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Memo to John Doerr: We Are Well Into the Third Wave

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I start each day by working out, but today, I made an exception –- I woke up and tuned into the live feed of TechCrunch Disrupt. I was hoping to see what one of my favorite Silicon Valley people had to say — John Doerr, who somehow has a way of encapsulating an era, a trend or a combination of technologies with just a few succinct words.

I mean this is the guy who uttered the memorable (and very true, in hindsight) lines such as “the largest legal creation of wealth on the planet” or “The old economy was about monopolies; the new economy is about competition.” And who can forget: “I have never paid so much for so little,” following his investment in Google.

This is also the man who invested in market-making startups such as Sun Microsystems, Intuit, Genentech, Symantec,, Netscape, Google and more recently, Bloom Energy. He was due to talk about the third wave, Michael Arrington had hinted in a post — and in light of the fact that he was the driving force behind @Home, the company that jump-started the broadband revolution — I was more than a little excited to hear what he had to say.

So I made myself a nice cup of peach-flavored white tea and sat down to watch the conversation Doerr was having with Charlie Rose, another one of my favorite people. Watching two people I admire that much talk about the future was so exciting that I forgot to call my parents, who were leaving to make their way over to the U.S. Oops!

What I got was a commercial for social gaming startup, Zynga, which Doerr described by saying: “We invested in Zynga 20 months ago, and it’s the fastest-growing venture we’ve ever had.” Then came his thesis about the third wave:

I think we’re on the verge of a third great wave of innovation. The first was the microchip and the PC in the early 80s. The second wave was 1995: the Internet. Marc Andresseen brought Netscape Navigator to the world. Then Amazon came. Then in 1999 we saw the 15th search engine called “Google.”

This third wave is social, mobile, new commerce. We don’t have a name for it yet. We could be on the verge of reinventing the web. It’s people, it’s places, it’s relationships. It’s exciting.

These smartphones change everything. They’re always connected, always on. It’s a powerful new platform. 85 million iPhones and iPod touches – we’re there. And now we have the iPad. It took just 28 days to sell a million of them. It’s not a big iPod. It’s a new paradigm. Imagine 10 years forward.

That was the extent of what he had to offer; even in a subsequent follow-up interview with TechCrunch TV he had little to add. But Social, Mobile and New Commerce — that doesn’t add up to the third wave of anything. That’s just the natural evolution of the Internet. It was obvious in 2002 that due to a growing number of broadband connections, more edge touch points (mobiles, laptops, connected televisions) and more people on the web, the Internet revolution, which began in 1995 — with Doerr providing the fertilizer — would continue to gain scale.

It was also obvious that more people and more always-on connections at higher speeds would mean more opportunities. Social — thanks to a determined kid named Mark Zuckerberg — is now part of the Internet fabric. More than 500 million have already signed on to be part a part of his social networking site, even despite the company’s privacy-related shenanigans.

Mobile? We’ve been a mobile society for the past few years — the iPhone only added fuel to the fire lit by the rollout of 3G networks in the middle of this decade. And new commerce? That’s an idea the South Koreans and the Japanese have been mucking around with since the 90’s and lately the Chinese. Zynga might be the darling today, but virtual currencies and gifts have been around an awful lot longer than that.

So if Social, Mobile and New Commerce are the third wave, we are way past the prediction stage. We’re already riding it. What comes next? That’s what I want to know. Especially from the one man whom I’ve have always counted on as being able to see the future better than everyone else.

P.S.: If you have thoughts about the next evolution of the web, leave a comment or feel free to drop me an email with your thoughts.

From GigaOM Pro: As Zynga Profits From Personal Data, Other Opportunities Abound and Is an iPhone- and Android-Only World the Best We Can Do?

37 Responses to “Memo to John Doerr: We Are Well Into the Third Wave”

  1. It may be possible that the really big waves of Internet change are actually over! The caterpillar has become a butterfly and will probably not become something else again. The web has already changed the world in a major way, and the future may be about tweaking and improving what we already have. Even the social networking phenomena that people are so excited about now is nothing new, and has really been the driving force of the web for many years. It’s just gotten more refined and easier to use for more mainstream users.

    We face a lot of challenges in the coming years that involve dealing with a changing and depleted environment that we all depend on for sustenance. As far as I know, no one has figured out how to actually eat the stuff they produce in Farmville. So the next significant wave of innovation may be coming from somewhere else entirely, and actually may have little to do with the Internet.

  2. He forgot about the first wave with the mainframe replacing the poor people who used to calculate for a living.

    I’d say the next wave is about the intersection of the age of information abundance with the abundance of computing. This will intersect whereever and whenever we need it, possibly without “us” ever being in the picture.

