A Compounding Life

If you don't own a business - read this

About

• ⏪ Quick recap about Compounding

• 👨‍💼 How Business Owners Compound

• 👩‍🚒 I bet you aren’t doing some of these list

⏪Quick Compounding Recap

Compounding is a process where the value of an something grows exponentially over time because the earnings on the investment generate their own earnings.

Just unpacking this quickly. If you invest in the S&P 500 and it returns 10% on average and you have 40 years to retirement - your future amount (FV) if you had $100k invested is 1.1^40 * 100,000 = ~4.5 million doll hairs.

👨‍💼Business Owners and Compounding

Lets look at the big daddies of wealth creation - business owners. From what I’ve seen in life, if you ask a bunch of wealthy people how they made their money - from owning or a business or investing; they are most likely to say - from owning a business.

What do business owners do to create compound returns?

• Take a markup on Employees

• Have Reusable Assets:

  • Code

  • Tests

  • Marketing

  • Systems

  • Frameworks

  • Automation

• Duration in the game

• Building a Brand

• Employee Development

Therefore the ideal is assets is one that:

gets utilized for a long period of time, providing a return over and over again

👩‍🚒If you are not a business owner

It would be foolish to leave the only compounding force in your life - to just being your retirement account.

Why not compound other efforts?

If you don’t own a business and don’t have employees you can:

• 🏆Brand - Make yourself the brand

  • Be friendly, fun, outgoing

  • Be the best at the job

  • Don’t burn bridges

  • When you leave, leave on the best possible note - they should be remorseful that you are leaving😢

• 📬Network - Grow it

  • Grow your network - spend a few hours per month

    • Be active in going to events

    • Even if they are leftfield to what you do/know

  • It takes effort, time and money but that is an investment. Remember - investments pay compound returns

• 🤝Network - Join Networks together

  • My definition of value is -

    “an exchange between two consciousnesses of something deemed less valuable for something more valuable”
    Or in this context - there is huge value to you connecting two people who don’t know each other with a solution that the other is looking for.
    Those who constructively join disjoint networks are highly valuable.

• 👯Network - Common Connections

  • If you share a common connection that trusts you and speaks highly of you, you’ve now got a very powerful “in”. Lets say the common connection can give you an in to 20 people that connection has a multiplier effect or a 1:20 ratio. If you have a bunch of these people thinking highly of you - you have a very powerful outcome.

• 🕰️Duration

  • The longer you stay in the game:

    • the larger you network will be

    • the more knowledge you will have

  • Imagine changing careers every 10 years. Domain specific knowledge that you have amassed can get thrown out when you pivot careers (aside of general life/project experience). I’m painting with broad strokes here but you get my point

• 💰Assets

  • Imagine hiring a consulting company to do a job and they show up on day one with nothing. No frameworks, no examples, no code, no templates, no presentations, no educational materials, no starter kits, visuals, scripts processes - nothing - blinking slowly
    
    The reality is they don’t. They show up with a shit-ton of tools ready to be unleashed on the engagement.
    
    What makes companies special that they can do this but you as an individual cannot do this?
    
    A company is an entity, you are an entity. There is no difference.
    
    Nurture, collect and bring tooling whenever you switch companies -
    I command you.
    
    The probable reason companies do this intrinsically is:

    • If they are not profitable they will die and cease to exist

    • They have to scale by making repeatable processes out of everything

    Therefore these assets are created and long lived due to natural company processes.
    

  • Companies use their power to try to enslave employees, stop them from competing, stop a leak of knowledge, get competitive advantage.
    
    They are greedy.
    
    Be a wealth creator - go against the grain. I give you permission. Emulate exactly what a business does

• 🧙Education - Be a forever learner. Once you know your profession inside out. Move onto Marketing, Sales. Aim to spend 2% of your gross salary on education.