Mike Tecku first appeared on this podcast in 2019 as an Amazon marketplace seller. Shortly afterward, he sold that business, a maker of floormats. He retired, became bored, and in 2022 launched Momentum, a direct-to-consumer nutritional shake producer. He and I discussed that venture last year in his second appearance.
He’s back. Momentum Shake is flourishing, as is Tecku. He’s evolved from the nuts and bolts of making money to achieving a purpose, building a team, and self-improvement. “If I’m not growing, I’m dying,” he told me.
Our entire audio conversation is embedded below. The transcript is edited for length and clarity.
Eric Bandholz: Your entrepreneurial journey is impressive.
Mike Tecku: Growth gives me meaning and a sense of being alive. If I’m not growing, I’m dying. The American dream of not having to do anything runs counter to human nature. When I retired, I got good at golf. I read many books but could not shake the urge to solve problems. I’d be in a store and think, “This is an interesting product. I wonder if I could make this.”
I got depressed when I wasn’t working on anything. I could feel myself shrinking. About a year into that, I decided I needed to re-embrace being an entrepreneur. That’s just who I am. Those are my gifts. I wanted to use my gifts and strengths, and now I had the privilege of using them in a way that I wanted, not just to survive or make money.
The world is constantly changing. To make something perfect is impossible, but you can pursue it by continually adjusting. The farther you get along, the more precise the destination is, and the more attuned you are to your goal. You gain knowledge and make better decisions. When you’re really into something, you’re continually growing and perfecting your art.
Bandholz: How does a company strive for perfection?
Tecku: You must develop trust with your customers so they know you have their best interest at heart. If we change the flavoring of our shakes, customers worry we’re making it cheaper when the reality is the opposite. You must be transparent with customers and communicate that you want to add more value without increasing their costs. It’s essential to zoom out beyond supply and demand. What advantage can you bring to the market besides making more money?
I want to produce a product 10 times better than everybody for the same price. Most businesses are just media and marketing platforms. They don’t touch the product. If they’re doing anything at all, they’re selling commodities. I want to make something that is a masterpiece and stacks much value into it.
That wasn’t happening with our outsourced manufacturer. I love those people, but they can’t innovate at the speed I want. I can cut costs by 30% when I take over manufacturing. I can shrink cash flow, increase quantity, reduce costs, and improve quality. The only way to do that is through owning the manufacturing process.
Bandholz: What are the pitfalls of in-house manufacturing?
Tecku: The first step is believing it’s doable. I spent 10 years thinking manufacturing was complicated and beyond my expertise. But I had to start questioning myself. Why can’t I assemble a team of intelligent, hardworking individuals? Why can’t I solve those problems?
The goal is to make manufacturing easy. If I can build something simple and scalable, it will be more secure and reliable. I like to forecast five to seven years down the road. What are my goals? I want to scale to a hundred million dollars. What does that look like in the number of units I need to make a day and the machines capable of that?
I’m buying machines to simplify and reduce the chance of error. We can’t eliminate mistakes, but we can streamline processes, steps, and inputs. The machines I’m buying should be able to make a thousand bags an hour with one employee. That’s a scalable system.
Bandholz: You have a single SKU earning thousands of dollars monthly. You’re not touching it. There’s beauty in that.
Tecku: It is beautiful because it frees me for growth and improvement. Recall the old phrase, “Work on your business, not in it.” That can’t change. You have to be on top looking at the pieces. My job is decision-making. I want two hours of hyper-focused thinking every day.
Constantly executing is not the best use of my skills. Some people are way better at it. I consider all components of the business to be assets. The manufacturing facility I’ve been building for the last six months is an asset. I want it to run perfectly without me. That involves the machines, the space, the team — every decision.
Bandholz: I struggle with shifting from the execution role into strategy and decision-making.
Tecku: I try to check with my team to see if they need something from me. I have to remind myself this is what they’re good at and that they appreciate my trust in them. If you want to create independent people who think for themselves, you have to let them fail. My job is to determine the next step. There’s no right path. It requires a lot of walking around, reading books, talking to folks, and paying attention.
This story first appeared in China Report, MIT Technology Review’s newsletter about technology in China. Sign up to receive it in your inbox every Tuesday.
If you ask any child in China what’s the most exciting thing about welcoming another year, they are likely to answer: the red packets. It’s a festive tradition: During the holidays, people give out red envelopes full of cold hard cash to young members of the family. You can reliably get cash gifts every year until you graduate from school and start working full-time.
So this week is a great opportunity to talk about how the tradition of giving red packets, which has been around for hundreds of years, has evolved in the digital age. Even though I’m not in China now, I still managed to send two red packets to my nephew and niece, through mobile payments on WeChat.
In fact, red packets have not merely turned from a physical activity to a digital one. They’ve become a way for Chinese tech companies to make a stack of money each year and attract new users and traffic.In return, users have to follow increasingly complicated rules to get a few bucks.
The promise of variable rewards increases the feeling of excitement when you get a big share. It also prompted those who didn’t get much to ask for another chance, which has really made it a centerpiece of the new red packet culture.
And it didn’t take long until tech companies became the ones giving out the money.
In 2015, WeChat decided to give out over $80 million in red packets during the Spring Festival Gala, a yearly tradition in China that gathers the family around the TV. To get a share of WeChat’s red packets, people had to shake their phones at a certain time of the show. According to data provided by WeChat, throughout Lunar New Year’s Eve, people shook their phones 11 billion times. At the peak, people shook their phones 800 million times in just one minute.
This immense success inspired every other tech company in China to join the game and spend millions of dollars. Today, every major app offers a version of that promotion during the new year. But what users need to do in return has become much more complicated.
1For example, to participate in one of the red packet events this year on Douyin, the Chinese version of TikTok, users have to complete a series of tasks: log in every day, invite new users to the platform, upload an avatar, follow certain accounts, set up a group chat, post a gif in the group chat, make a video call, upload a video, watch videos for a minimum amount of time, and download other apps. The more time you are willing to spend on these tasks, the more you will get back from the app.
The 2010s saw immense growth in China’s mobile internet sector, and one of the lasting outcomes is that apps have gotten very sophisticated at gamifying their gimmicks to attract users and traffic. The new year’s red packet promotions are essentially the pinnacle of these promotion gimmicks.
As the rules get increasingly convoluted, most people don’t have the time to follow up with every single mini-game. I stopped participating in these red packet promotions years ago because the payout is always abysmal compared to the efforts required. (Am I willing to message five of my college friends whom I haven’t spoken to for years in order to get this $5 cash gift? No.)
But there are still people who treat it seriously. As Chinese publications have reported, some people, particularly those who are less well off, would study the rules of these red packet games thoroughly, hoping to make a fortune with them. Since the games reward social interactions, some people actually pay others with their own money to join in the efforts. New apps have even emerged that connect people who are gaming the system.
This is a side of the Chinese tech world that the outside doesn’t often get to see. The Chinese mobile internet industry is saturated with mini-games or incentives that are designed to chase infinite growth.
From what I have heard, most people still see it as a nuisance. But as the longevity of red packet promotions in China shows, once companies find the right audience and the right profitability model, these stunts could become a fact of online life for all of us.
Did you get any digital red packets this year? Let me know your experience at zeyi@technologyreview.com.
Catch up with China
1. Sam Altman’s plan for a $7 trillion-worth semiconductor empire includes building dozens of chip fabrication plants with money from Middle East investors, then having the Taiwanese chipmaker TSMC run them. (Wall Street Journal $)
2. A former TikTok executive is suing the company for unlawfully firing her due to what they called a lack of “docility and meekness.” (Financial Times $)
3. If he’s reelected, Donald Trump is promising a 60% tariff on all Chinese imports. If that actually happens (big if), it would almost wipe out all imports from China by 2030. (Bloomberg $)
For the first time in 22 years, Mexico has surpassed China to be the United States’ largest import source. (ABC News)
4. Members of the European Union have had a falling out because of their different positions on China and how to handle trade across economic sectors. (South China Morning Post $)
5. A new report found more than 100 websites disguised as local news outlets in Europe, Asia, and Latin America are actually part of an influence campaign linked to a Beijing public relations firm. (Reuters $)
6. How Hefei, a city in central China, rose up to become a leader in electric-vehicle production by investing government money in fledgling startups. (New York Times $)
Lost in translation
While we are on the topic of digital red packets, people are selling AI-generated artwork as red packet designs this year, according to the Chinese publication Guokr. After WeChat allowed users to customize what their red packet looks like on the app in 2019, a new business has emerged to let people spend a few bucks and get a new look for their digital gifts every year. Successful artists can make a decent bit of money with it.
