In Part 1 of this series, we spoke about some of the struggles transitioning from academia and learning the programming skills needed to work in a tech start-up. I spent a lot of time struggling to figure out how to build software, but there was a big problem: We were boot-strapped and anxiously watching the company’s bank account drain. We didn’t have TIME to research the best ways to do things, we needed to start making a product that we could put in front of customers NOW.
This was the second start-up for one of our founders and he had a phrase that was perfect for this scenario: “The most boring way to fail is to run out of money“. We needed to start earning revenue and that meant creating as many minimum viable products as possible to see if there was interest in the market for the technology. We needed to show customers what was possible and then double down on the ideas that grabbed the most interest. Also, do it fast before we run out of money.
But I still barely knew what I was doing! How do I learn what I SHOULD be doing while also trying to build things for customers at the same time? I also had two babies at home! How the heck am I supposed to get it all done?
Ramit Sethi uses the phrase, “Cut ruthlessly on the things that don’t matter to you and be extravagant with the rest“. I realized that some things could have way more impact than others. But how to figure out which? Over the years, I spent a lot of time trying to sort out what I should be investing in.
Compounding works for more than just money
Einstein said, “Compound interest is the most powerful force in the universe.” Most people only think about this in terms of finance when you have money gaining interest. However, it applies to so many other things as well. The sooner you can learn a skill, the sooner you can start using that skill for the rest of your life. You can leverage the skill to do more things than you could before. Some skills compound when combined with other skills and can sometimes accelerate the acquisition of the next skill (e.g. reading).
I think that how we spend our time offers the largest possible opportunities for leverage. Let me give you an example: Let’s say it costs you $100 to pay someone to cut the lawn. You could hold onto that $100, maybe invest it and cut the lawn yourself. You may earn interest on the money, but that time spent can’t be leveraged in any way. Once you know how to cut a lawn, doing it more times is never going to provide more long term benefit for you other than it’s a task that needs to be done. Now, let’s say you paid that $100 to get your lawn cut. Let’s pretend you spent that time:
- learning a skill
- writing something that can be shared with others (e.g. like this blog)
- looking for a new job
- creating a tool (e.g. software or any other tool that you will get repeated use out of)
- building a network
Any of those things could be leveraged for more than that $100 plus interest, if done right. Additionally, skills can combine together to be far more valuable together than each of the skills in isolation. Scott Adams (of Dilbert fame) talks about how hard it is to be the top 1% in any field, but being the top 25% in 2-3 fields can put you into a league of your own. Combining skills is multiplicative, rather than additive. For example, Combining sales and software, or managing and marketing. Frequently, combining hard skills and soft skills are the best combination as there aren’t too many mechanical engineering accountants out there.
I lean strongly towards skill acquisition, and this probably comes from hedging my bets as part of a start-up. If the start-up failed, I wanted to be sure that I still walked away with lots of valuable things beyond money (see Scott Adams on Goals vs Systems). It doesn’t matter if the stock-market crashes if you have enough skill to keep making money afterwards.
Additionally, there are a few skills that are much more valuable when used as leverage. Typically, those involve building or selling things. You have to be careful though. Some skills have a cap on their upside. You can invest a lot in becoming a carpenter, but there is a limit to what the market will pay for that skill. This is why Silicon Valley focuses so much on software. Knowing how to build software is a high leverage skill because it makes tools that you can immediately sell or use to make more software tools. Also, because the cost to duplicate and distribute software is so low, you can leverage the internet to replicate it for infinite customers.
The same concepts apply to growing your network. If you are continuously meeting people and providing valuable contributions to their lives, whether it’s sharing knowledge, helping them connect to the right people. Your network is your net worth. If something ever happens in your career (or life), it’s your network that you turn to.
Getting Leverage by Removing Low Value Items
People often think about leverage in terms of real estate and use that to justify buying versus renting. For instance, if I put down $200K on a $400K mortgage and the housing market goes up by 10%, I will have made $40K on this house minus the interest costs (note it’s actually way worse, and could be considered one of the worst investments there could possibly be). Compare that scenario to the case where you used that $200K to purchase a $200K home outright. In the second scenario, when the housing market went up by 10% one would have only made $20K. Unfortunately, leverage in real estate works both ways. If the housing market goes down by 10%, in the first scenario you lose $40K while in the second you will only have lost $20K.
