It is a very simple idea to use the power of compound interest

It is a very simple idea to use the power of compound interest  Smart people are easily attracted by complex things, and underestimate the great influence and importance of simple ideas. But Monish Pabrai is a full pragmatist, and he will not fall into this trap. "It is a very simple idea to use the power of compound interest, a very simple idea to imitate, and a very simple idea to be honest." He said. However, when you apply some powerful ideas with great enthusiasm, the cumulative effect is "incomparable".

Spatial induction and temporal induction

 Spatial induction and temporal induction

Before explaining the "misunderstanding of induction", we first need to fully understand the specific connotation of this thinking mode. Usually, when people use induction, they often set a certain reference first. From the inertia of human thinking, this reference is often space or time.

The so-called spatial induction, in short, means that people will acquiesce to the effective law in one space, and it is also effective in other spaces or even all spaces. Just like an entrepreneur who succeeds in a certain regional market, he will take it for granted that he can succeed in other markets. We can use a more popular example to illustrate.

If all the swans people see in Europe are white, all the swans they see in Africa are white, and all the swans they see in Asia are white, people will naturally default that swans all over the world are white.

As the name suggests, temporal induction means that some rules that were established in the past are also valid in the present and even in the future. Just like in our cognition, the sun always rises from the East, so the sun will continue to rise from the East in the future.

Induction is a way of thinking that extends the laws within a certain space-time boundary to all time and space. For thousands of years, people in both the East and the West have adopted this way of thinking by default. We can even say that 99% of human daily knowledge and experience are based on induction.

In fact, there are many examples of applying induction in the operation of enterprises, especially in start-ups. Why are entrepreneurs best at using induction? For example, all start-ups inevitably have to make business plans in the financing stage. In all business plans, there must be an upward curve, whether it is the growth of users, revenue, or profits. Behind this upward curve, there is actually something that entrepreneurs want investors to perceive. If startups can maintain sustained growth in the current space and time, they will also achieve more brilliant performance in the broader market in the future. The way of thinking behind this is actually induction.


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