Summary from Superlinear Returns essay

I was excited while reading an essay by Paul Graham and wanted to jot down the main ideas. Wrote with Perplexity and Grammarly support.

“Superlinear Returns” is an essay by Paul Graham that discusses the concept of superlinear returns, which refers to situations where the output increases at a faster rate than the input. Graham argues that the most obvious way to take advantage of superlinear returns for performance is by doing exceptionally good work. At the far end of the curve, incremental effort is a bargain, and it’s worth taking extraordinary measures to get there. Graham also notes that in all fields, you have to put in the initial effort, and superlinear returns seem small at first, but because the reward curve rises so steeply at the far end, it’s worth taking extraordinary measures to get there.

What is the significance of the essays?

In Paul Graham’s essays, the significance of “superlinear returns” is that it refers to situations where the output increases at a faster rate than the input. The most obvious case of superlinear returns is when you’re working on something that grows exponentially. For example, growing bacterial cultures. When they grow at all, they grow exponentially. But they’re tricky to grow. This means the difference in outcome between someone adept at it and someone who’s not is very great. The prospect of superlinear returns for performance is an exciting one for the ambitious. And there’s good news in this department: this territory is expanding in both directions. There are more types of work in which you can get superlinear returns, and the returns themselves are growing. There are two reasons for this, though they’re so closely intertwined that they’re more like one and a half: progress in technology, and the decreasing importance of organizations. In all fields, you have to put in the initial effort, and superlinear returns seem small at first, but because the reward curve rises so steeply at the far end, it’s worth taking extraordinary measures to get there.

What are some examples of “superlinear returns” in business?

Superlinear returns refer to situations where the output increases at a faster rate than the input. In business, there are several examples of superlinear returns, including:

1. Exceptional work: The most obvious way to take advantage of superlinear returns for performance is by doing exceptionally good work. At the far end of the curve, incremental effort is a bargain. All the more so because there’s less competition at the far end.

2. Exponential growth: The most obvious case of superlinear returns is when you’re working on something that grows exponentially. For example, growing bacterial cultures. When they grow at all, they grow exponentially. But they’re tricky to grow. This means the difference in outcome between someone adept at it and someone who’s not is very great.

3. Thresholds: Thresholds are akin to step functions, i.e., winner takes all. Crossing a threshold can enable exponential growth. Fields with the highest superlinear returns include science due to combining learning, thresholds, and novel discoveries. Other examples include business, fame, and investing.

4. Technology and declining organizational power: Technology and declining organizational power are expanding the scope of work with superlinear returns as well as the magnitude of the returns themselves.

5. Developing good work techniques: Developing good taste and learning from the best examples can help expose ourselves to compounding at work.

In all of these examples, the rich get richer. The prospect of superlinear returns for performance is an exciting one for the ambitious.

What are some strategies to achieve “superlinear returns” in business?

Here are some strategies to achieve superlinear returns in business:

1. Do exceptionally good work: The most obvious way to take advantage of superlinear returns for performance is by doing exceptionally good work. At the far end of the curve, incremental effort is a bargain. All the more so because there’s less competition at the far end.

2. Focus on exponential growth: The most obvious case of superlinear returns is when you’re working on something that grows exponentially. For example, growing bacterial cultures. When they grow at all, they grow exponentially. But they’re tricky to grow. This means the difference in outcome between someone adept at it and someone who’s not is very great.

3. Cross thresholds: Crossing a threshold can enable exponential growth. Fields with the highest superlinear returns include science due to combining learning, thresholds, and novel discoveries. Other examples include business, fame, and investing.

4. Develop good work techniques: Developing good taste and learning from the best examples can help expose ourselves to compounding at work. Always be learning. If you’re not learning, you’re probably not on a path that leads to superlinear returns.

5. Leverage technology: Technology and declining organizational power are expanding the scope of work with superlinear returns as well as the magnitude of the returns themselves.

In all of these strategies, the key is to put in the initial effort and to keep working towards the far end of the curve where the rewards are much greater. By doing so, you can take advantage of the phenomenon of superlinear returns and achieve disproportionate rewards for your efforts.

Citations:
[1] https://news.ycombinator.com/item?id=37921121
[2] http://paulgraham.com/superlinear.html
[3] https://tradingqna.com/t/things-we-are-reading-today-october-27th-2023/155201
[4] https://marcellus.in/story/superlinear-returns/
[5] https://www.linkedin.com/posts/nadeemshabir_superlinear-returns-activity-7121531678702874624-yo9x
[6] https://www.sciencedirect.com/science/article/pii/S0883902623000691