Compounding Crazy

The Law of Accelerating Returns states that the rate of change of progress accelerates because humans can use the technology at their disposal to progress faster than previous generations could without the technology.

If the Fed jacks up interest rates, growth assets could tank short-term. Ham-fisted crypto regulation is a legitimate concern. Markets never go straight up. Even though global equities and the Nasdaq have compounded at a roughly 10.5% CAGR and ended up and to the right, there were a lot of bumps along the way. Please don’t mortgage your house and Y... See more

When it comes to history, we think in straight lines. It’s really hard to grasp how much crazier the future is going to get, because most people extrapolate based on the past growth rate, and even the more optimistic and adventurous ones will extrapolate from the present growth rate.

So how do you prepare?

Open-mindedness will be important. You should continue playing the Great Online Game. Reading sci-fi will make the crazy seem more familiar (I just finished Project Hail Mary and it’s excellent). There will be abundant opportunities for people who are down to get a little crazy.

For one, the faster a new company is built, the faster other companies can benefit from it. New primitives create new opportunities for innovation. Kind of obvious.Less explored is the fact that if a new company needs fewer employees, because it can outsource whole functions to APIs and software, there are more talented employees freed up to go sta... See more

Back to our ten small companies. Not only can they build new things themselves, some of those ten companies will build things that become building blocks for new companies. Maybe their innovations will help bring the required team size down from ten to five, freeing up more innovation energy, and so on.It also creates 10x the number of companies fo... See more

Things could totally fall apart. But if history is a guide, we’ll wake up a decade from now to a market full of much higher numbers than we can reasonably wrap our minds around today. Some of the new market cap will come from today’s public companies, some will come from today’s private unicorns, some will come from existing startups that aren’t ye... See more

First, there are the timing risks.

These being tail risks, there are countless definitionally unimaginable things that might happen. Perhaps the next global crisis won’t be such a boon for innovation. Unknown unknowns abound.