In 1994, a 30-year-old Jeff Bezos was a vice president at a prestigious hedge fund in New York City.
One day, as he was researching markets, he came across a fascinating fact. This fringe thing that people called the Internet was growing at an incredible 2,300% per year.
Immediately, the opportunity alarm bells went off in Bezos’ head. “Things just don’t grow that fast! The Internet might be a once-in-a-lifetime opportunity,” he thought to himself.
Now, put yourself in Bezos’ shoes for a minute. After years of hard work, you’ve finally made it. You’re highly paid, your work is stimulating, and you’re on the fast track. You’re also recently married and planning to have kids in the next few years. While the Internet is growing, many “experts” believe that it’s a toy now and always will be.
Which path do you take:
- Go all in on the new thing?
- Keep researching the Internet opportunity part-time?
- Focus on your knitting?
We all know how the story ends. Bezos took the plunge. He decided to leave his cushy job, drive across the country with his wife, and start Amazon. The Internet took off. As they say, the rest is history.
Although Amazon was founded nearly 30 years ago, the underlying dilemma is just as relevant…
When confronted with a big new technology, tool, or other change in the world that is growing exponentially, should we copy Bezos and go all in or stick to our knitting? Put differently, should we be an early adopter or laggard?
I call this the Jeff Bezos Dilemma.
It’s particularly important for all of us to have a solution to this dilemma, because it impacts every area of our life, could change the trajectory of our life, and is particularly timely in today’s world.
Furthermore, for many of the biggest opportunities, if you’re waiting to hear about it, you’re already too late. In other words, if you’re waiting for the media to write about it and for people in your network to talk about it, you will miss the biggest opportunities. Counterintuitively, many of the biggest ideas look like toys at first and are almost universally ignored or written off. I learned this the hard way with investing in crypto (more on that below).
So what should we do?
Fortunately, the Jeff Bezos Dilemma has a solution. In this article I present you with a research-backed, street-tested approach you can easily use to gauge “once in a lifetime” opportunities that look like toys — all without getting completely distracted.
But, before we jump in, it’s worth understanding the dilemma a little deeper. As the Charles Kettering saying goes, “A problem well defined is half solved.”
#1: The Jeff Bezos Dilemma Applies To Every Area Of Our Life
In mathematics, the Jeff Bezos Dilemma is known as the Explore-Exploit Tradeoff. In other words, should we exploit what we already know works or explore something that may work better or not at all?
Here are a few practical examples of where it applies to our careers…
- Investing. Should we invest time to understand the crypto world now or wait until it’s more mainstream, safer, and easier to use?
- Social Networks. Should we adopt the new social network of the day or focus on building out our existing internet presence?
- Tools. Should we adopt the fancy new tool in our industry or stick with the one we’re comfortable with?
- Entrepreneurship. Should we launch a new business or stay at our current company?
- Industry. Should we stay in the same industry or explore switching to a new industry that has more potential?
Once you see the Explore-Exploit Tradeoff, you start to see it everywhere in your personal life too…
- Friendships. Should we spend time with our closest friends or spend time making new friends?
- Reading. Lydia Davis brilliantly captures the dilemma with reading: “In the allotted time left to me on earth, should I read more and more new books, or should I cease with that vain consumption — vain because it is endless — and begin to reread those books that had given me the intensest pleasure in my past?”
- Food. Should we search for a new restaurant we’ve never been to or eat at our favorite one?Should we order our favorite menu item or try something new?
Bottom line: If you just get a little bit better at confronting the Jeff Bezos Dilemma, and you will see how in this article, the benefits will ripple throughout your entire life.
#2: The Jeff Bezos Dilemma Is Timely Because Of The Number Of Historic Events Happening Simultaneously
The chart below maps major technological breakthroughs in the last 250 years and their economic impact. I love it because it really captures how unique this moment is. It looks like a tidal wave coming at us and, in many ways, it is.
The historical chart above also captures what you are probably feeling. Things are speeding up, and it seems like everyday we are hearing about new technological breakthroughs, tools, social media networks, social movements, and crises.
