The Third Wave: An Entrepreneur's Vision of the Future (19 page)

Yet, as James Surowiecki wrote in
The New Yorker
in August 2012, “In 1990, the number of employment-based permanent visas was capped at a hundred and forty thousand a year. Astonishingly, that number hasn’t changed since, even though the U.S. economy is now sixty-six per cent bigger, and, with the rise of India and China, the supply of global talent has grown sharply.”
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We need to create a Startup Visa program, one that opens the door for immigrant entrepreneurs with a proven idea to launch their startups in the United States—and, should
they find success and want to stay here, gives them a route to citizenship. Reforming the H-1B visa system is important to the big tech companies, but the Startup Visa is more consequential. We’ve long talked about stapling a green card to graduate school diplomas—now it’s time to pass legislation to do it.

The United States can remain the most innovative and entrepreneurial nation, but only if we are a magnet for the world’s best and brightest. Immigration is not just a problem to solve; it’s an opportunity to seize.

What we saw in the First and, to some extent, the Second Wave of the Internet we are seeing once again in the Third: The economy changes far faster than the rules governing it. The system we have in place to regulate business is stuck on twentieth-century notions of how the American economy works—some of which no longer make sense.

Companies such as Uber and Instacart (an on-demand grocery delivery service), which rely on individuals who work on a project-to-project basis, are leading us to rethink ideas about employment and what it means to be a worker. These companies give people the flexibility to work their own hours as they see fit, and the compensation to make a good income for those hours. But this new approach is not without some problems—for example, some workers are concerned that they don’t have protections against losing their contractor status
for undue cause. Specifically, as the “uberization” of more and more industries takes hold, how will the middle class earn paid sick leave, vacation days, and unemployment insurance and contribute to their retirement plans?

A primary reason why these issues are emerging is that our legal system’s view of employment wasn’t designed for the freelance economy. Rather, it was written into New Deal legislation, which divided workers into two categories: full employees and independent contractors. That worked for decades, but it doesn’t work anymore. A large part of the labor force of these startups is now composed of people who work only a few hours a week.

There is a happy medium that can exist between full employment status, which usually confers benefits and stability to employees, and contractor status, which provides flexibility and mobility. Preserving the rights of workers and enabling economic growth do not have to be mutually exclusive aims—but they will be if we stick to old definitions of employment. As Senator Mark Warner put it in the
Washington Post,
“Instead of trying to make the new economy look more like the old, Washington should encourage these innovations and work to create more opportunities and upward economic mobility for everybody.” It’s up to the government to take an active role in establishing a fair compromise that allows us to do just that. There’s a tremendous upside in getting this right—not just for the companies in question but for middle- and low-income workers. If the government creates a new employment
designation that both allows for this sort of on-demand work structure and provides basic worker protections, it could open a new path to socioeconomic mobility.

That’s not to say that climbing the socioeconomic ladder will become easy. But it’s not as if the people who will be in a position to benefit from the freelance economy have it easy now. Undereducated workers today have few options to move up. By and large, it’s difficult for such workers to find the time or resources to dedicate to furthering their education. The people who manage to do so while working low-wage jobs are practically superhuman. But that shouldn’t be the requirement for living a good life in America.

Other countries don’t have the same preoccupations we do. They’ve watched America grow and prosper and have studied our methods, and now they are working to do the same for themselves. All around the world, nations are working to replicate the conditions necessary for a vibrant entrepreneurial environment. They’re encouraging entrepreneurship, making it easier to start and run businesses, increasing access to capital, and creating the support networks needed to better position their citizen entrepreneurs—and those they can attract to their shores—for success.

In 2013, Canada launched its Start-Up Visa Program, offering permanent residence to entrepreneurs willing to move
to Canada and start a business or relocate their current one. As Employment Minister Jason Kenney put it, “We’re seeking very deliberately to benefit from the dysfunctional American immigration system. I make no bones about it.”
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In Chile, the government launched a flagship seed accelerator program called Start-Up Chile in 2010. The goal was to create Chile’s own “mini Silicon Valley,” which could provide a boost to an economy that was already one of Latin America’s fastest growing. Europe, too, is waking up and embracing the entrepreneurship imperative. Cities such as London, Helsinki, Stockholm, and Berlin are becoming thriving startup communities. London leapfrogged San Francisco and New York as the world’s top city for crowdfunding in 2013. And the British government is trying to modify their regulatory environment to position the UK as the fintech capital of the world.

South Korea, meanwhile, is working to rid the stigma associated with failure—a fear that every entrepreneurial nation must conquer—through investing $2.9 billion in startups. And China wants to grow its skilled worker pool to over 180 million by the end of the decade.
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In doing so, they hope to reverse the trend in which Chinese citizens leave the country to study at premier universities and end up contributing to other economies—including ours.

We also see emerging startup sectors in the Middle East and Africa—creating a more stable world and new competitors, all at once. Israel is widely praised as a preeminent “startup nation” and is making huge investments in basic technology. We’ve
seen the creation of venture capital funds in the West Bank to fund entrepreneurs who can create jobs, opportunity, and hope in the region. (I’m proud to note that The Case Foundation was a catalyst for the creation of one such fund when my wife, Jean, co-chaired the U.S.-Palestinian Partnership for President George W. Bush.)

Africa is on the move, with Nigeria and Kenya in particular emerging as hotbeds of entrepreneurial innovation. And we’re even seeing an entrepreneurial culture break out in Cuba. After a half century of being held back by socialism, Cubans are preparing for an innovation revolution. Small businesses, long banned, are now permitted, and some of those small businesses may, over time, become big businesses.

