Author | Old parable
Please do a question:
If you could earn $2 million a day and live a thousand years, how much wealth would you have?
The answer is as follows:
Why is the gap so large? Is it because making 208 million a day is too little? Or is it because a thousand years is too short?
Smart as you know, Gates and the other richest people have achieved an astonishing accumulation of wealth by growing exponentially in a non-linear manner.
Of course, making 2.08 million yuan a day is a lot, but it still makes money by rental time, which belongs to the conventional "day arch pawn".
Ordinary people rely on this linear way of "arching the day and a pawn", and it is even more difficult to change their fate.
The principle of value investment is understood by everyone, and the method of investing in index funds will be, but if you set a few thousand and hundreds of dollars every month, when can you "wealth freedom"?
No wonder everyone wants to gamble, watching the people who speculate in coins two thousand dollars become twenty million, everyone yearns. As a result, it has been reduced to leeks again and again.
That being the case, what is the point of "one pawn in the day"?
For a long time, people have misunderstood the word.
What this article wants to discuss is:
What exactly is the correct posture of the "sun arch pawn"?
The real master is such a "day arch pawn"
"Day arch a pawn", from "the sun arch a pawn has no end, the merit is not donated to the sea".
"There is no end to the day arch": it means that every day like a pawn to move forward a little bit, perseverance will eventually achieve something.
Don't donate to the sea: It means that the effort to work something will not be wasted.
However, how many people have worked hard all their lives and bowed down to the end, but they just stand still, or even abandoned by the times.
"The sun arch is endless", will it just be a comfort to the creeps?
"Meritorious donation will eventually enter the sea", it is said that there will be a reward for paying, is this really the case?
Open a Taobao store, operate a public account or a vibrato number, which is not a loss more to earn less? Who should entrepreneurs who have lost their money look for in return?
What's the problem?
It turns out that we have a too shallow understanding of "sun arch and pawn".
The real master, for the "sun arch pawn", has the following correct posture:
1. "Day arch and pawn" is to do multiplication, not addition;
2, the key lies in large-scale repetition, and then the formation of network effects;
3, "arch" is action, but also decision-making, in order to cope with uncertainty;
4. "Sun arch and pawn" need convex protection;
5. Under the overall view of assets and resources, "a pawn in the day".
1
The daily offering is to do subtraction
In the past three stages of market decline, the decline of different funds has been largely different:
Let's go back to the opening paragraph.
If you make $2.08 million a day, your wealth changes like this:
Day 1: 2.08 million;
Day 2: 4.16 million;
Day 3: 6.24 million;
Day 4: 8.32 million;
......
Day n: 208n million.
It seems to be a good "sun arch pawn", and the arch is quite large.
However, calculating by addition does not accurately reflect changes in wealth.
We should use multiplication.
Wealth V1 on the first day = 2.08 million;
The next day's wealth V2 = V1 (1 + G2) ;(G2 represents the day's wealth growth rate, which is 100%)
Wealth V3 on the third day = V2 (1 + G3) ;(G3 represents the wealth growth rate of the day, which is 50%)
Wealth V4 on the fourth day = V3 (1 + Gg4) ;(G4 represents the wealth growth rate of the day, which is 33.33%)
The wealth of the nth day Vn = 2.08 million (1 + G2) (1 + G3) (1 + G4) ... （1+Gn）
From the above calculations, we can see that Gn is getting closer and closer to zero.
So, even if it's assumed you'll make $2 million a day and live a thousand years, your wealth will grow smaller and smaller, and it's hard to surpass the Gates.
The focus is on the calculation of the geometric mean.
The above simple reasoning also contains two profound concepts:
1, independence case;
2. Overall assets.
An independent case
The so-called independent event means that if we take the heavens as a unit, then the "day arch and one pawn" of each day is an independent event.
In this way, it is easier for us to understand that the sun arches and the pawns are multiplying relationships with each other.
I can't resist discussing Locke's "identity" in this regard, but use an analogy to express this:
If you're a robot, you'll do a software upgrade every day at 12:00 midnight.
