The days of overnight startup success may be numbered, at least according to Steve Case during his talk at CES last week about entrepreneurship and risk-taking. The AOL Co-founder and venture capitalist thinks that startups in the next decade are going to have to increasingly turn to partnerships and regulated industries for the next big wave of growth.
“I think in the last decade we’ve seen a lot of overnight successes, that I think will be less common in the next 10 years for a variety of reasons,” said Case. “I think it’s going to require more partnerships.If you are really trying to disrupt healthcare or education, or transportation, or energy, or food, or financial services, you can’t go it alone. You kind of have to go it together, being able to establish partnerships, which is tricky.”
Increasingly the big startup opportunities are going to require government involvement, something that entrepreneurs may not want to hear, according to Case. “It’s going to require more engagement with government, because many of those sectors are regulated, and by the way, in many of those sectors like healthcare and education the government is actually the largest customer. I think it’s going to require a little bit different mindset in this next wave of entrepreneurship.”
“Do you really want to change health care? You kind of have to like engage with doctors and hospitals. Do you really want to change education? You kind of have to like be working with schools and teachers and universities. It’s not just about what you do in your app. It’s not just about what you can do in the cloud. It takes more time and then it’s going to require more perseverance and require, as I said, a different mindset around partnerships,” emphasized Case.
Case reminded the audience that AOL was far from an overnight success, requiring years of long-term perseverance. “When we started AOL, and this was 30 years ago, nobody knew what we were doing. Nobody cared what we were doing. Even my parents for a decade didn’t even know what I was doing. They had no clue what I was talking about, and people really didn’t want to back it, because they said ‘most people that have PCs don’t have this modem thing. It’s a peripheral. The people who do use it seem like they’re weird. They’re like hobbyists and hackers. That’s never going to be a mainstream business,’ so it was actually really hard to raise money.”
“We’d been at it for 7 years, the market value was $70 million when we we went public. We raised $10 million and had a $70 million valuation,” said Case. “On the road show, we’re explaining the internet. Most people looked at us like ‘You don’t know what you’re talking about. It seems kind of faddish.’ A decade later, the company was worth $150 billion and was the fastest growing value creator in the whole decade.”
“It went from something nobody cared about … to being like one of the most valuable companies in the world and actually the best performing stock of the decade. That’s the payoff, if you really tackle one of these things and can take that long-term view and recognize you might fail,” stated Case. “You really have impact, the opportunity to change the world. You really have the opportunity to create some super significant companies.