Tito's Blog

Leverage And Internet Businesses

Scalability and leverage offered to internet businesses are unprecedented. Network effects create a system with exponential paths for growth. Small differences (in the “exponent”) drive big differences in the outcome, with the appearance of power law concentrations and “winner takes all” effects.

Naval Ravikant says it best in his post “The returns to entrepreneurship”.

Rather, I posit that the amount of leverage available to a modern Internet entrepreneur is far, far greater than was available to entrepreneurs of previous generations. The number of entrants has dramatically increased as well. The overall hit rate might be lower, but the ones who win, win bigger and faster thanks to the leverage.