Physics Applied to Start-ups: 4 Surprising Lessons that the Fundamental Laws of Physics can Teach us about Running a Company
Summary: There are four core rules of start-up building that are actually principles of fundamental physics. By studying these principles, and seeing how they work in the start-up context, a better understanding of start-up dynamics can be acquired: (1) If you don’t input a large amount of resources (i.e., money, hard work, and time), you will never have a business that yields returns as an output; (2) there is always a tendency to increasing chaos you have to fight, and it gets bigger the more complex your company becomes; (3) start-ups moving with a certain speed and direction will keep moving that way unless a force is applied (i.e., law of inertia), meaning that in order to speed up its movement/change direction, a substantial force needs to be applied; (4) the force you apply will be proportional to the start-up's acceleration (the bigger the effort put in, the bigger the startup’s rate of growth), and the size (mass) of the start-up will be inversely proportional to its acceleration (the bigger the startup, the harder it will be to accelerate its growth).
Introduction
Personally, I’ve always been an avid follower of the world and principles of physics, studying it to the highest level possible during my high school studies. Growing up becoming an entrepreneur, I cannot help but see countless parallels between the worlds of physics and the realm of entrepreneurship.
In this article, I will go over some core principles of physics and their parallels behind building a start-up.
The way that I will show how principles of physics can provide insight into startup building is by making an analogy between the laws of physics and early-stage startup growth. Start-up building faces challenges that the fundamental laws of physics can anticipate (i.e., the laws of physics can tell us what the main hurdles faced will be in terms of energy and forces). Learning physics can, perhaps surprisingly, tell us a lot about the key to successful start-up building.
There are four laws of physics that capture the hurdles and requirements of successfully building a start-up.
These are:
(1T) the first law of thermodynamics of conservation of energy: energy cannot be created or destroyed, it can only be transformed.
You decide to kickstart a start-up as you had a great idea you think would make a solid product. In order to get things moving at all, you are going to need a lot of resources, including time, money, a team, and brainpower. This is because nothing will be created if you don’t input as much energy as you want to output (in the form of a company/rewards).
If you stop investing resources early on, the transformation of energy will cease too. Your company will lose its initial momentum and shrivel into oblivion. The resources you invest will merely turn into thermal energy, which can’t be used to do work.
Just like energy in a closed system, resources in a start-up (time, money, effort) are finite and need to be efficiently transformed into growth and success. Misallocated resources cannot be regained but must be optimized for different aspects of the start-up. Nothing is created or destroyed, but rather resources should be transformed into their most effective forms.
Remember: the time/energy/money you put in can either be transformed into useful work or into useless thermal energy. Which process occurs will depend on how you use your resources.
(2T) the second law of thermodynamics: according to this one, the entropy of a system, which is a measure of the disorder of a state, tends to increase.
The only way to decrease the entropy is through work. In a start-up, without consistent efforts towards organization and focus, projects can become chaotic and lose direction. Continuous effort is required to maintain order and progress.
(1N) Newton’s first law of inertia: an object at rest will tend to stay at rest, and one in motion will tend to stay in motion, unless acted upon it by a force.
A start-up at rest (in planning or early stages) tends to stay at rest, requiring significant effort to overcome inertia and begin moving towards growth. Once momentum is gained, maintaining it becomes crucial for sustained progress, but it’s a lot easier to do so if the initial impetus is powerful enough.
Starting a start-up is always an ‘uphill battle’. It is like you are being pulled into a blackhole by the force of gravity. As a founder, what you need to do is put in the speed and energy necessary to avoid this pull (and only 5% of founders will manage to do so).
(2N) Newton’s second law of force and acceleration: the rate of change of momentum of a start-up is proportional to the applied force and takes place in the direction of the force.
The growth and success of a start-up are directly proportional to the efforts (force) applied. Strategic investments, marketing, and product development (forces) can accelerate growth and direct the start-up towards success.
In what follows, I will dive deep into how each of these laws translates into the realm of start-ups. Understanding these principles can help you leverage the resources and decisions that will allow you to succeed in the start-up world. Hopefully, after reading this article you will obtain a more fundamental understanding of what it takes to successfully build a company.
1T - Energy can only be transformed
In the realm of start-ups, the principle that energy is always being transformed is a powerful metaphor for initial investment and resource allocation.
You can’t try to build a start-up without putting in the work, energy, and money necessary to ‘get things off the ground’, so to speak. This is precisely because energy can only be transformed. If you want to build a company, the input better be as significant as the results you want.
