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1/ Diminishing returns for money are well-documented. I.e. an extra $100 is worth a lot more to someone with $1k than to someone with $100k.
But focusing too much on diminishing returns can blind us to high leverage opportunities.
Two examples:
But focusing too much on diminishing returns can blind us to high leverage opportunities.
Two examples:
2/ If you're optimizing for saving, you probably undervalue raises. If you make $100k post-tax and save $20k, then finding a job that pays $120k is only a 20% raise, but you'll 2x your savings. That is, one year in the new job lets you save as much as two years in the old job.
3/ If you're raising a seed round, you probably undervalue runway. It may take 6 months to reach product/market fit & 4 months to raise a Series A. 1 year of runway gives you 2 months to build traction. 2 years of runway gives you 7x more time to build traction w/2x more funding.
4/ In these examples, a small increase in something like salary or seed round size yields a big increase in the KPI you *actually* care about. It's important to remember that when you're making important decisions: optimize for your KPIs, not for other loosely correlated metrics.
