Think small

How the power of compounding leads to big outcomes

Compound interest is the eighth wonder of the world

-Albert Einstein

Everyone knows the anecdote about the penny that doubles for every square on a chessboard. For those that are unfamiliar, it goes like this - would you rather have one million dollars or the amount equal to a penny doubling for every square on a chess board.

Even knowing the answer, I find it difficult to comprehend the power of the compounding penny (which equals 184 quadrillion dollars).

What’s even harder to see is the power of compounding behaviour. If you exercise for 30 minutes per day for 60 days, each workout will build on the last. The 60th workout is easier and pays larger dividends than the 1st. Read for 30 minutes per day and you will transform your mind. Write for 10 minutes per day and you will become a better thinker.

The more you do something, the easier it becomes and the more effective it is. It’s the same principle as the compounding penny, except for your body, mind, emotions, and skills.

The key is to smart small. As small as you can think. I have several daily habits that I do for between 10 and 30 minutes. Even 10 minutes compounded over long stretches of time can add up to huge outcomes.

“The first rule of compounding: Never interrupt it unnecessarily.”

- Charlie Munger

Another idea I’ve been thinking about is things that never change. Jeff Bezos famously articulated how Amazon would focus on the timeless constants of price, selection and delivery. Customers would forever want low prices, vast selection and fast delivery. There is no future whereby customers want higher prices, slower delivery and small selection. So Amazon would focus effort on improving these timeless truths.

We can use the concept of timeless truths to improve our personal outcomes. What are the things that will never change for you. For example, for those of us with children, there is likely no future where we think ‘I wish I spent LESS time with my kids when they were young'. Hence, it would follow that you should optimize for more time with your children. And so on..

I’d love to hear about the behaviours you are currently compounding, and your timeless truths. Just hit that reply button and let me know!