Ladies and gentlemen, please welcome Cleveland
Clinic CEO and President, Dr. Tom Mihaljevic. Good evening and welcome. Steve Case and J.D. Vance are on a quest. They're travelling America
to find new and overlooked opportunities for investments, and their target is America's
heartland. Steve Case is one of the
most successful entrepreneurs of the Internet
era. Steve was born in Hawaii, graduated from Williams College, we know a few graduates
from Williams College here in the audience, and went to work for Procter
and Gamble and Pizza Hut. In the early 1980s, he joined a small startup called
Control Video Corporation. And then between 1983 and 1991, Steve helped build a company
into a new kind of enterprise, the pioneering
internet platform, America Online or AOL. As the CEO of AOL, Steve led the second
largest corporate merger in history acquiring Time Warner
for only 166 billion dollars. Since then, Steve has doubled
down on investment, bringing venture capital
to unlikely places through his company, Revolution, and its seed fund called
The Rise of the Rest. And Steve is here as I mentioned
with J.D. Vance. J.D.’s a fellow Ohioan
who was born in Middletown. He joined the United
States Marines and served in Iraq. From there, he went to law school at Yale. And in 2016, he published a book which was
an enormous hit, Hillbilly Elegy, A Memoir of a Family
and Culture in Crisis. The New York Times called
it a compassionate, discerning, sociological analysis
of the white underclass. J.D. then went to work in venture
capital and moved back to his home state
to fund a nonprofit, Our Ohio Renewal. J.D. serves as a managing partner
of the Rise of the Rest Seed Fund. Steve and J.D. travel across the country
on their Rise of the Rest tour in a bright, red bus. They visit 5 cities in 5 days
to host local pitch competitions. Today, the Rise of the Rest Fund
has made over a 100 investments. The fund investors include
people like Jeff Bezos of Amazon and our own Cavs owner, Dan Gilbert. But here is a video
to tell you more. Steve Case just ended his Rise
with the Rest bus tour investing in young entrepreneurs
in 14 cities. A road trip across America
in search of innovation. Revolution will keep investing
the bulk of its capital outside of Silicon Valley and New York. Inventive startups
and passionate entrepreneurs making
their pitch. 100 thousand dollars. This is part of the Rise
of the Rest competition. The Rise of the Rest Seed Fund
emerged from the combined efforts of 2 visionaries, Steve Case and J.D. Vance, shining a spotlight on ideas, looking for untapped potential. Known for topping the New
York Times bestseller list for weeks, J.D. Vance described weathering
his difficult childhood in his memoir, Hillbilly Elegy. The book has been praised
nationally and will soon be a movie. The book's overarching theme
of overcoming obstacles resonates as Vance
eventually graduated from Ohio State University, Yale Law School, and became a venture capitalist. His story and experience
caught the eye of accomplished entrepreneur Steve Case. A pioneer in making the Internet
a part of everyday life, Steve Case co-founded
America Online in 1985. At its peak, nearly half of Internet users
in the United States used AOL. Welcome. You've got mail. With a driving force
supporting entrepreneurs, he helped launch the startup
America Partnership in 2011, which has accelerated
entrepreneurship throughout the nation. He shares his expertise
in the New York Times best seller, The Third Wave, an Entrepreneur's
Vision of the Future. With a passion for discovering
what's next, Steve Case is the CEO
and chairman of Revolution, a venture capital firm
primarily backing companies outside of major tech hubs. Bringing in J.D. Vance to manage the Rise
of the Rest Seed Fund, the duo took to the road
with more than 100 million dollars
in investment wealth in search of businesses
in need of a big break. What Steve Case being here
signals for us is that people outside
of Memphis are ready to invest in our companies, in us. With a keen business sense, a passion for risk, and an instinct for success, each of these men is a force
to be reckoned with. Together, they are even stronger, clearing the path of opportunity
and fueling the power of big ideas sure
to one day redefine our world. So let us welcome Steve Case
and J.D. Vance. [APPLAUSE] So welcome to Cleveland Clinic. Good to be here. Good to be back. Good to be with Toby, who’s been a friend for a long
period of time. Actually, watching that video, I realize that those photos
with President Obama with Air Force One actually
was coming to Cleveland to launch Startup America, a jumpstart here
in Cleveland so, some history. And J.D., your first visit to the clinic? First visit to the clinic. Yeah. Thank you. Thanks so much for having us
and thanks to Toby for making this a possibility. It's good to be here. So, I noted you had
an extensive tour of the campus right before
the start. Any impressions. It's very big. [LAUGHTER] You know, the thing that jumps out at
me is how you guys you're trying to integrate health
care with breakneck innovation in health sciences and life
sciences and actually turn what's going on here
into something that is commercializable
that ultimately can actually help people. And I think that's
really valuable. You know one of the things
that I love to see these community institutions
actually doing is building technologies that can make
people's lives better and being thoughtful about how
to integrate them into the broader economy. It's really, that second piece
is really important. It's impossible to help people
unless you've actually got things out there
that people can use. It’s just a beautiful, obviously well-designed
and inviting campus. When people are here, their first instinct is probably
not positive. They're probably here
because of some problem and having an environment
that makes them feel welcome and safe and comfortable
obviously is super important. So it's great to see. I was here on a tour
of the Cleveland Clinic probably 15 years ago or so. It's amazing what's happened
over the last 15 years. And then, including the new building
we toured that I guess opens in 2 or 3 weeks. Health Education Campus. Extraordinary. Everybody should feel great
about what's happening here and any folks
who are in the room who are like on the board
or donors, thank you. [LAUGHTER]. Well, Steve let me just ask
you for a perspective. You've seen the internet era
transform different businesses, transforming our entire society, every single aspect
of our lives. Can you comment briefly
on the opportunities that this type
of a transformation can play in health care, now being the leading
the largest industry, one of the more complex
industries in the world? What are your opinions
about that opportunity? I think a lot has happened
in the last couple of decades, as you said, with technology and how
the Internet and other technologies have become
more part of everyday life. And it's begun to have an impact
in terms of health care. But I think the next
20 years or so, the real transformation is going
to happen. Obviously Cleveland Clinic
is poised to lead the way. We even saw, as part of our tour, that there is a goal of I think
it’s 40 percent of patients would be dealt
with digitally 5 years from now vs. about 1 percent now. That's a more convenient
way for people to interact. It's a more cost effective
way for people to interact. And perhaps, even a way to generate
better outcomes using data and other things in a more
precise kind of way. So I think we've talked about
the 3 Waves of the Internet. The 1st Wave was getting
it moving online, literally getting America
and getting the world online. When we started, as the video says, 1985, what’s that? 34 years ago, only 3 percent of people
were online. And those 3 percent were online
an average of one hour a week. So, we've come a long way
