5 VC investment criteria

I reviewed 200 startup business concepts last week. Brainache.

The enterprises sold various goods and services. The concepts were achingly similar: give us money, we'll produce a product, then get more to expand. No different from daily plans and pitches.

Most of those 200 plans sounded plausible. But 10% looked venture-worthy. 90% of startups need alternatives to venture finance.

With the success of VC-backed businesses and the growth of venture funds, a common misperception is that investors would fund any decent company idea. Finding investors that believe in the firm and founders is the key to funding.

Incorrect. Venture capital needs investing in certain enterprises. If your startup doesn't match the model, as most early-stage startups don't, you can revise your business plan or locate another source of capital.

Before spending six months pitching angels and VCs, make sure your startup fits these criteria.

Likely to generate $100 million in sales

First, I check the income predictions in a pitch deck. If it doesn't display $100M, don't bother.

The math doesn't work for venture financing in smaller businesses.

Say a fund invests $1 million in a startup valued at $5 million that is later acquired for $20 million. That's a win everyone should celebrate. Most VCs don't care.

Consider a $100M fund. The fund must reach $360M in 7 years with a 20% return. Only 20-30 investments are possible. 90% of the investments will fail, hence the 23 winners must return $100M-$200M apiece. $15M isn't worth the work.

Angel investors and tiny funds use the same ideas as venture funds, but their smaller scale affects the calculations. If a company can support its growth through exit on less than $2M in angel financing, it must have $25M in revenues before large companies will consider acquiring it.

Aiming for Hypergrowth

A startup's size isn't enough. It must expand fast.

Developing a great business takes time. Complex technology must be constructed and tested, a nationwide expansion must be built, or production procedures must go from lab to pilot to factories. These can be enormous, world-changing corporations, but venture investment is difficult.

The normal 10-year venture fund life. Investments are made during first 3–4 years.. 610 years pass between investment and fund dissolution. Funds need their investments to exit within 5 years, 7 at the most, therefore add a safety margin.

Longer exit times reduce ROI. A 2-fold return in a year is excellent. Loss at 2x in 7 years.

Lastly, VCs must prove success to raise their next capital. The 2nd fund is raised from 1st fund portfolio increases. Third fund is raised using 1st fund's cash return. Fund managers must raise new money quickly to keep their jobs.

Branding or technology that is protected

No big firm will buy a startup at a high price if they can produce a competing product for less. Their development teams, consumer base, and sales and marketing channels are large. Who needs you?

Patents, specialist knowledge, or brand name are the only answers. The acquirer buys this, not the thing.

I've heard of several promising startups. It's not a decent investment if there's no exit strategy.

A company that installs EV charging stations in apartments and shopping areas is an example. It's profitable, repeatable, and big. A terrific company. Not a startup.

This building company's operations aren't secret. No technology to protect, no special information competitors can't figure out, no go-to brand name. Despite the immense possibilities, a large construction company would be better off starting their own.

Most venture businesses build products, not services. Services can be profitable but hard to safeguard.

Probable purchase at high multiple

Once a software business proves its value, acquiring it is easy. Pharma and medtech firms have given up on their own research and instead acquire startups after regulatory permission. Many startups, especially in specialized areas, have this weakness.

That doesn't mean any lucrative $25M-plus business won't be acquired. In many businesses, the venture model requires a high exit premium.

A startup invents a new glue. 3M, BASF, Henkel, and others may buy them. Adding more adhesive to their catalogs won't boost commerce. They won't compete to buy the business. They'll only buy a startup at a profitable price. The acquisition price represents a moderate EBITDA multiple.

The company's $100M revenue presumably yields $10m in profits (assuming they’ve reached profitability at all). A $30M-$50M transaction is likely. Not terrible, but not what venture investors want after investing $25M to create a plant and develop the business.

Private equity buys profitable companies for a moderate profit multiple. It's a good exit for entrepreneurs, but not for investors seeking 10x or more what PE firms pay. If a startup offers private equity as an exit, the conversation is over.

Constructed for purchase

The startup wants a high-multiple exit. Unless the company targets $1B in revenue and does an IPO, exit means acquisition.

If they're constructing the business for acquisition or themselves, founders must decide.

If you want an indefinitely-running business, I applaud you. We need more long-term founders. Most successful organizations are founded around consumer demands, not venture capital's urge to grow fast and exit. Not venture funding.

if you don't match the venture model, what to do

VC funds moonshots. The 10% that succeed are extraordinary. Not every firm is a rocketship, and launching the wrong startup into space, even with money, will explode.

