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“Before the Industrial Revolution came along, everyone kind of had their own little farm, their own little house, their own little job, and their own little worksmith,” he told me, clicking the cap on his whiteboard marker on and off. The effect was professorial, although Ravikant, with a black pullover hoodie, gray jeans, and brown wing-tip loafers, looked less like a scholar than a hipster monk. Then came efficiencies of scale and the advent of the factory, he went on. In an influential 1937 essay called “The Nature of the Firm,” the economist Ronald Coase argued that a firm would grow as long as its internal transaction costs were less than the external costs it would otherwise incur. But in the Bay Area today, Ravikant suggested, the external transaction costs for many things have got so low that there are fewer such economies.
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