in terms of being in something essentially
nobody knew about or cared about, to something that now
people can't live without. That kind of set the stage
for the 2nd Wave of the Internet. Once everybody was online, all the on ramps were built, the servers were there, the networks were there, really more about
software and apps, mostly on smartphones that have
dominated the last couple of decades, Facebook and Google
and so forth. But I really think the 3rd
Wave is going to be the transformation
in health care, the transformation
with smart cities, the transformation in areas
like education and food and agriculture, arguably the most important
aspects of our lives, that it did change somewhat
in the 1st wave, changed a little bit
more in the 2nd wave, but are gonna change a lot
more in the 3rd Wave, but it's going to require, as we were talking
about earlier, it's going to require
leading into the future, trying to establish a different
kind of culture around collaboration, a different culture
around partnerships, and from our standpoint, it’s also going to require
backing these crazy entrepreneurs everywhere
that have the ideas that could, in fact, lead us to that future. Right now, there's too much focus
in backing entrepreneurs in a place like Silicon Valley, not enough focus
on backing entrepreneurs in places like Cleveland. So what has your experience been
so far in Ohio and medical ventures, if any? J.D., did you have a background
in the medical field to some extent, is that right? We're talking briefly about it, that you had some interaction
with our field. Well, I wouldn't say that I've
had a background in medical field, but I did stay at a Holiday
Inn Express last night [LAUGHTER.] I have invested in some
biotech companies and so that forces
you to become as much of an expert as is possible
without the requisite training. But I really care about
health care innovation for the obvious reasons
that people should care about it, you can live longer, you can cure really
terrible diseases. That's just a good thing. But I also think about
it from a slightly broader perspective and when
we think about technology and the thing
that I really agree with Steve's 3rd Wave thesis
is that there is a way in which, if you say technology today, people think
software applications. And if you said technology
I think 50 years ago, if you read books about
what technology was, they were thinking flying cars. They were thinking
curing cancer. They were thinking doing
things across the entire field of sort of human
endeavor and human life. And I think it's a little
bit weird that we don't talk as much about
advancement in those things that aren't just related
to software. And again, what I really like about
this place, what I really like about
similar places, I know you guys are competitive
with the Mayo Clinic a little bit, but the Mayo Clinic’s
pretty good on this stuff, too, is thinking about how
you turn medical practice into life changing technologies
and trying to integrate the two. I just think it's such
an important part of again, advancing our society
but actually solving real problems for people. Well, it will be curious to find
out from the two of you, how did you guys decide
to work together? It was actually after
Hillbilly Elegy came out. I read the book like millions
of other folks and it was really mesmerizing
and then sent a note to J.D. actually via Twitter. Twitter. And then he was in D.C. for a TV interview. I'm based in D.C., a month or two later. So, a little over 2 years ago. And we got together and I said
I really loved the book. I'm sure many of you read
it and also loved the book. I said the only thing
I didn't love was it kind of framed this story
or narrative which was super interesting and kind of defined, or at least highlighted, some of the challenges, some of the problems, but kind of left me hanging. It didn't really
offer a solution. And there are many parts
to it obviously but part of it was, people in different
parts of the country, including here in Ohio, that did feel kind
of left behind. The future felt like it
was moving past them. And he said, well interesting
you mention that, because I'm in Silicon
Valley right now, but I'm actually thinking
of moving back to Ohio, being being part of it. And his wife was about
to move to D.C. to be a clerk at the Supreme
Court and did that for about a year and then, this past summer, they moved to Cincinnati. So it was really coming out
of the book and trying to understand, because we've been working
on Rise of the Rest about 5 years, Startup America that was
mentioned was probably 8 or 9 years ago. How do you create a movement
that basically educates people about
the opportunities in this 3rd Wave
and encourages people in communities all across
the country to believe in these entrepreneurs, invest in these entrepreneurs, because the jobs are created
in this country by these young, high growth startups, actually. Look at the data and this
was the surprise to me when I started working
on this about 10 years ago, that most of the jobs
do not come from small business or big business. Small business accounts for a
lot of jobs. By that, I mean like a restaurant
on Main Street. But if that restaurant
goes out of business, some other restaurant probably
will move in and it be about the same number of jobs. In Fortune 500 companies, there are obviously some
that are growing and adding a lot of jobs like Amazon
but there are also some like G.E. which 30 years ago was the most
valuable company in the world, has been losing jobs. And so, if you add up the sectors
of the small business and large business, they don't account for a lot
of net job growth. It comes from these young high
growth startups. So then, that's one data point. The second data point
is if you look at venture capital investment, and not every company
is venture capital, but there is a
correlation between the companies that grow
the fastest, create the most jobs, and create the most success, in terms of economic
value creation, most of them do have
venture capital. Last year, 75 percent of venture capital
just went to 3 states. California, New York, and Massachusetts get 75
percent of venture capital. The other 47 states, including Ohio, fight over 25 percent. Ohio gets less than 1 percent. Virginia gets less
than 1 percent. Pennsylvania gets
less than 1 percent. Michigan gets less
the 1 percent. Texas, everything's bigger in Texas, little bigger, less than 2 percent. California alone, last year, 50 percent. And they're great entrepreneurs
and [SNEEZE] great things to California, particularly in Silicon Valley. Hats off to them. But they're also great
entrepreneurs in Cleveland and Columbus and Cincinnati
and St. Louis and Minneapolis
and Atlanta and Pittsburgh, et cetera, et cetera. And right now, we're not backing them
and that's really the idea behind Rise of the Rest that got
us working together. J.D., I'm sure that people ask
you a similar question all the time, but nevertheless, I'll ask it. Given your background, your childhood that you spent
in Ohio and looking out at a position
that you're at, I'm certain, I just assumed that very
many young people ask you, OK, how can I bridge the gap, is that right, from where I am to get
to this point to become an entrepreneur, to be well educated, to become successful
and a productive member of the society? How do you think about it today
with the experience that you have with the benefit
of starting from the position of success and experience? Sure. Well, I'll give a specific
answer to your question, then I’ll contextualize
a little bit. The things that I tell
people who are maybe where I was or close to where
I was and want to get something more out of their
lives is to one, be strategic about the choices
that you're going to make
and the opportunities that are presented. I think that the biggest culture
