#137 - The Career Math Everyone Gets Wrong

I've always been a negotiator. I don't know if I was wired this way, or if it came from years of watching my dad haggle over the price of cars and Christmas trees. Probably a bit of both.

But in the month I graduated from university, I negotiated my first job offer, my first car (a lease on a Camry), the cost of a move from New York to Texas, and a couch from Crate & Barrel. Yes, my friends, even Crate & Barrel negotiates. 🙃

The couch and car lasted a couple of years, then I ditched them when I moved to California. But the offer negotiation came with me when I moved -- and then it followed me to each job I've ever held.

How so? Because that first negotiation created leverage for my second negotiation. And that leverage led, in turn, to a higher salary in the second job. Ditto in my third job -- and on and on it went. In short, the first negotiation compounded.

We talk about compounding all the time in finance because it's such a powerful phenomenon. But we rarely talk about career compounding, even though there are skills, opportunities and decisions that compound in ways that are just as potent.

In other words, there are certain forms of "career capital" that compound. Negotiation compounds; so do networking, reputation, communication, and storytelling. And as with compound interest in finance, the earlier we start accruing career capital, the more dramatic its impact. So this week, we use our Stories to explore how career compounding works, and bring its impact to life:

🎯 Story #1 - Basketball legend Kobe Bryant wasn't just a prolific scorer, he also trained insanely hard. But his work ethic wasn't accidental -- Kobe understood the simple math behind compounding, and chased down the leverage it gave him. His incredible video interview breaks down the logic for us. 🏀

🎯 Story #2 - Networks are another form of career capital that compound in powerful ways. Today's second (real life) Story explains how, and highlights the ROI of building our networks intentionally -- and from early on . 🙌

🎯 Story #3 - What does it mean to chase your "first win", and why is achieving it such a powerful career lever? Movie stars and venture capitalists define the term for us, and illustrate the way some types of career capital compound into an unfair advantage. 🥇

Thanks for reading -- and have a great end of the week!

Aki

#1

Kobe Bryant won five NBA titles with the Los Angeles Lakers, and became one of basketball's all-time greats before dying, tragically, in a helicopter crash in 2020.

When we hear stories about elite athletes’ work ethic, they often focus on the grind -- the early mornings, the endless reps, the sacrifice. But there’s something deeper in this interview of Bryant (here, on YouTube): an appreciation of how small advantages compound into gaps his competition can't close.

This is Kobe on his approach to training:

But then he shares his insight on compounding advantage:

But the magic doesn't come from the early start time, per se -- it comes from the way small, daily advantages stack up:

Asked if this approach was innate or developed, Kobe pointed to simple math:

To be clear: the goal here isn't to glorify hustle culture. It’s to highlight two fundamental principles of compounding:

First, the earlier you start, the more dramatic the eventual impact. Second, small but consistent advantages compound into massive leads over time.

Some saw Kobe’s 4am starts as extreme dedication; he saw them as math: a way to build career capital that compounded into championships.

#2

Lachy Groom was an early employee at software company Stripe. In a recent tweet, he reflected on the career capital he accrued there -- one of its most valuable forms: a network.

What matters is not just that Lachy built strong relationships -- it's when he built them. The connections were forged in his first job after university, and their value has compounded ever since.

Investor-billionaire Warren Buffett likens compounding to rolling a small snowball down a very long hill. As the snowball rolls, it collects more and more snow until it becomes huge. The trick, Buffet says, "is to have a very long hill."

But how do relationships compound in the first place? They're a form of network effect -- the phenomenon where something gets more valuable as more people use it. But professional networks compound even more powerfully because:

• Each connection brings its own network
  • Trust deepens over time
  • Shared experiences create stronger bonds
  • Knowledge and opportunities flow both ways
  • Early relationships grow together professionally

There's another insight to be gleaned from Lachy's Story, by the way, because the years he spent at Stripe were also a great example of getting a "first win" -- another form of powerfully compounding career capital, and the focus of our last Story. ⬇️

#3

​Daniel Vassallo runs a course called “Small Bets", and uses it to promote a portfolio-based approach to building a business. The course profoundly influenced my understanding of how to manage a modern career, and allowed me to see the ups and downs of my own with much more clarity. 🙌

Daniel's thesis is that in any hard-to-predict realm -- starting a business, venture capital, making movies, publishing books -- it doesn't always make sense to go “all-in” with our time and money. Instead, we want to learn to make “small bets”.

The goals of a small bets approach are twofold:

1) to learn as efficiently as possible from the bets we make

2) to get to a game-changing “first win” more quickly

But this approach doesn’t just apply to business. It works on careers too. And pursuing a first career win is a great illustration of how some choices compound to such powerful effect.

Careers as inherently unpredictable -- and a series of "bets"

Like building a business, navigating a career is an unpredictable, open-ended exercise defined by risk, uncertainty, and complexity. Competition abounds, and we see a wide distribution of outcomes and success.

Careers are also a series of bets on jobs, companies and industries. When we place them, we allocate our “career capital” -- time, skill, network, experience, etc. -- to maximize "success", i.e. some combination of impact, meaning, growth, status, and compensation.

Why a first career win matters

There's a reason venture capitalists obsess over their first big win, and actors chase a breakout role: because in any uncertain field, that first win changes everything -- and its effects go on to compound dramatically.

Why? Because of the signaling it offers: you were always capable, but after your first win, people now perceive you as successful.

Take Chris Hemsworth after Thor. Sure, he spent years toiling in auditions, acting in local soap operas (and lifting weights, let's be honest). But after Thor he's seen as successful, so everybody wants to work with the guy.

Now, success begets more success: Hemsworth can pick and choose his scripts, and command higher pay because the compounding has kicked in. ⚡️

We see the same phenomenon in venture capital, where the logic of, 'You invested in Uber?! Invest in my startup!' plays out the same way:

The investor's first win gets the ball rolling: it increases the chances of another win, and things keep on compounding and compounding --

• Reputation compounds: “You were an early Uber investor?!”
  • Network effects compound: better deals come to you.
  • Access compounds: more doors open when you knock on them.
  • Leverage compounds: you get better terms on your next deal.

Skills, networks, relationships, negotiation, brand, reputation -- all compound. They always have. But it's important to highlight that the more complex and unpredictable our world -- including work -- become, the higher the return we get from compounded capital.

Today, we focused on individuals and careers. But compounding works at the organizational level too, through leadership, culture, hiring, and retention.

These organizational skills are often taken as fixed: you either have them or you don't. But that's not true. They're muscles, and like any muscle, they get stronger with effort and intent. Next week, we look at how. 💪

Thanks for reading and exploring with me. 🙏