Critical Chance

Tag: career advice

  • The Power of Consistency

    The Power of Consistency

    Warren Buffet has an interesting principal he follows. 

    At the end of each year, a company gets to decide what to do with their earnings. Some companies issue a portion of the money to their shareholders; this is called a dividend. Most investors love it, in fact some design their portfolios to exclusively invest in companies that provide annual dividends. Warren on the other hand? He HATES investing in these companies.

    Why? When you receive a dividend, you realize gains, which means you have to pay taxes each year.

    Warren would rather the money was reinvested into the business to help it grow.

    First off, this allows him to avoid taxes for as long as he can.  But if we remember the rules of compounding, it allows his money to stay in the system and work even harder. Warren wants to be taxed only once, at the very end when the journey is over, not throughout.

    Buffett principal #2: Never take your money out

    The Aggregation of Gains

    The first rule of compounding is to start as early as you can. 

    But once your money is in, we want to optimize towards growth – this means paying as little as possible. 

    “The objective is to buy a non-dividend-paying stock that compounds for 30 years at 15% a year and pay only a single tax at the end of the period. After taxes this works out to a 13.4% annual rate of return.

    Charlie Munger, 1998

    If you invested $10,000 with Warren Buffett, at his annual rate of return of 23%, the following chart shows you the amount you’d have in 30 years, based off if you paid taxes each year versus allowed the money to keep compounding. 


    Assumes 23% compounding annual rate, blue line allows money to compound, red line removes taxes at 35% rate each year
    It’s worth noting that these are extremely high rates of return, and the average investor can expect to get closer to 8% ARR

    Breaks vs BRAKES

    Breaks are healthy – they allow us to recover and admire our results.

    Trouble comes when we allow a short break to turn into hitting the brakes (that is, stopping completely). 

    Here’s what what I mean:

    • Health – When we feel physically in shape, we decide to stop exercising – a few days becomes a few weeks
    • Learning – When we believe we’ve mastered enough, we decide to stop learning – binge reading becomes binge television
    • Relationships – When we sense our connections are strong, we decide to stop building them – personal texting becomes singular social media posting 

    Warren’s principal reminds us of the power of pausing too often or for too long.

    Once you stop showing up, you stop gaining. 

    Keep It Going

    You’ve decided to start (that’s great!), but don’t underestimate the importance of continued hustle. The laws of compounding don’t care if you’ve had a bad day, or it’s a busy week.

    When we decide to follow through, we continue to gain, period.

    So wherever you are, keep it up, and just like Warren you too will enjoy the aggregation, not of a single year, but an exponential 30 years. 

    Getting up when others won’t is what makes all the difference. 

    And who knows, that determination might be worth an extra $2.8M dollars, in whichever domain you’re compounding.

    Post inspired by:

    Buffettology: Unexplained Techniques That Have Made Warren Buffett by Mary Buffett

  • Change your story, change your world

    Hey readers,

    Last week I was invited to speak at Indiana University’s Kelley Business School. The theme for the day was innovation; where does it come from?

    My talk bridges lessons from successful entrepreneurs (what did they do differently?) and my own college experience (which events, in hindsight, made all the difference?).

    Check out the video below, and if you enjoy it, share and subscribe!

    Let’s spread positivity together.
    -Alex

  • How this billionaire predicted the future

    Steve Jobs gave a commencement speech at Berkley in 2005.

    By this time, Apple had become one of the most successful enterprises of the new Millennium. Jobs was famous for having a set of unique experiences – he believed these were critical in forming his opinions and ideas at Apple.

    So how did he know that his past experiences would help create Apple?

    Well, he didn’t.

    Here’s Steve on predicting the future:

    “You can’t connect the dots looking forward; you can only connect them looking backwards.

    So you have to trust that the dots will somehow connect. You have to trust in something – your gut, destiny, life, karma, whatever.

    This approach has never let me down, and it has made all the difference in my life.”

    -Steve Jobs

    From Apple to Chess

    When I was a kid, Chess was one of my favorite games.

    In Chess you spend most of your energy trying to guess your opponents next move. When they play a knight, your brain visualizes the new locations on the board. You work to understand the updated positions, as each move creates an entirely new game.

    “How will this help or hurt me?” you wonder.

    Well, Chess is shockingly similar to another game: the game of life.

    Unpredictable Paths

    Humans are terrible at seeing the future.

    We tend to believe that our ability to predict leads to success, however that’s not quite true.

    Preventing yourself from making a critical mistake allows you to keep playing the game, but it’s usually the unpredicted events which lead to your victory.

    This is the same in businesses as it is in personal development. Odds are that a critical component of you (as you are today) did not exist when you first started. Whether that’s your newfound interest in running 5K races, or the way you pitch to clients.

    With this hunch, The New York Times wanted to better understand which career paths most executives took before becoming CEOs.

    After interviewing across all fields, one pattern emerged: there was no path.

    From musical theater to religion, CEOs were less concerned about their current trajectory in the moment and more focused on learning from each experience.

    “Rather than wondering if they are on the right career path, they make the most of whatever path they’re on, wringing lessons from all their experiences.” 

    New York Times

    What about you?

    This week, pay more attention to novel differences. While hidden in the background, these may lead to your future successes.