shock for me when I moved from where I grew up
to places where people had a little bit more money
and a little bit more influence is that they were pretty
strategic about figuring things out. They were thinking about
what next job they wanted to have and how they might
get there, what credential they needed
to get their next position, what person even maybe
it was useful to know, what mentorship relationship
it was important to develop. And I think it's important
if you want certain things out of your life to just be
strategic in the way that a lot of people are about
how to get from point A to Point B. That's
the specific piece of advice that I give. But I also think that, from a broader
social perspective, obviously Yale Law School
was a critical piece of my ability to live, what we might call, an upwardly mobile life. But Yale Law School accepts 200
students every single year and as just a matter
of arithmetic, it's not going to be
the pathway for more than a couple hundred students
every single year. Of course, most of those 200 students come
from pretty privileged backgrounds, themselves. And so, I think, when I think back at
my hometown, when I think about my
grandfather's life where he grew up in the deep poverty
of Eastern Kentucky coal country, was able to build a decent
life for himself working at a steel mill in Middletown, Ohio in Southern Ohio, what bothers me so much and why
I think it's important to encourage real durable job
growth in some of these communities is, not everybody in the world wants
to be a Steve Case and that's OK. It's important that we have
the people who found 150 billion
dollar companies. But it's also important
that we have people and opportunities
for people who don't necessarily want to become
the next world changing entrepreneur. They just want to go to work
and have an interesting job and be able to support a family. And you can't do that without
real durable growth in these communities. I hate when people think
of dynamism and vibrancy in our economy, we sort of associate it with
Silicon Valley or maybe with the Northeast, New York City and Boston. But so many people don't think
of the communities where we call home, the people in this room
including myself, don't think of those places
as especially dynamic places. And that does mean that you're
going to have fewer entrepreneurs who are able
to build world changing companies. That also means that a lot
of people who work and live in those communities
aren't going to have the same access to opportunity, even if their ambitions
aren't as great as again founding a world
changing company. And this also ties
in with the history of the Internet. When we started in 1985, the leader in the country, in terms of interactive access, online access, internet access, was CompuServe in Columbus, Ohio. The most important
communications company at the time, in terms of modems
to connect your PCs, was Hayes in Atlanta. The most important
communications company in terms of networks was Sprint
in Kansas City. IBM’s PC operations
were in Boca Raton, Florida. Dell started in Austin. Gateway in North Dakota. Microsoft actually
started in Albuquerque before moving to Seattle. The point is that 1st Wave
of innovation was fairly regionally distributed
and there was opportunity in a lot of different places. Really, the 2nd Wave, it sort of centralized more
because it was around software in places like Silicon Valley. But as a result, what's happened in Cleveland
and every other community we visited is a massive
brain drain. Over the last few decades, a bunch of your kids left
because they felt the opportunity
was better elsewhere. You probably told them
the opportunity was better elsewhere. You didn’t want
to tell them that. You’d rather just have them
stay close to home probably. Some kids maybe not, but most kids you do. [LAUGHTER] But they left. A lot of people left. As a result, some of the talent
where the talent, that creativity, that sense of possibility
is more evenly distributed but opportunity
is not, so people went to opportunity, in the case of technology, innovation, entrepreneurship, often that was going to places
on the coast like Silicon Valley. So we have to figure
out how to reverse that. And everybody in this room
has a role to play. How do you create that sense
of momentum in your community so it is a place where people
want to stay or if they left, they feel like now it's time
to come back. And the Cleveland Clinic
is enormously well positioned, based on all the things
that have been put in place in the last several decades
and because of this 3rd Wave of innovation and health care
and other kinds of things, to really create a robust
startup community here, and as J.D. said, not everybody wants
to be entrepreneur, not everybody wants
to work for a startup. But for every startup job, not just tech startup, there are many other kinds
of startups, five and a half other jobs
are created in the community. How do you create that momentum
so more people have a pathway, irrespective of what their
skill set or their desire is, as opposed to having
cities that are either on the decline or flat where
there's not that energy, there's not that magnet
that attracts and keeps talent. When you speak about
the deployment of venture capital, predominantly in east
and west coast, how is your work different
than all these other venture capital firms, because obviously, the vast majority of people
who have capital would prefer the traditional
venues for investments? Is it just a deliberate decision
to focus on Midwest, or is your approach
to investment different, as well? No, it is deliberate. The Rise of the Rest
Fund that J.D. oversees invests outside
of Silicon Valley, New York City, and Boston. So it made, as the video said, over 100 investments. I think it's 60
different cities, 30 different states. We’re explicitly doing that. We're doing that for a number
of reasons. One is, we're trying to change
this paradigm, if you will, and get more people
understanding the opportunities. Number two is, we think the expertise
in these 3rd Wave sectors are all around the country, not just on the coasts. Cleveland Clinic and health
care is a perfect example. There's a lot of intellectual
property in this room, on this campus, expertise about this ability
to partner, to kind of accelerate
your market entry here. Third, the valuations in all
these cities because it is a supply
and demand, there's not as much capital, are lower. And so, it's a combination of factors
but it's an explicit kind of focus on investing outside
of the places where everybody else is investing. There's still a lot of venture
capitalists who are very smart people and we know them
and respect them who basically say, we're not willing to invest. They’re sitting
in Silicon Valley. They're not willing to get
on a plane to go somewhere else because that takes time
and they think there's plenty opportunities
right in their backyard, so why should they bother? And we understand that. But we think they should bother
because there are great entrepreneurs everywhere
building great companies everywhere. And also, we think there in the long run, it’s not just an investment
strategy, what drives it, there's also a need to create
jobs everywhere. If we want to have
a country where people are feeling more connected, we've got to create jobs
and hope and opportunity everywhere, not just in a few places. Right now, there clearly is a divide
in our country. It seems to be getting worse, not better, and some of it is around
jobs and opportunity and given the role startups play, if we’re not creating
jobs everywhere, we shouldn't be surprised
that a lot of people that are kind of frustrated
and feel left out. If you take a look at
the landscape in the heartland of America, do we already have early
examples of early success with an approach
that you just described? Can you highlight
