Steve Case has been getting notice for his annual bus tour, “Rise of the Rest,” in which he barnstorms middle America investing in digital-tech companies. CBS 60 Minutes recently featured the $150-million initiative created by the America Online co-founder and billionaire venture capitalist based in Washington, D.C.
But while they appreciate the attention and the capital, out in the heartland communities that Case and his entourage visit, more CEOs, politicians and economic-development officials who actually live there are saying: We can take it from here, Steve.
And that’s exactly what Case himself likes to see. “Each city is different, and at different stages of development,” Case tells Chief Executive, “but the common thread is that these are cities on the rise because of the work of entrepreneurs and enlightened leadership on the government side. The economic-development playbook for the last half-century focused on getting big companies to open an office or a factory; but the better bet is to back little companies. It’s a more cost-effective and sustainable approach to economic development and job creation.”
Case certainly has put his money where his mouth is. Since 2014, he and his team from Revolution, his investment outfit, have visited more than 40 cities and logged more than 10,000 miles throughout flyover country, highlighting, encouraging and priming local tech enterprises. The last stop was Florida and Puerto Rico, early this year.
He’s joined by J.D. Vance, a venture capitalist who came to fame through his book about rising through the disadvantages of growing up in Appalachia, Hillbilly Elegy and now is managing partner of Revolution’s Rise of the Rest seed fund. The fund has invested in more than 100 companies in 60-some cities.
“Case is trying to seed things,” says Dennis Cuneo, an economic-development consultant based in Reno, Nevada. “There’s a lot of talent in flyover country, and Silicon Valley is getting so expensive. People see stories about how, unless you’re a high-income person, you can’t even buy a house any more in the bay area. We’ll see more of that – and more economic-development strategies by other cities to tie into that, and also to play up their own universities.”
Rise of the Rest has even inspired knockoffs such as a Comeback Cities Tour launched by U.S. Representative Tim Ryan, an Ohio Democrat who now is running for president. He led a heartland tour for coastal venture capitalists and politicians last year. Ryan and others in the region make a big point of the fact that about 75 percent of all venture capital in America is invested in three states – New York, California and Massachusetts – while the Midwest receives only a paltry four percent.
Many mid-American cities recently have gotten a leg up on participation in the digital era nabbing facilities such as server farms, research labs, sales offices and other outposts sited by digital giants including Google, Apple, Facebook and Microsoft.
But there’s growing recognition in America’s heartland that economic development begins at home and can and should be bootstrapped from within as well as catalyzed by largesse from the coasts. Such efforts are growing, riding the shoulders of what regional leaders see as some of their uncommon or even unique advantages in the digital derby.
Chattanooga, Tennessee, for example, stole a march on most other American cities a decade ago by installing the nation’s fastest internet, which immediately began attracting interest – and investments – to the city from tech companies.
“It put us on the national radar,” says Charles Wood, a local development chief. “When you do something that forward-thinking, it causes people to take notice.”
Atlanta has emerged as a center for financial-technology digital startups in part because it’s already a money center involved in 70 percent of U.S. financial transactions, according to Pat Wilson, Georgia’s chief of economic development.
Omaha has become a leader in obtaining cloud-server farms in part because the U.S. Strategic Command, with its huge demand for digital bandwidth and redundancy, is located at Offutt Air Force Base near the city – and just announced plans to build a $1.3-billion new headquarters.
And Tampa’s digital-tech efforts benefit from companies’ being able to use nearby MacDill Air Force Base as a feeder of “thousands of highly qualified veterans, including many from their cyber-security group,” says Adam Elinoff, executive director of finance for Amgen, a California-based biotech giant that selected Tampa over 400 other cities for a back-office support center, with 600 jobs, that opened in 2017.