Carter Williams is CEO and Managing Partner of iSelect Fund. Educated at MIT, he has spent his career working on innovation, first as a young engineer at McDonnell Douglas, and then as the founder of Boeing Ventures and later as President of Gridlogix, which sold successfully to Johnson Controls.
Bob Metcalfe is a name that many in our industry know and greatly respect, and for good reason.
After completing his Ph.D. in computer science at Harvard in the 1970s, Bob coinvented the technology behind Ethernet and went on to found 3Com. He even has his own law—dubbed “Metcalfe’s Law”—that states, in short, as networks grow they become increasingly useful and more valuable.
He is, quite literally, one of the founding fathers of the Internet as we know it today and someone that I have great respect for.
But, in hindsight, what Metcalfe and his early Internet peers thought would happen with computer networking was, in fact, the exact opposite of what actually ended up happening. They expected the government to step in at some point and subsidize the Internet as a public good, to take over for the free market in order to allow innovation to blossom unencumbered by profitmaking concerns.
But that’s not how innovation works.
True innovation is driven by increases in consumer welfare. We don’t buy a gallon of gasoline simply to hold onto it for later. We buy it so we can drive our car to get groceries, take the kids to school, and so on. If a combination of services—such as Uber, electric vehicles, etc.—allows us to lower our net cost and accomplish those chores for less, then we will do more of that and buy less gasoline.
Efficiency mission accomplished.
This pattern exists in all markets. The opportunity for innovators, then, is to deliver new welfare and services to consumers versus what they’re using today. What burdens do they face? What opportunities are waiting in those burdens? How can you change things in a way that, over time, can kick in the law of accelerating returns?
That’s where the true path to lasting innovation lies.