a few locations? Sure. Here In Ohio, from Cover My Meds
started in Cleveland, expanded to Columbus. And in Indianapolis, a company called ExactTarget
was acquired by Salesforce for 3
billion dollars. They had 1000 jobs
in the last 4 years. They doubled that. They now have 2000 jobs. In Ann Arbor, Michigan, a company, Duo Security was acquired
for 3 billion dollars. And in Provo, Utah, a company called Qualtrics
which was acquired for 7 billion dollars. And it's not so much
the acquisition price but that is a proxy
for the value they created and the jobs
they created that then helps kind of create
that tipping point. And one of our interesting
companies that just shows you that innovation is possible
anywhere is a company called Magic Leap that's
outside of Miami. There are 1500 people. They’ve raised 2 billion
dollars in venture capital and they're creating a pretty
interesting augmented reality technology that most
people say there is no way a startup in Miami, Florida could possibly do this. It has to be in Silicon Valley. It has to be in Boston
or some other place. There are companies like that
that are beginning to be birthed. We just need to pay more
attention and invest in them and the communities
also need to rally around them. Do you want to add to that? Well, yeah. I mean, there are a lot of examples. Chewy in South Florida, a pet e-commerce company
sold for 4 billion dollars. There are a lot of little
sectors or ecosystems that are really interesting. There are some interesting
things going on in Ag Tech, Agriculture Technology in St. Louis, Missouri. A place that we don't
think of as especially struggling economically, but I don't think we appreciate
just how dynamic it is is San Diego, California, sort of the little cousin of Los
Angeles and San Francisco, has a remarkable life
sciences innovation. The thing to keep in mind
is that when we make an investment in our fund, we're thinking best
case scenario, we'll see something out of it 6
to 8 years down the road. More likely, you're talking a 10
to 12 year time horizon before that company really
reaches its full potential. So this is a long game, the type of investing, the type of entrepreneurship
that we're talking about. It's not quick and easy. It's really long term
but ultimately again to Steve's point about net job creation, that's what you have to do. Amazon wasn't built in 2 years. Amazon was built over a course
of 2 decades and now it employs tens of thousands of people, maybe hundreds of thousands
of people at this point. So those types of businesses, you really have to think
about the long term opportunity and be willing
to be a little patient and that's what I think a lot
of these ecosystems most lack is one, a lack of risk appetite
from the entrepreneurs. They think about, they've been doing something
for 3 years and they're looking for the exit
ramp or two, from the investors, they're actually willing
to make a bet on a founder and on an idea and on a company
and actually let it ride for more than a few years. Just to mention, because we're at the Cleveland
Clinic and many people here are obviously
focused on healthcare is arguably the most
successful health I.T. company in the last
20 years is Epic, which is outside of Madison, Wisconsin, ten thousand employees focused
on electronic medical records. It's not in Silicon Valley. It's not in Boston. It's not in New York City. It's in Madison, Wisconsin. So it's just another example
that if you have a great entrepreneur with an idea
and they are able to raise the capital, they are able to attract
the team, they are able establish
the partnerships necessary, particularly healthcare, because you all know, it's a systems business. It's actually, and this is gonna be
an important lesson for our friends in Silicon Valley
and you all have been working on this for many
years and know this, but healthcare is not
about software. It's not about technology. It's about integrating
that into the system. It's about people and culture. It's how you get nurses
and doctors to change how they're doing. How do you get patients to do
things in different kind of ways. How do you get integrated
into the hospitals and the health plans and how
do you think about some of the policy regulatory issues
around health care and so forth. It is really tough, as you all know because you're
dealing with every day, a really tough
systems challenge, the software is kind of table
stakes that gets you in the game. The real action is everything
else that happens around it. So that's why this 3rd Wave
is gonna be so different from the 2nd wave. The 2nd Wave, if you wrote good code, create a good app like Facebook
or Instagram or what have you, it could get viral adoption. You could suddenly be
an overnight success. Partnerships didn't matter. It was just about the apps. Policy didn't really matter, particularly in early days. Get it out there and see
what happened. In these areas like healthcare
when people's lives are on the line, you have to approach
it differently. And some of you may have
seen the recent HBO documentary around Theranos. It was an example of sometimes
disruption, big ideas, the art of the possible. It's one thing if you're
creating an app. It's quite another thing
if you're dealing with people's lives. That's the dynamic that’s going
to shift in this next 20 years. And that should play
the advantage of cities like Cleveland, that's gonna require everybody, not just the Cleveland Clinic, but everybody really
understanding that, believing in that, and figuring out ways
to celebrate these entrepreneurs. It is hard to start a company. It is risky to start
a company and most people in their own neighborhood
don't really believe in them, don't really believe
in their ideas. I think changing that paradigm
is going to be critical and having
a little bit, there’s always risk assocaited
with startups, but there also is risk
associated with assuming it's going to be business
as usual and just spending all your time looking
in the rearview mirror. Speaking about believing
in somebody’s idea, you get pitched hundreds
of ideas a day. How do you decide
which one to go for? I'm sure we each have different
answers to this. I mean, part of it is a little
bit of pattern recognition, which can be a problem
because you don’t want to get too filtered down
a particular pattern because then you miss a lot
of good ideas that fall outside of that pattern. But what I really like to see
is two things. One, I like to see companies
that are thinking about really big markets
and really big problems. They're going after, you're not something
that small bore or maybe there are a couple of hundred
customers every year. Not that those businesses
aren't valuable, but that's not really
what gets me excited. I like to see businesses
that are going after something really big and really ambitious. And the second thing is I really
like to see founding teams. I would like to see
entrepreneurs who have a really concrete plan. I think there's something weird
about our society in which we're almost unwilling to pick a point
8 years in the future and say, I'm going to get from right
where I am right now to that point 8 years
in the future and here's how I'm going to do it. And of course, you've got to innovate
and change and adjust along the way. But I really like people
who have a confidence in their
own vision, their ability to take what is, when we look at it, at the very best, a small idea with a few
number of customers and think about how they're
going to get it from where we see it to where they want
it to be 8 or 10 years down the road. The other thing I’d add is the
ability to kind of take the idea and really execute. Thomas Edison, arguably one of America's
most famous inventors and entrepreneurs, had a great line a century
ago which is, Vision without Execution
is Hallucination. [LAUGHTER] Having a good
