9/23/2017

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The Third Wave
An Entrepreneur’s Vision of the Future
by Steve Case

The title of America Online cofounder Steve Case’s new book, The Third Wave, refers to his idea that we are entering a new phase of Internet use—one that will require tech entrepreneurs to rethink their relationships with customers, competitors, and governments. In the framework that Case lays out, the First Wave of the Internet saw AOL and other companies lay the foundations for consumers to connect to the Internet. In the Second Wave, companies like Google and Facebook build on top of these basic structures to create search and social networking capabilities. Now, Case argues, we’re entering the Third Wave, a period in which entrepreneurs will transform major “real world” sectors like health, education, transportation, energy, and food—and, in the process, change the way we live our daily lives.

The Third Wave of the Internet will be defined not by the Internet of Things; it will be defined by the Internet of Everything. We are entering a new phase of technological evolution, a phase where the Internet will be fully integrated into every part of our lives—how we learn, how we heal, how we manage our finances, how we get around, how we work, even what we eat. As the Third Wave gains momentum, every industry leader in every economic sector is at risk of being disrupted. Think about what’s been happening in Silicon Valley over the past few decades and imagine what it will look like when we apply that same culture of innovation and scope of ambition to every part of our economy. That’s the Third Wave—and it’s not just coming; it’s here.

A Healthy Healthcare System

If you’re a tech entrepreneur looking for an industry to disrupt, what better place to begin than the healthcare system? For starters, it’s massive—making up one-sixth of the U.S. economy. On top of that, healthcare industry incumbents have been disturbingly slow in the adoption of technology. As most can attest, going to a hospital often feels like you’re stepping back in time. Many hospitals still use paper medical records and fax machines. Most can’t even tell you what their services cost. And most research and development is focused on medical devices and pharmaceuticals, with very little focus on how to use connected technology to improve outcomes. The lack of coordination and actionable data makes for a tenuous healthcare system, riddled with error. As patients, we are expected to seek expensive second opinions, not because insurance companies want us to but because misdiagnosis is disconcertingly common. In September 2011, for example, MD Anderson researchers found that as much as 25 percent of the time, a second opinion results in a change of diagnosis.

And yet for decades, complacency has been held up like a value to behold. If you’ve ever wondered why the American healthcare system costs more than other advanced countries’ but doesn’t produce better results, this is why. Our hospitals are stuck in a pre-Internet world, and patients are suffering because of it.

Luckily, entrepreneurs see an opportunity. In 2014, digital health startups raised four times as much money as they had in 2010. What began with fitness trackers that measure steps and speed and heart rate will soon transform into hardware and software that will enable users to take the full range of vital signs on a serial basis, collecting and saving data and alerting patients and their doctors if something is wrong. It won’t be long before tracking your vitals on a daily basis will become routine, as simple and essential as brushing your teeth. It may sound basic, but it will have profound effects both on how patients are treated as individuals and on how the entire health system operates.

When your doctor receives a summary of your health tracking data, she’s leveraging a tool of precision that she currently lacks. Today, when a doctor asks us questions like “When did it start bothering you?” or “Have you noticed any other symptoms?,” too often, we don’t have an accurate answer to provide. In most cases, that lack of precision may not be significant, but there are times when a more accurate reading could be the difference between life and death. It can give a doctor the tools to assess whether the headache a patient is complaining about is a simple migraine or a deadly aneurysm—perhaps before the patient even arrives at the hospital. It means being warned, at home, by your smartphone, of the clot before the stroke or the clog before the heart attack—a warning that will make your mobile device seem smarter and more essential than ever.

This kind of technology can also help reduce disease mismanagement, which accounts for more than 30 percent of healthcare spending. With connected devices, doctors will be able to monitor high-risk patients at home, using sensors that check everything from a patient’s vitals to whether she’s taking the right medications at the right time. These kinds of innovations could save tens of thousands of lives each year while substantially bringing down healthcare costs.

Of course, in the Third Wave, it won’t just be doctors who analyze your health data; it will be third-party apps designed to keep you healthy. Imagine the possibility of instant diagnosis, not by a doctor, but by a supercomputer like IBM’s Watson. These are the kinds of changes that will reverberate throughout the entire healthcare system. The CDC estimates that 200,000 people each year suffer preventable deaths from chronic disease. What if getting them to the hospital a day or even an hour earlier could save their lives? We can even quantify the value of those better outcomes: According to the consulting firm McKinsey, the value to the economy of this kind of monitoring could be as much as $1 trillion per year by 2025.1 And that’s before we even begin to look at the data in the aggregate. Once researchers have access to anonymous population-wide data, once that data can be analyzed, we’ll be able to see once-invisible patterns. That could change everything from how we track epidemics to how we characterize illnesses themselves, driving a genuine revolution in medicine.

