Okay, got something for you. So let's talk about compounding. Let's talk about compounding. in general compounding interest whatever so this is something that's been rattling around my brain is what else in the world compounds besides your investments in the stock market, you know? So like putting money into an index fund or whatever, you put a hundred dollars in after a year, you made $10 on that.
now you have a hundred and ten dollars and you wait another year and that hundred and ten dollars if that makes ten percent now you have made eleven dollars so now it's a hundred okay whatever you know compounding well you know this this is so silly but like how many days hold on i gotta put this mic down i'm sorry for the noise um how many days okay uh So you probably heard this. I think my grandpa used to say this. There's some...
It's like, would you rather have $10 a day or like $100 a day for a month? Would you rather start with one penny and double it every day for 30 days? And if you do that, if you start with one, this still kind of boggles my mind. If you start with one... penny and double it every day for 30 days you end up with over five million dollars isn't that wild because that's compounding is this it's exponential um okay so it's
It's starting to work for me a little bit. Like I'm starting to see my net worth compound after being in the stock market for like 10, 12 years. And I know that 30 years from now or whatever, it's just going to be like... you know, the gains are going to be wild and I will have done nothing extra. It will just be my money is making more money and that more money is making more money. And it's this really cool thing. So anyway.
That's a powerful thing. And when I see something like that, it's like, this is... This is one of those fundamental deep truths, those resonant truths. It's just like a truth in life. If you want to be a smart life person, you sniff out something like compounding interest and you sense a big, big lever and you go, oh, oh, oh.
so all i have to do is pull a little bit you know on this thing and the force way at the end of this thing is going to be um magnitudes larger than like the effort i put in you know this is kind of dumb i'm describing literally a lever but that's what leverage is it's it's mechanical advantage this is financial advantage
In the same way that, you know, with the long enough, whatever, you can move the earth or whatever. What did Archimedes say? With a long enough lever, I could move the earth or move a mountain or something. And it's true. It is wild. Like you ever use a breaker bar? Like you can't get like one of the lug nuts on your tire off. You just can't with all your force. You're jumping on the tire iron. Like you can't do it. But as soon as you...
throw a breaker bar on there, which is just like whatever, like a four foot tube. And then you go to the end of that four foot tube and you turn it and now it's easy as cake. And so I'm always like, I guess leverage. That's, that's the thing to sniff out. That's the thing to sniff out. Okay, here's why I'm not, I'm like, okay, compounding interest is awesome. It's this powerful thing. So I want to figure out like, what are other things in life?
that compound and if you type this in the chat gpt or you've heard other people talk about it or you've seen some feel good you know tweet or youtube short about it you might read things like You know, do things that compound, like, you know, not just the stock market, like relationships compound and knowledge compounds and whatever. That stuff, like, just doesn't feel that true to me.
You know, here's why I don't think relationships compound in the same way that the stock market does. You know, it's like, yes, there are network effects, of course. Network effects, that's actually a form of compounding. That's a true form of compounding. It's like, if you have a business, like my first business, the skinny kid films, like the reason it was successful fundamentally was because everybody who. Got a wedding video from me, posted it on social media. And so everyone else.
on their list saw that and they go so then when they got married they're like well we want to just do whatever that person did and so it grew in sort of that exponential way because of those networking effects. It's like one person hears about it and they tell two people, those people hear about it and they tell...
They each tell two people and now you have this, you know, thing. Okay, so that is compounding. But personal life relationships, they're valuable and they build once you meet someone, it unlocks meeting other people. But real relationships are difficult to make. maintain. They require an investment. There is a hard cap to how many relationships you can reasonably maintain, which...
Relationships are not compounding in the way that the stock market is. Scrap that. They grow. They're good to invest in. Good. Fine. But that's not it. Knowledge. Is knowledge compounding? If I learn something about something, does that now help me learn another thing about two things? And it's like, yes, it does, kind of. Knowledge is valuable.