However, the industry is now unsurprisingly being disrupted by image-making AIs like Midjourney. There’s even a burgeoning entrepreneurial scene where people repackage these AI services to tailor them to design red packets, simplifying the process. On social media, some people are promising that you can earn quick cash by generating AI red packets, attracting others to cash in on the trend. But in reality, there are still many obstacles to fine-tuning the designs and gaining traction among potential buyers.
One more thing
You might not be able to get an Apple Vision Pro yet, but you can hop on a Hainan Airlines flight, where all passengers are given a pair of augmented reality goggles made by a Chinese company for free in-flight entertainment. They look so much lighter than Apple’s headset. I want to try them out!
Allen Walton is the founder of SpyGuy, a seller of surveillance cameras from his base in Texas. He’s also a world traveler and a seasoned acquirer of airline travel points. Ecommerce merchants who pay with a rewards credit card for advertising, shipping, and other expenses can “rack-up crazy points,” he told me.
In our recent interview, his third for this podcast, he elaborated on his methods for obtaining cheap airline tickets and hotel accommodations.
The entire audio of our conversation is embedded below. The transcript is edited for clarity and length.
Eric Bandholz: You are the points guy.
Allen Walton: I’m pretty well-versed. For almost 10 years now, I have been paying attention to points and miles and figuring out how to save money, especially on international travel. Many folks come to me for tips, and I am happy to help because I know how meaningful it is to lay flat on a business seat when you’re on your way to meet suppliers in Asia.
If you desire to travel, whether for business or personal, and you’re willing to learn some rules to redeem those points, you could fly business class from the U.S. to Asia or get just under $400 in cash. There are some tricks. Ideally, you must be flexible about when you fly out or your final destination.
Say you’re trying to get to Barcelona in the summer. There might not be something available that gets you the whole way there, but if you’re happy with ending up in Madrid or Paris, there might be something there that’s just a fraction of the price of trying to get to Barcelona. Flexibility opens up the possibilities.
Bandholz: What’s the process?
Walton: Airlines have loyalty programs. American has the AAdvantage program, United has MileagePlus, and Air France has Flying Blue. You can rack-up airline miles from standard fares and redeem those miles for tickets. You can also get airline miles just by making regular credit card purchases. You don’t have to fly on those airlines to rack up their miles.
“Anytime awards” or “everyday awards” are where you pick the exact flight you want on the same date you want, and the airlines will quote you a price that will typically be expensive in terms of points. On United, it might be 200,000 points from New York to Japan or New York to Hong Kong. But there are what’s called “saver awards.” On many flights, the airlines will designate a small number of seats at a saver rate, which might be much less. So, instead of 200,000 points, it might be 80,000. If you know the game’s rules, you can look for these saver seats, which aren’t on every flight, but you can book these awards at a fraction of the average points.
Bandholz: Do you have to switch credit cards to get the maximum points?
Walton: No. Getting a big signup offer, canceling it, and switch cards to max out the number of points is what somebody with a nine-to-five job might do because they don’t spend the amount of money necessary to facilitate redeeming points for miles. You do not need to do that as an ecommerce entrepreneur. When you factor in ad spend, shipping, SaaS, and paying suppliers, your monthly spend on a credit card is so much that you don’t need to do that game. You could stick with one, two, or maybe even three cards and rack up many points from your regular business expenses.
Bandholz: What are the best cards for entrepreneurs?
Walton: There are a few for ecommerce entrepreneurs, particularly the American Express Business Gold Card. For the last decade, it was four points for every dollar of online advertising and shipping. That was big for anyone who advertised online or shipped physical products. You could rack up crazy points. AmEx recently tweaked that card. This year, instead of 4-times on shipping, they added 4-times on software and cloud computing. Klaviyo and ClickUp will be on that, for example. The card has a $400 annual fee but pays itself when you get four points for every dollar you spend. You can start redeeming that for business-class international travel or hotel stays.
The Chase Ink Business Preferred is the next option, but getting multiples of this card is much more challenging. Generally, you need a relationship with the small business banker at Chase, such as your local regional banker. This card gives you 3-times points on online ads and 3-times on shipping. It has a $95 annual fee and a 100,000 signup bonus. You could do a round-trip ticket from the U.S. to Europe in business class just from the signup bonus. And so it’s a card worth picking up if you’ve tapped out on AmEx cards.
You might want to consider looking at a hotel card for loyalty reasons. I have platinum status with Marriott Bonvoy because there are a lot of Marriotts. They give you a 4:00 p.m. checkout, an upgrade to suites, and a free breakfast. Sometimes you have to ask. They won’t do it automatically. It makes it a lot easier to get status for when you’re traveling and want a better hotel experience, specifically the late checkout.
Consider getting another card for any spending that doesn’t have a multiplier.
Bandholz: Where do you search plane tickets by point costs?
Walton: There’s a tool now that I love called Seats.aero. It scans the most popular routes every hour or so. It will tell you when the flight takes off, how many seats are available, and booking options. There’s a free version, but the paid version costs $10 a month and is worth it. They have a bot that crawls all the airlines’ websites. It will find what’s available at that saver level, what date it is on, how much the fees are, and how you book. It’ll explain all that right there, but it’s imperfect and doesn’t include every airline. It misses a lot of stuff.
Aaron Orendorff is a chaplain turned writer turned digital marketer. He was the first editor-in-chief at Shopify Plus and then vice president of marketing at Common Thread Collective, an ecommerce agency.
He’s now head of marketing for Recart, an SMS platform. His passion is empowering colleagues and clients. He told me, “I find joy in bigging others up.”
The entire audio of our recent conversation is embedded below. The transcript is edited for length and clarity.
Eric Bandholz: Tell us who you are.
Aaron Orendorff: I’m the head of marketing for Recart. We’re an SMS app for Shopify businesses. My claim to fame is coming up with Shopify Plus. I cut my teeth with Shopify early in ecommerce. I remember writing how-to guides and articles about why you should trust the cloud for ecommerce.
I then moved to the agency side at Common Thread Collective. Now I’m sending text messages.
I didn’t have any background in this industry, nor any clients, pedigree, or connections. My life radically changed a decade ago. I’ll celebrate 11 years of sobriety at the beginning of February.
At the time I was unemployed and unemployable in Klamath Falls, Oregon. I created a website and wrote 10 blog posts to make it look like something was happening. I bought a traffic course from Neil Patel. It said to purchase your first 5,000 followers on Twitter. So I did. I think it screwed me for quite a while, but it helped to look like I was a legit business.
Bandholz: You have a big Twitter following.
Orendorff: Yes. My production rate is so much lower than what I see happening in the world. I’m relentlessly enthusiastic. I find joy in bigging others up.
At my core, I’m a writer. I warn folks when I’m starting to work with them and say, “Listen, I’m going to light you up in this Google Doc more than you’ve ever been in your entire life. The fact that I do that is an act of love. I would not invest in this if I didn’t believe in you.”
Criticism is a gift. Criticism is love because it takes energy, and it takes emotional risk. It’s much easier to fix and ship a thing than tell somebody where they went wrong. You run the risk of them misunderstanding or thinking ill of you. And I care a lot about that.
Bandholz: There is a line between criticism and hate.
Orendorff: That’s a powerful point. I’m fascinated by how to get somebody; how do you get on their side and disagree with them? How do you rapidly build trust? What are the cues? What are the shortcuts to it? What are the heuristics? The rule of thumb?
Bandholz: It’s just authenticity, right? You have to be authentic. From there, you build trust. Where can people follow you?
Earlier this month, a massive ship picked up over 5,000 electric cars from two ports in northern and southern China. Five days later, it passed through Singapore, and it is now headed for India. However, its final destination is in Europe, where most of the cars will be sold.
The ship’s name is BYD Explorer No.1. As the first of a massive fleet that BYD is building, it reflects the Chinese company’s ambition to establish a seafaring business that supports its new role in the global car trade.
BYD, founded by a Chinese metallurgy researcher named Wang Chuanfu in 1995, started out making small batteries for mobile devices. It later expanded its business to automobiles and eventually combined the two to make electric vehicles. In two decades, it became China’s largest EV maker. By the fourth quarter of 2023, it was the world’s.
BYD offers a lot of options, ranging from affordable sedans to luxury SUVs, and there’s rising appetite for its cars overseas. In 2023, BYD exported over 240,000 vehicles, up from 55,000 in 2022. But it’s run into a snag: to get the most financial benefit from its exploding popularity abroad, it’s having to expand beyond the car trade into the shipping business.
