Mylo production stop: Is scalability of innovation the Achilles' heel of the fashion industry?

• Bolt Threads is pausing production of Mylo due to lack of funds for scaling
• Costs, uncertainty and rigid fashion structures prevent innovative solutions from scaling
• Cooperation, investment and regulation as possible solutions

The fashion industry is under increasing pressure to address its drastic environmental impact. This dynamic is being accelerated by growing demands from stakeholders, including consumers and investors, and regulators. A look at the continuous media presence of new sustainable technologies and innovative material solutions creates the impression that the industry is getting closer to them step by step. Sustainable innovation is officially recognized as one of the most important tools to mitigate the climate crisis. Algae, fruit or vegetable based leather alternatives as a solution to push fashion in a sustainable direction. In 2022 alone, more than 450 million US dollars were invested in next-generation materials.

But as more and more trail blazers launch eco-friendly alternatives, a recent event marks a turning point in the cosmos' success story. Bolt Threads has announced that it's ending production of its Mylo - Paused due to difficulties in raising funding for scaling. And this despite the fact that it has achieved pioneering status as a start-up for material innovation from well-known companies such as Stella McCartney and Kering, and has received over $300 million in investments.

The question of why Bolt Threads is failing to raise the necessary funds to expand its business despite high-quality support and exceptional investment volume reveals the urgent need for scalable solutions. Solutions that are necessary to realize the needed change.

Profitability & Scalability: Challenges of Sustainable Innovation in Fashion

According to Dan Widmaier, who founded Bolt Threads in 2009, scaling a novel product like Mylo is the most difficult and expensive phase in a startup's lifecycle (via Vogue Business). This period is about overcoming technical challenges, meeting regulatory requirements and ensuring that the product is marketable.

Despite rising global interest in sustainability and cruelty-free products, funding at this crucial time has proven difficult. Part of the reason for this is that the entire alternative materials sector has faced fundraising issues over the last 18 months. While sustainable materials play a crucial role in mitigating climate change, their long-term viability and scalability are often viewed with skepticism. The consequence: Many investments are shifted to areas that are classified as more lucrative or less risky, such as AI.

Widmaier emphasizes that even innovative start-ups with sustainable ideas are not immune to the macroeconomic pressures that the economy as a whole is confronted with. Inflation and dwindling financing options are causing even pioneers to stagnate. After two rounds of layoffs this year, Bolt Threads is now on hiatus. It is important to evaluate what can work in the future.

Reproduction prevails Disruption: Why companies cling to the dominance of established structures

In addition to economic strain, however, the news points to a comprehensive portfolio of challenges that both define and challenge the status quo of the fashion industry. Despite sustained commitments, much of the sector is still steeped in tradition supply chains anchors and reproduces questionable manufacturing models. Courageous pioneers therefore often encounter resistance from established actors. Disruptive changes are seen as a threat to the rules of the game and thus to their dominance.

For example, chrome plating - a fast and cheap process for making leather at scale - was invented over a century ago. And with billions of dollars invested in optimizing the process and reducing its cost, the question is: why change? The same applies to polyester. Its supply chain was established more than 70 years ago and geared towards low costs. At the same time, its nature was perfected through research and development.

That is why most industry giants are characterized by an unwillingness to end the dominance of established materials such as leather or polyester. Despite (lip) service to sustainability, their reluctance to face the costs and uncertainty associated with new technologies prevails. One reason for this is the complexity of financing. When inventing materials, the marginal cost initially stays the same. It's only through scaling that they begin to decline. Means: The planning of a financing is not only long-term, but also risky. The process of replacing established processes and extensive approval procedures add to the difficulty.

Consumer Orientation: Potential Driver of Disruptive Solutions

Another obstacle to the scalability of innovative biomaterials: consumer willingness to buy. While many studies, including Bain & Company, show that consumers are willing to spend more on sustainable products, there is no compelling empirical evidence that they actually invest more in fashion made from materials like Mylo. Consequently, more research is needed to reliably calculate profit margins. And actually to motivate companies to sustainability. In addition, there is a need for clarification. Too many consumers view sustainability and innovation too differently from each other. It is important to show how promising the synergy is and to position innovation as a driver of sustainability in a way that attracts public attention.

In the Big Picture, this booth underscores the relevance of understanding consumer needs. And to develop products that have tangible added value for their lives and correspond to their value system. Industry should see this as an incentive to invent and test innovation in a consumer-centric way, and then scale it up.

Solution approaches for the scalability of sustainable innovation

The good news: by being aware of a problem, you can also find its solution. Given the economic motivation of large industry players, it is important to promote collaboration between start-ups, established players and technology providers. It is important to create strategic plans that focus on long-term gains rather than quick returns. Non-monetary factors such as image, resilience or competitive attractiveness can play an important role in securing investments. Ultimately, the scalability of a product is necessarily dependent on financial resources, which is why investors must understand their long-term benefits.

In view of branched supply chains and traditional production models, investments to accelerate the targeted conversion of the networks also make sense. Means of decarbonization or adoption of clean energy can be instrumental in making outdated processes obsolete. And thus to increase the readiness for new materials. At the same time, it is advisable to use existing infrastructure and supply networks to bring novel ideas to market.

Ultimately, scaling innovative materials like Mylo requires a regulatory environment. One that encourages - if not rewards - sustainable practices, sanctions environmental sins and facilitates the adoption of disruptive technologies. Regulations must encourage companies to take responsibility and compensate both nature and workers appropriately.

Bolt Threads: Wake-up call for the fashion industry

The Bolt Threads situation demonstrates that the scalability of sustainable innovation is challenging fashion's broader sustainability movement. It should be a wake-up call for the entire industry to invest more and prioritize long-term gains over short-term profits. This is the only way to counteract the effects of climate change.

Investors and established industry giants should feel it is their urgent duty to support companies like Bolt Threads in order not to let the green revolution of the industry stagnate in its infancy. The potential of such early adopters can only be exploited through financial means, comprehensive cooperation and a future-oriented legal framework. Once these are in place, their scalability is the next critical step in a positive direction.