On February 16, I visited Washington, DC, where I attended an HBS Club of DC lunch on the Case Foundation and Startup America.
Michael Smith, leader of the Social Innovation team at the Case Foundation, introduced the Foundation as a non-profit started in 1997 by Steve Case (AOL co-founder) and his wife, Jean Case. Its mission, to invest in people and ideas that can change the world, is supported by a venture philanthropy model that is funding a dozen “big ideas” in a focused way. Steve Case is also CEO of Revolution, an fund that seeks to invest in the same kind of game-changing companies as the Case Foundation.
Michael noted that the Case Foundation’s goal of finding new solutions to old problems mirrors the original conception of AOL as a civic engagement experiment in personal connectivity, beyond just a profit-making venture. Although they focus on initiatives that leverage technology, they engage in a wide spectrum of cross-sector collaborations with for-profit, government, and non-profit institutions.
One of those partnerships is with Startup America, who was also featured at the lunch. Startup America describes itself as a “startup for startups” that provides new companies with the resources they need to succeed. They do that by aggregating America’s startups, providing them with pro bono services, and promoting regional ecosystem development. They’ve developed over 50 partnerships, and are now launching a series of Connection Programs to introduce start-ups to some of America’s largest companies. Despite their success, Startup America’s goal is to continue for three years, and then fold their operations and let the infrastructure they’ve created exist independently.
The following are my rough notes (with permission, but without review by the speakers) from the event:
Michael Smith, introducing the Case Foundation. Michael leads the Social Innovation team, which works with programs and grants.
• We prefer social innovation over grant-making; we’re looking for new solutions to old problems.
• We’ve set up teams in a cross-functional way so that marketers, developers, etc. are all working together.
• We’re not issue – specific. Our goal is to give people the tools to solve the problems they care about.
• We initially focused on digital divide, but have moved to a venture philanthropy model. We now have a dozen big ideas that we’re supporting in a focused way. As we’ve evolved, we’ve focused on more on initiatives that leverage technology.
• Steve and Jean Case saw AOL as a civic engagement experiment, beyond just a profit-making venture. Initially, the Cases thought that they’d leave their CEO hats off at the Case Foundation, and just let nonprofit leaders take the lead. They’ve now seen the value in using their business experience more thoroughly.
• Revolution and the Foundation have the same mission: investing in people & ideas that can change the world. For example, ZipCar (a Revolution investment) could have been supported through either vehicle.
• We also do a lot of cross-sector collaborations: bringing in for-profit, government, nonprofits, etc. Startup America is an example. Another example is our work on the US-Palestinian Partnership – couldn’t have done this ourselves.
• We are also doing work on civic engagement through “Billion and Change”, which Jean launched initially when she was in the Bush Administration. It’s designed to provide capacity to nonprofits in the areas that they’re weakest. We’ve moved >$1b in resources from the corporate sector to nonprofits.
3 specific issues:
1. How we embrace technology for good. Case Foundation didn’t have a website until 2005, although founded 1997. The original intent was to be discrete and to avoid potential criticism (which happens whenever you try to create change). However, as we got involved in issues like clean drinking water, we realized we’re missing a big opportunity to rally communities around us. In 2007, launched “America’s Giving” challenge with Facebook and Parade magazine. We were seeing this movement towards causes on Facebook and elsewhere. We wanted to direct some of that energy. We wanted to educated nonprofits about the importance of social media. We put out some money in challenge grants. We told people: whoever recruits the most people for their goals, will get challenge grants. In 6 weeks, we saw >$1m in mostly $10 donations from 80,000 donors. Did this again in 08-09. Saw >$2m from >100,000 donors.
2. Our website. We created ‘learn & do” sections where people can learn how to use social media for social good. We invest in Code for America (“Peace Corps for Geeks”). Goal: tap into power of developers to solve community problems. One year program for developers to work at cities/nonprofits to address challenges. “Give to the Max” days. Have done a lot of investment on platforms for good (e.g., Network for Good, Global Giving, Mission Fish (behind ebay’s GivingWorks). These sites have led to >$1b in donations from tapping into people/citizens.
3. Promoting innovation. We obviously care about new solutions to old problems. Steve & Jean are the board; it’s their money. We do a lot of work sharing everything that we’ve learned.
