Experience is logarithmic. More specifically, an individual’s personal work experience and capabilities within a single field, industry, or role compound exponentially along a logarithmic growth curve, and not with a linear growth curve as one might expect. But that second statement, while more precise, doesn’t exactly roll off the tongue. Let’s dive in further to see what this means.
We become more powerful more quickly as we build on our existing strengths in a specific field, industry, or role. For example, creating my third finance business is far easier than creating my first. It’s scaling faster and orders of magnitude larger. I’m attracting more interest and traction more quickly, from higher quality partners, in higher quality markets, with higher quality products. I have a larger existing network of talented and connected industry professionals, even though I need less outside help at each step. The research I’m doing this round is far more nuanced and specific to the opportunity, rather than spending a lot of time on basic, high-level research, and it’s going much faster than the research I needed to do for previous opportunities. All these factors compound even more, since I’m this financing opportunity is in the energy industry, which is also an industry I’ve worked in before.
In short, the experience I gain with each new finance venture — and with each additional year I work within the energy industry — increases my capabilities exponentially, not linearly. I’m 10X more capable each time I start a new business in the same field.
In contrast, last year I attempted to launch a carbon credits venture. It moved quickly, but I spent a lot of time just researching and learning and trying to get conversations with anyone I could. In the end, I was never able to get to revenues. Similarly, prior to that, I attempted to launch a digital twin business in the energy industry. Again, I got nowhere, partly because of my inexperience. It’s not that there aren’t opportunities in carbon markets and digital twins. It’s that I, with my lack of relevant domain experience, couldn’t identify and capitalize on those opportunities.
The logarithmic growth curve of compounding domain experience holds true for any venture and job I’ve done, not just the recent ventures mentioned above. For example, I co-founded a brain supplement beverage company in 2011. None of the three founders had done anything like this before. We flailed around a lot at first, which impaired the trajectory of the business for years to come. If I were to launch another business in that space today, it would go much better and grow much faster. Similarly, when I launched a rock climbing products brand in 2020, I stumbled a lot, mostly for reasons unrelated to the pandemic that began that year. If I did launch a similar CPG (consumer packaged goods) sporting equipment business again today, it would go much better. If I even relaunched that business today, it would grow much faster than before.
I’ve seen this principle at work in other people as well. For example, my brother has experienced it in his successful mutli-decade career as a sales leader in the medical device industry. It seems obvious, right? People grow careers over time. They climb the corporate ladder, moving to higher positions with more responsibility, they earn more money, and so on. However, all this mistakenly implies linear growth of capability. People change jobs every few years. Their salaries increase a little bit with each move. They attend conferences a couple times a year and learn a little and meet a few more people. But that linear career growth masks the true power of compounding capability.
Perhaps this is because people’s true power is often not as fully expressed while working in jobs as it is as an entrepreneur. Employees are often held back from expressing and implementing their best ideas. They don’t have full decision-making ability or the right influence. They have a specific job to do, and they’re supposed to do that one thing over and over. Whereas entrepreneurs must be, do, and know so much more. Entrepreneurs have the ability to make key decisions. Entrepreneurs almost never do the same thing twice. Every day is a new adventure. That’s not to say that employees don’t learn and grow at the same rate, but only that the impacts of their work and the growth of their career can feel linear. With entrepreneurs, it’s often easier to see the exponential impact of their day-to-day actions.
When starting a new business in a space an entrepreneur has worked within for a long time, all that exponentially compounded experience becomes obvious. The business fails, flails, or rides on rails. Start a venture in an new industry if you feel you must, but know that experience is logarithmic, and that could make or break your business.