But all of that math only considers the leverage on the finances and not the leverage on your time. There are lots of rent versus buy calculators, but they can’t properly account for the added time cost when you own the house. Even if you contract out all the work in your house, all of the decisions for maintenance and renovations are still on you. All of that stuff takes work! Plus, your house will never appreciate as much as you and your skills will. If you use the cash to pay for the downpayment and then can’t afford to buy back your time then you can’t invest in the REAL primary assets (i.e. you).
Any time I thought I could outsource a task that didn’t UNIQUELY REQUIRE me (e.g. don’t outsource being a parent) and wasn’t giving me a high-value skill I could leverage, I tried to do that. This included: meals, cleaning, yard maintenance, house maintenance (We rented for years until it was obvious the kids needed more stability), vehicle maintenance, snow removal, etc… I’m sure I looked like a lazy ass to the outside world, but I was spending that time reading, working on the start-up, practicing software development or making sure I was investing in the people in my life that mattered to me. When trying to figure out if you should outsource a task, ask yourself: does this task UNIQUELY benefit from having ME do this? Is there something about this task that would be substantially better for having me participate in it, compared to another competent person doing it? Again, parenting and many other relationships benefit from you showing up. If you try and delegate those you’ll quickly find they atrophy into nothing. But there are lots of tasks that don’t add anything to your life by having you do them.
To emphasize this point, right now my house looks like a hurricane swept through it. My garage and my laundry room look like all the shelves vomited their contents on the floor. Every time I look at the mess spread through my home I know that it contributes to some clutter in my headspace as well. But I also have three kids, and I’ve played the game where we spend 6 hours putting our life back together and the following day the kids have undone half of it. I’ve picked up an entire room and seen it devolve again in under 15 minutes once the kids pass through. If I ever made tidying a priority, I would never carve out enough time for learning or creating. I’d never be moving big rocks because I’d always be picking up legos. Don’t get me wrong, we hold back on rewards like TV until the chores are done and we’re willing to pay for chores (leverage the kids!) but at ages 8, 7 and 3 it’s still going to be a while before they can contribute more than they can muddle.
It’s worth noting that there are a few counter-arguments to outsourcing chores. The first is some variant of “I don’t mind doing laundry” or “I like cutting the lawn”. My argument to those that say they “like” doing the low-leverage activity are two simple questions:
1) If you showed up and the chore was already done, would you be pleasantly surprised at the newly found chunk of time?
2) If you really DO enjoy it and you are convinced of this, do you enjoy it as much as OTHER leisure activities you could be doing? For example, if you had to allocate time to enjoyment, would this activity be what you would pick?
The purpose is to highlight that there are also high leverage enjoyments, and I expect that for most people, chores aren’t one of them. There are some people who love working with cars, so maintaining the car is what they would do anyway. Another example are people who like to play with numbers so figuring out how to optimize your taxes brings about satisfaction. Gardening too! There are lots of examples of pure passions, but I expect that for most of us it’s not vacuuming.
The other argument against what I am proposing involves things along the lines of, “I could never let my house get that messy”. In some instances, the mess is too distracting to get real work done. OK, I get that. Also, it should be clear that I am NOT talking about living in a way that’s unsanitary (pay for cleaners, please!). If there’s a mess or something that could damage your property, by all means clean it up!
But I also know there are instances of “I could never let my house get that messy” where they actually mean “I would be ashamed if someone saw my house in such a mess”. In those instances, one is driven by what others think rather than what’s REALLY important to you. I like Josh Kaufman’s framing of calling it a status malfunction. Put another way, “Would you behave the same way if no one could attribute the actions (good or bad) to you in any way?” Imagine that you were invisible, or the action was attributed to some anonymous individual. Would you behave in the same way? I find that concept is a good way of figuring out if I am doing things for someone else, doing them for me and those I care for, or doing them because I believe that’s the right thing to do.
