In 2013, venture capitalist Chris Olsen, a former partner at Sequoia Capital, left Silicon Valley to move to Ohio, where he’d just started Drive Capital. Even his movers thought he was nuts for leaving California for Ohio.
“They were like, ‘Oh, sorry, man,’” he says.
Just a year or two earlier, Olsen would have agreed with them.
When I was at Sequoia, he says, “We passed on a company that was in Petaluma because that was too far from Silicon Valley.” (Petaluma is about 40 miles north of San Francisco.)
Then, in 2011, one of his fellow Sequoia partners, Mark Kvamme, at the behest of Ohio Governor John Kasich, took the helm of JobsOhio, an organization created by the state of Ohio to privatize that state’s economic development efforts.
“Sequoia was looking at opening an office in Turkey,” Olsen says. “I told [Kvamme] about that, and he said, ‘Wait, we passed on Petaluma because it was too far.’ I said ‘Yeah, but this is fun.’ That’s when he said ‘What about Ohio?’”
Olsen told this story last week at a one-day summit called “Inclusion in Tech,” sponsored by the Atlantic. Generally, the summit addressed diversity, sexism, and equity in Silicon Valley. Olsen was there to make a case for geographic inclusion, too.
He admits that his reaction to the idea of opening an office in Ohio was initially extremely negative.
“I thought, Rust Belt, yeah, sure, and went to look at the data, figuring I would prove this was a terrible idea. I found instead that it was a great idea,” he says. There were plenty of potential entrepreneurs out there, he concluded, along with universities and—one thing Silicon Valley doesn’t have—affordable housing.
Sequoia hadn’t opened an office in the Midwest (though it has funded companies there), and Olsen kept thinking that someone should do it. Finally, fearing that someone would soon—and it wouldn’t be him—he left Sequoia. Meanwhile, Kvamme left JobsOhio; the organization had had some successes in its two years, but was also facing legal challenges.
The two started Drive Capital, based in Columbus.
“Initially,” he says, “I thought going to the Midwest meant going to Chicago.” But Olsen says he tends to operate analytically, and his goal was to tap into the largest possible community of engineers. He figured that that meant being close to urban areas.
“We got on Google maps and drew a 200-mile radius, trying to find a circle with the highest volume of cities,” he says. “That’s how we picked Columbus.”
He and Kvamme proved, he says, that the conventional wisdom—and data—is wrong. “It understates the amount of activity in the Midwest—the typical data sources, like Crunchbase, miss that investment. Deal flow has been a massive surprise—Andreessen Horowitz says they see 4000 investment opportunities a year [in Silicon Valley]; we are seeing 3800 a year” in the Midwest.
It’s gotten easier to recruit top technologists to Ohio, Olsen says, than in 2013. “There have been enough pioneers in our portfolio, enough anecdotes, to convince people to come out and join companies in the Midwest.”
And, he pointed out, there’s the political conversation. “People say Ohio voted for Trump. Well I say, ‘What are you doing about that? Ohio was decided by 40,000 votes—that’s one start-up.’”