Why Moore’s Law May Mean Success, Or Death, For Your Startup

Amid talk of the 50th anniversary of Moore’s Law, one may be tempted to ask: so what? Three years before co-founding Intel, Gordon Moore observed that transistors would decrease in cost and increase in performance at an exponential rate.

Moore made his observation in a now-defunct trade rag in April 1965 to… not much fanfare. Most people – including Moore – don’t remember a reaction at all. Fifty years on, only the most devoted chip and materials science fanatics seem to care about transistor counts, “finFet” structures and “III-V” materials. Talk of Moore’s Law seems best confined to museums and small gatherings of techno-nerds. It’s history. Or is it?

Quietly and stealthily, Moore’s Law continues to be a revolutionary force. Those who ignore it, do so at their own peril. Those who grasp its true implication and leverage the magic stand a chance of becoming successful and maybe even revolutionary.

Google may be an example. Veteran journalist Steven Levy recently theorized about how Moore’s Law made Google possible. When Larry Page developed the idea that would become Google Search, he had the power of Moore’s Law in mind.

Levy writes: “When (Page’s) thesis professor noted that such a task meant capturing the whole web on Stanford’s local servers, Page was unfazed. With a firm grip of how much more powerful and cheap tomorrow’s technology would be, he realized such a feat would eventually be relatively trivial.”

Moore’s Law certainly isn’t the only secret to success in technology and related fields. But its often-fundamental role is inescapable, if largely invisible. Around the time Moore made his observation in the 1960s, transistors, the basic building blocks of the digital economy, were selling for $150 each. Today, a transistor costs 140 millionth of a cent. Put another way, you can buy 70,000 transistors for a single penny.

That exponential force and all that it brings – stunning decreases in prices, dramatic increases in performance and better energy efficiency – underpins such innovation as the smartphone, drones, genome analysis and wearable computing. Not only does Moore’s Law make the very idea of the smartphone possible, it means it has the same compute power as the fastest supercomputers had in the mid-1990s.

For entrepreneurs, Moore’s Law means that starting a data-intensive company – which used to require spending millions of dollars on servers, networking and networking equipment – now simply requires a great idea and the ability to rent computing capabilities.

As Levy writes: “Businesses in virtually every sector are being challenged — and in some cases shut down — by young entrepreneurs applying Moore’s Law. (Call it the Uberization of everything.) It’s quite probable that on someone’s drawing board right now is a project that will change our lives and earn billions — but is a funding challenge because the pitch sounds, well, crazy.”

What’s an entrepreneur to do about all this?

Clearly, you can do worse than try to comprehend and exploit the exponential power of Moore’s Law. It’s difficult for humans to think exponentially – it seems crazy – but it often pays big dividends.

Perhaps the last word might best come from Moore himself.

“My feeling has been that you identify the products, the areas where you want to do something and then, if it makes sense, start a new concern. So many entrepreneurs today seem to approach things the other way around. They decide they want to start a new company and then start looking for an idea that they could exploit. Some of these will turn out to be big deals, you know, such as Google. A lot of them will turn out to be kind of a flash in the pan that, for a short period, will be successful but then will be displaced by something else. I guess if I would give current and future entrepreneurs advice it would be to look for how you can make a long-term enterprise out of what you’re trying to do rather than just a short-term success.”