Compound Knowledge

Howie Diamond
Jul 5, 2017 · 7 min read

“Read 500 pages every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.” — Warren Buffett

I believe many aspects of life compound the way interest does in finance; slowly in the beginning, then robustly over time. Here is a simple illustration of interest compounding:

If I invest $5k at 25 years old at a conservative 7% rate of return (compounded annually), it would take approximately ten years to double my money. So when I turn 35, that $5k would turn into $10k and then that $10k would get reinvested and double again into $20k when I turned 45. At 55 years old I would have $40k, at 65 $80k, and at 75 I would have nearly $160k. So my initial $5k turns into $160k because the money keeps getting reinvested every year and compounds at the 7% rate of return.

If you think about life as a long-term investment, many facets begin to mirror the effects of compounding interest. When investing early and re-investing often into relationships, health, love, money, abilities etc they will all compound and eventually begin to yield exponential returns.

In essence, what we are really compounding, or rather the fuel that this particular compounding effect runs on is…..foundational knowledge.

We’ve all heard the expression, “knowledge is power.” But to truly know something, to really understand the concept, the place, the relationship or the idea, it must be experienced. Therefore, going beyond the linear to reach a deeper level of understanding and realize exponential returns, foundational knowledge needs to be reinvested. In other words, we need to be learning every day.

So how do we acquire and retain knowledge in a consistent, meaningful and effective way?

This is the tricky part.

First and foremost,I think an individual must possess the desire to learn. It’s an exercise in both motivation and incentive; the individual wants to expand his/her mental capacity and potential while simultaneously believing that learning is important and will pay long term dividends in life. Through this lens, learning stops feeling like a chore. It becomes self-expressive and even fun. Knowledge gained is akin to say buying a new pair of dope running shoes or listening to the latest album from your favorite artist or watching a new, recommended show on Netflix with a friend.

At some point, the motivation to learn becomes your default setting. You wake up and think, “I am open and excited to learn new things today”, or “what can I refine from my previous learnings today?”, or “it’s ok if I can’t comprehend something very complex and out of my comfort zone, because I have the confidence and courage to create new mental models and will eventually learn it.”

To hasten this “new” learning process, I find it helpful to break it down into steps:

Step 1: Set the intention to learn.

Step 2: Put things in motion. Start doing, start learning. Even if it’s something super small like 1 new vocabulary word a day or reading for 20 minutes.

Step 3: Develop and reinforce the action. Make it a deliberate, daily habit.

Step 4: Assimilate into your core identity.

Fake it until you become it. Then you won’t have to fake it anymore.

Oh yeah and about that whole intelligence thing….

“It’s not how smart you are that matters, what really counts is how you are smart.” ~ Howard Gardner

Intelligence comes in different forms. Some are born with a natural ability to retain and grasp concepts easier and quicker than others. Some need to rely on different methods to obtain a deeper understanding. The point is that the brain is a muscle that can be exercised and strengthened; most people have an opportunity to create optimal learning frameworks which will allow them to flourish.

Developing these unique learning frameworks takes time, patience and many hours of trial and error, but is essential for being able to digest and understand new concepts/ideas in our rapidly changing world. Through this practice, an individual will spend time essentially learning how to learn by creating a rigorous system that works specifically for them and then fine-tuning that system.

Once this system is in place and optimized for you, it’s important to remember to trust the system.

Ernest Hemingway wrote the following (from The Sun Also Rises):

“How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually then suddenly.”

Forget that this quote is about going bankrupt; the pace of learning and understanding is often the same. It’s difficult to assess progress when it comes to complex endeavors until, seemingly out of nowhere, you can play a full song on the guitar, or have a conversation in Spanish, or write code fluently enough to develop an app.

I often forget that I am compounding knowledge on a daily basis because most often the tangible progression signals are hidden in the near term. Despite this, I still trust that it’s happening and I am growing stronger. I have to. Eventually, the epiphanies and “aha!” reflective moments come to light and it’s almost shocking to see how far you have come. The compounding factor is much more obvious in hindsight and before you know it, your metaphorical $5k has grown into a cool $160k.

Here are several activities and behaviors that make up my own personal compound learning framework:

  • LISTEN MORE/ASK QUESTIONS: My default used to be unsolicited talking and over talking. Now I find it much more useful to ask questions and listen. Especially if I don’t understand something. This seems like a fairly straightforward concept right? But how many times have you experienced apathetic head nodding, paired with a glazed look of confusion as someone explains something to you that you clearly have no clue about just to be agreeable?
  • READ MORE: Reading seems the most obvious, yet the hardest to make time for. Setting aside just 1 hour a day for dedicated reading can make a material difference.
  • FORM GOOD HABITS : “Habits can allow you to background-process certain things so that your neocortex, your frontal lobe, stays available to solve brand new problems. Usually the big habit changes comes when there’s strong desire-motivators attached to them” — Naval Ravikant
  • COMMIT/DISCIPLINE: There are a TON of distractions, peer pressure and influences that can veer you off course. Remain strong in your convictions.
  • SOURCE IT, CONSUME IT, RETAIN IT : Where you source your information from, the medium by which you consume it and how you determine the best way to make information stick in your brain are all mission critical. Spend some time on this.
  • PUT IN THE WORK: Internalize a results-driven success cycle. Hard work creates results. Results enhance motivation. When you’re motivated, working is more enjoyable and fun. The more you work, the more results you have, the greater your successes will be.
  • EXERCISE (PHYSICAL and MENTAL): For me, it’s primarily basketball and meditation, which provides me with energy and clarity. Both put me in the right headspace for learning. Find something that works for you that you enjoy.

I’ll leave you with a fantastic excerpt from a John Garner speech about the importance of lifelong learning as well as some of the important realizations and compound knowledge he’s gained along his own journey:

There’s a myth that learning is for young people. But as the proverb says, “It’s what you learn after you know it all that counts.” The middle years are great, great learning years. Even the years past the middle years. I took on a new job after my 76th birthday and I’m still learning. Learn all your life. Learn from your failures. Learn from your successes. When you hit a spell of trouble ask, “What is it trying to teach me?” The lessons aren’t always happy ones, but they keep coming.

We learn from our jobs, from our friends and families. We learn by accepting the commitments of life, by playing the roles that life hands us (not necessarily the roles we would have chosen). We learn by growing older, by suffering, by loving, by taking risks, by bearing with the things we can’t change. The things you learn in maturity aren’t simple things such as acquiring information and skills. You learn not to engage in self-destructive behavior. You learn not to burn up energy in anxiety. You discover how to manage your tensions. You learn that self-pity and resentment are among the most toxic of drugs. You find that the world loves talent but pays off on character. You come to understand that most people are neither for you nor against you; they are thinking about themselves.

You learn that no matter how hard you try to please, some people in this world are not going to love you, a lesson that is at first troubling and then really quite relaxing. Those are things that are hard to learn early in life. As a rule you have to have picked up some mileage and some dents in your fenders before you understand. As writer Norman Douglas said, “There are some things you can’t learn from others. You have to pass through the fire.” You come to terms with yourself. You finally grasp what playwright S.N. Behrman meant when he said,

“At the end of every road you meet yourself.”

Thanks for reading!

Howie Diamond

Written by

Co-Founder/Managing Director — Alpha Bridge Ventures