What can you do? Follow us and join the conversation. We’re always pushing out great resources/tools. We look for leadership, collaboration, and innovation. Look for organizations willing to collaborate. Look for innovation & technology. Connect with our partners, e.g., Derek Holt.
David Hall, HBS 03, discussing Revolution
• The focus is at Revolution is building disruptive change. ZipCar is a great example—each car takes 8 cars off the roads. When Hertz started doing hourly rentals, it was a sign we were impacting the market.
• We’re also long-time investors in LivingSocial. It started as a group of guys from Revolution Health, trying to get people to catalog books/CDs/records from their personal records. That led us to buy a company called ‘Buy Your Friend a Drink’. Some people in Chicago were starting a company that rhymes with “coupon” at the time. We saw there was a clear link between offline and online actions.
• Exclusive Resorts is another example of a disruptive business. The vacation model hasn’t changed for decades. We said, there has to be a better way. It’s the largest destination club, with luxury homes in 40 different destinations around the world. We have a new product, PorticoClub.com, which is the same product at a lower price point.
Derek Holt of Startup America
• We’re one year old as of last Tuesday. It was a “Ready-Shoot-Aim” launch. We run this like a business; we view ourselves as a startup for startups.
• Our origins were some studies from McKinsey to Kauffman . From 1970 to 2009, nearly all new net job creation (44m jobs) came from young companies (not small, and not large, but young).
• Our customer is ultimately the startup. We focus on everything that can help them grow. It took a few months for us to realize jobs were a symptom—they weren’t something that we could directly create. The real goal is growth; no one else hires.
• So, we zoomed in on how to help companies grow:
1. Aggregate America’s startups. Provide free pro bono services (law, accounting, software, AmEx, Cooley, Pillsbury, Google). We have offers to support up to 100K startups, which is our publicy stated goal. There are 1.4m-1.6m companies in our target market at any one time. We have 55 partnerships, with more coming, and have made over $1.2b in aggregate commitments.
2. Regional ecosystem development. We’re not just focused on NY/Boston/Silicon Valley. We’ve launched 17 different startup states. CA and NY are in process; they’re bigger and more complex than other states.
• GE has a framed letter from Thomas Edison in their reception area, offering to do their ticker in a more efficient way. It reminded us even GE was a startup once.
• We view the world as: “Idea → startup → Rampup → Speedup.” The pyramid is fat at the top and shrinks as you go right, but for job creation, the pattern is the reverse.
Now that we have 50+ partners, we want to scale.
• We’re now launching a series of Connection Programs, which are valuable for startups to get introductions to America’s biggest companies. CEA, large Consumer Electronics Association, carved out a special section of their trade show for startups.
• We’ll do this at many more conferences.
• All of our regional leaders are serial entrepreneurs who are thinking about giving back. We’re there to help them. We hold quarterly regional summits.
How you can help:
1. If you’re at a large company, partner with us
2. The best affinity networks are alumni networks (besides religion). We want to explore working with them.
Q: When is a startup no longer a startup?
Early stage startups are <5 yrs old. 5-10 years is typically the rampup stage.
We view Startup America as a 3.5-year project, which aims to put itself out of business. Our goal is to catalyze the ecosystem.
Q: How do you determine the capacity-building needs of a startup?
1. We have a flat list organized into expertise, back office services, capital, etc.
2. We’re also layering over recommendations. Working with Startup Genome, and Entrepreneurial DNA (Myers-Briggs for Entrepreneurs).
Q: How do you work with VCs/Angels/Accelerators?
We’re partners with ACA, NVCA, Techstars, etc.
Q: How do you apply?
We just moved to s.co domain, and have partnered with their registrar. A lot of our materials is startup to startup.
Q: Who funds you?
The Kauffman Foundation, Case Foundation, and others. We have 6 major corporate sponsors. The White House also a partner. They have a phenomenal platform for getting the word out (laughter).
Q: What happens at year 3.5?
I’ll be looking for a job.
Q: What do you do with DC specifically?
Almost all our work in DC is thru Venture Philanthropy Partners. We’ve also funded City Year in DC.
Q: During DC entrepreneurship week, there’s been a lot of discussion around VC for social entrepreneurs. What is your model for working with social entrepreneurs?
In most cases, the endowment of foundations has no alignment with the foundation’s goal. We want to address that. Startup America deliberately did not have anything separate for women, minorities, social enterprise, etc. The view was that rising tide lifts all boats.
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