But just because your startup won't make $100M in 5 years doesn't mean it's a bad business. Most successful companies don't follow this model. It's not venture capital-friendly.

Although venture capital gets the most attention due to a few spectacular triumphs (and disasters), it's not the only or even most typical option to fund a firm.

Other ways to support your startup:

• Personal and family resources, such as credit cards, second mortgages, and lines of credit

• bootstrapping off of sales

• government funding and honors

• Private equity & project financing

• collaborating with a big business

• Including a business partner

Before pitching angels and VCs, be sure your startup qualifies. If so, include them in your pitch.

Weekend project: limitless design service. It was fun to see whether I could start a business quickly.

I use no-code apps to save time and resources.

TL;DR I started a business utilizing EditorX for my website, Notion for client project management, and a few favors to finish my portfolio.

First step: research (Day 1)

I got this concept from a Kimp Instagram ad. The Minimalist Hustler Daily newsletter mentioned a similar and cheaper service (Graphically).

I Googled other unlimited design companies. Many provide different costs and services. Some supplied solely graphic design, web development, or copywriting.

Step 2: Brainstorming (Day 1)

I did something simple.

• What benefits and services to provide

• Price to charge

Since it's a one-person performance (for now), I'm focusing on graphic design. I can charge less.

So I don't overwhelm myself and can accommodate budget-conscious clientele.

Step 3: Construction (Day 1 & 2)

This project includes a management tool, a website, and a team procedure.

I built a project management tool and flow first. Once I had the flow and a Notion board, I tested it with design volunteers. They fake-designed while I built the website.

Tool for Project Management

I modified a Notion template. My goal is to keep clients and designers happy.

Team Approach

My sister, my partner, and I kept this business lean. I tweaked the Notion board to make the process smooth. By the end of Sunday, I’d say it’s perfect!

Website

I created the website after they finished the fake design demands. EditorX's drag-and-drop builder attracted me. I didn't need to learn code, and there are templates.

I used a template wireframe.

This project's hardest aspect is developing the site. It's my first time using EditorX and I'm no developer.

People answer all your inquiries in a large community forum.

As a first-time user developing a site in two days, I think I performed OK. Here's the site for feedback.

4th step: testing (Day 2)

Testing is frustrating because it works or doesn't. My testing day was split in two.

• testing the workflow from payment to onboarding to the website

• the demand being tested

It's working so far. If someone gets the trial, they can request design work.

I've gotten a couple of inquiries about demand. I’ll be working with them as a start.

Completion

Finally! I built my side project in one weekend. It's too early to tell if this is successful. I liked that I didn't squander months of resources testing out an idea.

Or the “lie to me” method.

I can predict a startup's success in minutes.

Just interview its founder.

Ask "why?"

I question "why" till I sense him.

I need to feel the person I have in front of me. I need to know if he or she can deliver. Startups aren't easy. Without abilities, a brilliant idea will fail.

Good entrepreneurs have these qualities: He's a leader, determined, and resilient.

For me, they can be split in two categories.

The first entrepreneur aspires to live meaningfully. The second wants to get rich. The second is communicative. He wants to wow the crowd. He's motivated by the thought of one day sailing a boat past palm trees and sunny beaches.

What drives the first entrepreneur is evident in his speech, face, and voice. He will not speak about his product. He's (nearly) uninterested. He's not selling anything. He's not a salesman. He wants to succeed. The product is his fuel.

He'll explain his decision. He'll share his motivations. His desire. And he'll use meaningful words.

Paul Ekman has shown that face expressions aren't cultural. His study influenced the American TV series "lie to me" about body language and speech.

Passionate entrepreneurs are obvious. It's palpable. Faking passion is tough. Someone who wants your favor and money will expose his actual motives through his expressions and language.

The good liar will be able to fool you for a while, but not for long if you pay attention to his body language and how he expresses himself.

And also, if you look at his business plan.

His business plan reveals his goals. Read between the lines.

Entrepreneur 1 will focus on his "why", whereas Entrepreneur 2 will focus on the "how".

Entrepreneur 1 will develop a vision-driven culture.

The second, on the other hand, will focus on his EBITDA.

Why is the culture so critical? Because it will allow entrepreneur 1 to develop a solid team that can tackle his problems and trials. His team's "why" will keep them together in tough times.

