John Candeto, in a white shirt, smiles while sitting outdoors near stone steps and green potted plants.
- Investor John Candeto writes about the “power laws” that come into play whenever significant impact can be traced to a small number of key factors.
- Here, he explores what it means to notice power laws in the wild — and how to act when we find one.
- “The future is full of power laws, but you can’t predict what they will be. You can only let them emerge.”
This essay is an installment of The Long Game, a Big Think Business column focused on the philosophy and practice of long-term thinking by Eric Markowitz, a partner at Nightview Capital. Subscribe to his weekly newsletter, The Nightcrawler, in the form above. Follow him on X: @EricMarkowitz.
John and I often joke that we’re technically competitors — we both manage investment funds — but we tend to act more like teammates. That spirit of collaboration speaks to the heart of John’s work: He’s far less concerned with quick wins and vastly more interested in the few forces that shape life’s most important outcomes.
For the past few years, John has been deep in the weeds of a single question: where do power laws — visible whenever a very small number of factors wield monumentally oversized impact and influence — show up in our lives? The answer, it turns out, is everywhere: relationships, investments, time, attention. John is writing a book about the subject and runs Phronesis Fund, where he invests and writes with equal clarity and conviction.
His essays are smart, beautifully crafted, and deeply human.
In this conversation, we talk about what it means to notice power laws in the wild, how to act when you find one, and why most of the leverage in life comes from just a few things — if we’re lucky enough to catch them, and wise enough to hold on.
Eric Markowitz: What first got you interested in power laws? Where did you start seeing these patterns emerge?
John Candeto: It really started during my decade building an enterprise software business from 2010 to 2020. We went from zero to respectable revenue, but this pattern kept emerging that was impossible to ignore. As we grew from no clients to dozens of clients, it became very clear that a handful of them were paying most of the bills.
But it wasn’t just revenue. I started looking inside the business and realized that three engineers built most of the platform. At some point we had many more engineers, but if the wrong three walked, that would be a problem.
Then I looked at product features — we had over a hundred features, but when I watched clients use the software, they were all clicking the same few buttons. When we’d give demos, there were always two or three things that people loved. We’d spent all this resource building hundreds of features, and two or three were what really mattered.
Eric Markowitz: So you started seeing this extreme minority carrying all the weight across different areas of your business.
John Candeto: Exactly. And once you see it, you can’t unsee it. I started looking everywhere — revenue, product, which clients took up most of our time, and what we were spending time on. All of it was this extreme minority carrying all the weight. Then I started seeing it outside business too.
Netflix released data showing that of their 18,000 shows distributed globally, the top 1% attracted a quarter of total hours viewed, and less than 4% of shows attracted over half of the total hours viewed. What kind of business is Netflix without that small handful carrying all that weight? This isn’t just Pareto’s 80/20 — in a lot of cases, it’s way beyond that. We’re closer to 99/1 territory.
Eric Markowitz: You’ve identified power laws in some surprising places. Can you walk me through some of the more unexpected ones?
John Candeto: This is where it gets really fascinating. Let’s start with people. What is America without Lincoln? What is China without Mao? What is France without Napoleon? You get these big power law people who really shape history.Mozart for music. Michael for basketball. Plato for philosophy. Even if we could make a list of one million power law people, that’s just 0.001% of all people who have walked the earth. And that’s just humans, who are an extreme power law vs. all other known species.
But it goes deeper. Take languages — a handful account for most speech. This holds true for human languages, programming languages, even databases. Take the words in any book, whether it’s the Bible or Shakespeare, and there’s a power law distribution in word frequency. Roll that up to the popularity of books themselves, and you get the same pattern.
What is America without Lincoln? What is China without Mao? What is France without Napoleon? You get these big power law people who really shape history.
Or relationships — think about it. You’re 37, you’ve probably had thousands of relationships ranging from the coffee shop guy you say hi to, to your wife. Of those thousands, how many are actually meaningful? Your parents, a few close friends, your wife, your kids. Maybe a dozen out of a thousand.
Eric Markowitz: You’ve said that power laws emerge from two simple conditions. Can you share more?
John Candeto: One: Small changes in starting conditions. And two: feedback loops. This comes from studying complex adaptive systems, and it was first obvious in natural sciences. Everyone’s familiar with the Richter scale — big earthquakes aren’t just a little bit bigger than the rest, they’re thousands of times bigger.
Same with weather events, energy density in minerals, and so on.
But you also can tell the Amazon story this way, too. Jeff Bezos has said Amazon was most fragile in the beginning — it could have easily died. But he knew that if they put things into the world, some would work, some wouldn’t, and the only way to find things that work is to put things into the world. They started with books, then consumer electronics, and eventually got to the Fire phone.
Bezos’s reflection on the Fire phone is one of my favorite business ponderings — he said it was a cosmic failure, and they will have more failures even bigger and worse, because that’s who they are and how the world works. The future is full of power laws, but you can’t predict what they will be. You can only let them emerge.