And I think it is true that once you have more knowledge in different areas, you can draw connections between things. And that's some, it's like somehow. smells of compounding a little bit. But the problem with knowledge, this is my fundamental problem with investing in knowledge, is I lose it. I fear that... I'm just not great at retaining knowledge. When I absorb things like books, podcasts, like things like that, I am aware now of how much of it just kind of goes out the window.
slowly over time. It decays. Knowledge decays. Some of it stays around, the useful knowledge that gets used a lot, but a lot of it... doesn't stick around uh and i know that it's still useful in ways and it built up other pieces of knowledge that are still used but whatever it's just it's not it's not the same it's not putting a hundred dollars in the stock market and letting it do the work for you for your life i don't think there's anything that is
I can't think of anything that is truly passive like that. Like that is a powerful thing. So really the main point here is put money. in the stock market okay do that let let money passively make more money for you and let that be a massive tailwind in your life. Do that. Okay. And then these other things like knowledge and relationships, grow them, invest in them. They are valuable. They are not, there are things that are useless.
to invest in. These are not useless things to invest in. There are also things, I sort of think of it like when you talk about work and it's like, you know, you're selling your, let's say on one end there's slavery. You're doing work. For nothing, you know, or you might call it volunteerism. That's the extreme end of the spectrum. And there's similar things in life to what, to that. That's like.
Maybe investing in a relationship with somebody who is toxic or somebody who is unreliable or whatever. It's like that is, there's no return there. In fact, there's a negative return. Now think about selling your time for dollars, doing freelance work, working as an employee, your hours turn into dollars. That is good. It's good to do that. and that is work in value out
but there's no lever, there's no building, there's no passiveness to it. And then there's selling a product that you can sell multiple times or hiring people to do work for you and you can capitalize on that. Those are the things that are more compounding. And knowledge can be...
that you know knowledge can be a little bit like that but i'm saving one because i think there's one of these things that you hear is compounding i think is actually more compounding than the rest it's nothing is nothing is the stock market Put your money in the stock market. But if we're talking about other things in life to invest in, here's what it is. And here's what I would say. If somebody came to me and was like, what do I do with my life? Which I do talk to people.
like this and so charlie munger is sort of a an idol of mine and he's got this bit about like you know people coming to him and saying you know, how do I become a billionaire or I'm in law and I want to get out of it. I want to do something else. It's higher or whatever. It's like, and, and he says, he tells the story about Mozart.
You know, somebody comes up to Mozart in their 20s and says, I want to write symphonies. And Mozart says, you're too young. And they say, you started writing symphonies when you were 10. And Mozart said, yes, but I wasn't going around asking people how to write symphonies.
and it's like that is so true there are so many people who have you know come up to me and like oh like you know you're successful in some way and you love doing what you do or whatever it's like what what should i do what opportunity you know and i'm always just like eager to to brainstorm with somebody about their life and improving themselves and i think that's great and people should whatever but there is some amount of like yeah well there's a bias here because
Some of like the degree to which I am successful is because I never thought about it. I never asked anybody like what path to take. And it's like you hear people talk about brainstorming like a business venture. You know, it's like, that's just not how it works. It never works that way. It's just.
falls in your lap you're just doing work you're doing something and then something emerges in the process of doing something you recognize a need or an opportunity or whatever it's never just sitting down with a napkin and figuring out the next app idea you know and similarly
I think in life it is that way where it's like, yeah, sitting down with a nap. For most people, if you're thinking that that's how it's going to work, you sit down and you go, what's a good career path? And I'll choose that. I'll go do that or whatever. That's just not how it is. It's like, I think really successful. people. It's like, you never asked, you know, what, how do I do this? It's like, you just kind of got into it because you're whatever, whatever. Okay. Back to business.
So compounding interest, great. Okay, what other things compound? I start to think about this. And so I'm like, what about skills? So that's something that comes across the chat GPT list of things.
