March 9, 2025
E144: How the World’s Top Investors Compound Their Advantages
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In this special solo episode of How I Invest, I break down one of the most powerful forces in investing: compounding. Over the course of 142 episodes, I’ve discovered that the best investors all leverage compounding—not just in their portfolios but in every aspect of their business. From relationships and reputation to proprietary information and top talent, compounding creates exponential advantages in a hyper-competitive market.
Highlights:
Compounding Beyond Capital: The biggest investors understand that everything compounds, including reputation, diligence, and deal-making experience.
The Power of Relationships: Trust compounds with each deal, leading to faster and more efficient decision-making.
Reputation as an Asset: Warren Buffett’s ability to negotiate superior terms stems from his compounding reputation as an ethical and skilled investor.
Proprietary Information Loops: Access to unique insights leads to better investments, which generate even more privileged information.
People as a Compounding Advantage: The best organizations attract and retain A-players, who in turn recruit other top talent, creating a self-reinforcing cycle of excellence.
The Arbitrage of A-Players: Paying A-players above market rates is a competitive advantage, as they generate exponentially greater value.
--
Stay Connected: X / Twitter: David Weisburd: @dweisburd
LinkedIn: David Weisburd: https://www.linkedin.com/in/dweisburd/
Questions or topics you want us to discuss on How I Invest? Email us at dweisburd@gmail.com.
(0:00) Episode preview (0:21) The role of compounding in investing and relationships (2:13) Trust bias, deal-making efficiency, and reputation effects (4:23) Proprietary information and the compounding of talent (6:50) AI's impact on productivity and compounding (7:49) Closing remarksTranscript
1
00:00:00,960 --> 00:00:01,919
Welcome back.
2
00:00:01,919 --> 00:00:06,799
For episode one fifty, I wanna do something
completely different and record my first solo
3
00:00:06,799 --> 00:00:07,299
episode.
4
00:00:07,679 --> 00:00:11,359
But just like with my New Year's resolutions, I
don't really believe in waiting for an
5
00:00:11,359 --> 00:00:12,719
arbitrary date to do something.
6
00:00:12,719 --> 00:00:16,324
So, alas, I'm releasing this as episode one
forty three.
7
00:00:16,464 --> 00:00:20,464
If you enjoy it, please let me know by sharing
this episode with a friend, which lets us know
8
00:00:20,464 --> 00:00:21,765
that you value the content.
9
00:00:21,984 --> 00:00:23,204
Let's dive right in.
10
00:00:23,265 --> 00:00:28,144
Across the first hundred forty two episodes,
the one consistent component I found across all
11
00:00:28,144 --> 00:00:31,329
top investors is the role of compounding in
their business.
12
00:00:31,629 --> 00:00:36,670
Today, I'm gonna cover how the world's top
investors compound their advantages in a hyper
13
00:00:36,670 --> 00:00:38,210
competitive capital markets.
14
00:00:39,469 --> 00:00:43,789
Lesson number one, when it comes to
compounding, is that everything compounds when
15
00:00:43,789 --> 00:00:44,689
it comes to investing.
16
00:00:45,125 --> 00:00:49,364
Whether you're investing someone else's money
or your own, even areas that appear not to
17
00:00:49,364 --> 00:00:49,864
compound.
18
00:00:50,484 --> 00:00:55,284
Most investors assume that going from one
investment opportunity to another is a linear
19
00:00:55,284 --> 00:00:55,784
exercise.
20
00:00:56,405 --> 00:00:58,984
But in reality, it is a compounding exercise.
21
00:00:59,939 --> 00:01:04,599
Your reputation compounds, your experience
compounds, your ability diligence compounds.
22
00:01:04,979 --> 00:01:09,239
All these skills compound and stack on top of
each other from one deal to the next.
23
00:01:10,019 --> 00:01:15,625
That being said, while some things compound
exponentially, others only incrementally.
