Are you going to run for president . I think i just got an f from you guys, when this is over. audience applauding steve case, welcome. Good to be with you. Nice to see you. So when i heard about this book, before it was published, i heard third wave, i thought alvin toffler. I guess you also thought, i totally did. To some degree alvin toffler, so can you tell the alvin toffler, third wave, versus steve case third wave. Sure, no, i actually was in college in 1980, when that book came out, Alvin Tofflers third wave, yeah. And i was completely memorized by it. And it talked about this notion of electronic cottage, and different ways to connect to people, information, and i just knew it was right. And so when i was graduating, there was no startup culture back then, there was no Internet Companies to go to back then, so i worked for some Big Companies for a few years, but finally in 1985, cofounded aol, and i was sent on that path by toffler, so when i decided to write this book, i deliberately named it the third wave, and he was kind enough to read it, and provide a blurb for it. So the toffler estate is not chasing you, with his lawyers and, no . No we have a great, great, relationship, and ive been really grateful for how he inspired my life. But of course your three waves, including the third wave, are different than his waves, and his third wave . Yeah, his third wave was really the agriculture revolution, and the industrial revolution, then sort of technology, digital, revolution, really over the last 200 years. Im focusing more in the last 30 years, the first wave of the internet, which is really building the internet, creation. And getting people to connect in the software, and the servers, and the on ramps if you will, to the internet. And when we started aol 31 years ago, only three percent of people were online, right, and they were only online one hour a week so that would be like, apple, that would be sprint, cisco, microsoft, and sun, right. Sun microsystems, the early big guys who have hung around. The pioneers who basically kind have said were gonna stand up the internet, build that foundation, and educate people about why to get connected. And, did it in a time when by the way, it was probably not super consumer facing, right . Wasnt at all. Thats why the very early stage. Wasnt at all, thats why it was hard when we first launched. Most people didnt have pcs, most people who did have pcs, didnt have modems, remember you had to go the peripheral section of the Computer Store to get this thing called a modem. If you did get connected off, it was 10 dollars an hour. And it made that awful noise. Well, i loved that sound. Thats the screeching dial tone, well for you, thats the sound of money. I should wake up in the morning with that. I still wake up, three oclock in the morning, bolt up, by hearing the aol connection noise. Cha ching, cha ching, right . Cha ching, cha ching. So that was the first wave. That was first wave. Just building there, second wave, really been the last 15 years or so, building apps and services on top of the internet. So its facebook, and twitter, google, amazon. Waze, and google. And basically because in that first wave the foundation was built. And everybody got connected, the last decade or so has been innovation, around apps and services, and some tremendous companies have been built in that second wave. Right, so the third wave is coming . Or the third wave is sort of, kind of, here . Just beginning, just the early stages of it. So whats the distinction . The distinction is the second wave was really all about the app. It was about the software. The third wave is how you integrate the internet in everyday life. And how you use it to improve how our kids learn in classes, or how we deal with healthcare, or energy, or transportation. Well some of us would think mr. Case, some of us would think that, or financial services. Were already at that point. Because many of us will use an app to call a car, or well use our app at the supermarket, hold our phone up to the cash register, and pay. There are things happening in the healthcare industry, we happen to be sitting in a state, texas, that has the most People Without Health Insurance in the country. Right. A lot of people cant get access to even doctors. Well, telemedicine is becoming a way that people are suddenly transforming their own healthcare. So in some ways, that era, is here. No, its beginning. I would say healthcare take, is an example. Yes, in the first and second wave, there have been some innovations in healthcare, but the way most people in most cities, when they go to the doctor, go to the hospital, do, is about the same as it was. Yeah. And so there is still a lot of room for innovation, in terms of figuring out better ways to help people, when theyre trying to stay well, better ways to manage chronic disease, things like diabetes. Yeah. Better ways to manage life threatening diseases. And the anderson, here in texas, says when people come for second opinions, 25 percent of the time they reverse the first opinion. Which shows you, good. Theres not a precision, to that diagnosis, no, ill feel very good about that actually. Well, its a little concerning, and it shows you that theres still a need for more precision, in terms of understanding what the issues are, and then being able to figure out what the diagnosis, so there, so has there been progress . Sure, theres been progress, but same in schools. Most kids learn, and the way most teachers teach, is still about the same as it was, 10 or 20 years ago, but there are opportunities for more personalized, adaptive approaches to learning, which some schools are doing, most are not. In the third wave, it will become much more common. So lets talk about healthcare, and then i want to go to education. I think those are both very good examples. Is the technology revolution, youve talked about, this third wave, one in which, entities interact with us, and we with them, or is it more of a diy thing . Is it where were taking the entities essentially out of the equation, and were taking control through technology of our own disruption and innovation . A little bit of both. I think whats going to be unique in the third wave versus the second, is the role of partnerships, its not just about the software, its how do you