The Future of Food

The food industry is a $5 trillion sector, and, unless you grow your own vegetables and hunt your own game, chances are you’re a frequent customer. Any Third Wave entrepreneur would look at those numbers and see opportunity. A lot of people have—and a lot of people do. They see a chance for innovative Third Wave companies to challenge the way food is produced, distributed, and consumed.

That doesn’t mean you should expect to start seeing edible microchips. The only apples with Wi-Fi connections will still be your iPhone or MacBook. It also doesn’t mean you should expect mainstream adoption of “food alternatives” such as Soylent, a powder mixed with water that’s popular among some Silicon Valley elites.

Instead, the Third Wave will fundamentally change how we grow and raise our food, how we store it and transport it safely, and how we deliver it to customers.

Out of necessity, the agriculture industry has long embraced technological advances as a way to improve productivity and cut costs. Farms across America have, for years, been using sensors to track temperature, water saturation, and other critical variables for healthy yields of fruits and vegetables. But the Third Wave will take that to a whole new level. As reporter Nicole Kobie explained in the Guardian, the Third Wave may even save the bee population, which has been dying off mysteriously for years, creating a threat to our ability to pollinate our fields. One of the primary causes of the collapse of bee colonies is the presence of a particular type of mite. These mites can be killed by heat, but heating up the hive will melt the wax it’s made of. Killing mites that way would take out the bees, too.

So a group of researchers set out to solve the problem, developing a way “to heat up specific spots in a hive from the inside, rather than heating the entire structure, using circuitry that’s screen-printed on to a hive base, called a foundation,” Kobie wrote. The bees build their home following the screen-printed pattern, creating a colony that’s connected directly to the Internet. Will MacHugh, one of the lead researchers, explained the system to Kobie: “What our electronics do is two things: they monitor temperature and they produce heat.” When the sensors detect a bee larva that might be susceptible to a mite, they heat up the area around it, killing any nearby attackers without harming the larva or weakening the hive structure.

“The bees actually kind of like it,” said MacHugh. “The mites, because they’re so much smaller, it almost pops them like popcorn.”

Once produce is harvested and livestock slaughtered, food in America goes through a food safety system that was created by Teddy Roosevelt a century ago and hasn’t changed that much since. In most processing plants, inspectors from the USDA look at less than 1 percent of the meat being processed. And the inspections they do conduct are mostly done by sight. Even when they test for foodborne pathogens, a positive result for something as dangerous as salmonella rarely shuts down an operation. From a public health perspective, food safety needs a technological reboot.

Third Wave entrepreneurs are poised to revolutionize this process. There are companies, for example, working on ways to use beams of light to kill pathogens without heating up meat, making it possible to guarantee safe processing rather than just spot-checking it. There are others working on smart packaging—embedded with RFID (radio-frequency identification), NFC (near field communication), or Bluetooth technology. This will allow constant real-time monitoring of meat, making sure that refrigeration remains constant from factory to refrigerator.

It won’t be long before we can take this technological evolution one step further. Imagine a refrigerator that can determine whether your produce has been mishandled, or an oven that refuses to cook questionable meat. These are not the things of science fiction; they are the children of the Third Wave.

All of this will take place at the convergence of demographic, lifestyle, and tech trends that will also shape the direction of food’s future. Millennials, now greater in number than baby boomers, are generally more food-centric and more experience-centric. They tend to eat out far more than other generations, and they also tend to be much more health-conscious. According to the New York Times, per capita soda sales fell 25 percent between 1998 and 2015, replaced mostly by water. That demand for healthier food can be seen in the way fast casual restaurants like Sweetgreen—which my firm, Revolution, invested in—are eating away at the fast food market. Unlike McDonald’s, Sweetgreen isn’t using tech to process foods; they’re using it to manage the logistics of a seasonal farm-to-table operation. That, in turn, has contributed to the revival of artisan farmers, who are able to sell fresh produce at better prices than they could get selling through distributors.

This trend isn’t lost on investors. When they look at food-tech startups to fund, it will be those best able to tap into that culture—those best able to reap value from a healthy eating revolution.

Steve Case (@SteveCase) is the cofounder of America Online and chairman and CEO of Revolution, an investment firm based in Washington, D.C. He also was the founding chair of the Startup America Partnership, an effort launched at the White House to accelerate high-growth entrepreneurship throughout the nation. A member of the Presidential Ambassadors for Global Entrepreneurship, Case also serves as chairman of the Case Foundation, which he established with his wife Jean.

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