24
00:01:16,965 --> 00:01:18,424
What compounds exponentially?
25
00:01:19,204 --> 00:01:22,185
Above all else, relationships compound
exponentially.
26
00:01:22,885 --> 00:01:25,864
This is both for obvious as well as non obvious
reasons.
27
00:01:26,244 --> 00:01:31,049
Relationships compound because, of course,
doing the second deal or the third deal with
28
00:01:31,049 --> 00:01:33,629
somebody is much easier than the first deal.
29
00:01:34,090 --> 00:01:38,409
On the first deal, your counterpart needs to
diligence both the deal at hand as well as you,
30
00:01:38,409 --> 00:01:39,069
the individual.
31
00:01:39,369 --> 00:01:43,530
When you get to the third deal, the diligence
at that point is almost entirely based on the
32
00:01:43,530 --> 00:01:45,905
deal presented, not on you as a counterparty.
33
00:01:47,484 --> 00:01:51,905
The implicit difference here is trust, which is
why trust compounds within relationships.
34
00:01:52,364 --> 00:01:56,284
When you present a second deal, you're much
more trustworthy than when you had presented
35
00:01:56,284 --> 00:01:57,299
the very first deal.
36
00:01:57,780 --> 00:02:01,880
By the time you present the third deal, there's
almost an automatic trust in the relationship
37
00:02:02,180 --> 00:02:04,439
and embedded trust in the diligence process.
38
00:02:05,299 --> 00:02:10,659
Of course, capital allocators will rarely admit
this and may not even be aware of this, but
39
00:02:10,659 --> 00:02:12,919
indeed a bias of trust is present.
40
00:02:13,594 --> 00:02:19,454
This trust bias is a heuristic or a mental
shortcut that serves to save investors time.
41
00:02:20,634 --> 00:02:25,114
Before you go about criticizing this behavior,
keep in mind that when psychologists studied
42
00:02:25,114 --> 00:02:30,079
people's behaviors over many decades, there was
consistency as it relates to ethics.
43
00:02:30,859 --> 00:02:34,000
Just take a moment to think about someone that
you've known for twenty years.
44
00:02:34,219 --> 00:02:35,840
Have their ethics changed dramatically?
45
00:02:36,859 --> 00:02:41,435
I would venture to guess that although their
skills and maybe even their lifestyle has
46
00:02:41,435 --> 00:02:45,594
changed dramatically, their ethics have
remained consistent throughout the twenty years
47
00:02:45,594 --> 00:02:46,655
that you knew them.
48
00:02:48,235 --> 00:02:53,115
There's another reason why relationships
compound exponentially, and that is because of
49
00:02:53,115 --> 00:02:54,974
the familiarity between parties.
50
00:02:55,439 --> 00:02:56,419
What does that mean?
51
00:02:56,879 --> 00:03:00,340
Once you've done enough deals with a
counterparty, you have an implicit
52
00:03:00,400 --> 00:03:05,039
understanding of how the other side looks at an
opportunity, how it fits into their overall
53
00:03:05,039 --> 00:03:08,145
portfolio, and the kind of deal terms they care
about.
54
00:03:08,465 --> 00:03:12,004
You essentially start with half of the deal
cake already baked.
55
00:03:13,425 --> 00:03:16,405
The next factor that compounds exponentially is
reputation.
56
00:03:17,105 --> 00:03:19,444
Reputation compounds when it comes to
investing.
57
00:03:20,460 --> 00:03:24,719
Teddy Roosevelt once said, reputation is what
people say behind your back.
58
00:03:25,020 --> 00:03:27,680
Reputation can be a key advantage when it comes
to investing.
59
00:03:28,219 --> 00:03:32,699
This is the number one reason why Warren
Buffett is able to negotiate superior terms on
60
00:03:32,699 --> 00:03:39,055
his investments, both because of his reputation
as an ethical counterparty and as his
61
00:03:39,055 --> 00:03:40,995
reputation as a great investor.
