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The Chosen Few,
Jewish community reaped the benefits of their investment in literacy by selecting into urban skilled occupations.”
We stop compounding our learning. Twenty years of living become the same year repeated 20 times.
One way of doing this is through networking. Each person you know has the potential to lead you to additional people. The stronger your network, the more influential or interesting the people you could get introduced to are.
When we create societies where starting conditions matter more than capacity and effort, we narrow the range of who can reap the benefits of compounding even if they start from nothing.
The Case for Universal Basic Income,
Compounding is an incredibly useful mental model because it requires us to think long term about our knowledge, experiences, and relationships.
Network effects set off a reinforcing feedback loop wherein the added value attracts new users, who in turn create new users. Getting network effects started can be difficult, as certain types of products and services have little use until they reach a critical mass of users. But once this occurs, it creates a strong competitive advantage over new entrants to the market, even if they have a better product.
However, first movers are not always the most successful in a market, as later movers can learn from the early mistakes.
Thinking about sampling can help us overcome some forms of bias. For example, we tend to place too much emphasis on anecdotes, in particular those coming from people close to us or that make good stories.
Randomness can be a hard model to use because humans aren’t great at comprehending true randomness. When we look at the world, we tend to see order.
« [T]he human mind is built to identify for each event a definite cause and can, therefore, have a hard time accepting the influence of unrelated or random factors. » Leonard Mlodinow2
In 1913, the roulette wheel in a Monte Carlo casino landed on black 26 times in a row.
Randomness as a model reminds us that sometimes our pattern-seeking, narrative-building tendencies can be unproductive.
« That is all there is to the 80/20 rule. We tend to assume that all items on a list are equally important, but usually, just a few of them are more important than all the others put together. » Hans Rosling1
Regression to the mean is a great lens through which to look at the world because it helps you put success and failure into context.
To say it is an order of magnitude smaller means it is a tenth the size.
Ignoring geographical accuracy, he portrayed the Tube lines as simple colored lines, with circles representing stations.3 In reality, neither is laid out in a logical manner.
The story of a new product, from conception to widespread use and high market share, is usually one of ups and downs.
There are so many facets of business to learn, from production to sales to marketing, that for novice businesspeople trying to turn their great idea into a successful sales story, there are usually a few mistakes along the way.
Using the model of global and local maxima helps us remember that we often cannot reach our full potential if we aren’t willing to stretch ourselves, take risks, and fail once in a while.
We need to make the big changes first, before we try to optimize the details.
It encourages us not to see achieving our goals as a steady upward trajectory but as a path full of peaks and valleys.
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