Scaling Theory #7 – Michael Mauboussin: The Fascinating World of Increasing Returns
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Jul 15, 2024 
Michael Mauboussin, finance expert, talks about increasing returns, market dynamics, Charles Darwin, AI, and the Santa Fe Institute. They discuss leveraging increasing returns in business, impact of intangible assets, navigating complex technologies, and embracing complexity in everyday life.
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Mauboussin's Dinner Guests
- Michael Mauboussin admires Charles Darwin for his methodical and open-minded approach to science.
- He would have dinner with Darwin, Isaac Newton, and Aristotle for their diverse and foundational contributions.
Five Types of Increasing Returns
- Increasing returns arise from economies of scale, trade specialization, learning by doing, network effects, and idea recombination.
- These concepts reveal why some firms grow efficiently and create value beyond simple inputs.
Companies Leveraging Increasing Returns
- Tesla and BYD exemplify learning by doing, reducing costs through experience and scale.
- Social media firms like Meta benefit immensely from network effects, creating high coordination barriers for competitors.