Riptide from the Third Wave

Were it left for me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate for a moment to choose the latter.

– Thomas Jefferson

In his new book, The Third Wave, Steve Case, the founder of AOL, makes the argument that we are entering a new era of digital technology that will call for new paradigms in business strategy and public-private partnerships.  To roughly summarize:

  • “The First Wave” happened in the heady early days of AOL, when governments were still laying fiberoptic cables and expanding Internet access to private citizens
  • “The Second Wave” happened in the late bubble days and early 2000s, when apps and sites helped power productivity gains from the Internet infrastructure
  • “The Third Wave” is starting right now, and involves the rise of IoT and platforms leading to disruptions of everyday living (e.g., hotels being replaced by AirBnB)

In his book, Steve Case lays out a vision for how the Third Wave will go more like the First Wave: requiring public-private partnerships to establish sensible regulations.  Because the Second Wave companies existed solely in the medium of traditional IT (Facebook is a website, Google is a website, Apple launched new categories of standalone devices), they could largely sidestep the issue of regulation.  But because the Third Wave companies are disrupting hotels, taxi cabs, refrigerators, speakers, lighting, home security, and much much more, consumers and regulators will demand more stringent protections.

Reading a piece in the Journal about Dara Khosrowshahi groveling to London regulators reminded me of The Third Wave. It proves his point.  Steve Case is right.  We are seeing more and more that governments are interjecting themselves into big tech and demanding that these global enterprises be responsive to the needs of the body politic.  In fact, Uber’s brash regulatory approach (which extended to recruiting, I can tell you personally), is probably the reason that it is the first major tech company to have approval ratings below 50%.  However, what Steve Case gets very wrong is his assertion that we have been here before and that we can use techniques from the First Wave’s playbook to succeed.  In fact, we have not been here and the same rulebook does not apply.

In his second term, the Clinton administration passed the Telecommunications Act of 1996.  This sweeping regulation represented the first major update to telecommunications regulation since before World War II, and was the first governmental framework for regulating the Internet[1].  Because the Internet was so new, it was important to establish guidelines and frameworks rather than specific implementation policies.  In fact, the bill’s opening paragraph speaks to this motivation, reading:

Begun and held at the City of Washington on Wednesday, the third day of January, one thousand nine hundred and ninety-six
An Act to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.

This is an important distinction from the battles being waged today! Regulators then were dealing with a greenfield technology, with few incumbent interests[2], in a sector that had no existing labor.  Today, Uber, AirBnB, TaskRabbit, Kiva, Instacart, Tesla and other Third Wave companies pose a direct challenge to vested interests in dozens of different industries that are already highly regulated.

In fact, this is the irony of Silicon Valley.  For years, start-ups have been preaching that they are the harbingers of change, ready to #Disrupt (clearly, my favorite hashtag) our entire way of being.  But what of the early 2000s tech companies? They largely produced technology that created new ways of communicating, gaming, shopping, or working at white-collar jobs.  The major IPOs in the past decade have been from companies like Zynga, Facebook, Box, Alibaba, TrueCar, and Twitter.  These companies did not transform existing aspects of our lives, they only added to it.

The truly disruptive companies have only sprung up in the last 5-10 years, and largely remain private.  These are the ones I mentioned above, and include many that are facing intense regulatory scrutiny.  These companies finally did it! #Disrupt! But that may have led to a quickening of governmental intervention.

Tech Companies Winning at #Disruption

I don’t know how this fight will shake out.  I don’t think there will be a solution (or even détente) in the next decade.  This is a long, slow fight that software engineers and technology leaders have never had to face.  Will this lead to the certification of software engineers as “automated vehicle engineers” to ensure safety standards? Will this lead to criminal suits against leadership at gig economy companies for violating federal minimum wage laws? The high-tech sector may wish for an Internet without the government, but as with Jefferson’s original quote, around the world we are starting to see the former more often than the latter.


[1] In fact, this resulted in subsequent litigation including Reno v. ACLUwhich invalidated portions of the Communications Decency Act (Title V of the Telecommunications Act).

[2] Existing telecommunications companies were lobbying hard against Internet deregulation because they stood to lose, but they also had active investments looking to capitalize on this opportunity and today major players like AT&T are still represented as cable/broadband carriers.



On the Treadmill

Before I left Amazon, I had a conversation with a co-worker that went a little bit like this:

Me: “I really am ready to branch out on my own.  Business school has got to be that catalyst.”

Colleague: “I know, I’m really itchy to find out if there’s anything else going on out there. It’s time for a good startup experience.”

Me: “Have you looked?”

Colleague: “Well…”

This conversation came to mind recently because occasionally I have conversations with business school classmates that go like this:

Me: “Starting a company is tricky work.”

