Increasing returns to focus

Range is how you find the thing worth focusing on. It isn’t how you win at it. People who have built phenomenal careers with outsized returns explore widely, then do one thing at incredible depth for an astoundingly long time. In the next few decades, those who do this stand to profit even more than they have in the past. We’re entering the era of “increasing returns to focus.”

Why?

Generational factors:

(1) Highly leveraged technology (read: AI) allows you to do more with less. One-person billion-dollar companies are becoming possible (although arguably this has been done with Bitcoin). The flipside here is that finding the ‘needle in a haystack,’ the few tools that matter is getting harder as the barriers to creation become lower—there are more tools than ever.

(2) Advanced civilisations favour high levels of specialisation (Will and Ariel Durant, Lessons of History). And as, Naval has said, in the modern world, “If you’re the best at something, you get to do it for everyone.”

(3) Opportunities to get rich are abundant. It’s hard to argue that there’s never been a better time in history—globalisation and the number of markets, social media, access to capital, access to knowledge and playbooks—to become wealthy. The flipside is that shiny object syndrome has never been more pervasive. Choosing ‘one thing’ feels crippling and challenging existentially: a reminder that we are in fact finite individuals (cue: Oliver Burkeman).

(4) Digital distractions are still underestimated. Bill Gates once ripped the radio out of his car so he didn’t think about anything but Microsoft: “Hey Bill, did somebody steal your radio?” asked Michael Moritz. “No, I had it taken out myself,” replied Gates. His reasoning was: “If I’ve got the radio, I’m afraid that I’ll switch it on and I won’t be thinking about Microsoft.” Those who sail the breadth of their ocean without being pulled off course by the godly current of distractions stand to receive the lion’s share of outcomes in their domain.

(5) Rising global equality of opportunity, ethnicity, and gender means that the world has never been more competitive. Every vertical in the future will be crowded. If you’re not maniacally focused on doing one thing well, someone will do it better.

The normal factors of compounding:

(1) Iteration. The value of any great creative act—whether building products, companies, or films—is in the thousands of tiny details that you earn the right to work on after taking care of the large details. The most advanced people do the basic things better than anyone else.

(2) Switching costs. The ‘local’ or immediate cost of switching between tasks or projects is often low, but the ‘global’ or cumulative cost measured in years is incredibly high.

(3) The clock resets each time you change direction. When you change direction and begin working on a new project, idea, or company, you fiercely interrupt compounding. You’re not only changing “P,” you’re also reducing “R” and, of course, “T” on whatever you’re switching to (see image).

The range vs. specialist conversation is mostly people talking past each other. “Range” is essential when you’re young because it cultivates broad interests, skills, knowledge, etc. To maximise the growth rate and compounding in the long run, specialising is numero uno. There’s a reason that the top 0.01% of entrepreneurs, investors, athletes, and creatives all harp on about one thing: “Focus”

Steve Jobs to Jonny Ive: “What have you said “No” to today?” Warren Buffett: “The difference between successful people and very successful people is that very successful people say ‘no’ to almost everything.”

The best strategy has been and always will be, as @rickbuhrman and @paulbuser have so eloquently articulated:

(1) Find “P” your passion or purpose or the thing you commit to working on

(2) Improve “R” your rate of improvement or quickly you can compound

(3) Nurture “T” the duration of compounding

The question becomes, “Okay, that’s great, but how do I find “P?”

My answer so far:

To find your P:

Increase these:
– Iteration cycles: if you have a hypothesis, give yourself uninterrupted time to validate/invalidate a pathway
– Raw inputs: conversations with people who have done interesting work, books, exposure to interesting problems in the world
– Reflection: thinking and reflection. Uninterrupted, unbroken, undisturbed
– Feedback: what do your parents say you loved as a child, what do your friends say you love, what does the ‘hypothetical’ market say you’re good at (i.e., where have you demonstrated excellence)
– Patience: trust and belief in the iterative and messy process of finding your path. As Steve Jobs has said: “The only way to do great work is to love what you do. If you haven’t found it yet, keep looking”

Decrease these:
– Memetic desires
– Social expectations, prescriptions on what/who you should be, defaults you’ve inherited
– Digital distractions
– Environments/people that don’t align with your ambition

Credit for the image goes to @rickbuhrman and @paulbuser from their brilliant podcast, The Art of Investing, now Joys of Compounding. I recommend it.

To improve your R:

Increase motivation by:

• Finding an ambitious group of friends; moving to a city (SF or New York) with ambitious, high-energy people
• Being around people more successful than you
• Visualising any or all of the below when required: not having what you want; having what you want—a vision that inspires you; people who have doubted you/criticised/or insulted you, and the specific moments they’ve done so; material things; people who have succeeded wildly despite the odds
• Focusing on the gain, not the gap
• Being outwardly open and honest about your desires
• Simplifying your choices. When you have no alternative your faculties are concentrated
• Calling your shot publicly or increasing the stakes of failure
• Committing to something where the upside is immense
• Setting ambitious deadlines
• Shutting off all communication with the outside world
• Creating a compelling us vs. them (or me vs. the world) mentality
• Restricting your resources to force creative problem-solving
• Practicing forced willpower activities (e.g., fasting every 4 days)
• Regular reviews and accountability checks
• Working on projects with a high degree of risk; something that’s uncertain

Decrease motivation by:

• Spending time with people who have a low bar
• Spending time with pessimists or complainers
• Spending time in uninspiring, low-energy environments (e.g., corporate office)
• Not doing what you said you’d do
• Thinking that it isn’t possible
• Drinking alcohol

To make the most of your T, choose the highest-leverage activities:

To increase your leverage, ask yourself before any activity:

• How could I complete this task in a fraction of the time to the same standard? (decrease time cost)
• What is the expected (confidence x ROI) impact of this task? (increase value)
• What else could I be doing that’s higher leverage? (opportunity cost)

To identify your highest leverage task, ask:

If I could only do one thing for the rest of the week that would have the greatest impact, what would it be?

• Are the results worth a multiple of time and energy invested?
• How many future hours of work am I removing by completing/automating/delegating this task?
• Does this solve a problem permanently?
• Does this get more work done?

If I could do one more thing, what would it be?

High-leverage activities:

• Outsized impact relative to time invested
• Reduce future time investment required to sustain something
• Use unique abilities
• Act as “energy multipliers”
• Have cascading influence to many people
• Remove bottlenecks in a system to increase throughput
• Remove excess from a system to increase throughput
• Have cascading influence beyond one area (global impact, not local)
• Focus on unique creation vs generic completion
• Impact individual people for the rest of their life
  

Low-leverage activities:

• Anyone can do them
• Equal or less output compared to input
• Provide services for a direct fee
• Repetitive and automatable
• Limited impact beyond scope (localised impact rather than global)
• Require little focus or concentration