In the 1990s, Jeff Bezos identified a once-in-a-lifetime opportunity: web usage was growing at an unprecedented 2300% annually. Recognizing this exponential growth, he started Amazon—and the rest is history.

Figure 1. World’s top companies ranked by market cap, Nov. 2024

Today, 8 of the ten companies with the highest market capitalizations (see Figure 1, source) owe their success to exponential technologies. Here are some examples:

• nVidia: GPU computing power, network effects (CUDA), AI
• Apple, Microsoft, and TSMC: computing power and semiconductors
• Amazon, Google, and Meta: internet and network effects
• Tesla: batteries and AI for self-driving cars

Figure 2. Progress of GPUs by Huang’s law vs Moore’s law

What Makes Technologies “Exponential”?

Exponential technologies are those that experience rapid, compounding growth in performance and capabilities, often described by specific “laws.” Sometimes, this growth is not even exponential, in which case the term is colloquial.

• True exponential growth: For example, Huang’s law for GPU computing power (doubling less than every 2 years, see Figure 2), AI compute growth law for leading AI models (doubling every 6 months)

• Rapid but diminishing scaling growth: Scaling laws for large language models (LLMs), Swanson’s law for solar panels’ costs initially improve rapidly but eventually encounter diminishing returns.

Though not always mathematically exponential, these technologies drive disruptive innovations. Even more interestingly, combining exponential technologies magnifies their impact. When growth curves interact, they don’t just add—they multiply.

The Power of Combining Exponential Technologies

Combining exponential technologies creates unique, hard-to-replicate advantages that drive differentiation and explosive growth.

Real-World Examples:

• ByteDance: Unique combination of three exponential patterns: AI scaling laws, platform network effects (Metcalfe’s law), and novel pattern Content velocity unique to short-form video they pioneered.
• Moderna: The combination of mRNA, AI, automation, and high-throughput manufacturing for experimentation drives their success, as described by Huang’s and Wright’s laws.

These combinations amplify growth and create barriers to imitation, giving businesses a defensible edge. For example, in biotech, combining Huang’s law (computing power) and Carlson’s law (declining DNA sequencing costs) demonstrates how combined exponential trends can create a hypothetical capacity that is substantially greater than either of the combined elements (see Figure 3). Remarkably, Huang’s law (illustrated in Figure 2) looks almost negligable when viewed alongside the combined capacity – such is the extraordinary difference in magnitudes.

Figure 3. Combining exponential trends magnifies impact, creating a capacity far exceeding individual contributions (example on biotech)

To fully realize this potential, business models must:

1. Maximize utilization – The business case and operation should use as much hypothetical capacity as possible and should position itself to benefit from future scaling.
2. Deliver value – Solution must meet market needs and drive the demand.

Lessons for Business Leaders

1. Spot the trends early (6-12 months horizon): Exponential technologies are often evident only in hindsight. Stay informed and vigilant to identify these trends as they emerge. Think structurally; is the trend stable or temporary? Exponential technologies have an underlying structure that gives rise to trends.
2. Look for synergies: Focus on more than just one technology. Explore how multiple exponential trends can interact to create super-exponential impacts.
3. Project the future: Use the laws driving these technologies (e.g., LLM scaling laws, Metcalfe’s) to map out opportunity spaces and predict growth trajectories.
4. Innovate business models: Adapt or create new models that combine exponential technologies to deliver value in unique ways.
5. Ride the wave—and adapt: Start strong; but also continuously adjust your strategy to outpace competitors and adapt to evolving markets.

Why Act Now?

Exponential technologies move fast, and the cost of missing out is steep. Leaders who act decisively and strategically can position their organizations to survive and thrive in a rapidly changing world.

If you’re ready to identify and combine the technologies that will shape your industry’s future, let’s talk about how to onboard the future and avoid being left behind. Send me a message, and let’s explore opportunities for collaboration.

Written on: November 22, 2024