$80.7 billion of Warren Buffett's $81 billion fortune came after his 50th birthday.
This magical force called "compounding".
For my unitiated friends, compounding is earning money on your money.
If you earn 7% on $100, you get $107. If you earn 7% again you don't just earn $7.
You earn $7.50 because you get to earn 7% on your bigger base of $107.
Over a long time, this makes a massive difference.
Here's what I mean:
1% better every day for a year = 37,778% gain
1% worse every day for a year = 97% loss
But I'm not here to be your 8th grade math teacher.
Everyone thinks about compounding with money.
Because it's easy to quantify. But I have a core thesis:
You need to apply compounding to everything in life.
Let's apply it to relationships...
"Your network is your net worth" is a super cringey cliche.
But there's something wrong with coffee-infused networking chats with strangers where you beg for a job.
You're building hyper-transactional relationships. Nothing compounds.
You kiss their ass a few times and hopefully they give you a job.
Then you disappear into the ether until your next job. It's similar to dumping money in the stock market for a month then selling it.
And this is how everyone approaches network building.
Let me give you another example:
If you move to a new city every year, you make new friends and build a new network.
Then you leave.
You have 0 compounding value in your network and relationships.
Instead, what if you move to New York City and spend 10 years compounding relationships across your industry.
Who will be more successful?
The guy or gal that lives in 10 different cities with 10 different networks of transactional relationships.
Or the one who lives in 1 city for 10 years and compounds their network exponentially over time.
This is why digital nomading is a terrible idea.
Once you realize this concept, you see it everywhere:
Go on 1 date / week with a new person - you build 52 transactional relationships a year.
Go on 1 date / week with the same person - you build a 52x compounding relationship.
I have a hard to follow but simple rule for 2023:
Become allergic to relationships and decisions that don't compound value.
You can apply it to your network. You can apply it to friendships. You can apply it to business. You can apply it to you love life.
The category doesn't matter - the philosophy does.
Now go do it.
p.s. if you loved this, forward it to a friend. If you hated this, forward it to an enemy