“A thought, even a possibility, can shatter and transform us.” - Friedrick Nietzsche, German philosopher
Headlines of Jeff Bezos buying The Washington Post for $250 million got me thinking about the fate of industries many of us label as antiquated – sectors that disruptive thinkers too often overlook.
These industries are like a piñata – a shell of what could be – that just needs someone crazy and determined enough to crack it open and reap the rewards. Most people would run away from the journalism industry - hundreds of newspapers and other media have closed up shop in just the last few years, and there have been massive layoffs as companies scramble to adapt to online and mobile platforms. According to The Washington Post itself, it was about to face its seventh year of declining revenue with estimates of about $40 million in losses for 2013. But entrepreneurs like Amazon’s founder and CEO don’t see failure. They see opportunity.
The problem is that the most talented technology entrepreneurs are most passionate about (you guessed it) technology, when they need to be bringing that innovation to historically non-tech areas. Every industry needs a Jeff Bezos, someone who has the intuition to see things through a tech lens and make necessary changes – without the fear of ruffling feathers in the process. Technology needs to be harnessed to improve every sector, especially those stuck in an “it’s always been done this way” mentality. With tech-focused, disruptive people taking over the reins of large companies, new perspectives will fix old problems.
Just look at electric cars. Manufacturers like General Motors (GM) and Ford had killed their electric car programs because they didn’t think they would turn a profit. But then PayPal’s co-founder, Elon Musk, stepped into the space. He said he entered the electric car business not because he saw market demand, but simply because no one else would build them.
“For many years, almost all people regarded it as either stupid or insane or both,” said Musk, founder of Tesla. “The reason for me to do it is not because I saw a huge market opportunity. It was clear that we were not going to see electric cars from major car manufacturers.”
And then, it caught on. Electric cars suddenly went from an industry no one would touch to one where Musk created a viable business model. Electric cars became so cool that GM’s CEO recently assigned a team to size up the competition and study Tesla, which is on pace to sell about 22,000 Model S cars worldwide this year after turning an $11 million first-quarter profit.
My business partner, Eric Lefkofsky, and I took on another technology-neglected sector: freight and logistics. In 2005 the trucking industry faced a number of headaches, like skyrocketing fuel costs and driver shortages as people tried to recover from the industry slashing about 91,000 jobs a few years earlier. We realized freight and logistics hadn’t been exposed to the benefits of deep technology innovation, yet it was at the core of all industry and represented a significant percentage of GDP. (The value of freight shipments in 2002 was $11 trillion.)
Some people told us we were crazy to enter an area that always had done things a certain ideosyncratic way, and that a data-centric, tech-focused logistics provider would not be viable. But in 2005 we founded Echo Global Logistics anyway. We created a technology platform that discovered patterns in massive amounts of data – insights that made a huge difference to our clients. The technology, systems, and expertise that we assembled made freight and logistics more transparent and uncomplicated, and it allowed us to build a company that both saves shippers money while making the entire freight process more efficient. Echo had an IPO in 2009, and from just over $7 million in gross revenue in 2005 to over $750 million in 2012 has drastically outpaced the logistics industry’s less than 3 percent annual growth, according to Crain’s Business Chicago.
These are but a few of many examples where fresh eyes, tech skills and an entrepreneurial soul have created opportunities in industries where longtime veterans thought none existed. But there is still a long way to go to permeate all industries, and the hacker mindset has barely scratched the surface. Look for even more unexpected, seemingly counterintuitive situations like Jeff buying a media company as technology entrepreneurs see possibility in the stagnant business models where industry veterans are mired in legacy issues.
Sometimes the critical mass created by a large, yet struggling company is the perfect canvas on which to paint a technological masterpiece.
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