"Give me a terrific start-up team with a mediocre idea over a weak one any day." Because a great team knows when to pivot and trusts each other. Weak teams fail.” — Bernhard Schroeder

Closings thoughts

Every VC must ask Why. Entrepreneur's motivations. This "why" will create the team's culture. This culture will help the team adjust to any setback.

The human brain is amazing. As more scientists examine the brain, we learn how much it can store.

The human brain has 1 billion neurons, according to Scientific American. Each neuron creates 1,000 connections, totaling over a trillion. If each neuron could store one memory, we'd run out of room. [1]

What if you could store and access more info, freeing up brain space for problem-solving and creativity?

Build a second brain to keep up with rising knowledge (what I refer to as a Digital Brain). Effectively managing information entails realizing you can't recall everything.

Every action requires information. You need the correct information to learn a new skill, complete a project at work, or establish a business. You must manage information properly to advance your profession and improve your life.

How to construct a second brain to organize information and achieve goals.

What Is a Second Brain?

How often do you forget an article or book's key point? Have you ever wasted hours looking for a saved file?

If so, you're not alone. Information overload affects millions of individuals worldwide. Information overload drains mental resources and causes anxiety.

This is when the second brain comes in.

Building a second brain doesn't involve duplicating the human brain. Building a system that captures, organizes, retrieves, and archives ideas and thoughts. The second brain improves memory, organization, and recall.

Digital tools are preferable to analog for building a second brain.

Digital tools are portable and accessible. Due to these benefits, we'll focus on digital second-brain building.

Brainware

Digital Brains are external hard drives. It stores, organizes, and retrieves. This means improving your memory won't be difficult. 

Memory has three components in computing:

Recording — storing the information

Organization — archiving it in a logical manner

Recall — retrieving it again when you need it

For example:

Due to rigorous security settings, many websites need you to create complicated passwords with special characters.

You must now memorize (Record), organize (Organize), and input this new password the next time you check in (Recall).

Even in this simple example, there are many pieces to remember. We can't recognize this new password with our usual patterns. If we don't use the password every day, we'll forget it. You'll type the wrong password when you try to remember it.

It's common. Is it because the information is complicated? Nope. Passwords are basically letters, numbers, and symbols.

It happens because our brains aren't meant to memorize these. Digital Brains can do heavy lifting.

Why You Need a Digital Brain

Dual minds are best. Birth brain is limited.

The cerebral cortex has 125 trillion synapses, according to a Stanford Study. The human brain can hold 2.5 million terabytes of digital data. [2]

Building a second brain improves learning and memory.

Learn and store information effectively

Faster information recall

Organize information to see connections and patterns

Build a Digital Brain to learn more and reach your goals faster. Building a second brain requires time and work, but you'll have more time for vital undertakings. 

Why you need a Digital Brain:

1. Use Brainpower Effectively

Your brain has boundaries, like any organ. This is true while solving a complex question or activity. If you can't focus on a work project, you won't finish it on time.

Second brain reduces distractions. A robust structure helps you handle complicated challenges quickly and stay on track. Without distractions, it's easy to focus on vital activities.

2. Staying Organized

Professional and personal duties must be balanced. With so much to do, it's easy to neglect crucial duties. This is especially true for skill-building. Digital Brain will keep you organized and stress-free.

Life success requires action. Organized people get things done. Organizing your information will give you time for crucial tasks.

You'll finish projects faster with good materials and methods. As you succeed, you'll gain creative confidence. You can then tackle greater jobs.

3. Creativity Process

Creativity drives today's world. Creativity is mysterious and surprising for millions worldwide. Immersing yourself in others' associations, triggers, thoughts, and ideas can generate inspiration and creativity.

Building a second brain is crucial to establishing your creative process and building habits that will help you reach your goals. Creativity doesn't require perfection or overthinking.

4. Transforming Your Knowledge Into Opportunities

This is the age of entrepreneurship. Today, you can publish online, build an audience, and make money.

Whether it's a business or hobby, you'll have several job alternatives. Knowledge can boost your economy with ideas and insights.

5. Improving Thinking and Uncovering Connections

Modern career success depends on how you think. Instead of overthinking or perfecting, collect the best images, stories, metaphors, anecdotes, and observations.

This will increase your creativity and reveal connections. Increasing your imagination can help you achieve your goals, according to research. [3]

Your ability to recognize trends will help you stay ahead of the pack.

6. Credibility for a New Job or Business

Your main asset is experience-based expertise. Others won't be able to learn without your help. Technology makes knowledge tangible.