The shortage of car-carrier vessels
To understand why BYD has made this move, you need to learn a little about how cars are transported across the sea. Usually, the cargo industry uses roll-on/roll-off (RORO) ships. Unlike ships that use a crane to lift up cargo and place it aboard, RORO ships have ramps that allow vehicles to be driven directly on, making the whole process much easier.
But these ships have been in short supply for the past few years. While old vessels have been entering retirement, new ship orders were down because of the 2008 financial crisis and the industry-wide upgrade to more environmentally friendly fuels, leaving a shortfall.
Also, most car companies have longstanding relationships with shipping firms or own their own fleets of boats. For example, Japanese car makers like Nissan and Toyota each have fleets of RORO ships that can carry tens of thousands of cars. But China’s domestic car-carrier vessels represent only 2.8% of global shipping capacity, leaving the Chinese brands few options for getting their cars across the seas.
As a result, their access to RORO ships has become prohibitively expensive. According to Clarksons Research, the intelligence arm of the world’s largest shipping services provider, the price to rent (or charter, as the industry says) a car-carrier ship for a day skyrocketed to $115,000 in 2023, a historical high and close to seven times the average pre-pandemic price, which was around $17,000 in 2019.
New demand to ship cars predominantly comes from China right now. The country is on the verge of becoming the world’s largest car exporter (in fact, it may already have gained that status in 2023, but we won’t know until the official numbers are finalized). It exports a mix of traditional gas cars, electric cars made by Chinese companies, and Tesla cars manufactured in the Giga Shanghai plant.
The shortage of shipping capacity is what’s standing in its way.
News that BYD was looking to buy or charter ships was first reported by the shipping outlet Lloyd’s List in late 2022. In December that year, the company changed its corporate registration to include the business of international cargo shipping and ship management. MIT Technology Review contacted BYD for comment, but it did not respond in time for publication.
BYD Explorer No.1 was delivered at the beginning of this year. The RORO vessel, which can carry 7,000 cars at the same time, is officially registered under Zodiac Maritime, a UK company controlled by the Israeli shipping tycoon Eyal Ofer, but BYD has leased it for an undisclosed period of time. In a press release, BYD says it plans to add seven more vessels to the fleet in the next two years. It also plans to let other companies export their vehicles using BYD’s ships, it says.
For its maiden voyage, the ship is carrying over 5,000 BYD vehicles and heading toward the ports of Vlissingen in the Netherlands and Bremerhaven in Germany, according to Chinese state media outlet Xinhua.
BYD is not the only Chinese automaker making this move. SAIC Motor, a Chinese state-owned company, sold 1.2 million vehicles overseas in 2023, 24% of which were EVs. It formed a RORO shipping subsidiary in 2021, and its newest RORO vessel, the largest of its kind and able to carry 7,600 cars, also set sail for the first time in January. Like BYD Explorer No.1, it’s going to Europe.
While BYD has announced that it will add energy-storing battery tech to its vessels, the RORO ships it’s chartering today are not electric yet. Most of the newer ships can be powered by either traditional fuel or liquefied natural gas, which is a cleaner energy source.
From carrying wood pulp to cars
It will be some time before these Chinese companies finish assembling their sea freight empires, as these massive new ships take years to build. In the meantime, some have turned to creative fixes for the supply shortage: repurposing ships that were designed for other types of cargo.
Particularly, they have their eyes on gigantic ships typically used to import thousands of tons of wood pulp from South America to China, where it’s made into everyday products like tissue, paper, and books. These wood-pulp carriers often end up empty or barely loaded on the way back, because China doesn’t have similar products to export.
However, in recent years Chinese car companies have started to sell their vehicles to the South American continent, and shipping companies saw an opportunity there. China Ocean Shipping Company (COSCO), one of the largest shipping companies in the world, designed a foldable rack that can load cars and stack them up into a wood-pulp carrier. In July last year, COSCO loaded such a ship with over 2,700 cars and sent them to Brazil.
With makeshift arrangements like this and new RORO vessels being built, shipping bottlenecks for Chinese automakers could be significantly reduced in the next couple of years. Having their own fleets or chartering ships from domestic shipping companies could also further drive down costs, making Chinese cars even more competitive abroad.
And just as the auto industry in Japan and South Korea has pushed these two countries to become global leaders in shipping, EVs could make China a major player in the ocean too.
For decades, procurement was seen as a back-office function focused on cost-cutting and supplier management. But that view is changing as supply chain disruptions and fluctuating consumer behavior ripple across the economy. Savvy leaders now understand procurement’s potential to deliver unprecedented levels of efficiency, insights, and strategic capability across the business.
However, tapping into procurement’s potential for generating value requires mastering the diverse needs of today’s global and hybrid businesses, navigating an increasingly complex supplier ecosystem, and wrangling the vast volumes of data generated by a rapidly digitalizing supply chain. Advanced procurement tools and technologies can support all three.
Purchasing the products and services a company needs to support its daily operations aggregates thousands of individual decisions, from a remote worker selecting a computer keyboard to a materials expert contracting with suppliers. Keeping the business running requires procurement processes and policies set by a chief procurement officer (CPO) and team who “align their decisions with company goals, react to changes with speed, and are agile enough to ensure a company has the right products at the right time,” says Rajiv Bhatnagar, director of product and technology at Amazon Business.
At the same time, he says, the digitalization of the supply chain has created “a jungle of data,” challenging procurement to “glean insights, identify trends, and detect anomalies” with record speed. The good news is advanced analytics tools can tackle these obstacles, and establish a data-driven, streamlined approach to procurement. Aggregating the copious data produced by enterprise procurement—and empowering procurement teams to recognize and act on patterns in that data—enables speed, agility, and smarter decision-making.
Today’s executives increasingly look to data and analytics to enable better decision-making in a challenging and fast-changing business climate. Procurement teams are no exception. In fact, 65% of procurement professionals report having an initiative aimed at improving data and analytics, according to The Hackett Group’s 2023 CPO Agenda report.
And for good reason—analytics can significantly enhance supply chain visibility, improve buying behavior, strengthen supply chain partnerships, and drive productivity and sustainability. Here’s how.
Gaining full visibility into purchasing activity
Just getting the full view of a large organization’s procurement is a challenge. “People involved in the procurement process at different levels with different goals need insight into the entire process,” says Bhatnagar. But that’s not easy given the layers upon layers of data being managed by procurement teams, from individual invoice details to fluctuating supplier pricing. Complicating matters further is the fact that this data exists both within and outside of the procurement organization.
Fortunately, analytics tools deliver greater visibility into procurement by consolidating data from myriad sources. This allows procurement teams to mine the most comprehensive set of procurement information for “opportunities for optimization,” says Bhatnagar. For instance, procurement teams with a clear view of their organization’s data may discover an opportunity to reduce complexity by consolidating suppliers or shifting from making repeated small orders to more cost-efficient bulk purchasing.
Identifying patterns—and responding quickly
When carefully integrated and analyzed over time, procurement data can reveal meaningful patterns—indications of evolving buying behaviors and emerging trends. These patterns can help to identify categories of products with higher-than-normal spending, missed targets for meeting supplier commitments, or a pattern of delays for an essential business supply. The result, says Bhatnagar, is information that can improve budget management by allowing procurement professionals to “control rogue spend” and modify a company’s buying behavior.
In addition to highlighting unwieldy spending, procurement data can provide a glimpse into the future. These days, the world moves at a rapid clip, requiring organizations to react quickly to changing business circumstances. Yet only 25% of firms say they are able to identify and predict supply disruptions in a timely manner “to a large extent,” according to Deloitte’s 2023 Global CPO survey.
“Machine learning-based analytics can look for patterns much faster,” says Bhatnagar. “Once you have detected a pattern, you can take action.” By detecting patterns in procurement data that could indicate supply chain interruptions, looming price increases, or new cost drivers, procurement teams can proactively account for market changes. For example, a team might enable automatic reordering of an essential product that is likely to be impacted by a supply chain bottleneck.
Sharing across the partner ecosystem
Data analysis allows procurement teams to “see some of the challenges and react to them in real-time,” says Bhatnagar. But in an era of interconnectedness, no one organization acts alone. Instead, today’s supplier ecosystems are deeply interconnected networks of supply-chain partners with complex interdependencies.