Yeah, like what about skills? Are they compounding? And here's what I realized. Skills are better than knowledge. I've always felt this way and I've... practiced it because so i like skills i like getting good at things that's just something that has always been in my nature and i think and then so i know people where knowledge is their thing
Skills are not their thing. Knowledge is their thing. They're big, big documentary watchers. They're big, they're readers and all of these things. And that's great. And being a thinker and having a lot of knowledge is probably a big advantage in some ways. But if I'm putting my money, if I'm thinking about a person as an investment, I'm going to bet on the skills person every day over the knowledge person. Again, because knowledge decays and...
Knowledge is always just like a tool to an end, you know, where skills is the end. Skills, it's skills. So if that person is coming up to me and asking me, you know what do i do with my it's whatever it's like so here here's the skinny and then we'll dive into it it's learn skills get very good at things Pick one and do it and then move on to the next one, whatever. Get very good at maybe never move on. Maybe stay with one skill your entire life. Get very, very good at something. Ideally.
If money is what you desire, find something, a skill that is marketable, obviously. But I think that's even bad advice. It's like once you become incredible at something, this is the compounding part.
There's two elements of compounding with skills. One of them is when you become incredible at something, you've just gotten much better at becoming incredible at things. That's one bit of truth, I think. The second bit is that... the actual tangible skills you picked up are probably applicable are probably a building blocker part of another skill so now you can kind of move around the skill landscape a little bit more freely
And if it's money you seek, you can hop over to one that's a little more marketable because the marketability of skills, that's a whole other discussion to think about is like.
What determines the marketability of a skill? Because I think it's somewhat preposterous that one of my closest friends is a dedicated lifelong violist. Is that how you say it? He's... in uh he plays in philharmonics you know and around the country and he's incredible and has dedicated his life to this he's done he is more skilled at playing a viola than i will ever be at anything
And he's the kind of, you know, you have to practice for eight hours a day, minimum. And if you're going on vacation for a week, you have to bring... your instrument and continue practicing so that your muscles don't atrophy it's crazy it's pro level something okay i will never be to that level but being a great violist is kind of it's not marketable
Like these people in these, these orchestras, even in big cities, they don't make that much money. Developers make more than they make often. Like rank and file devs make more than. than incredibly lucky and skilled musicians. And I say incredibly lucky because it is so difficult to land these jobs. The competition is unbelievable. Okay. So there's so many things like that. So what goes into a skill being marketable, whatever, but okay.
Um, it probably mattered. Like if it's money you seek, try for the marketable skills, you know, but definitely it's honestly, it's just more important to try for skills. Um, so skill arrow money arrow stock market. get really good at stuff, extract money from being really good at those things, put that money in the stock market, let it compound. That's the formula for life. That is the success formula for life. Okay. Let's talk more about skills because I think it's fun.
It's a fun thing to talk about. So I was trying to think about, like I was just saying, like what ways that skills compound and that first way that I mentioned where. you learn a skill and now you're better at learning skills. I think that is absolutely true because you know the right question. It's like if you learn, you know, if you become a very good programmer, you...
You've undergone the process of going from knowing nothing about something, not even knowing the questions to ask, to then learning how to ask the question, to learning how to find the questions to ask. That's what it is. And then figuring out, you know, like finding how to identify authority in a field and learn from that and how to sort of shortcut things by choosing an objective and you know whatever we talked about this in the after effects episode um the last episode but
I think it is very true. Once you get good at something, you're much better at getting good at something. Real recognizes real also is I've never been... I've been... 80 percent at things and programming is a weird thing because it's not like it's not like a skill in the traditional sense but as far as like things in my life if we if we judge skill based on how many people look
up to you as an authority figure in a field, then programming is by far and away the thing in my life that I've invested the most in and become the best at. And because I've sort of gotten to a level... in software and again it's funny because you can you can also like you i could easily look at my look at peers and people above me and think about how much of a um novice i still am but point is um sorry just stretching our neck here mid podcast point is is that um
getting really good at something real recognizes real you see what it takes and you see uh how it's rewarded and that's sort of um whatever it's just familiarity so you know what you're getting into and you can also identify areas where a skill is a little easier to attain there's also there this is part of the marketability of skills there's
I don't know. There's a lot that goes into this skill discussion. One random throwaway thought. YouTube showed me and Hannah this thing the other day, this like a British talent, British has talent thing. And this... kid who's like a little kid and he's a incredible guitar player and i'm like well i'm always up for that so i watch it and here's the thing he's not he has a viral video
and everybody gave him a standing ovation, and he has, and everybody, you know. But if you're a guitar player, you look at this and you go, oh, well, it's because he's young, he's cute, he has a great stage presence, and he knows a few of the tricks, like finger tapping. Can you hear that? Like that type of thing. Sounds like you're a guitar wizard. It's actually very easy.
