How to Build an Industry

I’ve spent the last twenty years of my career solving really hard problems. To solve really hard problems, you often have to transform how the entire world works. While rarely discussed, there are names for this type of work - launching moonshots, creating category defining companies, or industry building.

In the past, engaging in this work would take decades, often centuries, so we never bothered to teach people how to do it. Yet today’s new technologies make industry building not only possible but increasingly common.?

Outside of X, the Moonshot Factory and Singularity University (where I worked for many years) most business schools, incubators, accelerators and investors still focus on launching new products and companies – not new industries. Few teach about it intentionally and methodologically.

Over the last ten years I created a framework to teach founders and corporate leaders about industry launching. I was inspired by my own experience pioneering the drone transport industry and later by mentoring other innovators who were also launching industries.

I am sharing here the key steps to building an industry.?

How to Build an Industry

• You need a new idea, product or solution that is also grounded in a new paradigm and worldview. I will share examples below.
• You have to communicate the new paradigm and worldview to everyone. One of the biggest frustrations industry building innovators face is that no one understands what they see. It can take a few years to break through mindsets and help investors, potential employees, partners, regulators and customers see what you see.?
• While sharing your vision you must also remain super focused on your first product, not only because that is what investors care about, but because without completing the first step of your vision, you will never get further.?
• You have to build your regulatory environment. If you are working on a truly new solution, you need to work with regulators and policymakers to ensure your products are safe and legal. This is extra work, but part of the job.?
• In addition to building your product or solution, you need to create a ten year timeline of how your solution will evolve as other technologies and industries evolve, and as your market evolves. While many serial entrepreneurs will launch one product and then jump to the next one in an unrelated field, if you truly want to solve a huge problem, you will likely be launching a series of products and solutions that work together over at least a decade, bringing into being a new reality.?

Most of all you need to know you are building a new industry. Otherwise you will find yourself trying to focus on your product, while you are continually haunted by the above challenges. Most people will say these are distractions (which is true if you are launching a product in an existing industry) but if you are launching a new industry, they are crucial to your business and a key part of your job.

Let’s take a closer look at step one: a new idea, product or solution that is also grounded in a new paradigm and worldview.

If you really want to solve a huge problem and change the way the world works, your solution also has to rest on a new paradigm. The companies and founders building successful moonshots and new industries fundamentally see the world differently than other people. This allows them to launch a creative new product or solution, and their solution and worldview often unravels the way other industries work, opening up countless opportunities for innovation and value creation and efficiency everywhere. This is the meaning of innovation and disruption. The new paradigm changes everything, for everyone.

Let’s look at some examples.

Drone Transport

I first started thinking about paradigm shifts in the business world in 2011 when I was a student at Singularity University and co-founded one of the world’s first drone transport companies, Matternet. At the time drones were only known as weapons or toys. But what if a drone could be a little flying ambulance delivering medicine to people in need? That was the first paradigm shift, but there were more. Building and maintaining roads is expensive and inefficient. What if you instead could put that money into an aerial network? Over the long term would it be cheaper to keep building and maintaining roads or to build flying vehicles? As technology becomes better and better while also becoming cheaper, this is a real question to calculate. It matters even more in countries where the road infrastructure is non-existent, congested or no good, or there are time-sensitive life saving products that need to be delivered. There is a third paradigm shift. What if we stopped moving physical goods (matter) in a centralized hub and spoke model and instead moved matter the same way we move information on the internet (in small, decentralized, flexible, flying packets?) Hence the name Matternet (Network of Matter.) This TED talk by Matternet’s CEO, Andreas Raptopoulos, introduces the concept of Matternet to the world ten years ago and walks you through the paradigm shifts in detail at a time when the whole industry was nascent.?

Rethinking Biology

Earlier this year I wrote about another paradigm shifting company, St?mm. St?mm is working on a moonshot to build 70% of current “man-made” materials using biological manufacturing. They are starting in the healthcare industry and tackling the specific problem that today’s bioreactors are in short supply and not efficient enough to produce all the biologically grown substances the world needs. St?mm’s solution is to create a new type of bioreactor – one based on biomimicry. Their biomimicry solution rests on a new paradigm. While most of the Western world has philosophically separated humans from nature and matter from biology the last few hundred years, St?mm has not. They asked why do we categorize human biology differently than other types of biology or other types of matter? Why do we have artificial intelligence and human intelligence? Why not just intelligence? You can read more about their company and paradigm shift here.