    As Steve Jobs points out, you have to trust your gut.

    Plus, we all know it’s your unwavering curiosity that really checkmates the King.

    Now go setup your board.

  • Three lessons on human potential

    Two weeks ago I had the opportunity to speak with student leaders at Vanderbilt University.

    They gave me ten minutes and free range for topic, so naturally I chose Human Potential. Part of this lecture contains material from my happiness talk which I present at Google.

    Check it out below, and if you enjoy, please subscribe for more.

  • We not me

    An executive once told me his top trick for hiring great people, and it wasn’t a difficult brain teaser or a credential on a resume.

    “Listen for how much the candidate talks about themselves versus the team. Was it their personal accomplishment, or do they credit a larger group of people?

    Keep a small scorecard in the back of your head and count the number of times they use I or ME vs. OUR or WE. When organizations truly thrive, they are built around we-based individuals.”

    It’s well-known that teams at Google are given less resources than requested. If a manager says they need 10 Engineers to get the job done, they’re purposely given half that number.

    Forget interviewing, consider the implications this has on the way we speak to each other and lead our teams.

    While it’s easier to use me-first language because it feels more direct and natural, taking the extra time to review your emails and communication will elevate your influence. This quality doesn’t stop at the office – it even works with the five-year old who’s never ready for bedtime.

    Embracing the “we” in our lives makes us better teammates, partners and leaders.

    So… what do we think?

  • The reputation pivot

    A successful executive once said to me,

    “The higher you move up in a company, the more important relationships become. VPs choose whether or not to help you based on your reputation, not your skills.”

    It’s this weird evolution where, when you FIRST start out in your career, your value is backed (mostly) by your abilities. Heck, you just graduated school and you barely know anyone (or anything). But fast-forward five, ten, or twenty years, and suddenly the inputs flip. Your relationships are now driving the majority of your value.

    Feel like you’re plateauing at work?

    Maybe you’ve accelerated your skills, but have you equally grown your relationship talent stack? Sure you might be technically capable of that next job, but are you good enough in reputation and networking?

    Perhaps it’s time to pivot your focus; skill alone will not get you there.

  • The hidden base

    You’re interviewing people for your new sales team, who would you rather hire?

    Group A: Scores high on an aptitude test, but has average levels of optimism

    Group B: High levels of optimism, but scores average on an aptitude test

    Turns out someone ran this study and if you picked B, your team performed better. Not just slightly, but significantly better.

    “The optimistic group outsold their more pessimistic counterparts by 19% in year one and 57% in year two.”

    Eric Barker, BUTWT

    While intelligence and skill are important, we are discovering that there’s this hidden section to the chart being less discussed and it’s at the base.

    75% of long term job success is predicted by three factors:

    • Social Connection â€“ the depth and breadth in your social relationships
    • Optimism â€“ the belief that your behavior matters in the midst of challenge
    • Perception â€“ the way that you perceive stress

    Most people have the equation flipped (they focus on IQ), but this month we’ll be diving deeper into the base.

    Buckle up because May is all about Social Connections; how to build them and why they matter.

  • Real positive change

    “We first make our habits, then our habits make us.”

    -John Dryden

    Last week, I was invited by Google to speak for Wellness Week.

    Of all the possible topics, I decided to focus on forming better habits. Once you become a master of yourself, you can master anything.

    Science is beginning to show us:

    1. Success is played at the margins (over slight, consistent improvement)
    2. Daily habits are more predictive of future successes than big moments
    3. Input-focused goals achieve the best outputs

    If you were to get just 1% better everyday (instead of 1% worse), you would end up over 1000x better by the end of the year.

    Architect a better strategy for your daily habits and reach your full potential.

  • Good luck or bad?

    Once upon the time there was an old farmer who had worked his crops for many years.

    One day his horse ran away. Upon hearing the news, his neighbors came to visit. “Such bad luck,” they said sympathetically.

    “Perhaps,” the farmer replied.

    The next morning the horse returned, bringing with it three other wild horses. “What great luck!” the neighbors exclaimed.

    “Perhaps,” replied the old man.

    The following day, his son tried to ride one of the untamed horses, was thrown, and broke his leg. The neighbors again came to offer their sympathy on his misfortune.

    “Perhaps,” answered the farmer.

    The day after, military officials came to the village to draft young men into the army. Seeing that the son’s leg was broken, they passed him by. The neighbors congratulated the farmer on how well things had turned out.

    “Perhaps,” said the farmer.

    Human nature has wired our brains to judge achievement and setbacks on an immediate basis. When things go wrong, we throw our hands up right away. This leads to these sort of “half stories,” which limit our potential.

         Half story: I was turned away from +10 companies my senior year of college.

    …Bad luck.

         Full story: The week of graduation, a role opened and I got a job at Google.

    …Good luck.

    Same story, different luck.

    This extends itself beyond setbacks; what about the way we consume news? Most headlines may as well read, “We don’t know all the details, but we’re confident this is bad.”

    Immediate judgement prohibits us from seeing the full picture, when in reality, the story isn’t complete.

    Before we’re able to declare luck (good or bad), our stories need time to develop.

    Which story have you ended too quickly?

    Is that setback actually the beginning to a great luck tale of your own?

    “Perhaps.”