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An old man lived in a village with his wife and a son. Every day he went to the forest to cut down trees and sold the chopped wood in the market. The earned money was spent to meet the daily needs of the family. They were living a simple and happy life. One day the son requested his father that he wanted to go with him in the forest. When they reached the middle of the forest, suddenly sky started thundering. The deafening sound was an indication of a big storm. They stood aside and patiently waited for the storm to pass away. The storm vanished after an hour. The little boy was flabbergasted to see that the big and strong trees were crumbled by the strength of a storm but nothing seemed to happen to a tiny grass. It remained the same as it was before the storm. The boy was curious to know the answer so he asked the question to his father. He replied, "My dear son it's a very deep observation." You have to understand a few laws of life to find the answer to this beautiful question. Let's discuss them one by one.


  1. Don't be too rigid but remain flexible while dealing with the circumstances of life. The stiff trees were uprooted but the flexible grass remained intact. The rigidity not only applies to physical objects but also to thoughts. Have strong opinions but hold them loosely. Some people are too rigid and don't want to change themselves with the changing dynamics of the environment. Therefore, demolish their self in the process. Intelligence is the updation of beliefs with the arrival of new information.

  2. Never become egoistic about the power, strength, beauty, wealth, etc. Learn to bow down and surrender the results of the actions to the higher power(God) while dealing with uncontrolled events. The big trees refused to bend against the flow of the wind whereas a tiny grass is dancing in the storm. Always be humble no matter how powerful and intelligent you are. Control the controllable and be wise enough to discern what is under and beyond your control.


Did you grasp the crux of the beautiful story?


Yup, you get it right. Ego is our biggest enemy. It's an abstract entity that creates an illusion of separateness. It is so subtle yet one of the most dangerous things in the world. It ruins the harmonious relationship among people. We rarely fight with the external world but the real fight is within ourselves. Dealing with life-threatening thought patterns and learning to soothe ourselves is the biggest art in the contemporary world.


If ego is so unhealthy then what is its antidote?


Spiritual Love is an antidote to ego. It is unconditional and never diminishes with time. It's an acceptance of the other person irrespective of his virtues and vices. Love and ego can't exist together.


Did you notice the word spiritual? You might be asking yourself What is Spirituality?


Spirituality is when I close my eyes I feel immense peace within me and when I open my eyes a holy voice within me says, "Hey, What can I do for You?". Materialism is when I close my eyes I feel disturbance and chaos within me and when I open my eyes a wicked voice within me says, "What can I get from you?"


Why are we interested in cultivating love and freeing ourselves from the shackles of ego?


To put an end to suffering and freedom from the cycle of birth and death. In Sanskrit, it is called Moksha.


The path of knowledge(Jnana Yoga) and the path of love(Bhakti Yoga) are one of the many ways to attain moksha. Mistakes are the byproduct of ignorance and knowledge is the solution to ignorance. The essence of Jnana Yoga is to remain aware of the unmanifested form(Nameless and Formless) in everybody. It is very difficult to tread on the path of Jnana yoga. We experience the external world through our senses and recognize them through their name and form. Therefore, it's difficult to meditate upon the unmanifested form.


In Jnana yoga, a spiritual seeker has to purify himself by subduing his senses. He needs to have firm control of his mind and be at ease with himself. The path of knowledge is like a king. The king(knowledge) would like to go to a clean place( a body free from impurities like lust, jealousy, envy, etc.). Therefore, the path of knowledge becomes too steep to climb for some spiritual seekers.


It's easy to walk on the path of love to attain self-realization. Humans are identified with physical forms and have lots of desires. A lord can be a merciful father, a divine mother, a wise friend, or a beloved. Choose whatever suits you the best. If desires are there in you then let them be but replace them with God. If the mind is restless then let it be restless for God. Therefore, worshipping the lord in the form of name and form is easy for spiritual seekers.


Your task is not to seek love, but merely to seek and find all the barriers within yourself that you have built against it. Rumi

The path of love is like a female servant who upon entering the house will clean up everything. There is no need to follow strict spiritual discipline in the path of love. The impurities will wither away with time. In Sanskrit, Bhakti Yoga is similar to a Bhikshu pada prasarana. A beggar requesting a little space to stretch his legs. After some time, he requests for a space in the other corner to keep the statue of a holy Lord. Later, he needs a separate space in the kitchen to prepare food for the lord. As time went by, he occupied the entire house. Spiritual love is like a beggar which upon entering the heart will occupy the entire body.


When will be the best time to implant the seed of love?


Sow the seed of love in your heart in the moods of extreme emotions(Happiness or Sadness).


What are the attributes of Spiritual love?


No Bargaining is the first attribute of Spiritual Love. There will not be any conditioning in spiritual love like I will give X amount of devotion and you will give me Y Rupees in return. Shopkeeping is not allowed in spiritual love. It is pure and unconditional.