idea is awesome. It’s better than not
any good idea. But that's just the beginning. Being able to execute against
the idea is critical. That requires, has always required teams, entrepreneurship
is a team sport. In the 3rd Wave, it's going to require
a mindset around collaboration and partnerships, exactly the kind of things
you're pushing at the Cleveland Clinic. So when I'm hearing a pitch, I'm not just focused on the idea
because I probably have heard that idea many times before. There's not actually that many, truly new ideas. It's more… How are they thinking
about this? How they executing
against that vision? And what team have they built
within the company and more importantly, what team have they built
around the company, the partnerships, the network they've built
around the company that might really result in them being
able to break out and be one of the real winners
in that space. So J.D., you’re speaking now
about the ability, almost imperative, to have a vision let's
say 8 years from now, what people like to accomplish. What's your vision? Oh, that’s a good
and tough question. I think what I would really
like to accomplish with this broader Rise
of the Rest mission is to look back and point
to my friends in Silicon Valley who maybe
were naysayers and say, I told you so. There, I think, is a lot of skepticism
from folks who spend their life between San Francisco
and San Jose who invest only in those areas, who spend time only
with those people, and thinking that there
aren't good ideas to be built in the heartland. And I really want to prove
those folks wrong. I want to see great
companies get built. I want to see jobs created. And I have my flaws and I want
to be able to say I told you so to a lot
of folks who don't think that investing outside
of traditional areas makes a whole lot of sense, because I think it does. My hope would be over the next 8
years, hopefully sooner, that we would double the amount
of venture capital going to these rising cities
like Cleveland. I mentioned the data before, 75 percent goes to 3 states, 25 percent is the other 47. I'm hoping we can double it so
it's 50/50. I'm granting that Silicon
Valley has a great lead and will still be
the leader of the pack, but if we could double
the amount of venture capital going to entrepreneurs
in places like Cleveland, we can double, kind of like shots on goal
in terms of the number of things you're trying, we can double the odds
that we're gonna have some breakout successes
that are gonna create thousands maybe even tens
of thousands of jobs. J.D. mentioned Amazon. I know Jeff Bezos. I’ve known him from the time
he had like 10 employees. And at that time, most people thought like selling
books online was interesting, but not that interesting. Fast forward 25 years later, it is a company with 600
thousand employees. So how do you create
those companies in places like Cleveland and level
the playing field so everybody, everywhere really does feel
like they have a shot at the American dream
and you really are pushing ahead in these
sectors like health care, food agriculture, things that we've been
talking about and really have innovative ways that we can
do things in a better way, so it improves society, lifts up communities by creating
more jobs and opportunity, as well as creating the value
that will lead the venture capitalists
on the coast, saying, Ah I get it. I now understand why
I should get on a plane and come to Cleveland
because they're awesome entrepreneurs who might create
the next Google in Cleveland, not just down the street. J.D., it is not about just
the venture capital. Is there ideals involved
in a nonprofit work back home. Could you speak a little bit
about your efforts to make Ohio healthier
and involvement about the certain
nonprofit activities? Sure. So, one of the things I wanted
to do when I came back home was just get involved at some
level on the opioid crisis and so, I founded a nonprofit
organization which really focuses on Southeastern Ohio
because in some ways that's where the opioid
crisis is worse. The thing that we're doing right
now is actually, we've taken a very, very well regarded national
addiction specialist, she's a psychiatrist
who's a fellow at a Washington D.C. based think tank, and she's actually planted
herself in Ironton, Ohio and is spending
a year there, both treating patients
who wouldn't otherwise be treated because of funding
reasons or because of access to just physicians. That's actually a big
issue sometimes. It's not just paying for the
health care in such a sparse rural area, it's, is there a doctor
who's actually qualified to provide the health care? But in the process, because of the researcher’s
eye that we hope she's going to bring to these problems, we wanted to write something, maybe a book, maybe something a little
bit shorter, maybe intended for academic
audiences, which really identifies
the things that are working and the things
that aren't working. Because one of the frustrations
I had when I first moved back home and started to think
about the opioid epidemic as something beyond just
something that affected my family personally, which of course it had, was if you ask people
what treatment methodologies work
and why do they work, you very rarely
get great answers. You get some very smart
people who are at the front tier of this problem
who have some good ideas, but we still haven't really
rigorously studied five different treatment methods
with a somewhat randomized set of people and say
with confidence that people who go into that treatment
program are just doing much better. They're relapsing less. They're much healthier. They're much happier. They're more able to work
and provide for their families than the people
who are going into these other treatment facilities. And I think that's such
a terrible, terrible problem because the
opioid epidemic will probably be with us for at
least the next generation. So many people are caught up
in it. So many people are already
addicted. It's a little bit troubling
that we're still not quite confident what we should do
to get ourselves out of this mess. And my big fear, if you ask what keeps
me up at night, my big fear is that we'll
look back 30, 40 years down the road
and say the opioid epidemic ended because people
basically died, because the people
who were caught up in addiction eventually just
ran the course of the addiction. Either they overdosed
or something else. And that really worries me. But that is, unfortunately, the trajectory that we're
on right now. More people are dying
than died the year before. More people died in that year
than the year before that. We haven't yet really
wrapped our minds around how to fix this problem. One thing that seems to work, I’m sure I’m not telling
anything people in this room don't know, for a lot of patients is what
folks call an M.A.T., Medication Assisted Treatment. That seems to work for a
pretty substantial part of the patient population. But it doesn't work, even for those it works
pretty well, it doesn't work all the time
or with complete efficacy and so I just want
to know what's going to work and that's really
what we're trying to figure out. One thing we may pilot
which might be interesting to work with you folks
on this in the next 6 to 12 months is actually an incentive
program where my organization would actually
fund people who would go through various
incentive payments to see whether that has a noticeable
impact, given certain controls
on whether people are relapsing into addiction. So anyway a lot of uncertainty. We're trying to make a little
bit of a dent in it. But most of all, we're trying to learn things
as we make a dent in it. This is a phenomenally important
and very, very complex problem. So I would just like to ask
one or two questions, then we’ll open it up
to the audience. One interesting phenomenon
obviously in the United States, and not only in the United
States, relates obviously
to availability of a good medical treatment uniformly, but access to good education, is that right, and a good education throughout
their lifetime. We spoke now for almost a half
an hour about entrepreneurship, big ideas. Those are typically pitched
by people who already have enjoyed some access
to education. How do we solve this gap
from those who are desperate, have lost jobs, yet do not have
educational opportunities? What's what's your view on that? I mean, I ask both of you. You've obviously
gone down that path, so I'm sure you have a very
unique perspective. But Steve you've traveled
the country extensively. I'm sure you have an opinion. Well, just briefly and at
a high level. I saw a statistic in the past
couple of days… What share of people
in the workforce right now both have a college
degree and have a job that requires a college degree? It's 1 in 6, which means
that 5 of every 6 working adults in this country right
now are working in a job where either they don't have
a college degree or their job doesn't require
a college degree. And I really worry that so much
of our educational policy conversation
and resources are focused on how to make the system
work a little bit better for the 1 of 6 people for whom
it actually works pretty well. Yes, college costs are rising. Yes, people are graduating
with too much debt. And unsurprisingly, the people who are graduating
from colleges dominate our media and culture and so we talk
about those problems a little bit more
than the problems of people who are trying to get trained
for jobs where you don't necessarily need
a college degree. It goes back to my point
about what is the pathway for people who don't want to be
world changingly ambitious people but just want to have
a nice job and provide for their family? And I really worry that we're
not so good at that. One specific thought
on that front… We spend a fair amount
of money and we talk a lot about job retraining, taking the classic example of a
coal miner who's lost his or her job, putting them in a retraining
program for a couple of years, and hopefully coming
out on the other end with some marketable skill. And what we see pretty
consistently across different geographies within the country, across different industries, is that our community colleges, unfortunately, aren't great at taking the 40, the 50 year old person
who's lost their job and retraining them into a
new job. What does seem to work
is employer led retraining. And I think that's probably
a pretty promising area for us to spend both more
resources but also more time. How do we make it a little bit
easier for a company whether they're in Cleveland
or Cincinnati or Silicon Valley to train their own
workforce and to prepare those people for the next
generation of jobs that exist. That to me is a really important
question and that's where I tend to focus. When I think about
education policy, I tend to think about
that particular piece. Just a couple of things. I would add on the K-12 side, I know a lot of people
working super hard on this, but the reality is, most of our kids in most
schools in most communities in this country are not really
getting the skills they need to be competitive in the future, to understand the industry
of the future. But it's not just about coding. People have said, more coding academies, things like that. For certain people, that is the path. For many people, it's not the right path. In this 3rd Wave, as I said, the software, the technology is important
as the table stakes. The real skill will be how
you then move that into the practice
and get it adopted. So skills around curiosity, around collaboration, around communication, or the three Cs, will be as important, maybe even more important, than the coding, itself. So we're just not teaching
kids the skills they need for the future and we should be
teaching more of the skills that machines can't do. Therefore, it's not easy for A.I. or other technology
to replicate them. As J.D. said, kind of reimagining community
colleges and embracing more models in Switzerland and other
places around apprenticeships, I think, would be helpful. And on the university campuses, trying to instill. And some are starting to do
a good job of this but there's still work to be done. Still, this path around
entrepreneurship. When I graduated college
from Williams College where Toby went in 1980, entrepreneurship
was not an option. It's part of the reason
I moved to Ohio and worked with Procter Gamble
in Cincinnati was I actually knew at the time what I want do. I wanted to start a company
to get America Online. But in 1980, there was a no startup culture
at the time. There was no capital
backing 21 year olds at the time. The Internet didn’t
yet exist at the time. So it wasn't obvious how
I was going to get from this idea to actually be
able to executing that idea. So creating that sense
of possibility and making sure people
understand that is important, as well. So there's work to be done
really at every phase of this. But it’s just recognizing
the world is changing and we need to change with it. Again this is not
rocket science. It's not even particularly new
that 200 years ago, over 90 percent of us
worked on farms. Now it's less than 2 percent. We did a pretty good job. It took a couple of decades. There were some bumps
in the road of retraining people from working on farms
to working in factories. We have not done such a good
job and retraining them to be part of this digital future. Well, thank you. So let me just turn it over
to the audience. Do we have any any questions
from the audience? And just before
you start asking, so, this is a great opportunity
to ask questions, not a forum to pitch your
ideas for a new venture. [LAUGHTER.] Thank you both for coming over
to Cleveland and I'm glad to hear all of your work
that you're trying to do to kind of instill more
of entrepreneurship beyond just the two major coasts. I wanted to follow up
a little bit on just the last comments that you guys
talked about, the three Cs, creativity, collaboration, and curiosity, and kind of tie it back
into the education question. There's a lot of concern
that I would have, especially with the fact
that I think we've been beating out those elements, maybe not collaboration
so much but creativity and curiosity in our
education system. So could you guys talk a little
bit about how those are really key and important
drivers to that 3rd Wave that you guys are seeing
and how we can try to revive those two characteristics
in the heartland that you guys are trying to reach out to. You’re 100 percent right. And again, I'm not an expert on education. I'm not a teacher, but I've talked to a lot
of folks in the area and talked a lot of teachers
and the general view seems to be that most kids, when they go into kindergarten
are pretty creative, pretty curious. They're asking a lot
of questions. Somehow by the time
they graduate, we've kind of beaten that out
of them and they're more focused on what they need
to know to take this test
and then to do this, to get into this school, to do that, and etc. etc. etc.. And I'm not saying some of those
core skills aren't important, but we have to figure out a way
to make sure that people, as they go from kids
to being young adults to even later in life, they're always kind
of leading the future. They're always asking
those questions. That is the most valuable
skill to most employers, is being able to look at
things in a fresh kind of way and have insights
of better ways to do things, better way to serve patients, better ways to get things done. It’s not so much the factory
work of stamping things out, but our education system
is still focused on the last wave of the, really more of the
Industrial Revolution and hasn't really been retooled, reimagined, rebooted for the world
