There has been an "incredible" transformation in social media since 2008, providing a sense of immediacy that has changed politics and economics in fundamental and powerful ways, Obama said.
"What that does is give entrepreneurs opportunities to leapfrog over old technologies, old political structures, old institutions, and start forming their own," Obama said. "It's disruptive. In some cases it's also scary."
Obama pointed to Egypt in 2010 and 2011, where social media helped launch the Arab Spring and the blow back that came with it.
"Part of our goal has to be to make sure that we help young people, like the ones that are here at this entrepreneurship summit, use these new tools, form these new bonds and not crush the innovation, but rather, help to shape it in a way that creates more jobs, more opportunities, more inclusiveness, more tolerance, more understanding, more peace, less conflict," Obama said. "It's going to take some time. I think you're always going to have people who react to all this new stuff and say, 'That's a little scary.'"
Obama said that fostering entrepreneurial culture requires openness and admitting new information, and that governments can't fall back on a "top down" control of communication technology, even balanced with the threat of violent extremism.
The president also said governments must be mindful to create a culture where those who want to start a business aren't bogged down by paperwork and fees. That includes the U.S. Congress, which needs to streamline the more than 16 agencies involved in doing business, he said.
"The thing that brands America more positively than anything is the notion that you have an idea, and you go out there and build something and you start something," Obama said.
Zuckerberg said at the event that he'd be willing to spend "billions" to build the right infrastructure — like worldwide access to the Internet and other technical tools.
"Entrepreneurship is about creating change, not just creating companies," Zuckerberg said on stage at the summit. "The most effective entrepreneurs that I've met are deeply about some mission and some change they are trying to create ... when I was getting started I cared deeply about giving everyone a voice and tools to share everything that they cared about and bringing a community together."