Industry Digitization S-Curve

Reasoning by digitization comparables

The framework predicts where a legacy industry's share of digital transactions is heading by locating an analogous industry that is already far along the curve and reading its earlier penetration rate as a proxy. Brad Jacobs reaches for the analogy rather than an abstract claim when he explains why building-materials distribution is a technology opportunity. As of the interview, e-commerce accounted for roughly 3 to 5 percent of building-materials distribution sales, the fraction of transactions sourced or covered digitally.¹ His claim: "That reminds me of where Truck Brokerage was 10 years ago. And today, Truck Brokerage at RXO, 97% of the orders are either sourced or covered digitally. And I expect that's where this industry is going as well."

Two anchor points define the curve in his telling: truck brokerage at roughly 3 to 5 percent digital a decade earlier and 97 percent at the time of the interview, and building materials at the same 3 to 5 percent starting point. Jacobs presents the prediction as a structural argument rather than a guess, that once digitization inflects it tends to run toward near-completeness in distribution contexts where the transaction is high-frequency, commoditizable, and benefits from network-matched liquidity. The physical goods still move; the transactions and coordination layer migrates to digital.

What makes the analogy load-bearing

Jacobs grounds the comparison in structural similarities rather than surface resemblance. Both truck brokerage and building-materials distribution are high-frequency, low-average-ticket, many-counterparty markets, where distributors buy from hundreds of manufacturers and sell to thousands of contractors, so digital matching is more efficient than phone and fax once a platform exists. Both had paper-and-phone coordination as the incumbent workflow, with tribal knowledge setting price, and both have a clear beneficiary of digital order flow in the aggregator that routes both sides and earns the information premium.

He treats the framework as a timing argument as much as a prediction. If building materials sits where truck brokerage was a decade before full digitization, the next decade is the capture window, and being the platform that processes the digital order flow, rather than the distributor that stores and moves product, is the higher-margin endgame. Jacobs also frames the transition mechanism as habit rather than necessity, describing contractors who drive to the same supplier every Monday morning and buy the same predictable, repetitive items, a workflow that automated ordering handles well once alternatives are available and incentivized. The framing suggests the binding constraint is behavioral and generational rather than technical.

The baseline gap the endpoint depends on

The framework's own limit, in Jacobs' account, is that the target industry may be behind on more than order flow. He notes that most warehouses in building materials do not scan and barcode goods and lack a warehouse-management system, capabilities he calls table-stakes basics in transportation logistics. This is a harder claim than the S-curve analogy, since a management system and barcode scanning are prerequisites for every higher-order technology the endpoint assumes. The diagnostic he applies elsewhere, asking which industry a target is analogous to and where that industry sat at the same penetration rate, connects to financeability as industry screen as a companion filter for which legacy industries are worth entering in the first place.