Going the extra mile

TL;DR: Going the extra mile in life often delivers outsized returns. This is, in part, due to the fixed costs of life. Once you cover those fixed costs, any incremental effort has a disproportionately large impact on your outcome. This realization is an argument for focus and hard work. Choose something worth doing, then double down with as much time and energy as you can muster. Do that extra set. Put in that extra hour of work. Boost your income just a little bit more to super charge your savings. Put in that extra effort and the gains will compound over time!

In life, going the extra mile often makes all the difference. That last 10% of input drives the majority of output. This is due to the reality of fixed costs and marginal gains. It’s such an important concept that it’s worth spending a few minutes unpacking it. Once you understand this concept, along with the power of compound returns, you’ll understand how people can develop huge advantages over time… and how you might apply this to your life as well. So let’s walk through some examples.

Example 1: Working out

The reality is that 90% of every workout is spent on fixed costs – the time spent getting your body warmed up and revved up to the edge of your current abilities. But if you stop at that point, your gains will be meager at best. To make any real progress, you need to go beyond the edge of your current abilities. You need to go the extra mile (sometimes literally) to push your body beyond it’s limit, causing the damage that signals a need for growth. It’s that last 10% of effort that yields all the gains.

Example 2: Building a startup

Building a startup is hard. You are building a business with limited resources, often facing competition from well heeled incumbents who can outspend you at every turn. So how do any of them ever succeed? One of the advantages lies in their limited size, and extra effort they put in. Working at a big company brings with it a ton of ‘fixed costs’ in your day. Everything from meetings to painful administrative processes might eat up 4-6 hours of what is usually an 8 hour day. That leaves regular corporate employees with ~2 hours to focus on real work. A startup is much leaner having way fewer ‘fixed costs’, meaning they might only spend 2-4 hours on meetings and minutiae. That would leave them with ~4 hours to spend on real work – double the typical incumbent. But because they also put in longer hours, they might turn an 8 hour day into a 12 hour day. In this case, adding 50% more hours, actually adds 100% of real work during the day. They go from having 4 hours to 8 hours of work focused on things that matter. Now, compared to an incumbent, due to lower fixed costs, and the increased effort, they actually have 4X the productive time in a day (8 hours vs. 2), which helps to explain how they can make so much progress in such a short time relative to the big company.

Disclaimer: I realize the dynamics of a startup and their ability to succeed against all odds is far more complex than simply putting in more time, and wouldn’t suggest this is the only factor, but it is certainly one of them.

Example 3: Earning & saving

We all have certain fixed costs in life. If you live in San Francisco, it’s probably in the ballpark of $150K per year for a household. Someone in the midwest might get away with $80K. In either case, those costs can flex a little, but not a whole lot. So if you live in SF and have after tax earnings of $180K, you’re only saving $30K per year. But, if you increase your after tax earnings by just 15% (going to $210K), you can double your savings! Again, the fixed costs are fixed, and the marginal value of a little more money is quite high in terms of the amount you save, and how quickly that helps you reach Ramen Retirement.

What does it all mean?

In all of these cases, putting in that extra effort delivers an outsized return. The importance of this can’t be understated. Couple this with the power of compounding, and tiny differences can grow into huge advantages over time.

Ultimately, this is an argument for specialization and hard work. Put simply, focus on something worth doing, then put all of your weight behind it. Go the extra mile above and beyond your peers and competitors, and you’ll find yourself in a league of your own, able to capture outsized returns, and compound that advantage over time.

Enjoy!

Ramen-san

 

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