Just as the biggest gains in your bank account over time come from financial investments – in stocks, bonds, and various funds, the biggest changes in your career come from personal investments – in your skills, habits, and relationships. As I argue in "Plant the Seeds", the effect of investing in yourself is cumulative, with small initial impacts that magnify as positive feedback loops take hold and you build confidence, experience, and eventually, a good reputation. This begs the question: how do you decide which investments, in yourself, to make?
The exponential effect of continually investing, both in financial assets and in yourself
To answer this question, we first must disprove a toxic myth: that you need to know exactly what you want from life in order to make the appropriate investments in yourself. In his book Antifragile, Nassim Taleb calls this myth the teleological fallacy (1):
"[It is] the illusion that you know exactly where you are going, and that you knew exactly where you were going in the past, and that others have succeeded in the past by knowing where they were going."
The teleological fallacy mistakenly implies that Mark Zuckerberg dropped out of Harvard fully confident he had a product for a billion people (he thought it would just be for college students). Or that bestselling author Robert Greene spent his entire life devoted to his writing career (he worked 80+ different jobs before his first book). It's tempting to believe in the inspiring narrative, the unwavering upward ascent to success, which conveniently ignores the ugly reality, the wrong turns, and the confusion and insecurities. It doesn't help we are all riddled with hindsight bias, looking back at the determinate past, telling ourselves and others the version of the "story" that paints a struggle in the best possible light.
It's all just an illusion. No one knows exactly where they're going or how or when they're going to get to the place they think they want.
When you invest in yourself -- going after an advanced degree, planning a pivot, deciding to take a big risk -- you instead must follow the investor Howard Marks' advice:
"You can't predict. You can prepare."
Why can't you predict?
The future is surprising and extremely uncertain, rendering most long-term plans useless, because it emerges from the random, unpredictable encounters that the physicist Murray Gell-Mann calls frozen accidents. A frozen accident is Gary Kildall turning down an opportunity to build IBM's operating system, leaving IBM to offer Bill Gates the lucrative deal instead. A frozen accident is the assassination of Franz Ferdinand in 1914, which unintentionally ignited World War 1. They are the random events that always seem insignificant when they happen, but, with the benefit of hindsight, turn out to be hugely impactful. What would life be without Microsoft, World War 1, or any given frozen accident?
We can't say, except: very different from what it is now.
As Gell-Mann himself said, “each of us human beings, for example, is the product of an enormously long sequence of accidents, any of which could have turned out differently.” Think about how your parents met and that your entire existence now depends on such a chance encounter.
None of us can predict those same frozen accidents and random twists and turns that will define our own successes, struggles, missed opportunities, and good catches going forward. It's therefore useless to build unrealistic long-term plans, overfitting for an inherently unknowable future, while worrying about whether we're in the best possible field.
What does it mean to prepare?
It means preparing an investment process that you can stick to each day, regardless of what happens externally that is out of your control. You read 30 minutes every night. You talk to two new colleagues a week. You learn one interesting skill every three months. Because at the end of it all, some stranger makes the hiring decision, some butterfly flapping its wings causes the economy to rise or fall, some random event pulls you up and then back down, and through it all, you can only control your process and it is therefore what should command most of your attention. You can only prepare; the results will come on their own.
Some helpful advice I've learned over the last few years about defining this process:
1) Know yourself: According to the Greek poet Pindar, you "become who you are by learning who you are." The first step to defining how you invest in yourself is to focus your gaze inward to understand what naturally interests you and what comes easy to you that is hard for others. Caring too much about what skills are valued by others can be distracting and can tear you off course. After all, today's hot skills could be tomorrow's useless ones.
Those that go to into a field that is not aligned to what truly interests them run a great risk (I've learned this from experience, too). At first the money, fame or status will provide a reasonable crutch and they will perform adequately. But over time, they will have trouble staying motivated and keeping up with their peers that are truly interested in the field. Not fully investing in themselves because it is just not interesting, they will miss out on the big cumulative returns in the long-term.
Robert Greene's book Mastery is an excellent resource that discusses how the great thinkers, writers, and scientists of history all deeply understood their own natural inclinations and abilities. They didn't always know exactly how these inclinations would manifest themselves in the future, but because they continually invested in them, they always found novel ways of applying their unique skillset, especially as technologies changed and new opportunities came into vision.
2) Be a generalist: Good investors diversify. They don't put all of their eggs in one basket, because certain financial assets do better in certain economic environments. The only people who disagree are the people who bought bitcoin in 2013. Good for them – they got lucky. Next time it won't be so easy.
As a diversified investor in yourself, it's crucial to be a generalist. You refine your interests in a few different industries. You may be "technical", but you still learn how to communicate with people and negotiate. Because the CFO of an organization isn't the best accountant. Because the guitarist you see at the halftime show can play a suspended 9th chord but also knows how to promote himself and build his brand. As writer Robert A. Heinlein once said, "specialization is for insects."
We are, to borrow a term from author Eric Beinhocker, merely a "portfolio of experiments". (2) We each preside over a portfolio of different skills, interests, relationships, habits, and experiences, with any one of these assets providing the greatest returns in the future, assuming we continue to appropriately refine, build, and re-invest in them along the way. We are venture capitalists, trusting that our well-defined process will identify at least one asset that will far outperform the others in the distant future.
3) Value the wrong turns: In America, entrepreneurs are highly celebrated for their love of risk taking; they almost enjoy taking wrong terms, embracing that it is part of the journey to building a lasting, battle-hardened business. America's technologies and innovations are copied throughout the world because we value these risk-takers; failure is just not appreciated in more rigid, and therefore less innovative, countries.
Every wrong turn you take in your investment process is an opportunity to learn more about yourself and to improve your process. If you shy away from risks – remaining dangerously in your comfort zone – you become fragile and afraid to explore the better opportunities that require a certain risk tolerance.
The Final Verdict
Investing in yourself is an art – not a science – because the world is too complex for us to formally select an exact proportion of skills and habits that maximizes some determinate long-term metric. No one can predict the future. Interests and personal challenges are constantly changing. Businesses evolve and die, technologies grow obsolete, the forces of disruption and globalization can shift the ground the beneath your feet when you least expect them to.
By remaining aligned to your inherent interests and talents, focusing energy on the process and not the results, and growing stronger from inevitable changes, your investment process can provide cumulative, growing returns in a variety of different challenging environments.
"Considering the monotony and consequent insipidity of life one would find it unendurably tedious after any considerable length of time, were it not for the continual advance of knowledge and insight and the acquisition of even better and clearer understanding of all things, which is party the fruit of experience, partly the result of the changes we ourselves undergo through the different stages of life by which our point of view is to a certain extent being continually altered, whereby things reveal to us sides we did not yet know."
– Arthur Schopenhauer, Essays and Aphorisms
(1) Antifragile by Nassim Taleb (p. 170)
(2) The Origin of Wealth by Eric Beinhocker (p. 334)