Reasons for optimism

Philip Morgan

For me, there's a pretty direct inverse correlation between my general sense of optimism and the amount of mainstream news media I consume.

Stuff like this really helps though: This long article talks about localized innovation and progress in America, much of which gets lost in the approach national-level mainstream media takes to news. The article mentions Steve Case.

I wasn't previously aware of Steve Case's book The Third Wave: An Entrepreneur's Vision of the Future. Steve was co-founder of AOL, which doesn't necessarily qualify him to make predictions about the future of technology, but I find the main idea of the book compelling and relevant to what we talk about here on this list.

Here's an excerpt from the marketing site for Steve's book:

We are entering, as Case explains, a new paradigm called the “Third Wave” of the Internet. The first wave saw AOL and other companies lay the foundation for consumers to connect to the Internet. The second wave saw companies like Google and Facebook build on top of the Internet to create search and social networking capabilities, while apps like Snapchat and Instagram leverage the smartphone revolution. Now, Case argues, we’re entering the Third Wave: a period in which entrepreneurs will vastly transform major “real world” sectors like health, education, transportation, energy, and food—and in the process change the way we live our daily lives. But success in the Third Wave will require a different skill set, and Case outlines the path forward.

This book is written for entrepreneurs, and that word can mean a lot of related but subtly different things. I think in this case the book's audience is entrepreneurs who want to build product companies.

There's another kind of entrepreneur, though, and you might be in that group: entrepreneurial service providers who scale their value and impact with economically valuable expertise. I think the idea of the "Third Wave" is relevant to us too.

Steve's argument is that domain-specific tacit knowledge will become increasingly valuable--indispensable in fact--during this Third Wave. This has always been true to an extent. How much of Facebook's dominance in social media is due to great code, and how much is due to a deep and nearly insidious understand of human psychology and addiction, clever lawyering to skirt regulation, and aggressive work to build business partnerships and so on?

The difference in the Third Wave is that software-driven innovation moves out of tech innovation hubs like Silicon Valley and into "the real world". In other words, the innovation starts happening within specific verticals like transportation, medicine, manufacturing, and so on. It's less a case of Silicon Valley tech companies trying to "disrupt" other industries, and more a case of those industries using advanced technology to improve themselves.

Here's a relevant excerpt from that Atlantic article I linked to above:

Case points out that venture-capital support for start-ups is still heavily skewed toward the coasts. Nearly half of the total funds in the U.S. are directed to companies in California alone. But he says the balance is shifting, as part of a “third wave” of technology businesses (the first the building of the internet, the second the building of companies using it) based on applying advanced technology to “real” enterprises, from agriculture to health care to manufacturing. “It’s going to be more important to know how doctors work and farmers think and to build strategic partnerships,” he told me, “than just to work on coding and software.” The coding and software centers are in a handful of big cities. These other businesses are dispersed across the country, and start-ups will follow. “We see the ecosystems developing—mayors working with entrepreneurs and university presidents,” Case said. “Things are bubbling in these cities. It’s an untold story.”

It's not just product business entrepreneurs who benefit from domain-specific tacit knowledge. Service providers can too.

To paraphrase a line from Steve: it's going to be more important for self-employed software developers to know how doctors work and farmers think and to be expert innovation partners with their clients. This is more important than just knowing how to code and build software.

Said differently: knowing how to code and build software are the table stakes. That's where the bar is set for "minimum viable competence". To move beyond that bar, you need something extra. That something extra could be domain-specific tacit knowledge. Understanding how farmers think. Knowing how a certain type of medical business makes money. Etc...

Focusing on a specific vertical helps you more quickly cultivate domain-specific tacit knowledge. Understanding how clients in that vertical think. Understanding how they make buying decisions. Understanding what specifically, in their world, reduces risk or represents opportunity.

If this approach to making your business better interests you, then the first workshop in Specialization School is worth a look. It's specifically designed to move you to a place of clarity about where you could focus, and it does so quite reliably in 4 weeks.

It's a combination of structured curriculum and live Q&A meetings. The live Q&A meetings are a mix of accountability (keeps you moving through the assigned work each week), quick consulting (get my specific feedback on your specific situation), and group support (see that you're not alone and others are having similar struggles and similar breakthroughs). For the July group, the live Q&A meetings happen at 9am Pacific time on Wednesdays, starting on July 11.

More information on this workshop: /specialization-school/part-1-decision-making-workshop/

If you want to join, I need to speak to you briefly to answer any questions you might have and make sure you're likely to get a good ROI on the cost of the workshop. You can set that up right here: