Tech Cosmology 101

A few years ago, I came up with a framework for thinking about tech that I called The Immutable Laws of the Tech Industry. Inspired by the science of cosmology—how galaxies and the stars that comprise them emerge, interact, and die—I noticed patterns that suggested technology evolved in very similar ways.

This was before the advent of AI. Right as the NFT market collapsed. When NVIDIA stock was worth 25% of its value today (even after yesterday’s drop). Just as Zoom fell to about a tenth of its peak price two years earlier. When the stock market was in its post-pandemic decline and news headlines were anticipating an inevitable recession.

That was, in other words, before we’d gone through another one of these predictable cycles of tech cosmology. And here we go again. The AI bubble… The tanking market this week due to DeepSeek…

So let’s revisit these laws once again, in light of everything going on these days.

Law #1: Valuable objects attract one another

In the physical world, all objects with mass are attracted to one another through the force of gravity. In the business world, the prospects of growth and better returns cause objects to inch closer that have other properties: money, talent, ideas.

Companies that have raised venture funding tend to attract more venture funding. Companies that have hired impressive employees tend to more easily bring on more of the same. The press likes to write of those about whom the press is already writing.

There’s a flip side to this: If you don’t already have mass, it’s hard to pull other objects toward you. If you don’t already have the attractive qualities of a successful company, it’s hard to attract those qualities in the first place. Gravity and business are both ruthless.

There’s a great Ray Charles song called Them That Got that touches on this phenomenon, although Ray probably wasn’t thinking of physics as he wrote this:

Law #2: More massive objects attract smaller ones

Following up on the first law, it’s then no surprise that the ecosystem gravitates toward that which shows signs of growing. The influx of top talent into the centers of AI excellence (OpenAI, Google, etc.) is a self-reinforcing loop. If I’m a talented ML engineer, where will I get the best resources, work on the most innovative technology, and, yes, get the best compensation? Of course, it’s those places that are already excelling.

This is why success is not linear. It compounds. And compounding is the most powerful mathematical law in the universe.

Gravity compounds. That which is massive gets more massive. Business compounds. That which is successful gets more successful.

Law #3: Similarly charged objects repel (until they’re sufficiently different)

And yet, there are other forces at play beyond gravity. In physics, objects that are too similar (in terms of electric charge, for instance), repel one another.

And tech companies (or any company for that matter) are no different. In a crowded space with large competitors, it’s easy to get lost in a sea of commoditization. And as I wrote in my last issue, everything does eventually get commoditized.

The same is true of the AI oligarchs, who offer essentially the same foundational architecture. (To understand how these large language models actually work, read this.) And so it’s the little things built on top of those architectures that differentiate the competitors.

Backward-looking examples of this phenomenon provide even more insight:

• Uber and Lyft had virtually identical offerings when first launched. They “repelled” by differentiating on expansion strategy: Uber focused on rapid global expansion and competitive pricing. Lyft was more community focused and driver-friendly.

• AWS and Azure (Amazon’s and Microsoft’s cloud offerings, respectively) offered virtually identical technical solutions to developers. But they “repelled” on the basis of positioning: AWS targeted startups, while Azure targeted enterprises.

• Stripe and Square both launched within one year of each other, having built payment processing tech stacks to modernize how credit card transactions happened. Stripe pushed off into developer services and APIs. Square focused on point-of-sale and consumer experiences.

Law #4: Over time, objects cluster into galaxies

Part of what makes technology (and science generally) fascinating is the eventual intersection of seemingly disparate technologies.

The number of companies that sat in isolation, in their own corners of the tech universe, only to now be commonly categorized in the “AI” or “Web3” galaxies is astonishing.

I can speak to this one from my own personal experience. My previous startup, Anchor, began as an audio-first social platform (often referred to as an “Instagram for audio”). Several years later, we were always spoken about in the same breath as legacy podcast platforms. The galaxy consumed us both. And yet, when Anchor had started, I doubt anyone (including me) thought we’d ever be direct competitors.

Disney was an IP-driven movie studio. Netflix began by mailing DVDs. HBO was a premium TV channel. Today, they’re collectively the world’s biggest competitive streaming platforms. That’s a pretty big galaxy.

Law #5: Eventually, most (but not all) objects run out of fuel, just like stars

Resources are finite. Stars die (as our sun will in a few billion years). So too do almost all companies.

Ideas burn bright, but money burns faster.

In predictable cycles, highly competitive sectors cause many of the stars in the galaxy to run out of the resources they need to sustain them, be that capital, people, consumer interest, or media attention. Not to mention inflated valuations making in difficult for startups to justify the money spent.

We saw this happen with crypto a few years ago. Crypto, overall, is far from dead. But most of the companies formed in the space are.

We’ll see this happening with AI in the next few years as well. It arguably just started this past weekend.

Law #6: The most massive dying objects explode as supernovas

The impact of the biggest collapsed companies reverberate through the galaxy. A single failed corporation (or a single bad quarter) can ripple through seemingly unrelated ecosystems, causing billions or even trillions of dollars in market capitalization to vanish overnight.

The obvious examples that come to mind aren’t even tech companies: Lehman Brothers, Enron, WeWork, etc.

Then there’s FTX. Silicon Valley Bank. Theranos.

These companies don’t exist in a vacuum (although, I suppose, outer space is a vacuum).

Law #7: Objects from the debris of a supernova begin attracting each other again (after a bit of a cooling off period)

Yet from the destruction arising out of the sixth law come the building blocks to bring us back to the start. Much of what is ejected from these large attractive massive superstars as they collapse is exactly what started accumulating in the first place: money, talent, ideas, etc.

So we return to the very first law. The cycle begins again, when a handful of isolated objects floating in tech space pass near each other in the night sky and, ever so slightly, begin pulling closer once more.