250 years of US innovation

The dawn of electrification

In October, we launched our 250 years of US innovation series with a focus on the transcontinental railroad. This month, I’m excited to present the second edition, featuring the dawn of electrification.

The incandescent lightbulb was a bright idea that sparked electrification. After nearly 3,000 prototypes, Thomas Edison created an incandescent lightbulb in 1879 with a carbonized cotton-thread filament that burned for 13 hours. His invention would receive US patent number 223,898 on 27 January 1880. Perhaps unsurprisingly, Edison got his start working in the growth industries of his era: railroads and telegraphs. Some of those early experiences spurred him to tinker and experiment to find new innovations, like the quadruplex telegraph that enabled four messages to be sent simultaneously. The same curiosity that spawned the lightbulb led to less well known but equally important advances in power distribution like generators, meters, and wiring switches. His overall approach to invention and entrepreneurship would inspire an entire new school of thought, embodied by people such as Henry Ford.

The lightbulb was a revolutionary invention, but it took more than a decade for electrification and its benefits to become essential for businesses and households—a necessity that sparked a wave of follow-on inventions. By the early 1900s, when electricity was just beginning to power commerce, the benefits of the telegraph and the transcontinental railroad were also becoming more entrenched. Productivity would rise rapidly in urban areas before climbing nationally in the 1920s as these transformational technologies reshaped the industrial and agricultural landscape. Electrification would spur yet another wave of productivity growth in the 1950s with the invention of household appliances.

Today, electric utilities are experiencing another significant growth phase—this time to power artificial intelligence (AI) and the energy needs for reshored manufacturing and electrification. Investors must now reconsider the electric utility sector, as its performance profile appears slightly less defensive and is instead powered by structural growth in revenues and earnings resulting from electrification and AI. In other words, the sector is experiencing accelerating power demand growth and investment like its dawning in the early light of the 1900s.

The spirit of enterprise

“No sooner do you set foot upon the American soil than you are stunned by a kind of tumult,” wrote Alexis de Tocqueville, taken by the pace of a young republic, in 1835’s Democracy in America. I, too, was stunned. Like Tocqueville, having been educated in Europe, America appeared to have turned things upside down. The question of “why could it work?” rather than “why will it not work?” seemed reckless yet enticing.

For the first time as a young professional, I stepped onto American soil in 2000 for a narrowly defined purpose—a project involving data, analytics, and a new way of systematic equity investing—much like Tocqueville, who crossed the Atlantic in 1831 under the banner of studying the US penitentiary system. I did not expect, however, to be swept into the same whirlwind that struck Tocqueville nearly two centuries earlier. 

Everywhere I turned, I witnessed what Tocqueville described as “the spirit of improvement always abroad in the United States.” In conversations with investors, business leaders, and start-up entrepreneurs, I encountered the same impatience with the present. I saw associations—what Tocqueville had once described as “the art of pursuing in common the object of their common desires”—not only in civic groups but also in venture capital and incubators.