And the crazy thing is that the pace of change is just going to pick up more and more. Google’s Director Of Engineering, Ray Kurzweil, provides a forward-looking perspective. Kurzweil has spent his whole career studying patterns of technological change. After plotting big tech breakthroughs out on a timeline, he came to the following conclusion:
My models show that we are doubling the paradigm-shift rate every decade.— Ray Kurzweil
This 10-year doubling rate is profound when you play it out over time…
Bottom line: If you thought this year was crazy, you ain’t seen nothing yet. Things are going to get exponentially more crazy in the coming years. This all is important because rate of change is a critical factor in the Jeff Bezos Dilemma. Explore too much in a stagnant world, and you’ll be distracted. Focus too much in a rapidly changing world, and you’ll be disrupted.
#3: The Benefits Of Being An Early Adopter Are Drastically Increasing
In the past, being an early adopter of tech was actually a bad strategy for most people. New technologies are typically super expensive and low quality. But as more people adopt them, the cost decreases dramatically while the quality increases. Case in point:
- Computers
- Flatscreen TVs
- Electric cars
- Solar panels
At one point, each of these were so expensive that only wealthy people could afford them. And even then, many bought them more out of curiosity or signaling rather than practicality. Amazingly, today’s computers cost the same as computers from 40 years ago, but are a million times more powerful, reliable, and useful.
More recently though, the math of when we should adopt has changed. Adopting certain types of new technology isn’t just a product adoption decision, it’s also an investment decision that could have a big impact on your financial future.
What’s unique about this moment is that the blockchain is enabling a new era of the web — Web 3.0.
In Web 2.0, platforms like Facebook and Twitter monetized the free work of users creating value (i.e., giving their attention, creating content, commenting, liking, voting, and curating the best content by sharing it with their network) on the platform.
In Web 3.0, creators and users get ownership for the value they create. Therefore, as the platform and their account grows, they make money. As I write this, entrepreneurs are raising capital and developing web 3.0 versions of every web 2.0 platform. Now, you can get paid for…
- Using social media (Deso)
- Playing games (Axie Infinity)
- Listening to music (Audius)
- Learning (Rabbit Hole)
- Putting your money on the blockchain (Defi)
- Participating in communities (Friends With Benefits)
I go deeper into how Web 3.0 pays early adopters in 5-Hour Rule: If you’re not spending 5 hours per week learning, you’re being irresponsible.
Bottom line: With Web 3.0, we get paid to adopt early. This changes the math of the Jeff Bezos Dilemma and should nudge us toward more exploration.
In summary, the Jeff Bezos Dilemma applies to every area of our life. Therefore, it’s worth spending your time on, because the benefits of confronting will ripple throughout your entire life.
In addition, there are two things happening in today’s world that change the math of the Jeff Bezos Dilemma:
- The number of historic events happening simultaneously is historic
- The benefits of being an early adopter are drastically increasing
These changes tilt the benefits more toward exploring what you don’t know rather than exploiting what you know.
The Jeff Bezos Dilemma became particularly timely for me because I have never experienced more FOMO than I have recently. I first heard about Bitcoin in 2013. I started hearing about it from many of the smartest people in my network in 2017. I didn’t invest until 2020. In retrospect, I wish I hadn’t written it off without taking the time to at least understand it. I’ve now spent over 400 hours understanding the world of crypto, and if I had spent the same amount of time seven years ago, the difference would’ve been 100x.
This past year I reflected on what I could’ve done differently that would’ve helped me explore Bitcoin when I first heard about it without getting overwhelmed with every new opportunity out there. The Hockey Stick Rule was the answer…
Enter The Hockey Stick Rule (Inspired By Garyvee)
If you’re ultimately going to spend the time understanding a tool, technology, or opportunity anyway because it gains mass adoption in the future, then explore it now to see if it has breakout potential.
