Small Fish in Big Pond and Compounding

Small Fish in Big Pond

One of the things about New York that I knew, but didn’t fully comprehend, is that it truly is the place where the world’s most ambitious and wealthiest people come to work. It is the biggest pond. This past weekend, I went out to the Hamptons to attend a conference/party at this billionaire’s beachfront super mansion. It was the largest house I’ve ever been in. 20 rooms, 15,000 square feet, manicured gardens, and everything else you can imagine. The crazy party is that this guy has another giant house down the road for his support staff. It is what you get when you have a lifetime of creating, scaling, and selling tech companies. This event was an interesting collection of people. It was around 250 fund managers and founders, and it is safe to say I was a very small fish in that room.

Now I know the saying that everyone says, “that you should never be the smartest or most successful person in a room”, but wow, it is a trip when someone’s support house for his beachfront party mansion is worth more than everything you have ever created combined. Now, this isn’t to say that what he’s doing is wrong; it is the opposite. I need to incorporate more of what he is doing into what we do. It goes to show that no matter how big you think you are thinking, you aren’t thinking big enough.

There is a lot of value to being in rooms where you are a small fish, but mentally it will eat you alive if you let it. I realized that I am not a small fish in a big pond; I am a grain of sand, and that is fine for now. Be comfortable being a grain of sand.

Compounding

Building off the above, this billionaire got where he is from compounding. It wasn’t one success. It was multiple. It was 60 years of building, where each brick in the wall was placed on top of the previous brick. When you do this for a lifetime, it starts to really add up.

When faced with two opportunities, it is most likely better to choose the one with more compounding, even if its starting value is lower.

As an example, let’s say you are between selling two services, one is a commodity service, while the other is a more specialized, ingrained service. The ingrained service is much stickier, in the sense that once a company signs on to working with you, they are not likely to move away, while with the commodity service theres a 50% chance they cancel after 2 months. Even if the commodity service is 2 times easier to sell, the specialized service will quickly outpace the number of clients that the commodity service has. Do things that naturally build over time.