The 8th wonder of the world
Harness wisdom of compound interest, make long-term power moves | MAJOR 🗝️ 🚨 | Vol. 31
Hello MF/TS Readers! Last week studied how a young company has perfectly implemented the brand growth playbook. 🤌
They went from 0 to +9900% in five years. 📈
That company is Liquid Death and there’s a lot you can steal from them as a marketer. 💦💀🏴☠️
MF/TS is a weekly newsletter on finding the adjacencies in life, performance, and brand marketing. This week we will focus on a powerful tool that can help you (or your teams) make power moves.
That Einstein quote was huge for me when I was young. It still inspires me to this day.
As a child, I struggled with learning disabilities. Today they call them learning differences. And Einstein was an example of what someone might become despite those differences.
Einstein was known to be a daydreamer, had slow speech, and had difficulty in his classes as a young child. Having an archetype like that helped me realize that all was not lost. That despite my academic struggles I could make way toward “intelligence” and potential “success.”
The implication of that famous quote is powerful and illuminating. What Einstein is telling us is you don’t need “inborn talents.” You just have to have a real curiosity. To ask questions. To seek out the truths. To try things. To see what happens.
As you grow up as a young child (and as adults as well) you’re told the “right” way and the “wrong” way towards finding the answers that work. But the truth is, there is no such thing as the “right” or “wrong” way towards a solution. Towards an idea. Towards a breakthrough. There’s only forward progress and a process of elimination until you land on a strong foundation. And a foundation that leads to execution and value gain. To the answers.
In this week’s Move Fast/Think Slow we will focus on the superpower of compound interest. It’s a way to identify the right kind of actions to translate into big gains. It’s a way to pressure test if you or your teams are focusing on the right kind of rituals and practices around the work. A way to transform small gains into big milestones.
In today’s world. I don’t believe we do a good enough job encouraging ourselves and the people around us to think in long-term increments. And the shame of that is that’s how all big time innovators see the world. That’s how long anything good takes to build. Mickey Drexler, the famous CEO who built two retail fashion juggernauts has said, “Anything good takes five years.” Many plan in quarters or maybe in yearly increments. But if you look at today’s actions through the filter of the next 10 to 20 years. It changes everything. And we don’t encourage that long-term view enough in Western American culture.
And what compounds on that problem (pun intended), is that technology is constantly instantly gratifying us. It games us into thinking we’re being productive when truth be told we’re just caught up with a tool. This is why many rummage around their lives frustrated. It’s why many get angry because they can’t find the right solution to solve said frustration or roadblock.
A path towards getting unstuck is understanding the concept of compound interest. To start and keep a practice. You just might be able to execute something you never knew you could do before. Or your incremental gain may one day turn into a juggernaut breakthrough. Who knows. Anything is possible. And truth be told, when you practice what you’re good at and what you love, you just might have a f*%k ton of fun along the way.
Let’s dive in.
But before we do, if you know of a friend who might be into this chili share.
“The quote comes from Frank Sinatra. It’s not how well you’re doing. It’s how long you’re doing well.” - ICE-T
This quote is jam-packed with wisdom.
Give that line and clip a listen b/c no one can deliver that line quite like ICE-T.
Let’s decipher key elements of that quote.
Long implies commitment. Putting in the work over an extended period of time.
Doing well implies focusing on your craft. Hitting your marks.
And last note: the keyword is doing in the doing well.
“The first time I played bass, I was successful! Succes is not a goal! Success. Success is in the doing.” - Ian MacKaye, music artist
A PHILOSOPHY FOR LIFE: COMPOUND INTEREST
Ever since I read this I haven’t been able to get it out of my brain.
What does he mean?
Isn’t compound interest a financial concept?
"My life has been a product of compound interest." - Warren Buffett
“The elementary mathematics of compound interest is one of the most important models there is on earth.” - Charlie Munger
Warren Buffett and Charlie Munger are two of the world’s best investors and business operators in the history of finance. They talk a lot about compound interest. Charlie called it 8th wonder of the world.
Naval Ravikant elaborates: An example of compound interest - let’s say you’re earning 10 percent a year on your $1. The first year, you make 10 percent and you end up with $1.10. The next year, you end up with $1.21 and the next year $1.33. It keeps adding to itself. If you’re compounding at 30% per year for thirty years, you don’t just end up with ten or twenty times your money - you end up with thousands of times your money.
