Jiu-Jitsu Letter


Blair Enns wrote an article called The Time Value of Knowledge. In it, he writes about how of the three variables of investing, principal (P), rate of return (r), and time (t), time is the one that brings in the results.

The compounding effect is not intuitive because people are not good at thinking exponentially. Consider a thought experiment. Off the top of your head, what do you think the future value of a $1 investment would be in 30 days if the value of that investment doubled every day?

Not many guess at anything approaching the right answer: just over $1 billion. Here’s the follow-up question that many people also struggle to answer correctly. How many days does it take for the investment to reach half that amount, about $500 million?

Many intuit the halfway point of 15 days which shows that we think linearly and not exponentially. The answer, which is obvious after you hear it, is 29 days. A $1 investment (at a ridiculously short doubling period, granted) yields $500 million in the 30th doubling period—in one day—when it yielded just $1 in the first one. On day 31 the investment is worth $2 billion. On day 40 that initial dollar is worth $1 trillion, and well before a year it’s worth more money than has ever been generated in the history of humanity.

Then he says that just as that’s true for investing, it’s also true for knowledge.

He highlights two lessons:

  1. Where we are in the beginning isn’t that important. That’s obvious for anyone learning anything, since we start at zero. But he also says the rate of return, or learning, when discussing knowledge, doesn’t need to be high, as long as time is long.
  2. The biggest gains come at the end.

In jiu-jitsu, nearly everyone starts with a 0 for Principal (P). And then we see who’s a quick learner, or someone with a high rate of return (r).

But it’s all about the student who sticks with it the longest (t).

Chris Haueter has a famous quote: “It’s not who’s good, it’s who’s left.”

Just keep going.

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