Benefit: This simple rule helps you stay open to new opportunities without becoming overwhelmed and distracted by them. The benefits of identifying a huge new trend early could be life-changing. The cost if the trends flops is five hours. If just 1 out of every 10 deep dives pays off, then you are golden.
Research: For more of the research behind the math of the Hockey Stick Rule, I recommend reading my article on the topic.
The Hockey Stick Rule provides guidance on four levels:
- When to explore new opportunities
- How to explore them
- How much time to spend exploring them
- What to do next
Let me break down each level…
When To Explore An Opportunity: Successful technology goes through several stages before it goes mainstream: idea, funding, proof of concept, exponential growth, and mainstream usage. At each stage, the odds of the idea going mainstream increase. Exponential growth is relatively rare. It represents real traction of users. Making this stage a filter helps you avoid wasting hours exploring every new technology breakthrough and product announcement — most of which never turn into anything.
How To Explore Them: Jumping in means more than reading headlines. It means getting your hands dirty with skin in the game. It means trying it out. It means going from “This is confusing and makes no sense.” to “Ok. I can at least see why this is growing so fast.”
By being a real user, rather than blindly passing judgement based on your first uninformed reaction, you’ll be able to pass judgement smartly. This is important because many breakthroughs sound silly or counterintuitive at first. You may remember that the early criticism of Twitter was, “Why do I care what people ate for breakfast?” A few years later, it was credited for the Arab Spring and overthrowing a dictatorship. Even the Internet was criticized. In 1995, David Letterman still couldn’t quite get it:
How Much Time To Spend: Five hours is enough time where you could get educated in just one day. This quantity of time was inspired by GaryVee’s approach to exploring social media platforms. Even though he is the CEO of a company with hundreds of employees, he still makes sure that he is conversant in every new social media platform. In an interview, he shared his strategy: when a new platform gains traction, he immediately spends several hours on it, even if it means staying up late to do so.
What To Do Next: After you use the Hockey Stick Rule, you’ll be better equipped to decide which of the following three paths to take:
Thus, The Hockey Stick Rule allows you to decide on the opportunity in multiple steps, removing the pressure of making a final decision about something you don’t fully understand. Here’s what the decision tree looks like:
Bottom line: We are all investors of our time. It is smart to stay focused on what’s working for us. And, it’s also smart to spend a small percentage of our time exploring new opportunities that could be even bigger.
That being said, it’s far too easy to put off applying the Hockey Stick Rule. Counterintuitively, when the benefits of exploring are the highest, the urgency is the lowest. Furthermore, it’s easy to get lost in the sea of opportunities, never making real progress.
If you see the power of the Hockey Stick Rule and want my support to apply it immediately to big new opportunities like crypto, web3, AI, or something else, my team and I have created a free, three-day experience to help you get started. Here are the details…
Apply The Hockey Stick Rule In My Free Three-Day Challenge Kick-Off (April 4th-6th, 2022)
From April 4th to 29th, I’m doing a month-long learning challenge called Month To Master.
The challenge kick-off, which I’ve made free, includes three half-day bootcamps:
- Teaching: On Day 1, I will share how to pick your topic. On Day 2, I will teach you how to create your unique learning curriculum, which will help you start building an expert-level understanding of your topic. On Day 3, I will teach you how to turn your knowledge into assets that build your online audience.
- Accountability Sessions: You will apply what you learned by hopping on a 90-minute co-learning call with my team and other ambitious learners on both days.
- Guest Speakers. There will also be guest speakers to provide inspiration and share their best learning hacks.
And, unlike most other online learning events, the three-day experience is designed to help you take action, vs. consuming interesting information that you would end up forgetting and not using.
Even a brief period of exploration can potentially change the path of your life. For example, a collaborator of mine, who has a few hundred Facebook friends, went all-in on learning crypto and publicly sharing what she learned. Within a few weeks, she ended up attracting multiple consulting and business offers. In her words to Ian (my partner)…
If you want to take the learning bet like Jelena did and make 2022 your breakthrough year, I invite you to join me now.
Learn more about the free challenge kick-off and get access
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