For this reason, sharing data-driven insights with suppliers helps organizations better pinpoint causes for delays or inaccurate orders and work collaboratively to overcome obstacles. Such “discipline and control” over data, says Bhatnagar, not only creates a single source of truth for all supply-chain partners, but helps eliminate finger-pointing while also empowering procurement teams to negotiate mutually beneficial terms with suppliers.
Improving employee productivity and satisfaction
Searching for savings opportunities, negotiating with suppliers, and responding to supply-chain disruptions—these time-consuming activities can negatively impact a procurement team’s productivity. However, by relying on analytics to discover and share meaningful patterns in data, procurement teams can shift focus from low-value tasks to business-critical decision-making.
Shifting procurement teams to higher-impact work results in a better overall employee experience. “Using analytics, employees feel more productive and know that they’re bringing more value to their job,” says Bhatnagar.
Another upside of heightening employee morale is improved talent retention. After all, workers with a sense of value and purpose are likelier to stay with an employer. This is a huge benefit in a time when nearly half (46%) of CPOs cite the loss of critical talent as a high or moderate risk, according to Deloitte’s 2023 Global CPO survey.
Meeting compliance metrics and organizational goals
Procurement analytics can also deliver on a broader commitment to changing how products and services are purchased.
According to a McKinsey Global Survey on environmental, social, and governance (ESG) issues, more than nine in ten organizations say ESG is on their agenda. Yet 40% of CPOs in the Deloitte survey report their procurement organizations need to define or measure their own set of relevant ESG factors.
Procurement tools can bridge this gap by allowing procurement teams to search for vendor or product certifications and generate credentials reports to help them shape their organization’s purchases toward financial, policy, or ESG goals. They can develop flexible yet robust spending approval workflows, designate restricted and out-of-policy purchases, and encourage the selection of sustainable products or preference for local or minority-owned suppliers.
“A credentials report can really allow organizations to improve their visibility into sustainability [initiatives] when they’re looking for seller credentials or compliant credentials,” says Bhatnagar. “They can track all of their spending from diverse sellers or small sellers—whatever their goals are for the organization.”
Delivering the procurement of tomorrow
Advanced analytics can free procurement teams to glean meaningful insights from their data—information that can drive tangible business results, including a more robust supplier ecosystem, improved employee productivity, and a greener planet.
As supply chains become increasingly complex and the ecosystem increasingly digital, data-driven procurement will become critical. In the face of growing economic instability, talent shortages, and technological disruption, advanced analytics capabilities will enable the next generation of procurement.
This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.
Learn how Amazon Business is leveraging AI/ML to offer procurement professionals more efficient processes, a greater understanding of smart business buying habits and, ultimately, reduced prices.
MIT Technology Review is celebrating our 125th anniversary with an online series that draws lessons for the future from our past coverage of technology.
It was 1938, and the pain of the Great Depression was still very real. Unemployment in the US was around 20%. Everyone was worried about jobs.
In 1930, the prominent British economist John Maynard Keynes had warned that we were “being afflicted with a new disease” called technological unemployment. Labor-saving advances, he wrote, were “outrunning the pace at which we can find new uses for labour.” There seemed to be examples everywhere. New machinery was transforming factories and farms. Mechanical switching being adopted by the nation’s telephone network was wiping out the need for local phone operators, one of the most common jobs for young American women in the early 20th century.
Were the impressive technological achievements that were making life easier for many also destroying jobs and wreaking havoc on the economy? To make sense of it all, Karl T. Compton, the president of MIT from 1930 to 1948 and one of the leading scientists of the day, wrote in the December 1938 issue of this publication about the “Bogey of Technological Unemployment.”
How, began Compton, should we think about the debate over technological unemployment—“the loss of work due to obsolescence of an industry or use of machines to replace workmen or increase their per capita production”? He then posed this question: “Are machines the genii which spring from Aladdin’s Lamp of Science to supply every need and desire of man, or are they Frankenstein monsters which will destroy man who created them?” Compton signaled that he’d take a more grounded view: “I shall only try to summarize the situation as I see it.”
His essay concisely framed the debate over jobs and technical progress in a way that remains relevant, especially given today’s fears over the impact of artificial intelligence. Impressive recent breakthroughs in generative AI, smart robots, and driverless cars are again leading many to worry that advanced technologies will replace human workers and decrease the overall demand for labor. Some leading Silicon Valley techno-optimists even postulate that we’re headed toward a jobless future where everything can be done by AI.
While today’s technologies certainly look very different from those of the 1930s, Compton’s article is a worthwhile reminder that worries over the future of jobs are not new and are best addressed by applying an understanding of economics, rather than conjuring up genies and monsters.
Uneven impacts
Compton drew a sharp distinction between the consequences of technological progress on “industry as a whole” and the effects, often painful, on individuals.
For “industry as a whole,” he concluded, “technological unemployment is a myth.” That’s because, he argued, technology “has created so many new industries” and has expanded the market for many items by “lowering the cost of production to make a price within reach of large masses of purchasers.” In short, technological advances had created more jobs overall. The argument—and the question of whether it is still true—remains pertinent in the age of AI.
Then Compton abruptly switched perspectives, acknowledging that for some workers and communities, “technological unemployment may be a very serious social problem, as in a town whose mill has had to shut down, or in a craft which has been superseded by a new art.”
Even those who agreed that jobs will come back in “the long run” were concerned that “displaced wage-earners must eat and care for their families ‘in the short run.’”
This analysis reconciled the reality all around—millions without jobs—with the promise of progress and the benefits of innovation. Compton, a physicist, was the first chair of a scientific advisory board formed by Franklin D. Roosevelt, and he began his 1938 essay with a quote from the board’s 1935 report to the president: “That our national health, prosperity and pleasure largely depend upon science for their maintenance and their future improvement, no informed person would deny.”
Compton’s assertion that technical progress had produced a net gain in employment wasn’t without controversy. According to a New York Times article written in 1940 by Louis Stark, a leading labor journalist, Compton “clashed” with Roosevelt after the president told Congress, “We have not yet found a way to employ the surplus of our labor which the efficiency of our industrial processes has created.”
As Stark explained, the issue was whether “technological progress, by increasing the efficiency of our industrial processes, take[s] jobs away faster than it creates them.” Stark reported recently gathered data on the strong productivity gains from new machines and production processes in various sectors, including the cigar, rubber, and textile industries. In theory, as Compton argued, that meant more goods at a lower price, and—again in theory—more demand for these cheaper products, leading to more jobs. But as Stark explained, the worry was: How quickly would the increased productivity lead to those lower prices and greater demand?
As Stark put it, even those who agreed that jobs will come back in “the long run” were concerned that “displaced wage-earners must eat and care for their families ‘in the short run.’”
World War II soon meant there was no shortage of employment opportunities. But the job worries continued. In fact, while it has waxed and waned over the decades depending on the health of the economy, anxiety over technological unemployment has never gone away.
Automation and AI
Lessons for our current AI era can be drawn not just from the 1930s but also from the early 1960s. Unemployment was high. Some leading thinkers of the time claimed that automation and rapid productivity growth would outpace the demand for labor. In 1962, MIT Technology Review sought to debunk the panic with an essay by Robert Solow, an MIT economist who received the 1987 Nobel Prize for explaining the role of technology in economic growth and who died late last year at the age of 99.
Robert Solow’s 1962 essay was illustrated by a cartoon of a Solow-looking character whistling past a trio of straw men (presumably jobless ones).
In his piece, titled “Problems That Don’t Worry Me,” Solow scoffed at the idea that automation was leading to mass unemployment. Productivity growth between 1947 and 1960, he noted, had been around 3% a year. “That’s nothing to be sneezed at, but neither does it amount to a revolution,” he wrote. No great productivity boom meant there was no evidence of a second Industrial Revolution that “threatens catastrophic unemployment.” But, like Compton, Solow also acknowledged a different type of problem with the rapid technological changes: “certain specific kinds of labor … may become obsolete and command a suddenly lower price in the market … and the human cost can be very great.”
These days, the panic is over artificial intelligence and other advanced digital technologies. Like the 1930s and the early 1960s, the early 2010s were a time of high unemployment, in this case because the economy was struggling to recover from the 2007–’09 financial crisis. It was also a time of impressive new technologies. Smartphones were suddenly everywhere. Social media was taking off. There were glimpses of driverless cars and breakthroughs in AI. Could those advances be related to the lackluster demand for labor? Could they portend a jobless future?
Again, the debate played out in the pages of MIT Technology Review. In a story I wrote titled “How Technology Is Destroying Jobs,” economist Erik Brynjolfsson and his colleague Andrew McAfee argued that technological change was eliminating jobs faster than it was creating them. This wasn’t just about a mill shutting down. Rather, advanced digital technologies were leading to job losses across a broad swath of the economy, raising the specter once again of technological unemployment.
