If you are Apple or Samsung, you need to produce an upgraded model of your flagship phone every year. If you are TSMC or Intel, you need to make a faster, more advanced chip every couple of years. You need to keep innovating and stay ahead of the competition constantly.

Whenever we think about beating our competition, we think about ways in which we can outsmart them. Like in World War II, Alan Turning built a machine the decrypted the German messages, figured out the German ships’ locations, and ended the war in one sweep. It was a work of genius.

Such miracles can happen from time to time, but if you want to stay ahead consistently, there is only one way to do it. You have to work harder than your competition. You’ve got to outwork them.

Consider the same example of TSMC vs. Intel. It is rumored that the TSMC R&D department works round the clock. Building a new chip every couple of years requires significant capital and research. You’ve to venture into the unknown to find new and efficient ways to achieve better performance than older chips AND make them smaller in size.

If TSMC is working 24 hours a day and Intel - like any big corporate - works 8 hours a day, 40 hours a week, TSMC has a 3x advantage compounding daily. Multiply that week over week, month over month, year over year, and you can really gain a significant lead.

Building a culture of hard work can become a competitive advantage.

But the thing about hard work is that you’ve got to do it over a sustained period. You could benefit even if you do it for a short period, but for it to truly become a competitive advantage, it has to compound.

It’s a bit like investing.

Every once in a while, you could get lucky and come across a stock that provides massive upside in a really short period of time. However, for good returns to truly compound, you need to play the long game. Consider the case of Warren Buffet, unarguably the best investor in the world. $81.5B of his net worth of $85B came after his 65th birthday. Buffet’s fortune isn’t due to just being a good investor, but being a good investor for the last 60 years. The latter is as important as the former. He is the living example of the benefits of compounding.

When solving hard problems or working on an innovative technology (or investing), most people try to out skill their competition. If the history of the world is anything to go by, out-working your competition is an even better strategy. Works every time.

But only if you have it in you to do it for a long time.

Best,
Kaddy

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