We are in the middle of a revolution. The Internet of Things (IoT), which gained legitimacy in 2015, is predicted to grow to $1.7 trillion in 2020, from $655.8 billion in 2014, as more devices come online and platforms and services grow up around them. For vendors selling hardware and software to support this market, 2020 revenues will exceed $470 billion.
How Did we Get Here?
Let's quickly step back for some context. How did we get here?
The history of the internet had two distinct phases. The first wave begin with the creation of the online world. People slowly woke up to the infamous "You've got mail" notification.
Then, around the year 2000, the second wave started. Businesses emerged that helped us navigate the vast amount of information that was coming online.
Online marketplaces like Amazon and EBay changed the way we shop and sell. Social media platforms including Facebook and Twitter appeared. Smart phones gave people internet access whenever and wherever they went.
Game developers and app developers jumped into the second wave with full force, capitalizing on consumer cravings to be engaged and connected. Once luxuries for the wealthy, our phones, tablets, and PCs became necessities, and even commodities.
Now, the internet is being woven into the fabric of every aspect of our life, creating the third wave. It's becoming standard in our homes and cars. Smart cities are popping up around the world, and industries that have been plagued by inefficiency are ripe for massive disruption.
The IoT evolution recently drew 600 leaders and investors to ConnectPreneur, one of the DC region's hottest quarterly events. Internet pioneer Steve Case shared his predictions and observations about this revolution, which he outlined in his best-selling book, "The Third Wave."
During a fireside chat with serial entrepreneur and ConnectPreneur creator, Tien Wong, Case offered attendees a summary of the three things entrepreneurs must know to cash in on the IoT revolution:
1: Partnerships Are Essential for Success.
During the second wave, we saw countless examples of lone companies achieving massive success by creating popular products that got people online and connected. Google, Twitter, Linked In, and Facebook were four of our biggest examples.
However, for the third wave, partnerships with "industry gatekeepers" will be essential to build credibility and gain momentum. "A great idea is no longer enough," said Case. Companies will need a solid partner strategy.
For example, companies that are looking to disrupt the healthcare market will need partnerships with hospitals and healthcare companies. This market comprises 1/6 of the U.S. economy, but the systems are notoriously slow, inefficient, and expensive.
Third-wave entrepreneurs are already seizing these opportunities. According to "The Third Wave," between 2010 and 2014 the amount of money raised by digital health care start-ups quadrupled.
2: Policy Is Ripe for Disruption.
Case shared that the greatest entrepreneurial opportunities will reside in industries that are ripe for disruption. In addition to the healthcare market, the food market will be a major focus for third wave entrepreneurs.
The food industry is a $5 trillion industry. The third wave will revolutionize how we grow, raise, store, transport, and deliver food.
3: Perseverance Will Be Essential.
The newest entrepreneurial generation grew up witnessing accumulation of extreme wealth by many second wave entrepreneurs. The overnight successes are a thing of the past.
The most successful entrepreneurs will be those who are comfortable with discomfort, who take risks, and who are willing to sacrifice existing revenue streams for new ideas. They are willing to take one step backward to take three steps forward.
Social Impact and a Level Playing Field Also Matter.
In "The Third Wave," Case also shared that impact investing, which merges traditional business and philanthropy, will take precedence over pure-profit investing. Investors will seek out companies that are committed to making significant social impact.
In addition, Case pointed out that the playing field is not level regarding investing. In 2016, 70 percent of venture capital funding went to three states: California, New York, and Massachusetts. Middle America has seen virtually no entrepreneurial investment.
"The vast majority of America is experiencing the downside of technology which is increased productivity and job reduction, but they are not benefiting from the upside because no one is investing in them to build their companies and create jobs," he explained.
Further, 90 percent of investments went to male founders.
For investors that think outside the traditional borders, and who embrace the female wave of entrepreneurship, there will be unlimited investment potential.
What Will Your Story Be?
As we sit on the cusp of this revolution, how will you seize your opportunity? Will you create a disruptive solution? Sell supporting hardware and software? Invest in the next big idea? Discover the next Steve Jobs in an obscure middle-America city?
I suggest starting with Case's "The Third Wave."