Like the 1930s and the early 1960s, the early 2010s were a time of high unemployment.
It’s difficult to pinpoint a single cause for something as complex as a dip in total employment—it could be just a result of sluggish economic growth. But it was becoming increasingly obvious, both in the data and in everyday observations, that new technologies were changing the types of jobs in demand—and while that was nothing new, the scope of the transition was troubling, and so was the speed at which it was happening. Industrial robots had killed off many well-paying manufacturing jobs in places like the Rust Belt, and now AI and other digital technologies were coming after clerical and office jobs—and even, it was feared, truck driving.
In his farewell speech before leaving office in January 2017, President Barack Obama spoke about “the relentless pace of automation that makes a lot of good middle-class jobs obsolete.” By that time, it was clear that Compton’s optimism needed to be rethought. Technical progress was not turning out to lead to inevitable job growth, and the pain was not limited to a few specific locations and industries.
Why Musk is wrong
In an interview late last year with the UK prime minister, Rishi Sunak, Elon Musk declared there will come a time when “no job is needed,” thanks to an AI “magic genie that can do everything you want.” Musk added that as a result, “we won’t have universal basic income, we’ll have universal high income”—apparently answering Compton’s rhetorical question about whether machines will be “the genii which … supply every need and desire of man.”
It might not be possible to prove Musk wrong, since he gave no timeline for his utopian prediction; in any case, how do you argue against the power of a magical genie? But the end-of-work meme is a distraction as we figure out the best way to use AI to expand the economy and create new jobs.
Breakthroughs in generative AI, such as ChatGPT and other large language models, will likely transform the economy and labor markets. But there’s no convincing evidence that we’re on a path to a jobless future. To paraphrase Solow, we should worry about that when there’s a problem to worry about.
Even a bullish estimate about the effects of generative AI by Goldman Sachs puts its impact on productivity growth at around 1.5% a year over the next 10 years. That, as Solow might say, is nothing to sneeze at, but it’s not going to end the need for workers. The Goldman Sachs report calculated that roughly two-thirds of US jobs are “exposed to some degree of automation by AI.” Yet this conclusion is often misinterpreted—it doesn’t mean all those jobs will be replaced. Rather, as the Goldman Sachs report notes, most of these positions are “only partially exposed to automation.” For many of these workers, AI will become part of the workday and won’t necessarily lead to layoffs.
The end-of-work meme is a distraction as we figure out the best way to use AI to expand the economy and create new jobs.
One critical wild card is how many new jobs will be created by AI even as existing ones disappear. Estimating such job creation is notoriously difficult. But MIT’s David Autor and his collaborators recently calculated that 60% of employment in 2018 was in types of jobs that didn’t exist before 1940. One reason innovation has created so many new jobs is that it has increased the productivity of workers, augmenting their capabilities and expanding their potential to do new tasks. The bad news: this job creation is countered by the labor-destroying impact of automation when it’s used to simply replace workers. As Autor and his coauthors conclude, one of the key questions now is whether “automation is accelerating relative to augmentation, as many researchers and policymakers fear.”
In recent decades, companies have often used AI and advanced automation to slash jobs and cut costs. There’s no economic rule that innovation will in fact favor augmentation and job creation over this type of automation. But we have a choice going forward: we can use technology to simply replace workers, or we can use it to expand their skills and capabilities, leading to economic growth and new jobs.
One of the lasting strengths of Compton’s 1938 essay was his argument that companies needed to take responsibility for limiting the pain of any technological transition. His suggestions included “coöperation between industries of a community to synchronize layoffs in one company with new employment in another.” That might sound outdated in today’s global economy. But the underlying sentiment remains relevant: “The fundamental criterion for good management in this matter, as in every other, is that the predominant motive must not be quick profits but best ultimate service of the public.”
At a time when AI companies are gaining unprecedented power and wealth, they also need to take greater responsibility for how the technology is affecting workers. Conjuring up a magical genie to explain an inevitable jobless future doesn’t cut it. We can choose how AI will define the future of work.
Hosting “Ecommerce Conversations” is a welcome respite from my day job of running Beardbrand, the direct-to-consumer company I co-founded in 2012. I periodically post podcast updates on Beardbrand’s performance, hoping the transparency helps other entrepreneurs.
Here’s my recap of 2023.
It was a terrible year for me and Beardbrand. It was the first year we were in the red. We’ve always had around 15% margins, but not in 2023
I described the year in this week’s episode, embedded below. The transcript is condensed and edited for clarity.
Losses
Beardbrand generates revenue primarily through our website but also via wholesale accounts. Sales from our site were down 53% from the peak of 2021 — our best year. They decreased slightly in 2022, but profit increased because we lowered expenses. In 2023, profit and sales continued to decline significantly. A huge tax bill last April was the downside of being so profitable in 2022. We’ve always had tax bills, which we paid on time, but it was difficult this time with the other losses.
Then we got hit with a tax lien early last year. The state of Texas audited us for sales tax compliance. We had to pay additional taxes, penalties, and fees. They gave us 30 days. Fortunately, we run a very conservative business and have emergency savings. We paid the state and the IRS simultaneously, plus some hefty bills from the holiday season. Thus all our cash went out the door at the beginning of 2023.
Another loss at that time was a mistaken 100%-off discount code. I created it about eight years ago, and somehow, it was reachable on our website. It was leaked to a Facebook group or on TikTok. We had roughly $30,000 worth of products purchased with this code. None of us here caught it.
Target was a key wholesale account for about five years. We lost that business in 2023. The staff there simply stopped replying to our emails after we proposed 2023 plans. We emailed, “If you don’t reply, we’ll assume you won’t carry our products from now on. We’ll adjust our order projections.”
We had purchased a lot of specialized inventory for Target that we could not sell elsewhere. We destroyed about $500,000 worth of unsalable products at the end of the year. Additionally, Target now claims we owe chargebacks for markdowns, which we strongly dispute. They have refused to pay about $170,000 of invoices over the disagreement.
We faced more challenges. My business partner had her third baby and decided to step back from the company. It’s been a challenge not having her in the day-to-day. We furloughed our entire team to half-time this past summer, and our organic YouTube content performed worse than ever. We tried TikTok Shops with the recommendation from Paul at BK Beauty, but it wasn’t effective for us. Lastly, we were sued for accessibility reasons despite the website’s excellent accessibility rating.
Wins
Our biggest win was having enough savings to cover our losses, tax bills, and unsalable products. Conserving cash over the years finally paid off.
We were fortunate not to have lost employees. Everyone we furloughed stuck through the hard times and returned to full-time in August.
Since June, we’ve been profitable, but not at the margins I’m comfortable with. We’ve plugged the holes in our boat. Now we’ve got to get the wind behind the sails.
Part of our sales drop was due to manufacturing glitches and launching products that did not meet customers’ expectations. We’ve resolved many product concerns by returning to our old-school formulations and finding manufacturers who align more with our production needs.
Another win was raising our prices in June. Our average order went from $48 to $60. We’re getting fewer orders, but our per-order fulfillment and shipping costs are a smaller percentage. That’s been nice. We pay less to our outsourced fulfillment vendor.
Another big win is increasing sales from product subscriptions. We went from about 1,100 product subscribers to about 3,000. I see that growth continuing into 2024.
For years we did not sell on Amazon. We launched there in 2023 and reached a $1 million annual run rate by year-end. Hopefully, Amazon will become a seven-figure channel in 2024 and beyond.
A final win was starting a new marketing strategy. After talking with the founders of Batch cannabis, we introduced an affiliate program. We’ve had good promotions and referrals from our affiliate partners, with excellent articles and other placements. We hope the program grows, not just in affiliate revenue but also in improved organic search traffic.
Looking Forward
Despite the challenges, I remain optimistic. Twelve years in, I’m as motivated as on day one to roll out new products and serve our customers. Tough times require perseverance to pull through.
We had many manufacturing problems in 2023. We’re excited to grow with a manufacturer that aligns with us. We will take it slow, one product at a time. We’ve learned the benefits of a tightly aligned partnership with one manufacturer versus diversifying with several.
We continue to focus on Meta for customer acquisition. We haven’t given up on our YouTube organic strategy. We plan on introducing a new video format. If that does not perform, we might shut down YouTube organic and focus on other avenues. We hope Amazon sales continue to grow and eventually replace what we lost on Target.
But our top priority is getting back to 15 to 20% profitability. That would help me sleep better at night.
