I’m experiencing a kind of material déjà vu.

Here’s what I mean. Natural Fiber Welding (NFW), a next-gen material company is winding down operations. This after restructurings, leadership churn, and a stopgap $23.6M raise. And also despite marquee brand investors like Allbirds and Ralph Lauren.

I say déjà vu because it doesn’t feel that far removed from when we learned about Renewcell meeting a similar fate. That happened despite similar hype and fanfare as with NFW.

I think there are two things that need to be mentioned here:

The first is that next-gen material activity seems like, as the kids would say, aura farming.

In case this is the first time you have heard the term, aura farming is a cheeky expression for harvesting a reputational halo without actually doing anything substantial.

The term applies nicely in the context of next-gen materials.

Next-gen startups tout their investments from brands and win in the court of public option as they can talk about being sustainable. Meanwhile, brands get to pat themselves on the back and talk about how they are investing in the future.

We get splashy pilots, capsule drops and social media garbage but little evidence of scalable manufacturing. When cash crunches hit, brands suddenly become shy and rarely step up with capital.

The second is that we need to re-calibrate our expectations on the payoff with next-gen materials. I’m not arguing that the R&D for new materials should be stopped, it absolutely needs to keep going. Think of it this way, at one time, polyester was considered a next-gen material.

But, there is significant complexity associated with new material innovation. Moreover, new material innovation is a very long game.

Meanwhile, other valuable forms of innovation are hiding in plain slight.

If we go back to some old-school Peter Drucker, we find that he has identified 10 areas of innovation.

Four examples include:

1 – New Knowledge. The domain of next-gen materials. It’s the riskiest path: long lead times, high failure rates, and it attracts all the hype and capital.

2 – Market/Industry Changes. As the market shifts, opportunities to innovate emerge. Usually, the big players are blind to these changes. Challenger brands exploit the gaps that incumbents miss. Lululemon (boring) vs. Vuori (not boring) as an example. Brands have to work hard to maintain market visibility.

3 – Improving Process Weakness. For example, starting with materials (like pre-existing and banked fabric and color) first instead of design first. Process fixes improve margin without selling more. It also curbs chronic overdevelopment which (checks notes) is also a sustainable outcome. For more information about this topic, make sure to buy our upcoming book: The Material Life – Process Innovation for Retailers and Brands, releasing in December.

4 – Unexpected Failure/Success. According to Drucker, these opportunities are often ignored and are highly productive. A fabric or color that failed in one application could very well succeed with another. Remember last week’s newsletter on menopause focused apparel? Why engineer fabric from scratch or play the PR game with a next-gen material when a vendor may already have a development that fits the bill.

All companies are well served by engaging in several of these forms of innovation to reach their goals. Each company can judge the risk/effort relationship with each form accordingly.

I’m not dancing on NFW’s grave. New material development is a worthy pursuit, and as a former chemist, I’m especially interested in AI startups that aim to accelerate molecular-level R&D for new material innovation. Whether said startups can meet their own hype remains to be seen.

The point is we need smarter innovation bets. If sustainability matters, we should acknowledge multiple, profitable innovation paths to get there and go explore them.

Otherwise, we will keep aura farming for headlines instead of planting the seeds for durable, long-term success.