On a dreary Thursday afternoon in March, the halls of the Russell Senate Office Building in Washington, DC, swelled with people who spend their lives trying to salvage the economies of America’s forgotten towns. Hailing from across the country, they hurried past Majority Leader Mitch McConnell’s office in their sharp suits and jewel-toned dresses, each one carrying a different proposal for how to keep their cities and states afloat.
Together, they reflected America’s diversity: a mixture of millennials, Gen Xers, and baby boomers, men and women of different races and religions. So no, they were not members of the United States Senate.
They were startup founders, venture capitalists, and academics who had come to DC for the Rise of the Rest Summit, convened by AOL founder Steve Case and his investment firm to call attention to tech and innovation outside the coastal hubs where the industry remains largely cloistered. In a great marble-columned room, the Rest had gathered: people like Darcy Howe, a retiree who hosts dinner parties in her Kansas City, Missouri, home for early stage investors, and Jill Ford, a former angel investor from San Francisco who moved to Detroit to become the city’s head of innovation and entrepreneurship.
“It gives you a real view of how small businesses are in many ways fueling America,” Ford told the crowd. “They’re the source of inspiration for young people as they’re getting introduced to what is possible for them.”
The mood was light as the crowd snacked on soda and cookies and applauded each others hard work. But the very need for such an event underscored one of the country’s great 21st century divides: the deep economic imbalance between the tech industry in its enclaves and the rest of the American people.
For too long, Silicon Valley’s rainmakers have poured the vast majority of their billions into businesses in just three states: California, New York, and Massachusetts. They’ve created showy islands of wealth in those places, exacerbating economic tensions now roiling Washington between coastal elites and the rural poor. Ironically, because the industry has concentrated its wealth, talent, and votes in so few places, it has simultaneously undermined its own political clout.
Silicon Valley, in other words, has gerrymandered itself, helping to stir the ill will that empowers President Trump to bulldoze over many of the policies tech leaders care about, from climate protections to immigrant rights. The tech industry has become economically, politically, and culturally isolated from much of the rest of the US. As those entrepreneurs roaming the halls of the Senate hoped to make clear, it’s in tech leaders’ best interests—and the interest of the country—to start looking beyond the coastal metropolises they call home.
Rich Getting Richer
Ross Baird may be one of the only venture capitalists besides Peter Thiel who saw President Trumps win coming, and for good reason. Baird’s firm, Village Capital, has invested about 60 percent of its capital in states that Trump won. (Only about 15 percent of venture capital overall goes into those states.) As he traveled the country meeting entrepreneurs, Baird witnessed firsthand the frustration business owners and employees felt about the growing economic divide.
“The way we allocate our resources in the investor world right now makes all other issues harder to solve,” says Baird, whose firm co-sponsors the Rise of the Rest effort with Case’s VC firm Revolution. “Over time, the best-off cities get better and better, and the worse-off lose more people, more businesses, more talent.”
But the tech industry, confident in its belief it was creating a better future for the world, never paid much attention to that disparity. As a result, it systematically weakened its hand in Washington, Case argues. In the quid pro quo world of US politics, he says the tech industry has tended to hold government at a distance until it needs something. “People start coming to Washington, but only to deal with issues that are, frankly, selfish,” Case says.
Little wonder then that representatives from other parts of the country would be reluctant to, say, fight for more worker visas to fill the engineering talent gap in US tech when their own constituents are underemployed. Or that they’d hesitate to fight for green tech when coal has served as the lifeblood of their districts.
“If tech isn’t really in their districts other than people using iPhones and companies having computers, its harder for a member of Congress, even a member thats sympathetic, to put them at the front of the line,” says Rob Atkinson, founder of the Information Technology and Innovation Foundation.
If the tech industry wants more leverage at the federal level, Atkinson says, it needs to do a better job explaining to the rest of the country how it too can benefit from the economic upheaval tech is spurring. And then the tech industry needs to put some money behind ensuring those opportunities exist.
To some extent, that’s started to happen. Facebook founder Mark Zuckerberg has been stoking speculation about a political run after pledging to visit 30 states in 2017. San Francisco-based Salesforce recently opened an office in Indianapolis, where it plans to hire 800 people. Those gainfully employed workers will earn their paychecks not far from where Carrier will keeping making air conditioners in the US, saving 1,100 jobs. But thanks to President Trump, most American have probably only heard of Carrier.
“We’ve got to do a better job telling each other’s stories,” says Case. That’s one reason why Revolution recently hired JD Vance, author of the bestseller Hillbilly Elegy. After the election, Vance’s book became a kind of guidebook to the rural America that helped vote Trump into office. Vance, himself both a product of a hardscrabble rural upbringing and a principal investor at Peter Thiel’s firm, will help Revolution find and support new companies that further the Rise of the Rest agenda.
Still, reorienting the tech industry’s entire worldview will take more than good storytelling. There is, after all, a reason tech has huddled around Silicon Valley, with its esteemed educational institutions like Stanford churning out a steady stream of capable coders and a venture capital industry that knows how to foster billion-dollar companies. While in theory the internet should make for a mobile tech workforce, the highly skilled workers tech companies need in order to thrive remain concentrated in big cities. Even Baird acknowledges that many of the Rise of the Rest companies are unlikely to deliver the sort of overnight exponential returns that the Valley’s investors are accustomed to getting. Often these companies have found their place in niche industries that just aren’t built to have a billion users. Investors in such companies often need to take a long-term view.
‘Over time, the best-off cities get better and better, and the worse-off lose more people.’
That’s where he says Washington may be able to help. As senator Mark Warner (D-Virgina) noted when he spoke at the summit, the average length of time investors hold a public stock before selling it has dropped precipitously over the last few decades. That makes tech companies more risk averse and less likely to, say, open an office in the middle of Kentucky. “They’re only concerned about that next quarter,” he said, noting that Washington could craft legislation to encourage investors to hold onto their shares longer, which would give companies more room to diversify their investments and let them take root in places where growth might come more slowly but yield more widespread benefits to the economy.
The good news is, especially after the presidential election, politicians are looking for ways to create jobs for people living beyond the coasts. And some in Silicon Valley are waking up to the realization that by expanding beyond their own ultra-pricey borders, they’re not just helping out middle America. They’re helping their own case in Washington.