On life and time

An immensely powerful concept which I understood quite late in life is the 80/20 or the Pareto principle.

Now that I understand the power of this principle, I try to apply it all the time. It is a perfect lens

I don’t need to explain what it means but here is an interesting way to look at it. I have come to believe that this 80/20 principle is almost like a law of physics. It just keeps manifesting itself everywhere. It is mighty hard to beat it.

Some examples which I can think of as I am writing this blog. I don’t even need to google/chatgpt it.

• 20% companies on any listed exchange contribute to 80% of them total market cap of that exchange
• 20% of handles on social media bring 80% of followers/activity
• 20% of the workforce of any company is responsible for 80% productivity
• 20% of all content you consume will be high quality (may be 20% of the 20%)

So now we might (and this is my own hypethesis, and I hope to sharpen this) be able to predict the future by applying this law.

• only 20% of the hot technology we see today will survive in the future
• only 20% of the top companies of today will survive in the future
• only 20% of your skills will have any relevance in the future
• only 20% of your investments will gain above average returns in the future
• only 20% (I hope less than that) of the self- claimed gurus of today will survive in the (hopefully not too far) future
• on and on…

Further, like the laws of compounding, the 20% of the top 20% continue to attract the gains and over time you have concentration of power, money, knowledge etc.

Another thought experiment to help you understand the work you need to put in if you want to stand out. Well, this particular example may not be relatable for someone not in a job, but I am sure you are smart enough to apply this to your particular life situation.

Assume you are working in a large organisation with a head count of over 500K. This number looks big so another way to look at it is consider the top tech companies and imagine you want to be one of the best in that group.

Now, to be the best of the best, you need to slowly be 20% of the top 20% of the top 20% an so on. Or you just need to be tremendously lucky. Either ways, this can be very hard.

In a way this table also explains what it takes to be mediocre. All you have to do is either a. be in the 80% consistently or b. compete against people below your level (means imagine you arrived in the top 4K people, but now rather than marching on you keep benchmarking yourself against the 20K folks from where you made it, and as a consequence you stop growing).