connect, say with a hospital system, or the school system, right. And how do you help them figure out a way to kind of lean in to the future, and create better products and services that are more convenient, better outcomes, lower costs, and things like that. So its not just about the app, and thats whats really gonna define this. The partnerships are going to be very important. The other aspect, may be very important, is the role of policy in government and regulations. Which people dont like to hear particularly, the entrepreneurs, because the government kind of slows them down, right. It can be cumbersome, and obviously theres some truth to that. But the reality is these are aspects of our lives that are pretty important, and the government is going to have some kind of regulations in them. And so the innovators need to understand, that of course the software matters, of course the team they have in their company matters, but the partnerships they form around the idea, also matter, and then having constructive engagement with government around the right way, to regulate drugs in the case of healthcare, or how we think about smart cities, and driver less cars, what is an appropriate role for government, an appropriate role for regulations. Its going to require a different mindset and thats ultimately why i decided to write the book. I realized some of the lessons of the first wave, will help people thinking about innovating in the third wave inform the third wave. Exactly. But of course the incentive for us is clear, you know from our perspectives, as individuals as consumers, our lives may be improved, our access to services may be enhanced. Is there as much of n incentive on the other end . If youre a big healthcare company, and you like the way things are going right now, more or less, and youre making big money off of the way that things are built right now, and you imagine this third wave universe, in which were gong to streamline everything, for them there may be less profit. There could be less profit, but if they dont lead into the future, and try to innovate, they probably will go out of business. Change is coming, yeah, change is coming you have to embrace it or not. And the lesson i talk about in the book, is Eastman Kodak company. Right, you do talk about it. When i, when i was a kid, kodak was one of the most iconic american companies, and if you thought of photgraphy, you thought of kodak. Yep. They went bankrupt. Yep. And the reason they went bankrupt, is they lost their way, they didnt invest enough in digital photography, but the really bizarre thing there, is their engineer at kodak, actually invented digital photography, but they didnt make it a focus, if only. They didnt, they did like the profits from selling the paper, and selling the chemicals, they were not eager to see that digital future. The flip side of an Eastman Kodak, and an example of a company that has leaned in to your mind, one that you can point to as an example, a shining star would be. Well some olderlying companies, like general electric, is reinventing himself around the industrial internet, ibm has also done some reinvention, and some younger companies, in the grand scheme of things, like google and apple, they really figured out ways to not just drive their core businesses, but figure out ways to enter new business, even though they now are pretty valuable companies, and have a lot of scale, with tens of thousands of employees, theyve figured out a way to continue to innovate despite that scale. Education you brought up as another place ripe for the kind of disruption and innovation, sal khan, was here a couple of years ago, to talk about his khan academy, which of course is an Online Learning opportunity for people. Its, you know, started as youtube videos that he did for his family members and has now expanded into x number of countries. Again thats a case where youre providing to people in their own homes, without the entities, right. Providing it. This access to information and knowledge that they otherwise would not have had. But from a school standpoint, wheres the benefit to this . Is it foreseeing them to think well now theres all of a sudden this competition offline from the way the traditional model is operated, is that what . Well i think what sal has done, a lot of other people have done, in terms of trying to take learning and make it more convenient, make it more democratizing. Democratize it, put it in the cloud, as they say, is terrific. But most kids, are still going to learn in classrooms. And so how do you take some of the benefits that technology and help the teachers figure out better ways to teach. Not all kids learn the same way. True some just need a little more time, some are a little more visual learners. So using tools to customize and personalize, and have a more adaptive approach. And its a combination of hardware and software. And people. Right. My idea, which i talk about in the book, of course im a big believer in the internet, of course im a big believer in technology. Of course im a big believer in software. But its also about people, its also about taking that technology, and integrating it in institutions that matter. In terms of peoples lives, its not just k 12, its also universities, there some people believe all these campuses are going to go out of business, and they have no model. Absolutely preposterous i actually believe, absolutely preposterous, and so getting people who have that technology, innovation, mindset, to partner with the institutions, and say, how can we help you move into the future . , what problems can we help you solve . , what opportunities can we help you seize . , so its not just about the apps. Its not just about the software. Its about the relationships and the partnerships that are going to be so critical in this third wave. Well in two cases, at least that i can think of on both healthcare and education, there are arguments, that kind of come at people like you, who say that this is right for disruption. One is, that theres a socialization aspect, especially in education, to being in the classroom with other students, with other teachers. And the idea that were going to take a significant portion of education out of the classroom, out of real time, and put it in the virtual universe, in some ways