It's a hack. If you do that on a guitar, people who don't know guitar think you are a god. But if you are a guitar player, you know that it's super easy to do. There are many more difficult things to do on a guitar. So I'm not trying to dunk on this guy. He's obviously like way talented for his age, but...
I've seen a hundred other videos of savant kids that could shred circles around this kid, but they don't have the look. They don't have the stage presence. They're not doing the dances and they're not using these hacks. So anyway. Skills are an interesting thing when it comes to like the marketability of them and the showiness. Like some skills don't, that's a quality of skills.
Some skills are very hard to attain but aren't impressive. People look at that and they think they could do it. Then there are some skills that aren't that there's like or often it's areas of a skill. It's like a gymnast, like something that is very impressive, isn't the hard thing. Something that's very hard is bright. And so you, if you've ever learned to do anything or play an instrument or juggle or whatever, it's, it's sort of that way. It's that some of.
the most difficult things are the least impressive to people who aren't involved in the skill and are looking at you, and that matters. But anyway, we're off the track. Let me get back to skills. The second quality of skills that I love, which is... this. If you, well, okay, here's an example. Let's do this live. I'm going to put this mic down. I'm going to pick up this thing next to me. I bought a ukulele from Guitar Center a couple weeks ago.
What you just heard on the mandolin. Make sure that this is still recording. Yeah. What you just heard on the mandolin. Maybe. Does that sound like somebody who's been playing the mandolin? for a couple weeks off and on like who's barely given it like total time on the mandolin five hours does that sound like somebody who's been playing the mandolin for five hours
Not at all. Do you know why? Because I know how to play guitar, so I pretty much already know how to play the mandolin. Same thing with it. If I play a ukulele, I'm playing guitar.
If I'm playing a ukulele, I'm playing guitar on easy mode. It's stupid simple, you know? A mandolin is different and is more difficult than a ukulele, but it's... it's a guitar there's frets you have a pick and you're moving your fingers around the fretboard there's a lot of little things that my fingers already know how to do you know um so uh
So because I learned guitar, I now, if I attempt to learn the banjo, the bass guitar, acoustic guitar, electric guitar, a mandolin, a ukulele, any of those instruments, I'm immediately very good at them. if i'm incredibly good at guitar i'm very good at those things and that is leverage you know um same thing with like also even just learning the guitar You know, I am sure I would suck at violin if I ever tried, but I'm positive I would be better than somebody who wasn't good at the guitar.
because they would pick up a violin and they their fingers my fingers are used to pushing strings down on a fretboard they know how to do a vibrato you know like there's things built into my hands now that work with a violin um so another area that i thought about this is racket sports like i think about like if you learn basketball if you get very good at basketball how transferable is that to other sports like some obviously like athleticism in general but
But not in the way that a racket sport is. Like, if you get good at tennis, you're already good at pickleball. Like, you could just pick it up and be good at it. I think you would be good at ping pong.
