What characteristic of modern inventions like communication protocols enables them to achieve profitability that dwarfs traditional manufacturing?
Answer
Network effects where value increases with the number of users
Systems such as communication protocols or social media algorithms benefit from network effects. This phenomenon means that the utility and value of the invention grow exponentially as more people adopt it. This creates a self-reinforcing economic model where the invention becomes more essential and valuable to existing users as it gains more participants, allowing for a growth trajectory that can outperform traditional manufacturing.
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