These regions and nations are moving forward at a time when America is trending sideways in certain areas and moving backward in others. And the tools that have long been available to entrepreneurs in America are increasingly available to entrepreneurs all over the world.

It seems everywhere you look in the world—from Australia
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to Zambia
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—governments are working with the private sector to optimize a startup-friendly environment. Admittedly, these are not imminent threats. Lagos isn’t going to leapfrog Silicon Valley in the next six months, or even the next six years. Nor is Santiago, São Paulo, or Seoul. But that doesn’t mean we should be content with where we stand today. And it certainly doesn’t mean that we shouldn’t seek to be better. 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.

The American economy is an entrepreneurial ecosystem. To get growth, we need to support growth. We need new ideas coming out of R&D labs, which entrepreneurs can then adapt for commercialization, knowing they have the runway they need to scale and succeed. And then we need to do it all over again. That’s what will create the jobs and the economic activity that will maintain our position on the point of the spear. But if any of those groups fails to make a contribution, the system breaks down. Already, the government’s failure to support our entrepreneurial community properly is costing us countless jobs and economic growth.

America led in the First Wave, and again in the Second Wave. We can—and should—lead in the Third Wave. If we take the right actions and do it quickly, a bright future will be assured. If we fail to, the world will no longer look to us as a source of radical innovation. Instead, we’ll end up playing catch-up, attempting to emulate the creations of other nations rather than introducing the ideas that others try to copy.

It won’t mean the end of America. But likely it will mean the end of American leadership. And that’s a future we all must work to avoid.

I
N JUNE
1983, I was at a crossroads. I was twenty-four years old and had spent a year working for Pizza Hut. And while I had a good time traveling the country and stuffing myself, the job was starting to get old. That summer I made a pros and cons list. I wrote down various career options—going to an established company, a startup, or a consulting firm—and ticked through the benefits and drawbacks of each possible move.

First on my list were established tech companies such as Apple and Atari. Marketing positions at those companies would have provided the tech on-ramp I was seeking, but with big companies come internal politics and red tape. There were some pros to those jobs but also a whole lot of cons.

When considering the possibility of joining a marketing consulting firm in San Francisco, I noted that while it would
be fun to work in Silicon Valley, I had three concerns: “stuffy, tough sell, don’t like consulting.” So that was a pass, too.

Finally, there was CVC, the startup I ended up choosing. I saw a lot of upside to going there: an exciting idea, promising technology, a chance to make a big impact in a growing market—and, best of all, the opportunity to work alongside and learn from entrepreneur Bill von Meister. I listed only one downside: “future uncertain.”

Everything about that CVC job was up in the air, from my future role in the company to the future of the company itself. Of course, you know how the story ends, but at the time this was a big concern. In a way, though, that uncertainty was as much a pro as it was a con. Sure, an uncertain future meant I could be out on the streets looking for a job in a few months’ time. But it also meant a chance to make my own destiny. A chance, as it turned out, to play a role in making the Internet a part of everyday life.

I’m often reminded of the famous newspaper ad Ernest Shackleton is said to have placed before his 1914 attempt to explore Antarctica: “Men wanted for hazardous journey. Small wages. Bitter cold. Long months of complete darkness. Constant danger. Safe return doubtful. Honor and recognition in case of success.”
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That’s the beauty of entrepreneurship, and that’s what drew me to CVC.

The bottom line is that when I was twenty-four, I had no idea where my own “hazardous journey” would lead me. I didn’t know whether my stock options would even be worth
the paper they were printed on. All I knew was that in the uncertainty lay immense challenges—and enormous opportunities. There was a boundless electronic frontier to explore, an online Antarctica filled with peril and possibility. And I knew that I needed to be a part of charting that uncertain future.

When I think about what the world will look like thirty years from now and try to anticipate what problems we need to solve—to say nothing of the problems we face now—I see another uncertain future. But I also believe that, as in my case, this uncertainty isn’t a disadvantage. Once again, we’ve got a pro masquerading as a con. Once again, we have the opportunity—and, I believe, the obligation—to set a new course. Now we just have to think about what all of us—entrepreneurs, business leaders, government officials, everyday Americans with good ideas—can and must do to make sure we arrive there.

If you’ve decided to skim this book or skip to the end, I won’t take offense as long as you stop here. These are the things you’re going to need to remember, whether you’re a budding entrepreneur, a corporate executive, or a casual reader.

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. It will mean the rise of the Internet of Everything, where everything we do will be enabled by an Internet connection,
much in the way it’s already enabled by electricity. This process will lead to the transformation of some of the industries that are vital to our daily lives, which will make the barriers to success higher, and the need to form partnerships much more central, as a way of building credibility, opening doors, and getting past industry gatekeepers. One such partner will likely be the government, which has an interest in regulating the industries most affected by the Third Wave. Don’t confuse your views of government with the role of government, which can be either an impediment to progress or a driver of it, and which cannot be ignored. Much Third Wave innovation will come from impact entrepreneurs focused on building “profit plus purpose” companies that have a measurable impact in the world. And this innovation will be geographically dispersed, as the rest of the country (and the world) rises up to complement the innovation now occurring largely in a few places, such as Silicon Valley. The challenges in the Third Wave will be vexing, and as Thomas Edison reminds us, “Vision without execution is hallucination.” But if we rally together, and execute with precision, we can remain the world’s most innovative and entrepreneurial nation.