62
00:03:42,895 --> 00:03:46,995
This is so much the case that every deal that
he's worked on has been kept extremely
63
00:03:47,135 --> 00:03:51,770
confidential, lest it increase the price of the
stock before the deal is ever announced.
64
00:03:53,430 --> 00:03:56,090
The opposite, of course, is also true.
65
00:03:56,310 --> 00:03:58,650
Negative reputations compound exponentially.
66
00:03:59,750 --> 00:04:04,585
Institutional investors oftentimes do a minimum
of 10 reference checks on a potential manager
67
00:04:04,585 --> 00:04:09,385
prior to investing, making it nearly impossible
to raise institutional capital if you have a
68
00:04:09,385 --> 00:04:10,844
bad reputation in the market.
69
00:04:11,305 --> 00:04:16,779
This is why, sadly, many investors will never
raise a single dime of institutional capital.
70
00:04:18,839 --> 00:04:23,020
The next factor that compounds exponentially is
proprietary information.
71
00:04:23,480 --> 00:04:27,555
This compounding factor is less obvious versus
the other ones.
72
00:04:27,615 --> 00:04:31,235
There's a significant compounding effect when
it comes to proprietary information.
73
00:04:31,615 --> 00:04:36,574
This is because proprietary information leads
to higher returns, which leads to improved deal
74
00:04:36,574 --> 00:04:39,714
flow and turn leads to additional proprietary
information.
75
00:04:40,175 --> 00:04:41,714
This is a virtuous cycle.
76
00:04:42,149 --> 00:04:46,389
This is why some families are able to preserve
their wealth for many generations, especially
77
00:04:46,389 --> 00:04:51,110
in poor countries where information is more
concentrated and limited to a small group of
78
00:04:51,110 --> 00:04:52,089
powerful individuals.
79
00:04:52,949 --> 00:04:57,029
This can even be the case when the next
generation is not as hardworking or even as
80
00:04:57,029 --> 00:05:01,795
intelligent because proprietary information can
beat that much of a competitive advantage.
81
00:05:02,735 --> 00:05:07,074
It becomes exponentially easier to make good
decisions when you have access to proprietary
82
00:05:07,295 --> 00:05:07,795
information.
83
00:05:08,415 --> 00:05:12,735
One does not need to be a genius to buy land in
an area where there's a recently discovered oil
84
00:05:12,735 --> 00:05:14,560
field that few people know about.
85
00:05:14,560 --> 00:05:18,580
The same goes for buying secondary in a private
company that you know is doing well.
86
00:05:20,480 --> 00:05:23,860
The next factor that compounds exponentially is
people.
87
00:05:24,240 --> 00:05:25,779
People compound exponentially.
88
00:05:26,675 --> 00:05:30,375
Every CEO says, our most important advantage is
our people.
89
00:05:30,435 --> 00:05:34,535
But if you don't have policies in place that
lead to attracting and retaining the very best
90
00:05:34,595 --> 00:05:37,654
people, this statement is simply window
dressing.
91
00:05:38,689 --> 00:05:42,629
How do you go about attracting and retaining
the very best people, the a players?
92
00:05:43,410 --> 00:05:48,290
Firstly, a players want the ability to develop
skills and develop their own value in the
93
00:05:48,290 --> 00:05:48,790
marketplace.
94
00:05:49,410 --> 00:05:52,389
This could be a difficult pill to swallow for
insecure managers.
95
00:05:52,610 --> 00:05:57,824
Insecure manager may think, what happens if I
develop my a player and he or she leaves my
96
00:05:57,824 --> 00:05:58,324
organization?
97
00:05:59,264 --> 00:06:03,904
The answer is that if you don't develop your a
player, they are guaranteed to leave and likely
98
00:06:03,904 --> 00:06:06,324
sooner than later as they have many options.