Similar to how energy in a physical system can be converted but not created or destroyed, the resources available to a start-up — be it time, capital, or manpower — are limited and must be efficiently managed.
This law underscores the importance of strategic transformation of available resources into outputs that drive growth and value creation, not just spending for the sake of spending. Any use of resources needs to be highly thoughtful and targeted.
For start-ups, the key to thriving is not merely spending resources but converting them into something of greater value. This involves transforming initial investments into products or services, marketing efforts into customer acquisition, and innovative ideas into marketable solutions. The effective management of these resources determines whether a start-up can scale its operations and sustain its growth trajectory.
Example: Consider a tech start-up that begins with a finite amount of seed funding.
The amount of energy put into turning funding into traction will have to match the traction expected. Imagine the following formula:
Seed Funding + Work done = Output value + Waste
Obviously work done cannot be measured through time spent alone. It will be about the quality and speed with which the work is carried out. This formula helps to show that the output value you expect is the product of the funding you have plus the work you put in, exemplifying the law of conservation of energy in the realm of start-ups.
Adding the variable ‘waste’ helps to show that you might have substantial seed funding and carry out a lot of work, but if this is not done wisely and efficiently, output value will be flat and all the energy inputted will be transformed into waste.
This also helps understand resource allocation.
Every dollar spent needs to contribute directly to the company’s growth. If the start-up allocates too much of its budget to peripheral activities, such as lavish office spaces or over-the-top marketing campaigns, it might struggle to have enough capital for critical product development or market expansion efforts.
On the other hand, a start-up that understands the principle of energy transformation might use its limited resources more wisely. For instance, by investing in lean product development processes or targeted marketing strategies, the start-up ensures that its expenditure directly contributes to creating products that meet market needs and acquiring customers efficiently.
A third option is a start-up that doesn’t invest its money fast enough, instead hoarding their cash ‘just in case’. In this case, there is just nothing to be transformed into useful work (i.e., hiring people/growing the companies). The first law of thermodynamics shows that you have to input something as energy-rich as what you are expecting from the output.
This strategic transformation of capital into value-generating activities helps the start-up not only to survive but to thrive.
In essence, just as energy in a closed system cannot be created or destroyed, but only transformed for various uses, start-up resources must be carefully allocated and optimized to ensure they yield the highest possible returns, instead of it going to waste.
Missteps in resource transformation can be costly, given the finite nature of the resources, emphasizing the need for strategic planning and execution in all phases of start-up development.
2T - Any system tends to disorder
In the context of start-ups, the second law of thermodynamics, which posits that the entropy, or disorder, of a system tends to increase over time, serves as a crucial metaphor for organizational structure and project management.
Just as entropy increases in a closed system unless energy is inputted to maintain order, a start-up will naturally tend toward chaos without concerted effort to impose structure and efficiency.
This principle underscores the critical need for continuous, deliberate management efforts to counteract the natural drift towards disorder in business operations. start-ups, with their fast-paced environments and constant changes, are particularly susceptible to entropy increase, as they are out-of-equilibrium systems.
Without strict processes and clear directives, projects can quickly become unfocused and resources may be wasted, which stalls growth and can lead to failure.
The formula for the second law of thermodynamics is:
In essence, this says that the change in entropy (dS) in a closed system is greater than or equal to the heat added to the system (δQ) divided by the temperature (T) at which the heat is added.
To relate this to a start-up context, we could consider each variable as follows:
δQ (Heat added to the system): This could represent the resources or energy invested into the start-up, such as capital, effort, and time.
T (Temperature): In the start-up context, this could symbolize the pressure or intensity of the market environment in which the start-up is operating. It could also symbolize the stage at which the company is: more employees will make it harder to manage, increasing pressure and intensity. A higher "T" could mean a more intense competitive market/bigger company size, while a lower "T" might represent a more controlled, less aggressive market/company management.
dS (Change in entropy): This would represent the change in the 'disorder' or the complexity of the start-up's operations as it grows. An increase in entropy could symbolize increased operational challenges, diversity in product lines, or market expansion.
So the start-up equivalent of the second law could be conceptualized as:
(Invested Resources + Work done) /Market or Internal Pressure ≤ Increase in Disorder
Here's how to interpret this in the start-up environment:
As you invest more resources into a start-up (the numerator), and as the market pressure or competitive intensity increases (the denominator), the potential for operational complexity and 'disorder' within the start-up naturally tends to increase (the right-hand side of the equation).
