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Steve Case emerged from the most maligned merger in American business history to become one of the nation's leading proponents of entrepreneurship. Backing innovation across a wide range of industries through his Revolution investment company and working tirelessly on Capitol Hill to push legislation in support of small business, this online pioneer is bringing big ideas to life--through drive, leadership and a personal touch.
Steve Case likes to talk about the transcendent joy of entrepreneurship more than just about anyone you've ever met. And he has a lot to say.
On a warm and sunny afternoon in midtown Manhattan, Case is sitting inside the Casablanca Hotel, expounding on a topic that seems to have dazzled him since he was a schoolboy in Hawaii. This morning, at Nasdaq headquarters, the guy who stewarded America Online through its halcyon days held forth on technology and business trends before an audience of 150 tech entrepreneurs at the prestigious annual gathering known as F.ounders."The only way to continue to have a robust economy is to out-innovate other nations." --Steve Case
When Case talks about entrepreneurship, he likes to come back to the same word: disrupt. In fact, the investment firm Case founded seven years ago, Revolution, defines its mission in part as building"disruptive" companies. That's because in Case's view, the best entrepreneur is one who throws custom to the wind, upsetting the established order of a given industry.
"It's usually a sign of kind of a big idea," he says."You're not just trying to do something marginally, incrementally better. You're doing something that is a fundamental paradigm shift, that will have exponential impact. That means it's harder to do, but ultimately, if it's successful, the impact it has is far greater."
As someone who played a leading role in turning the internet into a transformative force for good and profit, Case has a solid history as a disrupter. And he's come a long way since the dark days of the disastrous merger of AOL and Time Warner, a debacle for which Case, rightly or wrongly, received much of the blame. (The widely criticized deal, in which AOL bought Time Warner for a reported $160 billion-plus, remains the largest merger in the history of American business.) Case resigned as chairman of the board of the combined company in 2003, and two years later he started his investment firm, reaching into his personal fortune to dole out a total of roughly $200 million to early-stage companies--among them Zipcar and LivingSocial, pioneers in their respective industries of car-sharing and daily deals--that he felt had tapped into the big ideas he so covets.
Then, late last year, with former AOL colleagues Ted Leonsis and Donn Davis, Case founded a $450 million venture capital fund known as Revolution Growth. The fund is used for larger investments--typically $25 million to $50 million--in what Case calls"later-stage growth companies."
Meanwhile, over the past two years, Case has enmeshed himself in public policy issues, advising the White House and lawmakers from both parties on matters related to entrepreneurship. Given his credentials, when Case talks--particularly about the role of the entrepreneur in the resuscitation of the American economy--people tend to listen."Because he's a brand," says a longtime friend, Sen. Mark Warner of Virginia,"congressmen will take his call."Disrupter-in-Chief: Steve Case at Revolution's Washington, D.C., headquarters.Photo © Getty Images
On Capitol Hill, Case has advocated for legislation that would help startup entrepreneurs raise more capital and make it easier for foreign-born entrepreneurs to start companies in the U.S. One bill, the Jumpstart Our Business Startups (JOBS) Act, enables entrepreneurs to raise capital by issuing equity online, a newly permitted form of crowdfunding. In April, when President Obama signed the bill into law in a Rose Garden ceremony, Case stood nearby. A month later, when Warner and three other senators introduced a follow-up bill known as Startup Act 2.0 at a Capitol Hill press conference, Case was there, too.
In the first dozen years of the new millennium, in fact, Case, now 54, has emerged as perhaps the most high-profile champion of the American entrepreneur, devoted not only to the success of his own robust portfolio--Forbes has estimated his net worth at $1.7 billion--but to a cause no less noble than the enduring vitality of the American economy. Call him the Disrupter-in-Chief.
"We've had a great run as a nation," Case says."We are, as we sit here, the world's most entrepreneurial nation. But at the same time we shouldn't get cocky or complacent. We need to step up our game, because our global competitors are stepping up their game."
Revolution is Case's answer to Silicon Valley. Case is determined to make it the leading VC firm focused on consumer technology and "disruptive business models" on the East Coast, where the competition is less fierce than around Silicon Valley. As is his custom, Case has surrounded himself with the smartest people he could find. His wife, Jean, the CEO of the family foundation, says it's a habit she recognized back at AOL, where they met."He was never hesitant to have people maybe smarter than he thinks he is around him," she says."He's just figured out how to have a big vision and how to execute it."
At Revolution, which is based in Washington, D.C., Case brought on such heavy hitters as Tige Savage and Philippe Bourguignon. Savage, a former Time Warner vice president, is managing director of Revolution Ventures, which handles the firm's investments in early-stage companies. Bourguignon, a former CEO of Euro Disney, serves a dual role as vice chairman of Revolution Places, which invests in luxury real estate, and CEO of Denver-based Exclusive Resorts, which operates a stable of luxury homes around the globe and is 80 percent owned by Revolution.
