The Elephant in the Room: The Myth of Exponential Hypergrowth and Great Advice on Writing

Kazuki

Hatched by Kazuki

Aug 28, 2023

4 min read

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The Elephant in the Room: The Myth of Exponential Hypergrowth and Great Advice on Writing

In the world of business and writing, there are often misconceptions and myths that can hinder our understanding and progress. One such myth is the idea of exponential hypergrowth in companies. It is commonly believed that high-growth companies experience exponential growth, but the reality is quite different.

High-growth companies actually grow quadratically, not exponentially. This means that their growth rate, as a percentage, naturally declines with scale, even when there's nothing wrong with the company. This phenomenon is known as Growth Decay or Growth Persistence. Benjamin Brewster aptly states, "In theory, theory and practice are the same. In practice, they're not."

To better understand this concept, let's compare the difference between "word-of-mouth" and "viral" products. Viral products are unusable unless you invite others to become users, thereby enforcing exponential growth. On the other hand, word-of-mouth products encourage sharing naturally. However, even if a product follows an exponential growth model, it cannot continue growing exponentially indefinitely because it eventually runs out of market.

The logistic curve provides a more accurate representation of growth. In the early stages, the curve exhibits exponential growth when it is far from reaching its natural limit. As the product reaches around 25% market penetration, the curve flattens into linear growth. This is due to the tension between the exponential force of growth and the diminishing number of potential customers. Eventually, the curve levels out at what is called the "carrying capacity," which represents a fully-saturated market.

This model is not only applicable to companies but also to biological viruses infecting a population. Just like companies, viruses experience exponential growth in the early stages but eventually reach a point where the growth rate slows down and levels off as the population becomes more resistant.

To combat this growth decay, at-scale companies often resort to spending billions of dollars to increase the size of the market. This is one of the few ways to create growth other than raising prices. It highlights the importance of expanding into new markets and developing wholly new products or significant updates to address evolving market needs.

When plotting growth as market share, Elephant Curves become more visible. This concept recognizes that the carrying capacity of the underlying market can itself be a moving target. In the early stages, the focus should be on winning market share in a specific space, creating the first Elephant Curve. However, as the product matures, more drastic measures are required to tap into new markets or address changing customer preferences.

In the world of writing, Tim Urban offers valuable advice. He emphasizes the importance of writing consistently and persistently. Urban wrote 300 blog posts between the ages of 23 and 29 before starting Wait But Why. It takes time to find your voice, tone, and style as a writer. Even if you're experimenting and something isn't working, keep fiddling until it clicks. Rewrite parts, start over, try a new approach, and continue refining your craft.

Reading extensively is also crucial for growth as a writer. It acts as fertilizer, nourishing your mind with new ideas and perspectives. Urban suggests finding a balance between completely copying another writer's style (a 1 on the spectrum) and developing a completely unique writing style (a 10). Start somewhere in the middle and gradually work your way up the scale as you mature as a writer. Imitate then innovate to discover and cultivate your own unique style.

Feedback is an essential component of growth as a writer. However, it's important to be selective about who you receive feedback from. The person giving feedback should genuinely believe in you, root for your success, and be aware that what they're reading is not your maximum potential but rather your experimentation and growth process. Feedback from someone who satisfies these criteria can be truly valuable.

Ultimately, the ideas behind your writing hold more significance than the quality of the writing itself. Great ideas with pretty good writing are more valuable than the opposite. Focus on developing and expressing compelling ideas, and the quality of your writing will naturally improve over time.

In conclusion, understanding the myth of exponential hypergrowth in companies and the importance of realistic growth models can help entrepreneurs and business leaders make more informed decisions. Additionally, following Tim Urban's advice on writing can empower aspiring writers to find their unique voice and continually improve their craft. Here are three actionable pieces of advice to take away:

  • 1. Embrace the reality of growth decay: Recognize that exponential growth is not sustainable in the long run. Plan for growth plateaus and invest in expanding into new markets or developing new products to maintain momentum.
  • 2. Build word-of-mouth into your product: Focus on creating a product that naturally encourages sharing and word-of-mouth growth. This will not only be more cost-effective than traditional marketing but also fuel automatic growth as your company expands.
  • 3. Write consistently and seek feedback wisely: Dedicate time to writing regularly and refining your skills. Seek feedback from individuals who believe in your potential, support your growth, and understand that experimentation is a crucial part of finding your unique style.

By debunking myths and embracing practical advice, both in business and writing, we can navigate the challenges and achieve sustainable growth and success.

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