The era of the office isn't going to end.

Recently, Steve Case, Ryan Simonetti, and I had the opportunity to talk about how Covid-19 is affecting the future of work as part of the Collision From Home conference. We discussed how coronavirus could spread the wealth of venture capital opportunities beyond the coasts, what will become of Silicon Valley, and why this won't be the end of the office as we know it.

Nicholas Thompson Hello, I'm Nicholas Thompson. I'm the Editor in Chief of Wired. I'm joined here with Steve Case, founder and CEO of AOL, now the founder and CEO of Revolution, and Ryan Simonetti, CEO of Convene. So, Steve, let's get this going. You've worked very hard on a very noble cause the last few years, which is to make the tech industry spread around America so it's not so concentrated in just a few places. How is that going? And how is it going to change with the coronavirus pandemic?

Steve Case Well, it's going well. We do have a lot of work to do. Even last year 75 percent of venture capital in the United States went to three states: California, New York and Massachusetts. So, 47 states fight over the other 25 percent, including some big states like Michigan, Ohio, Pennsylvania, Virginia, and each get less than one percent of venture capital. California alone gets over 50 percent of venture capital. That's a big problem. But we have been making some strides in the last year. More people recognize that there are great entrepreneurs building great companies all across the country. More local investors are starting to back those companies. And even in some, coastal investors are beginning to take a look at not just investing in their backyard in, say, Silicon Valley, but investing across the country. In this post-Covid environment, because now Zoom is becoming a way for pitches to happen, that could make it easier for the entrepreneurs in other places to access the venture capitalists in places like Silicon Valley and I hope that's the case. And it likely also will accelerate the flow of talent. There's been a brain drain in many parts of the country, people leaving where they grew up to go to the coast, to Silicon Valley, because that's sort of been the land of opportunity. Now, some of those people are sheltering in some other place, even maybe the venture capitalist is sheltering in some other place, maybe as their companies put their programs in place some are going to be allowed to work from home or from wherever. That could lead to some people returning to parts of the country that they left. And over time, that probably will have a positive spill off impact in terms of the startup sector. So we're optimistic. There are some challenges. We're worried that some investors, particularly local investors, might back away from backing these startups in their backyards. We worry some coastal investors might just hunker down and focus in their own neighborhood. But our hope is this will result in a flow of talent, a boomerang of people, returning to these places, and that more capital will flow back to more of these people in more of these places.

NT Steve, that seems like a little smaller than I would have thought. You're saying some, maybe, a little... I get the sense that the tech industry is changing massively. Companies are saying people can work from home forever. You can work from home forever, why the heck would you live in Silicon Valley? Am I wrong to think that maybe you're downplaying the change that's about to happen?

SC I hope you're right. But we take the long view as we've been working on this for almost a decade now, including founding an initiative at the White House called Startup America, starting the Rise of the Rest effort about five years ago. So we know it's a long journey to really level the playing field so everybody everywhere has access to capital or startups creating jobs in all parts of the country. We didn't get here quickly. We're not going to get out of this quickly. But I do believe this will end up, as we look back 10, 20 years from now, this will be a tipping point that really resulted in an acceleration of some of these trends and will ultimately result in a more evenly dispersed innovation economy. Silicon Valley will continue to be the leader of the pack, but there will be many other cities in many parts of the country that rise up and really birth the next generation of startups.

NT Right. Well, and just to make that point, you're normally based in a city and now you're in rural Virginia. I'm usually based in New York and San Francisco and I'm in the Catskills. Ryan, where are you?

Ryan Simonetti I'm in eastern Long Island.

NT And where are you normally based?

RS I'm based downtown in the city, in Tribeca.

NT So, yet another example of somebody who now can do their job and is doing their job remotely. Question for you though Ryan, you are an expert on the future of work. You're an expert on how we will do our jobs. How is the coronavirus going to change the way the tech industry operates?

