‘You don’t really understand something unless you can explain it to your grandmother.’ – Albert Einstein.
Well, try explaining AI or cryptocurrency to your Grandmother and tell me how that goes.
Technology startups will seem mysterious and hideous to our grandmothers. There’s no physical evidence to help them understand what we are up to. It is all in our heads and laptops. We are in the business of intelligence.
So what is intelligence?
Intelligence is the ability to make nuanced mental models for scenarios that arise in our lives and improve these models based on evidence. Intelligence also means that you realize one model that applies to a particular situation might not work in the other.
In other words, intelligence is the skill to make mental models that help us identify blind spots and increase performance in dealing with a particular situation.
Compounding is one of the most powerful mental models. Compounding is a mental model borrowed from the field of mathematics. According to the model, financial investment or an investment in yourself tends to reap exponential returns. And you only see diminishing returns once you see huge returns. Money can beget money. And its offspring can make you more wealthy, similarly, for business networking. A snowball rolling down a hill is often used as an analogy here. And rightly so. Compounding is a reasonably simple mental model.
Tech business involves coming up with much more complex mental models and testing those mental models in the market at a rapid pace. It is not enough that these mental models seem perfect in your head, but they also have to make sense to the market you are serving.
To make the most out of mental models, understand that mental models are temporary tools. Understand that mental models are not laws that govern our lives.