A start-up needs to invest resources wisely, especially in a high-pressure market, to ensure that disorder doesn't grow uncontrollably. Good management aims to keep the increase in complexity to a minimum, maintaining it at a level equal to or less than the ratio of invested resources to market pressure.
The goal for a start-up, then, would be to optimize the allocation of resources and streamline operations such that any increase in complexity remains manageable and doesn't lead to chaotic growth, thereby maintaining sustainable development and scalability.
Example: Consider a start-up that initially has a small team and a single project. As the start-up grows, it adds more team members and projects to its portfolio. Without a proportional increase in structured efforts — such as project management tools, clear communication channels, and defined roles — the complexity of managing multiple projects and team dynamics can lead to confusion and inefficiency.
In this scenario, let’s say the start-up began with a manageable entropy level with one project and five team members. However, as the number of projects and team members doubles, the entropy or disorder could quadruple without adequate management interventions, effectively squandering human and financial resources on duplicated efforts or conflicting initiatives.
To combat this, the start-up could implement a robust project management system and enforce regular team meetings and updates. These structured efforts help reduce entropy by ensuring that everyone is clear on their roles and responsibilities and that projects are aligned with the company’s strategic objectives. Regular training sessions could also be introduced to keep all team members up-to-date with the tools and processes that help maintain order.
This strategic imposition of structure ensures that the start-up’s growth in complexity does not outpace its managerial capacity, thus maintaining productivity and facilitating sustainable scaling.
You have to feed a company with ‘neg entropy’ (i.e., information, order, structure, resources) in order to fight the drive to chaos.
Consider an example that evinces this principle for large companies: Google, despite its immense resources, has struggled to launch significant new products over the past decade. The increasing entropy within the organization—marked by overlapping projects and slow decision-making—has led to inefficiencies and a lack of focus. This illustrates how even a tech giant can succumb to chaos when order and direction are not consistently enforced.
In summary, just as energy is needed to maintain order in a physical system, continuous and structured management efforts are essential to counteract the natural tendency toward disorder in a start-up. By recognizing and planning for the increase in entropy, start-ups can implement systems that ensure resources are used efficiently and that the company’s trajectory remains aligned with its goals, thereby maximizing productivity and minimizing waste.
1N - It takes force to change an object's trajectory
Newton's first law of motion, often termed the law of inertia, states that an object will remain at rest or in uniform motion in a straight line unless acted upon by an external force.
This principle can be applied to start-ups to illustrate how they require a significant force to change their state from inaction to action or to alter their growth trajectory.
In the gravitational analogy, the second stage of building a start-up, after it attains some ‘mass’ and movement, the difficulty of keeping it alive makes it seem like it is being continuously pulled into a blackhole. The immense gravitational force of a black hole can be compared to the market forces and inherent inertia that prevent a start-up from launching or scaling.
Just like an object needs a considerable force to escape a black hole’s event horizon, a start-up needs substantial effort, resources, and strategic action to overcome the forces that keep it stagnant or on a path to failure and put it on a trajectory of a self-fulling prophecy.
Example: Imagine a start-up that has developed an innovative software platform. Despite its potential, the start-up struggles to gain traction and is unable to gain initial traction when competing with industry's dominant players or incumbents, similar to when smaller celestial bodies are trapped in the orbit of a black hole.
In this state of rest, without additional force applied, the start-up's trajectory will not change; it risks getting swallowed by the competitive forces of the market.
In this scenario, the 'force' needed could come from a strategic partnership, new hires, founder-led sales or a new round of funding. If the start-up secures an investment, the capital infusion is the external force that propels the business forward, providing the necessary speed to break free from the gravitational pull of the imaginary black hole. This might involve expanding the team, intensifying marketing efforts, accelerating product development, or (more frequently) a combination of these.
The key takeaway is that inertia in the start-up world is a powerful force (that needs to be overcome).
Image 3
Without a significant 'push' and sustained effort, a start-up may fail to launch or grow. Founders need to apply sufficient force in the right direction — towards product-market fit, customer engagement, and innovation — to move the start-up forward and avoid falling into the black hole of market oblivion.
2N - Acceleration is proportional to the force applied
Newton's second law of motion states that the acceleration of an object is directly proportional to the net force acting upon it and inversely proportional to its mass.
The formula is:
Force = mass * acceleration
or
Force / mass = acceleration
For start-ups, this translates into the concept that the rate at which a company grows — or accelerates in its market — is directly linked to the intensity of effort and resources — forces — that are invested in it.
