We often hear that America spends an exorbitant amount of money on healthcare, but people rarely stop to think how much it is or what that means. In 2011, the United States spent 17.9% of its GDP (over $2.6 trillion) on healthcare.
That number is insane.
To give it some context, our peers in the 18% range are Liberia and Sierra Leone. In the 10-11% range are countries like France, Canada, Denmark, Germany, Switzerland, Austria, Portugal and New Zealand. Down closer to 7-8% are Uruguay, Croatia, Hungary, Chile, Cyprus, Bulgaria, Vietnam, Poland, and Turkey. Between 3-5% are countries including Singapore, Sri Lanka, United Arab Emirates, Algeria, India, and Thailand.
We spend about $8,800 per citizen, which is surpassed only by Switzerland, Norway, Luxembourg (which all have higher per capital incomes), and is more than double what most of the developed world spends.
If we could cut spending by just 1% of GDP, that would save us over $150 billion per year. Cutting 7%, getting us in line with our peers in the developed world, would save over a $1 trillion per year.
This is a graph I constructed with data I pulled from worldbank.org, plotting life expectancy at birth against a country's healthcare expenditure as a percentage of GDP. Why is the United States sitting at the intersection of the developed world and Liberia and Sierra Leone?
What this graph doesn't show is that these costs are running away. We spent 17.9% in 2011 compared to 16.6% in 2008, and all experts predict this number will continue growing.
Obviously, life expectancy is a rough indicator of the effectiveness of a healthcare system and there are a lot of conflating factors. But you'd expect this most basic goal of healthcare - keeping people alive - to improve with higher expenditure.
An endless list of problems
Moral hazard is a huge part of the problem; the third-party payer system is crippling our economy. When medical bills are footed by insurance companies the pricing system gets completely out of whack.
Drug companies charge $50,000 for a single chemotherapy treatment, an IV drip whose cost is defended by years of research and development. An MRI in the US can cost anywhere between two and eight thousand (good luck finding out exactly how much) - in France, by comparison, it costs a few hundred.
A single-party payer system, or more pejoratively, “nationalized healthcare”, has drawbacks. For example, wait times for elective treatment go up (just ask a disgruntled Canadian), and the government has to become integrally involved, which Americans tend to react negatively to (despite the fact that the data says it's better in almost all dimensions).
But the truth is that there's good reason for healthcare to be nationalized. I'm no great liberal; I am all for taxing cigarette smoking, motorcycle driving, and maybe even obesity. But why do people not see that healthcare is one of the few areas that makes sense - theoretical, academic, and practical sense - to have a highly involved government?
Healthcare is an inherently irrational market, where patients routinely act based on emotions rather than logic, and where the costs of decisions made by one person fall on someone else's shoulders. Externalities run high, payoffs and outcomes are unclear at best, and the philosophical backdrop for the whole system is closer to liberty than to capitalism. Everything about my economics degree tells me this is the textbook entry point for government.
Aside from the system itself, the worst offenders are probably insurance and pharmaceutical companies. But doctors are not without blame either. Hospitalized patients feel incredibly price inelastic (since the money doesn't come out of their pocket) and will pay for basically whatever their doctor recommends. Even the best-intentioned doctors may tend to recommend treatments that are more expensive and will give them a bigger payout, especially if they think that treatment is marginally more effective (and not all doctors have the best intentions).
Despite our obscene healthcare expenditure, almost 50 million Americans still don't have health insurance. Why do we have the general understanding that free speech, gay marriage, and social equality are part of a civilized and compassionate society, but somehow universal healthcare is not? We all agree that everyone has the right to food, water, and air; why do we draw the line before basic medicine and healthcare? As a worldview, I think it's barbaric.
And why are we still on a system where healthcare is tied to employment? This is a 70 year old mechanism that was installed during World War II to avoid regulations on wages and prices. This worked well back then, when employees stayed at one company for decades or life. Today's average American changes jobs a dozen times over a career, and so tethering healthcare to employment makes little sense. When Americans lose their jobs, they and their families are taken out of the healthcare system, which becomes a complete mess when they have preexisting conditions (although Obamacare is slated to fix this).
What can be done?
At this point you can probably guess that I support nationalized healthcare, but I recognize that that won't happen. There are too many people in positions of authority that are incentivized to block this change. Even more difficult to overcome is the national sentiment of “this is America where we work to buy our own healthcare, leave socialism to those lazy Canadians.” These self-described capitalists apparently refuse to look at healthcare data in the rest of the world.
