Steady growth is all about balancing the short- and long-term
The home run is one of the most exciting events in sports. With one swing you can score the most runs possible. Even propel your team to victory. No other play in baseball comes close to having such a big effect on the game. It’s almost like a giant screw you to the tactical nature of the other 95 percent of the game. But there’s a drawback to home runs. In professional baseball, players get a hit about one third of the time. Home runs only make up one tenth of those hits. That means as a pro, you’ve got a 3% chance of hitting it over the fence whenever you step up to the plate. Not exactly the best odds. Swinging for a home run is risky. And baseball managers (along with any good business owner) know you can’t win if your strategy is just to try and hit it big every time. Sometimes setting yourself up for success means hitting some bunts and base hits along the way. In life, opportunities are similar. Base hit opportunities have lower reward but are lower risk, while home run opportunities have a big payoff but higher risk Here’s an example: My wife and I think differently about money. Her focus leans more toward base hit opportunities like tracking our spending habits and setting up financial plans. She’s even switched our bank account multiple times a year to get better rates. On the other hand, my focus is on home run opportunities. I look for ways we can create big financial gains—like starting a company—where if it pays off, we won’t have to worry which bank we’re with. Our differences created tension at first. But eventually we realized our approaches were a perfect balance. Without my wife, I would never have paid back $40k in student loans in less than two years. And without me, we may not have started a company that now supports us and many other people. It’s this balance that’s the key. Alone, my wife may have saved some money and I may have started a company. But together, we created the optimal mindset to pay off debt while taking on long-term opportunities for financial and personal freedom. Top investors understand the importance of the balance between base hits and home runs. Sam Gerstenzang, was an investor at Andreesen-Horowitz, ranked top venture capital firm in the world with over $4 billion dollars of assets. Gerstenzang said:“Managing a portfolio as a collection of risk-reward ratios leads to superior returns. Make sure to have a mixture of low reward, low risk and high reward, high risk projects at work and in life.”Sam GerstenzangNo matter what position you’re in life, balance between base hit and home run opportunities is important. If you’re focused too much on either, you set yourself up for extra risk. If you only pay attention to base hits, small win opportunities, you risk never hitting a home run that gets you out of the day-to-day game. If you only aim for home runs, you risk having nothing to fall back on if you strikeout. Balance is especially important if you have not already hit a home run or accumulated many base hits. As Y Combinator’s GM Sam Altman said:
“It’s hard to overstate how valuable it is to keep your personal burn rate low. It probably 10x’s interesting opportunities available to you.”Find a balance between base hit and home run opportunities. You’re most dangerous when you’re balanced. Base hits buy you the time to find your home runs.
How can I apply base hits and home runs philosophy to my life?
This ‘base hit and home run’ philosophy doesn’t just apply to money. It can be applied to anything from growing your company to your daily to-do list. Every morning I focus on a long-term, home run project, like coming up with our product strategy for the next year. My afternoons meanwhile are typically focused on more base hit priorities like answering emails. It can be hard to focus on home runs if you’re worried about how you’re going to make your next rent payment or pay for food. But it’s not impossible. If you feel you don’t have the stability to do any home run thinking today, then hit your base hits until you’ve opened up time. You may have to focus only on base hits for a while. Get roommates to lower your rent, don’t eat out, or swap 1-hour of watching TV for working on your home run opportunity. You don’t have to make a big thing of it. But get to the point where you have enough stability to give an hour a day to your home run idea. You’ll be surprised how far you can get with an hour a day.By approaching life with a balance between base hits and home runs, you decrease the risk associated with success while increasing your chances to win big. Lay the foundation of your success brick by brick while creating your way to lay hundreds of bricks for years to come.