Yet, it goes way beyond basic macroeconomics philosophy. Charlie Munger is correct. Compound interest is the 8th wonder of the world. Because when you stop and study it you start to see that it’s the backbone to all massive gains.
PROOF OF LIFE | ADJACENT CONNECTIONS
There are different examples of proof of the power and widespread belief in compound interest and it crosses a wide section of personal triumph, ecosystem breakthrough, and organizational success. Illustrating a deep truth about the standard requirements for positive transformation.
The compounded interest of getting to mastery: Malcolm Gladwell’s 10,000 hours made famous in his book Outliers is an example of the fruits of compounded interest of practice and repetition.
No one succeeds at a high level without innate talent, I wrote: “achievement is talent plus preparation.” But the ten-thousand-hour research reminds us that "the closer psychologists look at the careers of the gifted, the smaller the role innate talent seems to play and the bigger the role preparation seems to play." In cognitively demanding fields, there are no naturals. Nobody walks into an operating room, straight out of a surgical rotation, and does world-class neurosurgery.
Cal Newport elaborates in So Good They Can't Ignore You: what makes ridiculously successful people so successful is they're experts at practicing — they can push themselves to the exact limit of their skillset and thus expand their abilities day after day. If you're not expanding yourself in such a fashion — called deliberate practice in the org psych lit — you'll never be ridiculously successful.
The compound interest of scientific breakthrough: Einstein spent his life/hours just ruminating over his theory of relativity. And it forever changed and evolved our understanding of space and time. The theory challenged and expanded Newtonian physics and opened new fields of research. Apparently, we wouldn’t have GPS (and I’m sure other modern technological advancements if it wasn’t for Einstein’s breakthrough. But the breakthrough wasn’t some stroke of genius. He dedicated his life to this theory.
“If he had any qualities that were extraordinary, they were his patience mixed with his extreme tenacity. After what can only be considered as well beyond 10,000 hours of contemplation of one problem, he reached a transformation point. His two theories of relativity have to be considered as perhaps the greatest intellectual feats in history, the fruits of intense labor and not of some extraordinary, inexplicable genius.” - Mastery, Robert Greene
Compound Interest in marketing: By repeating the same message over time it increases the value the messaging has for the brand and products they’re trying to sell and the value of said brand. In other words, the more consistent the better value and ROI.
One of my all-time favorite case studies is when Tropicana re-branded and changed their package design in 2009 to move away from the product and brand design they had for years. Their sales took a nose dive by 20% immediately. They ended up quickly returning to their original branding and packaging. Completely validating the research that says consistent communication standards increase value of brand over time. How much cash did they burn ignoring that foundational truth?
Compounded Interest of Strategic Focus: When Paul 'O’Neill took over as CEO for Alcoa in 1987, at his first investor meeting, he cited turning Alcoa into the safest company company in America. And everyone thought he was crazy. Long-story short. It was a brilliant strategy. That singular focus of safety is #1 for everyone in a leadership position at Alcoa completely changed the company. By the time he left Alcoa 13 years later, their net income was 5x larger than before he started with a market cap of $27 billion. That’s the compound interest of a simplified strategy that everyone could wrap their heads around and consistently make modifications on. And it had huge dividends.
Different sources of the key to success. Different case studies on the superpowers of compound interest.
When there are adjacent examples of the same thing, multiple lateral connections synch up to the same truth. That’s an insight.
But you can’t leverage this insight without intentionally focusing on the right things. The right things tend to be your strengths and the things you’re most passionate about. I’d also argue, they ought to be the most high valued thoughts or actions. And thanks to the age of abundant information, you should be able to find the high-value areas of thinking and doing. Also you should fight to be in or part of communities to share your work in order to generate feedback and accelerate your craft.
THE WISDOM OF JAMES CLEAR + ATOMIC HABITS
“Reward is on the other side of sacrifice.” - James Clear
What I find to be so wonderful about the truth of compound interest is the multitude of potential applications. It works on a personal level. Anything you’re trying to get better at or want to break through on. It also works on an organizational level. I’ve seen its effects firsthand with teams and the advertising businesses I’ve led.
But it begs a question: how do you get there?