So theoretically, you are 1.0 on the first day, and 2.0 on the second day...
So, every day there will be a new version of you, and for this "you", the "you" of the previous day is actually another person.
The advantage of this is that "you" will look at the whole new day with scrutiny.
You realize that as a successor, you have an obligation to see the cards in your hand, make decisions for the day, and arch your hand every day.
The advantage of thinking like this is to jump out of the continuity of consciousness and imprison us.
Indeed, how a person's sense of self is formed, and why there is a continuous "me," is one of the deepest mysteries in the universe.
We benefit from it and we are trapped by it.
I, become a slave to "me."
Furthermore, in this digital age, I am not only a slave to "me", but also a data slave to the system:
The vast majority of people speak Internet buzzwords, think of KOLs that have chewed ideas, and do things that big data predicts.
One day, I was watching Westworld 3 and came up with a sentence:
The self is the "own choice" that transcends the part that can be predicted by the system.
This is the original meaning of the sun arch.
To get rid of the inertia of the self, to get rid of the drift under the control of the system, and to realize that you can make a real choice about fate.
In Go, one of the most important characteristics of a master is the courage to "get off the front".
Detachment means that in the contact battle between the two sides of the game, the opponent's moves are temporarily ignored and the first hand is thrown elsewhere.
On the surface, it seems that the first step is to gain the initiative. At a deeper level, it means that each of your chess hands, every bet, is actually "unrelated" to the previous hand, it is an independent event, so you can play anywhere you can.
The new hand plays chess, and follows the others step by step. Why don't they understand detachment?
First, the level is not enough, the field of vision is narrow, and there is no better hand elsewhere;
Second, there is not enough courage. "Detachment" will lead to local losses, and the "loss aversion" of novices is more intense.
Only by understanding the philosophical and chicken soup parts can I understand what I want to express:
The day arch is an independent event, multiplication, not addition.
Overall assets
The day arches and the pawn needs to be based on the overall asset as the basis for multiplication.
In the paragraph at the beginning of this article, although you earn 2.06 million yuan a day, the money accumulated in the past has not become an asset that continues to make money.
"Day arch and pawn" is an independent event, and many "day arches and pawns" are strung together, which requires a global view and plays each sub-effect, just like the overall football style of play.
To do this, there are two principles:
1. Use the goal as the criterion for "continuity";
Persistence as a virtue should mean that one maintains continuity toward goals, not continuity of actions.
If yesterday's "sun arch pawn" does not seem to match the goal, immediately change the arch method without having to maintain the consistency of your behavior.
Persistence is not necessarily correct, and there is no shame in giving up.
Since it revolves around the goal, the "correctness" of the goal is very important. But who can guarantee that the goal will not change?
Therefore, for individuals or institutions, there should be a vision, a mission, values, and such things that seem to be very virtual, suitable for the goal of being a North Star.
A little bigger, a little more obscure, a little more correct, will last longer, and it is more suitable to lead us through the uncertain era of rapid change.
2. Use the overall interests to assess the value of the current "day arch and pawn".
Earlier, I simulated a scenario: the daily "sun arch and a pawn", which is equivalent to having a new version of you making a decision independently.
The advantage of this simulation is, on the one hand, to cut off the unnecessary continuity, and on the other hand, to give the new version of you a "decision point" to re-examine the overall situation.
At this decision point, the independence of decision-making behavior and the overall nature of value evaluation are unified.
As the saying goes: It is better not to be a general for ten years than not to be a pawn for a day.
The complete expression of this sentence should also be added:
A pawn who doesn't want to be a general is not a good pawn.
2
The key to the day arch is mass repetition
Or the opening paragraph:
You make 2.08 million a day and earn a thousand years in a row, is there anything wrong with that?
Yes.
The mistake is in two points:
1, rent your own time, will not make you too rich;
2, money is not wealth, money that can help you make money is wealth.
"Sun Arch" is very slow, very stupid, but if it can be scaled up, can be copied on a large scale, it is very fast, very smart.
This large-scale replication, if it can create a network effect, adds another product to the exponential growth.