youre going to gain a lot, but youre also going to lose a lot. The interpersonal relationships that you would have in a traditional classroom mode, what about that . I agree with that, and i think again the possibilities of learning through apps, like, or Services Like a khan academy, are terrific, the fact that people all around the world have access to that, they didnt before, is terrific. But thats not to say, thats the way everybody should learn. There is a role for teachers, there is a role for classrooms, there is a role for the discussions you have. But some of the initial trials of what they call, mocs, the massively online courses. Many of them fail, because people signed up for them, but didnt really complete them. Because it wasnt just about the content, what youre trying to learn, it also was the context and the community. And having a community of learners is very important, for having more interaction. So it could be, it could be both end, right . And you may even see the idea of a flipped classroom, where maybe instead of going to class, and taking notes as the professor is giving the same lectures, he or she has given potentially for decades. You watch that lecture in your dorm room, the night before, and you come to class ready to talk about it. With the professor, with smaller groups, that interact with learning, leveraging whats so great about the classroom environments, important using technology to infuse some new possibilities, i think is also important. But thats, i think, gonna be the key message of this third wave. Its about going beyond the software, going beyond the technology, and having it improve important aspects of our lives, which only can happen if the innovators are partnering with the institutions in place, and having a dialogue with government, because theyre gonna be regulating many of these sectors. Well, what about privacy concerns . You know, we live in a paranoid country at the moment. Anytime somebody is connected to an entity digitally, the people, some people, on the receiving end of that, go well this is just about the government taking my guns, or this is about the government somehow finding out theyre going to put a chip in my head, i mean that paranoia has gotten a little bit off the edge, but at the same time you understand that youre pushing up against sectors of our country, in which, whether its access to Electronic Health records, or somehow conducting education electronically, people go whats really going on here, and am i somehow made more at risk . There were hippa issues, right. There were ferpa issues, what do you say about that . Thats true. These innovations as they accelerate in the third wave, are going to create new kind of challenges. There are things that we can do, that we couldnt do before, which are going to be great, but there are also going to be some challenges. Which is why policy is going to matter, and i understand the reluctance. You think its a legitimate concern . Oh absolutely its a legitimate concern. All these issues are a legitamate concern. But in taking encryption for example, which youve gotten a lot of youve mentioned government policy, when you were interviewing president obama, at south by, yes. That was a big focus of it. Its a tricky issue, and in that particular instance, it was the government saying we need access to that phone, for National Security kind of reasons and the company in this case, apple, was saying, no we dont want to give you that. And anxiety over privacy, insubordinate and so society over privacy. They say the anxiety over privacy is actually a greater National Security interest, weirdly, or National Interest than giving you access to that. But the key is going to be balanced, and you mentioned hippa in healthcare. That yes, of course people want more personalized approach to dine. Where they ask, can have a mhmo targetesotin that requires data, which requires things like Electronic Medical records, but at the same time, people want to make sure that their privacy is protected. Protected. In the area of smart cities and sensors to manage traffic, or driver less cars, that a number of companies are working on. People say, well thats an interesting innovation, maybe thats be good for me, right. But how do we make sure in our cities, that somebody cant hack into these cars, and create a huge kind of disturbance. So there going to actually ask the government, in those instances, to make sure those innovations are allowed to go forward in society in a way that protects people. To provide a layer of security, or a layer of security and encryption, so in some cases, the government really forcing the innovators, to have more encryption in other cases, is the innovators pushing back saying, the point is its complicated. And its going to get more complicated as the internet goes from being something we connect to on our pcs, to Software Apps were running on our phone, to being integrated in much more seamless ways throughout different aspects of our lives, changing in fundamental ways, how we learn, how we stay healthy, how we move around, how we invest our money, even what and how we eat. Theres some big aspects that are up for grabs in this third wave, and its not gonna happen unless we have a contsructive dialogue between the innovators and the policy makers. Well you mentioned on the policy makers front, you mentioned the apple encryption case, now it becase a mute point. Because the government paid like a gazillion dollars to get the phone hacked, or whatever it was, i mean it all got resolved, but there was a fundamental foundational issue at the center of that argument between apple and the federal government, whose side were you on . I didnt have enough data to have a side. I think part of the problem with this, is people just kind of think about these in vague talking points. Black and white. I lean towards the technologists side, of protecting the privacy, but im sympathetic, as the president said, to the needs of making sure people are able to, that the governments able to protect people. And particularly from risk around terrorism, and so i, its going to have to have a discussion. Yeah. Its going to have to have some kind of dialogue. Do you think the policy apparatus of this country, whether its official washington, or just generally speaking,