We can still make meaningful changes within the system. We can figure out how to align incentives so doctors and drug companies aren't incentivized to over-treat patients (or, more sinister, prevent the cure of profitable diseases). We can address the tricky problems with end of life care, which drain hundred of billions of dollars per year to keep many patients miserable and bed-ridden. We can change regulations for pharmaceutical companies, create clearer pricing schemes at hospitals, and reduce friction throughout payment systems. America's obesity is clearly a huge part of the problem, but regulating calorie consumption doesn't go over well (thanks for trying Mayor Bloomberg).
I also think there are new innovations on the way that could dramatically change healthcare costs. Real-time blood monitoring, where an implant in your bloodstream could send a notification to your iPhone when something was wrong, promises to reinvent preventative medicine (which admittedly has its own set of problems). Software technology companies are in the process of streamlining and automating healthcare systems, which will save billions.
Right now, I think the most important thing we can do is begin a cultural shift to make people care about the problem of healthcare expenditure, which begins by articulating the issues. It's lucky that we live in a country where popular consensus dictates policy, but it's a shame that Americans don't know enough to fight for substantive changes.
“People overvalue optionality. It’s one thing I learned in chess. You just need to have one good option, instead of going for Option A or B or C or D.” - Peter Thiel
There's a peculiar tradeoff we all must constantly make between keeping our options open and focusing very hard on one thing. From our earliest days in school we are told to make decisions that don't close any doors, and this sentiment generally sticks with people for a long time.
America's education system promotes liberal arts degrees for a huge part of the population, keeping us like generic stem cells until we are 22. Our international counterparts tend to begin differentiating at 18 when they graduate high school. Professionally, the country's top students seem to have an insatiable demand for banking and consulting jobs, which are valuable in large part because of the opportunities they lead to (industry, private equity, business school).
The urge to not close any doors and keep one's options open for as long as possible - to diversify - is understandable. If you give yourself lots of chances to succeed, you'll be more likely to succeed, right?
At first blush this makes sense, but I think there is good reason to avoid taking this approach.
First is the superstar effect, which says there are huge gains to be had as you approach the top of a field. In a highly differentiated world, it's more valuable to have deep expertise in one or two areas than general proficiency in five or six.
Second is the counterintuitive truth that the best way to open lots of doors is to do one thing really well. The most successful people in the world have such strong operating leverage that they are able to get meaningfully involved in any endeavor they choose. They almost all got there by being extremely focused and good at one thing.
Naturally, the way I most often think about this tradeoff is with startups. When building a company, founders have a choice about how to handle the tradeoff between focus and optionality. Normally, the best startups look for one very good option and then find ways to make that happen. It's surprising how often I hear founders say they aren't sure what their business will look like yet, but they have lots of great options so something will probably work out.
Remember that on some level you can only do one thing at a time; it's better to get offers from your first choice job or school than your second through fifth choices. It's also normally better to be in the 99th percentile in one thing than the 90th percentile in two or the 80th percentile in three.
If there are free options you can layer into your life without losing focus you should take them; I'm not saying you should intentionally pigeonhole yourself. Instead, I'm trying to be a tugging force toward focus since I think people typically overvalue optionality and end up on the wrong side of the optimal balance.
Nothing in tech feels like more of a bubble than YC demo day. While the average seed deal in 2012 was valued at around $6 million, YC deals are routinely two or three times that expensive.
Hyper-expensive deals are a problem, but not so much so for investors. YC companies could easily be two or three times as likely to be successful as average startups, and as long as investors pick the good startups, they will do well regardless of the terms. YC has not yet proven to be a bubble; investors have done very well with these deals.
Instead, the main losers from these inflated valuations are the startup founders. Raising a seed round at a high valuation when you have relatively little traction is risky and damaging, and is generally done for the wrong reasons. Here are the main problems I've seen startups run into when they raise money at very high valuations.
Raising subsequent rounds gets much more difficult
You can usually only raise money on a promise once, and your seed round is the time to do it. This is your opportunity to partner with investors who want to invest in your team, your product, and your market. Investors will give you an implied valuation of millions of dollars in spite of the fact that little to no money is coming into your company.
