Compound Interest

I love this very simple yet profound and powerful reminder about compound interest:

Now for the matter of drive. You observe that most great scientists have tremendous drive. I worked for ten years with John Tukey at Bell Labs. He had tremendous drive. One day about three or four years after I joined, I discovered that John Tukey was slightly younger than I was. John was a genius and I clearly was not. Well I went storming into Bode’s office and said, “How can anybody my age know as much as John Tukey does?” He leaned back in his chair, put his hands behind his head, grinned slightly, and said, “You would be surprised Hamming, how much you would know if you worked as hard as he did that many years.” I simply slunk out of the office!

What Bode was saying was this: “Knowledge and productivity are like compound interest.” Given two people of approximately the same ability and one person who works ten percent more than the other, the latter will more than twice outproduce the former. The more you know, the more you learn; the more you learn, the more you can do; the more you can do, the more the opportunity — it is very much like compound interest. I don’t want to give you a rate, but it is a very high rate. Given two people with exactly the same ability, the one person who manages day in and day out to get in one more hour of thinking will be tremendously more productive over a lifetime.

I’ve been finding the model of compound interest more and more useful as I get older. It’s also a painful one, if I’m to be honest, because I could have put this model into practice many times in my youth which would have resulted in some very serious and significant gains.

But, now’s the best time than ever before to apply it. Now or never. This can easily apply to just about everything, by the way. I think the compounding interest related to relationships is something that I’m particularly keen about these days.


Also published on Medium.