The DealBook newsletter delves into a single topic or theme every weekend, providing reporting and analysis that offers a better understanding of an important issue in business. If you don’t already receive the daily newsletter, sign up here.
Steve Case has long said tech ecosystems can — and should — expand beyond major coastal cities.
In 2014, Mr. Case, a co-founder of AOL, started an initiative at his venture firm, Revolution, that focuses on investment outside tech hubs like Silicon Valley and New York. He has pushed for more venture capital to flow inland.
But the landscapes of both the United States and business are shifting rapidly. The pandemic has given white-collar workers in states like California, New York and Massachusetts, which have received 75 percent of venture capital dollars in the past decade, an opportunity to work from wherever they want. Politicians in states like Florida and Texas — where many companies with left-leaning social stances set up shop over the last few years — have introduced abortion bans. Florida revoked Disney World’s designation as a special tax district after the company opposed a law prohibiting discussion about sexual orientation and gender identity in schools.
As companies try to lure workers back to their desks, in a tumultuous political environment, during a year that has looked particularly grim for tech stocks, can entrepreneurial ecosystems outside major tech hubs thrive?
Ahead of the release of his new book, “The Rise of the Rest,” which will be available on Tuesday, DealBook spoke with Mr. Case about how politics are having an impact on tech hubs, how the current tech slump compares with the ’90s tech bust and more.
The interview has been edited and condensed for clarity.
What do you think of the argument that building a handful of big tech ecosystems is much more efficient and productive — creating more innovation — than 10 or 20 scattered ones?
I wouldn’t agree with that. Diversification is a healthy thing. Particularly in this next wave of innovation, when you’re disrupting health care and food and agriculture and sectors like that, some of the domain expertise that exists in other parts of the country, and partnerships that could be formed in other parts of the country, are helpful.
I would agree that there’s some value in clustering. And there is value, even in a world where more people are working remotely, to be able to come together. Our view is that instead of just having it be a few cities, particularly San Francisco, New York or Boston, let’s have it be a few dozen cities and create a robust ecosystem there around particular sectors that play to the advantage of particular cities.
During the pandemic, we saw major companies open facilities in different cities, often moving from blue to red states. But now we’ve seen legislation in some of the red states that appears to be at odds with the policies of those companies. What do you expect happens to these companies and people who relocated to places like Texas and Florida?
While it’s too early to tell how much of an impact state laws and sentiment around certain social issues will have on people’s decisions to move — or not move — to certain places, I do think there is not enough attention being paid to the topic. The pandemic led many to rethink where and how they want to live and work, and accelerated a dispersion of talent to places that have long fought to be viewed as emerging tech hubs. Communities now recognize they are competing to attract people to move to their cities.
People will consider many factors in making these relocation decisions, but for some, the decisions states make on key social issues may prove to be pivotal. The way local and state leaders — on both sides of the political spectrum — approach hot-button issues and the way local media cover, and influencers discuss, these sensitive issues could send powerful signals to those thinking of moving to, or investing in, rising start-up cities.
We have many things that divide us in this country, and supporting entrepreneurs is one of the few things that has historically united us. I hope we can avoid an entrepreneurial culture war, so we can continue to advance our efforts to create jobs and hope for the people and places that have been left behind.
I believe we’ve hit peak Silicon Valley. It’s not that the area won’t continue to attract innovators, but it won’t have the lead it has held for the last decade.
Have you heard concerns from companies that people are reluctant to move to a state because of its politics?
I’ve heard some concern, particularly when the Supreme Court decision [overturning Roe vs. Wade] was made. But I have not heard of any specific people who were going to move and decided not to, or had moved and decided to leave.
Comments