AOL's Steve Case: Seeing AI transition from horizontal LLM platforms to vertical integration

President Biden and Microsoft President Brad Smith announcing Microsoft’s $3 billion AI investment in Wisconsin this week and joining us now with more on tech’s impact on middle America’s economy. Steve Case Co founder of AOL and chairman and CEO of Revolution. He’s also the chairman of the Case Foundation. Good morning to you. Good morning. This is another example of of trying to do, I think, what you’ve been trying to do for a very long time. However it’s been tried in Wisconsin before as you know with Foxconn. So I’m I’m, I’m curious what you thought of that news. I think it’s very positive. We started the rise the rest effort actually 10 years ago when we were first in Detroit. We’ll be back there in a few weeks to celebrate what’s happened over the last 10 years and we’re seeing this more broadly around the country including as Wisconsin. We were there with our Rise the rest bus 6-7 years ago. Since then, Microsoft working with the Green Bay Packers broke brown and built the title town tech facility, a kind of a a hub for startups in is Wisconsin. And this announcement of a $3 billion commitment from Microsoft to build out a AI facility in Wisconsin, it’s helpful. It’s also I think and important to recognize we’re seeing a transition from AI being really about the big horizontal platforms, the large language models which have been centered in Silicon Valley to now more vertical AI which creates an opportunity all around the country. How does AI impact manufacturing, which is the focus in Wisconsin or how does it impact agriculture AG tech or how does it impact health tech. We’re seeing more and more companies including some we back that revolution that are focused on vertical AI. So it’s not just the generalized platforms, it’s more specific ways that different industries can be reimagined and be more productive because of AI and that creates the opportunity for more regional innovation. Before we dive in fully to the AI story I I have one other question that relates to just the rise of the rest and and and sort of distributing if you will, the success and and wealth of Silicon Valley to the rest of the country. Which is to say we had conversations during the pandemic and after the pandemic about these idea of zoom cities and this idea that there were going to be, there was going to be talent all of the country that was all of a sudden going to be used in very different ways because people were not going to be working at the office. They were going to live all over the country and then the headquarters might be on a coast or what not but it didn’t matter. And now there’s been this complete shift it feels like back to everybody into an on office place and how you think that’s changed maybe how you think about that. I think it’s changed too much. What we’ve seen even with rise of the rest, we’ve now backed over you know 200 companies, 100 different cities, a lot of them have been in person all along even during the the pandemic. So it’s really more the big cities, the New York’s, the the San Francisco’s that were tended to be more you know kind of focused on remote work and these startups as they start scaling are still benefiting from being able to tap into expertise in other places particularly around hyper growth. How do you scale these companies? That was a challenge sometimes some of these startups and Rise of the rest sold out too early because they didn’t really have access to either the capital or the talent to scale those companies. They are still tapping into that. We’re using remote workers. So I think we’re moving from a world where five years ago everybody was in the office to three years ago essentially everybody was working remotely. And now there’s more hybrid concept and different companies depending on where they are in their life cycle, their scale, the challenges they have. Some have a bias towards being more in the office, Some are still more more remote. But it does open up I think a permanent opportunity for more regional version of talent. Well, let me ask you though about the regional dispersion of talent. Because it also seems like if AI is successful, as we think it’s going to be, and create the productivity gains that we’re talking about, that you may need a lot less people to actually be doing these jobs. You may need more robots. But the idea of having engineers, which is what we told all of our kids, they were supposed to study in college because they were going to be programming these things and hopefully programming them in in in the middle of America, you know, Open AI might do it for you. Well, I think there’s some of that. And I’ve always said, even when I wrote the book, the 3rd wave, seven or eight years ago, that not everybody should focus on coding. Some other skills around communication, collaboration, creativity are going to be more important. And you’re right. AI is going to be doing some of the basic work, including the basic work and encoding, which will make the coders a little less valuable. And the people understand the core business problem in specific industries, whether it be healthcare, agriculture, other things, much more important. I think that does again tie into the possibility of more regional dispersion. We can’t just have AI be big tech getting bigger and we can’t just have AI being Silicon Valley continuing to be be dominant. We need to figure out a way to have a more dispersed innovation economy that follows what’s made America great. China has more of a centralized top down system. We have more of a bottoms up distributed system and we need to make sure that that philosophy that’s driven our success for the last 250 years continues as we move into this AI revolution. Steve, you you have an eye for talent. I think I’m going to start hanging out with you. I mean the the guy you brought on the show that that you know was kind of your partner in a lot of these efforts to expand the the prosperity. Are you surprised at the rapid ascension of of JD Vance He went from you know palling around with you to a possible vice presidential candidate. Are you surprised and and is it I mean when you look at at JD is is he someone that you would see in that position someday. Well I think we worked well together when rise the rest now probably goes back five years or so ago then you’ll have to move back to Ohio start his own venture firm. So I haven’t been in touch with him and see him occasionally here in in Washington. DCI always knew they had interested in politics. I always knew he had interested in serving. The fact that he jumped into the into the race ended up becoming a senator. What happened a little faster than I might have anticipated? I think he has a voice around, you know, some of these issues around technology, certainly a voice around the the importance of regional dispersion, right. But you’re not, you’re not going out on the road stumping for him anytime soon. As you know, for the I’ve stayed out of politics for for my entire life. Try to focus more on policy, bring people together, whether it be the JOBS Act 10 years ago or some of the focus on tech hubs, the chips and Science Act. So I’ll continue to remain on the sidelines politically and try to work with both parties, make sure America continues to lead and we do it in a more inclusive way. Before we let you go talking about the CHIPS Act and just some of the work that’s being done. Talking about and talking about politics. How concerned are you right now about some of the tariff ideas that are being raised by the way, by the Biden administration and by a potential former President Trump if he becomes the president. I haven’t felt focused as much on tariffs to be honest. Most of the startup economy issues don’t don’t deal with that quite as much as some of the really, really big companies. I do think the core issue is making sure that we are making as a country the investments in R&D. Right now we’ve we’ve as a percentage of our economy it’s much lower than it historically been we’ve called for including with our national entrepreneurship strategy the National Advisory Council Innovation and entrepreneurship put out a couple of months ago when we were at the White House called for more of an investment there. I think we need to relook at our policies around immigration. So we continue to attract to retain some of the brightest talent. We need to make sure we’re making these investments in in in tech hubs which part of the chips and science acts of fully funding the tech hubs I think is, is, is important. So those are some of the areas I’ve been mostly focused on as in trying to make sure that America continues to lead. But as I said earlier, we do it in a more inclusive way. It’s not just a few people in a few places doing well and other people feeling left out and left behind. We need to make sure this next wave is is more inclusive and that’s why things like the announcement in Wisconsin I think is is a big step forward.