The Reasoning Behind the 10x Principle
Here’s an idea that has been touted many times. Whether it’s Peter Theil stressing the need to be 10x better than second place in Zero to One, Google’s 10x thinking, or Grant Cordone’s 2011 motivational book The 10x Rule, the sentiment is the same. In order to stand out, innovate, or spur self-improvement you have to improve tenfold.
But why 10x and not 5.7x or 20x? Is 10x just some arbitrary multiplier everyone converged upon? It was only after having my own 10x experience did I realize why a magnitude of difference means so much. I am writing this after concluding three months living and working in Beijing. My time in China has helped me confirm a couple things.
First, the world isn’t flat. I don’t mean flat in a geographical sense but a world where international organizations have significant global influences that transcend geographic, political, and cultural differences. I am going to have to side with Pankaj Ghemawat on this one because globalization isn’t as rampant as it’s made out to be.
Living in China has helped me understand just how culturally different the world is. I was able to do this because I was a part of the life in Beijing rather than an onlooker. For instance, as an observer I might have simply marvelled at the ubiquitous WeChat App payment system envied by Apple and Android Pay. But as a regular user of WeChat pay and after many conversations with locals who also use WeChat pay daily, I learned about the underlying cultural factors that made it a success. WeChat pay’s wide adoption can be attributed to the practice of exchanging red envelopes with money during festivities such as the Lunar New Year. WeChat used this to spread their payment feature by replicating this tradition digitally.
Now to tie this back to why the world isn’t flat. Today geography isn’t a major issue with increasingly affordable flights for business travel, instant messaging, and web platforms to rapidly distribute product. Political barriers have also decreased with a more peaceful world (relative to the past century) and an increasing number of trade deals. These two factors have been driving PayPal’s reach worldwide yet cultural understanding is the remaining obstacle that prevents PayPal from winning foreign markets. PayPal certainly would not have been able to pull-off a WeChat and convince all of China to adopt their mobile commerce system because in China a red pocket from a friend means 10x more than cash for referrals.
Second, early stage startups are chaotic and sweaty. By chaos I mean pivoting, changing roles, putting out fires, and pivoting again is all in a week’s work. At first, I thought it wasn’t professional that I didn’t have a job description but there is nothing that can accurately predict the work you’ll do at a young startup — besides, that time drafting the job description is better spent elsewhere because there’s plenty to do.
This is where the sweat comes in. In the end it’s not about VCs, technology, or credentials. It doesn’t matter what companies or schools you’ve been to but it’s the willingness to work Saturdays when the AC is off, respond to WeChat messages from your partners at every odd hour, and hustle. I would be remiss if I didn’t also acknowledge the sweat of early adopters who are willing to work with you and use your incomplete (and sometimes buggy) product. This is what matters at a startup and the product you create, the money you raise, and everything else comes from the efforts and tolerances of these two groups who give much more than they get.
What does my understanding of how flat the world really is and me working at a sweaty startup have to do with the 10x principle? It has to do with the impact this experience has had on me. By far the past summer has been my most memorable summer. Had it been just another summer at home, in ten years it would be just a blur. But this summer has left an impression on me because it was 10x more different than anything I’ve experience before. And that’s the reason why the 10x principle is so popular. It’s the way we perceive.
The Weber–Fechner law is a concept in psychophysics that explains the way humans perceive stimuli. Physician Ernst Heinrich Weber found that whether or not a person notices a difference between two stimuli for instance light intensity is based on the magnitude of the stimulus and the person’s sensitivity. Gustav Fechner expanded on this idea and found that the perception of a stimulus is logarithmically proportional to the intensity of a stimulus (Lav R. Varshney and John Z. Sun explains why). The classic example of this is how we measure the intensity of sound with a logarithmic scale. Sound that measures 20 decibels is 10x more intense than sounds at 10 decibels.
10x is the threshold needed for a person to recognize by instinct that option A is better than option B. For consumer facing companies, a product can’t just be incrementally better. It has to be 10x better to command the attention of its customers. For you and me this principle applies to our everyday lives because the most vivid memories you’ll form are from the experiences you have outside of your comfort zone. So when it comes to having meaningful experiences that will stay with you for a lifetime, think about doing something that’s 10x harder, weirder, and more different than anything you’ve done before.