Bourguignon had already accepted a position as a business school dean in Paris, where he has a home, when Case asked him to join Revolution. At Case's request, Bourguignon flew to Jamaica, where Case and other Revolution executives were meeting with Island Records founder Chris Blackwell to discuss possible expansion opportunities for Exclusive Resorts. A few days later, Bourguignon flew back to Paris, talked with his wife and changed career plans."The attraction," he says,"was fundamentally and very candidly to work with Steve."
Bourguignon says he especially enjoys that his new employer operates with minimal bureaucracy."At Revolution," he says,"we discuss with Steve, with the other partners; we analyze, we argue, we weigh pros and cons, a decision is made and off you go--no more meetings."
The experience has also allowed Bourguignon to see the human side of Case, who was widely criticized for seeming distant, even aloof, during his abbreviated tenure as chairman of AOL-Time Warner. Eighteen months after starting at Revolution, Bourguignon had to return to Paris to cope with a death in his family. Case told him to take as much time as he needed; his job would be waiting for him when he was ready to return. Case knew something about family crises: His older brother, Dan, an investment banker, was diagnosed with brain cancer a year after the merger with Time Warner was announced. Dan died in June 2002.
Steve and Jean Case, Bourguignon says,"showed they really had compassion. They work with people they like and have respect for and become close to them, so if they are in any sort of pain or trouble or sadness, they're very present, and that's very appreciated."
As investors, Case and his partners don't look for businesses that are interested only in Revolution's cash. Case wants to be an active player, particularly in long-term planning and strategy."They really want us to help them build their company," he says."If all they need is capital, or they just want to flip, we're not the right guys."
Last fall Revolution invested in a New York City company, GramercyOne, that Case describes as"OpenTable for everything except restaurants." Josh McCarter, CEO of GramercyOne, says Case and his partners have indeed been involved,"but in a supportive way." The Revolution Ventures team has advised the company on finding top talent, and McCarter says he's had the team interview all applicants for high-level executive positions. He's been happily surprised to discover how accessible Case has been as a business partner.
McCarter has even received a few weekend e-mails from Case.
"They're just very upstanding guys," McCarter says."When they say they're going to do something, they follow through on it. Their responsiveness, compared to other venture firms we met with, was just night and day. When we had questions and concerns, we'd get a response the same day or the next day at worst. They not only make introductions, their credibility and connections allowed us to capture capital and move very quickly to sew up the investment."
Revolution has invested in more than two dozen companies thus far. Revolution Growth, which has backed another three, expects to invest in roughly a dozen; its first was FedBid, which helps companies and government agencies buy goods online through a reverse-auction marketplace. Case says in five years the company could be saving the federal government more than $1 billion annually."I like ... what I characterize as more built-to-last ideas rather than built-to-flip ideas."
"Because of our involvement, they clearly have been able to attract a stronger team, a stronger board, establish stronger relationships with both buyers and sellers and expand more rapidly into new sectors," Case says."The capital was part of it, but of the top five things they were looking for, capital was probably number five."
So what attracts Case to invest in a business?"I like big ideas," he says."I don't like little ideas. The ones that captivate me are people that really are thinking big, thinking longer-term--what I characterize as more built-to-last ideas rather than built-to-flip ideas.
"If they really have a long-term view," he adds,"if they really are trying to swing for the fences and change the world, and really want some help in thinking through what to do and figuring out how to scale their company, establishing strategic partnerships or creating more visibility, that makes it more interesting and more satisfying."
Revolution Growth has given Case a higher-stakes role as a business mentor. It's a role he seems to relish, perhaps because he knows he has a lot of wisdom to impart. He says he has learned many lessons from his own mistakes, mainly having to do with staffing."I think that's the mistake most people usually make," he says."In terms of not really getting the right people, either delegating too much or delegating too little, or, if you need to make a change, not making the change soon enough.
"Even the merger with Time Warner--which obviously was frustrating--I stepped down as CEO as part of it because I believed it was the right deal to do," he adds."The reason the combined company wasn't able to execute on that idea mostly had to do with people--different philosophies, coming from different perspectives. So ultimately it really broke down over people issues."
Case says he's also learned important lessons about the fault lines that divide the business landscape. As he describes it, the business world consists of attackers and defenders."And entrepreneurs are the attackers," he says."They change the status quo, disrupt the status quo, usher in a new, better way. Large companies--Fortune 500 companies--are really defenders, trying to protect what they have.
