Clash of Linear vs. Exponential

A clash between linear and exponential systems is coming.

What's a linear system? Think governments, politicians, regulators, large and slow-moving legacy companies, and the like…

What's an exponential system? You. Today's exponential entrepreneurs. Silicon Valley startups. Fast-moving innovators and disruptors that want to change the game.

We've seen indicators of the conflict as lawsuits are filed against Uber, Airbnb, Tesla, 23andMe and various drone companies.

But this is just beginning.

It's a revolution of sorts…

And more is coming. A lot more.

Why?

Primarily because the number of exponential entrepreneurs and organizations in the world is about to increase dramatically (more on this below).

These entrepreneurs coming online today now have access to bandwidth, tens of billions of capital in crowdfunding, the world's knowledge on Google, cloud computing, 3D printing, access to sensors, networks and even synthetic biology.

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What major challenge do today's entrepreneurs face?

Regulation.

Entrepreneurs are going to want to run faster than regulators will be willing to allow them.

When entrepreneurs find ways to do things much cheaper and faster, it gets traditional businesses up in arms.

The old guards don't know how to handle the rate of change.

It threatens their existence, so they work with the government to put up roadblocks (think Uber and taxi fleets).

In addition, when the government can't understand the impact of a new technology on society, their first reaction is to say, "Stop – I don't understand this, we've got to regulate this, it's too dangerous."

The entrepreneur's response? Don't try and stop me.

We have 3 billion new minds coming online this decade… representing tens of trillions of dollars flowing into the global economy.

There's an explosion in the amount of innovation coming out of China, India, Pakistan, Africa… parts of the world that will likely be much more permissive for reinventing health care or flying drones or whatever the case might be.

The U.S. has to be very, very careful that it doesn't over-regulate these technologies and ultimately put the brakes on technology here.

When George W. Bush was in office, the U.S. government stopped funding fetal stem cell research because of ethical concerns.

Putting aside the moral and ethical issues for a moment, the result of the government regulation simply meant that the research left the U.S. and went to China, South Korea, and other parts of the world. Consequently, the U.S. dropped from being No. 1 to No. 8 in stem cell work.

We live in a world of porous borders, and regulating against something doesn't mean you stop it.

It just moves somewhere else, especially if the field is moving from deceptive to disruptive and has the potential to generate large amounts of revenue.

To be clear, we *do* absolutely have moral and ethical obligations to respect and uphold… Just don't expect regulation to be the answer.

Will Silicon Valley continue to be a dominant force in the future?

Yes, but I think other places will begin to catch up.

Countries around the world want to replicate what exists in Northern California.

Some of the smaller countries with more agile governments – the Netherlands, Israel, Singapore – may soon have an advantage, because regulation is going to start to become a hindrance or strategic advantage for innovation.

Innovation at a large scale means that you're eroding some of the existing workforces and large businesses that are the tax base.

And often, a government's first reaction to that is to put up regulatory barriers.

So, for example, as autonomous cars come on the road, it's going to create a lot of downstream issues.

Maybe we won't need to produce as many cars, because people won't own cars anymore – they'll own access to a car.

Maybe we won't have to build as many roads, because autonomous cars are more efficient in their packing density.

Then, we won't need to have as much construction equipment.

We won't need parking garages or taxi drivers.

You won't even need automotive insurance anymore, because these cars just don't crash.

A single exponential technology can disrupt a multitude of secondary businesses resulting in a domino effect.

And some countries will say "stop." Other countries will embrace it, and work hard to attract those young companies onto their shores.

We live in the most exciting time ever.

As we move towards this future, we are going to be disrupting many industries and creating even more entrepreneurial business opportunities.

The shocking statistic from the Olin School of business says: In the next decade, 40% of today's Fortune 500 companies will no longer exist.

For the abundance-minded entrepreneur, and as I lay out in my next book BOLD: How to Go Big, Create Wealth & Impact the World(S&S, Feb 2015), this disruption is also filled with massive opportunities.

The speed at which we are going from "I've got an idea" to "I run a billion-dollar company" is moving faster than ever.

I have a team that works with me to research and study these meta-trends – like the clash coming between linear and exponential systems.

For the last three years, we've presented our insights and data to a very select group of 250 CEOs in my Executive Mastermind called Abundance 360 (A360).

A360 is now full. In fact, it's oversubscribed.

For that reason, I've decided to create a scalable digital Mastermind group called Abundance 360 Digital (or A360D).

A360D is developed specifically for entrepreneurs (like you) to provide you with monthly access to the knowledge, resources and tools resulting from exponential technologies, moonshot and abundance thinking, and crowd-related tools (incentive competitions, crowdfunding, and more).

A360D will aim to connect you with other bold and abundance-minded entrepreneurs, and to connect you with me on a monthly basis for discussion around these topics.

If you'd like me to send you more info on A360D, submit your name and email here.

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All the best,
Peter

* Many of these questions come from interviews done with me in the December 2014 issue of Inc. Magazine, and the January 2015 issue of C-Suite Quarterly.

P.S. Every weekend I send out a "Tech Blog" like this one. If you want to sign up, go to PeterDiamandis.com and sign up for this and my Abundance blogs.

P.P.S. Please forward this to your best clients, colleagues and friends — especially those who could use some encouragement as they pursue big, bold dreams.