joe chen: “simple math for multiplying impact: how to do better in work and philanthropy”
DESCRIPTION
Joseph Chen, Founder, Chairman and CEO of RenRen, Inc., gave a keynote speech at China 2.0 Forum in Beijing on Friday, April 12, 2013 at the Stanford Center at Peking University (SCPKU). The Forum was hosted by the Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) of the Stanford Graduate School of Business.TRANSCRIPT
Simple Math - How to do better in work, life, and philanthropy
First, a simple math example
0200400600800100012001400
CompoundSimple
What are some examples of compound growth?
What is the secret of compound growth?
Conclusion: To achieve compound growth of capital, interest accrued from last period must be re-deployed in current period with similar returns.
0
50
100
150
200
250
300
350
400
1967 1968 1969 1970 1971 1972 1973
Compound growth
Simple growth
What is the implication for personal growth?
• One reads a book every week. One year 50+ books. 10 Years 500 books. Will her wisdom grow to 1.01^500≈148 or 1+0.01*500=6 ?
• What kind of reading would result in compounding
growth in personal wisdom? What does not? • What is the value of learning about the ways of learning,
or meta-learning vs. reading martial arts novels? • How to make use of the knowledge gained reading the
first book about history, and deploy it toward adding value to reading the second book on investment, psychology, management, etc.?
What is the implication for personal growth? - Build a latticework of mental models
What is the implication for career development?
• You spend at least 8 hours a day on your career, doing something society wants you to do. How do you make sure you have compound returns on your effort?
• Intuition 1: doing something you are good at and love to do. Why? You learn more efficiently.
• Intuition 2: 10000 hour rule, be focused. Why? You compound growth your skills on one thing. Not having to start from scratch every time changing the subject.
What about philanthropy?
1. One of the least researched, highly inefficient market place, because results typically not measurable.
2. The wealthiest members of our society are devoting majority
of their wealth into philanthropy. 3. Renren investor: General Atlantic founder, the Billionaire
who wasn’t.
What about philanthropy?
4. Bill & Melinda Gates Foundation: 100B+ 5. How do they measure their success? What simple formula
do they use?
The Bill Gates Foundation
• What formula does it use to measure its success, or rate of
return on investment?
The Bill Gates Foundation
Gates’ formula: saving maximum number of human lives.
How should we think about it?
The future of humanity…
Save maximum number of human life, present and in the future?
This is a hard problem. What if you couldn’t figure it out?
Coming back to simple math…
“Read Ben Graham and Phil Fisher, read annual reports…..
Continued..
… but don’t do equations with Greek letters in them.”