Fearlessness is the second attribute of spiritual love. As long as we think God is somebody who is sitting above the clouds who rewards or punishes us according to our actions is nothing but fear. Fear resides deep within us that if we don't worship him then he will punish us. Pure love is when we do something for others without any fear. A woman is walking on the street and suddenly a loin comes in front of her. She immediately hides herself in the other corner of the street. But if a woman is walking with her child then she happily goes into the mouth of a lion to protect her child. Love knows no fear. The love of a mother is purest for her child. In spiritual love, we are the means and the other becomes the end. We rarely care about our happiness and are concerned only with the happiness of our beloved.


Love is the highest ideal in spirituality. Many times we see a beautiful girl loving an ugly boy. To onlookers, the boy appeared to be very ugly but to a girl, he is the most handsome boy in the entire world. She projects her ideal of beauty onto him. Therefore, he looks most handsome to her. The underlying idea is we are projecting our ideals into the world. The external world gives suggestions that act as a benchmark to measure our spiritual growth. When a grain of sand is washed into the shell of an oyster, the irritation caused by the sand produces a secretion that is converted into a beautiful pearl. When one successfully passes through the stages of no bargaining and fearlessness, he becomes pure and everything appears beautiful to him. To the wicked, the world is hell and to a saint, the world is heaven.


A child is the most selfish creature in the world. He only cares about himself. When he becomes young and falls in love with a girl, the love spreads from one to two people. The love grows from two to many when he becomes a father. He becomes perfect by following the right spiritual practices and the love moves from many to everyone. He enters into a superconscious state and goes beyond the cycle of birth and death.


Whatever our souls are made of, his and mine are the same. Emily Bronte

What are the best spiritual practices that help a spiritual seeker to attain the superconscious state?


  1. Name: Enchant the name of God with love. The name and the person to which it points are the same because the name and the form are inseparable. Create one and the other immediately enters from the backdoor. Whenever you are sitting in a bus or walking on the street enchant the name of holy God within yourself. The mind becomes pure and you will be free from negative thoughts. With time you will start feeling deep silence within yourself. Your happiness is no longer dependent on anybody. Bliss starts coming from within yourself.

  2. Form: Meditate upon the form of the lord. If it seems difficult then simply look at the image of the lord with love. A magnet covered with a cloud of dust is unable to attract a piece of iron. Similarly, a body full of lust, jealousy, envy, etc. is no longer attracted to God. Keep meditating on the form and the impurities within you will wither away with time. You will start seeing the results within you after a few months.

  3. Powerful: The way of love is a life-positive spiritual practice. It is not against the world. Whenever you encounter anything powerful or beautiful immediately attach it to God. Suppose you saw a beautiful girl in the street, pause and become aware of the being that gives her immense beauty. There is no need to go to the forest and turn your back against the world. Live in the beautiful galaxy of ours and appreciate the beauty. Enjoy the spiritual as well as the materialistic world.

  4. Nature: Spend some time in nature. Enjoy the greenery of the trees and see how it soothes your eyes. Relish the beauty, smile, and dance of tiny flowers in the wind. When you observe the silence of trees then you will start feeling it within yourself. Be grateful to the Lord that you are alive and seeing the beauty of our Mother Earth.

  5. Oneness: Life is a sum of experiences. Things keep on changing around us but the experiencer remains the same. There is something within us that is observing everything but is beyond the pain or pleasure. Attain the highest state by becoming aware of it. It is a thread running through all the life forms and helping us to realize oneness. All are the same and nobody is higher or lower. Duality clubs and unity appear everywhere around us.


A devotee passes through three stages of life. Initially, he wants worldly objects. As he becomes more mature, he wants to end his suffering and finally, he becomes choiceless. He wants nothing. He is loving for the sake of love. He offers everything to God. A train that carries you will also carry your belongings from one place to another. Similarly, the divine power that is running the Universe from the eons will also take care of your life. Don't worry and surrender the outcomes of uncontrolled events to him.


Conclusion: Support is necessary for a small plant to grow. Similarly, idol worship is important for a spiritual aspirant in the early stages of life. By following the right spiritual practices, one starts seeing God and uncovers the divinity within him. A spiritual seeker is not buoyed up by praise and cast down by an insult. He is not running after the pleasure and avoids pain but lets things come and go as they happen. An equal regard for friend or foe, neither grieves nor has lust for anything. In the final stage, he becomes one with everything.



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Photo by JOHN TOWNER on Unsplash

 


Harry and Linda were living in a small village. They earned their living by catching fish from a river. Both of them worked for 8 hours a day. The difference in their lives depends on what they did during the 8 hours. Harry spent 8 hours catching fish and by the end of the day, he caught 8 fish. On the other hand, Linda spent 6 hours catching fish and the remaining 2 hours to make a net. By the end of the day, she caught 6 fish. As time progressed, she made the net and caught more fish in less amount of time. She caught 8 fish in 4 hours and spent the remaining time making a boat to further enhance her productivity. Linda had a deep understanding of a universal force which led her to boost productivity.


Okay! Okay! I understand your concerns about the universal force hidden in the story but let's first discuss some golden nuggets of the parable.