99
00:06:07,669 --> 00:06:12,310
To the upside, having a fully developed a
player for three years is more valuable than
100
00:06:12,310 --> 00:06:15,990
having even an equivalent a minus player for
ten years.
101
00:06:15,990 --> 00:06:20,089
So many ways developing a players is the price
for having a great organizations.
102
00:06:22,305 --> 00:06:25,444
A players will recruit other a players at your
organization.
103
00:06:26,064 --> 00:06:29,605
A players are the most underrated recruiters on
the planet.
104
00:06:29,824 --> 00:06:32,485
That is because a players wanna work with other
a players.
105
00:06:33,585 --> 00:06:38,389
Conversely, a players serve as a very effective
quality control for the business.
106
00:06:38,689 --> 00:06:43,730
A players have zero tolerance for even a single
b or c player on their team as they realize
107
00:06:43,730 --> 00:06:48,149
that one bad apple can significantly hurt the
entire team and organization.
108
00:06:50,145 --> 00:06:54,464
This is why as investor, even with a small
investment team, you could argue that your
109
00:06:54,464 --> 00:06:58,165
number one job is to make sure that you attract
and retain a players.
110
00:06:58,944 --> 00:07:02,865
A players are the ones that will create the
organization that leads to sustained alpha and
111
00:07:02,865 --> 00:07:03,365
performance.
112
00:07:05,040 --> 00:07:10,020
The arbitrage when it comes to a players is to
pay them 10 to 25% over their market rate.
113
00:07:10,080 --> 00:07:14,580
This is a competitive advantage in both
attracting and, perhaps most importantly,
114
00:07:14,639 --> 00:07:15,860
retaining a players.
115
00:07:16,125 --> 00:07:20,464
The reason you can afford to do this is because
a players will produce an order of magnitude
116
00:07:20,525 --> 00:07:26,064
more and higher quality output than even a
minus players, leading to overall savings.
117
00:07:27,085 --> 00:07:32,169
This arbitrage will only continue to grow as
productivity increases with the advent of AI
118
00:07:32,169 --> 00:07:33,310
and AI tools.
119
00:07:34,810 --> 00:07:39,870
And that's the lessons I've learned through the
podcast and also in my career on what compounds
120
00:07:39,930 --> 00:07:40,430
exponentially.
121
00:07:42,044 --> 00:07:45,904
Einstein famously said that compounding is the
eighth wonder of the world.
122
00:07:46,204 --> 00:07:46,925
What do you think?
123
00:07:46,925 --> 00:07:47,745
Do you agree?
124
00:07:49,324 --> 00:07:51,805
Thanks for listening to my episode on
compounding.
125
00:07:51,805 --> 00:07:54,327
If If you enjoyed this episode, please share
with a friend.
126
00:07:54,327 --> 00:07:58,167
This helps us grow and also provides the best
feedback when we review the episode's
127
00:07:58,167 --> 00:07:58,667
analytics.
128
00:07:59,047 --> 00:08:00,347
Thank you for your support.
00:00:00,960 --> 00:00:01,919
Welcome back.
2
00:00:01,919 --> 00:00:06,799
For episode one fifty, I wanna do something
completely different and record my first solo
3
00:00:06,799 --> 00:00:07,299
episode.
4
00:00:07,679 --> 00:00:11,359
But just like with my New Year's resolutions, I
don't really believe in waiting for an
5
00:00:11,359 --> 00:00:12,719
arbitrary date to do something.
6
00:00:12,719 --> 00:00:16,324
So, alas, I'm releasing this as episode one
forty three.
7
00:00:16,464 --> 00:00:20,464
If you enjoy it, please let me know by sharing
this episode with a friend, which lets us know
8
00:00:20,464 --> 00:00:21,765
that you value the content.
9
00:00:21,984 --> 00:00:23,204
Let's dive right in.
10
00:00:23,265 --> 00:00:28,144
Across the first hundred forty two episodes,
the one consistent component I found across all
11
00:00:28,144 --> 00:00:31,329
top investors is the role of compounding in
their business.
