Steve Case is someone we should all be listening to. As co-founder and CEO of AOL, he ran the iconic business that popularized access to the internet and instant messaging in the early days of the web. His work is how we came to consolidate the term internet service provider into ISP. He was at the center of things when AOL bought Time Warner in 2000: one of the biggest media mergers in history.
He is the very model of an exponential entrepreneur.
In 1993, AOL had a value of $70M, 200 employees and 180,000 subscribers. Seven years later, it had a market cap of $163B, 4,000 employees, and 25M clients. It managed half the internet traffic in the US and was worth more than General Motors and Ford combined. The jingle “You’ve Got Mail” was etched into the memories of a generation.
The Third Wave of the Internet
Case’s book, The Third Wave: An Entrepreneur’s Vision of the Future, is part autobiography, part manual, and part manifesto. It’s a guide for businesspeople who yearn for ventures with far-reaching social impact and disruptions in traditional industries, who learn from failure rather than fear it. It covers the internet’s early era of business and its hype-cycle as an emerging technology: the turbulent beginnings, the collective euphoria, the disenchantment – the burst of the dot-com bubble in 2002 – the realistic refocusing, and the productive maturation.
Case was inspired by Alvin Toffler’s The Third Wave, which described three waves in our society: the first pre-industrial (agricultural) wave; the second industrial wave of the Industrial Revolution; and the third (current) information wave, with nearly unlimited access to information.
As a tribute to Toffler, Case structures the evolution of the internet into three waves:
1. The First Wave (1985-1999) of building the infrastructure and foundation for an online world, heralded by AOL, IBM, Apple, Cisco, Sprint, and Sun, among others.
2. The Second Wave (2000-2015) of search engines, apps, and social networks building on top of the First Wave’s infrastructure. Google, Amazon and eBay turned their corners of the internet into one-stop shops. Facebook, Twitter, Waze, and Snapchat developed digital communities.
3. The Third Wave (2016-) of internet-enabling, in which everything and everyone is connected, moving from the “Internet of Things” to the “Internet of Everything.”
In this Third Wave, the internet stops belonging to internet companies. Products will require the internet, even if the internet doesn’t define them. The term “internet-enabled” will sound as ludicrous as “electricity-enabled.” IoT sensors in products will be limiting, because what’s emerging will be much broader: the Internet of Everything.
This ubiquitous connectivity of everything, in which the internet provides the global infrastructure that enables platforms to be managed in real time, is also the era of AI, IoT and enabling technologies.
Entrepreneurs will ride the Third Wave to transform and disrupt the business sectors that most affect our daily lives. Case notes the importance of perseverance. He cites XPRIZE founder and Singularity University co-founder Peter Diamandis, demonstrating why big corporations have serious difficulties in innovating in this new era.
“It isn’t that entrepreneurs are smarter than companies,” says Diamandis. “It’s that they are trying more crazy ideas, taking more shots on goal.”
This is a good definition of the entrepreneurial concept of moonshot thinking.
Without mentioning it explicitly, Case adds moonshot thinking to the management concepts of entrepreneurship and leadership. Together, these create an energizing, optimistic business culture eager for disruption, a culture in which fear of failure don’t exist. The Silicon Valley mantra of “shoot the moon, fail fast, learn quickly” could be extended to corporate culture: “think high, fail often and cheaply, learn faster.”
Large Companies Must Imitate Entrepreneurs
A 2015 study stated half of the best companies in their respective sectors may disappear after 2020. Large companies’ business transformations tend to be ineffective, at best, relying exclusively on incremental innovation and developing standardized talent within their corporate culture.
The first problem is that these companies view innovation as linear, which limits their evolutionary processes to rigid, long-term strategies that aren’t reviewed until the end of the period. They fail to consider the exponential speed at which the Fourth Industrial Revolution evolves.
The second problem is that these companies acquire talent, but do not create an environment that allows for the development of an adaptive corporate culture. And as Peter Drucker said, “Culture Eats Strategy For Breakfast.”
Siemens employs 90,000 scientific researchers. Monsanto, General Electric, and other innovative companies compete for the brightest minds in the world. They’re awash with masters and doctorates. The raw talent is there, but Case points out that there is an issue with how it is organized and whether the corporate culture really helps mobilize talent to innovate at exponential speed.
Will failures be seen as learning opportunities? Or will they instead be criticized and careers within the company sentenced to death?
Employing talent simply isn’t enough. Employees have to have a voice, as well as the resources and environment that allow them to test their ideas. To survive, innovation teams need to mirror the perseverance and start-up mentality of entrepreneurs.
Entrepreneurs like Steve Case.