The next round is not as forgiving. Series A investors do much deeper diligence on your revenues, operational costs, market potential, and key metrics, and they want to invest at a price that is (somewhat) grounded in reality. If you can't show investors serious traction 18 months after your seed round when you run out of money, you will get into trouble. You run the risk of raising a down round at a lower valuation (which brings on all kinds of problems), or not being able to raise more money at all.
Lower quality investors
Top tier investors often pay premiums to invest in good companies because they are actually very good. However, when a given startup artificially inflates its pricing relative to what it should be, it often ends up pushing out those high quality investors who know a good deal when they see one.
Another unfortunate consequence is that the investors you do get will be lower quality to you than they would be had you given them a better price. Because they will own a smaller stake in your company and feel less invested, they will be less incentivized to help you.
Waste of time
This is a really important one. Despite how it often seems, a startup CEO's main job is not actually to raise money; it's to lead the company to success. Fundraising is distracting from the important working of building a business, and should be done as quickly as possible.
When founders decide to raise at an obscene valuation, they can spend several weeks or months speaking to investors, and worse, all of their cognitive focus and emotional energy. Picking a reasonable valuation allows you get investors much more quickly so you can get back to building your business.
Just to drive home how insignificant the seed valuation of a startup is to the founders, here's a quick example.
If a startup raises a million dollars on a $4mm cap convertible note, it gives away 20%; if it raises a million on a $9mm cap note, it gives away 10%. For a founder who owns 30% of the company, we are talking about a difference between diluting down to 24% vs. 27%. It just won't matter. There will be a bigger variance in your eventual exit price based on the whims of your acquirer's M&A team that day, so forget about the equity.
Founders aim for high valuations so they can raise more money, suffer less dilution, and enjoy the internal satisfaction (or external competition with other founders) of running a valuable business.
Here is my advice: Founders, your outcome is binary. Either your startup will be a success and make you rich or it won't. Don't optimize for equity, optimize for success.
Startups can always identify their competition. If they're in a worthwhile market, they have competitors, and they know who they are. Surprisingly, I have found that many startups can't pinpoint the way in which they compete, and many more haven't thought deeply about why they should compete in that particular way.
Startups can compete in three main dimensions; quality, convenience, and price. As startups grow, they gain resources, leverage and market share, which allows them to compete in more ways than one (Airbnb is an example of startup that often beats hotels at all three). However, early stage startups usually only have the ability to compete in one dimension well.
It's usually not that difficult to figure out how best to compete, and it's critically important. Knowing the company's key dimension of competition is on the short list of things everyone at a startup should know at any given point (other items on the list include short-term goals and critical metrics).
Intuition and empirical examples typically lead to the same conclusions and should allow founders to extrapolate the best way for their startup to compete.
From what I've seen, startups often prefer to compete on quality; it's everyone dream to offer a truly better solution than anything else that exists. Marc Andreessen said that to be successful, startups have to offer a solution that is 10X better than existing solutions.
Startups should compete on quality only when they actually have something is that is 10X better than existing solutions. This requires a very honest look at your product and market. Can you really provide users with a product that is so much better than everything else on the market that nothing else matters? If you are, great. If you aren't, that's okay - you can still be successful, you just have to compete differently.
Competing on convenience makes sense when two conditions are sufficiently satisfied: 1) demand for a solution is price-inelastic and 2) existing solutions are inconvenient.
Uber is a great example of a startup that competes with other car services on convenience. Uber has been successful because it is so much more convenient than any other transportation solution, not because of cheap prices or unbeatable high quality. People need to get around and they will pay to do it, so competing on convenience makes sense in this market.
Startups can successfully compete on price when one of two conditions is satisfied: either 1) existing market prices are artificially high for some reason, or 2) when offering a solution at a cheaper price will gain sufficient market share to ultimately drive the company's success.
Warby Parker's value proposition and success has come from competing on price, and they have been able to do so because of artificially high market prices. The international conglomerate Luxottica had a stranglehold on the high-end eyewear industry, and was selling glasses for $300-500 that it produced for less than $20. By entering the same supply chains and cutting out middle men and licensers, Warby Parker successfully entered the market based on $95 glasses.
Competing on price is tricky and should be done thoughtfully. Amazon is famous for this strategy; they slashed their margins to almost nothing in order to successfully gain a stranglehold on the online retail and book markets.
