Equilibrium Reactions are powerful. Yes, they helped us get through chemistry, but their framework is foundational in explaining and predicting trends in human nature, strategy, and technology.
An equilibrium (or reversible) reaction is one where both a forward and backward reaction is occurring simultaneously. Its beauty is that levers can be pulled (typically temperature, pressure, concentration) to switch the momentum in either direction and increase respective yields. An intuitive way to visualize this concept is like a “slinky” – applying stressors transfers momentum away from one end, and delivers it to the other side. But this isn’t going to be a chemistry newsletter. Instead, because the equilibrium framework is so pervasive, I’ll use it to explain current phenomena, predict technology trends, and uncover new frameworks in the process.
Let’s take an example. Information’s utility can be described as an equilibrium reaction from creation to consumption (Creation <-> Consumption). The democratization of information, removal of friction, and expansion of connectivity have been key levers in recently driving the momentum towards consumption. But we’ve overshot. With the wealth of accessible information generated, the average person has so much to consume that there’s little energy left for them to create. This has led to the start of a reverse shift that’s gaining impetus: shifting the momentum to the backward reaction, creation.
Startups like Substack and Grammarly caught wind of this movement early on. They gained traction through removing friction from the distribution and creation processes. As with any momentum swing, we’ll likely overshoot again. But through the process of iterating through how we pull equilibrium levers, we’ll eventually reach a point where the magnitude of change is far lower: equilibrium.
Another example is the unbundling and bundling of technology products. Over the past decade, “platform mindset” companies excelled – for example, LinkedIn (professional networks), Facebook (social networks), and Google (information organization). This “equilibrium reaction” looks something like this: Bespoke, Niche Products <-> Bundled Platform. But once again, there are areas where we’ve overshot.
As more users gravitated to these platforms, many of them realized that their niche has unique requirements that can’t be met by a “one size fits all” product. As a result, we’re starting to see more specialized startups like Nomad (healthcare recruitment), Nextdoor (neighborhood-specific social networks), and Golden (AI-curated information organization) gain significant traction. I wouldn’t be surprised if years down the line we revert to bundling products, but the shifts will continue to iterate till we find that sweet spot: equilibrium.
Equilibrium is an alluring framework, but don’t worry – I won’t just post an equilibrium essay every week! My goal is to use it as a starting point to explain phenomena and generate new frameworks as I explore technology, investing, and various other topics that seem exciting. It may be scattered at first, but hopefully it’ll be a thought-provoking journey for everyone as I explore, iterate, and navigate the most fundamental equilibrium question: how do we find our own equilibrium?
Thanks for reading and I’ll see you next week!
Aqil
Interesting Links:
1. The Future of Consumer Tech: Connie Chan at a16z Summit (16 Minute Video)
This is a fascinating talk on how super apps, cross-company collaboration, and audio will define the future of Consumer Technology. What struck me about this was the bullish case on “Super Apps” – applications that cover cross-industry functions which would typically warrant their own application (see screenshot below). This contradicts typical design principles which favor simplicity and focus over piling many capabilities into one application. It’ll be interesting to see how these Super Apps evolve and strike a balance with good design, which has been central in technology’s rise.
As the appetite for e-commerce delivery continues to rise, businesses are more incentivized to find ways to save money on fuel, avoid the volatility of oil prices, and gain good favor by further helping the environment. The best way for them to do this is through replacing their gas-guzzling delivery vehicles with electric delivery vehicles. This could be the true driver in EV adoption as opposed to the consumer vehicles that have been in the spotlight. It may mirror the phenomenon of how B2B companies had a higher success rate than B2C companies did, and we’re already seeing this as companies like Rivian and Arrival gain traction.
3. Reynolds, the famous Aluminum Foil manufacturer, is going public
Not really related to technology, but this caught my attention because I assumed a company that’s products are in 95% of US households would already be public. Given their operational efficiency and profitability ($135M Net income on $2.1B Revenue), perhaps this was strategic timing as the appetite for profitable, mature companies is rising after the recent WeWork debacle and lackluster Uber IPO. This might’ve been what enabled Reynolds to have the largest listing by a household good maker, so I wonder if we’ll see more private, smaller scale, and profitable companies enter the public markets this year.