I SPENT A fair amount of my senior year in college hiding away in the stacks of the library, reading and rereading a new book I couldn’t put down. It was The Third Wave, by futurist Alvin Toffler, and it completely transformed the way I thought about the world—and what I imagined for its future.
Toffler wrote about a coming global transformation. In his telling, the “First Wave” of humanity was the settled agricultural society that was dominant for thousands of years. The “Second Wave” was the post–Industrial Revolution world, where mass production and distribution transformed how people lived. Toffler’s “Third Wave” was the information age: an electronic global village, where people could access an endless array of services and information, participate in an interactive world, and build a community based not on geography but on common interests. He predicted the world as we know it today. His vision captivated me. I knew I wanted to be part of that Third Wave. Indeed, I wanted to be part of making it happen.
In the more than thirty years since the birth of America Online, the Third Wave that Toffler predicted has indeed come to pass. I was lucky to have been there at the beginning, and luckier still to have been a part of it ever since.
The Internet age has progressed at a remarkable pace since those early days. It has had several phases of evolution, too—its very own Toffleresque waves.
The First Wave of the Internet was all about building the infrastructure and foundation for an online world. These were the companies—Cisco Systems, Sprint, HP, Sun Microsystems, Microsoft, Apple, IBM, AOL—that were working on the hardware, software, and networks that would make it possible to connect people to the Internet, and to one another. Together, we were building the on-ramps to the information superhighway. (Remember that term?)
Back then, our band of online pioneers had to fight for everything. We had to fight to reduce the cost of getting connected, as telephone networks were typically charging $10 per hour to get online, making it unaffordable for most. We had to beg PC manufacturers to consider shipping their computers with built-in modems. At the time, only hobbyists were online, and most PC executives couldn’t fathom why any normal person would ever need a modem.
In the early days of AOL, so much of our job was just explaining what the Internet was, how it worked, and why anyone would want to use it. I remember doing an interview in 1995 on PBS where I was asked, “Why do people need this?” This question was still an open one at the time. And that was a decade after we got started.
Getting people online gave the next generation of innovators a new canvas and new paint. Great minds started considering the vast applications of global connectivity. They tinkered and fiddled, then chased ideas and started companies. (One of our users got his start in coding by hacking AIM, or AOL Instant Messenger, communications software. His name was Mark Zuckerberg.)
The Second Wave of the Internet began at the turn of the twenty-first century, just in time to inflate the dot-com bubble and let it burst—the Internet’s first real extinction event. A lot of entrepreneurs and investors lost fortunes. But those who survived were primed to lead the next era of Internet innovation.
The Second Wave was about building on top of the Internet. Search engines like Google made it easier to explore the sheer volume of information available on the web. Amazon and eBay turned their corner of the Internet into a one-stop shop. It was during the Second Wave that social networking came of age, too. Where Google sought to organize the Internet’s information, social networks let us organize ourselves—and attracted a billion users. And it was during the Second Wave that Apple introduced the iPhone, Google introduced Android, and a mobile movement was born. This convergence supercharged the Second Wave, as smartphones and tablets became the engines of the new Internet, creating an economy that would populate the world with millions of mobile applications.
The Second Wave has been largely defined by software as a service—social apps like Twitter and Instagram that make sharing ideas and photos easier, or traffic apps like Waze, which weren’t practical without ubiquitous mobile connectivity. And while the most successful of these companies all dealt with unique obstacles to climb to the pole position, they also have a great deal in common. First, their products are, practically speaking, infinitely scalable. Coping with new users is usually as simple as adding more server capacity and hiring more engineers. And, second, the products themselves—the apps—tend to be infinitely replicable. Nothing has to be manufactured.
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Today, the Second Wave is starting to give way to something new. Decades from now, when historians write the story of technological evolution, they will argue that the moment the Internet became a ubiquitous force in the world was when we started integrating it into everything we did. This moment is the beginning of the Third Wave.
The Third Wave is the era when the Internet stops belonging to Internet companies. It is the era in which products will require the Internet, even if the Internet doesn’t define them. It is the era when the term “Internet-enabled” will start to sound as ludicrous as the term “electricity-enabled,” as if either were notable differentiators. It is the era when the concept of the Internet of Things—of adding connected sensors to products—will be viewed as too limiting, because we’ll realize that what’s emerging is the much broader Internet of Everything.
The entrepreneurs of this era are going to challenge the biggest industries in the world, and those that most affect our daily lives. They will reimagine our healthcare system and retool our education system. They will create products and services that make our food safer and our commute to work easier.
But if this new generation of entrepreneurs is to succeed, the playbook from the Second Wave won’t do.
Third Wave company creation stories are less likely to begin with dorm-inspired apps that go viral, as they often did in the Second Wave. Third Wave entrepreneurs will need to build partnerships across sectors in a way that Second Wave companies never had to. They will need to navigate a policy landscape that most Second Wave companies could ignore. And they will need to do it all in a space where the barriers to entry—even for a worthy idea—are far greater than anything experienced in the Second Wave.
The playbook they need, instead, is the one that worked during the First Wave, when the Internet was still young and skepticism was still high; when the barriers to entry were enormous, and when partnerships were a necessity to reaching your customers; when the regulatory system was coming to grips with a new reality and struggling to figure out the appropriate path forward.
I am writing this book today because we are living at a pivotal point in history, and I want to offer whatever perspective I can to ensure a bright future. I am writing this because the history of the First Wave has become increasingly important as a way to think about this future—how we plan for it, adapt to it, and seize upon its opportunity. And yet much of that story, including my own, remains untold.
I come to this from a variety of perspectives. As a startup entrepreneur, but with experience at a big company. As someone who’s never served full-time in government but has worked in and around government. I come to this as both an investor and an advocate, and as someone who gets Silicon Valley but was never of Silicon Valley.
And so I aim to accomplish several things in this book. I want to tell you the story of how the consumer Internet was born, and how close companies like AOL came to not making it. I want to share my candid memories from behind the scenes—the details from a roller-coaster ride few have experienced. I want to tell you what it was like at the very top—and give you a view from the boardroom on the way down.
But I don’t want to do any of that in a vacuum. Each of these stories is meant to illustrate a broader thesis: that the lessons from the First Wave of the Internet will be integral to the Third. And so I want to zoom in on the Third Wave as well. I’ll describe what it will look like and how it will unfold, and give you a glimpse of the future it portends.
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I’ve written this for entrepreneurs to help shape their dreams and for corporate titans to help temper their nightmares. I’ve written it both for the business student and the casual observer. For people old enough to feel nostalgia about AOL CDs in the mail and for those young enough never to have heard the term “CD-ROM.”
My journey over the past few decades has been an unpredictable adventure, a thrilling, sometimes frustrating mix of ups and downs. It has been marked by moments of sheer terror, and many more of joy and jubilation. I’ve tried to convey that here. I’ve tried to bring you into my world. And what better medium than the book, which was invented around two thousand years ago?
I didn’t want to write a memoir, but I did want to share some of my stories, as I do believe, as Shakespeare famously said, “what’s past is prologue”—that there are lessons to be learned. I didn’t want to write a guidebook for budding entrepreneurs, as there are plenty of those—but I did want to explain why the rules of the entrepreneurial game are changing. And I didn’t want to get too wonky on policy, but I do believe America is at risk of losing its lead as the world’s most entrepreneurial nation, and I wanted to explain why—and what we can and must do about it.
Writing The Third Wave—part memoir, part playbook for the future, part manifesto—has been a labor of love. I hope that it might light the same spark for you that Toffler’s Third Wave lit for me.