It's a bit of a counterpoint.
I am a tech entrepreneur. I am supposed to dream Hypergrowth.
But lately, disturbed as I am with 2020 itself, I started to think - why are things the way they are.
Two Types of Companies
There are two types of companies. Those that are designed to create wealth for founders and employees, and the others designed to create wealth for a Fund. Don't get me wrong - most companies end up doing neither - and some will do both. But every company is designed to do ONE and ONLY ONE of those things.
This is not just my opinion.
Paul Graham wrote in "Startup = Growth" that a startup is a company designed to grow very fast. One question to ask is - to what destination exactly? And why should a company want to grow so fast?
Let's try to unpack Hypergrowth. And let's borrow the framework from Daniel Kahneman, to do so.
Hypergrowth Tickles the Market's Fast Thinking Brain
Hypergrowth is the business equivalent of your fast brain - the market reacts as if by instinct. Growing fast helps the company cover a good market share before competitors take note and 'copy-cats' come into the picture. Growing fast leads to a new behaviour (or a slight modification in the old one) getting adopted by a very large number of people, in a pretty short time.
Just F*****G Download The App, Stop Thinking
The slow brain of the market would pause, think, analyse, and might decide NOT to adopt the new behaviour. It might ask questions about privacy, addiction, security, safety, life ... the fast brain of the market does not analyse.
It jumps instinctively to the shiny new app because it's trendy to do so. From a business perspective, you do not want the market to critique what you have built, you want them to adopt it.
What happens when the slow brain does kick in and start asking questions later? By that time, the behaviour is so well set, that it is hard to break. So it is likely to stick. Think about people criticising, and then using Facebook. As if they're addicted.
Without hypergrowth and it's related behavioural sciences, we would still have Facebook, Instagram and Whatsapp, but probably with lesser adoption, and in slightly different avatars.
Hypergrowth Leads to Winner Take All Markets
Another thing that hypergrowth helps do is make money. To understand what speed has got to do with capital, we need to understand Extrapolation.
We love to extrapolate. From debates about race, to forest fires to climate change - everywhere you can see this happening. An easy way to detect careless extrapolation is the phrase "at this rate ... X will happen" - assuming that "the rate" is a universal constant.
The Symbol of Extrapolation
We love extrapolation so much, that with took this word and created a special symbol to represent it. And then we made it the most important symbol of modern times. That symbol, of course is "@" or "at the rate of.." . Yeah yeah. I know, it was meant for some other purpose - but even in the old definition, the rate is implied to be a constant - even if for a small duration. But I digress.
This is how it works - you grow fast - say 8x a year. That growth 'activates' a multiplier to your valuation in the private markets. That multiplier is super handy because as larger and larger funds get in on the action, smaller investors are able to exit at a profit.
And it's all great except for one thing - it creates Winner Take All markets.
Stop Minding Your Business and Come Work For Me
Hypergrowth, when adopted at large scale, creates 'Winner Take All' markets. In these markets, every small company that does something similar to the big guy, tends to die out. This leads to a large number of people, who were literally minding their own businesses, to crash, burn and work for the large corporations.
Do a few cycles of this, over a few decades, and you get an economy that is seriously debt ridden, afraid that even the remaining jobs will be taken away in the name of innovation. This society responds with mass scale knee-jerk reactions, even if for the right causes. This society gets divided into "Heroes" and "Zeroes". And when there are enough Zeroes and they are unhappy enough, it's easy for chaos to ensue. An incompetent leadership is just an icing on the cake.
This society responds with mass scale knee-jerk reactions, even if for the right causes. This society gets divided into "Heroes" and "Zeroes". And when there are enough Zeroes and they are unhappy enough, it's easy for chaos to ensue. An incompetent leadership is just the icing on the cake.
Hypergrowth = Einstein Works 3 Jobs
Hypergrowth is a great concept, intellectually. But, if it is force fed to a society, it kills innovation. Because in these economies, Einstein does not work at a Patent Office. He works 3 jobs to pay his debts, and never has a moment to think about "light, energy and matter".
Other than large scale internet companies helping us take selfies, we haven't innovated much. The situation is so bad that it takes a crazy right wing billionaire (another one of my heroes) to build a battery powered car mainstream. Ford built his MVP in a f****ing garage.
A World Without Winner Take All Markets
There isn't a quick fix solution to this. But if fixed, here's what the world would look like.
There would be 10-15 Facebooks, for different niches. Most subreddits would be dedicated communities, and companies, of their own. Most markets won't be winner take all. There will be way way way more entrepreneurs than today - mostly small, and mostly "businesspeople" not innovative. Lesser debt, more healthcare. Less stress, more time. Less "me too" disruption, more real innovation. Less noise, more signal. But also, way lesser companies for VCs to invest in, way lesser organised Funds, way lesser ways for rich people to invest in and make even more money.
Consequently, many smart people will fill these gaps, start new funds. Invest in "me too disruptive" companies. And in a few decades, the world will be back to "let's grow fast".
But in those decades, Einstein would happen, again.