Horsepower as a marketing unit
James Watt invented the unit 'horsepower' purely for marketing purposes so mine owners could calculate how many horses they could replace with a steam engine.
Snapshot · My First Million
Killer marketing secrets that always work (ft. Ogilvy Adman, Rory Sutherland)
Explore episode
Jul 27, 2026
Where this was said
Horsepower
At 3:17 · chapter starts 1:44
Sam sets up one of the episode's best stories: how did 'horsepower' come to exist? Rory explains that Watt and Boulton realised mine owners didn't care about piston strokes — they wanted to know how many horses they could fire. So Watt invented a unit that answered the customer's actual question [1] — Rory Sutherland "James Watt invented 'horsepower' not as a scientific unit but as a marketing tool. Mine owners didn't care about piston strokes — they want…" 03:17 . The story expands into a richer claim: the Industrial Revolution required a marketing revolution to match it, because abundance means nothing without corresponding demand. Watt didn't stop at units — he also pioneered outcome-based pricing, supplying steam engines free of charge and taking one-third of coal savings [2] — Rory Sutherland "Watt and Boulton gave steam engines away for free and charged one-third of the coal savings they generated. This perfectly aligned incentiv…" 06:10 . This naturally directed the first engines to Cornwall, where coal was most expensive, aligning Watt's profits with the mines that needed him most. Rory then touches on the Danish Øresund Strait's 14th-century equivalent of honest self-reporting — a customs system where merchants declared their own cargo values, with the Crown retaining the right to buy at the stated price. The conversation briefly wanders into AI products' failure to create their own 'horsepower' equivalent, with Shaan noting that ChatGPT and Claude could simply display an IQ-equivalent rather than opaque benchmark scores.
Horsepower: The First Great Marketing Unit
James Watt invented 'horsepower' not as a scientific unit but as a marketing tool. Mine owners didn't care about piston strokes — they wanted to know how many horses they could fire. By translating engineering specs into business outcomes, Watt made the Industrial Revolution's first great sale.
Watt's hardware-as-a-service pricing, 1775
Watt and Boulton supplied steam engines for free and charged one-third of the coal savings — an early 'hardware as a service' model 250 years before Rolls-Royce copied it with jet engines.
Watt's Pricing Innovation: Hardware as a Service in 1775
Watt and Boulton gave steam engines away for free and charged one-third of the coal savings they generated. This perfectly aligned incentives: the mines where coal was most expensive — Cornwall — saved the most money and paid the most fees. Rolls-Royce reinvented this model for jet engines 200 years later.
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