RS Well, it's interesting. You know, when I look at this crisis, obviously there's the devastation, both from a public health perspective, lives lost, and the economic impact. But we actually view this as a great accelerator of a lot of trends that were already happening, especially around the future of work, mainly around the adoption of remote and virtual as a core part of a company's overall real estate and workplace strategy. And when we think about the future of work, we're using the word hybrid to really define that. And that's a new HQ experience that needs to be redefined and not so much about individual work. Because I think if we've learned anything it is that working from home can be extremely productive from an individual work perspective. But these new HQs really need to be focused around collaboration and becoming the cultural hub for an organization. And then we see this growing distributed network of what we think about as third spaces for big enterprise companies. These will be your smaller satellite offices that ultimately do become much more distributed. And that's not just urban to suburban, which we're already seeing within our customer base. But I think all of these other cities, which were seeing a tremendous amount of momentum, even pre-crisis, markets like Nashville and Pittsburgh and Indianapolis, Tampa, Florida, Jacksonville, Austin, Texas obviously being a great example of the city that's really gotten the benefit of a lot of the trends that Steve's been talking about. And then lastly, we see this growth of a remote and virtual workforce, a distributed workforce. And I think each of those things really supports a future where work is much more distributed. People will have the choice, I think, not just to work from home or work from their office or work from a third space, but also which cities do I actually want to work from? And, you know, I don't think that this is the end of urbanization. I think that this is a real catalyst to the acceleration of a lot of what was happening pre-crisis and what I would think about as these second- and third-tier cities that have tremendous access to education, healthcare, to create great work, live, play environments. And we see those markets doing really, really well coming out of this crisis.

NT So, a question for either of you: what area will be hit the worst? There are people who make the argument the area that will be hit the worst is Silicon Valley, because it has the highest percentage of people who can work remotely. There is software and hardware that's easier to make remote and the rent-to-wage ratio is the worst in the country. Is that correct?

SC I think that's probably correct. I even saw that some recent data came out this week that the rents in apartments in San Francisco are down more than any other part of the country. So I think that because everybody felt like they had to be there, all the money was there, a lot of the iconic startups, sort of the second wave, the Internet, were there. They created this increasing returns network effect dynamic. And a lot of people in a lot of parts of country did feel like they were left out if they weren't there. I think this changes that dynamic and people are starting to realize they can work in different places. Even some of the large companies are now encouraging, or at least allowing, their employees to decide to work from wherever they want, including some of the biggest Silicon Valley companies. That will result in more people making a choice in terms of where they want to live, as opposed to feeling there is a certain place they have to live. And over time, that will result in more startups. I think it will put some pressure on Silicon Valley. Silicon Valley still leads by such a long measure, it will be fine. But I do think in the next 10 or 20 years, people will be surprised how many these rising cities all around the country, indeed all around the world, really emerge as strong startup ecosystems, in part because some of the expertise needed in this next third wave in the Internet, in healthcare and smart cities and food and agriculture, that expertise actually is in the middle of the country and some of the big partnerships and the big Fortune 500 companies you need to partner with are also in the middle of the country. So that's going advantage these Rise of the Rest entrepreneurs in this next wave and the next 10, 20 years.

NT As somebody who's spent a lot of time in San Francisco, I can vouch that it is not leading the nation in smart city infrastructure. If I were to make the argument, though, for why Silicon Valley could be strengthened, I would say, well, as Ryan said, this is a great accelerator, trends are happening more quickly. But what's going to happen is power is just going to accumulate in the small number of companies that have the cash to weather the storm, that are actually growing. There are a lot more people using Facebook now because there's nothing else to do. And if power accumulates in those companies, maybe there isn't a startup ecosystem that spreads around the country. What do you think of that argument?

SC Well, there is more and more power in these big platform companies, no question about it. As a result, there is more and more scrutiny, including antitrust scrutiny, in Washington and Brussels and other places. I think that's going to intensify in the years to come and that some of these big players like Facebook are struggling in terms of how to best deal with this, how to shoulder the responsibility that comes with such enormous power. And it does stifle the development of competitors in those sectors. It's hard to raise venture capital when you want to create a search engine to compete against Google or to create a social network to compete against Facebook. Thankfully, in this next third wave of the Internet, it's not so much about apps on top of the Internet. It's really the Internet meeting everyday life and changing some of the most fundamental aspects of our lives. I think that's going to advantage these other cities and entrepreneurs, other places that bring a different perspective and expertise and credibility and even a cultural understanding of how the healthcare system works or how the farming system works. I think that's the opportunity in this next wave.

NT Ryan, explain to me what kind of technology company will be most likely to thrive in this new hybrid working model that you're describing.