This lets you use your time as you choose while helping others. Changing professions or establishing a new business become learning opportunities when you have a Digital Brain.

7. Using Learning Resources

Millions of people use internet learning materials to improve their lives. Online resources abound. These include books, forums, podcasts, articles, and webinars.

These resources are mostly free or inexpensive. Organizing your knowledge can save you time and money. Building a Digital Brain helps you learn faster. You'll make rapid progress by enjoying learning.

How does a second brain feel?

Digital Brain has helped me arrange my job and family life for years.

No need to remember 1001 passwords. I never forget anything on my wife's grocery lists. Never miss a meeting. I can access essential information and papers anytime, anywhere.

Delegating memory to a second brain reduces tension and anxiety because you'll know what to do with every piece of information.

No information will be forgotten, boosting your confidence. Better manage your fears and concerns by writing them down and establishing a strategy. You'll understand the plethora of daily information and have a clear head.

How to Develop Your Digital Brain (Your Second Brain)

It's cheap but requires work.

Digital Brain development requires:

Recording — storing the information

Organization — archiving it in a logical manner

Recall — retrieving it again when you need it

1. Decide what information matters before recording.

To succeed in today's environment, you must manage massive amounts of data. Articles, books, webinars, podcasts, emails, and texts provide value. Remembering everything is impossible and overwhelming.

What information do you need to achieve your goals?

You must consolidate ideas and create a strategy to reach your aims. Your biological brain can imagine and create with a Digital Brain.

2. Use the Right Tool

We usually record information without any preparation - we brainstorm in a word processor, email ourselves a message, or take notes while reading.

This information isn't used. You must store information in a central location.

Different information needs different instruments.

Evernote is a top note-taking program. Audio clips, Slack chats, PDFs, text notes, photos, scanned handwritten pages, emails, and webpages can be added.

Pocket is a great software for saving and organizing content. Images, videos, and text can be sorted. Web-optimized design

Calendar apps help you manage your time and enhance your productivity by reminding you of your most important tasks. Calendar apps flourish. The best calendar apps are easy to use, have many features, and work across devices. These calendars include Google, Apple, and Outlook.

To-do list/checklist apps are useful for managing tasks. Easy-to-use, versatility, budget, and cross-platform compatibility are important when picking to-do list apps. Google Keep, Google Tasks, and Apple Notes are good to-do apps.

3. Organize data for easy retrieval

How should you organize collected data?

When you collect and organize data, you'll see connections. An article about networking can assist you comprehend web marketing. Saved business cards can help you find new clients.

Choosing the correct tools helps organize data. Here are some tools selection criteria:

• Can the tool sync across devices?

• Personal or team?

• Has a search function for easy information retrieval?

• Does it provide easy data categorization?

• Can users create lists or collections?

• Does it offer easy idea-information connections?

• Does it mind map and visually organize thoughts?

Conclusion

Building a Digital Brain (second brain) helps us save information, think creatively, and implement ideas. Your second brain is a biological extension. It prevents amnesia, allowing you to tackle bigger creative difficulties.

People who love learning often consume information without using it. Every day, they postpone life-improving experiences until they're forgotten. Useful information becomes strength. 

Reference

[1] ^ Scientific American: What Is the Memory Capacity of the Human Brain?

[2] ^ Clinical Neurology Specialists: What is the Memory Capacity of a Human Brain?

[3] ^ National Library of Medicine: Imagining Success: Multiple Achievement Goals and the Effectiveness of Imagery

It’s simply not conceivable, or at least not credible.

One of the most touted selling points of Crypto has always been this grandiose idea of decentralization. Bitcoin first arose in 2009 after the housing crisis and subsequent crash that came with it. It aimed to solve this supposed issue of centralization. Nobody “owns” Bitcoin in theory, so the idea then goes that it won’t be subject to the same downfalls that led to the 2008 crash or similarly speculative events that led to the 2008 disaster. The issue is the banks, not the human nature associated with the greedy individuals running them.

Subsequent blockchains have attempted to fix many of the issues of Bitcoin by increasing capacity, decreasing the costs and processing times associated with Bitcoin, and expanding what can be done with their blockchains. Since nobody owns Bitcoin, it hasn’t really been able to be expanded on. You have people like Vitalk Buterin, however, that actively work on Ethereum though.

The leap from Bitcoin to Ethereum was a massive leap toward centralization, and the trend has only gotten worse. In fact, crypto has since become almost exclusively centralized in recent years.

