Steve Case’s Rules for Building Startups in Internet’s “Third Wave”

Software could be poised to truly transform entrenched sectors like healthcare, education, financial services, and more. But the next wave of software companies will take longer to build than some entrepreneurs have grown accustomed to in the smartphone era, and success will require more patience and willingness to work closely with policymakers and industry stakeholders.

That was part of the vision of the future of technology’s role in society sketched out by AOL co-founder Steve Case at an event Thursday in Boston. Case was in town promoting his new book, “The Third Wave.”

The entrepreneur, investor, and first-time author identifies the “first wave” of the Internet as the era of AOL and other companies that helped consumers connect to the Internet. In the next phase, companies built software and apps on top of the Internet—think Google, Facebook, and Snapchat. Now, Case argues we’re entering a “third wave” in which technology will “finally” remake major sectors like healthcare, education, government services, food systems, banking, and so on.

“It’s about integrating the Internet seamlessly and pervasively in every part of our lives,” Case said during a talk at the Hatch Fenway co-working space located in Boston’s Landmark Center.

Technology has already started impacting some of those areas, such as the adoption of electronic medical records systems and some integration of software in the classroom. But doctor visits and classroom instruction haven’t really changed much in the past couple of decades, Case said.

They will, he said, but it might take 10 to 20 years. And it will require new approaches from entrepreneurs and executives at large companies. “It requires a partnership mentality, a policy understanding, and more perseverance,” Case said. “These actually are hard problems. They’re not going to be solved overnight.”

In an interview with Xconomy, Case said he recognizes that patience and working hand-in-hand with lawmakers and other companies runs counter to the ethos of many entrepreneurs in Silicon Valley. Uber and Airbnb are two salient examples of this. They have often barreled into new cities without seeking local regulators’ permission, quickly gaining popularity among consumers while skirting laws.

That approach won’t work in industries like healthcare and education, which pose more complex problems, are more strictly regulated, and have more gatekeepers between the company and its end user, Case said. He understands Silicon Valley’s “general libertarian disdain for government,” which he said has a reputation of being frustratingly slow and cumbersome. “But to take the Uber lesson and say that the right way to enter a market is to ignore the government—the people that adopt that strategy, they’re going to find themselves out of business.”

Entrepreneurs in this new tech era will also need to take more of a “10-year view than a 10-month view,” Case said. “They don’t like that either. So I get it. But to the extent you want to take on some of the world’s biggest problems—but also through that, some of the world’s biggest opportunities—it’s going to require a different mindset and a different playbook.”

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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