  3. Peter DiLaura

    From my perspective, the next evolution is the democratization of data, enabled by web technologies. The web will continue to transition from an information resource to a data synthesis platform, and elements like the social graph will be critical not for their information or visible connections, but as a backbone for predictive algorithms and a database of behaviors. The move of “quants” from Wall Street to the technology space will drive a tremendous amount of innovation very quickly.

  4. Chris

    Totally with you there Om! Was quite disappointed by John Doerr – he spent the bulk of his speaking time advertising the startups Kleiner has invested in and talking them up. I felt almost dirty watching it.

  5. Edgar

    It’s important to note that these revolutions dont start when the early adopters take on a new technology but when the masses adopt it. Sure smartphones have been “online” for awhile but in the grand scheme of things they are still only a relatively small percentage of the population.

    • ronald

      Edgar, to your point you might want to take a look at:

      why @11min in. Are we at 15-18% smart phone penetration? And shouldn’t VCs identify trends before they reach 15-18% or are they all me toooo.

  6. I believe the next “wave” is about hyper-localization…aka “the internet of things.” With GPS, WiFi, and Bluetooth all readily available and the near ubiquity of a network connection, the next logical step is to start personalizing your surroundings. This will require objects we don’t typically think of as “computers” to “evolve” (much as the cell phone was just a few short years ago) and connect with each other.

    For example, as I approach a coffee shop, my personal device will notify the store that I’d like my usual designer cup of coffee (sans foam). As I enter the store, payment will be deducted from my account (possibly using voice print verification as I say “Hi” to the barista), and I’ll pickup my drink and be on my way.

    This will be a long wave (time wise), but a tsunami none-the-less.

  7. ronald

    As you can imagine I think about it differently.

    There is the Web and there is the internet.

    The web is published data, which are organized by humans (links) to reveal context (org. idea). Maybe from all the data on the web only 2% (to make up some data)is relevant to me at any given moment. Means 98% is irrelevant to me right now, as more data from diverse sources gets published as less relevant the overall data becomes to me. That is because context is organized data and as more diversified it gets as less relevant it is to me, since I have limited capacity and be bound to past experience. In other words the web doesn’t scale nor do search results. Specially if humans take advantage of ambiguity and are able to make money of it.

    Then there is internet which is just a set of open protocols which allow machines to communicate in an organized way. So far it has scaled to incredible levels. Now since human data organization doesn’t scale on a very large scale, specially with ambiguity, we have to use different ways to organize those data. Social graphs is one way, introducing trust and context (related people) and limiting ambiguity on how data relates. Subscription to streaming models is another way, which gives you basically a snapshot of “random” data of all new data created with a limited context of what you might be interest in.

    Local apps is just another way to limit scope and allow for better organization (UI) of the data.

    All of this boils really down to organization, and sooner than later we have to get machines involved to help out. The semantic web is only a very small thumbnail of that picture, since it requires to much human involvement. As sooner as we go beyond the believe that we can capture text as a boolean expression as faster we get to new ways to organize the worlds data.

    The next big thing is about new ways of organizing the worlds data.

  8. nice post. I like some of your themes!

    I think the point of “waves” is that they are not billion dollar ideas but they are hundreds of billions of dollars over many years, So yes, Internet is a big wave and everything follows in its wake. So if the big “third wave” is really a wave, we are way into it.

  9. actually, Om, I think he customized the message to that audience. To others, including Congress he plays more of a sustainability message given Kleiner’s 50+ investments in clenatech. He has other investments in healthtech, personalized medicine etc. So, I would argue there is a Fourth Wave of innovation coming soon after which is described in my upcoming book, The New Polymath as blending 3,5,10 strands of infotech, cleantech, nanotech, biotech to come up compound, exotic new solutions to solve some of our complex problems. I profile Kleiner, GE and many more who are already able to handle that breadth of disciplines.

    About your respect for John, it is a remarkable track record and what a sense for markets years before others. In recent years the gloss had gone off VCs as opportunistic, looking for the quick hits. When I interviewed Kleiner for their chapter in the book, I was struck with the breadth and frontier nature of their cleantech portfolio – they started investing heavily in 2003 and are up to 50 wide ranging investments in that sector. You can call it many things but not aiming for a quick hit.

  10. 1Ecolife

    Maybe the next focus of attention for the market is the awareness of itself. Privacy issues and data mining, which has been around for decades will become a central topic once cloud computer and the sparse algorithm reach average Joe. Who owns what? Have you ever stepped over an ant’s nest? By the time of the realization one might be cover with them.

  11. You’re right, “we” (quoted purposely) are already into the third wave. Been so for a while now but that is “us”; early adopters and those on the cutting edge of technology availability.

    John talked about smartphones like they are just coming out and you know what, they are “just” coming out. Feature phones still outweigh smartphones and so the third wave for those that haven’t migrated over to smartphones is just occuring.

    And that brings us to the “we” I quoted above.