I want to build Beardbrand. To me, the destination is the journey. Creating a business my kids can grow up around brings me joy and excitement. I’m aiming for a generational company that my kids and grandkids can run, allowing our family to live happy, healthy, functional lives. That’s why I show up every day.
Abandoning fossil fuels and adopting lower-carbon technologies are our best options for warding off the accelerating threat of climate change. Access to rare earth elements, key ingredients in many of these technologies, will partly determine which countries will meet their goals for lowering emissions or increasing the proportion of electricity generated from non-fossil-fuel sources. But some nations, including the US, are increasingly worried about whether the supply of those elements will remain stable.
According to the International Energy Agency, demand for rare earth elements is expected to reach three to seven times current levels by 2040; demand for other critical minerals such as lithium may multiply 40-fold. Delivering on the 2016 Paris Agreement, under which signatory nations are obligated to reduce emissions to cap the global temperature increase, would require the global mineral supply to quadruple within the same time frame. At the current rate, supply is on track to merely double.
Obtaining rare earth elements begins with obtaining source materials, which can happen, broadly, in three ways: primary extraction, or mining directly from the earth; recovery from secondary sources, such as end-of-life electronics; and extraction from unconventional sources, including industrial wastes like coal ash and waste products from mines. But China so dominates the market—it controlled 60% of global production in 2021—that other countries are at a disadvantage. After China announced export restrictions in 2023 on gallium, germanium, and graphite, nations scrambled to find alternative sources in anticipation of future restrictions.
Primary extraction in the US is limited; only one active mine, the Mountain Pass Rare Earth Mine and Processing Facility in California, produces rare earth elements domestically. Opening new mines can take decades. As a result, scientists and companies alike are intent on increasing access and improving sustainability by exploring secondary or unconventional sources.
Finding critical materials
All but one of the 17 rare earth elements appear on a 2022 list of 50 designated “critical materials”—meaning they are economically important yet vulnerable to supply disruption. The 17, such as praseodymium (used in aircraft engines), gadolinium (used in MRI imaging), and neodymium (used in computer hard drives), include the “lanthanide series”—the 15 elements with atomic numbers 57 to 71 near the bottom of the periodic table—as well as two chemically similar elements. The “rare” in “rare earth elements” refers not to the quantity available but rather to their wide dispersion—it’s hard to find an economically meaningful quantity in a single location.
One unconventional source of rare earth elements is coal ash, the residual solid waste from burning coal at power plants. Historically, coal ash has often been mixed with water to form a slurry that is stored in ponds (also called surface impoundments). This ash, which contains elevated concentrations of rare earth elements, could be a significant domestic source of the materials in former US coal towns, which face challenges due to plant closures. There are more than 1,000 coal ash ponds across the US, mostly spread across the eastern part of the country. One of the largest facilities, Plant Barry in Mobile County, Alabama, contains more than 21 million tons of ash spread over 600 acres.
These ponds are not harmless; according to the US Environmental Protection Agency, improper management of them can compromise waterways, groundwater, drinking water, and air via contaminants such as mercury, cadmium, and arsenic. A document submitted by Earthjustice, a nonprofit environmental law organization, and Earthworks, a nonprofit focused on preventing the destructive impacts of oil, gas, and mineral extraction, responding to a 2023 request for information from the US Department of Energy, noted that “91% of power plants storing coal combustion residuals (CCRs) are polluting the underlying groundwater to levels that exceed federal drinking water standards.” Ponds can also be destabilized during extreme weather events, and the resulting flood of contaminated material can destroy wildlife, damage property, and threaten community health and safety.
A startup, Rivalia Chemical, believes the health hazard posed by ash ponds can be addressed by repurposing ash to create a domestic supply of rare earth elements. Laura Stoy, the environmental engineer who founded Rivalia in 2021, says she is motivated by both environmental concerns and the potential for economic revitalization.
Stoy began developing Rivalia’s flagship technology during graduate school at the Georgia Institute of Technology and is now working to scale it within the Chain Reaction Innovations program at the DOE’s Argonne National Laboratory. In 2019, Georgia Tech supported the budding company in filing a patent (currently pending) for its technology, for which Rivalia holds an exclusive license.
That technology extracts rare earth elements from coal ash, leaving behind a solution rich in those elements and a residual solid containing iron and other metals. Through sequential steps of heating and cooling, rare earths are transferred into an ionic liquid—a salt in liquid state—via a proton-exchange mechanism. Acid-based reduction techniques and salt-based leaching can reduce the amount of iron in the final solution, after which rare earths must be further separated to produce pure metals or oxides. Rivalia can sell primary outputs to companies that handle subsequent processing steps, manufacturers using rare earths, and sell residual solids to concrete producers. Stoy says Rivalia’s efforts will produce materials that could be used for cleaner products and alternative energy sources. Furthermore, they could help reduce the carbon footprint of concrete production by repurposing the solid residue as a replacement for emission-heavy Portland cement—a major ingredient in concrete. (For more on this, see “Climate’s hardest problems”.)
Rivalia prefers to work with existing waste products as opposed to coal that has not yet been burned. This approach is risky; extraction from unconventional sources can cost more than mining, given the low concentrations of rare earth elements and the greater initial concentration of toxic contaminants.
Still, Stoy says, this is a strategic move in light of the need to diversify supply. It’s also an opportunity to make use of a widely available material with few alternative uses and significant economic value; the value of rare earth elements in US coal ash reserves was previously estimated at $4.3 billion (based on 2013 prices) and has likely grown since then. As a fairly new startup, the company is still in the R&D stage and is currently focused on reducing extraction costs.
“I want to be one player in a big ecosystem where there’s a lot of folks producing rare earths. That’s the best outcome for everyone.”
The race to produce rare earth elements domestically in the US is, at least partially, an attempt to figure out how to do so economically; however, companies are unlikely to get production costs low enough to be able to compete on price alone. Experts hope consumers will be willing to pay a premium, partly absorbing the increased costs.
“Hopefully there is a market for a domestically produced material that’s produced in an environmentally conscious manner and an ethical manner that’s respectful of the workers producing the material,” says Evan Granite, program manager for the carbon ore program at the DOE’s Office of Fossil Energy and Carbon Management.
Regulators have started addressing the coal ash problem, so startups hoping to use the material will need to watch ongoing developments closely. The EPA began regulating the management of coal ash ponds in 2015 following destructive spills in 2008 and 2014. A recently proposed update to the 2015 rule mandates that older, inactive ponds that were previously exempt be covered or excavated.
Following the 2015 regulation, Earthjustice said that closing ponds by capping them in place is insufficient if they are within five feet of groundwater, and that in such cases only full excavation will prevent future damage. Either option—capping or excavation—would make coal ash harder to access for companies like Rivalia. Stoy says she considers this a reason to move decisively.
Stoy says she is wary of inadvertently creating new markets for coal by-products, which could jeopardize the country’s clean-energy ambitions. Ironically, if utilities stopped using coal, Rivalia’s source materials would eventually dry up. However, she isn’t worried just yet—even in the absence of new production, the US now has 2 billion metric tons of ash, and many other countries seem likely to continue burning coal for the foreseeable future.
Handling all that ash will have to be done with care, says Lisa Evans, senior counsel in the clean-energy program at Earthjustice. Evans says that even for companies motivated by cleanup hopes, additional regulatory oversight is needed to ensure they dispose of by-products appropriately. “What I’ve experienced in so many years of looking at how industries behave is that they don’t do anything they’re not required to do,” she says, adding that the government should also ensure that communities receive adequate notice of nearby extraction activities.
Modernizing extraction
Another unconventional source of critical materials is tailings—the waste products of mines themselves. The EPA does not yet regulate mine tailings, even though they are similar to coal ash in the environmental risks they pose, says Evans of Earthjustice.
Phoenix Tailings is a Massachusetts-based startup extracting rare earth elements from mining sites. Two of Phoenix’s founders, who grew up in communities affected by mining, say they are motivated by personal experience in addition to the growing demand for rare earth elements.
Besides the four rare earths used most commonly in magnets (neodymium, praseodymium, dysprosium, and terbium), Phoenix recovers battery metals, platinum group metals, low-carbon irons, and other materials in what it calls a “portfolio approach” that improves economic viability. Like Rivalia, Phoenix repurposes residual materials into concrete and other aggregates. This, the company says, provides long-term storage for carbonaceous materials, reducing environmental impact by trapping them and preventing them from ending up in the water supply.
