Balatro Capital - Growth is for dummies
Outline: Will fill out later I am a big time math and comp sci person with a penchant for hard games about growth and scaling systems (Power Grid, Slay the Spire, Balatro).
In these games you have short and long term limitations. If there is a short term limitation, you need to solve for it immediately or you will not move forward. You have to spend all necessary resources to solve for the short term. With your remaining resources, if there is an option which sometimes there isn’t, you will solve for long term limitations.
The complexity lies in that there are many, many moving parts in these games. There have been many studies on how many things people can keep in their heads, how fast people learn, etc. Generally speaking, if you hyperspecialize in a game, you can encode it in your memory in a way that lets you play it faster, with better patternistic memory for situations you’ve seen. However this breaks down when you’re playing a new game, or have reached a new state in the game you haven’t seen before. Often you will have to use some form of deductive or gut reasoning to move to the next phase, and while you’re assisted in your knowledge of the game, you can in no way think as efficiently about the next problem if you have never seen it before.
You can pause and recalculate at every opportunity. This is often not 100% possible because systems are changing and growing while you are learning. You can learn the system inside and out. This is also often not 100% possible because many games are complex enough that they compete with the current limits of AI, game theory, computation etc. Most people fight this by coming up with strategies, goals, and rules around best play. A common strategy is to make sure your growth scales faster than the difficulty of the game.
It’s easier to optimize for growth than perfect play. It’s a simpler formula and a simpler goal. People employ a mix of strategies but at a more abstract level growth is a good general goal that is padded out by knowing the game and knowing any pitfalls to avoid that would completely undercut it. Real play is way more complex than this but this strategy generally holds true.
Complexity and difficulty scaling in many games are different. Multiple systems or mechanics scale differently both on how they are designed and how the game designer intended you to play.
In real life, looking at business, the complexity is way higher, you cannot pause, you are often given completely new things to handle, black swan events etc. The scale of complexity of just managing the people inside an organization is often more complex than a game not to mention the actual day-to-day things the business contends with in the real world. This is often why businesses just do one thing. It’s hard to manage complexity, so you can simplify it by just making tires instead of the whole car. You will find exceptions to this, but many businesses specialize or start out specializing.
It’s easier to solve for growth in business as well, rather than optimizing day to day efficiency.
Due to the competetive nature of capitalism, success is stratified and the more successful you are, the less competition there is. This is counter to what we are taught. It is so hard to succeed in any significant way, that if you do end up financially better off, while you will be exposed to more problems, there is a larger pile of resources to lean on to solve them. The same is true for new opportunities.
A great example is anticompetetive pricing or location choices. Walmart followed a model where they would open up in areas they targeted as good markets. They would also open within a driveable distance for everyone in the area. Walmart was often making profit margins of a few pennies per item, which would bankrupt any other business. As they slowly took over rural towns and malls, they became the only employer and only large retailer in many, many small towns in the US.
Once you have a monopoly, it is a mandate to raise prices and reduce product quality as much as people will bear. People are now forced to shop at Walmart, work at Walmart, get foodstamps and spend them at Walmart as well.
Not only do you get a dominant pricing advantage, but you can hire more people to come up with and execute new ideas, so you actually have to manage less and less as long as you can maintain legal control over some financial stake in the company.
As complexity scales to an enormous level like a multinational everything store, it’s impossible for any one person to know the ins and outs of that business. It’s also impossible to accurately communicate about the bussiness to other employees within the business. You become your own fog of war.
At a top down level, you can scrape a bunch of stats about the company and then pick growth as your target. If you’re growing you’re probably surviving.
If you add the stock market on top of that, any publicly traded company now lives or dies on growth, rather than just using it as a lazy success metric.
The irony is that nothing can grow forever, so as growth as a metric is used more and more, you have a compounding of unrealistic expectations, which
What I would argue is that growth is a great stand-in for a lack of better metrics, but has its limitations as it necessarily depletes resources and can eventually deplete all of the resources it requires to sustain. This is why planned obsolesence is a thing. If you plan for customer growth, but your product is a lifetime purchase, you will theoritcally acquire every customer and because your product lasts forever, they will die before they buy another. You can then plan for it to break every four years or release an updated version, driving more purchases from the same customer base, but you now run into limitations on R&D (which is why the auto industry is famous for having very planned and slow R&D and MPG improvement) or physical resources on the planet. You can manufacture the same thing out of multiple resources, so there’s quite a lot of opportunity to make things, but you also run into limitations on global shipping capacity, or even just the amount of purchasing power an individual customer has on any given day.
Growth is an excellent stand-in for a lack of deep understanding of a system. You absolutely need it to begin the process of mastery, but growth itself is just a concept, and often as you grow to greater heights, you recognize the limitations, why trees and ants struggle to get beyond a certain size, why rooms have a firecode limit, on and on. And you begin to work either on the system or within the system.
Growth is both the most excellent tool and the worst. If you do not recognize that there is limitation, you will expand beyond it and self destruct.