“Software has good margins.” Ok, but why? You’ve probably been told that it’s because there’s zero replication cost. But that isn’t true. It simply looks that way because the replication cost and the consumer price are very far apart due to the fact that you have a monopoly. With enough competitors, Salesforce must be free, and you still need to pay for servers and SDRs. It’s the lack of competitors that allows Salesforce to create margin. Software had good margins because it was easy to make a monopoly. Why was it easy to monopoly in software? Because innovation always creates monopoly, at some magnitude. When you innovate, you are for a moment the only company in the world that has your capability. The world was very big, and the group people who knew how to eat it was very small. For 30 years, software was a wide open field for innovation and therefore monopoly creation. A vista of infinite margins. In many ways it still is. What if I told you that the same is true in the physical world? I don’t just mean that software can be applied to the physical world (though it certainly can be, and that will yield gargantuan companies). I mean that atoms themselves are currently arranged poorly. Infinitely poorly, allowing for infinite monopolies, the same way that software was 30 years ago. To make matters worse (or more opportune), smart and high agency people have generally been ignoring the world of atoms since the 70s. That means there’s an enormous amount of lag in the system. Many crowns lying in many gutters. But it won’t stop there. I think that the software / hardware divorce was a singular moment in time. I’m not so sure it was a good one. For one thing, it gave everyone brainworms. We now think that software has infinite margins innately, or innately has the ability to scale. But the fact is that the universe will be arranged in a million ways by thousands of brilliant people, and it is those *ideas* that have infinite scale and infinite margin. SpaceX took launch from $50,000/kg to $500. That was just the beginning. Beyond Valar, I can’t really tell you what that will look like. That’s the whole point. But there are things which cost $10,000 today which will cost $100 in ten years. As energy, intelligence, and dexterity become cheaper, and as creative and genetic minds turn their attention back to atoms, you will see the next brood of leviathans grow.