The famous Metcalfe's law describes the economic phenomenon in which the value of a network grows at a rate of square in the number of nodes in the network.
Many "day arches and pawns" can form a network effect between each other, which will be more powerful.
If this is done, the chicken soup of "donating to the sea" will become technically achievable.
The network and the platform are this "sea".
I often tell my friends in the company that to turn what I usually do into a shabu-shabu, I must have a pot to bring together all kinds of efforts and repeatable stupid kung fu.
Otherwise, the "sun arch pawn" becomes a monkey breaking bud rice.
Many companies try to build network effects by burning money, some do it, most don't.
For example, some online education is not a full node network, not even a bilateral network.
This kind of "sea" is at most a back sea.
In the digital era, the great place of technology companies is that the entire network has become the core of growth, and the larger the core of growth, the more powerful and flexible the company, and the marginal utility increases, which is completely different from the industrial era.
"Sea", able to aggregate "day arch and pawn";
"Sea", can also enlarge the "sun arch a pawn";
"Sea" can also resist the opponent's "day arch pawn".
The best at this are companies like Amazon.
Amazon continues to turn revenue into a snowballing growth kernel, and has also built one "sea" after another nested together.
Bezos always said "Day One", in fact, it is "a pawn in the sun", and every day is like new.
3
Arch is action, but also decision-making
"Day by day" is not so much an action as a decision.
Many times, the pain is not to do something tough, but to make active choices in difficult times.
The vast majority of people use diligence to escape real suffering and give up their decision-making power.
Translating "day and day arch" into decision-making helps us apply probabilistic thinking.
The "independent event" mentioned earlier is also preparing for this.
If we are doing something with positive expectations and the probability of success is 60%, it means that 40% of the time, we will suffer from failure.
Simplify the above probability to 100 days of "day arch and pawn", of which 40 days of "day arch and pawn" is a failure.
What's more, the distribution of reality is even more uneven, and we may face nine defeats and one victory, or even ninety-nine defeats and one victory.
What people cannot endure is not the hardship of "arching the day", but the suffering in the face of uncertainty.
Investing and starting a business are a bit like leading soldiers to fight, and you need to experience war and sacrifice.
In the eyes of the master, the "day arch pawn" not only needs a system, but also a "sea", but also a probabilistic continuous decision-making process:
What is important is not the gain and loss of one city and one pool, but the continuous optimization of probabilities in action, and the use of the law of large numbers to achieve positive expected returns.
4
The sun arch needs to be cared for
The growth rate of "day arch and pawn", continuity, and probability of victory or defeat will face "resistance".
The snowball of wealth is like Sisyphus pushing stones to the top of the mountain, rather than taking a slide from top to bottom.
After all, we live in a universe of increasing entropy.
The effort and persistence of individuals, needless to say, but this is only a small part of the whole.
More importantly, we have to design our own luck, and the luck of luck.
Therefore, "day arch a pawn" needs a good base probability.
It's called getting into the right line and hitting a good track.
In this way, you can do the right thing with a relatively high probability.
You also need to get things right, learn quickly, and keep updating.
What's harder is that the "day arch" is accompanied by the allocation of resources, and the proportion of bets is not even.
Regarding the above framework, if you must give a key concept, I think it should be:
convexity.
"A pawn in the arch of the day" is easy to give people the illusion of "paying is rewarded".
But this is not the case.
The success of entrepreneurship and investment follows the power law distribution, a very small number of people win, most people work without gain, not only no merit, not even hard work.
The book "Silicon Valley Entrepreneurship Lesson" repeatedly mentions three concepts:
1, convexity; 2, grand slam; 3, reverse thinking.
So, what exactly is convexity opportunity?
Convexity: A situation in which there is a very asymmetry between potential (large) gains and (small or harmless) losses in venture capital.
The best investors understand that the success of venture capital businesses lies in the convexity of buying mispriced.
Uncertainty is a friend of wise investors, as uncertainty leads to the presence of convexity in mispricing.
So, convex opportunities can sometimes seem a little crazy.
