Listen to the full episode on iTunes (and please leave a rating to help the podcast reach more people): E30: The 2X Rule
According to the 2X Rule, you can either start an established career at a company like McKinsey and Deloitte or take half of that salary to enter a position where you can shine more.
Examples of positions where you can shine more:
- Working for a small company in a new, fast-growing industry.
- Entrepreneur or free agent.
If you take half of the salary you will make less money at first, however over the long-term you will have the potential to make more money.
Why? Because of the experience curve.
In order to achieve massive financial success, you need to accumulate enough experience in a field that consciously applies the experience curve (and preferably also fits your talents and interests).
Ideally you will work in a new, fast-growing industry that consciously applies the experience curve and which fits your talents and interests.
Examples of new, fast-growing industries include:
- Financial technology (fintech): New technology and innovation that aims to compete with traditional financial models.
- Biotechnology: Use of living systems to develop or make products.
Most new fast-growing industries are in the intersection of science, finance, marketing and online.
Given that you have the talent to succeed in one of those fields and you work hard for many years, there’s a bigger potential for making a lot of money.
The faster you can begin learning and gathering experience in a field like that, the higher your chances of succeeding will be.
If you don’t start the experience curve at a young age, you get into the habit of never starting a experience curve throughout your life.
This is especially important to understand if you’re below the age of 30.
Why is age 30 so important?
- Energy levels: Your energy levels are at their highest when you’re young. After age 30, you will need more recovery time for each unit of effort produced.
- Cognitive: Your brain is at the most malleable before age 25-30.
- Character: According to two of the most experienced managers in history, Napoleon and Lee Kuan Yew, one’s character is formed by age 30.
- Practical situation: Once you’re over 30 it’s usually harder to take advantage of the experience curve because you are likely to have more responsibilities such as family, kids and debt.
Overall, things are moving fast therefore school alone cannot prepare you for the new demands of the job market.
This puts more premium on the person who consciously follows the 2X rule to become the best version of themselves.
If you follow the 2X rule, here’s what you want to avoid the most: Organisations with obsolete traditions and regulations that prevent you from learning, innovating and inventing.
And here’s a more specific list of the top 3 career mistakes you want to avoid:
- Pursuing a career in a field you’re not interested in along with substandard co-workers.
- Going into an established industry with the goal of becoming a pioneer. This will stifle your initiative.
- Monotonous entry level job without incentive for initiative.
Just like with investing, as long as you don’t make the top mistakes the upside will take care of itself.
Finally, here are 4 great career choices:
- Small organisation with free range as long as you provide results.
- Good corporation where the best work. Management consulting, finance, investment banking.
- Enter a new fast growing field or industry.
- Self employed as soon as possible. Combine it with maximising your learning. Don’t only get caught up with running the day to day business. Maximise growth, learning and income while self employed.