Three Ways Startups Will Survive The Next Wave Of The Internet
Entering A New Era
In today's entrepreneurial landscape, with more barriers to entry than ever, technology alone will not be sufficient. Success will depend upon partnerships, policy, and perseverance.
Donald Trump recently met with Silicon Valley tech titans at his Manhattan Tower and among the attendees was Amazon CEO, Jeff Bezos. Bezos said in a statement that Trump “shared the view that the administration should make innovation one of its key pillars, which would create a huge number of jobs across the whole country, in all sectors, not just tech — agriculture, infrastructure, manufacturing — everywhere.”
The new administration will have an opportunity to re-evaluate policies that affect innovation and technological development. Affecting federal policies like promoting broadband buildout, spurring investment in intelligent infrastructure, encouraging research and development, and advancing a host of other actions should be put front and center so there’ll be greater potential to improve productivity and the economy. Also at the forefront of the conversation should be tech startups. Startups, companies that can scale quickly and disrupt existing categories, account for nearly all of net new job creation in the United States. In fact, the top performing one percent are accountable for 40 percent of new job creation each year.
We are entering a new era of emerging technologies and it’s become increasingly more important for startups to navigate a new roadmap. Steve Case refers to this paradigm in his book as The Third Wave. Paying homage to the work of the futurist Alvin Toffler, Case, Cofounder of AOL and current Partner at Revolution Growth, believes that entrepreneurs will begin spending time focused on things other than tech.
The First Wave (1985–1999) laid the foundation for the online world with consumers connecting to the internet via AOL and IBM. The Second Wave (2000–2015) was the app economy and mobile revolution. This period was driven by people, product and platforms spawning successes such as Facebook, Snapchat, Amazon, and Google. The Third Wave (2016-) features ubiquitous connectivity allowing entrepreneurs to transform major real-world sectors. The Third Wave will largely be driven by the same elements that Case met head-on in the First Wave when launching AOL.
“The Third Wave of the internet will be defined not by the Internet of Things; it will be defined by the Internet of Everything.” — Steve Case, Author of The Third Wave
This new era will require a different set of skills from the previous one which encompasses three main areas: partnerships, policy, perseverance. Below I’ve listed passages in Case’s own words on each particular lesson to be learned:
Partnerships
It's particularly true for the Third Wave, where the success of a company will depend largely on the partnerships its leadership can forge — sometimes even with the very organizations, they are trying to disrupt.
During the Third Wave, a great product will only get you so far. You typically won’t be able to build an audience by dropping your app in the App Store and waiting on users to sign up. That’s because most Third Wave industries have gatekeepers. There are key decision makers in school districts who will need to approve any products that have to do with classroom learning.
Policy
And whether you want to build a wind farm or a solar farm, companies can’t build things in the real world with the same freedom they might in the virtual world.
The government will always play a role in Third Wave industries, and that means Third Wave entrepreneurs must have a fluent grasp on the policy issues they will encounter.
A lot of companies won’t be able to get venture funding without demonstrating a credible go-to-market strategy, including how to manage regulatory issues. No matter how good an idea, a Third Wave company that lacks a clear strategy for policy is a dangerous gamble for investors.
Perseverance
There will be the occasional come-out-of-nowhere phenomenon, but the next generation of entrepreneurs is going to need to be prepared for a long slog. And the Third Wave will require a high degree of adaptability. Your initial product may not survive its first contact with the marketplace. Or with regulators. Or, perhaps partners you seek to align with will demand some adjustments. You’ll have to keep adjusting, tweaking, pivoting.
Bill Gates recently said that the new administration has an opportunity to establish “American leadership through innovation” similar to how President Kennedy talked about the space mission. Whether it’s space, education, renewable energy or fighting cancer, innovative startups must bridge the disconnect between the government in order to break through regulatory barriers. Success in the Third Wave will be largely determined by the entrepreneur's proficiency to form relationships with partners, policymakers and grit. Otherwise, there won’t be many opportunities to go far alone.
