Back in my internet marketing days the metric of choice was monthly income. Monthly everything really. Anyone reading this in the IM space knows what I’m talking about — hitting the $10k/mo, $30k/mo, $50k/mo milestones are a rite of passage. It is all about liner growth, the output of a machine you build that churns out cash as much as you want to work.
This suited me for a long time. I, like many of you, prefer systems based thinking when it comes to money. I like having buckets for my capital and romanticize long term, sustainable dividends. Daily actions that compound are my love language. Sure the Atomic is nice, but give me the Habits any day of the week pls.
After reading The Slight Edge in 2013 (highly recommended), I was sure I figured out the key to life. Small actions, done consistently, yield the biggest returns over time. Then 2017 came and my life exploded to the upside. Crypto investments went parabolic. I started a YouTube channel and podcast that garnered enormous popularity. My previous 8 years as an entrepreneur were dwarfed by 4 months of a crypto bull market. I began questioning this whole Slight Edge mentality. Maybe the answer was to find these wild, exponential opportunities and just chill in between? The math was clear — nothing compares to a step function.
Then came 2018 and 2019. Anyone who was around then knows it was different. Twitter and the tradable markets were ghost towns. And I mean ghost towns. Trying to find someone who was actually bullish on crypto was possible but you had to search for them. There was no liquidity on any exchanges, at least compared to today. Daily moves were sometimes 0.5% for weeks. This bear market is quite nice in comparison — so much to learn, so many people still into it all, so much you can still do and invest in. For that I am grateful.
During times like this, we forget how investments work. And as I have discussed many times on this blog, the laws of nature apply to everything in our lives. When the daily, compounding actions are most boring when they are most important and should be given the most amount of work. And when the step function growth is happening, we should be doing the least amount of work. Of course, we all do the opposite and wonder why we underperformed just holding a basket of coins and hitting Airplane mode in Fiji for a few months.
It has taken me a while to realize this but Time is the greatest mindfuck the human species must deal with. Time dictates all our decisions whether we like it or not. Time, when fused with a brew of societal memes and biological hormones, convinces us that things called Urgency and Age are real things, not bullshit created by our own minds. Because of this, we do nothing in bear markets and do daily, consistent actions in bull markets. The urgency creates motivation. The rational mind is no match for the emotional one.
I have more financial regrets than I can count. If you’ve been in the money business for any length of time, you do too. If you don’t you’re not playing hard enough. What they all come down to is this very principle:
Daily, compounding actions when it’s boring — Limited, passive actions when it’s ripping.
You see, the Step Functions occur the way a volcano erupts. It’s not a result of 10% more pressure each month that slowly oozes out. It is the result of pressure building and building beneath the surface for years, even decades. 50 years of this underground work for one week of eruption.
The modern world does not like these laws of nature. Governments and Central banks do not want markets to operate this way. Reflexivity makes it very hard to maintain order in society. They dampen volatility in every aspect they can, feeding you a bland soup of “education” to make you believe that your life and your future is linear. They don’t want you to expect great things. They do not want to see you have a Step Function in your wealth. They tell you that you should simply be OK with the power of compounding and enjoy your gains when you’re 70 years old and can spend it all on health care. Fuck that.
Instead, I would offer an alternative way to view your world. One that allows you to beat this beta index that the world is built on. For most people out there, dollar cost averaging into the S&P500 index fund is probably the best move. But I have a feeling the people reading this aren’t really interested in being average. I know I’m not.
What I have learned after a few crypto cycles and 10 years of building companies is that the Step Functions you are looking for happen in times like this. They are sown in a soil that feels monotonous and rather hopeless. There is no external river of energy to fire you up each morning — you create your own goals and your own vision to generate excitement.
The Step Functions you saw in 2021, the people in your chat rooms who had multiple 100x returns, were the byproducts of being early. And being early means being boring. Remember when people were so impressed the Synthetix returns? Well I remember reading that whitepaper when it first came out and it sounded completely ridiculous. And in no universe did I think it could do what it did. Same with Chainlink or Aave or Matic. But there were people who did believe. Some traders, some developers, some fans.
They put in the time, every day, to do the research and find the projects and build the conviction. They are the ones who experienced Step Functions not just because they were right, but because they were able to hold through the entire parabolic move.
The byproduct of working through boring times is that you become immune to the cocaine of bull markets. You are less affected by the hype and the FOMO. You stop being a sheep, hoping for scraps of the residual pump and you become a terminator who decides when and how your sell orders trigger.
The obvious question is “how do I know which projects to focus on?” which is implying that you will be wasting your time if you don’t work on the right things. This is a false paradigm — there is no wrong project to work on right now. There is only a process to follow.
Because what I have learned over the years, especially in crypto, is that the people who put in real work during bear markets ALWAYS win when the bull comes. Sure some people hit it bigger than others, but I have yet to meet someone who worked really hard in 2018–2020, made investments and didn’t absolutely crush shit compared to investing in the S&P 500.
The Step Functions in wealth only happen to people who put in the work when the fewest other people are doing so.
Right now, all you have to do is network like you have some level of interest to get lots of deals and information. But you don’t have the excitement to keep you going.
In a bull market, you’ll have all the excitement to keep you going but you’ll have to work 10x harder because everyone else is doing the same thing.
Time is a made up idea used to organize our lives and our societies. It has nothing to do with how long or how fast something should happen.
Instead, you should be thinking about the rules of nature when it comes to having life altering progress. Nature rewards people that are first and people that have better access to good information. Nature gives disproportionate gains to the people in the top 1%. Nature is reflexive and volatile — as the entropy expands like it does in bear markets, you must focus and build in order to front run the inevitable changing of the tides.
As you begin to think like this you may face The Resistance. Read the book The War of Art by Steven Pressfield if you do. Just keep doing something. 15 minutes a day. 1 phone call a week. Stay in the scene and keep looking to deploy capital in small, intentional ways. This may continue and get even harder for years to come. Who cares. Keep going.
It is when all hope is lost that the greatest opportunities arise. They don’t build statues of men who had a vision at the top, they build statues of men who held their vision at the bottom.
The Step Function in wealth is the byproduct of the work you do today. When the next bull run is going full force, you will finally understand.