-founder of America Online (AOL), now an investment firm CEO, just wrapped up his seventh Rise of the Rest Road Trip and shares his perspective on the promising entrepreneurial ecosystems between the two coasts.

Memphis emerging economy

He is the co-founder of AOL, but Steve Case has been blazing an innovative new trail since retiring as chairperson of AOL Time Warner 15 years ago. As CEO of Washington, D.C.–based investment firm Revolution LLC, that trail has taken him to nearly 40 cities, all outside the traditional hubs like Silicon Valley and New York City. This year’s Rise of the Rest Road Trip made five stops — Dallas; Memphis, Tennessee; Birmingham, Alabama; Chattanooga, Tennessee; and Louisville, Kentucky. Access met up with him in Memphis, home to FedEx, to hear more about his journey to connect with elected officials, innovation ecosystem leaders, investors and entrepreneurs — and invest $100,000 from the Rise of the Rest Seed Fund in a local start-up in each city.

It’s been four years since you ventured on your first Rise of the Rest Road Trip. What was your thinking then — and how has it evolved since?

Revolution LLC CEO Steve Case connects with local entrepreneurs
Revolution LLC CEO Steve Case connects with local entrepreneurs during his stop in Memphis.

At Revolution, we believe that some of the most compelling investment opportunities in the next decade will likely emerge from start-ups in cities all across the United States — not just in Silicon Valley, New York and Boston. Last year, 76 percent of venture capital went to just three states: New York, California and Massachusetts. This means that 47 states are vying for just a quarter of the pie. It’s because of this geographic concentration that my firm Revolution and I embarked on the first Rise of the Rest Road Trip four years ago. The road trip gives us an opportunity to witness firsthand the growth and talent in start-up ecosystems across the country while investing in local entrepreneurs in every city we visit. So far, we’ve traveled 10,000 miles on a bus to 38 cities — from Detroit to Dallas, Columbus to Chattanooga, and everywhere in between.

Late last year, we announced the $150 million Rise of the Rest Seed Fund backed by a group of iconic entrepreneurs, executives and investors including Jeff Bezos, Sheila Johnson, Michael Bloomberg, Adebayo Ogunlesi, Sara Blakely, Tory Burch, Roger Ferguson, Reid Hoffman and Sean Parker. Since then, we’ve invested in dozens of companies. Most recently, Soundways, a company that is helping musicians and songwriters get credit for their work, won our pitch competition — and a $100,000 investment — during the Rise of the Rest Road Trip stop in Memphis. The team at Soundways, led by Gebre Waddell, is delivering the next generation of audio solutions for the music industry and we look forward to seeing them grow.

Why was it important to stop in Memphis on the tour?

Today, Memphis is innovating in industries like logistics and music, and intentionally supporting and attracting entrepreneurs who reflect the diversity of the city.

Steve Case
CEO, Revolution LLC

The history of entrepreneurship runs deep in Memphis, from Sun Studios and Stax, to Holiday Inn, AutoZone and pioneering brands like FedEx. Today, Memphis is innovating in industries like logistics and music, and intentionally supporting and attracting entrepreneurs who reflect the diversity of the city.

Silicon Valley is clearly one of the most expensive places in the country and in the world. The lower cost of doing business is the benefit people seem to talk most about when discussing alternative tech markets. What do you see as some of the other benefits to these cities, including those on the Rise of the Rest Road Trip?

Over the last 10 years, we’ve seen demographic shifts and infrastructure growth that positions rising cities for success. Some of the most vital factors that contribute to that success are already at play in Memphis. These include access to accelerators and resources for entrepreneurs, a lower cost of living, and the presence of large Fortune 500 companies that support the ecosystem. I was especially impressed on this tour to see the work of ecosystem conveners like Epicenter in Memphis, which is connecting entrepreneurs to the resources they need to be successful while being a part of a strong statewide entrepreneurial network through Launch Tennessee.

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Do you think Amazon’s second headquarters plan will influence other Silicon Valley and West Coast companies to consider similar, albeit smaller-scale, options? What do you see as the benefit to such moves?

Tech companies have the opportunity to broaden their aperture by establishing headquarters outside of Silicon Valley in rising regions that have deep expertise in traditional industries such as manufacturing and logistics.

I recognize that a new Amazon HQ brings a large number of jobs to a city, but I also think it is critically important for policymakers, investors and ecosystem builders to focus on helping start and scale the next generation of high-growth companies in their own backyard. One of those start-ups could end up being the next Amazon.

On the flip side, many companies around the U.S. have set up tech offices in Silicon Valley. Do such moves hurt the opportunities for other markets to build tech talent?

I believe that we are starting to see the beginning of a boomerang of talent. Tech talent that lives and works on the coasts — whether for companies headquartered in the region or elsewhere — is starting to return to cities where they grew up or went to college. Because of the renaissance in many American cities, individuals now see opportunities to scale strong companies while enjoying lower overhead and cost of living. While many young people will still choose to pursue jobs in New York or Palo Alto, we are seeing the dawn of a new era where they don’t feel as if they have to.

Millennials are motivated by the worldview that profit and purpose are inextricably linked.

Steve Case
CEO, Revolution LLC

You connect with lots of Young Innovators on your road trips. Research by The Economist Intelligence Unit, sponsored by FedEx, indicates that 70 percent of Young Innovators say social responsibility matters more than it did five years ago, and two-thirds call it essential to the success of their business. Are you seeing the same trend?

Yes, millennials are motivated by the worldview that profit and purpose are inextricably linked. As a result, as employees, members of this generation actively select roles in part because of the impact of the company for which they work. And as customers, millennials want to make a positive impact with their purchases. Investors today are also far more committed to creating positive change with their investment decisions through impact investing, and we are seeing more young entrepreneurs launching social enterprises with the intention of generating both financial and social returns.

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