The final argument I have heard against outsourcing is “I could do/make that myself.” My wife and I had this discussion just the other day, and it seemed like there were three categories for the “I can do/make this myself”:
- I could do it myself, but it would take a LOT of effort to be as good as what I could buy. For example, you could make your own sushi. Yes, I am sure that you could do it, but it would take so much of your time and effort to get close to what a decent sushi restaurant can do that it’s simply not worth it.
- What I can do is just as good as what they could do. E.g. I can do a mean steak on the BBQ and lots of times it’s as good or better than what I can get at a restaurant. I think that in this scenario ONLY going to the restaurant or ONLY eating steak at home is wrong. If you enjoy it, do it at home. If you don’t enjoy the act of doing it, then outsource. In these categories I would almost always lean towards outsourcing because if you take on too many of these items, there’s not enough room for the big rocks.
- I tried outsourcing, but I just wasn’t able to get the result that I wanted. My wife used the example of getting her eyebrows done. Apparently, finding someone who’s good at this is hard and they are never going to care more about it than you do. Plus, for the amount of time to get it organized for an appointment, just buying the tools and doing it yourself is a better answer. We had similar struggles with a general contractor. When we did our first renovation, I felt like I was constantly chasing him to do things that even I knew should be done (as is probably obvious, I am not very handy). Despite the lists I made for him of the outcomes I wanted it was never done right. The following summer, I acted as general contractor during our kitchen renovation as I felt the money and time on an external contractor wasn’t going to get me the result I wanted (an environment that enabled the things we value).
Getting Leverage by Adding High Value Items
OK, so I keep talking about all of the things one SHOULDN’T do. Then what the heck SHOULD I be doing?
Frankly, I really don’t know.
By that, I mean the things that are going to matter the most to you are going to be highly personal.
The best I can do is point you to tools/exercises/questions that can help you figure out what are the things that are going to have the biggest impact on your life.
Time is your most valuable resource
I’m borrowing a lot from Tim Ferriss on this one, but here’s a more complete description: Time is your most valuable non-renewable resource. People will frequently trade their time to save money, without acknowledging that they will never get that time back. That was time that you could have spent with your loved ones or maintaining your health, but once you give it up to the mundane it’s gone.
Tim Urban has a fantastic post called The Tail End, that I strongly encourage everyone to read. It’s super short and worth way more anything I could write here. But the basic concept is that when you look at the big events in your life and how many you have left of them, you can probably count how many you have left. If the average life expectancy is 85, and your parents are 70 and you only see them twice a year then you may have only 30 more visits with them. 30 is not a lot. Check out his post for other reasons to be more protective of your time.
Another great resource on this is Life is Short by Paul Graham. It also highlights things that matter and things to avoid.
What “One Thing” will drastically improve everything?
This concept is from Gary Keller. I’ll just quote him from a recent interview:
What’s the one thing I can do such that by doing it everything is either easier or unnecessary? It’s an understanding that you can’t do two important things at the same time. You could definitely multitask but the second that something really matters to you a lot, you don’t multitask. You hone in on that and you do that thing. […]
The whole idea behind the focusing question was to keep — when it matters, when it’s important to you — making sure that you’re doing the priority right now that will lever your life, grow your life, expand your life. It’s the idea that if two people are standing in the same spot, and one has a clear focus and understands the thing they need to be doing right now in order to get where they want to go, their next step is an appropriate step. For the individual who doesn’t know what they should do, they’re most likely going to take the wrong step, and then another wrong step, and another wrong step. Over time, they are worlds apart.
Tim Ferriss has another riff on this concept in his post “Productivity” Tricks for the Neurotic, Manic-Depressive, and Crazy (Like Me), where he journals on the most important things he is working on and what things are scaring him right now and tries to just get one of them done a day even if everything else that day falls apart.
If you are having a hard time figuring out what is your “One Thing”, another technique you can do is try to figure out what you want more of in your life and what you want less of.
The people you surround yourself with are high leverage
You are the average of the 5 people you hang out with most. If your 5 best friends are drinkers, I bet you’re a drinker. Same if they are fit or overweight, if they do things or just watch Netflix all the time. If there are things you want more of in your life, be very careful who you spend your time with. They will dictate your values and your behaviours more than anything else.