12
00:00:31,629 --> 00:00:36,670
Today, I'm gonna cover how the world's top
investors compound their advantages in a hyper
13
00:00:36,670 --> 00:00:38,210
competitive capital markets.
14
00:00:39,469 --> 00:00:43,789
Lesson number one, when it comes to
compounding, is that everything compounds when
15
00:00:43,789 --> 00:00:44,689
it comes to investing.
16
00:00:45,125 --> 00:00:49,364
Whether you're investing someone else's money
or your own, even areas that appear not to
17
00:00:49,364 --> 00:00:49,864
compound.
18
00:00:50,484 --> 00:00:55,284
Most investors assume that going from one
investment opportunity to another is a linear
19
00:00:55,284 --> 00:00:55,784
exercise.
20
00:00:56,405 --> 00:00:58,984
But in reality, it is a compounding exercise.
21
00:00:59,939 --> 00:01:04,599
Your reputation compounds, your experience
compounds, your ability diligence compounds.
22
00:01:04,979 --> 00:01:09,239
All these skills compound and stack on top of
each other from one deal to the next.
23
00:01:10,019 --> 00:01:15,625
That being said, while some things compound
exponentially, others only incrementally.
24
00:01:16,965 --> 00:01:18,424
What compounds exponentially?
25
00:01:19,204 --> 00:01:22,185
Above all else, relationships compound
exponentially.
26
00:01:22,885 --> 00:01:25,864
This is both for obvious as well as non obvious
reasons.
27
00:01:26,244 --> 00:01:31,049
Relationships compound because, of course,
doing the second deal or the third deal with
28
00:01:31,049 --> 00:01:33,629
somebody is much easier than the first deal.
29
00:01:34,090 --> 00:01:38,409
On the first deal, your counterpart needs to
diligence both the deal at hand as well as you,
30
00:01:38,409 --> 00:01:39,069
the individual.
31
00:01:39,369 --> 00:01:43,530
When you get to the third deal, the diligence
at that point is almost entirely based on the
32
00:01:43,530 --> 00:01:45,905
deal presented, not on you as a counterparty.
33
00:01:47,484 --> 00:01:51,905
The implicit difference here is trust, which is
why trust compounds within relationships.
34
00:01:52,364 --> 00:01:56,284
When you present a second deal, you're much
more trustworthy than when you had presented
35
00:01:56,284 --> 00:01:57,299
the very first deal.
36
00:01:57,780 --> 00:02:01,880
By the time you present the third deal, there's
almost an automatic trust in the relationship
37
00:02:02,180 --> 00:02:04,439
and embedded trust in the diligence process.
38
00:02:05,299 --> 00:02:10,659
Of course, capital allocators will rarely admit
this and may not even be aware of this, but
39
00:02:10,659 --> 00:02:12,919
indeed a bias of trust is present.
40
00:02:13,594 --> 00:02:19,454
This trust bias is a heuristic or a mental
shortcut that serves to save investors time.
41
00:02:20,634 --> 00:02:25,114
Before you go about criticizing this behavior,
keep in mind that when psychologists studied
42
00:02:25,114 --> 00:02:30,079
people's behaviors over many decades, there was
consistency as it relates to ethics.
43
00:02:30,859 --> 00:02:34,000
Just take a moment to think about someone that
you've known for twenty years.
44
00:02:34,219 --> 00:02:35,840
Have their ethics changed dramatically?
45
00:02:36,859 --> 00:02:41,435
I would venture to guess that although their
skills and maybe even their lifestyle has
46
00:02:41,435 --> 00:02:45,594
changed dramatically, their ethics have
remained consistent throughout the twenty years
47
00:02:45,594 --> 00:02:46,655
that you knew them.
48
00:02:48,235 --> 00:02:53,115
There's another reason why relationships
compound exponentially, and that is because of
49
00:02:53,115 --> 00:02:54,974
the familiarity between parties.
