Steve Case Interview (page: 7 / 8) Co-Founder, America Online	Print Interview

One of the innovations that you have brought along with you in your charitable work is the Starbright program. Could you tell us a little about that concept?

Get the Flash Player to see this video. Steve Case: One of the things we've tried to do is use technology to help people, but particularly to help kids. And the Starbright initiative, which really was led by Steven Spielberg, was: "How do you reach kids in hospitals that are kind of lonely and out of touch with their friends and dealing with very difficult circumstances and give them the tools and experience that really is fun?" And I think Spielberg and the whole team there has done a terrific job. AOL played a role in providing some of that technology and creating some services for it, and AOL and then AOL Foundation tried over the years to do a lot of different things like that, trying to recognize that this is a great business, and we've done well in building the business, but we also shoulder responsibility, beyond just the business, in trying to make sure that these tools are used in a constructive and responsible way.

So a lot of the things we've been doing on the philanthropic side, both when I was affiliated with the company and now more independently, are trying to reinvest some of those resources in areas that I think can be pushed forward. Not always technology oriented.

Get the Flash Player to see this video. One of the things I'm most focused now on, with the Case Foundation, is the notion of social entrepreneurship. I'm an entrepreneur. I like building companies, but I also like building projects, and one of the things I learned in the last five years is it's easy to start new things, particularly in the not-for-profit world. It's harder to scale them, and so we're trying to figure out a way to work with some of the not-for-profit organizations -- around maybe ten years, or already well led, already well respected -- on how to kind of get them over that tipping point where they really become more mainstream phenomena. One statistic that was startling to me is if you look at the top 20 companies, and you look at the list 20 years ago and you look at the list today, about half of the companies change every 20 years, because 20 years ago CISCO and Microsoft and some of the other companies didn't really exist. Wal-Mart. And so in the business world there's this process of constant change and evolution and a list changes. In the not-for-profit world, if you look at the top 20 not-for-profits 20 years ago and today, 19 of them are the same. One has broken through, which is Habitat for Humanity, which is a great group that we work closely with.

So the question for me is how do you get more change, more out of-the-box thinking, and more focused on scaling in the charitable sector. One of the key challenges is helping them build the leadership skills and the teams, but also how to help them get access to capital in a more sustainable way. In the business world, if you have a little idea, you get seed financing from a venture capitalist. That sort of happens in philanthropy. If that idea works, then you get what's called mezzanine financing, which is more funding, and you take it to the next level. That sometimes happens in philanthropy, but in business, when everything is really firing on all cylinders, then you go public, and then you have an ongoing mechanism to get capital. That does not happen in philanthropy. There's no equivalent of going public. So we're trying to figure out a way to fill that vacuum and really encourage not just business entrepreneurs but social entrepreneurs.

Get the Flash Player to see this video. A related issue we're working on is trying to build business models into philanthropic organizations, because their number one issue is sustainability. Every year they have to go back with a hat in hand trying to raise more grant money and a better approach is to have something that is more of a recurring revenue stream. The Girl Scouts have that with their cookies program, where every year they unleash hundreds of thousands of girls to go door-to-door and sell cookies, but that's the exception, not the rule. And we're trying to figure out how to build programs like that into philanthropic organizations so they have a steady source of income.

And in some cases that business aspect becomes a core part of what they're doing. A great example of this is National Geographic. A great organization. It has been around 100 years. They decided when they were formed 100 years ago that they really wanted to educate people about the world.

Get the Flash Player to see this video. Today, National Geographic has a membership side with a magazine and some television side, and they generate about a billion dollars in revenue, and they're profitable. And so at the end of the year they have some bottom line profit which they can then reinvest, because they're running it as a not-for-profit in charitable endeavors. But, the real magic in National Geographic isn't how much money they have left at the end of the year. It's the fact that through their overall focus they're reaching hundreds of millions of people and educating people about the world. It just happens to be done in a business-oriented kind of way that is more sustainable.

I think it's important to have more charitable operations work like that. You can be entrepreneurial even if you don't want to be in business. You can be a social entrepreneur focused on the not-for-profit sector. You can be an agriculture entrepreneur if you want to change how people think about farming. You can be a policy entrepreneur if you want to go into government. The idea of an entrepreneur is really thinking out of the box and taking risks and stepping up to major challenges. Trying to instill that sense of entrepreneurship in areas other than business is one of the areas I want to focus on in the years ahead.

A lot of businesses have stopped giving to nonprofits. A lot of foundations have tightened their belts. It has been a very painful time because of the downturn in the stock market, but you seem quite confident that you're going to break through that.

Steve Case: I hope we will. I'm going to play a role at least, but part of it is bringing a different perspective. I think the model of businesses make the money and then give some portion of that to shareholders and some portion of that to philanthropic organizations, and not-for-profit organizations just rely on grants every year, I just don't think is a great model. So we do encourage companies to give more. I was on a committee that was trying to encourage corporations to step up their level of giving. I do think that's important, but I think it's more important for nonprofit organizations to start thinking about sustainability. It obviously varies depending on what area they are focusing on, but looking for some way to create a sustainable recurring revenue stream, like the National Geographic example. It reaches more people, number one, as well as generating ongoing funds.

So to me it's a somewhat different model, trying to implant more business principles in not-for-profit organizations so they have that benefit of sustainability. Trying to identify the leaders that are emerging and help figure out a way to help them build their teams and get access to capital, so they can cross over that chasm and hit the big time. We also do a lot of traditional philanthropy through the Case Foundation, but the key area I'm focused on is how to move the concept of entrepreneurship into the mainstream in the not-for-profit world.

With all of your these accomplishments to your credit, you're still a young man. Are you thinking about other businesses in the future?

Steve Case: Right now I spend about a third of my time with family. One of the reasons I wanted to step down as a CEO five years ago is that I have five young kids. The oldest now is 16, but they're still sort of young and I just wanted to spend more time with them. I spend about a third of my time on philanthropy through the Case Foundation, and about a third of my time on other businesses. I do like building business. I'm not likely to go off and start something myself, because I did that and had a good run at it, but partnering with entrepreneurs if they're doing interesting things in consumer markets where there is some kind of big breakout disruptive potential and the opportunity to build significant companies that really have a profound impact on people's lives -- that is of interest.

So it's really a mix. There is some blurring between the amount of time I spend on philanthropy and the amount of time I spend on business. Maybe it doesn't make sense to view them as separate worlds. The traditional model, not just for companies but for individuals, is if you focus for a number of years on business and you make a lot of money that at some point later in life you'll focus on giving back, either by giving money away or playing some role in terms of public service.

I'm trying to figure out a way to do it in a more integrated approach that's not so disparate, and to have an impact on society. I do think that people have an obligation to give back but that doesn't necessarily mean that you give back just the traditional way. Maybe there's new ways to give back and make a contribution. I'm looking forward to some mix of philanthropy -- maybe through a somewhat different prism -- as well as helping entrepreneurs build some significant new businesses.

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