The Scaling Laws That Govern Everything, Including Companies

The Pursuit Of Unifying Principles

West has spent a big part of his career in pursuit of unifying principles, the kind of deep, transcendent ideas that cut across the messy particulars of any given problem. He traces that obsession back to his discovery of “dimensional analysis”, where from very general arguments, you can derive results that don't depend on the specifics of the situation. "There was something transcendent about it," he explained. "Something beautiful and elegant."

That concept of looking for generalities, things that transcend particulars never left him since.

When he moved into biology, he found a culture that was almost its mirror image. Everything was detail. Everything had a name. Beyond the single organising principle of natural selection, the field seemed obsessed with specificity. But then he encountered scaling laws that researchers had discovered back in the 1930s and 40s, offering patterns nobody had ever explained. He went after them, not just to explain these patterns, but to crack open what they were hiding: the underlying architecture of life itself.

"There are emergent laws that govern companies. Most leaders have no idea they exist."

Economies Of Scale & Increasing Returns

The core insight of West's scaling theory is disarmingly simple and reveals a hidden mathematical order governing how complex systems of all types grow. Rather than assuming that doubling size simply doubles all characteristics, West shows that biological organisms, cities, and companies all follow scaling patterns.

Two key dynamics emerge. Sublinear scaling (economy of scale), whereby larger systems become more efficient. For instance, when a creature twice the size needs only 75% more energy, not 100%.  And, on the other hand, superlinear scaling (increasing returns), whereby larger systems become more productive. Like when a city doubling in population generates 115% more economic output, innovation, patents, wages, restaurants, a faster pace of walking, but also crimes.

These aren't coincidences but reflect how networks, whether blood vessels or city roads, fundamentally distribute energy, resources, and information.

Cities are the purest expression of superlinear scaling. As they grow, they need only about 85% more infrastructure while generating roughly 115% more wealth and innovation. The reason, West argues, is that cities keep expanding their "dimensionality": the range of jobs, opportunities, and functions available, for instance. That openness is what tolerates the mavericks, the eccentrics, the difficult people who don't fit anywhere else. And those are exactly the people who drive creativity and speed up innovation. Remove them and you kill the engine. Which is why cities, unlike almost every other human institution, rarely die.

Companies, on the other hand, only start out city-like. There's creative buzz, energy, the feeling that anything is possible. But as they scale, administration and bureaucracy inevitably come to dominate over creativity. Around 50 to 100 employees, that multidimensional energy collapses into something more uniform. Mavericks - those that I like to call the “positive troublemakers” and “frustrated enthusiasts” - get fired or at least isolated and ignored. The focus shifts from inventing the future to exploiting the past.

The result is that publicly traded companies average about a ten-year lifespan. They are mortal in a way that cities simply are not.

There are outliers too, of course. Companies like Walmart, Microsoft and Apple have somehow managed to push back against the slowing down and the entropy that almost inevitably comes with scale. Regular readers of this newsletter will know I like to call these rare organizations Phoenix Companies. Often, it takes a shock to their system before they start to fight back, though. Amazon, for instance, shocked Walmart. OpenAI shocked Google. Sometimes you need the ground to shift beneath you before you're willing to accept that you need to deeply transform.

Business schools barely teach any of this, which shouldn't surprise anyone. As West explained, they tend to work backwards from success stories, picking a handful of case studies and treating the lessons as universal. His framework doesn't fit neatly into that world. It's a different paradigm entirely, which institutions, that have spent decades building their identity around existing models, don't tend to welcome with open arms. They either find it liberating, or, more often, they find it threatening.

Unexpected Changes In Scale

It’s deeply fascinating how pending changes in our systems might affect these laws of scaling. Take the rise of AI agents, for instance, autonomous software systems that can understand goals, make decisions, and take actions, and that with minimal human intervention. They are quietly pushing the Silicon Valley obsession with scale is into reverse. Where size used to be the ultimate competitive advantage, something different is emerging: a thirty-person company running 270 AI agents that together can outperform a corporation ten times its headcount. It has almost become a reverse fetishism, where the smaller and nimbler you are, the more impact you can have. What's changing isn't just headcount, though, it's the nature of complexity itself. We're moving from human complexity towards agentic complexity.