Connectivity as an Asset

Giant Protocol set out to solve the problem of making Internet bandwidth more accessible by allowing people to auction off or donate unused minutes. In the process, they realized unused bandwidth was also a problem for consumers who could afford to pay for bandwidth but were not using all of it, and for the telecom companies who were not maximizing selling bandwidth as much as they could be. As GIANT dug further into the problem they realized the world was thinking about connectivity the wrong way - the new paradigm is that connectivity should be thought of as an asset. GIANT is now turning connectivity into an asset class making the whole marketplace for bandwidth more efficient. This benefits telecoms, existing consumers and those who can’t afford connectivity today.?

Refugee Settlements as Universities and Innovation Centers

Spectrum Transformation Services, a community based organization in Uganda that is currently running a school outside of the Kyangwali Refugee settlement aims to build an innovation center for refugees and host communities where people can learn about technology and solve local problems and sell solutions related to food, water, clean energy, poverty, job creation and more. In fact, they think every refugee settlement in the world could be turned into a university and innovation hub, allowing refugees to solve their own problems and those of surrounding communities. Their paradigm shift is that they see refugees and settlements not as charity projects or costs to society, but as valuable overlooked ecosystems of people, talent, human capital and innovation.?

These are a few examples of new paradigms. I am sure you can think of more if you start looking around and analyzing some of your favorite industry building companies.?

There are a few additional points to consider:

There is a strong relationship between technology and industry building, but it's not the key.

If one wants to launch an industry, one can’t just come up with a new idea out of the blue because one wants to. Your new idea, paradigm and worldview are usually grounded in new technologies that make your solution just barely possible. In all four examples, each solution rests on recent breakthroughs. An aerial drone network is possible because of falling computing and battery costs. A bioreactor based on biomimicry is possible because St?mm invented a new type of 3D printer that could print parts of the bioreactor in a way that mimicked human capillaries. Giant is only possible because today’s blockchain technology and computing power can handle the trillions of transactions involved in creating a bandwidth marketplace. Refugee settlements can become universities and innovation hubs because of increased internet connectivity, accessible computing and lower costs of technology overall. Importantly, it’s not the technology itself driving the new industry. It’s the innovator seeing the new paradigm that is possible at the crux of the problem and the new technology.?

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There is a strong relationship between industry building, problem solving and social impact.?

Social impact problems are key drivers of industry building. While it’s easy to categorize social impact as simply ESG or value-driven work, solving a huge social problem not only helps people, it can create trillions of dollars in value for businesses, investors and the overall economy. This is because if you dig deep enough into any social problem, you will find a broken system and a huge amount of inefficiency, waste and frustration impacting billions of people. These systems remain in place because people are stuck in the old paradigm and worldview and assume that’s just how the world works. But if you keep digging you can break through to the other side.

Matternet started with the idea that people living in impoverished countries should not have to walk ten miles to a medical clinic when you could instead fly a blood test or medication in twenty minutes. Digging into that problem further also revealed a huge amount of waste in the medical transport industries in wealthy urban areas, as well as the entire global logistics and transport system.?

St?mm set out to solve the problem of environmental pollution and waste and came up with a solution that can be applied to almost anything in the world that is currently manufactured.

Giant set out to solve the problem of Internet access, and ended up creating a new asset class. What else could be turned into an asset class?

Spectrum set out to unleash the talent of refugees by reinventing refugee settlements. How many other groups of people are currently held back because of similar broken systems?

In each case the initial problem revealed a much bigger global systemic problem. Of course this bigger systemic problem is a huge entrepreneurial opportunity in disguise. I am confident that if you genuinely set out to solve a massive social problem, you will develop a new understanding of how the world works, revealing countless entrepreneurial opportunities creating both social and financial value

I hope you have enjoyed this article. Please follow me or comment if you would like me to share more about industry building. If you need help, reach out to me directly as I coach and consult with startups, companies, investors, governments and social organizations.