"After America Online and Time Warner merged," he continues,"it shifted us from being an attacker to a defender. In an economy that's challenged, the incumbents, the big companies … are playing defense, not offense, which creates opportunities for entrepreneurs who are willing to play offense as long as they have the capital and the expertise to be able to successfully pursue that disruptive strategy. So I think there's going to be enormous entrepreneurial innovation over the next decade."
Case has lived in or near Washington for close to 30 years now, and his advocacy for legislative issues pertaining to the internet dates to the 1980s and his work at AOL, so he's accustomed to finding himself in the company of elected officeholders. But not until July 2010, when U.S. Commerce Secretary Gary Locke asked him to co-chair the National Advisory Council on Innovation and Entrepreneurship, did Case take on a Capitol Hill leadership role on matters most dear to entrepreneurs.
As an entrepreneurial cheerleader, Case stays relentlessly on-message. He has appeared on a panel at the Brookings Institution, spoken to the Economic Club of Washington, authored op-eds in The Washington Post and chatted with Charlie Rose--all in an effort to boost the collective fate of entrepreneurs across the nation. He likes to cite a recent Kauffman Foundation report that says in the past three decades, startup companies have generated about 40 million jobs, accounting for all of America's net job growth during that period.
"Policy around entrepreneurship is critical," Case says."Our country is only going to be as stable as our economy, and our economy is only going to be propelled by innovation and entrepreneurship. To the extent I have the ability to have some impact there, some voice there, as long as that can continue to be the case, I'm happy to spend some amount of time on that."
One assignment led to another. Six months after Locke called, the White House tapped Case to lead the Startup America Partnership, part of the Obama administration's effort to promote entrepreneurship (the initiative receives funding from the Case Foundation and the Kauffman Foundation). At about the same time, Obama created the President's Council on Jobs and Competitiveness, known as the Jobs Council, and asked Case to chair the subcommittee on entrepreneurship and high-growth companies. As it turns out, Case and Obama attended the same elite high school--the Punahou School in Honolulu--although Case has only fleeting memories of the future president, a freshman when Case was a senior.
American history is rife with presidential panels that meet for six or nine or 12 months only to produce a 3-inch-thick report that then gathers dust on the bookshelves of Washington bureaucrats. But Case took to his task with characteristic doggedness. The council generated a series of recommendations for improving the economic climate for entrepreneurs. Those recommendations led Case to initiate discussions with Republicans and Democrats in the House and Senate. And those discussions led, ultimately, to the JOBS Act.
Sen. Warner of Virginia is blunt when asked to assess Case's role in the success of the JOBS Act."I don't think it would have passed without Steve's efforts," he says.
The bill's passage proved to be that most rare achievement in Washington these days: a bipartisan proposal aimed at improving the economy. In his zeal to get pro-entrepreneur legislation passed, Case has insisted on working across party lines. ("You can ask," he says, when the subject of his own political affiliation is broached,"but I'm not going to tell you.") Among Democrats, Case has worked closely with Warner and Delaware Sen. Chris Coons. Among Republicans, Case has teamed with Sens. Jerry Moran of Kansas and Marco Rubio of Florida, as well as Majority Leader Eric Cantor of Virginia, who has known Case for several years.
Cantor says Case was instrumental in bridging Washington's notorious partisan divide to get the JOBS Act through both houses of Congress."It was Steve who said, 'I'll help you with the White House. I'll get you support there.' That was pivotal in pushing it through the House in a huge bipartisan vote," Cantor says."I appreciate somebody who can cut through a lot of the red tape or all the excuses for not producing results and say, 'We need to be results-oriented.' That's the way he operates."
As Case sees it, gathering support for the JOBS Act was really a matter of appealing to the best interests of lawmakers from both parties.
"Right now both Republicans and Democrats are really concerned about the economy and the unemployment rate and economic growth, and the data suggests that all the growth really happens from entrepreneurial companies," Case says."Seems like we've identified a set of things that could happen to help entrepreneurial companies and drive growth. Seems like people, if they looked at that, would believe it's the right thing from a policy standpoint. But frankly, it would also be in their self-interest from a political standpoint. Because then when they run for reelection, they can say, 'Well, I did something for entrepreneurship to help create jobs and ensure our competitiveness.'"
In advocating for entrepreneurs, Case has shown he is not afraid to take part in the often messy process of legislative sausage-making. Lawmakers who have witnessed Case's lobbying efforts on Capitol Hill say they're surprised to see someone of his stature (to say nothing of his tax bracket) toil so relentlessly on bills that many believed would go nowhere, especially in an election year."I was told this by a lot of people I respect: 'Why are you spending time on this? Nothing is going to happen. I love your optimism, but you're crazy,'" Case says.
"I would give him great credit," Warner says of Case."Maybe he was naive, but to his credit … he actually thought you could get this stuff done."