50
00:02:55,439 --> 00:02:56,419
What does that mean?
51
00:02:56,879 --> 00:03:00,340
Once you've done enough deals with a
counterparty, you have an implicit
52
00:03:00,400 --> 00:03:05,039
understanding of how the other side looks at an
opportunity, how it fits into their overall
53
00:03:05,039 --> 00:03:08,145
portfolio, and the kind of deal terms they care
about.
54
00:03:08,465 --> 00:03:12,004
You essentially start with half of the deal
cake already baked.
55
00:03:13,425 --> 00:03:16,405
The next factor that compounds exponentially is
reputation.
56
00:03:17,105 --> 00:03:19,444
Reputation compounds when it comes to
investing.
57
00:03:20,460 --> 00:03:24,719
Teddy Roosevelt once said, reputation is what
people say behind your back.
58
00:03:25,020 --> 00:03:27,680
Reputation can be a key advantage when it comes
to investing.
59
00:03:28,219 --> 00:03:32,699
This is the number one reason why Warren
Buffett is able to negotiate superior terms on
60
00:03:32,699 --> 00:03:39,055
his investments, both because of his reputation
as an ethical counterparty and as his
61
00:03:39,055 --> 00:03:40,995
reputation as a great investor.
62
00:03:42,895 --> 00:03:46,995
This is so much the case that every deal that
he's worked on has been kept extremely
63
00:03:47,135 --> 00:03:51,770
confidential, lest it increase the price of the
stock before the deal is ever announced.
64
00:03:53,430 --> 00:03:56,090
The opposite, of course, is also true.
65
00:03:56,310 --> 00:03:58,650
Negative reputations compound exponentially.
66
00:03:59,750 --> 00:04:04,585
Institutional investors oftentimes do a minimum
of 10 reference checks on a potential manager
67
00:04:04,585 --> 00:04:09,385
prior to investing, making it nearly impossible
to raise institutional capital if you have a
68
00:04:09,385 --> 00:04:10,844
bad reputation in the market.
69
00:04:11,305 --> 00:04:16,779
This is why, sadly, many investors will never
raise a single dime of institutional capital.
70
00:04:18,839 --> 00:04:23,020
The next factor that compounds exponentially is
proprietary information.
71
00:04:23,480 --> 00:04:27,555
This compounding factor is less obvious versus
the other ones.
72
00:04:27,615 --> 00:04:31,235
There's a significant compounding effect when
it comes to proprietary information.
73
00:04:31,615 --> 00:04:36,574
This is because proprietary information leads
to higher returns, which leads to improved deal
74
00:04:36,574 --> 00:04:39,714
flow and turn leads to additional proprietary
information.
75
00:04:40,175 --> 00:04:41,714
This is a virtuous cycle.
76
00:04:42,149 --> 00:04:46,389
This is why some families are able to preserve
their wealth for many generations, especially
77
00:04:46,389 --> 00:04:51,110
in poor countries where information is more
concentrated and limited to a small group of
78
00:04:51,110 --> 00:04:52,089
powerful individuals.
79
00:04:52,949 --> 00:04:57,029
This can even be the case when the next
generation is not as hardworking or even as
80
00:04:57,029 --> 00:05:01,795
intelligent because proprietary information can
beat that much of a competitive advantage.
81
00:05:02,735 --> 00:05:07,074
It becomes exponentially easier to make good
decisions when you have access to proprietary
82
00:05:07,295 --> 00:05:07,795
information.
83
00:05:08,415 --> 00:05:12,735
One does not need to be a genius to buy land in
an area where there's a recently discovered oil
84
00:05:12,735 --> 00:05:14,560
field that few people know about.
85
00:05:14,560 --> 00:05:18,580
The same goes for buying secondary in a private
company that you know is doing well.
86
00:05:20,480 --> 00:05:23,860
The next factor that compounds exponentially is
people.
