Welcome back to the 1st Law Newsletter - Friday Edition.

In this email:

• Vertical Progress
• Unlimited Resources
• Incentivizing efficiency

Escaping Competition Through Vertical Progress

"What valuable company is nobody building?" - Peter Thiel

Progress and improvement can go in two distinct directions: from 0 to 1, or from 1 to n. From 1 to n is horizontal progress and incremental improvement. No groundbreaking innovation is required, just enough to make existing inventions and technology more available and accessible. Horizontal progress can also be called globalization.

From 0 to 1 is vertical progress and innovation. Going from 0 to 1 demands that you do something novel and unique. Something that nobody has done before. The single word for vertical progress is technology... new technology. Inventing something that drastically changes how we live.

It is possible to have both, either, or neither type of progress in a new company or venture.

These types of progress relate to competition in the marketplace. Competition in business only exists when you have multiple entities offering undifferentiated products, and perfect competition is considered the default and ideal state of economics. Competition is fiercest when everybody is progressing horizontally, going from 1 to n and producing more and more of the same thing. However, if you were building a company, wouldn't you prefer to have no competition? This is achieved through vertical progress, by creating new technology and tapping into a new market. Being so good and offering such immense value that no other firm can offer a substitute.

Ideas from Zero to One by Peter Thiel

Unlimited Resources

For the purpose of this article, resources are defined as the thing that you combine with knowledge to create wealth.

We often worry that we will run out of resources. Whether it is a vital resource like oil, clean water, nutritious and healthy food or energy, or merely a convenience such as toilet paper or air-conditioning. However, humans as a species have the ability to create new technology and exploit new natural resources for our personal gain in ever-increasingly efficient ways.

This implicates that we should never run out of resources, for technological advancements should always outpace the depletion of our current resources. For example, we have transitioned from extracting energy from burning wood, to coal, to oil, to nuclear power. Now we are focused on expanding renewable energy, both technology and adoption.

Ideas from Naval Ravikant​

Quote I Want To Share

“To the economically illiterate, if some company makes a million dollars in profit, this means that their products cost a million dollars more than they would have cost without profits. It never occurs to such people that these products might cost several million dollars more to produce if they were produced by enterprises operating without the incentives to be efficient created by the prospect of profits.” — Thomas Sowell

This is exactly why the government and most government funded bodies are so wasteful. If they do not spend all of their budget each year, their funds get cut for the following year. This results in no incentive to be efficient, hiring more useless employees, throwing more pizza parties, giving undeserving raises and generally wasting money in the name of a bigger budget for the next year. Money gets wasted and taxes go up.

We need to incentivize efficiency, innovation and progress in our society.

Thanks for reading!

Lucas