by Peter High, published on Forbes
Steve Case was one of the architects of the first wave of the Internet. For many who learned about him and his company in the mid-1990s, it may have seemed as though his was an overnight success, but AOL took nearly a decade to truly take off. The early days required building a great team, working on the product, and building strong platforms. It also required perseverance, a familiarity with and an ability to influence government policy, and an ability to establish strong partnerships.
In Case’s new book, The Third Wave: An Entrepreneur’s Vision of the Future, he talks about the how the work of entrepreneurs today will have to heed the lessons of the entrepreneurs of the first wave of the Internet (roughly from 1985 to 1999) more than those of the the second wave (roughly 2000 to 2015). He also talks about how venture capital will flow to cities that have not traditionally been tech-sector hubs, as the “rise of the rest” phenomenon. Some of his insights come from his having witnessed the rise of Washington, DC from an entrepreneurial back-water when he founded AOL in that area to a dynamic technology hub today.
His book is an interesting read; part memoir, part history lesson, and part crystal ball. In it, he offers sage advice from one who has experienced the highest of highs in founding a company that was, as he points out, “for most Americans…for its time, Google, Facebook, Twitter, Amazon, Spotify, YouTube, and Instagram combined.” He also covers candidly the low points after the acquisition of Time Warner in 2000. In the years since, he has focused on venture capital and philanthropy, and he has developed a healthy perspective on how the lessons of the past will impact the future.
(This is the 17th article in the IT Influencers series and my 250th article for Forbes. To read past interviews with Meg Whitman, Walt Mossberg, Jim Goodnight, Sir James Dyson, and former Mexican President Vicente Fox, among others, please visit this link.)
Peter High: Steve, in your book, , you articulate three waves. The first from 1985-1999, roughly, which was the laying of the foundation of the online world. The companies that were the architects of this phase include AOL, Cisco, Sun, IBM, Apple, etc. The second wave companies took advantage of that foundation in the period of roughly 2000-2015. You note that this was the period of the app economy, mobile revolution, and companies that are the best representatives include Amazon, Facebook, Twitter, and Google, among others. Now you put this year as the date that starts the third wave of organizations, the Internet of Everything. You talk about six different factors, all beginning with “P”, that are germane to the first and third waves. There are three of the Ps that pertain to all three waves, namely people, products, and platforms. You articulate that policies, partnerships, and perseverance are the factors that were of particular importance in the first wave and will become increasingly important in the third. Please explain.
Steve Case: Great summary of the core themes! First, I think partnerships are going to be much more important in the third wave than they were in the second. In the second there were some overnight successes that were apps that just came out of nowhere, they did not need help from anybody, whether it be Facebook or Snapchat, what have you, a dorm room phenomenon. There will still be examples of that in this third wave, but I think that will be rare. If you really want to revolutionize health care, while there are some things you can do with apps, I think there is more you can do when you work with doctors and partner with hospitals. Similarly, in education, there are a lot of apps and influential MOOCs [massive open online courses] like Khan Academy and others. Other things that are really interesting in terms of learning in the cloud—but I think most people are still going to learn in the classroom, whether it be young kids or adults when they are in colleges or universities and partnering with those institutions so you can create more personalized, adaptive approach to learning will become more important. So I think it will shift from being about the software and the app, which is the hallmark of the second wave, to being much more about partnerships with players in each of these sectors of healthcare, education, energy, transportation, government services, or other kinds of things, and innovators that are skilled at partnerships will be the winners.
The second is policy. These are regulated sectors. Entrepreneurs do not like to deal with government and do not like to deal with regulation. But issues around driverless cars are going to need regulation to make sure that the benefits of that accrue to society without risk. In healthcare, there is a lot regulation around drugs and devices. There are a lot of issues around food safety. Those are not going to go away. As we move the internet into the real world in much more profound ways, the role of policy, the role of regulation, the role of government will be ongoing. Innovators will need to have more of a dialogue with government.
Finally, the third factor is perseverance, again I recognize that people are not going to like to hear this because overnight successes are awesome when you get them, but in many cases these are complicated problems and are going to require engaging over a long period of time with partners on policy and other things. Perseverance is going to matter. I used to say that AOL was a decade in the making overnight sensation. In the mid-90s it looked like we came out of nowhere, but we had been slogging away for a decade before anybody really noticed. I think that dynamic is going to become more important in the third wave. Some of the things around people, products, and platforms will continue to be important, but partnership, policy, and perseverance will be critical in the third wave as they were in the first wave.
High: You talked about how in the second wave there were companies that were born in dorm rooms, came out of nowhere, did not have the decade long slog to become overnight successes, as you indicated was the history of AOL. As I think about the three characteristics you just highlighted, all of them would seem to suggest that it requires a greater level of experience and patience, factors young people do not necessarily have in great supply. To what extent do you see the mix of entrepreneurs or the average age of those who are founding the great companies shifting up a little bit as a result?