RS Look, you know, I think to Steve's point, when we look at a lot of the innovation, the last 20 years has been really about pure play software or technology companies. And when we think about the next 20 years, it's really applying technology and business model innovation back to core legacy industries. If you think about a company like Convene bringing an entirely new business model, a technology-driven mindset, and a service experience to real estate, one of the oldest, largest industries and asset classes in the world. And so I think to Steve's point, the challenges in these industries are unique. I think a lot of these business models, ours included, don't have to worry about an Amazon or a Facebook or a Google or a Microsoft doing what we do. And so I think there's a tremendous amount of innovation that's going to happen over the next five, 10, 15, 20 years, some of which just bred from crisis in and of itself, similar to what we saw happen in 2008 and 2009 when a whole generation of innovators and platforms was built. And then I think there's a real opportunity in this idea of online and offline and really understanding omni-channel and how it needs to play back, and solving some of the biggest issues of our time right now around healthcare or affordable housing or education or things like real estate. So I'm extremely bullish on innovation. Yes, the big companies, of course, will get the benefit of consolidation. But I believe deeply in entrepreneurs sprouting up all around the country in some of these new markets. And really pioneering and leading this country into the future. 

NT I keep hearing in the back of my head, as you're answering, in the Zoom where it happens. Ryan, explain what the options are going to look like when we come back. What is the data that you have from Convene? What do you know? Are we all going to have plastic dividers and tape on the floor of the elevator?

RS Look, we recently published about two weeks ago our new Covid operating standards, which, for those that are really interested in a topic, I highly recommend you go to our website and check out the work that we've done. The entire challenge that companies like us are facing, and really all organizations that are thinking about reentering the workforce, is it's really about psychological safety. We know for a fact that premium and safe are now synonymous. And it is our responsibility as a designer and an operator of space that we need to create the safest and most healthy environments possible for our customers. So in the short-term, that's about testing. It's about temperature checking. It's about cleanliness of facility. It's about redesigning spaces from a furniture perspective to accommodate social distancing. It's rethinking the hospitality service delivery model, an experience where the idea of going to a buffet is not really an option any longer and we're going to have to create prepackaged individual meals for people. So the entire experience will be different, but it will still feel like hospitality. It will still feel human-to-human. And that's really the short-term. Medium- to long-term, I think it's too early. And I think it would be unwise to figure out exactly what the future office needs to look like today. I think there's still a lot of research that needs to happen, both observational and also quantitatively. What I can tell you is that people will have an office, they will go back to work again. As Steve mentioned, face-to-face meetings and collaboration are going nowhere. I think it's more important in a distributed world than even the one we lived in prior. So we remain bullish on physical space and the experience and are excited to pioneer this industry into the future.

NT If you advise and work with a whole lot of companies, what advice are you giving them on how to come back to work?

RS Number one is it should be an opt-in model. To Steve's point, it's about the individual employee choosing when and if they want to come back. Obviously, we're recommending things like managing given occupancy in a space to maintain social distancing. We are recommending A-B shifting early, especially as we first start to reenter the workforce. And again, this is a dynamic environment, and I think being open-minded and agile in the approach is really the most important thing. And continue to be transparent with your team because it is such a dynamic environment. It is uncharted waters for all of us.

NT Steve, does that sound right to you?

SC Yeah, I think every company will have to decide what makes sense. It will depend on what city they're in and whether they're relying on some of the mass transit infrastructure, like in New York City it's a little bit more complicated than most people coming in to work through the subway or some other way to get in. It's easier in some of these rising cities where they tend to be less dense. But even there, it's going to have to be companies deciding when they want to open and allowing employees to decide when they want to start coming in. And also when they're ready to start inviting guests in. And so it's going to take some time and there probably will be some examples where it's two steps forward, one step back, and people are experimenting, trying to figure out what the right approach is. Over the next few months, I think we'll start getting back to that sense of a normal, or maybe it's a new normal, but it's going to take a while and a lot of experimentation for companies and people to really feel like they're in the right kind of system.

NT All right. Bringing this back to the topic we started with, Steve. Let's wrap this by you telling me about one company in one place that you are extremely excited about that's not in Silicon Valley, Boston, Seattle.

SC Well, at Revolution we've backed more than 100 companies in 70 cities, more than 30 states. So it's a little bit like picking your favorite child. But one that big is representative of the idea of the Rise of the Rest is a company in Chattanooga, Tennessee, called FreightWaves. They're building a data platform for the trucking industry. What Bloomberg is for finance, FreightWaves is for trucking. Guess what? Some of the biggest trucking companies in the country are headquartered in Chattanooga. So in some ways, Chattanooga is the Silicon Valley of trucking. And so a company based there that understands the needs of that industry can build systems for that industry is exactly the kind of thing we'll see more and more of in this third wave, more and more of as these cities rise, if we're able to make sure people are able to live wherever they want, work wherever they want. If we get venture capital dollars flowing everywhere, not just to a few people in a few places.

NT Great. Thank you, Steve. Thank you, Ryan.