Phoenix works to modernize extraction, reducing the amount of energy, equipment, and funding required, says cofounder Anthony Balladon. “You develop chemistries that are tuned for the rare earths, as opposed to trying to brute-force your way through them,” he says.
After obtaining an oxide concentrate containing the rare earths, Phoenix uses separation techniques to draw out the desired end products. This is followed by reduction into final metal and alloy products using mixed-halide molten-salt electrolysis, resulting in 35% to 45% lower energy requirements. Chief technology officer Tomás Villalón says Phoenix’s process reduces the amount of material inadvertently lost between processing steps and improves the purity of the final product. Phoenix’s founders also highlight the sustainability of the company’s process, which they say uses no hazardous materials and creates zero direct carbon emissions. The company is currently producing rare earth metals for commercial clients and expects to be producing over 3,000 tons per year of finished rare earth metals by 2026.
Villalón estimates that Phoenix will be busy for a long time: at least 10 billion tons of mine tailings are created each year from new activity.
Increased demand for magnets
Some companies target recycled materials rather than coal wastes as a source of recoverable rare earths. Noveon Magnetics—formerly Urban Mining—extracts critical materials from discarded commercial magnets (from motors or medical devices, for example, or from storage drives used by data centers) or those withdrawn from the supply chain because of manufacturing defects or obsolescence. From these materials, Noveon manufactures new sintered neodymium boron magnets, critical components of generators in wind turbines and motors in electric vehicles.
According to DOE projections, US demand for these rare earth magnets is set to more than quadruple by 2050. This is partly because of improved industrial technologies, says Noveon’s chief commercial officer, Peter Afiuny. “Industrial pumps, compressors, HVAC systems … 50% of our electric consumption is being driven by those motors. If you’re talking about getting to carbon neutral, you need to upgrade those systems and make them more efficient,” he says.
There are fewer than 10 active magnet manufacturers outside China; Noveon is the only one in the US. Afiuny says it acquires all its materials domestically.
The company produces a new type of high-performance magnet, which it calls “EcoFlux,” using less material than conventional versions, says Afiuny. While it’s hard for recycled magnets to perform as well as nonrecycled products, Afiuny says that Noveon has managed the feat by combining a proprietary technology that improves the composition and properties of magnetic materials with its patented Magnet-to-Magnet technology that can recycle up to 99.5% of input materials. He adds that Noveon has multiple customers and produces at commercial scale in its Texas facility. He says the company plans to produce 10,000 tons a year within five years.
These new magnets serve the same types of customers from which the materials were collected—such as companies using motors to power consumer electronics and medical or automotive products. The result is a loop of reuse.
Can these alternative sources replace existing imports? In a recent paper published in the National Academy of Engineering’s magazine, The Bridge, DOE researchers estimate that for some critical materials such as germanium, coal ash can meet US demand for nearly 4,000 years, but for most materials, the supply will last for less than 20 years (and for nickel, for just a little more than one year).
Additional new sources are needed, says Granite: “You’re going to need many different waste materials and nontraditional sources to meet the long-term demand, because we project growing demands for many of these critical metals.”
The researchers suggest that a much broader range of waste sources could be considered, including “red mud,” created during aluminum production, and “produced waters,” which result from oil production, as well as materials sourced from the ocean floor or even outer space.
A universal policy priority
Between 2015 and 2021, the DOE awarded at least $27 million to projects related to extracting rare earth elements from both conventional and unconventional resources. In 2022 and 2023, the government announced at least $1 billion of funding available to support related work, including significant amounts from the Bipartisan Infrastructure Law. Other agencies have also announced support for companies working to help boost the nation’s supply of critical materials, signaling a renewed sense of urgency for a longtime item on the policy agenda. Rivalia, Phoenix, and Noveon have all benefited from government support, suggesting that the government is willing to place bets on companies at varied sizes and stages of progress.
These funding allocations often reveal the priorities of the issuing administration; the focus under former president Donald Trump, for example, was independence from China, while the Biden administration’s support for domestic production of rare earths seems more tied to its push for wider adoption of electric vehicles. Regardless of motivation, all parties seem aligned on the importance of rare earth elements.
“It’s something that’s broadly supported in a bipartisan way,” says Rivalia’s Stoy. “It’s something that I think is very safe from a research funding perspective. The government is interested in this and is going to be funding it for a long time.”
As the race to achieve self-sufficiency in rare earth elements and critical materials intensifies, the US is likely to further expand both the number of organizations involved and the diversity of potential sources.
Despite growing competition, Stoy says there’s room for everyone. “I want to be one player in a big ecosystem where there’s a lot of folks producing rare earths,” she says. “That is the best outcome for everyone.”
Mureji Fatunde is an academic and writer who explores how companies and consumers make decisions.
Google Glass, a prototype augmented-reality headset released in April 2013, had the makings of a hit. It promised intuitive, hands-free access to a smartphone’s most important features—video recording, navigation, and even email. Forget touch screens and buttons: the future of computing was on your face.
It was a disaster.
Though beautiful in concept, Glass was awkward to wear and struggled to deliver a sharp, bright image outdoors. Then came the “glasshole” backlash. The size of the display made wearers easy to spot in a crowd and, on at least twooccasions, led to physical altercations.
The implications were clear. Hands-free augmented reality (AR) was fun on paper, but with tensions over Big Tech’s influence mounting, it couldn’t overcome the stigma of making people look like extras in a cyberpunk flick.
Now, more than a decade later, the future Google envisioned—and much more—is on the brink of becoming reality. Tiny new displays, some small enough to fit on the tip of your finger, will contain micro-LEDs and micro-OLEDs (organic LEDs). They are set to deliver a wave of headsets that may convert even the most ardent AR skeptics.
Apple’s Vision Pro, slated for release in 2024, will lead this change—though it might not shake the cyberpunk aesthetic. The fully enclosed headset, vaguely reminiscent of ski goggles, is intended for a mixture of AR and virtual reality (VR) that Apple calls “spatial computing.”
The Vision Pro avoids some of the problems Google Glass faced by narrowing the product’s scope. Apple hopes the headset might replace a computer, tablet, and TV—though only within the confines of your home or office.
The real innovation is inside: a pair of micro-OLED displays no larger than a postage stamp that pack 4K resolution into a screen just 1.3 inches square. Each display contains more than 11 million pixels spaced only 6.3 micrometers apart—less than the diameter of a human red blood cell.
It’s a spectacular upgrade. Apple’s Vision Pro, like the Meta Quest 3 and the HTC Vive XR Elite, uses cameras to replicate the outside world on internal displays, a technique known as pass-through mixed reality. But its competitors use liquid crystal displays that lack the sharpness to faithfully reproduce the world around you, so tasks that should be simple, like glancing at a handwritten note, can prove difficult.
“I think overall they’ve achieved something impressive,” says Anshel Sag, principal analyst at Moor Insights & Strategy. “This is the headset that you build if you want people to really, fully understand what the maximum potential of AR and VR is.” Sag believes the individual pixels on Vision Pro displays will be invisible to most people, “unless you have extremely impressive visual acuity, like 20/10.”
The Vision Pro’s pixel-dense displays are widely believed to be the culmination of years of work from Sony’s Semiconductor Solutions Group. The division’s micro-OLED adventures were originally focused on colorful high-resolution digital viewfinders for cameras like the Sony SLT-A77. The group also built them for a head-mounted device, the HMZ-T1 Personal 3D Viewer, that Sony launched in 2011, pitching it as a movie-theater-like experience for watching video.
The HMZ-T1 headset performed best with 3D films, which proved to be a fad. But Sony didn’t give up on micro-OLEDs, and in 2018 it announced a 0.5-inch micro-OLED display that reduced the distance between pixels from 7.8 to 6.3 micrometers (the same as the larger displays found in the Vision Pro), an innovation made possible by a breakthrough that placed the color filter closer to the OLED’s light-emitting organic material. With a display this small, any subtle change in the angle of light emitted from red, blue, and green subpixels can hurt color performance. Moving the color filter improves the viewing angle of each pixel, which makes a smaller display possible without compromising image quality.
Micro-OLEDs benefit from some of the traditional strengths of light-emitting diodes made with organic films. Each pixel is self-emissive, which means its brightness is zero when it’s “off.” The LCDs in most headsets can’t achieve this, and as a result, darker scenes have a hazy, gray glow. And when micro-OLEDs are on, they’re on. The Vision Pro’s displays are quoted at a peak brightness of 5,000 nits, the industry’s go-to measure of brightness. It’s a 50-fold improvement over Meta’s Quest 2, which hits just 100 nits. (Meta hasn’t revealed the Quest 3’s brightness, but it’s likely similar.)
