The Third Wave Part 2

The Third Wave 

An Entrepreneur's Vision of The Future

(Part 2)

In Chapter 7, "The Rise of The Rest", Steve Case begins by noting that, since the First Wave of the Internet, venture capital money has been mainly limited to 3 states - California, New York, and Massachusetts. However, with the dawning of the Third Wave, a new distribution, which the author terms the rise of the rest, is occurring.   Whereas during the First Wave hugely successful start-ups were mainly the creation of "twenty-something coders" in places such as Silicon Valley, during the Third Wave, entrepreneurs with multi-billion dollar new companies are "...more likely to be thirty-something farmers, teachers, doctors, chefs, and artisits - people who saw a problem in their own spheres of expertise, then leveraged the skills of others [in their own backyards] to build great companies." (109)  

One of the many benefits that Case attributes to the rise of the rest, is the injection of new investment in dozens of cities and regions throughout America and the positive impact such investment is having on local and the national economies.  As well, the author predicts that the rise of the rest will bring much needed diversity - "...both of people and ideas" (115) to an Internet-driven world of commerce that has, hitherto, been dominated by the cultural majority.  Writes Case, "...Facebook reported that only 4 percent of its employees in the United States were Hispanic in 2015, while only 2 percent were black.  At Google, the numbers are similar, and have been for years." (115) 

Impact investing is another phenomenon of the Third Wave.  The author defines it as "...a bridge between traditional business and philanthropy - and between financial return and social good." (120)  In other words, it is not enough in this day and age for corporations, if they want to attract ethically-minded young workers, to "do well" (attrack investment and make profits); they must also "do good". (122)  

Steve Case recounts, in Chapter 9, the story of the unsuccessful merger of AOL with Time Warner in January 2000 and the subsequent decline of AOL, and his departure from the company he co-founded.  The reason for the merger had to do with the replacement in the late 90s of dial-up (phone lines) internet access with broadband (cable lines) internet connectivity.  Unable to partner with a cable company, AOL bought Time Warner instead. 

Although both internal and external problems led to AOL's demise, Case belives the biggest factor in its failure was cultural incompatibility between AOL and Time Warner and a related lack of trust.  The merger got off to a rocky start when, as a condition of the merger, $1 billion in cost cuts were made, resulting in layoffs of people and cutting of projects.  Writes the author, "That bred an immediate and spiraling resentment among senior executives and severly undercut our ability to build trust." (141)  He also notes that there was "...a fundamental disconnect" between administrators at AOL and Time Warner about the Internet's potential. (142)  The Third Wave lesson to be learned from the decline of AOL is "...how important the people factor is.  It doesn't really matter what the plan is if you can't get your people aligned around achieving the same objectives." (153) Concludes the author on the failure of the merger: "I even noted that the two sides seemed to be speaking different languages and speaking past each other. And while some of the differences related to different world views and strategic perspectives, I think much of it, sadly, related to personal mistrust and lingering resentments." (154)  

  

 The main point the author makes in Chapter 10 is as follows: "Government is going to play an important role in the Third Wave." (159)  To support this theory, he illustrates the essential role government played in the First Wave of the internet.  For one thing, he notes that most innovations from the late 80s through the first decade of the new millenium were only made possible by federal support.  He also emphasizes that "We would not have had the Internet itself if not for government." (163)  Indeed, it was the Advanced Research Projects Agency of the United States Department of Defence that was responsible for creating the first host-to-host connection between computers in different locations which eventually gave birth to an internetworking system, or "internet" for short. According to Case, governments will have a dual role in the Third Wave - "as a regulator and as a customer". (164)   He believes governments need to regulate the storage and use of personal data so as to balance privacy and security needs against the commercial uses of data for profit.    

In "America Disrupted" (Chapter 11), Steve Case identifies 6 areas on which he believes the U. S. government should focus in order to attract Third Wave start-up companies.  Among these areas of focus are greater investment in reserach and development and making it easier for startups to raise money through measures such as tax incentives like reduced rates on capital gains earned from startup investments.  It is, however, his advice on how to make it easier to hire top talent that is most significant.  Case recommends a more flexible immigration system through measures like Canada's Startup Visa program.  He maintains that a more immigrant-friendly attitude is needed in America if the country is to continue to thrive during the Third Wave: "The United States can remain the most innovative and entrepreneurial nation, but only if we are a magnet for the world's best and brightest. Immigration is not just a problem to solve; it's an opportunity to seize. (192) 

In Chapter 12, Case offers some tidbits of Third Wave advice for entrepreneurs, corporate leaders, and government:

• For Entrepreneurs - Worry less about your net worth and more about your net impact
• For Corporate Leaders - "Keep your finger on the pulse of technology ... Empower your team to ask questions [and] Allow more crazy ideas to bubble up...." (206)
• For Government: Reduce regulatory restrictions currently on entrepreneurs.

The author then concludes his book with a 7-part plan for reinvigorating American entrepreneurship  which he calls RESTART:

• Reform how government works with startups - Government should provide them with incentives to reinvest their profits so that subsequent innovations occur and more jobs are created;
• Educate for the Third Wave - that is, teach entrepreneurial skills such as curiosity and collaboration;
• Source goods and service from startups;
• Provide Tax incentives to regional investors who are "...capable of funding startups in their own backyards." (221)
• Attract and retain talent, including immigrants.
• Rethink capitalism and entrepeneurialism replacing businesses-for-profit with "profit-plus-pupose businesses. (226)
• Transform local ecosystems making cities "more interconnected, more inclusive, and more impactful." (226)