The third wave of the Internet is about to break. The opportunity is now shifting to integrating it into everyday life, in increasingly seamless and ubiquitous ways. These third-wave companies will take on some of the economy’s largest sectors: health care, education, transportation, energy, financial services, food and government services. These third-wave sectors — all now ripe for disruption — represent more than half of the U.S. economy.
The third wave will be different from the second — and will pay homage to some aspects of the first. Although there will be continuing opportunities for new apps and more lean start-ups, the challenges will be new in this next wave, and will require a different kind of entrepreneur.
I tell the entrepreneurs we’re working with at Revolution that to be successful during the third wave they will need to remember the three P’s:
Perseverance: Overcoming long-term structural changes within regulated sectors won’t happen overnight; entrepreneurs (and investors) will need to be more patient.
Partnerships: Just as partnerships were key in the first Internet wave, they will be key again in the third. Entrepreneurs won’t be able to go it alone in the third wave; they must go together.
Policy: Entrepreneurs will need to understand public policy in a more nuanced way. Entrepreneurs who choose to ignore government will do so at their peril, as governments aren’t just the regulators of many of the third-wave sectors — they also are large customers.
And the changes that are brewing as we enter the third wave aren’t just limited to what we do — they also will begin to shift where we do it. Although Silicon Valley will remain the most vibrant innovation region, we are beginning the see what I like to call the rise of the rest, as entrepreneurs start building great companies nationwide. And as partnerships become more important, this trend will accelerate. Coincidentally, last year, 75 percent of venture capital went to just three states: California, Massachusetts and New York. But 75 percent of our Fortune 500 companies are located in the 47 other states, and many of them will play a pivotal role in the third wave, as a new generation of partner-friendly entrepreneurs seeks strategic alliances to gain credibility and accelerate growth.