Look for other people who are trying to get better. Some will only be mildly interested. Find the people who are willing to match or exceed your drive and connect with them. Masterminds, brain trusts, whatever you can get into where people are self selecting into that group. I joined Ramit’s Brain Trust (when it was running) and it was a fantastic glimpse into a group of high functioning people debating ideas and best practices. I had multiple questions rejected when I was flailing about trying to find my way because they weren’t high enough quality (either something I could find elsewhere, too vague or not useful enough for the community). The best question I posted was to ask people in the software community to point out the things I had no idea about. I had multiple phone calls with people who were further along in their career point me to the next steps. It’s worth pointing out that I PAID to be a part of this group
This concept also applies in your work. Your work culture is extremely high leverage. If you have a team of people committed to the cause and each other then I am positive that as a group you will be amazingly successful. Don’t let any bad apples poison the bunch. We’ve all been around that one person in the office who just drags everyone through the muck and once your team loses momentum it’s super hard to get it back. Try to keep these people out of your organizations as much as possible.
Finally, if you are constantly trying to work on your company’s “One Thing” I am certain that you will eventually be a leader on your team. You’ll have a group of people working under you all trying to work on that big “One Thing”. Having all of these people coming to you will make you feel like your time is always being eaten up by other people and you will have gone from the Maker’s Schedule to the Manager’s Schedule. This will be a hard transition for people who are “do-ers”, but it’s at this point that you need to ask yourself, “Do I think I could really make myself twice as good? Five times as good?” I doubt it’s possible, but even if it was, how long would it take?
That’s when you will come to realize that you don’t scale. This is where you need a team of fantastic people and then training and mentorship become the way that you get more done as a team. You can teach them about concepts or skills and suddenly you’ve added one more person to the cause and it was way easier than trying to double your output.
Putting some of these concepts into place in the early days definitely wasn’t easy. Let me set the stage again: It’s 2013, I just finished my PhD last year, our daughter is almost 2 and our son is 6 months. We have only my income coming in, which was a boot-strapped start-up salary which wasn’t a lot higher than what I was bringing in during my PhD. The student loans are due. We have a car, but only because my wife’s parents gave it to us and offered to pay the insurance because we couldn’t afford it. At least that way, they would get to see the grand-kids more. I was biking to work every day.
During this time, I completely stopped playing video games and watching TV. I would get up before my wife and kids and try to read/watch/listen to whatever I thought was most relevant at the moment. Ditto for after the kids went to bed. I read most of Code Complete 2 while sitting in my son’s bedroom doorway to help him go to sleep each night. During that time I made us get cleaners. It was $120/month (which was tight), but I knew I shouldn’t be spending my time on that. Also, my wife shouldn’t have to watch two kids all day long just to clean in the evenings.
I paid for a number of Ramit Sethi’s courses and continued to buy books. Frequently, I would have to convince my wife that this was a good expenditure of our budget. We both had monthly spending allowances and there were times when I couldn’t convince her so I put it on my personal credit card and just started making payments from my monthly allowance.
Despite having two babies and a busy life, we made lots of time for our friends and family. Both of our parents were a half hour away and we were able to have a weekend where the grandparents took the kids at least once a month. This let us keep in touch with the people that mattered most and let my wife and I get some desperately needed R&R.
When I was spending time with the kids, I really tried to be present as this was the only time of mine they would get. I still don’t think I am very good at this, but I try to get time solely with them.
At work, I would focus on building and would constantly be asking about what the most important thing was. Usually, asking this led to answers that caused me to work on bottlenecks along the way (E.g. Most important thing? Revenue! Why can’t we get revenue? Product isn’t good enough. Why isn’t the product good enough? I don’t know what I’m doing…). Continually asking the question was really helpful when the bottlenecks were different and prevented us from doubling down on efforts that didn’t need any more attention.
Asking myself what the most important thing for me was, usually came up with the answer: We need more resources! Specifically: time, energy and money. In the early days, more money could solve some of the time and energy problems so it became the highest priority. But in order to get more money, I had to prove to our team that I was valuable. And in order to do that, we needed to start making a product that was more valuable to our customers. Which begs the question for part 3, what’s valuable?