Recalling the legislative thrust and parry in which he engaged while pushing for passage of the JOBS Act, Case invokes his first lesson in entrepreneurship--persistence--and a legislative calculus that he calls"the art of the possible." He remembers when AOL was in its infancy, when only 3 percent of Americans were online as much as one hour a week."There was no evidence that people actually wanted this stuff," Case says."So first we had to explain, 'Well, here's why we think people someday will want this stuff, and someday why it will be ubiquitous.' If you can't do that, you can't attract a team, you can't attract capital, you can't attract partners. On the policy side, it's not just believing the policy is important, but believing there is some possibility of something happening."
Case is not finished trying to make things happen in Washington. These days he's pushing for passage of Startup Act 2.0, which aspires to help American companies hire foreign-born workers with skills in science, technology, engineering and mathematics--the so-called STEM fields. The bill would create two new types of visas: one that would allow foreign students who earn graduate degrees from U.S. universities in STEM fields to remain in the country; the other to offer permanent residence to immigrants who start successful companies.
Case describes the bill as an attempt to help America win the global competition for high-skilled talent."Right now," he says,"over half the people who come to our universities to get Ph.D.s and master's degrees [in STEM fields] are from other nations. We give them this education, then we kick them out and essentially force them to create companies that compete against us. It's completely insane."
The bill, of course, treads on immigration policy, and for that reason it hasn't been embraced as quickly or as widely as the JOBS Act. Case does not pretend the bill is perfect, or that it solves all of America's prickly immigration issues, but he does believe it's a good idea.
"I'd much rather have challengers of the great American industries and enterprises be new American entrepreneurs, as opposed to others in other parts of the world," he says."But there's always going to be a mix. The only way to continue to have a robust economy is to out-innovate other nations, and the only way to out-innovate other nations is to have an entrepreneurial culture and the support structure around capital and talent and regulation that enables the United States to be in the lead. Other countries are stepping up their game. They've recognized that the secret sauce that's driven the American economy for the past century is entrepreneurship."
Case considers his foray into the tumult of Washington policy and politics as the third chapter of his career, following his work at AOL and Revolution. Although he studied political science at Williams College in Massachusetts, he never had much taste for political life. Still doesn't.
"Obviously, it's not my passion," Case says."But I think it's important for the nation. I personally think my best and highest use is being an entrepreneur and being a mentor to entrepreneurs. I think I have a reputation as someone who couldn't care less about the politics of talking points and negativity and more about finding the common ground that unites us as opposed to the wedge issues that divide us. So I think that bipartisan, almost nonpartisan, bent has been helpful."
So what does the future hold for Case? In 10, or 20, or 30 years, would he like to be doing what he's doing now? The very question elicits an expression that seems to call into question the sanity of his inquisitor."I like it," Case says of his chosen vocation, and he cites as a good model--at least on the investing side--the work of his friend Warren Buffett."I'd like to do it as long as I feel like I'm having an impact. It's what I do. It's how I'm wired.
"It's not like we've solved all our global problems and everything's perfect," he adds."There's work to be done. And entrepreneurship is being part of making the world a better place."
It's really not difficult to imagine Case at 80--or 85, or 90--as engaged as ever in the business of American business, still captivated by big ideas and brimming with his own. Still investing. Still mentoring. Still advocating. Still disrupting.
Sharing the Wealth
Revolution's various units have invested in a diverse range of businesses in such fields as healthy living, education, luxury travel and web analytics. Here are some of the companies that have benefited.
BenchPrep: Test-prep courses for web, smartphone and iPad.
BrainScope: Medical neurotechnology company developing instruments for care of traumatic brain injuries.
Cacique: Luxury resort community in Costa Rica.
Echo360: On-demand lectures and collaborative learning platform for universities.
ePals: Education technology and social learning networks for elementary and high-school children.
Everyday Health: Personalized online health information.
Exclusive Resorts: Members-only luxury travel club.
Extend Health: Online resource for finding healthcare coverage.
FedBid: Online marketplace targeted to businesses and government agencies.
Gaiam: Healthful lifestyle products.
GramercyOne: Cloud-based business management and marketing software.
Grove Farm: Hawaiian land development.
HelloWallet: Online financial advice and budgeting tools.
Koofers: Online network for sharing university study materials and professor/course reviews.
LivingSocial: Daily deals.
Loosecubes: Online office-sharing network.
Miraval: Luxury spa and resort in Tucson, Ariz. (pictured above)newBrandAnalytics: Social marketing analytics for the hospitality industry.
Personal: Online and mobile platform for securely storing private data that can be shared with personal network.
RunKeeper: App for tracking workouts.
SnagFilms: Distributor of independent films.
SparkPeople: Online resources for weight loss.
UberMedia: Developer of social media products and apps.
Vinfolio: Online wine marketplace.
Zipcar: Car-sharing network. (pictured at right)