Classmate: “Your startup sounds so cool! Maybe we can talk about the idea and see if you need any help?”

Me: “Absolutely! I love help! How are you looking to get involved?”

Classmate: “Well right now I’m recruiting for banking/consulting/tech and finals are a pain and next week…”

I don’t question the sincerity of my classmates’ interest or their desire to help, but it’s amazing to see their struggle to break free of the routine.  No matter what lives we lead, at some point we all end up on a treadmill.  Most times, we don’t know how or why we got there.  Our lives become interrupt-driven: running in a continual loop, only to pause if someone or something actively takes us out of it.  Combine this behavior with the tendencies of business school students to be risk-averse, and it makes it nearly impossible to take advantage of entrepreneurial opportunities.

In high school and college I basically never got off my treadmill.  But more recently, I feel like I notice routine.  I notice that the same conversations keep happening, the same stressors.  Increasingly, I get an almost claustrophobic feeling and find it important to actively discover why what’s filling my days fills my days.

When I do re-evaluate my choices it’s scary, and can sometimes (read: usually) end up disorienting me.

What happens most times I step off the treadmill

But sometimes (as happened with me about a year and a half ago when I first pulled the trigger on applying to business school) it can result in some really amazing things.  If nothing else, it gives me an excuse to be introspective and procrastinate my coursework.

In fact, I only pulled the trigger on starting a company because of this type of reflection.  Recently, I’ve been listening to the amazing podcast How I Built This by Guy Raz.  A couple of weeks ago I pulled up his new episode, which featured Jim Koch, the founder of Sam Adams.  As Jim discussed his entrepreneurial journey he had a great insight:

It’s the difference in life between things that are scary and things that are dangerous.

I can give you a climbing analogy… One of the things we taught people to do was repel off a cliff.  And really, it’s a very scary thing to do, but you’re also held by a belay rope and that rope will hold a car.  So walking off the cliff backward is scary but not dangerous, okay. Walking across, you know, a 35 degree angle snowfield on a beautiful late May afternoon with this bright blue sky-it’s not scary at all, but it’s very dangerous, because the snow is melting, eventually it’s going to find a layer of ice, the water will lubricate that and you have an avalanche.  That is dangerous but not scary.

And in my situation, staying at BCG was dangerous but not scary and the danger there, the risk of it, was continuing to do something that didn’t make me happy and getting to 65 and looking back and go, “Oh my God, I wasted my life”.  That is risk, that is danger.

I took a step out of my routine, took a day to myself, and began thinking, wondering if starting a company was dangerous, or if I was just scared? It didn’t take me long to realize it was the latter.  So, I stopped recruiting cold turkey (yikes!), wrapped up studying for midterms early, and got to work.


– Thad


The Line

A brief introduction: my name is Thaddeus Diamond.  Currently, I am a first-year full-time MBA candidate at the University of Chicago Booth School of Business.  Before this I was a software engineer building the data ingestion and transformation platforms for the Amazon Echo.  Even before that, I was an experienced (read failed) entrepreneur at CoderHeap, early employee at Hadapt (later acquired by Teradata), and Yale comp sci major.

Why am I writing this? I think there are several answers, but to start I’ll give you the three most relevant ones:

To make mistakes and pay tuition. I saw Michael Alter (co-founder and former CEO of SurePayroll) speak today and he brought this up.  In life, you need to get out there and make mistakes.  I’ve had an amazing first few months at Booth, but I’m already ready to get in the wild and start doing.  If I can have an outlet for writing, thinking, and interacting with folks, I know that I’ll improve on a personal and professional level.  Which brings me to…

Getting in touch with more people in the startup ecosystem. I want to hear from you, no matter what I’m doing.  You’ve taken the time to read this blog post, so thank you.  Consider it that I owe you! If I can be of any help, or if you just want to chat on topics that would interest you, I would love to.  I’m in downtown Chicago, and always happy to converse by email (firstname.lastname@gmail.com) or talk in person over a cup of coffee.  And finally…

To find The Line.  What is the line you might ask? Why was that the title of my inaugural blog post?  The line is a concept I was discussing with a classmate in one of my Fall classes.  Here at Booth, every first year takes LEAD, a course on how to develop effective leadership skills.  Early on in the course, one of my classmates posed a very insightful question: “What is the line between self-improvement and self-acceptance?” It’s deceptively simple, but in the past few months, I’ve had a tough time even forming a rudimentary answer.  As I continue on my journey at Booth I want to learn makes me “me”, and how I can get better.  Over time, I hope this blog acts as a long-form answer to that.  By chronicling my journeys, struggles, and insights, maybe I can help you to start to find The Line as well.

That’s all for week one.  Check me out for more real-time updates on Twitter or LinkedIn in the meantime!

– Thad