that exists now let alone the world that is emerging. Thank you. I think we have another question
over there to the left. Hi. Thank you. So, I worked in clinical trials
before I went to medical school. I worked there for 3 years
and I was working on studies that when I came
on as a 22 year old, had been going on for about
10 years. I was reconciling
all the documents. So, as you guys talk about
this 3rd Wave of technology that may take over healthcare, how do you reconcile
and foresee it actually coming to fruition in the
setting of the realities of the health care system, where sometimes it can take
an idea for a drug or a device up to 10 or 15
years to actually be FDA approved? Well, so, just a couple of thoughts, things that I've actually seen
that make me feel pretty optimistic about the ability
of even the health care space to see a lot of innovation
despite the long time line to get from ideation
to actual concept and end product. So one is, I do think that there
is a lot of really interesting stuff going
on in the artificial intelligence and machine
learning space figuring out how to use different drugs
in different ways and specifically, how to take drugs that have
already been through the regulatory process
and figuring out how they might apply to disease
states that we haven't thought that they might
apply to. There are interesting, especially companies in the
the neuropsychiatric space, that are trying to answer
the question, if we don’t want to go through
safety trials with this new drug, we just want to figure
out if it's efficacious, how can we take something
that's already been approved and actually try it in
different patient populations and can this new
technology give us some predictability for whether
it will work in those new disease states? A related concept… there's a company called Adimab, outside of Dartmouth in New
Hampshire and what they've developed is a yeast
display technology that effectively allows them
to produce new and complex therapeutics primarily
for oncology, but at a number of other
disease states, as well, very quickly, much more rapidly than otherwise
you might have thought. So that company has currently, I think, about 200 drugs in active
clinical trials. They partner, to Steve's point
about partnerships, they partner
with the pharmaceutical companies to actually
handle the really complex and expensive regulatory piece, but their technology helps
their partners figure out new drug candidates very quickly
and much more quickly than was true I think
even 10 years ago. So just a couple of examples. But those are the sorts
of things that I think about and try to look at
in the healthcare space. How we're technologies making
the regulatory process a little bit easier
or developing new ways of treating diseases
that weren't possible before. Again, a lot of work is underway
but there's still work to be done around smarter trials
and using data to understand which patients are likely
to work on it and not work on it. The data that we talked about
a little before from M.D. Anderson on the cancer
side is kind of shocking to me which is that 25
percent of time people come to M.D. Anderson I'm sure it's true here
as well, for a second opinion. They reverse the first opinion. That's like a data analysis
kind of problem and I think there's work to be done on it. I think the key thing, key message from us is, it's not about the technology. It’s about the people. It's one of the core principles
of the Cleveland Clinic. It's about the people
and how do you make sure that people who are building
this technology understand how patients are interacting
and how the people in the system, nurses, doctors, others are interacting
or integrating these things. That's really where
the revolution in health is going to come from. It's not creating
better software, creating some kind
of a robotics or A.I. or other kind of thing. That's really a facilitator. It's how you get it, the culture changing around
that technology is where the real breakthroughs
will come. Thank you sir. I think I have another one, another question. Hello everybody. Thank you so much for making
it to Cleveland, Ohio. Such a pleasure to actually see
people of your caliber in the city. And thanks for Dr. Cosgrove and Dr. Mihaljevic for making it happen. Thank you guys. Big round of applause
for everybody. [APPLAUSE] So I'm
not nervous at all. First, I would like to say I brought
both of your books. I would love to have
them signed later. Thank you so much, appreciate it. Personally, I am from Morocco. [UNINTELLIGILBLE] and I've
been here for 20 years. I can see like the culture
change. I can relate lots to what J.D. was saying in his book. But my question to you is, as someone personally
who is in technology, I'm personally an entrepreneur
and I lack resources, not money wise, because I do have a lot
of friends who can be able to assist me would with capital. But I'm lacking resources
of someone of your caliber who has easy access who can
make an app for instance, happen from an idea to a
timeline to all of a sudden 3 months and it will be up, available for everybody. What kind of advice
would you give someone like myself? And also, would you be able to have for me
for later elevator pitch, if it's possible. Well, first of all, you're your point
around capital, it is important. You have an idea. Don't have your capital, unless you happen to be wealthy, but most people aren't wealthy, you don't really have a shot. So getting people with capital, you need to start and scale
your ideas is important. But that's also just
the beginning. We're spending as much
time on trying to create a network of services. We've hosted multiple
summits where we brought entrepreneurs together, over 100 entrepreneurs that we
have backed to figure out ways to learn
from each other. We’ve backed regional venture
firms and brought them together. We’ve backed
the community leaders that are focused on startup
communities. There's a lot of work
underway to build out that so that there
are resources. We're not just investing
in a company, but we're surrounding
them with resources and people and expertise. In this last summit I mentioned
we were doing in Chicago, Dan Gilbert flew in for it. Eric Schmidt of Google
flew in for it, to actually give these
entrepreneurs advice. That's as important as writing
the check to give them the capital they need
is giving them a broader network of mentors and partners
and ways to attract talent and other other things
that really enable the companies to the scale. So just one quick response
there. It's always hard sometimes
to offer advice in the abstract. You need, I think, a lot more specifics before
the advice is maybe useful. But if I understand your
question correctly, you're maybe asking a little
bit about how to take a concept from an idea
to an actual developed product and one really
good piece of advice I've heard is that technology, if you think about it, whether it's a software
application or a new therapeutic, is just doing more with less, or maybe doing something new
that was previously impossible. But what software can help
you do is reach more customers, scale a business more quickly, reduce the costs of what you're
doing. But almost any software
business can actually be, you can do a dry run
without the software. If you want to create a service
or a product that's going to be useful to people, it's always useful to actually
go and talk to the people who you want
to use it before building the app and seeing
if they'll use it. The latter path, it costs a little bit more
money and certainly a lot more time. And so I always think
that it's useful for young entrepreneurs, especially those who maybe
don't have a technology background but want
to build something technology enabled or something
even more reliant on tech, it's always useful to just go
talk to people and see whether they're going to use the thing
