Compounding seems to be one of those elusive concepts for the human condition. Through a product evolutionary machinery, our minds operate well projecting linearly, but are always unable to encompass non-linear or exponential growth.
As legend has it, the inventor of chess stood before his king, promising any reward that he would like. The inventor asked to be given rice grains, but in a particular pattern. One rice grain for the first square, two for the second, four for the third and so forth, the rice grains doubling with each square every passing day. The king agreed, surprised at such a small price for a unique invention. One day the king was approached by the inventor, questioned as to why he hasn’t received his reward. Surprised, the king called forth his treasurer to explain this mishap. The treasurer simply explained that there weren’t enough rice grains in the kingdom to fulfill the inventor’s demand. It’s not hard to see why. Halfway across a 64-square chessboard would correspond to 232 rice grains, or 4,294,967,296 (a little over 4 billion) rice grains. The king nor the treasurer could fully appreciate the compounding effect of exponential growth and the seismic proportions it can reach.
There are many other common examples of such compounding. Think of the COVID-19 pandemic which started as a mild concern in December 2019 and progressed to bring the global economy to its knees by March 2020. No one expected case rates to rise globally as they did, but they did. Exponential growth once again outwitted our limited intuition about compounding.
However, all is not doom and gloom. Compounding can be leveraged for positive outcomes. As college students, understanding compounding in all areas of life like relationships, finances and career is pivotal to development. The fundamental rule of compounding is this: There are no shortcuts. Everything requires consistency. Effort, day in and day out. If you want to ace that class, the best way is to put in the hours every week consistently instead of cramming everything right at the end. You might even get away with cramming at the end, but at significant caffeine-induced mental and physical cost! It’s the same when it comes to building relationships. Trust is built over hours of shared experience and companionship; you can’t expect to have it all within a week. When it comes to finances, having good spending habits and saving regularly according to a fixed schedule will lead to effective results. Everyone wants to profit off of that meme stock within a week, but that strategy could also likely leave you with a 100 percent loss.
The moral is that great things require patience, time and consistent effort. We often have misconstrued notions about success and time scales. Going into a new job or internship, we often feel like we’ll kill it within a week and then sulk if things don’t exactly go like that. Perhaps this is a product of the world of immediate gratification we live in. We’re chained to the idea that winning happens quickly, or it doesn’t happen at all. Successes in fact are the result of months and years of repeated habits and small actions. Iterations upon iterations of apparently insignificant happenings that lead to huge growth. Years of work leading to an overnight success – the definition of compounding.
As we begin this new semester, we must focus patiently on achieving the goals we’ve set out. Setbacks will occur, as they always will. That’s no reason to stop doing anything. In the long-run, compounding will always take over and the trendline will trend upwards the further you zoom out. Keep at it, stay the course and results will inevitably arrive. If they don’t, recalibrate and go again, there’s no gain in stopping. Here’s to a great fall semester!
SAYYED HAIDER HASSAN is a junior in Morse College. Contact him at haider.hassan@yale.edu.