Geoffrey also explained how depopulation may ultimately dwarf every other transformation. “The entire architecture of the modern economy was built on the assumption of an ever-expanding population. Take that away and the foundations start to shift in ways we don't yet have models for. We have no idea what it means. How do you keep an economy going when the marketplace is shrinking rather than growing?"

Should Companies Survive?

Geoffrey showed his own maverick streak by asking a daring question about how long organizations are really meant to survive. “Do we want companies to survive? Or should we want their ideas and people to survive? No one really cares if TWA or Sears are no longer there”, he explained. “The ideas developed there are still alive, though. The people moved on and built new things. IBM's near-collapse was arguably a gift to the world, because otherwise Steve Jobs, Bill Gates or Larry Page might all have been absorbed into that ‘machine’. The mavericks would have been managed. We'd have missed an entire era of transformation.” He quoted Steve Jobs as saying something similar: “Death is very likely the single best invention of life. It's life's change agent. It clears out the old to make way for the new.”

It’s a fascinating thought. Though of course, today's economy is very much focused on preserving the structures and the stock prices rather than the ideas themselves. We've built systems optimised to protect the vessel, not the voyage.

The Limit Of Adaptation

The conversation took a darker turn when I asked about pace. West's theory holds that the pace of life inevitably accelerates as systems grow. It means that innovations must come faster and faster, and that we must adapt faster and faster. The question I wanted to ask was whether there is a limit for brains that are biologically identical to what they were 10,000 or 100,000 years ago? Geoffrey believes, as do I, that many of the signs suggest that we are at or near that limit, a critical point where we simply cannot keep up with our own innovations. It’s that point where the only people who fully understand the new technologies are the people who built them. The rest of us are just along for the ride. Or left behind entirely.

I shared something Mo Gawdat, former Chief Business Officer at Google X said last year: unless you're in the top 0.1% in this age, you're going to be a peasant. "That is exactly my concern," West answered. "We might be moving towards a kind of science-fiction elite that controls everything, while the rest of society loses agency. Or we get the other scenario: complete collapse. A chaotic, balkanised, fragmented world." And then he said something I haven't been able to stop thinking about. He wonders whether all the craziness we're seeing right now, like the current authoritarian turn and the seemingly irrational behaviour everywhere, is already the early signal of this underlying dynamic.

Reinventing The Planet

I asked whether systems approaching collapse can be reinvented. He started by saying that this would probably require a civilisational shift in values: from hyper-individualism towards something more collective, more communal. In the past, he said, change at that scale tended to happen top-down, driven by charismatic figures like Gandhi or a Martin Luther King. He wasn’t sure if that would happen now that people like Donal Trump jumped in that gap and filled it in the exact opposite way that is needed.

He was also honest about the split he himself feels about our current situation. Part of him is a classic optimist who thinks we'll muddle through. The scientist in him, however, looks at the global metrics and feels differently. The data says we're heading towards a singularity.

His question of whether we can reinvent the planet the way we sometimes reinvent companies is one we should take very seriously. “If there were a more effective form of global governance,” he says, “it should already be thinking about what this means and whether we can actually turn it into an opportunity.”

I ended by asking what he would say to leaders grappling with all of this right now. His answer was grounded and precise. “Understand that there are emergent laws that govern the structure and evolution of your company. They have emerged from the underlying social and economic dynamics of the system you're part of, and to some degree they control where you're headed whether you acknowledge them or not.”

Companies Need To Understand The Laws

“So first of all: learn to understand these laws. Then look carefully at where you in comparison to them. Are you overperforming or underperforming relative to what the laws would predict? If you're doing better: why? What's the source of that advantage? If you're doing worse: what's suppressing your potential? "That's not just an analytical exercise," he concluded. "It's a kind of intellectual honesty about your position in a much bigger picture. You are a complex system inside an even more complex system. The leaders who grasp that and who can zoom out that far, will be the ones who actually understand what they're building, and what they're building it inside of.”

I left our conversation feeling two things simultaneously: more hopeful than ever about all the opportunities to do better, but also considerably unsettled. Which, now that I think about it, is probably the right response to a conversation about universal laws.