    “We”, as in those that read tech blogs, are inside the bubble (hate to say that word) of technology and because we live it everyday we believe everyone in the world is in the same state, which is not true.

    John in all his wisdom was probably trying to convey that the emergence of smartphone technology, which provides increased levels of social, comms, & commerce, is becoming more commonplace as average joe’s/jane’s start migrating off feature phones and into the 3rd wave.

    “We” have to keep in mind not everyone is bleeding edge or completely into all this techie stuff. If we don’t keep that in mind we can get disappointed when someone of John’s caliber gets on the stage and says a new trend is just starting vs. in our minds has been ongoing.

    • Ben

      I respectfully disagree. I think the iPhone launched in 2007 so it has been 3 years as per “third wave.” But we are assuming that rest of the world doesn’t exist.

      If you look at the growing sales of mobile phones, data connections, broadband connections etc from 2005 onwards, you are off target in saying early adopters. I think a whole lot of places (South Korea, parts of Europe, Japan) were already very connected.

      Further more, a Wall Street firm has put together a “research report” which is normally way late into a trend :-) If someone like JD is going to make a pronouncement, I would like to get it ahead of the curve not 5 years into it. That said, I think the whole concept of 3rd Wave if marketing speak.

  12. I believe the most compelling big trend is the actual take off of the internet out of the computer coming to new set of devices. Setting the internet free from the computer and making it present everywhere is what is radically changing the game: the iPhone is the obvious part, but think of game consoles, tvs, tablets, cars,…The everything connected is in my mind the biggest thing ever happened to the internet since it was created (originally for computers)

  13. Nice post, Om. Well I think it is very hard to speak about future, as for me I think that next 10 years Twitter will be #1 position, and if google doesn’t change something and will not create a great service like youtube or something else Twitter can easily conquer them.

  14. to come :
    – Augmented reality goes mainstream
    – Sensor detection in every device
    – Machine to machine > human communication
    – Artificial inteligence everywhere (like robot journalist)
    – new designe for mobile device (data > voice -> 6sens by MIT)
    – auto login with biometrie everywhere (using cam for eye recognition)

    But the main thing is that Internet gonna be used outside of the computer : mobile, car, terminal like surface or iPad.

  15. r0macdonald

    Om, the 3rd wave will be Semantic Web. We see early uses in the Zemanta and Thomson Reuter’s OpenCalais services. Twitter’s annotation feature and Facebook’s Open Graph will bring partial implementations to a much broader developer community and demonstrate the scaling value of Tim Berners-Lee’s vision.

  16. I think that the next wave will involve the relationships of data with genetics. computers and software is just part of it now! the manipulation of life will be bigger than the computer revolution.

  17. hey om, i think charlie is awesome too. and john yep. but here’s the thing – sometimes charlie rose as an interviewer is like an ADD teenager. it’s like he’s not even listening sometimes. i mean what was that non sequitor question about “what is it with steve and adobe?” so I think part of what made this frame a little less crisp and sharp was that instead of doerr engaging with a technologist who gets it and can unpack the discussion and doerr’s thoughts like a pro we got what rose readily admitted was “a layman’s approach” to exploring these topics. I don’t think doerr is losing his edge or behind the curve; I think charlie didn’t bring out the best and deepest thinking in his kind of flitting questions and while I love charlie I think he doesn’t need to keep changing the subject – sometimes he should go deep…

  18. Peter

    I agree with your observations. Very marginal comments from John. I didn’t get the feeling that he really understands the social movement all that well.

  19. Om, I wrote a long post in April with my thoughts for the potential Billion dollar opportunities in the next decade – most of which aren’t pure “web” ideas but most of which do involve the pervasive Internet in some capacity (or pervasive & ad-hoc networks – not just “the Internet”)


    I’d love your thoughts/reactions/feedback on my predictions – I’m certain I’ve missed some huge opportunities.


    • nice post. I like some of your themes!

      I think the point of “waves” is that they are not billion dollar ideas but they are hundreds of billions of dollars over many years, So yes, Internet is a big wave and everything follows in its wake. So if the big “third wave” is really a wave, we are way into it.

  20. THE evolution really is mobile. I’m not sure why Doerr was so non-specific. Pick a horse… and mobile is the horse to pick. Mobile is re-defining commerce (Square, mobile payments, mobile donations), advertising (Google had to acquire Admob to catch up and Apple Quattro), devices… look at every new phone after the iPhone… UI rich, and app-tastic!

    I have been in the mobile space since 2003. Every year I hear the proclamation that it is the “Year of Mobile”…. but if you look around, the shift already happened. It happened so fast even Mr. Doerr missed it.

    The iPad has kicked off a tablet market that thrives on a user experience that is inherently mobile.

    If the third wave of the internet evolution were a hollywood blockbuster, the through line would be mobile.