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00:05:24,240 --> 00:05:25,779
People compound exponentially.
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00:05:26,675 --> 00:05:30,375
Every CEO says, our most important advantage is
our people.
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00:05:30,435 --> 00:05:34,535
But if you don't have policies in place that
lead to attracting and retaining the very best
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00:05:34,595 --> 00:05:37,654
people, this statement is simply window
dressing.
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00:05:38,689 --> 00:05:42,629
How do you go about attracting and retaining
the very best people, the a players?
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00:05:43,410 --> 00:05:48,290
Firstly, a players want the ability to develop
skills and develop their own value in the
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00:05:48,290 --> 00:05:48,790
marketplace.
94
00:05:49,410 --> 00:05:52,389
This could be a difficult pill to swallow for
insecure managers.
95
00:05:52,610 --> 00:05:57,824
Insecure manager may think, what happens if I
develop my a player and he or she leaves my
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00:05:57,824 --> 00:05:58,324
organization?
97
00:05:59,264 --> 00:06:03,904
The answer is that if you don't develop your a
player, they are guaranteed to leave and likely
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00:06:03,904 --> 00:06:06,324
sooner than later as they have many options.
99
00:06:07,669 --> 00:06:12,310
To the upside, having a fully developed a
player for three years is more valuable than
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00:06:12,310 --> 00:06:15,990
having even an equivalent a minus player for
ten years.
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00:06:15,990 --> 00:06:20,089
So many ways developing a players is the price
for having a great organizations.
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00:06:22,305 --> 00:06:25,444
A players will recruit other a players at your
organization.
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00:06:26,064 --> 00:06:29,605
A players are the most underrated recruiters on
the planet.
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00:06:29,824 --> 00:06:32,485
That is because a players wanna work with other
a players.
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00:06:33,585 --> 00:06:38,389
Conversely, a players serve as a very effective
quality control for the business.
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00:06:38,689 --> 00:06:43,730
A players have zero tolerance for even a single
b or c player on their team as they realize
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00:06:43,730 --> 00:06:48,149
that one bad apple can significantly hurt the
entire team and organization.
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00:06:50,145 --> 00:06:54,464
This is why as investor, even with a small
investment team, you could argue that your
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00:06:54,464 --> 00:06:58,165
number one job is to make sure that you attract
and retain a players.
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00:06:58,944 --> 00:07:02,865
A players are the ones that will create the
organization that leads to sustained alpha and
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00:07:02,865 --> 00:07:03,365
performance.
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00:07:05,040 --> 00:07:10,020
The arbitrage when it comes to a players is to
pay them 10 to 25% over their market rate.
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00:07:10,080 --> 00:07:14,580
This is a competitive advantage in both
attracting and, perhaps most importantly,
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00:07:14,639 --> 00:07:15,860
retaining a players.
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00:07:16,125 --> 00:07:20,464
The reason you can afford to do this is because
a players will produce an order of magnitude
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00:07:20,525 --> 00:07:26,064
more and higher quality output than even a
minus players, leading to overall savings.
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00:07:27,085 --> 00:07:32,169
This arbitrage will only continue to grow as
productivity increases with the advent of AI
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00:07:32,169 --> 00:07:33,310
and AI tools.
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00:07:34,810 --> 00:07:39,870
And that's the lessons I've learned through the
podcast and also in my career on what compounds
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00:07:39,930 --> 00:07:40,430
exponentially.
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00:07:42,044 --> 00:07:45,904
Einstein famously said that compounding is the
eighth wonder of the world.
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00:07:46,204 --> 00:07:46,925
What do you think?
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Do you agree?
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00:07:49,324 --> 00:07:51,805
Thanks for listening to my episode on
compounding.
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00:07:51,805 --> 00:07:54,327
If If you enjoyed this episode, please share
with a friend.
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00:07:54,327 --> 00:07:58,167
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Thank you for your support.
