Compounding

You might not know this, but you’ve been compounding your entire life.

Compounding is most widely known as that crazy monetary liftoff moment where your money starts to earn money for you, and then that money starts to earn its own little bit of money. This interest is interesting enough, but it is the idea that compounding applies to knowledge and wisdom as well that I want to talk about today.

You start learning your ABCs at some point between age 2 and 4, and then you start learning words. Comprehending words means you can start to read sentences, and before you know it you’re writing and publishing on Substack for the umpteen-millionth day in a row.

You create the tools you need to build the next tools, and it’s reverse-turtles all the way up.

You can see this playing out in AI right now, where new frontier models are coming out at decreasing intervals. Code tools help workers build better code, and then that better code builds code that’s better still. Eventually, the code just improves itself, or so every dystopian sci-fi novel or show about AI goes.

I’m really underselling the singularity-esque aspect of all this, but the main point is that technology is often used to create better technology. Think about the printing press with me: as more books were printed, more people became interested in reading, driving literacy. Literacy and reading drove demand, but so did price—a printed book was vastly cheaper than a laboriously hand-copied one. Some of those books may even have discussed ideas for better, more efficient printing presses that would produce (what else) more books.

That’s because tech is really just knowledge that has been applied to the physical world. Knowledge can be used to gain ever-more knowledge, and tech can be used to produce more tech.

The idea that your actions in the present affect your ability to do things in the future should come as no surprise to fans of linear time. What’s shocking is the accumulation over time—the compounding itself.