Silicon District: Steve Case Is Betting $450 Million on a D.C. Start-Up Hub


Ted Leonsis, the owner of the Washington Capitals (and Wizards) joined Case to create a fund for local start-ups. Their half-a-billion-dollar bet is an important lesson in building a culture of innovation.

615 washington dc.jpg

Five days after Steve Case, the founder of America Online, stepped down as chairman of AOL Time Warner, the most infamous merger in modern business history, he got to work starting a venture capital firm called Revolution. In the last eight years, Revolution has been an engine of the sharing economy, launching companies like Zipcar and LivingSocial that represent innovative solutions to old problems, like What's the best way to get around town? and Where can I find a good deal? We wrote about Revolution's story here.

Today, Case and and his business partner Ted Leonsis announced that they have amassed a $450 million investment "war chest" to invest in Washington entrepreneurs and turn D.C. into a start-up hub. The Washington Post reports:

Outside the business of the U.S. government, efforts to stir up a swashbuckling business ethos that spawns cutting-edge technology enterprises have come in fits and starts.

At $450 million, which is a significant amount for a first-time effort, the fund signals that the two entrepreneurs are putting their money -- around $75 million between them -- to work in an attempt to reignite the same culture that gave rise to local innovators such as MCI and AOL.

In our interview, Case said something that stuck with me. Most of the jobs created in the U.S. don't come from big business, he said, and they don't come from small business. They come from new businesses that catch fire and scale up. "If it's the economy, stupid, then it's the jobs stupid," he said. "And if it's the jobs, stupid, then it's the entrepreneurs, stupid."

Case is putting his money where his mouth is. His bid to turn Washington, D.C., into the Silicon Valley of the East (that is not named Boston) shows you the lengths one must go to put a city on the map with America's top innovation clusters.

Boston has something that Case and Leonsis can't build on their own. That's research universities up the wazoo. At Harvard, Boston U., B.C. MIT, Tufts and so on, thousands of students work with professors supported by lavish, federally funded institutions, where they research, conduct experiments, write papers, and make incremental advancements in science and other field that they can spin off into patents, products, and even small companies.

A similar culture of inter-generational creativity thrives in Silicon Valley, where entrepreneurs who filed out of Stanford and Xerox PARC built awesome products and used their fortune to invest in the next batch of awesomeness. Like so many parts of city culture, a reputation for innovation is a virtuous cycle. Having lots of entrepreneurs attracts lots of entrepreneurs who want to be around, well, lots of entrepreneurs. But first, you have to get on the map. And D.C. isn't, really.

Case and Leonsis don't have the advantage of living in a city with a rich recent history of consumer start-ups. In the three decades since AOL launched, the northern Virginia tech corridor has thrived predominantly as a business-to-government tech corridor. That's fine. It's the kind of place you go to do lucrative tech consulting for HUD. It might be the kind of place you stay if, like LivingSocial, you happen to start your company in Chinatown. But it's not the kind of place you take your hot new mobile app or biotech idea. Not yet.

If D.C. becomes that city, it needs help. Case and Leonsis' $450 million fund is just that. It's a downpayment on a more exciting district.

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

The Time JFK Called the Air Force to Complain About a 'Silly Bastard'

51 years ago, President John F. Kennedy made a very angry phone call.

Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus


Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.


What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.


Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.


Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.


Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.


The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air



More in Business

Just In