Context: Post #5 in my sequence of private Lightcone Infrastructure memos edited for public consumption. Much of the advice in this might not apply to your situation, read with that context in mind.

Most things have diminishing marginal returns. I often repeat the Pareto Principle to others: "You can get 80% of the benefit here with the right 20% of the cost", which is a particularly extreme case of diminishing marginal returns.

But I think for much of the work that Lightcone does, the returns to effort are generally increasing, not decreasing.

To explain, let's start with the simplest toy case of a situation in which trying harder at something gets more valuable the more you are already trying: A winner-takes-all competition.

If you are in a competition where the top performer takes all winnings, then doing half as well as the other contestants predictably gets you 0% of the value. Indeed, inasmuch as you are racing against identical candidates that put in 99% of the possible effort, and your performance is a direct result of the effort you put in, all the value is generated by you going from 98% to 99%+. If you stopped at any point before then, you would gain nothing and all your effort would be wasted.

Dum — Failing to put in the last unit of effort to win a winner-takes-all competition

Winner-takes-all markets are particularly common in software, where the cost of distribution and the time to scale up distribution are approximately zero. If someone ships a better product than you, your users can often shift suddenly and all at once. But really almost every market is structured so that being the very best at something is a lot more valuable than being the second best. Inasmuch as performance is correlated with effort, this means the marginal returns to effort are increasing.

But winner-takes-all markets are not the only dynamic that causes increasing returns to effort. The next biggest factor is that coordination costs increase (roughly) with something like the square of the number of people involved.

Maintaining context on a project you are working on alone is easy. But when you bring someone else into the fold you suddenly have to think about how to split up the work, and coordinate on that work. This burden of coordination is often quite large. If you can avoid bringing in an extra person, the hours that you worked to prevent that are thus high return.

To make this p...

The Lightcone Principles

The Lightcone Principles