How DC-area entrepreneurs can help government solve our problems

Day 4 of the Virginia Velocity Tour: Northern Virginia

The Virginia Velocity Tour is an effort to find and support the best entrepreneurs across the Commonwealth of Virginia. On Thursday, the fourth day of the tour, it’s important to remember that although 78% of startup investment goes to three US states — New York, Massachusetts, California — the most valuable Internet company of the 1990s was not in those areas. It was in Northern Virginia.

Why was AOL in Virginia? AOL’s headquarters literally sat on top of the fastest Internet in the world. In the 1980s and 1990s, the early adopters of the Internet created two main connectivity points: Metro Area Exchange (MAE)-East, in Dulles, VA, and MAE-West (no relationship to the actress), in Silicon Valley. The Internet in its early days required a series of underground cables to transmit signals, and the interchanges were critical for speed. If you were sending an early packet of information from Chicago to Miami in 1991, for example, your signal had to “change tracks” in Dulles, Virginia.

So when Steve Case, a marketing whiz, and Jim Kimsey, a technology genius, wanted to make the Internet accessible to everyone, they set up headquarters in Dulles, VA so they could tap into MAE-East, the fastest Internet connectivity in the country.

Washington, DC area was a helpful location for other reasons: the Internet faced policy barriers as well. Until 1990, you couldn’t legally access the Internet, except through universities or libraries; only 3% of Americans had ever been online. If you wanted to start a company that provided customers access to something that, to date, had been a government monopoly, you needed to have a presence with DC regulators.

The success of AOL transformed both the Internet and the Washington, DC metro area. AOL itself was the most valuable company of the 1990s, but its greater legacy is the new ideas that AOL created.

Consider the following:

Jean Case, who met Steve as an early AOL employee who led marketing (including the CDs you probably received!), led many of AOL’s early campaigns. Jean and Steve Case married in 1998, and today Jean Case is the CEO of the Case Foundation. Jean has been one of the leaders transforming the original concept of philanthropy to “impact investing” — merging the separated world of impact and social good into the same pocket, looking for a better world.

In 2005, Steve Case joined forces with Donn Davis and Tige Savage, two team members from AOL, and they began to make investments in new companies in the DC area and beyond. The new firm — Revolution — has launched and popularized categories that have transformed real-world industries that matter every day, from ZipCar in transportation, to Revolution Foods in our food systems, to Shinola in creating a vision for twenty-first century jobs.

Ted Leonsis, another member of AOL leadership, now owns the Verizon Center, Washington Wizards, and Washington Capitals, and as a result is one of the largest employers in the region. He’s also a partner in Revolution’s growth fund.

And nearly every important startup in the DC area over the past twenty years can trace its success in some way to AOL. Blackboard, a DC-based company, whose learning management system is in 75% of universities and 50% of K-12 schools in the US, received early venture investment from AOL. 1776, who hosted our Virginia Velocity Tour lunch, has been a leader in regulated industries. And our firm, Village Capital, owes a great deal to AOL’s legacy.

Today, taking the bus across Northern Virginia, we saw a thriving startup ecosystem originating from an Internet switchboard in Dulles, VA.

So what’s the next AOL? Northern Virginia is perhaps better-placed than any other startup ecosystem to solve the problems plaguing the front pages.

The theme of Day 4 of the Virginia Velocity Tour was government technology — how startups can help government work better and be more responsive to communities. Perhaps one of the blind spots of the startup community across the world is its regular lack of engagement with government in the public sector. But when you look at the front page of the papers — from Russian hackers to police riots to national security and terrorism worries — these are the issues startups should be engaging in.

The day’s keynote, Ben Jealous, hammered this idea home. As the former head of the NAACP, and current partner and impact investor at Kapor Capital, Ben highlighted the disconnect between the startup world and the real-world headlines when he was talking to well-known Silicon Valley venture capitalists about, in light of the major problems on the planet, the critical imperative to colonize Mars. Ben’s response: “I don’t know a lot about Mars, birut it seems pretty inhospitable. Maybe we better fix the planet we have.”

While politicians of all stripes love to cite Washington as the problem, the startup community in Northern Virginia is actually making meaningful progress on the problems we see on the front page every day. We’re worried about terrorist threats — both real and cyber — and yesterday, we saw startups leading in cyber-security and utilizing data to prevent terrorist attacks. In our communities — most recently, in Charlotte — we’re seeing senseless killings of innocent people, in ways that are heartbreaking and unacceptable. At the same time, we’re seeing millions of law enforcement officers doing the right thing in complicated scenarios.

Better data, higher-caliber Internet protection, and greater synthesis of information can help governments prevent terrorismbetter and enforce the law more justly; prevent future cyber attacks from foreign governments and hackers worldwide; and help cities operate better, faster, and more transparent. But startups need to see themselves as an integral part of the conversation — in Northern Virginia, they do.

Entrepreneurs and investors need to be aware, though, and take an intentional approach to the problems they’re trying to solve. “Bring your whole self to the table when we’re trying to solve the political questions,” said Ben Jealous. If you care about cyber-security, you can educate people on the risks (like the day’s $25,000 winner, Hill Top Security). If you are using big data to make cities work better, you can focus on the communities where things aren’t working as well.

In politics, Washington is often seen as the problem — and in many cases, for good reason. But the next great startups we’re seeing in the DC area will engage with government to be the solution to the problems we’re worried about solving.