you're good at racquetball you're probably good at badminton you're good at squash it's like all of the this entire family of sports you're good at now you know like done um so sports is something that's like learning one unlocks a bunch of other ones sometimes um so i don't know other examples so here's like non-sports type well here okay similar if you learn if you're really good at halo like that was the only first person shooter i ever really played
before well i when i was a kid was halo and i got decent at it then when i picked up call of duty i was decent at call of duty it's like oh there you go and now that you're decent at call of duty fortnight comes out you're decent at fortnight you know what i mean you play a first person shooter you played one you played them all
In a sense. So that skill unlocks a lot of these other skills, which I think is a cool thing to think about. It's like, what are the, so it's not just the marketability of skills, it's the transferability of skills. That's another quality of skill that is important. Or is that part of the, it's leverage. It's another lever. It's you get things for free. That's what a lever is. You put a little in and you get a lot out. Another, like a soft example would be learning.
Sales and marketing. I'm going to say marketing in general. Learning how to market a product and sell it to people is a valuable thing in life. And let me draw a line for you. If you do that with a product. like an ebook okay you have a lot of skills and knowledge i should probably use the opposite example but if you want to open up a stand at a farmer's market you have a leg up
You understand things. Just because of my... I tripped over being into business and marketing. But just because I have had to do it, I now have an intuition about the... how good a business opportunity is basically it's like first thing i want to know what are the margins it's like i would never think about that but now i know what it's like
i know what it's like to have a good business and a bad business and having good margins is the first step it's like all right are you selling coffee in a cafe like what is the Like there's a problem right there is, is people not only are the margins horrible, they're horrible because people have an idea of what a coffee is meant to cost. They think they know what it's meant to cost. So you're locked in.
Same thing. I mean, a lot of things are like that. So like, is the business something that... is confusing enough that you can set a price or adjust it with inflation and people don't have an idea of what it's meant to cost and be mad that it's too pricey like that's one quality i don't know just one random quality of it um
that that that nuggets from i wish i could tell you the name of this youtuber that i like uh he's australian and he talks about business stuff and marketing okay um margins you know uh i mean there's tons of things it's um
That's all I know about businesses margins. So. Okay, so learning how to sell something like a digital product and then I go to a farmer's market and now I know a lot about like presenting myself and positioning a product and anchoring and pricing and... making myself stand out and making the value proposition simple and making it approachable and getting people in the door and a conversion rate and how to increase that and blah blah blah blah blah right
And then those skills, so they helped me at the farmer's market. But now think about like, if I just want to make a board game, if I want to design a board game, I'm better at it than somebody who's not good at marketing because I understand incentives. That's the thing that business teaches you is understanding incentives and understanding what you can do that makes somebody do something else, you know? And now you can make games because...
You can design a world where you can incentivize people in directions that are fun and competitive and result in a... non-boring experience, you know, because you understand incentives. And now that you understand incentives, you understand psychology and child psychology. And so now you can use all those things when you're parenting, because in the same...
The same way that you're trying to use the psychology of reciprocity to get more sales by like giving somebody something so that they feel like compelled to reciprocate.
It's like, well, you understand that you have an intuition for that psychological factor now. So now in your dealings with, you know, somebody on Craigslist, that's going to come through with your... with your spouse or your child you'll understand and have an intuition for how to get how to win friends and influence people you know
It's a book about business that is also just a book about life because a lot of these things apply on the spectrum. So those are skills that give you an intuition that transfers to a lot of other things and makes you a more skilled person in general. So this is a long episode to tell you that. Skills are what matter. Invest in skills. Skills are leverage. Learn skills and leverage them with other skills. Be a skilled person, not a knowledgeable person.
I consider myself a somewhat skilled person. I'm not that knowledgeable. I'm not great at takes.
uh take tweets take crap like that like people are great at that and that's entertaining and i love to follow people who are really good at that how everybody seems like certain people always have a take about i like feel like i never have a take about things um at least on the internet and and but but it's sort of what my identity is is like i am a skills person if i have to have an identity it's going to be yeah i like to do things and get good at them that's my thing i i don't
I'm not as good at talking about things, but I like getting good at things. I'm a skills person. Be a skills person. I'll be seeing you.