Habits are the compound interest of self-improvement. The same way that money multiplies through compound interest, the effects of your habits multiply as you repeat them. They seem to make little difference on any given day and yet that impact they deliver over months and years can be enormous. It is only when looking back two, five, or perhaps ten years later that the value of good habits and the cost of bad ones become strikingly apparent.
Last year, I decided to take my running up a notch than previous years. I made one simple decision. Run very early in the morning in order to ensure I stopped skipping days. The results? I grew my monthly average by +332% per month. This was my way of testing James Clear’s wisdom because I had control over this and running brings me joy.
Two additional running antidotes echoing the compound interest of dedicated focus.
One, I started running consistently ten years ago. When I started I was running 8:30 - 8:45 per mile average. Today, I can run 6:45 - 7:00 minute per mile average when I’m at top speeds. I got faster despite getting older. It happened incrementally over the years and then one day, I was breaking 7:00 minute per mile.
The other antidote is the residual effect of running and long-distance racing. My goal this year is to break 4:00:00 in the marathon. Now, I’m so bent on it I’m changing my diet to be plant-based. So far I’m am at the lowest weight I’ve been since college. I have more energy. The residual effects of long-term focus are eye opening and wonderfully unexpected.
Goals are the results you want to achieve. Systems are about the proceses that lead to those results. - James Clear
GETTING TO AN ACTION PLAN
“Until you make the unconscious conscious, it will direct your life and you will call it fate.” - Carl Jung.
For some of you what you want to get better at might come easy. For others, it might take a moment. I know for me, I am still asking what else aside from running and writing I want to get better at.
How can I take this wisdom and apply it to the teams I lead and the work I influence?
Below are questions you can ask yourself:
What am I very good at? What do people consistently come to me for?
What do I find joy doing?
What are the three tnentats that embody excellence for my team? How do we ritualize those elements daily?
What can I do to start small? When can I schedule the doing daily?
How do I keep a systems journal to track my own behavior?
Can our team find qualitative and quantitative marks we consistently track over time?
I’m bullish on answering these questions with a notebook and a pen > a computer. But beggars can’t be choosers so you answer these questions however you like. I think the answers will be illuminating.
IN SUMMARY
Be curious. Be active. Be consistent.
In this life, we all have an opportunity to become a better version of ourselves than we were yesterday.
It’s one of the magical things about life IMHO.
We can grow over time.
Stagnation doesn’t feed the soul.
Movement does.
So quit ignoring the power moves you could be making.
And get moving.
Have fun.
It’s going to be great. 🤗
LINKS THAT MAKE YOU THINK
Some of my friends have been writing their asses off lately. And it gets me fired up. Sharing their links below. I also share newsletter recommendations that are delightful perspectives and a refreshing change of pace compared to what we typically digest from the American media diet.
Shout out to Heather Sundell’s deep reflection on 2023. Informative. Vulnerable. Relatable. Holy sh** impressive. Deeply human. We spend a lot of time posturing in our world these days. And that’s what makes Heather’s writing super refreshing and powerful. Oh, you’re human too? And she is an absolute warrior. Reminding me of all the working MOMS (aka the real bosses of society) who put the squad on their backs - literally.
Shout out to Alec McNayr’s Top Writer. Tracking his journey back to the stage and writing is fun to read about. He reminds me of the importance of experimentation and the practice of good humor. Reminding me that it’s courageous to restart. Read his story about going on stage for the first time in years and also an inspiring story about the writer’s room related to this very dispatch today. One of the best storytellers I’ve ever seen in my life getting back in the saddle is straight glorious.
Want to see the world through a different lens? Follow Kai Branch’s Dense Discovery. This is a top 5 favorite newsletter. Always discover something from a different angle. Always learning something I wouldn’t otherwise have learned by just reading American media.
Want to stop reading depressing sh**. Subscribe to NICE NEWS. Let me tell you, this newsletter is a refreshing change of pace. Reminds me of now-defunct REASONS FOR OPTIMISM. I don’t read it as consistently as I would like but when I do it makes me happy and reminds me that all of life ain’t shit no matter what American media discourse says. We’re actually pretty exceptional and there’s proof of it.
What newsletters are you reading? Do you have any pro tips for me? Just reply to this note and let me know what you’re digging into!
IMAGES OF THE WEEK
Taken by moi 📸 👐
Go forth. Stay safe. Ride the wave.
-Mitch