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Issue #14 - Personal Compounding
As I was brainstorming what I might write about this week, I had one of those days where it felt like the Universe was trying to tell me something.
On my morning walk with our dog, Sammie, I was enjoying one of my favorite podcasts, How to Take Over the World (I was listening to a history of the famous banking family, the Rothschilds), and in the episode the host mentioned an essay by Sam Altman on the topic of how to be successful and, in particular, the notion of personal compounding.
Compounding has been called the 8th wonder of the world and its effects really are amazing. Getting into situations where gains are exponential rather than linear creates massive outcomes in future periods. And, the impact can be very dramatic, as shown in this chart of Warren Buffet's net worth over time (note that while successful very early in life, most of his wealth was created after the age of 50, a couple of decades after he began investing seriously).
In any case, when I returned home, I pulled up Altman's essay and his first bullet point is titled Compound Yourself. The sentences that resonated most with me were these:
You also want to be an exponential curve yourself—you should aim for your life to follow an ever-increasing up-and-to-the-right trajectory...You don't want to be in a career where people who have been doing it for two years can be as effective as people who have been doing it for twenty—your rate of learning should always be high. As your career progresses, each unit of work you do should generate more and more results...In a world where almost no one takes a truly long-term view, the market richly rewards those who do.
The subject doesn't get a lot more coverage in the article, but coming as the first attribute mentioned by Altman it does show the importance of the idea in his mind. (Note: the essay goes on to describe 12 other traits he believes contribute to success and, if you are interested, I do recommend the whole piece).
After finishing my reading and going back about my day, I later came across this Twitter thread, which coincidentally, also focused on an element of personal compounding:
The main thrust of the thread is that relationships also compound and that we can take actions that allow us to meet more high quality (however you define that) people with less effort over time. To do this, the author suggests you need to manufacture advantageous situations and focus on ones that position you to immediately and obviously demonstrate credibility, social proof, people knowing who you are, and your prior work.
He gives an example of becoming a regular at a restaurant rather than hopping from one to another each week. By being known to the staff, you are immediately conferred with VIP status in the eyes of other patrons and anyone joining you. This makes it easier to meet new and interesting people over time as, perhaps, a bartender could introduce you to another regular patron they know that is doing something interesting and related to something that you've discussed with the bartender in the past.
Another example given is the hosting of an industry conference. As the host, everyone knows you before they arrive, you are viewed as credible and worth knowing by attendees and, over time, it becomes very easy to connect with high-profile and interesting people in your business community in a way that is more difficult for others who aren't hosting well-attended gatherings.
I'm a fan of these types of hacks -- simple ways that make achieving worthwhile outcomes easier. And, in the cases of ones that compound, it seems that the effort to study and apply them is often a good use to time and energy, especially if you are patient.
One Somewhat-Related Concept
A number of months ago, a friend turned me on the work of Oren Klaff, a finance professional who has written a few books on how to close deals. This friend was involved in some very serious national security-related conversations in his early career and was given extensive training in Klaff's concepts and techniques, so when he said that they are effective, I believed him. They also make intuitive sense to me, though I've had a harder time implementing them myself, mostly due to lack of discipline and practice, but also a small sense that these are powerful ideas that could be easily misused and cause harm to others.
So, what are these ideas? Perhaps Klaff's most famous contribution to the study of sales is the notion of frames and the power dynamics that these create. I've included a link to a summary of this concept below (see the write-up on Chapter 2), but it posits that in every encounter people show up with a given 'frame' and that this subconsciously creates a hierarchy of participants. Those with higher status and power have an advantage and often have greater success in achieving their objectives. Klaff provides tips and tools that help to control and, when appropriate, techniques to flip these power roles. Imagine walking into an important meeting with a top CEO who is regally sitting behind a large desk in a lavish office. As you enter, she looks up and says "I have 5 minutes" (you were scheduled for 30). What do you do to regain control of this situation? Klaff provides guidance.
How does this relate to personal compounding? To me, both involve using what I earlier called hacks to create greater chances of success.
I haven't gone very deep on any of these ideas, but when I came into contact with a podcast, an essay, and a Twitter thread all in one day on a common and uncommon topic, I thought the signs were too strong to ignore and that I'd write about it as a way to see if this idea resonates with just me or if it makes sense and seems valuable to others.
Let me know by emailing me at tim [at] majoritysearch [dot] com. I'd be curious to hear your reactions and how you'd expand on this subject.
Links Referenced in this Post
I’ve observed thousands of founders and thought a lot about what it takes to make a huge amount of money or to create something important. Usually, people start off wanting the former and end up...
Several weeks ago Suraj Mehta from 500 Startups recommended I read Pitch Anything by Oren Klaff. I ordered it while we had lunch at Miss Saigon in SOMA.
We tell the stories and analyze the lives of the greatest men and women to ever live. By examining their strategies, tactics, mindset, and work habits, H…