How is power law different than compounding or leverage? For example, companies like Amazon used leverage of code and internet to grow as compared.
I am trying to store "power law" alongside my other mental concepts of compounding or leverage. Thus, I would like your clarification and additional notes with a real example.
Power law outcomes are the result of complex adaptive systems, which are [1] highly sensitive to starting points, and [2] are refined through feedback loops. Many forms of natural and social order are complex adaptive systems e.g. planets, species, cultures, companies, communities, products, etc.
An example:
Bezos started Amazon because he noticed internet adoption was growing at incredibly high rates, and chose books as the first product because internet-scale uniquely enabled offering millions of titles to consumers. These starting points (the "when" and "what") mattered enormously, and he has pointed out many times that Amazon was most fragile in its earliest days. It went on to thrive because it developed *many* feedback loops that have helped it get better-and-better-and-better. This led to e.g. AWS (and leverage-through-code), and resulted in enormous compounding of value and, subsequently, valuation.
How is power law different than compounding or leverage? For example, companies like Amazon used leverage of code and internet to grow as compared.
I am trying to store "power law" alongside my other mental concepts of compounding or leverage. Thus, I would like your clarification and additional notes with a real example.
Thank you for sharing this with the world!
Power law outcomes are the result of complex adaptive systems, which are [1] highly sensitive to starting points, and [2] are refined through feedback loops. Many forms of natural and social order are complex adaptive systems e.g. planets, species, cultures, companies, communities, products, etc.
An example:
Bezos started Amazon because he noticed internet adoption was growing at incredibly high rates, and chose books as the first product because internet-scale uniquely enabled offering millions of titles to consumers. These starting points (the "when" and "what") mattered enormously, and he has pointed out many times that Amazon was most fragile in its earliest days. It went on to thrive because it developed *many* feedback loops that have helped it get better-and-better-and-better. This led to e.g. AWS (and leverage-through-code), and resulted in enormous compounding of value and, subsequently, valuation.