Industry Waves Since 1990 That Truly Fit the Five Rules

Last Updated: 2026-06-28

Introduction

The Five Rules presented in this note are not an established academic theory, nor are they a universally accepted investment framework. Instead, they are an industry selection framework proposed by Sun Yuchen after studying the evolution of major industries, technology cycles, and capital markets in both the United States and China.

The purpose of these rules is not to predict short-term stock prices. Instead, they are intended to evaluate whether an industry possesses the characteristics necessary to create long-term structural opportunities for careers, entrepreneurship, and long-term investment.

Since 1990, countless industries have attracted public attention. However, very few have satisfied all five rules simultaneously. Some industries experienced explosive growth but faded quickly. Others had enormous demand but lacked scalability. Some produced a handful of successful companies while the industry itself never generated widespread opportunities. This note therefore focuses only on industries that most completely satisfy all five rules and ultimately became long-term engines of economic growth.

The Five Rules

Rule 1: Choose an Industry Right Before Its Breakout

The greatest opportunities rarely appear after an industry becomes obvious to everyone. They usually emerge when technology has matured, infrastructure is nearly complete, demand is beginning to accelerate, and competition is still relatively limited.

Many people enter an industry only after it has become fashionable. By then, competition is intense, valuations are high, and the easiest growth has already occurred. The real challenge is recognizing industries that are ready to explode, but have not yet fully exploded.

Rule 2: The Industry Must Grow Rapidly for a Long Time

A great industry is defined not only by fast growth but also by the length of its growth cycle.

If an industry remains popular for only two or three years, most companies never have enough time to establish lasting advantages before growth slows. By contrast, transformational industries often sustain expansion for more than a decade while continuously creating new business models.

A long growth cycle gives individuals time to build expertise, companies time to scale, and investors confidence to continue supporting innovation.

Rule 3: The Business Model Must Scale Efficiently

Outstanding industries are capable of scaling value rapidly.

Internet software can serve billions of users simultaneously. Cloud computing builds infrastructure once and provides services worldwide. Electric vehicle manufacturers continuously expand production through standardized manufacturing.

Industries that depend heavily on individual craftsmanship, geographic limitations, or manual labor may have strong demand, but they rarely achieve exponential expansion.

Rule 4: Demand Must Be Real and Continue Expanding

The world’s greatest industries rarely invent entirely new human needs. Instead, they satisfy long-existing needs through better technology.

The Internet improved access to information.

Mobile payment transformed transaction efficiency.

Electric vehicles accelerated the global energy transition.

Artificial intelligence improves knowledge work and productivity.

Only when demand continues expanding can an industry continue growing.

Rule 5: Personal Fit Matters More Than the Industry Itself

This is the most important rule.

Every successful industry eventually becomes highly competitive. Without deep understanding, continuous learning, and years of accumulated experience, entering an industry simply because it is popular rarely leads to lasting success.

The industry determines the size of the opportunity.

Your capabilities determine whether you can capture it.

1995: The Internet (United States)

The Internet represents perhaps the clearest example of an industry that satisfies all five rules. During the mid-1990s, web browsers, personal computers, communication networks, and venture capital all reached sufficient maturity at roughly the same time. Although many people recognized the Internet’s potential, large-scale commercialization had only just begun, placing the industry immediately before its explosive growth phase.

Over the following two decades, the Internet continued expanding through multiple technological waves, including web portals, search engines, e-commerce, social media, online video, and eventually mobile Internet. Rather than replacing one another, each wave built upon the infrastructure created by the previous one, extending the industry’s life cycle far beyond what most technologies experience.

Equally important, Internet businesses possess exceptional scalability. A single software platform can serve hundreds of millions of users worldwide with relatively low marginal cost, allowing strong network effects to emerge. The Internet also fulfills fundamental human needs—access to information, communication, and commerce—that continue growing alongside digitalization. Companies such as Amazon, Google, and Meta ultimately became global infrastructure providers, demonstrating how completely the Internet fits the Five Rules.

2006: Cloud Computing (United States)

While the Internet connected people and information, cloud computing transformed how businesses access computing resources. Instead of purchasing servers, maintaining data centers, and managing software internally, companies could rent computing power, storage, databases, and security services on demand.

