The Third Wave Ushers in an Era of Collaboration
In his book, former AOL CEO Steve Case takes an up-close and personal look at how entrepreneurs will find solutions. Expect some frustration—and lots of revolutionary ideas.
Much of what gets written about Silicon Valley and startups focuses on pattern matching. Whether it is the shorthand description of startups as the “Uber for” something or the quest to identify the next twenty-something technical wiz, it’s all about matching what has been successful before to what is going on now.
For an innovative economy, pattern matching is not particularly innovative. Perhaps this is why I found Steve Case’s book, “The Third Wave,” so interesting. I highly recommend it. In this book, the next wave of innovation doesn’t look like any of the recent waves, and it is refreshing.
Case, former CEO of AOL, delineates the technology revolution of the past couple of decades into three waves. The First Wave had technical risk and was dominated by the likes of Google, PayPal, Yahoo, Apple and AOL. These companies were making revolutionary technology, and the close-knit communities where these products were developed were necessary because it was all about technical risk. That’s one reason there was a high concentration of regional innovation—although even in the First Wave, it wasn’t completely concentrated.
Case interweaves his own stories about AOL, which started and thrived outside of a major innovation center. Perhaps because Case was part of the internet movement without being truly part of the Silicon Valley scene, it has allowed him to observe innovation growing elsewhere.
The Second Wave is still going on, of course, because these waves have tremendous overlap. The second wave is about market risk. For me, SnapChat and Facebook are the quintessential Second Wave companies. These companies also are geographically concentrated because they leverage the skills of a small pool of people. Importantly, one of the characteristics of this wave is that the products are mostly autonomous offerings with viral growth.
The Third Wave is much more than the Internet of Things (IoT). It is the Internet of Everything. Case makes a brilliant argument that the Third Wave is going to be substantially more complicated than the Second Wave – also more frustrating but more revolutionary. We are going to tackle large systemic problems in this wave. Third Wave innovations will rely, by necessity, on partnerships and collaborations among startups, large corporations and government across geographies. Think of healthcare or education or food production, these are industries fraught with regulation, many players and many unmet needs.
The hallmark of this new wave will be collaboration. The need for deep industry knowledge plus scale means that there is an important role for corporations. Antiquated regulations, especially around immigration and investment, call for public policy changes that we cannot shy away from at this important juncture. The search for the best collaborators means that this innovation will not be located exclusively in the top entrepreneurial markets of Silicon Valley, New York and Boston. The new wave will use different geographies to its advantage, whether that is leveraging great universities, large municipalities or corporate partners.
The Third Wave in upon us now. As I travel, I see innovation in so many places. For me, Case’s book The Third Wave was a great framework for thinking about how innovation itself is going to be disrupted.
It’s obvious to me that the current pattern matching by venture capital investors is not going to yield the next great innovative companies. Looking for the same things in the same places as before won’t yield something new. Only diverse, inclusive teams will yield the best innovation in the coming wave. Narrow-minded pattern matching is over.