Know yourself, know your market
Picking your dimension of competition is critical, and I think a lot of startups would do well to give it more consideration. Knowing exactly why you belong in the market gives your team focus and a sense of purpose that will allow you to increase your value-add to users and ultimately the size of your business.
Would you rather be Thomas Newcomen and help invent the steam engine or Andrew Carnegie and use that technology to build a railroad empire? Would you rather be Tim Berners-Lee and be credited with inventing the world wide web (and receive a $1.65 million prize 15 years later) or Mark Zuckerberg and deploy that technology to create a $75 billion social media company?
Phrased for the general case, would you rather be an inventor or a deployer of a revolutionary new technology? If you had to pick, you’d probably choose deployer.
The nature of technological revolutions
Chris Dixon wrote a great post about how technological revolutions come in two phases; installation and deployment. Typically, the installation phases happens during a financial bubble when excess resources are poured into a promising new technology. An inevitable financial collapse ensues, followed by a sustained period of growth fueled by the deployment of the new technology.
America’s unusual success has largely been fueled by major technological revolutions that have lead to large increases in productivity that unfolded over time. Innovations in manufacturing, transportation, engineering, and energy are examples of giant leaps in technology that resulted in real growth of productivity and quality of life.
Technological revolutions increase our national output and well-being in a way incremental improvements in labor and organization efficiency simply cannot. If you are America and want to maximize your success, it is essential to figure out how to create as many of these revolutions as possible. So how do you do that?
If America were an individual, it would probably invest time and resources into “installation” technologies – some promising places to start might be artificial intelligence, robotics, nuclear power, or materials science. America would know that many of these investments would never reach the deployment phase, but it would be worth it in the long run because those few successful revolutions would be so incredibly valuable.
America, unfortunately, is not an individual, and the inventors who dedicate their lives to making progress in installation types of technologies often don’t enjoy the benefits they seem to deserve. Most installation technologies never reach deployment phase, and even when they do, the inventors rarely reap the same benefits as the deployers.
In Homer's The Odyssey, Circe warns Odysseus that when he sails past the sirens, their beautiful singing will draw him in and result in his death. The singing will be so beautiful, in fact, that once he hears it he will still decide to go towards the music even know though he knows it will lead to his certain demise. Knowing that his preferences will change, he orders his men to put wax in their ears and tie him down so that he will be able to hear the music but unable to steer the boat towards it.
This is one of the earliest written examples of dynamic inconsistency, the phenomenon in which an individual's preferences are inconsistent over time. We are all too familiar with this in our everyday lives – we wake up in the morning determined to work out and eat healthy food, and cave in late at night to a delicious piece of chocolate cake. What you want right now is often different from what you want most.
When you are an individual, if you know that your preference will change over time, you can make decisions that force yourself to do the things you most want. Throw the cake out of your apartment so you can’t eat it late at night. Get ahead on your work on Sunday evening so Monday is better. Pay for a full online course to encourage yourself to see it through.
When you are a community, however, it is much harder to do this because individuals are driven by their own well-being, rather than by the well-being of the community.
Inventors and deployers
There are two main reasons it’s bad to be an inventor. First, much of the work done never results in a tangible product or service; instead, it’s akin to incremental advances in academic knowledge, which are important in the aggregate but typically yield little benefit for the individual researchers. Second, the period between the installment and deployment phases can take a really long time. As John Maynard Keynes said, in the long run we are all dead. Most people don’t want to wait around for decades to watch their inventions be gainfully deployed.
Individuals are much better off participating in the deployment phase than the installation phase because of the rapid and sustainable growth, and because many installation phases will hit a dead-end and never make it to deployment. The deployment phase is much less risky and, frankly, easier. This causes people to flock to deployment phases (think about the current deployment rush in tech) rather than installation phases (consider the nascent industry of computer chips and microprocessors).
America the individual gets long-term benefits when one person invents a brilliant new technology that another person gainfully deploys many years later. Unfortunately, humans' incentives are typically limited to themselves and those closest to them, so the inventor isn't always be so eager to pour his life into a risky research endeavor that may never pay off.
Incentivizing technological revolutions
Because the time periods are so long and third party externalities are so relevant, I believe we need to actively encourage work on promising installation technologies. Quantum leaps in robotics, cheap energy, transportation or AI will result in the long-term sustainable growth that has lead to America’s greatness, but how do we get the smartest people to leave their jobs at SnapChat or Goldman Sachs to work on those problems?
