The Inevitable Evolution of Our Most Essential Industries

These days, the word “essential” has become a catch-all term for certain activities, businesses and forms of employment that are sanctioned during the pandemic. When we talk about essential industries, though, our understanding of what that means has been constant since Day One at Eclipse Ventures.

Eclipse was founded to invest in the inevitable, digital transformation of the bedrock industries that drive economies and make modern life possible, such as manufacturing, supply chain, logistics, healthcare, transportation and construction. While the need for deep, technological innovation was founded to invest in the inevitable, digital transformation of the bedrock industries that drive economies and make modern life possible, such as manufacturing, supply chain, logistics, healthcare, transportation and construction. While the need for deep, technological innovation in these sectors wasn’t always top of mind, they are now.

The fragility of these aging industries factored heavily in failures that paralyzed global production and caused ongoing, yet needless desperation: hospitals scrambling for medical supplies and equipment, and consumers panicking over the shortage of everyday items like toilet paper, hand sanitizer, and still, Covid-19 tests.

Even before all of this, the reason we focused on these industries was because we experienced first-hand how dependent society is on them: from the manufactured devices in our pockets, to the food in our stores, to the vehicles that deliver them, down to the facilities that process and package everything.

Eclipse’s heritage is rooted in these complex, physical industries, and our team consists of former operators and executives who have successfully led and scaled production in massive sectors like automotive, communications, networking and semiconductor manufacturing. And because we’ve seen how advances in technology are transforming these sectors over time, we describe what’s happening now as an “industrial evolution.” … More on that in a bit.

As much as we hear the term “digital transformation,” the reality is that these industries still mostly look, feel and operate like they did half a century ago. All the innovations in tech over the last 30 years — open-source software, the cloud, application programming interfaces (APIs), artificial intelligence and machine learning, and so much more — should be leveraged by legacy sectors that are now frantically seeking modern-day solutions.

What these industries generate accounts for most of the world’s GDP, so the opportunity cannot be overstated.

The point I want to make here is that we seek to partner with that special breed of entrepreneur who shares our conviction that these essential industries must evolve — for the sake of resiliency, continuity and competitiveness on the world stage. And the earlier we can engage, the better.

Have frustrations built up in you over years of walking factory floors, sparking personal epiphanies for how to reinvent an aspect of manufacturing through technology? Have you identified a long-standing pain point for warehouse workers and managers that could be elegantly solved by digitizing a process that’s always been manual?

Asking senior leaders in these massive, physical-world industries to toss out traditional approaches and workflows and embrace digital solutions (that they may be very skeptical of) is not trivial. It requires someone who industry veterans will see as credible — in other words, as a peer who has an intimate and nuanced understanding of the business.

In a nutshell, that’s us: We are a partnership specifically engineered to help founders like you overcome the hurdles that lie ahead as you challenge these massive, old-line industries to evolve.

Our investment decisions start with what we’ve learned from decades of industry experience about the actual frustrations and inefficiencies that companies face. We also focus on the specific industries we know best, because they are the very ones that drive global commerce and prosperity — but only if we make them more resilient against present and future crises.

We like full-stack solutions because these giant industries often need a combination of technologies to drive real change. This is demonstrated by the companies we’ve partnered with. Among them are:

• Augury, which installs advanced sensors on factory machinery to monitor performance and, along with an AI-powered platform, enable predictive maintenance before equipment breaks down.
• Bright Machines, a leader in Software-Defined Manufacturing that leverages computer vision, machine learning and adaptive robotics to build a wide array of products commonly found in our cars, homes and offices.
• InsidePacket, a network-services company that has built a solution with off-the-shelf hardware and proprietary software that allows network operators, service providers and enterprises to better manage edge computing.
• Kindred Systems, which makes robotic sorting stations powered by artificial intelligence and designed for e-commerce order fulfillment. Retailers and logistics providers alike are increasingly adopting the company’s solution to keep pace with the recent explosion in online orders amid reductions in worker density due to Covid-19. (UK-based Ocado announced the acquisition of Kindred last week.)

Other industries we invest in include healthcare, transportation, construction, agriculture and advanced compute. While all of them aren’t necessarily as manual as warehouse or factory work, each of those sectors still rely on legacy approaches that are ripe for reinvention through technology that can increase speed, efficiency and precision at scale.

Maximizing positive impact means focusing on the sectors with outsized influence over our lives and our economies. Manufacturing represents a $6 trillion industry in the U.S. alone, and along with its adjacent sectors, manufacturing represents almost half of the world’s GDP. As another example, supply chain and logistics represents a $12 billion industry.

Those numbers may be hard to fathom. But there’s another, more fundamental reason why we must invest in the digital transformation of our essential industries. It’s the one playing out in real time: As Covid-19 persists, our notion of an efficient, modern society has in many respects shattered before our very eyes.

As frustrating as shelter-in-place orders were, it was widely assumed they’d be discrete, temporary measures, enacted to curb the severity of the virus. The plan, however, assumed a functioning and robust infrastructure — the infrastructure you might expect from a leading economic superpower and home to eight out of the 10 largest tech companies.

That assumption was wrong.

We’ve neglected to invest in innovative solutions that are vital to accelerating the evolution of our essential industries. But no longer. And the good news is, much of the hard, technical work has already been done — it’s time to integrate these technologies throughout value chains. The benefits are obvious.

Even though “revolution” is the long-settled way we’ve described seismic shifts in civilization — the first, second and third industrial revolutions — there’s no denying the notion of sudden and radical change embedded in that word. In the late 1960s, which marked the beginning of the third industrial revolution, we saw the emergence of electronics, information technologies and automation.

That’s why we call what’s unfolding before us now, what many have dubbed “Industry 4.0,” an evolution. It conveys a more gradual development, especially from a simpler state to a more sophisticated one. And depending on how much you defer to Darwin, evolution also exudes a sense of inevitability. That’s why those of us who’ve been watching technology transform more and more fundamental processes across industries think they’re evolving.

Indeed, the technological evolution of our most essential, physical-world industries presents enormous opportunity. In the near term, the adoption of innovative approaches to sourcing, producing and delivering goods will accelerate our economic recovery. And over time, this emerging generation of industrial companies will set the stage for the next inflection point in civilization’s advance.

If you share this perspective, this sense of urgency and entrepreneurial optimism, we’re here to help you build just that kind of company.

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