The Rise Of The Earthshot - 2021 Began Last Week
Photo by Mark Lennihan for The New York Times
The dawn of the Earthshot age occurred at 9:20am on December 14th, in Queens, NY when Sandra Lindsay, a 52 year old African American nurse received America’s first dose of the coronavirus vaccine. The vaccine was launched by Pfizer in partnership with BioNtech. It was heroic, fast, mission critical innovation that will save millions of lives, spur economic growth, and enable children and grandparents to hug one another once again. Every CEO in every industry should take a moment to understand what happened, why it happened, and why it matters for them.
Equally, there were two events last week, which are also of great strategic significance for innovative CEOs. The first was Uber’s decision to spin off its Advanced Technology Group, the division that focused on autonomous vehicles and flying machines. The second was that the Massachusetts securities regulator filed a complaint against the juggernaut online trading app Robinhood for aggressively marketing to inexperienced investors. (Disclaimer: Uber was once a client)
These events are interconnected in important ways. To understand how we need to understand Saturation Theory.
When I worked on Wall St. I developed a tool for predicting financial crises that I call Saturation Theory. When a company or industry passes the Saturation Point, it means that they’ve served every customer who has a legal, ethical, reasonable need for their services. Once they pass the Saturation Point, the only way for a company to sustain their growth is to create services for customers whose requests are illegal, or unethical, or unreasonable. The company transitions from useful and utilitarian to bloated, dangerous and unsustainable.
Saturation Theory was instrumental in my ability to predict the subprime mortgage crisis in 2006. There was a legitimate, ethical case for helping poor people gain responsible access to credit so they could own homes. But at a certain point, when almost all of those people had the mortgages they deserved, the banking industry quietly shifted into predatory lending in order to sustain growth. Once they passed the Saturation Point all of their growth and innovation inflated a massive balloon of risk that ultimately popped with the collapse of Lehman Brothers.
In my experience launching new ventures in huge companies, a Moonshot Lab is a consistent indicator that a company has passed the Saturation Point. A Moonshot Lab is a division of a company that uses advanced emerging technology to create things that won’t be ready for commercial mass distribution for a very long time. When a company announces its Moonshot Factory, they essentially say, “Our responsible, core business has run out of customers. So now we will try to establish a human colony on Pluto.”
Almost always, when a company creates a Moonshot Lab, its core business starts to show signs that it has passed the Saturation Point. For example, Uber’s advanced technology group, the division that focused on enabling people to use autonomous vehicles to take them to the airport by air or by land, gained prominence at exactly the same time that Uber’s ethical lapses with sexual harassment, labor rights, and urban blight started to gain traction. Another example was X, Alphabet’s moonshot lab. X rose to prominence at the same time that Google passed its saturation point, and was being weaponized by Russia to interfere in the 2016 election.
Robinhood was a different sort of Moonshot. Its innovation was business model transformation. It incorporated features that make video games addictive and used them to make online trading addictive. They passed the Saturation Point in July when a 20 year-old, Alexander Kearns committed suicide after he mistakenly believed he had lost $275,000 on the app.
While a Moonshot is a signal that a company or industry has passed the Saturation Point and will crash, an Earthshot is a signal that a company will flourish. An Earthshot is an innovative breakthrough that solves a critical, urgent problem for society. It is often a leading indicator of robust, healthy exponential growth. It is, in my view, why Tesla’s stock consistently defies gravity. Its fossil-fuel-free vehicles help solve the existential crisis of climate change. It is an Earthshot company in an auto industry that passed the Saturation Point a long time ago.
I want to emphasize an important caveat: the distinction between an Earthshot and a Moonshot is not technological, it is about who the technology is meant to serve. For example the same technology that was used in Uber’s ATG is an Earthshot when it is used to minimize civilian casualties during war and to safely and quickly evacuate wounded warriors.
Every company innovates. But the companies which can thrive in the Age of Disruption know their Saturation Point and develop Earthshots in order to never overshoot it. So if you are an executive, there are a few questions that you need to ask:
Who will be served by your innovation?
Will people’s lives improve or deteriorate because of your innovation?
When will they be able to use what you’re creating?
Do your Earthshots align with or diverge from the way you make money?
I hope that Pfizer’s successful Earthshot and the demise of the ATG and Robinhood serves as an example to every CEO with an innovation mandate. I hope that you start to think about how you can pivot your Moonshots to Earthshots. I hope that you look across your business and think carefully about which business units are approaching the Saturation Point. And, if you need me, I hope that I can help.