We know that we will be best off in the long run if we invest time and resources into installation technologies, but because America is not an individual we have to create structures to incentivize the behavior we want.
Some of these incentives are already in place. There are academic prizes and government grants, and even in the private sector, Zuckerberg, Milner and Brin teamed up to offer a $3 million reward for breakthroughs in medical research. The 20 under 20 Thiel Fellowship is at least tangentially related.
Still, it’s not enough; we could and should be doing much more. Private initiatives are good but there will probably need to be significant government involvement to correct the natural disparity in incentives for being an inventor over a deployer.
Until we make it more appealing to focus on inventing for emerging installation phases, people will continue the (relatively) easy and rewarding work of deploying the current revolutions. There are undoubtedly some private forces at work, and inventors can get great joy and satisfaction from their work, and often money too. But until we figure out how to make it as appealing to work on invention as deployment, we are leaving an indeterminate amount of innovation and growth on the table.
Consider a young high school couple. Odds are they won't get married; maybe the odds are 5%. If you have to bet whether they will get married or not, you'll make money in the long run by betting that they won't. However, if you have to bet on the single most likely person in the world for either of them to marry, their current partner is surely your best bet.
The same is true for knowledge. Paradoxically, even though we can safely predict that any given piece of knowledge will eventually be overturned or rendered obsolete, we can be almost sure that any given piece of knowledge is our current best bet.
Knowledge has a half-life
I recently read Ronald Bailey's article on Samuel Arbesman's book, The Half-Life of Facts: Why Everything We Know Has an Expiration Date and was sufficiently taken by the idea that I bought and read the book. The idea is a compelling one: just like half the amount of a radioactive element will decay during its half-life, in practically any field of knowledge, half of what we know will be replaced after some predictable amount of time.
In this post, “knowledge” refers both to facts that change over time or are proven wrong, and conventional wisdom or best-practices that are overturned.
Consider the following knowledge that was at one point considered true:
The Sun orbits the Earth. DNA has 48 chromosomes. Cigarettes are not bad for you. There is a dinosaur called the Brontosaurus. Red wine is bad for you. I mean good for you. I mean bad for you.
What gives one body of knowledge a shorter half-life than another?
I would argue there are four main characteristics that give a body of knowledge a short half-life.
The field is young and poorly-understood.
There is a limited amount of data from which to draw conclusions.
The knowledge is difficult to test and variables are hard to isolate.
The knowledge is more best-practice than fact.
Modern medicine has been around for less than a couple hundred years, the knowledge is part of a chaotic system where variable isolation is often impossible, and much of the knowledge is best-practices for treatment rather than provable facts. Medical knowledge can have a half-life as short as 10 years.
Nuclear and plasma physics are even less mature and well-understood, the data is hard to collect, and complicated conclusions are more often deduced than observed. For these fields, the half-life of knowledge is only 5 years.
This lead me to wonder: how does startup knowledge stack up? Probably not very well.
The half-life for startup knowledge must be very short
The startup industry in its current form is relatively young and poorly understood. Compared to other fields, there is a small amount of data about cause and effects for startups. What's worse, the data exists in an incredibly chaotic system where isolating individual variables is often impossible.
In other words, most of today's startups knowledge is probably wrong.
There are two type of startup knowledge that I'm talking about here, which I would describe as startup facts and startup wisdom.
Startup facts are just that; cold hard facts that are relevant to startups. These can lose their relevance because they are either proven untrue, or more likely, because they change over time. Examples of startup facts include:
Price of data storage. Number of people that own mobile devices. Government regulations.
Startup wisdom refers to generally accepted knowledge about what startups should do to succeed, a set of best-practices analogous to the generally accepted treatment methods in medicine. Current examples of this include:
Fail fast and iterate. Raise 12-18 months worth of runway. It's easier to enter an existing market than create a new one.
How likely does it seem that all of these insights will stand the test of time? The odds are pretty low.
All startup knowledge is susceptible to a half-life decay, and is turning over at a rapid pace. Although there will never be unanimously accepted best-practices for startups, consensus changes at a rapid pace. Similarly, trends like Moore's law and global mobile penetration are rapidly making yesterday's knowledge obsolete.
If today's startup knowledge will be obsolete tomorrow, how should founders proceed?
I think there are at least two takeaways from these (far from perfect) thoughts:
1) Founders should realize that the startup industry is immature and constantly-changing, the knowledge tends to be more best-practice than fact, the data exists in a chaotic environment and variables that are difficult to isolate. In short, founders should realize that the half-life of startup knowledge is short.