The Vision Pro is likely to quicken the adoption of micro-OLED technology. But despite its many strengths, those miniature OLEDs still have some shortcomings. Michael Murray, CEO of Kopin, a display company in Westborough, Massachusetts, notes that micro-OLED displays are excellent for moving images, such as movies, but sometimes less so for static text—a reason, he says, why Meta’s Quest headsets have stuck with LCD. While micro-OLED displays can be bright, the organic molecules inside them can degrade over time, a phenomenon known as burn-in. Micro-OLED also fails to entirely resolve the design issues of Google Glass: the display is improved, but the headset is even more conspicuous.
Fortunately, micro-LEDs offer a solution.
Truly microscopic
Micro-OLED and micro-LED displays differ in the details, but their production shares broad similarities. Both pair a silicon “backplane,” which provides structure and power, with a display “frontplane” that creates visible light. Each is named for the type of frontplane used: a layer of organic material that emits light in response to an electric current in the case of micro-OLED displays, and a very small array of electronic diodes made from semiconductors in the case of micro-LEDs.
Micro-LED display technology is not as mature as micro-OLED, but the possibilities are alluring. “Micro-LED happens to be the best of all worlds,” says Murray. “It has the best display quality, it has longevity, doesn’t have burn-in issues, has high brightness that you can control … that’s where the future is going.”
Mojo Vision, a display technology company based in Saratoga, California, was among the first companies to realize the LED’s potential in tiny devices. It made waves in 2020 with a contact lens with a flexible, transparent AR display. The company has since abandoned the contact lens to focus just on the display, and in 2023, Mojo Vision demonstrated micro-LED displays with an astounding 28,000 pixels per inch. That works out to a pixel pitch—the distance between the centers of two adjacent pixels—of just 1.87 micrometers, smaller than some bacteria and a third the size of what you’ll find in the Apple Vision Pro.
Mojo Vision hopes to have a color micro-LED prototype ready in early 2024.
COURTESY OF MOJO VISION
Such extreme pixel density is the result of a fundamental shift in micro-LED design. The first micro-LED displays were built with a technique called “mass transfer.” Red, blue, and green LEDs were produced on wafers and transferred one by one to a display substrate (a technique that is still used to make larger displays). But small micro-LED arrays, like those produced by Mojo Vision, take a monolithic approach: the micro-LEDs and the silicon backplane are bonded in a production pipeline like that used to manufacturer cutting-edge computer chips.
Most monolithic micro-LED displays are currently monochrome, meaning they display a single color (usually red, blue, or green). But full-color micro-LED displays are right around the corner. Mojo Vision hopes to have a color micro-LED prototype ready in early 2024, and one of its competitors, Shanghai-based Jade Bird Displays (often referred to by its initials, JBD), has demonstrated a functional color micro-LED prototype with a pixel pitch of five micrometers—larger than what Mojo Vision hopes to achieve, but smaller than Apple’s Vision Pro.
The key benefit of smaller, denser pixels is the reduction of display size at any given resolution, which in turn reduces the size and weight of an AR headset. JBD’s monochromatic AmuLED series, for example, achieves 640 x 480 resolution on a display a carpenter ant could carry on its back—with room to spare.
Micro-LEDs also score a massive win in brightness. The range is from 1.8 million up to 3 million nits, Murray says: “It will literally tear the retina out of your eye and blind you for life.” The brightest OLED displays, by comparison, currently peak at around 15,000 nits.
The possibility of permanent eye damage might seem an odd perk, but not to worry—no one will be looking at the micro-LEDs directly. Placing a display directly in front would block the wearer’s view of the real world, so many AR devices place the display to the side. Waveguides then redirect the light from the offset display to make it visible. This process can prove tremendously inefficient, especially for modern AR glasses like the Magic Leap 2 and Vuzix Blade 2, which focus and redirect light through multiple waveguides arranged like mirrors in a fun house.
“[The efficiency] is something like 5% to 10%,” says Michael Miller, augmented-reality hardware lead at Niantic. “If you have a display of 3,000 nits, you will get 300 nits out. You can put a dark lens on top of it so you can maybe use it outdoors, but it’s not good enough.”
Displays built from micro-LEDs should be able to make it through a gauntlet of waveguides and still be bright enough to be viewed on transparent lenses that look just like prescription ones.
Awesome performance, awesome cost
Headsets with cutting-edge displays, like the upcoming Vision Pro, thrash the performance of mass-market VR headsets. They’re also more expensive: the Vision Pro will retail for $3,499.
The displays deserve some of the blame.
Each micro-OLED display can cost $400 to manufacture, says Murray. “If you’re building a Meta Quest, or something like it, you need two of them,” he says, “and your bottom-line cost is already $800.”
The big price tag attached to such small displays might seem strange. After all, OLED displays are a mature technology found in hundreds of millions of smartphones, tablets, and televisions worldwide. LEDs are even more ubiquitous: just flip a nearby light switch to see one in action. These are well-understood technologies found in many affordable devices.
HMDmd’s Model CR3 headset is designed specifically for surgeons.
Like other AR glasses, the Vuzix Blade 2 redirects light from the side to the front through multiple waveguides.
On this diminutive scale, however, building a display is no longer a job for a factory. It requires a foundry—a specialized chip-manufacturing facility.
Costs could come down as manufacturers shift to building the displays on larger silicon wafers. Larger wafers are more expensive, but each one can pack more displays, which lowers the cost of each display. Micro-OLED makers are in the midst of a shift from eight-inch wafers to 12-inch wafers, which is the standard in high-volume, cutting-edge silicon manufacturing. Micro-LED production is less mature, with some companies relying on inefficient four-inch wafers.
Producing usable displays with the extreme pixel densities that micro-OLEDs and micro-LEDs can achieve is a challenge. The fundamental problem is a defect you’ve likely witnessed more than once: the “dead” pixel. A dead pixel displays one color—often perfect black or a bright, blinding white—and refuses to respond to display signals. Avoiding this defect is already difficult for smartphone displays, where pixels might be separated by 500 micrometers. With monolithic micro-LEDs, the smallest, most densely packed displays ever produced, the slightest flaw in the silicon, or the slimmest sliver of debris, can render a display useless.
“Here’s the scary math,” says Murray. “The amount of usable displays after you’re done is probably a tenth of the usable silicon you started with.” In other words, more than 90% of a silicon wafer could be wasted. Yet the company producing the micro-LED displays still pays for the entire wafer—adding huge costs to each display.
Micro-LED pioneers are investing in tools and processes that reduce the steps involved in production. That’s critical, because the more complex the production process, the higher the risk of introducing a defect.
Soeren Steudel, CTO of the Belgian display developer Micledi, is hyper-focused on this problem. The company has partnered with the semiconductor manufacturer GlobalFoundries and plans to move production there to reduce costs. “Micro-LED is not yet a mature product. It was a wild dream 10 years ago, and now the first companies have demos,” says Steudel. “The question now is, how can you manufacture that in volume without defects?”
Augmented reality finally goes mainstream
The difficulty of producing micro-OLED and micro-LED displays is high, but the problems are worth solving. These displays could make AR a virtual space people can easily and quickly access in their daily lives—not only because the displays appear more lifelike, but also because small, thin, high-quality displays give engineers more freedom to tailor a headset’s look and feel.
The impact of micro-OLEDs is already apparent. Kopin produces displays for HMDmd’s Model CR3, a headset designed for surgeons, and defense projects, such as an AR weapon sight for the M1 Abrams main battle tank. XReal, another AR pioneer, recently released its Air 2 headset, which packs Sony micro-OLED displays.
The possibilities for the future could be even more dramatic. The displays’ extreme brightness, diminutive size, and low power consumption could unlock the dream of light, attractive, fully transparent AR glasses that don’t immediately stand out from conventional eyewear.
“People want to go to consumer augmented reality. And consumer AR means that you have lightweight glasses, maybe 50 grams, and that you don’t look like Darth Vader,” says Steudel. Vuzix, a leader in lightweight VR headsets, has achieved this with the Ultralite, a prototype platform revealed in 2023 that uses micro-LED technology to provide sleek, slim spectacles that weigh just 38 grams.
Augmented reality still needs its “iPhone moment”—the debut of an easy-to-use device that offers irresistible benefits. Better displays will make AR—if it ever gets widely adopted—bright, sharp, convincing, and—most important of all—pleasant to use.
Matthew S. Smith is a freelance technology journalist based in Portland, Oregon.
