Believe in the power of compounding
Recently, I’ve been studying U.S. stocks. The more I research, the more it feels like internet entrepreneurship and investing are especially similar. Why does Buffett always emphasize compounding? Because what’s truly terrifying about compounding isn’t the first year—it’s the many years that come after. Many people think: someone else already has one million, and I only have a hundred thousand—how can I catch up? Actually, that’s an illusion. What truly determines the future is never the principal amount, but the rate of return. If a person with one million earns 10% in a year, that’s 100,000 gained. If a person with a hundred thousand earns 100% in a year, that’s also 100,000 gained. By the second year, the gap between them starts to shrink. Many excellent funds, small companies, and entrepreneurs grow so fast in the early stages—not because their foundation is thick, but because their growth rate is far higher than the industry average.
The same is true for the internet. A marketing account with 100,000 followers might gain 1,000 followers per month. A new account might gain 5,000 followers per month. Even though the gap is huge right now, as long as the growth rate keeps being faster, the gap will become smaller and smaller. What truly determines the future isn’t how much you have now—it’s how fast you’re growing.