Recently, in a tweetstorm, Naval Ravikant mentioned that “99% of all effort is wasted (in the long-run).” Does this mean you shouldn’t try because so little in your life matters? Quite the opposite. Let’s unpack what it really means.
Subsequent to the tweet, Naval expanded on the concept, mentioning that it’s important to ensure that you’re on the right path. You need to be thoughtful about what you’re focusing your energy on because if you’re able to focus on something that you enjoy, the benefits that you get compound and will eventually make all of that effort worthwhile in the long-run.
The trajectory of your life will likely be decided by very few factors. It’s difficult to know ahead of time what experience, event, or incident will be truly revolutionary to you. That said, it’s best to do your best work at every opportunity you get because you never know what experience, event, or incident will make all of the difference.
Hard work isn’t wasted because the experiences create us. It’s likely that a small fraction of our actions will create a large proportion of the value that we’re able to reap in the long-run.
Applied to investing/gambling
This concept might be easier to comprehend for people who deal with risk or investing on a daily basis. When dealing with investments, it’s possible to do a lot of work on any given idea. However, a small proportion of those ideas will generate an outsized proportion of the returns. This occurs because of the asymmetrically skewed positive pay-off profile of investments.
If we knew which gambles were going to pay off, then it would be prudent to only pursue those gambles and avoid the losses. However, we cannot know ahead of time which gambles will pay off and which will result in a loss. As long as the gamble isn’t going to result in an absolutely catastrophic loss, we should be open to the opportunity and weigh the expected return.
Use the gambles to learn and grow
If we only pursue the gambles that will certainly have a positive payoff we will neglect the benefits that come from doing and failing along the way. Seth Godin once mentioned (although I can’t find the exact quote) that the blogs he writes can lead to speaking engagements, which could lead to book contracts, which could lead to further paying work engagements etc. Is it one specific blog post that lead to someone picking up the phone and contacting him about follow on work? If so, which one would it have been? He blogs every day. Does that mean all of the posts but the one that lead to a further engagement was worthless? Far from it.
Having the process of creating a blog post every day means that it’s likely that he’ll create some really interesting content from time to time. Having a process of continuously failing without losing hope is important because it allows you to find that 1% of effort that matters in the long-run.
But when do you work hard?
At one point, George Soros mentioned to Byron Wien, from Blackstone, that
“the trouble with you, Byron, is that you go to work every day and you think that because you go to work every day, you should do something. I don’t go to work every day. I only go to work on the days that make sense to go to work… Any I really do something on that day. But you go to work and you do something every day and you don’t realise when it’s a special day.”
What’s missing from this picture is the fact that Soros is constantly talking to people that he perceives to be insightful as well as reading and reflecting on what’s happening and how it changes his global macro picture. It’s not like he isn’t doing any work. It’s just that he isn’t making investment decisions — what the current financial establishment would consider as work. He isn’t mistaking speed with velocity and has largely cut out all of the meaningless meetings and phone calls that can account for a meaningful portion of a typical work day.
All things considered, I believe that all the meaningful outcomes will come from 1% of the things that you do in your life (or something close to that number). It’s important not to confuse activity (read: being busy) with doing meaningful work. However, it’s impossible to know what 1% will lead to the meaningful outcomes ahead of time, so it’s worthwhile working as hard as you possibly can until you’re able to differentiate between the meaningful tasks and those that detract from your time.