Decentralization is only good in theory

It’s a good idea. In fact, it’s a wonderful idea. However, like other utopian societies, individuals misjudge human nature and greed. In a perfect world, decentralization would certainly be a wonderful idea because sure, people may function as their own banks, move payments immediately, remain anonymous, and so on. However, underneath this are a couple issues:

• You can already send money instantaneously today.

• They are not decentralized.

• Decentralization is a bad idea.

• Being your own bank is a stupid move.

Let’s break these down. Some are quite simple, but lets have a look.

Sending money right away

One thing with crypto is the idea that you can send payments instantly. This has pretty much been entirely solved in current times. You can transmit significant sums of money instantly for a nominal cost and it’s instantaneously cleared. Venmo was launched in 2009 and has since increased to prominence, and currently is on most people's phones. I can directly send ANY amount of money quickly from my bank to another person's Venmo account.

Comparing that with ETH and Bitcoin, Venmo wins all around. I can send money to someone for free instantly in dollars and the only fee paid is optional depending on when you want it.

Both Bitcoin and Ethereum are subject to demand. If the blockchains have a lot of people trying to process transactions fee’s go up, and the time that it takes to receive your crypto takes longer. When Ethereum gets bad, people have reported spending several thousand of dollars on just 1 transaction.

These transactions take place via “miners” bundling and confirming transactions, then recording them on the blockchain to confirm that the transaction did indeed happen. They charge fees to do this and are also paid in Bitcoin/ETH. When a transaction is confirmed, it's then sent to the other users wallet. This within itself is subject to lots of controversy because each transaction needs to be confirmed 6 times, this takes massive amounts of power, and most of the power is wasted because this is an adversarial system in which the person that mines the transaction gets paid, and everyone else is out of luck. Also, these could theoretically be subject to a “51% attack” in which anyone with over 51% of the mining hash rate could effectively control all of the transactions, and reverse transactions while keeping the BTC resulting in “double spending”.

There are tons of other issues with this, but essentially it means: They rely on these third parties to confirm the transactions. Without people confirming these transactions, Bitcoin stalls completely, and if anyone becomes too dominant they can effectively control bitcoin.

Not to mention, these transactions are in Bitcoin and ETH, not dollars. So, you need to convert them to dollars still, and that's several more transactions, and likely to take several days anyway as the centralized exchange needs to send you the money by traditional methods.

They are not distributed

That takes me to the following point. This isn’t decentralized, at all. Bitcoin is the closest it gets because Satoshi basically closed it to new upgrades, although its still subject to:

• Whales

• Miners

It’s vital to realize that these are often the same folks. While whales aren’t centralized entities typically, they can considerably effect the price and outcome of Bitcoin. If the largest wallets holding as much as 1 million BTC were to sell, it’d effectively collapse the price perhaps beyond repair. However, Bitcoin can and is pretty much controlled by the miners. Further, Bitcoin is more like an oligarchy than decentralized. It’s been effectively used to make the rich richer, and both the mining and price is impacted by the rich. The overwhelming minority of those actually using it are retail investors. The retail investors are basically never the ones generating money from it either.

As far as ETH and other cryptos go, there is realistically 0 case for them being decentralized. Vitalik could not only kill it but even walking away from it would likely lead to a significant decline. It has tons of issues right now that Vitalik has promised to fix with the eventual Ethereum 2.0., and stepping away from it wouldn’t help.

Most tokens as well are generally tied to some promise of future developments and creators. The same is true for most NFT projects. The reason 99% of crypto and NFT projects fail is because they failed to deliver on various promises or bad dev teams, or poor innovation, or the founders just straight up stole from everyone. I could go more in-depth than this but go find any project and if there is a dev team, company, or person tied to it then it's likely, not decentralized. The success of that project is directly tied to the dev team, and if they wanted to, most hold large wallets and could sell it all off effectively killing the project. Not to mention, any crypto project that doesn’t have a locked contract can 100% be completely rugged and they can run off with all of the money.

Decentralization is undesirable

Even if they were decentralized then it would not be a good thing. The graphic above indicates this is effectively a rich person’s unregulated playground… so it’s exactly like… the very issue it tried to solve?

Not to mention, it’s supposedly meant to prevent things like 2008, but is regularly subjected to 50–90% drawdowns in value? Back when Bitcoin was only known in niche parts of the dark web and illegal markets, it would regularly drop as much as 90% and has a long history of massive drawdowns.