that you want to build and get a little bit of validation. And if you get that validation
then maybe you'll figure out more
and easier pathways to actually build the thing
that you want to build. And we have time for one more
question please. OK. I'd like to get your
thoughts on two broad areas of potential opportunity. The first is hemp and its
opportunities really throughout the supply chain not, there's sort of has a stigma
of CBD to it, but I'm talking about
the hundreds if not thousands of products
that this suppressed raw material presents. That's one and two
is Blockchain. Cleveland is trying
to become a hub. So I'm curious as to your
encounters with either of those two broad subjects. I’ll let JD take hemp. I’ll take Blockchain. [Laughter] The Blockchain
is a core foundational technology. There’s a broad kind
of agreement that it’s a critical
new technology. There's still a debate
about what the right manifestations of that are. How do you productize
it in ways that, one company we backed
that won our pitch competition in Columbus, I believe, Safe Chain was using it for
contracts and I think that kind of thing is becoming
much more kind of common. It's not just talking about
it as a technology and there's also a lot
of confusion between Blockchain and discussion
of cryptocurrency, Bitcoin, things like that
which are related but kind of separate, but the conversation
often gets conflated. So Blockchain, we do believe, is a core
foundational technology. We're looking to back
companies in these cities that we visit that are
using Blockchain to improve how something
gets done. I guess that leaves me to talk
about hemp. [LAUGHTER] I don't have a ton
of experience with a product. I should say publicly but no, so I really don't know a ton
about hemp, so I think any answer I gave
would be relatively, well probably very stupid
or at least somewhat stupid. I will say that a lot
of the companies that I've seen in the hemp
space are hyper volatile, and whenever I see
like hyper volatility, I worry a little
bit as an investor. What's actually going on here? Is there something real here
and if you can find out the real, how do you really separate
the signal from the noise? And so, we haven't done anything in the
hemp space. I doubt that we really would. I certainly know folks who've
invested in that world and have made a fair amount of money, but it seems a little
bit unpredictable. And just to follow up
on what Steve said on the Blockchain point, I agree totally. I think it's a really
interesting and useful technology. It solves a problem that really
really existed which is, how do you actually confirm
or verify transactions when you have no obviously
centralized person who's determining whether those
transactions are valid or not? There are obviously a ton of, sort of applications of the
Blockchain technology. I will say that having seen
one real spike in the Blockchain crypto world
in Silicon Valley with all the ICO’s or Initial
Coin Offerings, I will say that most
entrepreneurs are really bad at explaining, even to a relatively
advanced audience, what their block chain
technology is going to do, or how it's going to solve
a real problem. I think the entrepreneurs
who are really good often can explain their business
concept to a 9th grader who has no background
in what they're doing and it will make sense. That is not true of probably 4
out of 5 Blockchain entrepreneurs I've
talked to. They could not explain
it to a 9th grader and have it even kind of make sense. So my thought is, it's really interesting and look
out for the people who, when you ask them, what are you going
to do with this thing, actually make sense when they
give you an answer. I know we’re out of time but can
I make one last Of course. It's actually a request, maybe even a plea, because we’ve know visited
dozens of cities and we don't know exactly which cities over
next 25 years are going to rise. We think the overall hypotheses
around the Rise of the Rest is right. We think if we can get
more people mobilized to be supportive and investing, mentoring, what have you, it will accelerate. But we don't really know, and people ask all the time, OK, you’ve been to 40 cities. Like, what are the top 5? What are
the the top 10? It's hard to know. And the reason it's hard
to know is it really is in the hands
of the communities and the leaders
in the community, including people in this room. And I would just leave
you a couple of data points and ask you to, whatever you're doing now, to do more in the next few
years to figure out ways to make sure Cleveland is a
vibrant startup community, it is able to attract
and keep talent here, it can take some of the ideas
that the Cleveland Clinic and other places are inventing
and figure out ways to turn them into companies
that can create a lot of jobs. It can be one of the iconic
3rd Wave cities. There is that opportunity. But there's also, if you don't get this right, over half of the Fortune 500
companies turn over every 25 years. There is a churning. Detroit, we're not talking
about Dan Gilbert, a friend of ours, investor. Over the last half century, Detroit lost 60 percent
of its population and then went bankrupt
and arguably a hundred years ago it was the most
innovative city in the country, kind of the Silicon
Valley of its time. So they're both opportunities
for cities to get this right. There's a risk of your
community actually, there's no amount
of governments, bailout, nonprofit, philanthropic support that can
make up for that if it happens. So just do what you can
and when you hear an entrepreneur pitching
their idea, don't just immediately
go to why it might fail. Imagine what if it didn't
succeed. Most of the big ideas, like AOL, seemed like a stupid
idea to people. Like why would anybody
type a message to somebody when they could just pick up
the phone and call somebody. With Air B and B, it's insane
to think that somebody is actually going to rent like a
couch in their room to a stranger. That's a stupid idea. Well, sometimes these stupid crazy
ideas turn into big ideas, big companies, and create a lot of jobs. So I just encourage
everybody in Cleveland to recognize this is a moment
time. It's game-on in terms
of kind of innovation, where it's going to happen. There's a lot of reasons
Cleveland should rise, but it's not going to happen
if everybody’s sitting back, watching. It's only going to happen
if everybody, including some of the powerful, influential people
in this room say, Let's make it happen
and join forces to drive the kind of collaboration, to change the culture
so Cleveland, itself, becomes more willing to take
risk on these crazy entrepreneurs. So please think about
ways you can be supportive of the entrepreneurs. Well, thank you. Thank you. Thank you very much for that. [APPLAUSE] And for us who live
and work in Cleveland, I mean, we are very biased, is that right, and we will tell you that
we know exactly which city is going to rise
and this is going to be this one right here. And one of many reasons why
we're convinced of it because we know that there
are institutions in this city that have
maintained an ability to attract talent, to retain talent, and create an absolute
excellence for decades. One of them for more than a
century and one of them is our Cleveland Orchestra, easily America's finest
and Franz Welser-Most, who's Austrian, our conductor, will be speaking as our
next Ideas For Tomorrow speaker is absolutely
remarkable, remarkable person a remarkable
leader. So we cannot thank you enough
for being here but also for everything
that you do. I mean this work
is inspirational. It will create a legacy
that I think you will be proud of. I'm convinced that you will
and we will be happy to convince you to be
able to come to you 8 years from now and say, I told you so. Cleveland is the one
that is going to rise. So big round of applause. [APPLAUSE]
