3 ms·
> The most obvious case of superlinear returns is when you're working on something that grows exponentially. For example, growing bacterial cultures. When they
by pazimzadeh 3y ago
> The most obvious case of superlinear returns is when you're working on something that grows exponentially. For example, growing bacterial cultures. When they grow at all, they grow exponentially.
There is a very linear relationship between the maximum concentration that your bacterial culture will get to and the amount of sugar/carbon that they have to eat. Log growth is not really sustainable.
(Unless you continuously find ways to unlock new energy sources, either by luck or because you set aside resources for research/generation of diversity.)
For markets, it would be also good to mention that the price of an asset is not necessarily tied to the value of the asset, and this made worse by markets of low or unknown liquidity. And I would guess that it's also made worse when the valuation of group of assets is calculated by extrapolating from the price of a small number of units of the same kind of asset (i.e. stocks).
- stvltvs 3y agoIn natural systems (i.e. all real systems), it's better to think of exponential growth as just the first half of a sigmoid curve.
- rtpg 3y agoIn that case, there's an interesting idea: trying to push things over the tipping point. It doesn't last forever, but nothing does! Instead there's an exciting idea in place: instead of committing your entire life to trying and getting "one thing" to be as big as possible, you can kickstart many things! As someone who likes a bit of variety in my life, that sounds way more exciting to me.
- chii 3y agoby splitting your resources across many projects, you run the risk of all of them not reaching a critical threshold for which they experience exponential growth.
- cinquemb 3y agoI think some people at any given point in time (and some institutions and some governments) do a better job than others at splitting their resources because in part because they have a better framework at recognizing what may reach that critical threshold faster than others based on a given set of conditions (or have lower switching costs when it comes to deciding to not allocate resources to something after a certain point).
- narag 3y agoYou don't split, but sell when successful then start other thing. That's the serial entrepeneur thing.
- yawnxyz 3y agoAll bacterial growth hits "stationary phase" at some point before collapsing, and he seems to miss that most empires and companies do the same.
- pierat 3y agoBecause the goal of a vulture crapitalist is to sell at the exponential part of the sigmoid curve. And of course, sell the idea that "the next big idea" is exponential at 30x..... Until you hit the top of the sigmoid. Wash, rinse, repeat. EDIT: Whoops, I forgot to fellate venture capital. You know, the group of companies that would rather leave smoking ruins rather than happily sustainable to 5x companies, and deign to get anything less than 20x companies... and ideally 30x companies. This is the same group of companies that destroyed Bed Bath and Beyond, Instapot, Toys-R-Us, and loads more, all to cash out and get a jackpot than actually create sustainable and happily workable long term companies.
- dalyons 3y agoFYI all those examples are PE, not VC. Fairly different. Not that VC doesn’t have its own problems, but yeah.
- mathackernews 3y agoYes it's a nice article but it doesn't take into account situations where the Law of Diminishing Returns applies.