Of course, just like the high school couple, today's knowledge still represents the best guesses we currently have. Even though we know it's more likely than not that any given piece of current knowledge will ultimately be supplanted, this is still where we should place our bets unless we know otherwise. However, founders should never be afraid to challenge assumptions, because odds are the assumptions will turn out wrong.
2) Perhaps even more interestingly, it follows that good ideas for new startups may be found at the place where knowledge is overturned. Peter Thiel effectively made this point when discussing the idea of secrets at Stanford; startup ideas may exist where you believe a truth that most people do not.
As data storage became cheaper and security improved, Box gambled that enterprise companies would keep their data in the cloud. HelloSign bet that e-signatures could work. Founders should try to see around corners to anticipate what knowledge today will be obsolete tomorrow, and find their place accordingly.
My mom is a dermatologist and her favorite drug is Accutane. If you haven't heard of it, Accutane is the amazing pill that cures even the most extreme cases of acne. Despite being a wonder drug, Accutane requires a fair amount of explanation for new patients. After 25 years of perfecting her talk, it still takes 10 minutes to touch all the bases.
One morning a few weeks ago, right before her first patient of the day, she decided to film this 10 minute explanation on an iPad. Now when she has a new Accutane patient, she hands them the iPad, goes to see another patient, and then comes back to answer any questions that remain.
The results have been incredible. Not only do her patients rave about the new video, but she now has more of her most valuable resource: time. Relative to the investment of a few hundred dollars for an iPad and 10 minutes of her time, the payoff has been astronomical.
Power law distributions
A couple of days after discussing the iPad video with my mom, I reread a discussion about the importance of power law distributions between Peter Thiel, Paul Graham and Roelof Botha. These are the notes from Peter Thiel's class called “Startup” at Stanford business school as recorded by Blake Masters. It's a great read.
Power law distributions are really important to understand. The class at Stanford discusses this concept with respect to startup investments: you plot all your investments from best to worst on the x-axis, and your investment returns on the y-axis. Most people expect that this curve would be fairly flat (a linear distribution), implying that the difference between the return of each investment would be about the same. In practice, most venture capital funds live in a world of power laws, where the best investment returns more money than the rest of fund combined, the second best returns more than the rest combined, and so on.
Venture capital is one obvious manifestation of power law distributions, but we see this phenomenon all over. In industries susceptible to the “superstar effect”, such as sports, movies, or politics, the outcomes of top performers tend to follow a power law curve. The best baseball player makes a lot more than than the 100th best player, who makes much more than the 1,000th best player. “A-list” actors do dramatically better than “C-list” actors, who do dramatically better than struggling artists in Manhattan. The president has much more power than senators, who have much more power than local officials, who have much more power than me.
There are more power law distributions in our lives than we think
In my mom's case, if you lined up everything she has done to try and improve her practice's efficiency from best to worst, the payoff from the iPad video would be on the far left of her power law curve. It was probably worth shockingly more to her efficiency than her average improvement.
We are all constantly exposed to these kind of curves in our own lives with our investments of money and time.
We spend money on a lot of things that don't provide us with that much happiness, but a small number of purchases produce amazing returns for our happiness (think your favorite shirt, an incredible pillow, a perfect gift for a friend, or maybe even the dopamine-releasing iPhone, despite the offsetting high cost). The curve for our time investments is probably even more pronounced. Sometimes we spend hours making little progress on problems that won't even be that helpful if solved, and other times we spend 30 seconds writing an email that turns out to be hugely valuable in our personal or business lives.
The important thing to remember is that there are outsized returns for a small number of our “investments”, and it's worth a great deal of our time and energy figuring out how we can be more likely to make these investments. For my mom this may mean asking other dermatologist what high impact changes they have recently made in their practices.
Almost always, these outliers have an element of unpredictability; you can never know for sure which early stage startup will be worth a billion dollars, which email will be worth a huge multiple of the time it took to write, or what new improvement will make a medical practice drastically more efficient.
However, we can reduce this unpredictability by removing focus from the types of investments that almost never have outsized payoffs, and by adding focus to the types that often do. By trying to be acutely aware of what activities have a high likelihood of ending up on the far left of our personal power law curves, we can give ourselves a much better chance to see great returns.