Stephen’s note: My new book Disruption Investing launches tomorrow. This is the last time you can pre-order it for just $2.99. Go here to claim your copy.

Today, I’m giving you a special look inside.

I wrote this book to share what I’ve learned from years of studying disruption. The excerpt below gets into one of its core ideas: The world is changing faster than ever. And for investors, learning to think differently about that acceleration is incredibly important.

I hope you enjoy it.

***

My grandad is a product of what I call the “Golden Watch Era.”

He spent forty years running one of Dublin’s most notorious pubs for the same owner. After four decades of loyalty, he retired and was literally handed a golden watch.

The Golden Watch Era is over. Welcome to the Great Acceleration. Never before has so much changed so quickly.

If you don’t believe you’re living in the most disruptive time in history, here’s a thought experiment my friend Tim Urban came up with:

Image the history of humanity as a thousand-page book

The first 999 pages, 248,000 BC to AD 1775, are pretty dull. Humans live at the subsistence level. Technological progress crawls when it happens at all.

The very last page covers just the past 250 years. On that page, America is born. We harness electricity. We invent the steam engine, the telegraph, the railroad…

We learn to fly. We build cars, skyscrapers, submarines, and supersonic jets. We split the atom—then harvest its power to light millions of homes.

We walk on the moon, launch probes beyond our solar system, and send thousands of satellites into orbit. We sequence the human genome, edit genes with CRISPR, and create artificial intelligence that can talk, reason, and learn by itself.

The last paragraph on the last page crams in more disruption than the rest of the book.

And it’s only going to accelerate from here.

How do I know? Think about this…

It took the telephone one hundred years to go from “invention” to serving 90 percent of US households.

Electricity needed seventy years to reach 90 percent of American homes.

The internet took thirty years. The smartphone? Eighteen years.

We’ve been adopting new technologies faster… and faster… and faster.

Netflix took ten years to amass 100 million users. Instagram did it in two and a half. TikTok in less than a year.

ChatGPT? Two months!

For us investors, this blistering growth offers great opportunity.

When innovations converge, growth compounds

If I had to answer, “Why is the world changing faster than ever?” with one term, I’d say, “Compound growth.”

You may know this as a mathematical concept. But it’s not just numbers that compound. Technology does too.

Consider Uber. Tap a button, get a ride. Nothing to it, right?

In reality, Uber is the result of a series of innovations that have emerged only recently. These innovations compound upon each other, mix, then create technologies and companies that were previously impossible.

Here’s some tech we needed before Uber could exist:

• Pocket supercomputers. Enough people were carrying smartphones with GPS antennas.

  
  

• Digital maps. Street-level mapping became detailed and reliable enough.

   

• Frictionless payments. App-native payments were safe and easy.

   

• App stores and the cloud. It took two clicks to download Uber and access it anywhere with cell coverage.

  
  

• Trust. Review systems turned a scary idea—getting into a stranger’s car—into a normal one.

We can do this exercise with many modern tech companies. Netflix is only possible thanks to cheap bandwidth, modern video processing, global content delivery networks, and low-cost cloud storage.

Why are EVs going mainstream now, and not one hundred years ago when they were invented?

Because now we have better electronics, dense charging networks, and software that makes the car a rolling supercomputer. Not to mention, lithium-ion batteries cost 97 percent less than they did in 1991.

Without these technologies converging and compounding, there would be no Tesla.

AI is the biggest convergence of tech ever. It wasn’t possible before recent improvements in computer chips, data availability, and network speeds.

Thinking exponentially

Compound growth is counterintuitive. Human brains are wired to think linearly. To be a disruption investor, you must think exponentially.

Let me offer you a proposition:

You have $5,000. You must invest it in one of two stocks, which you’ll hold for two and a half years. Both stocks currently trade for $5.00 per share.

You also have the gift of foresight, and you know for certain that the two stocks will perform as follows:

• Stock A will rise 10 percent per month.

  
  

• Stock B will rise $1.00 per month.

Over the next two and a half years, which of these stocks would you rather own?

Since you’re a disruption investor, you probably know the answer is Stock A. But maybe you were tempted to go with Stock B.

Seeing as you would own $5,000 worth of stock, Stock B would rise from $5.00 to $6.00 per share in the first month, handing you a 20 percent gain. That’s double the 10 percent gain on Stock A.

After two months, Stock A would be worth $6.05 per share (a 21 percent gain). Stock B would be worth $7.00 per share ( a 40 percent gain).

After a year, Stock A would be worth about $15.70 per share (a 214 percent gain). Stock B would be worth $17.00 per share (a 240 percent gain)—still ahead. But around month fifteen, Stock A would surpass Stock B.

After two and a half years, Stock B would be worth $35.00 per share, turning your $5,000 investment into $35,000—seven times your initial investment. Sounds like a deal.

But Stock A would be worth about $87.25 per share, turning your $5,000 into roughly $87,247—more than seventeen times your money.

That’s because Stock A represents exponential growth, which means the growth rate stays the same even as the base grows. The gains compound on themselves month after month.

Mathematically, exponential growth leads to much bigger gains over time. Linear gains are a straight line; exponential ones curve upward. Just look at how Stock A takes off after the lines cross:

With Stock A, you made seventeen times your money, versus seven times with Stock B. And the exponential gains extend their advantage more and more as time goes on.

Exponential growth is everywhere when you look for it. Here’s a chart of global GDP. See what happened on the current page of The Book of Humanity?

Everything!

***

Stephen again. If you enjoyed a look inside this chapter, there’s a lot more where that came from.

In Disruption Investing, I use real-world examples to show how disruptive companies take shape, the patterns they follow, and how to spot them before the opportunity becomes obvious to everyone else.

The preorder deadline is tonight at midnight. Until then, RiskHedge readers can grab a copy for just $2.99. You can preorder yours here or by clicking the image below.

Stephen McBride

Chief Analyst, RiskHedge