The decision to start a company is a relatively mad pursuit.
Anyone who chooses to found a startup does so because they believe — however irrationally, given the countless ideas out there and high likelihood of failure — that they’ve thought of something valuable and novel and worthwhile. And yet, the best founders pair that obsessive drive with strategic rationality. The Big Idea can be powerful enough to shove you to the start line, but it’ll never be the thing that gets you to the finish. Instead, it takes a thousand small ideas and decisions to create a lasting business.
Most experts in the field agree that execution is harder and more important than ideas. That accumulation of tiny correct decisions enables compound growth. A good way to understand compound growth is with a question: would you rather have $1 million on May 1st or a penny that doubles in growth every day of the month? Most people would take the much-larger lump sum, but it’s actually the magic penny that’ll be worth more than $10 million on May 31. The magic of compound growth is that snowball effect: as the pie grows, so does each slice of it. Grow 20% in your first year and you’ve lit a spark; grow 20% for five straight years and you’re on your way to building a wildfire.
Attaining compound growth — in your business and in your life — calls for two related, but separate skillsets: focus and understanding.
Focus in the sense of diving deeply into a task or problem and avoiding distraction; Understanding in the sense of knowing where you should aim that focus and where you’d be better served by delegating.
A great CEO doesn’t always know more than a bad one; they merely have their unknowns better organized. The key to compound growth is finding your superpower as a person and as a company, and then outsourcing everything else.
Compound Yourself
The opportunity for distraction is ever-present. Each of us moves through the world with an ultra-powerful computer constantly within our reach — and these devices are designed specifically to capture attention.
But if we understand compound growth as the positive accumulation of small, targeted actions then the ability to resist distraction proves essential. Wasted time should not just be quantified in the minutes lost — it should be Minutes Lost to a Factor of X because each of those minutes could be diverted to the exponential growth of a skillset.
Expertise and new learning have value; building your skillset on Candy Crush or mindlessly browsing Instagram does not. But the same distracting devices in your pocket can be resources to learn at an until recently unimaginable scale. They can be roadmaps to true mastery in new languages, in cooking, or countless other fields.
So, don’t dabble; dive in. Even if that just means rerouting an hour a day towards the building of a skill, that investment adds up. Small investments made regularly throughout a lifetime is the key to wealth building — the same that’s true for your savings can be true for yourself.
Expertise breeds confidence and connection; it can have effects in seemingly unrelated spaces within your life. As a skillset grows, it can also leak out to other parts of your life; the growth can show up at work and in your relationship.
Become Your Own Manager
Time is limited.
To truly nail the task of compounding yourself, what you spend your time on is just as important as what you don’t.
Become a good manager of your own schedule: do not waste time on things you’re not good at or don’t hope to become good at. If cooking isn’t your thing, spend that hour each night doing something that either brings you joy or that you hope to master. If you can afford it, outsourcing can carve out the space to create compound growth.
Finally, it has to be said (loudly): this does not mean you should only spend time on things you plan to master! There is value in distraction — a life without it would be extremely dull. But it’s important to be clear-eyed in how one spends their time and energy.
As Head of Product Adam Spector explains, “I’m not a professional stock trader. It’s not my day job. Even professionals rarely beat the S&P 500. Yet Hari (my co-founder) and I still like to trade stocks. Why? It’s fun and a good distraction here and there. I recognize that as a worthwhile distraction.”
He knows, rationally, that outsourcing the task would save time (and probably create more profit), but he’s made a choice because the distraction has its own inherent value. If you investigate your distractions with this rigor, it’s likely that you’ll recognize the ones that are worthwhile and the ones that are not. Eliminating the latter will create valuable space in your life.
Compounding Your Business Success by Outsourcing Operations
Sir Isaac Newton’s metaphor of “standing on the shoulder of giants” has become a favorite metaphor for the progress of knowledge for good reason. It’s a perfect image of how the work of those before us helps build the future.
Founders use this idea regularly when creating product: every time a library of open-source code is leveraged, every time a design is iterated upon, every time software is used to create something new, giants’ shoulders are being stood upon. But those same founders that intrinsically understand the value when building product, forget the idea when dealing with operations.
Founding a company takes a specific mindset and skillset — you are most likely creative, driven, a good communicator, and a bit quixotic. But are you skilled in accounting? A gifted writer? An expert at planning parties? Probably not. (And even if you are all these things, is it really the best use of the founder’s time to write ad copy and plan the Christmas party?)
This is where the ability to prioritize and sort through distraction becomes essential. The essential questions are: “What are you best at?” and “What would be valuable to learn?” This is the moment of superpower identification — the more realistic you and your cofounders can be, the better your startup will run.
Outsource the Rest
Once you understand the places you’ve already mastered or plan to master, then make it a priority to outsource the other tasks to others. Hire a content writer who’s spent years building a skillset. Hire an accountant who knows tax code like the back of her hand. Rather than becoming a giant in every slice of your industry, hire giants to knock out specific tasks or special projects. The amount of time it would take for you or your cofounder to build expertise is not an efficient expenditure: time is money, and a founder’s time doubly so.
Think about it another way: outsourcing work to experts does cost money. Finding a new customer or launching a new feature that reduces churn adds money. Which one is more important in the long-run? Easy answer: every new customer and every new product feature creates compound growth. And compound growth is what fuels lasting companies.
Don’t Be Penny Wise and Pound Foolish
Each correctly selected outsourced expert is an incredible value-add for your company’s growth. You’re acquiring thousands of hours of expertise building and aiming it at a specific problem with tools honed to solve that problem.
With that specific hire, you’ve exponentially grown the skillset of your startup in a time-efficient and relatively affordable manner. You’ve also freed up the time to focus on the most important thing: your product and your customers. That’s what spurred you to take the leap and start this company — the more you focus on them, the more your product will grow.
Presumably, you are passionate about the problem that you set out to solve with your startup, not everything else involved in running the business (RTB). By reducing work distractions, you can spend more time focused on the parts of a business that truly compound: a fantastic (and constantly improving) product and a satisfied (and constantly growing) customer base.
A startup is a collection of people tackling a collection of problems — rather than having one person do many tasks at varying levels of mastery, having a master attack each problem will lead to the most efficient and effective solutions. Prioritize and outsource and you’ll start to see that compound growth.