February 1, 2019
Often, when we're talking about our thesis at Intelis we describe it as "the digitization of analog industries" or "the digital revolution for analog industries". But what does that look like in practice?For simplicity's sake, we think of analog as not using software or technology to improve outcomes. The pen and paper industries still rely heavily on older systems and intuition to drive results, but external forces like increased complexity and consumer expectations combined with internal forces like aging workforce and infrastructure are pushing them into the information economy.The digital age has brought several business model innovations, but most have centered primarily on two new types of economic forces:1. Information goods: anything that can be digitized where the value is determined by the information it contains.2. Network effects: the multiplying force of the power information goods because they allow instantaneous consumption and distribution. That is they catalyze the distribution of a free, perfect copy from one to one or one to many.History has shown that if companies are able to build/leverage these two economic powers the results can be transformative. Uber and AirBnB are the prime examples for this, they both took excess capacity (information) and applied the network effect of a marketplace to multiply the power.We’re finally seeing these forces permeate the energy industry via the following trends:- Endpoints are growing exponentially: The data produced by sensors, drones, EV's and smart home devices are turning various parts of the energy value chain into information goods.- New data transparency/architecture: The groundwork is being laid by several companies looking to make information more readily available and easier to navigate. These startups are working on new data architectures, API platforms, and real-time demand solutions that leverage the continuously growing number of data sources to drive reliability for grid operators and affordability for consumers.The great thing about energy is that a lot of the hard groundwork has been done as a result of the 2007 boom in cleantech, similar to how the groundwork was laid for the internet before the bubble burst in 2000 or - if you prefer to go back centuries - how the railroad boom laid the foundation for the first Industrial Revolution. Just because the first pass doesn't end well, doesn’t mean the enormous amount of progress disappeared.While we see energy as the industry most ready for this transformation, it is not the only “atoms” industry that fits the criteria above - transportation, agriculture, and manufacturing are also unlocking their potential by becoming more connected and data-driven than ever. We often hear about how "connected" our world is, but the truth remains we still have a massive opportunity to leverage digitization in the industries that contribute the most to global GDP.