Welcome to the “third wave” – a new generation of Internet companies and applications. Just what the “third wave” is, however, is still to be determined. In pitching his new “sFund,” John Doerr wrote: “we’re on the third wave now. This is about the social web.” Previously, when pitching the iFund, Doerr described the “third shift” as “interacting fluidly on full and fast screens with vast information stored locally. And that will start a third renaissance of software.” Later Doerr described the three waves as (1) microchip & PC, (2) the Internet, and (3) social, mobile and new forms of commerce.
Michael Arrington talks about the third wave and the “Age of Facebook” and marvels at how Zynga (not Google, Amazon, AOL, Compaq, Electronic Arts, Genentech, Intuit, Netscape, or Sun) is fastest growing business Kleiner Perkins has ever invested in. Gravity.com sees the waves as “Theirs, Ours, Yours” emphasizing the shift to personalization.
The New York Times, in a story rife with anecdotes, quotes, and truisms but bereft of any useful trend data, has already cried “bubble!” noting that the “enthusiasm for social networking and mobile apps has venture capitalists clamoring to give money to young companies.”
Bubble or not, I think it’s clear that we are at the beginning of a new wave of Internet applications for a simple reason: there is a new infrastructure upon which to build them. Whether you accept Doerr’s first construct that the three waves are web, iPhone, iPad, or his second construct that the three waves are PC software, Internet software, and social software, (or my construct below), it is a certainty that entrepreneurs will build new things on the foundation that now exists that simply wasn’t available for these earlier waves.
The purpose of this newsletter is to explore this new wave – the ideas, the innovations, the technologies, and the companies – to not only understand it better but to shape it while it’s happening.
A New Foundation
I see the three Internet waves as being (1) Dot Com, (2) Web 2.0, and (3) Third Wave (3W). The dot com wave brought us ISPs, web browsers, directories (Yahoo), search engines (Google), ecommerce (Amazon), marketplaces (eBay) while it commercialized and globalized an academic network. On this infrastructure exploded countless companies and new technologies that expanded the participants in and possibilities of the Internet.
While the dot com wave was in great part about highly funded web sites that were accessible but impersonal, it laid the foundation for the participatory wave of Web 2.0. The OSS revolution and countless technical innovations made developing Web 2.0 sites an order of magnitude less expensive than dot com sites. The cornerstones of this new “read write web” that ushered in “UGC” were blogs, wikis, social networks, and “sharing” sites of all kinds making it easy to share photos, videos, and 140 character musings. As Microsoft was to PCs and Google was to dot com, Facebook is to Web 2.0.
And just as the dot com boom was built on the foundation of the PC boom, and as Web 2.0 was built on the dot com infrastructure, we are seeing a third wave grow on the platforms of Web 2.0. Zynga is likely the first great company of this wave, growing faster than the great companies of prior waves because it’s growing on top of them.
While necessity may be the mother of invention some of the time, Don Norman points out that technology often drives invention with needs being discovered to fit innovations, rather than the other way around. In other words, build it and they will come. (Or, build it and they will figure out what to do with it.)
Infrastructure for 3W apps
To understand the third wave, therefore, the place to start is the infrastructure & ideas that 3W entrepreneurs have to build upon that prior entrepreneurs simply didn’t have (at all or at least to this extent and in this way):
- Social infrastructure (Facebook & Twitter social graphs; open APIs)
- Smart Mobile infrastructure (smart phones, cameras, location awareness)
- App infrastructure (iPhone/iPad, Android, Chrome)
- Tablet infrastructure (touch interface)
- Gamification infrastructure
- Virtual goods/currency
- Ad targeting/ad networks
- Deals/Social commerce
- Read/write infrastructure (Blogs, wikis, Q&A, YouTube, etc.)
- Plentiful and inexpensive content
- Video upload & streaming
- SMO (social media as distribution channel, augmenting SEO & email marketing)
- Cloud services (Google, Amazon, Salesforce, etc.)
- Other candidates: auto-detection (location, flights, traffic, weather), bar codes, new UI/UX ideas, meatspace meets cyberspace (ShopKick), OCR, freelance services (eLance, 99Designs), contests, streams, intimacy/trust, email parsing, and more!
Your second question: what other aspects of the Third Wave would you like to explore? Here are some topics I had in mind. I would love ideas on other areas (and would especially love a guest post on a Third Wave topic):
- Characteristics of 3W apps & businesses
- Key “problems” that 3W will have to solve
- Major challenges & opportunities of building 3W apps and businesses
- Verticals ripe to become 3W
- A closer look at some early 3W companies
- How are traditional, 1.0 & 2.0 companies adjusting to 3W?
- What would a 3W media company look like?
- How does Groupon & the “Deal Economy” fit into 3W?
- Is there a 3W way to be an entrepreneur? What does the 3W startup look like?
- How to evaluate & start a 3W company, app, or project
- What should we name “3W”? Is it really “third wave” or should we call it something else?
Please hit me with your suggestions!
 “Doerr said the first wave was the creation of the microchip and the personal computer, for which he invested in Intuit Inc. and Sun Microsystems; the second was the Internet, with his investments including Google and Amazon; and the third is all about social, mobile and new forms of commerce, which Kleiner has aggressively invested in through its main fund and a side pool of capital called the iFund.” http://blogs.wsj.com/venturecapital/2010/05/24/john-doerr-on-the-great-third-wave-of-technology/
 This is one of the reasons I don’t read NYT!
 “New conceptual breakthroughs are invariably driven by the development of new technologies The new technologies, in turn, inspire technologists to invent things, not sometimes because they themselves dream of having their capabilities, but many times simply because they can build them. In other words, grand conceptual inventions happen because technology has finally made them possible. Do people need them? That question is answered over the next several decades as the technology moves from technical demonstration, to product, to failure, or perhaps to slow acceptance in the commercial world where slowly, after considerable time, the products and applications are jointly evolve, and slowly the need develops.” http://www.jnd.org/dn.mss/technology_first_needs_last.html