The majority of crypto is blatant scams, and ALL of crypto is a “zero” or “negative” sum game in that it relies on the next person buying for people to make money. This is not a good thing. This has yet to solve any issues around what caused the 2008 crisis. Rather, it seemingly amplified all of the bad parts of it actually. Crypto is the ultimate speculative asset and realistically has no valuation metric. People invest in Apple because it has revenue and cash on hand. People invest in crypto purely for speculation. The lack of regulation or accountability means this is amplified to the most extreme degree where anything goes: Fraud, deception, pump and dumps, scams, etc. This results in a pure speculative madhouse where, unsurprisingly, only the rich win. Not only that but the deck is massively stacked in against the everyday investor because you can’t do a pump and dump without money.

At the heart of all of this is still the same issues: greed and human nature. However, in setting out to solve the issues that allowed 2008 to happen, they made something that literally took all of the bad parts of 2008 and then amplified it. 2008, similarly, was due to greed and human nature but was allowed to happen due to lack of oversite, rich people's excessive leverage over the poor, and excessive speculation. Crypto trades SOLELY on human emotion, has 0 oversite, is pure speculation, and the power dynamic is just as bad or worse.

Why should each individual be their own bank?

This is the last one, and it's short and basic. Why do we want people functioning as their own bank? Everything we do relies on another person. Without the internet, and internet providers there is no crypto. We don’t have people functioning as their own home and car manufacturers or internet service providers. Sure, you might specialize in some of these things, but masquerading as your own bank is a horrible idea.

I am not in the banking industry so I don’t know all the issues with banking. Most people aren’t in banking or crypto, so they don’t know the ENDLESS scams associated with it, and they are bound to lose their money eventually.

If you appreciate this article and want to read more from me and authors like me, without any limits, consider buying me a coffee: buymeacoffee.com/calebnaysmith

I've summarized each.

Anne Lamott said books are important. Books help us understand ourselves and our behavior. They teach us about community, friendship, and death.

I read. One of my few life-changing habits. 100+ books a year improve my life. I'll list life-changing books you can read in a day. I hope you like them too.

Let's get started!

1) Seneca's Letters from a Stoic

One of my favorite philosophy books. Ryan Holiday, Naval Ravikant, and other prolific readers recommend it.

Seneca wrote 124 letters at the end of his life after working for Nero. Death, friendship, and virtue are discussed.

It's worth rereading. When I'm in trouble, I consult Seneca.

It's brief. The book could be read in one day. However, use it for guidance during difficult times.

My favorite book quotes:

• Many men find that becoming wealthy only alters their problems rather than solving them.

• You will never be poor if you live in harmony with nature; you will never be wealthy if you live according to what other people think.

• We suffer more frequently in our imagination than in reality; there are more things that are likely to frighten us than to crush us.

2) Steven Pressfield's book The War of Art

I’ve read this book twice. I'll likely reread it before 2022 is over.

The War Of Art is the best productivity book. Steven offers procrastination-fighting tips.

Writers, musicians, and creative types will love The War of Art. Workplace procrastinators should also read this book.

My favorite book quotes:

• The act of creation is what matters most in art. Other than sitting down and making an effort every day, nothing else matters.

• Working creatively is not a selfish endeavor or an attempt by the actor to gain attention. It serves as a gift for all living things in the world. Don't steal your contribution from us. Give us everything you have.

• Fear is healthy. Fear is a signal, just like self-doubt. Fear instructs us on what to do. The more terrified we are of a task or calling, the more certain we can be that we must complete it.

3) Darren Hardy's The Compound Effect

The Compound Effect offers practical tips to boost productivity by 10x.

The author believes each choice shapes your future. Pizza may seem harmless. However, daily use increases heart disease risk.

Positive outcomes too. Daily gym visits improve fitness. Reading an hour each night can help you learn. Writing 1,000 words per day would allow you to write a novel in under a year.

Your daily choices affect compound interest and your future. Thus, better habits can improve your life.

My favorite book quotes:

• Until you alter a daily habit, you cannot change your life. The key to your success can be found in the actions you take each day.

• The hundreds, thousands, or millions of little things are what distinguish the ordinary from the extraordinary; it is not the big things that add up in the end.

• Don't worry about willpower. Time to use why-power. Only when you relate your decisions to your aspirations and dreams will they have any real meaning. The decisions that are in line with what you define as your purpose, your core self, and your highest values are the wisest and most inspiring ones. To avoid giving up too easily, you must want something and understand why you want it.