The Bizarre Power Of Compounding - E6

Show Notes


How To Solve World Hunger With A Single Grain Of Rice - The Bizarre Power Of Compounding - Episode 6


Overview

In this episode, we discuss: Why 80% of your effort is probably a complete waste, how the one percent rule can make you a productivity machine, how making a bunch of small improvements took a team from laughing stock to Olympic champs, and why consistency is underrated.

Highlights

The magic of the compounding principle shows us that when we double things they grow fast. For instance, if you start with 1 grain of rice and double it for 20 days you'll have 1,000,000 grains of rice. If you keep doubling it by day 40 you'll have 1,000,000,000 grains of rice. And after 64 days of doubling that 1 original grain of rice, you'll have more than enough rice to feed the world.


The British cycling team is a famous example of using small improvements to make big changes. By examining every part of their system they went from worst to first. When they began their journey of making everything 1% better it paved the way to big success. It started with examining training and went to studying parts of the bike and uniforms. From there they explored things such as different paint colors to better spot dust in the gears, massage gels for faster recovery, and improved pillows for better sleep. It ended with multiple Olympic gold medals and Tour de France victories.


When you put systems in place, it's easier to grow faster. Building on previous successes is much more efficient than starting new processes over and over and trying to find success from scratch every time.


Doing little things consistently in the same space can create a snowball effect. The more you roll the snowball the bigger it gets until it eventually becomes an avalanche.


Understanding biases can greatly improve the quality of your life. The sunk cost fallacy is one example of a very impactful bias. The sunk cost fallacy says that the more time you put into something the less likely you'll be willing to quit. You can use this bias to optimize compounding for your benefit. Other times you may want to be aware of it so you can be better prepared to pivot.


One of the most common places where we hear about compounding is in financial investing. Investing less money when you're younger can turn into huge gains by the time you retire. People who start investing small amounts at a younger age, usually have more money when they retire than someone who invests larger amounts but starts later in their life. It's not about timing the markets, it's about time in the markets.


Timestamps

0:00 Intro

1:05 The magic of the compounding principle

3:05 How the 1% rule can make you 37x better in just one year

4:35 How the British Cycling Team went from laughing stock to dominant winners

8:25 Why Success leads to more Success

9:19 The power of anchoring habits

9:50 The vital role that consistency plays in growth

12:39 Using the snowball effect to achieve your goals

15:40 Leveraging the Pareto Principle for monstrous growth

17:00 Understanding biases to improve your life

17:57 The sunk cost fallacy and relationships

19:50 The greatest predictors of successful relationships

20:33 The brilliance of Warren Buffet

22:31 How to create better outcomes in a shorter time

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