Issue #1 | 16th Jan, 2021
Hi and welcome to the very first issue of the Curiosity Catalogue. For those of you acquainted with my previous newsletter, the subject of today’s issue is a different from the trivia-y stuff I usually write about, but is fitting for new beginnings.
For 2021, I’ve tried framing my ambitions differently than I usually do. I didn’t see a point putting a list of goals together. I had enough on my plate to work on/towards, what I needed to figure out was how to work.
In my search for coherently articulated thoughts on better ways to work and grow, one idea stood out above others - compounding.
The essence of compounding is this - regular inputs can yield a greater than proportional output, and over time, can really add up to significant outcomes. 1+1 can be greater than 2. It requires, however, the patience to stick with things for the long run, and the faith that there will be a payoff. (There can also be a down-side to compounding - the way cases in a pandemic increase exponentially, for example.)
Compounding is popular in the world of finance and investment. Here, it translates to the belief that regular investments grow exponentially if allowed to mature over a long enough duration. It becomes an insurance against short term volatility as well as a path to long-term success, and is a central lesson repeated by Morgan Housel in his brilliant book, The Psychology of Money.
While emphasising the importance of longevity to compounding, Housel gives the illustrative example of Warren Buffett. Here’s a quote from an article he wrote on Buffett (also discussed in the book), that makes clear just how powerful compounding can be:
Buffett began seriously investing when he was 10 years old. By the time he was 30, he had a net worth of $1 million, or $9.3 million adjusted for inflation.
But what if he was a more normal person…and, by age 30, his net worth was, say, $25,000?
And let’s say he still went on to earn the extraordinary annual investment returns he’s been able to generate — 22% annually — but quit investing and retired at 60…
What would a rough estimate of his net worth be today?
Not $81 billion.
$11.9 million (99.9% less than his actual net worth).
By Housel’s calculations, the extra 50 years of investing (between 10-30 and 60-90) made Buffett’s total investment period 2.6 times that of the average person, but it made his wealth 6,806 times what it would have been. To take it a step further, in his 91st year, assuming the same rate of growth, Buffett would earn about $16 billion, over 1700 times what he earned in his first 20 years.
My personal takeaway from this had little to do with finance. Like I said, it drove home the power of compounding, which was reinforced in a context more appropriate to my new-year need in James Clear’s book Atomic Habits. Clear’s book is explicitly about this, and it’s basic logic will seem intuitive and commonplace - when trying to achieve something, drastic action in the short-term is usually unsustainable.
His recommendation? Small changes, continuously repeated over a long period of time. He offers back of the envelope calculations to support this idea. A one-percent change implemented every day, he says, will leave you 37x better off in a year than where you began. These 1% changes aren’t about whipping yourself into frenzied motivation everyday, but about small adjustments that make good habits easier to do and bad habits difficult, which add up over time. To quote him:
“Every action you take is a vote for the type of person you wish to become. No single instance will transform your beliefs, but as the votes build up, so does the evidence of your new identity.”
The underlying premise to compounding here and with money is momentum - it takes time to build, but once it does it’s also hard to stop.
The principle of compounding applies equally to education and life experience, I realised, while reading Range by David Epstein. The book doesn’t explicitly address this, and I’ve had to some mental acrobatics both with his ideas and the idea of compounding to make my point, but I hope it makes sense.
The premise of Epstein’s book is that a range of experience and knowledge makes you more competent most times than hyper-specialization in a particular domain would. It goes against conventional wisdom that prioritizes head-starts, repeated practice, and the pursuit of familiar paths.
Epstein looks across domains to test this theory. He’s proven right across contexts - great sportspeople and musicians tend to play a variety of games or instruments, as the case may be, before settling on one; Nobel Laureates are 22x more likely to have a hobby outside of work than non-laureates; for successful comic-book creators, the greatest determinant of producing a blockbuster hit is experience across genres; and in research in technology, the most innovative patents are being developed by teams of people from across domains.
A wide range of personal experience give you a sampling period, as he puts it, and helps you better match you’re good at and what you want to do. My friends who are early into their professional life but have already switched jobs a few times will likely empathize. He says, aptly and poetically, “We learn who we are in practice, not in theory.”
A range of experience also broadens perspective. It creates a wealth of knowledge that can be applied across domains. Again, to quote him,
“…breadth of training predicts breadth of transfer. That is, the more contexts in which something is learned, the more the learner creates abstract models, and the less they rely on any particular example. Learners become better at applying their knowledge to a situation they’ve never seen before, which is the essence of creativity.”
This works particularly well in what are called ‘wicked learning environments’, he notes, characterized by unclear instructions, next steps and goals, erratic feedback, and constantly changing conditions - a fair description of what life looks like today. Here, specialization can be the enemy of adaptation.
Here’s how compounding comes in. Consider each domain you have knowledge of to be a book. Assuming you’re an intellectual blank-slate, reading one book gives you the knowledge of only that book. Reading a second book, however, gives you more than just the additional knowledge of the second book. You’ll find connections between the two and create new knowledge in the process, so the total gain is greater than what either taught you individually. There’s a greater than proportional return, the whole of what you gain will be greater than the sum of the parts, and 1+1 is more than two yet again.
There’s a caveat, though. If you work towards compounding knowledge in this way, early on you’ll likely fall behind specialists. They follow more defined paths, and are ready to step into a particular set of shoes that already exist. What generalists gain is the ability to step into a number of shoes, and ones that aren’t likely to wear out as quick.
Patience is necessary, because it will take longer to get there. It does seem to pay off in the future - Epstein shows that the gap in earnings is offset in a few years, and the peak to be reached is higher for generalists. A lesson from the pandemic applies here as well - in a fast-changing world (a wicked environment on steroids, in this case) where entire domains can be rendered redundant for periods of time, the ability to be prepared for alternatives becomes invaluable.
The Round-up
If you’re looking for other things to read, watch or listen to, here’s a small curation of stuff:
A 25-Year-Old Bet Comes Due: Has Tech Destroyed Society? (article): In 1995, the editor of WIRED, Kevin Kelly, had a bet with a self-proclaimed Luddite doom-sayer, Kirkpatrick Sale, about the fate of the world. Sale predicted that technology would accelerate the end of humankind as they knew it then. Kelly, a big believe in tech (he was the editor of WIRED, after all), stood staunchly opposed. They put $1000 on it, and last month, the bet came due.
A Scientist in the Kitchen (podcast episode): In episode 204 of The Seen and the Unseen, Amit Varma talks to Krish Ashok about Ashok’s new book, Masala Lab. The book is a light-hearted but stunningly informative look at the science of Indian cooking, and their conversation about it had me beaming from ear to ear throughout. You can also look for it on whatever podcast app you use.
Ali Abdaal’s YouTube Channel: This recommendation is for those looking for ways to be more efficient with work. Ali calls himself a “productivity grease-monkey”, and has amassed quite a following making content on the subject. You can get started with this video he made on Atomic Habits:
In case you want to get copies of the books mentioned above, here are links to them: The Psychology of Money; Atomic Habits; and Range (or give a nearby bookshop a call).
About me: I'm Shantanu Kishwar, a history buff turned policy-wonk, travel fanatic, and hummus-maker extraordinaire. I currently work as a Teaching Assistant at FLAME University, Pune. You can follow me on Twitter and Instagram.
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