Eric Markowitz: So how do we move from observation to action? If power laws are everywhere, what’s the practical takeaway?
John Candeto: I’ve been framing it as how we ought to change our expectations and how we ought to change our actions. First, on expectations: dream bigger in both directions. I used to ride motorcycles a lot more than I do now because I really don’t want my kids to grow up without a dad. I’ve imagined death in ways I didn’t a decade ago. [Conversely] I’ve also imagined upside — I think a lot about what my life would be if I hadn’t met my wife, and that nudges me toward treating that relationship even more seriously. The same is true of investments. [Warren] Buffett has noted that Berkshire Hathaway’s six decades of success came down to a dozen truly good decisions… and they were nearly ruined by a few bad ones.
Second, there’s a big incongruity between where we direct our attention and where there’s “power law potential” in our lives [in other words, where there’s an asymmetric opportunity to benefit from circumstances defined by power laws].I had dinner with my family the other night, and there was a couple at the next table both on TikTok the whole hour. We know your spouse is a big deal, but having a posture of scrolling TikTok when you dine with them — that’s a huge incongruity between attention and power law potential. And again, the same is true of investments. Some things have power law potential (in both directions), and many things don’t. The attributes of what could really move the needle are clear, and we should dwell in that territory.
Eric Markowitz: Your framework mentions survival first, then maximizing positive power law potential.
John Candeto: Exactly. As Charles de Gaulle said, “All that matters is to survive. The rest is just words.” What is Michael Jordan if he’d torn his ACL early on? Buffett if he had died at 50? We wouldn’t have heard of them. The number one thing is minimize the odds of game-overs.
If you get there, then I think there are three things. First, dream bigger — the human mind can barely comprehend exponential compounding. A classic example: Vulcan Materials [the largest producer of construction materials in the US] has sold rocks for 100 years. In that time they’ve turned a $1000 dollar investment into $400 million. This stuff is real.
Second, shift expectations away from averages. I’ve taken economics and management courses where there’s an extreme use of averages everywhere — average customer experience, average this, average that. But that’s not at all what a world dominated by power laws suggests you should focus on. There is no average client experience — there’s this person’s experience and that person’s experience. In the domain of power laws, averages hide reality.
Your most important relationships, your best investment ideas — you’ve got to treat those as deeply precious.
Third, you have to be set up so that if you catch a power law, you can squeeze all the juice out of it. What is Buffett if he hadn’t gotten large positions in Geico, Apple, Coca-Cola? His evolution was from turning a dollar into two to turning a dollar into hundreds.
Eric Markowitz: You’ve mentioned to me the importance of experimentation in creating surface area for serendipity. What does that mean?
John Candeto: This ties back to complexity science. If you frame everything as an experiment — your investments are experiments, your products are experiments, and so forth — then you nurture the ones that go well and cut the ones that don’t. A lot of people get a power law and don’t even know they have it. They look at something going well and think it’s normal rather than recognizing they need to treat it as deeply precious.
Eric Markowitz: There seems to be a tension between focus and experimentation. How do you balance that?
John Candeto: We’re all constrained by time, attention, energy, and capital. But I think the key is being set up to survive forever while exposing yourself to serendipity, and knowing what to do with it when you catch it.
Look at companies like Zildjian, the cymbal maker — they’ve done one thing for 400 years. There’s something to admire there, but there’s not much experimentation. Maybe the experimentation is compressed within that box of “we make vibrating metal and we make it really well,” betting there will always be a market for that. That doesn’t seem unwise.
Bezos talks about focusing on what won’t change — customers will always want better value for their money. So you can have this core focus while experimenting around the edges.
Eric Markowitz: Your work suggests we need to fundamentally rethink how we approach relationships, business, investing — everything.
John Candeto: I think so. Most people spend enormous amounts of time on things that, let’s just say, don’t matter. It’s illogical in this framework to spend time on things that don’t have power law potential — whether that’s investing in a very fragile business with low upside potential, or trying to have a thousand friends.
Your most important relationships, your best investment ideas — you’ve got to treat those as deeply precious. I’m probably not going to get a lot of good ideas in my life, so I really need to take the ones I do seriously. I intend to only have one marriage partner in life, so I better treat her well. I don’t want to go through a thousand clients to find the right 20 — I’d rather just find 20 really good ones, which implies being much more thoughtful in the early stages of the relationship.
Eric Markowitz: Any final thoughts on how people should think about power laws in their daily lives?
John Candeto: There are decades where nothing happens, and weeks where decades happen — that’s Lenin’s line, but it applies everywhere. Your wedding day is a day when decades happen. A random Saturday, you probably don’t need to be on your A-game as much. There’s wisdom in rest.
But when you’re in those moments that matter — when you catch a power law — you need to be ready. Most of our success as humans comes down to a handful of really important decisions and relationships. If you frame it that way, and expect that a handful will carry all the weight, then you’ll have some idea of what to do with the power laws when you catch them.