After Amazon Web Services launched in 2006, businesses gradually began migrating their infrastructure to the cloud. This transition did not happen overnight; it unfolded over more than a decade and continues today as digital transformation expands across industries.

Cloud computing possesses remarkable scalability. Once data centers are built, standardized services can be delivered repeatedly to customers around the world, while economies of scale continuously reduce operating costs. Meanwhile, businesses’ demand for computing resources, data management, and development efficiency continues increasing every year. Today, most Internet services, enterprise software, and AI applications operate on cloud platforms, making cloud computing one of the most important foundations of the modern digital economy.

2012: Mobile Internet and Mobile Payments (China)

The rise of mobile Internet marked far more than a continuation of the traditional Internet. It represented the moment when digital services became fully integrated into everyday life. As smartphones rapidly spread across China, consumers could shop, communicate, pay, work, and entertain themselves anytime and anywhere.

The true catalyst behind this transformation was mobile payment. QR-code payment dramatically reduced friction in daily transactions, seamlessly connecting online and offline commerce. Consumers no longer needed cash or bank cards; a smartphone became sufficient for nearly every purchase. As Alipay and WeChat Pay rapidly expanded, industries including food delivery, ride-hailing, e-commerce, mini-programs, and livestream commerce experienced explosive growth.

The industry maintained rapid expansion for well over a decade while continuously generating new platform businesses. Strong network effects emerged among payment systems, social networks, merchants, and consumers, allowing successful business models to scale nationwide within a remarkably short period. Mobile Internet ultimately became one of the most important foundations of China’s digital economy and stands as one of the strongest examples of the Five Rules.

2019: New Energy Vehicles (China)

Although electric vehicles had existed for years, the industry’s true breakout occurred roughly between 2019 and 2021. Battery costs declined rapidly, charging infrastructure expanded, and consumer acceptance improved, allowing the market to transition from policy-driven growth toward genuine market demand.

Unlike traditional automobiles, electric vehicles transformed not only the powertrain but also the entire driving experience through intelligent cockpits, over-the-air software updates, autonomous driving technologies, and vehicle connectivity. China’s highly integrated manufacturing supply chain further enabled batteries, motors, electronic control systems, and vehicle production to become increasingly standardized and scalable.

Automobile demand has always been substantial, while electrification addresses additional long-term needs such as energy transition and environmental sustainability. As a result, the industry entered a prolonged period of high growth and gradually established global competitiveness. The rise of companies such as BYD and CATL illustrates that the industry’s benefits extend far beyond individual firms, strengthening the entire industrial ecosystem.

2022: Generative Artificial Intelligence (United States)

Generative AI represents the newest industry wave that currently satisfies the Five Rules. Its emergence was not the result of a single breakthrough but rather the convergence of more than a decade of progress in Transformers, large-scale datasets, GPU computing, and cloud infrastructure. The release of ChatGPT brought these technologies together and accelerated AI commercialization worldwide.

Unlike previous generations of software, large language models can understand natural language, generate content, write code, analyze information, and increasingly support industries including education, healthcare, finance, law, software engineering, and design. A single foundation model can also power thousands of downstream applications, giving the industry extraordinary scalability.

Artificial intelligence addresses one of humanity’s most enduring needs: improving knowledge work and productivity. Its long-term influence may ultimately rival—or even exceed—that of the Internet itself. Although commercial models, regulations, and competitive dynamics remain uncertain, AI already exhibits nearly all of the characteristics shared by previous transformational industry waves, making it the strongest emerging industry under the Five Rules today.

Conclusion

Looking back at the evolution of industries since 1990, only a small number have fundamentally reshaped society. The Internet, cloud computing, mobile Internet, new energy vehicles, and generative artificial intelligence emerged in different countries and different decades, yet they all followed remarkably similar patterns of development.

Each appeared when technological maturity coincided with rapidly expanding demand. Each maintained growth for more than a decade. Each relied on standardized systems that could scale efficiently. Most importantly, each solved real and continuously expanding human needs. Together, they created many of the world’s most influential companies while permanently transforming the global economy.

The Five Rules should therefore be viewed as an analytical framework rather than a predictive formula. An industry satisfying all five rules does not guarantee that every company will succeed, nor does it guarantee success for every individual. The industry determines the ceiling of opportunity, but long-term success ultimately depends on whether individuals possess the knowledge, commitment, and ability to create lasting value within that industry.