Investor Sam Zell describes the relationship between the three as follows:
"Listen, business is not a difficult thing.
If you see an industry with low risk and a good upward trend, you do it.
If the stakes are high and the prospects are bleak, you give up.
The only situation where a lot of work needs to be done is that there is a clear upward trend and the risk is also high. ”
We need to be very patient in our "day arch", but realize that chance is not a cake that is evenly cut into 8 pieces.
The real world is uneven and non-linear.
Mathematics uses convex functions to give us a more precise understanding of convexity.
For example, the exponential growth model is a typical convex function model:
In the above formula, the corresponding value of time t is Vt, whose initial value is V0, and it grows at the rate R.
The slope of the convex function is incremental: the value of the function increases as the value of the measure increases.
(This is from the book Model Thinking.) ）
In recent and decades to come, the digital industry has grown by leaps and bounds, creating countless riches, and one of the underlying reasons is the astonishing convexity of Moore's Law.
Let's go back to the opening paragraph:
If you can earn $2 million a day and live a thousand years, your wealth graph looks like this:
The graph of the convex function is like this, such as Moore's Law, or Amazon's stock price:
The graph of the concave function looks like this:
The book "Averaged Risk" describes the concave function with a mortgage portfolio in the real estate market.
If house prices in the market go up and down, and the average house price stays the same, what do you think the profit chart of the portfolio will be?
In the example below, half of the house prices rose by 8%, resulting in less than 5% profit growth; the other half fell by 8%, bringing profits down by as much as 40%. As shown in the following figure:
(The image above is from the book "The Risk of Being Averaged.") ）
The result? The risks are far greater than they seem on the surface.
The concave function in the above figure is exactly the story that happened during the subprime mortgage crisis in 2008.
In the short seller's calculation formula, the above concave function is just reversed, and the result becomes the convex function of their investment.
The above pile of graphics illustrates nothing more than one thing:
"A pawn in the arch of the day" is by no means a hard work.
Even if you understand the convex function, you may not be able to capture the convexity opportunity.
Investors will tell you how they got their way into Tencent, but they can't tell you who the next Tencent is.
However, convexity can help us understand uncertainty at a higher order.
"Sun arching a pawn" is not a steady advance on land, but a surf in the undulating waves of the sea.
We need to find convex protection for ourselves.
5
A big picture view of resources and assets
The day arch requires both a soldier-style assault and a general-style decision-making.
In Wang Xing's view, the real entrepreneurial spirit is:
Know what your goals are, think about how to achieve them, no matter what you have now, even if you don't have anything on your hands.
In my opinion, "day arch" is to achieve the goal on the premise of limited resources.
"Day by day arch" is a process of thickening assets and allocating assets.
Some companies burn money and burn out assets;
Some companies burn money, and what burns out is the cost.
In this day and age, the biggest change and opportunity is the transfer of assets to the digital world.
Data has become the core asset of enterprises.
For individuals, your core asset is yourself.
Seeing yourself as an asset that can continuously optimize and appreciate is the soul of "a pawn in the arch".
Self-renewal, as Munger puts it:
At the end of each day, try to be wiser than when you wake up in the morning. Faithfully and brilliantly performing their duties, improving a little bit every day. Ultimately, if you live long enough, most people will get what they deserve.
In any past year, if you haven't overturned your favorite idea once, then this year is a waste.
At last
Who is not a pawn who cannot turn back?
We are all small soldiers who are arching their heads in the sun.
Or rather, more like the paratroopers in Company of Brothers, who are born surrounded.
This series, in my opinion, is one of the best business school textbooks, and there is a line in it that is still unforgettable:
Your only hope is to accept the fact that you are dead.
The sooner you accept this fact, the sooner you will be able to act like a true warrior, without pity, without sympathy, without self-blame.
That's what all wars depend on.
We are fortunate to live in times of peace, and we do not have to be so tragic.
However, this Passage of Camus's Words cruelly reveals:
A true master, only by letting go of everything, can he achieve "a pawn in the sun arch" and bravely move forward.