The Third Wave

1. The Third Wave of the Internet is Coming: The Internet of Everything

The Third Wave of the Internet is coming, the moment where the Internet transforms from something we interact with to something that interacts with everything around us.

The Third Wave defined. This new era will see the Internet integrated into every aspect of our lives, from how we learn and heal to how we work and eat. Unlike the Second Wave, which was characterized by apps and social media, the Third Wave will focus on transforming major real-world sectors like healthcare, education, transportation, and food.

Key characteristics:

• Internet-enabled devices in everyday objects
• Disruption of traditional industries
• Higher barriers to entry for startups
• Increased need for partnerships and policy engagement

Impact on society. The Third Wave has the potential to solve some of society's biggest challenges, from improving healthcare outcomes to democratizing education and revolutionizing transportation.

2. Partnerships are Crucial for Third Wave Success

If you want to go quickly, go alone. If you want to go far, go together.

The power of collaboration. In the Third Wave, success will depend largely on a company's ability to form strategic partnerships, often with the very organizations they are trying to disrupt. This is a significant shift from the Second Wave, where companies could often succeed independently.

Key partnership strategies:

• Collaborate with industry incumbents
• Build credibility through strategic alliances
• Leverage partnerships to navigate regulatory landscapes
• Create ecosystems of innovation through collaboration

Entrepreneurs must develop strong relationship-building skills and focus on creating win-win scenarios with potential partners. This may require a shift in mindset from the "disrupt at all costs" mentality that characterized many Second Wave successes.

3. Government Will Play a Central Role in the Third Wave

Government is going to be central in the Third Wave. Full stop.

Regulatory landscape. As Third Wave companies increasingly touch heavily regulated industries like healthcare and education, entrepreneurs must learn to work effectively with government agencies. This involves understanding complex regulatory frameworks and actively participating in policy discussions.

Government as customer and innovator:

• Public sector as a major market for Third Wave products and services
• Government-funded R&D driving innovation (e.g., DARPA, NIH)
• Potential for public-private partnerships to solve societal challenges

Successful Third Wave entrepreneurs will need to develop a nuanced understanding of policy issues and build relationships with government stakeholders. This may require hiring policy experts and actively engaging in advocacy efforts.

4. The Rise of the Rest: Innovation Beyond Silicon Valley

The rise of the rest and the Third Wave are two different phenomena. But they are colliding—and converging—in self-reinforcing ways.

Geographic diversification. The Third Wave will see innovation and entrepreneurship spread beyond traditional tech hubs like Silicon Valley, New York, and Boston. This "rise of the rest" phenomenon will create opportunities for entrepreneurs and investors in cities across America and around the world.

Factors driving the rise of the rest:

• Lower cost of living in non-coastal cities
• Industry-specific expertise in different regions
• Improved access to capital through crowdfunding and online platforms
• Local government initiatives to foster startup ecosystems

This trend has the potential to revitalize struggling economies and create a more inclusive innovation landscape. Entrepreneurs and investors should look beyond traditional tech hubs for opportunities in the Third Wave.

5. Impact Investing: Profit with Purpose in the Third Wave

Impact investing provides the best of both worlds. You can generate a financial return while enabling a societal benefit—driving both profit and purpose.

Aligning profit and purpose. The Third Wave will see a rise in "impact investing," where investors seek both financial returns and positive social or environmental impact. This trend is driven by changing consumer preferences, particularly among millennials, and the recognition that many of society's biggest challenges also represent significant market opportunities.

Key aspects of impact investing:

• Focus on measurable social and environmental outcomes
• Emergence of new legal structures (e.g., benefit corporations)
• Growing interest from institutional investors
• Potential for higher employee engagement and customer loyalty

Entrepreneurs should consider how their ventures can create both economic and social value, as this approach may lead to increased access to capital and talent in the Third Wave.

6. Established Companies Must Adapt or Risk Disruption

If you don't cannibalize yourself, someone else will.

The innovation imperative. Established companies in traditional industries must embrace innovation and be willing to disrupt their own business models to survive in the Third Wave. This requires fostering a culture of experimentation and being willing to take risks on new technologies and business models.

Strategies for corporate innovation:

• Create internal "innovation labs" or incubators
• Invest in or acquire promising startups
• Form strategic partnerships with Third Wave companies
• Empower employees to pursue innovative projects

Leaders of established companies should develop a "paranoid curiosity" about emerging technologies and be willing to cannibalize existing revenue streams in pursuit of long-term sustainability.

7. America's Innovation Leadership is at Risk

Losing our entrepreneurial edge is not just about how we are doing in comparison to other countries. It's how we are doing in comparison to our own potential.

Global competition. As other countries invest heavily in research and development, education, and startup ecosystems, America's position as the world's innovation leader is under threat. This has significant implications for economic growth, job creation, and national security.

Key areas for improvement:

• Increase federal funding for basic research
• Reform immigration policies to attract and retain global talent
• Modernize regulations to keep pace with technological change
• Invest in STEM education and workforce development

Policymakers, business leaders, and educators must work together to create an environment that fosters innovation and entrepreneurship across the country.

8. Entrepreneurs are Key to Solving Global Challenges

Our country—and the world—depends on you. Our future is going to rise and fall with the dreamers and doers, the builders of new technologies and the breakers of old orthodoxies.

The entrepreneurial imperative. Third Wave entrepreneurs have the potential to solve some of the world's most pressing problems, from climate change to healthcare access. This presents both a tremendous opportunity and a profound responsibility for those building the companies of the future.

Areas ripe for entrepreneurial innovation:

• Healthcare: Personalized medicine, remote monitoring, AI-assisted diagnosis
• Education: Adaptive learning platforms, virtual reality experiences, lifelong learning tools
• Energy: Renewable technologies, smart grids, energy storage solutions
• Food: Sustainable agriculture, personalized nutrition, food waste reduction

Aspiring entrepreneurs should think big and focus on tackling meaningful challenges that can create both economic and social value.

9. The Importance of Perseverance in Third Wave Entrepreneurship

Vision without execution is hallucination.

The long game. Success in the Third Wave will require a special kind of perseverance. Entrepreneurs must be prepared to navigate complex regulatory environments, build diverse partnerships, and overcome significant technical challenges. This often means a longer path to success compared to many Second Wave companies.

Key traits for Third Wave entrepreneurs:

• Resilience in the face of setbacks
• Ability to pivot and adapt to changing circumstances
• Patience to see long-term projects through to completion
• Skill in managing diverse stakeholders and partnerships

Aspiring Third Wave entrepreneurs should cultivate these traits and be prepared for a challenging but potentially world-changing journey. Success will come to those who can maintain their vision while executing relentlessly in the face of obstacles.

Last updated: November 22, 2024