Moreover, the bigger the mass, the slower the acceleration (with a constant force). This can be evidenced by how the size of teams affects start-up growth. Smaller teams get done more, thereby accelerating the company faster. Bigger teams struggle to create valuable changes.
This is the famous pizza policy at Amazon. One simple rule for maximizing meeting effectiveness that Amazon CEO Jeff Bezos has is this: no meeting should be so large that two pizzas can't feed the whole group. This is, of course, a shorthand method for ensuring that, as is often the case with big groups, no one's ideas get drowned out, and good ideas get transformed into action immediately.
Similarly, just as adding fuel to a fire increases its intensity, or pushing the gas pedal accelerates a car faster, intensifying efforts and resources can accelerate a start-up's growth. The number one way in which efforts are intensified is by accelerating and improving execution, i.e., by making high quality decisions at the right speed.
The analogous formula would be:
(Resources x speed & quality decision-making) / start-up size = start-up growth
In the start-up environment, 'force' is not just about the financial capital; it's a multifaceted input that includes strategic planning, marketing, innovation, team dynamics, and operational efficiency. Each of these components needs to be tuned and harnessed to push the start-up toward accelerated growth. The larger the start-up, the higher the force required to keep up growth at the same rate.
Example: Let’s consider a start-up specializing in online education technology. Initially, growth is steady but slow, as the foundational user base is built and initial courses are developed.
However, the company’s leadership realizes that to really make an impact — and to do so quickly — they need to accelerate growth.To achieve this, the start-up secures additional funding — increasing the ‘force' (i.e., resources + speed and quality of decision making).
This capital is allocated strategically through effective decision-making: it expands the course offerings, ramps up marketing efforts, and enhances the platform's technology. As these forces converge, the start-up's growth accelerates significantly, marked by rapid increases in user enrollment, course completion rates, and market share.
The growth is further facilitated by collaborations with educational institutions, which add credibility and reach.
Here's the catch: just as in physics, where pushing a heavier object requires more force to accelerate, the larger the start-up becomes, the more energy it will require to maintain the same rate of growth. So, while the initial boost of capital and strategic changes produces a surge in acceleration, sustaining that pace will require continued input of 'force' in the form of innovation, market adaptation, and operational scaling.
The start-up thus follows the principle of Newton's second law: the more 'force' applied, the greater the acceleration. But it also needs to be mindful of the 'mass' — the size and complexity of the organization that could resist change and slow down growth, requiring even more 'force' to overcome it.
Image 4
Consider a final, recent example: When Elon Musk acquired Twitter and rebranded it as X, he made the bold decision to downsize the company by approximately 80%, letting go of over 6,000 employees. This drastic reduction in workforce significantly streamlined the organization. By making the company smaller, Musk aimed to enhance agility, reduce bureaucracy, and accelerate decision-making processes. Smaller teams, quicker rate of growth.
Conclusion
Our understanding of physics can offer invaluable lessons to the realm of start-ups.
The physical laws governing the universe offer profound metaphors that extend beyond the start-up sphere, to virtually all aspects of life. The principles of energy transformation, entropy, inertia, and force translate into universal insights about efficiency, order, momentum, and growth that can illuminate paths to success in personal endeavors just as they do in business.
In personal relationships, the conservation of energy reminds us that what we invest in terms of time, empathy, and support often transforms into deeper connections and more fulfilling interactions. The fight against entropy is mirrored in the constant effort we put into nurturing these bonds to prevent them from descending into neglect.
Pursuing a new hobby, like fitness, embodies the laws of motion. Without applying force — in this case, effort and persistence — our physical strength remains unchanged. But once we set that energy in motion and continuously work against the gravitational pull of sedentarism (the ‘blackhole’ of fitness), we can build a momentum that sustains and enhances our fitness journey.
Newton’s second law reinforces the idea that the magnitude of our transformation is proportional to the force we apply. The more effort and discipline we put into our fitness regimen, the more significant and faster our health and vitality improve.
Thus, these physics principles, when viewed through the lens of human experience, provide a robust framework for understanding and navigating the complexities of life.
Whether we're scaling a start-up, deepening a friendship, cultivating a new skill, or working toward a healthier self, the same truths apply. Our actions and inputs — our forces — shape our trajectory and define our outcomes. Recognizing this, we can approach each venture with a scientific yet passionate mindset, knowing that the energy we put into the world is never lost; it simply transforms and sets us on the path to achievement and fulfillment.