The Technology Everyone Got Right (but it didn’t necessarily make them rich)
Most pundits are comparing the today’s AI boom to the Dot-Com/Telecoms bubble of the late 1990’s. It is a tempting analogy, it had hype, over-investment and soaring expectations, but it wasn’t a technology that rewired the entire economy.
Monday, December 8th 2025, 9:24AM
by Mint Asset Management
By: Kirsten Boldarin
Electricity was.
And if you look at how electricity unfolded, the capital cycles, the false starts, the consolidation battles and the long, slow path to real productivity, the resemblance to AI today are uncanny.
Initial promise…then extrapolation
In 1882, Thomas Edison’s Pearl Street Station opened in Lower Manhattan. It launched with just 400 lamps serving 82 customers, and by 1884 was supplying electricity to 10,000 lamps . It was a small start, but an undeniable proof-point: electric lighting worked. Then, markets did what they always do, they extrapolated.
And, the market was not wrong. Electricity demand and its usages did grow exponentially. But investors priced in that end-state almost immediately.
Within 18 months of Pearl Street opening, dozens of electric-light companies were listed across the US and UK . Competition for engineering talent intensified rapidly.
- Charles Brush attempted to poach Edison’s entire team, offering double salaries, stock options, autonomy, and patent royalties .
- George Westinghouse hired William Stanley (father of the modern transformer) by giving him his own lab, guaranteed R&D funding, the ability to hire his own staff, and the freedom to publish .
- Demand for “line men” surged; between 1882–85 they were among the highest-paid skilled workers in several US cities.
And yet, by 1888, roughly 80–90% of the companies formed during the 1881–83 boom had disappeared . Edison’s operations were eventually folded into Edison & Swan United and later into General Electric (GE). None of the 1882/83 pure plays remained independent by 1900. Only two meaningful firms, GE and Westinghouse, survived as industry leaders.
Why did so few endure when the promise of electrification was so great?
Because in the initial build-out from 1880–1900, uncertainty met over-optimism. Financing was speculative, regulation was embryonic, and many firms under-estimated the capital required to achieve scale or to defend their technologies. Reality failed to match the exuberance.
The productivity promise – and the productivity reality
Electricity ultimately reshaped the global economy. But the route from initial technology to full scale adoption was not smooth.
Pre-electrification factories were designed around steam. Steam engines were large, centralised, and transmitted power through line shafts. This created structural rigidity: fixed rows of machines, layouts optimised for power transmission rather than workflow, and limited scope for redesign .
Early adopters did not immediately see productivity improvements. Many simply replaced their steam engine with a central electric motor—a cost substitution, not a transformation.
The real step-change came with unit drive: individual motors powering individual machines. This enabled:
- more flexible machine placement,
- longer production lines,
- continuous-flow systems,
- multi-storey consolidation, and
- decentralised maintenance
But unit drive took decades to diffuse. Firms had to close plants, rebuild floors, retrain workers, redesign workflows, and finance new machinery. Many simply lacked the capital.
Ford’s Highland Park plant was one of the first greenfield factories designed entirely around electricity. Productivity gains exceeded 200%, not from electricity itself, but from workflow re-engineering . The biggest winners were the firms that rebuilt from scratch. Large incumbents, especially textile manufacturers, struggled. Mills that adopted electric motors without redesigning their layouts often saw minimal gains. Only those rebuilding after fires or bankruptcy realised substantial productivity improvements.
In effect, electricity’s productivity boom arrived 30–40 years after Pearl Street, once factories reorganised and once household electrification unlocked a brand-new consumer durables sector (washing machines, fridges, vacuum cleaners) that grew rapidly through the 1920s–1960s .Other later-cycle winners included chemical companies (DuPont, Dow), where electricity enabled temperature-sensitive processes, and national retailers (Sears, JCPenney), where electrified warehouses and refrigerated logistics supported scale expansion.
What lessons can we draw from the past?
- You can be right and still lose money
Electricity changed the world, but most early electric-light companies failed.
Technological inevitability is not revenue inevitability. - Every major phase of electrification produced more investment than could be profitably absorbed
The industry repeatedly overbuilt generation capacity, wiring networks, and equipment manufacturing. This was eventually absorbed, but not smoothly, see point 3. - Much early capex turned out to be obsolete
Edison’s DC networks were redundant within a decade. Westinghouse’s early AC lines needed redesign after transformer advances. - Regulation lags, but when it arrives, it reshapes returns
The electricity sector was chaotic until the 1920s–30s. Once regulation arrived, it consolidated the industry, entrenched incumbents, and stabilised returns. Eventually, utilities became boring. - Productivity eventually absorbs excess capacity, but only after organisational change
The productivity gains came not from the invention of electricity but its integration into workflows. This often required significant organisational and structural change in order for it to be maximally beneficial. - The survivors had deep balance sheets, integration, and diversification.
GE and Westinghouse did not win because they were first. They won because they:
- controlled systems,
- invested heavily in R&D,
- had access to global markets,
- and, most importantly, survived every capital cycle. It frequently looked like they would not make it!
We can certainly empathise with how investors must have felt in the late 1800’s, so much promise and so little insight into the future. When it comes to a transformative technology, it seems that overinvestment is an inevitability. As long as that capital commitment is absorbable and not leveraged, you will likely be okay in the long run, but it may well be a white-knuckle ride to the productivity gains on the other side!
Disclaimer: Kirsten Boldarin is the CEO of the Amplifi Group. The above article is intended to provide information and does not purport to give investment advice. Mint Asset Management is the issuer of the Mint Asset Management Funds. Download a copy of the product disclosure statement here.
Mint Asset Management is an independent investment management business based in Auckland, New Zealand. Mint Asset Management is the issuer of the Mint Asset Management Funds. Download a copy of the product disclosure statement at mintasset.co.nz
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