Practicing Wisdom — Issue #9

1. What I Learned This Week

Theme: The Incumbent’s Inertia, the Upstart’s Advantage

As technology matures, something paradoxical happens: the giants stop moving. Not because they can’t — but because they’ve built systems too complex to steer and incentives too entrenched to escape.

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Incumbency breeds paralysis.

Benn Stancil’s piece on the “Innovator’s Dilemma” frames it well. For years, VCs liked to ask: “What happens if Google builds your product?” But the better question might be: “Can Google even move fast enough to care?”.

Big companies become too big to experiment. Too large to fail fast. Too entangled to pivot.

“Google doesn’t want to build your niche product — not because it can’t, but because it’s irrelevant to its $300M/day profit machine.”

By contrast, small players thrive in volatility. They need to move. They can evolve into emergent opportunities before the incumbents have finished whiteboarding them.

This same pattern echoed in Galloway’s piece on Hollywood’s unraveling. The blockbuster economy — once the safest bet — is now the slowest target. Studios like Paramount are slashing $200M productions in favor of $10M AI-generated content. A dozen shots on goal beats one tentpole when speed and specificity matter more than scale.

In every mature system — aerospace, media, tech, finance — the moat eventually turns into a trap. Nick Howley’s TransDigm succeeded because it avoided this. It never tried to be a platform. It kept returning to three simple levers: price, cost, new business. Simplicity beat sprawl.

Even in investing, Eric Cinnamond sees it: savers, once the heroes of stability, now face a strange new risk — being outpaced by their own restraint. When asset prices are the economy, waiting becomes a liability.

Sam Hinkie, as always, sees further. His bet isn’t on strategy or industry — it’s on people. The ones who write and build and think publicly. The ones who leave breadcrumbs. The ones playing the infinite game. These people, he argues, aren’t just more adaptive — they’re building the next systems before the current ones collapse.

“You don’t win by outbuilding the old system. You win by revealing its irrelevance.”

Which is what this week made me realize:
The future belongs to the edge players. The ones not yet visible on the map — because they’re inventing new ones.

Sources Referenced

“Find Your People - Sam Hinkie” — Invest Like the Best Podcast (link)

“Save Your Money” - Palm Valley Capital Management (link)

“The End of the Blockbuster” - No Mercy, No Malice (link)

“Is the Innovator’s Dilemma Outdated?” - Benn Stancil (link)

“TransDigm: Foundations with Nick Howley” - 50x Podcast (link)

2. Key Distillations

• Incumbency is a local maximum. Emergence is global search.
  Once you optimize too well for the current environment, you lose optionality for the next one.

• Big companies don’t lose because they get outbuilt. They lose because they stop noticing.
  When innovation happens outside their update cycle, they can’t even see the threat.

• Speed has become the new scale.
  AI lets small teams ship faster than big firms can plan. That shift changes who gets to play.

• Every system becomes a bureaucracy — unless someone starts a new one.
  Innovation isn’t linear improvement, it is ecosystem reset.

• Default modes calcify. Breadth reopens them.
  Writing, tinkering, launching — these are now the moves of agility, not polish.

3. One Contrarian Viewpoint

“Market dominance” is no longer a moat. It’s a magnet for mispricing.

The assumption that incumbents will “just buy” their way into relevance is starting to break. Why? Because they don’t just lack speed — they often lack the architecture to absorb what’s next.

It’s not clear Apple, Google, or Netflix can integrate the pace of AI-native creation. It’s not clear the Fed can respond to fiscal-driven inflation cycles. It’s not clear VC megafunds can pivot fast enough to back niche context-layer startups.

Dominance creates drag. Emergence creates flight.

4. One Investable Idea

Build for the platform’s blind spot.

B2B context-layer startups — companies that wrap general-purpose AI in domain-specific workflows without building new models.

Stancil describes Claude as launching “dozens of products with just ads”. These aren’t products in the traditional sense — they’re context layers. The real leverage is in designing a UX + distribution strategy that lets horizontal models masquerade as vertical tools.

Thesis: We’ll see an explosion of startups that aren’t really AI companies — they’re prompt orchestration and context packaging layers for AI.

5. From the Archives: A Recall Highlight

“You don’t beat the incumbents by outbuilding them. You beat them by outcontexting them.”

This showed up in Issue #3, and it’s even truer now. Platforms grow slow and brittle. But edge players — the ones attuned to emergent context — can move faster, reframe markets, and quietly route around the giants.