  1. Cultivate the habit of delaying gratification which means sacrificing the present for a better future. Keep your eyes on the bigger goal. The right approach to a happy life is to embrace long-term thinking.

  2. Linda has leverage over Harry by making a net. She was able to achieve more by doing less amount of work.

  3. Don't become complacent even if you are getting good results. Keep innovating, keep learning, and always hunt for better approaches to do a relevant task. The best results come to those who are obsessed with self-improvement.


Hey smart readers! Did you notice the word leverage? What does it signify?


Leverage is the idea of gaining a substantial amount of output by putting in a small amount of input. The idea of leverage came from physics and was used by the Greeks to move large stones by putting a minuscule muscular force. It is one of the simplest yet innovative inventions.


How does it work? What makes it move heavy objects by putting small force?


A lever is a machine that consists of a bar, fulcrum(Center), moving weight, and the moved weight. By adjusting the center of a fulcrum, a small weight over a large distance is capable of lifting a large weight over a small distance.


Mathematically,


(Heavy Object) / (Distance of small object from the fulcrum ) = (Small Weight) / (Distance of large object from the fulcrum)





The great ideas have enormous reach. They can be applied to solve problems beyond those they are created to solve. The idea of leverage is not confined to lifting heavy weights. It is also applicable to human energy. In Physics, leverage means to lift heavy objects by putting a small amount of force. In human endeavors, leverage means getting maximum productivity by doing a small amount of work. The human brain has evolved to conserve energy. Humans have limited energy and they intend to yield the maximum return per unit of energy spent.


Give me a place to stand, and a lever long enough, and I will move the world. Archimedes

The Pareto Principle is a close cousin of leverage. The idea of the Pareto principle was given by the Italian Polymath Vilfredo Pareto. He was a man of keen observation. In his garden, he observed that 80% of the peas are harvested from 20% of the pea pods. By extending the 80/20 rule to the other areas of his life, he observed that 80% of the wealth was occupied by 20% of the citizens of Italy, 80% of the revenue of any business is generated by the 20% of the clients, 80% of the returns come from the 20% of the stocks, 80% of the clients use 20% of the features of the product, etc.


According to the Pareto principle, 80% of the results are roughly achieved by 20% of the activities. Therefore, focusing on those 20% of the activities gives leverage to reap the maximum benefit. The Pareto principle describes the relationship between input and output which is 20:80. Power law is an acute form of the Pareto principle where the relationship between input and output is 1:99.


Let's understand the Power law with the help of an example.


Do you know that the annual loss caused by the Earthquake is 5.7 billion dollars?


What is the average loss incurred by an Earthquake?


Make a rough guess.


If you are like me you would say it's a couple of million dollars. But surprisingly! the answer is 10,000$. The total number of Earthquakes that occurred in a year excluding the ones that can't be detected by instruments is 5,00,000. The events are not evenly distributed is the core insight of Power law. It is also known as winner takes all advantages.


Why is it known that the winner takes all the advantages?


Let's understand it with the help of real-world examples. Before digitalization, one newspaper was circulated in all the major cities. Initially, the newspaper which has better circulation than others is approached by the advertisers. People are inclined towards those newspapers that have more number of advertisements. It in turn attracted more advertisers because it is popular among people. The entire process creates a positive feedback loop. Therefore, in most businesses, the players who move first will take all the advantages.


A similar pattern is observed in schools, Universities, and Industries. When any student or teacher encounters any problem, they approach the guy who is slightly better than others. He pushes and stretches himself outside of his comfort zone to solve the challenge. He becomes better and more smarter in the process. As word of mouth spreads, more and more people approach him thereby creating a positive feedback loop for his intellectual growth. That is why, 20% of the people enjoy 80% of the opportunities in schools, colleges, and organizations.


The social media apps work on the same principle. Once any social media app crosses a certain threshold, more people will sign up to avail of the services provided by the application. It becomes impossible for people to switch to other products because all their friends and relatives are already on the same platform. Hence, companies create monopolies and it becomes impossible for their competitors to wipe them out of the market.


The rare occurrences that have a significant impact on our lives are known as Black Swan events. This term is given by Nassim Taleb a well-known author popular for his Incerto series. Black Swan events are very significant in the contemporary world.


Pasteur said, like all great discoverers, he knew something about accidental discoveries. The best way to get maximal exposure is to keep researching. Collect opportunities. Nassim Taleb

In hunter-gatherer societies, the things stayed around the mean. When a hunter came across a deer, it was either taller or shorter, thicker or thinner. The world was linear in those times. The modern world is Non-Linear. The handful of actions will increase one's wealth by a factor of 10,000. For example, winning the first prize in the Dream 11 Mycircle app. It is generally said that 40% of the revenue of the directors came from a single film. As the adage goes, 99% of the effort is wasted but we don't know which 1% will create the significant impact on our life. Mark Zuckerberg created other products before Facebook became a hit, J K Rowling had published many novels before Harry Potter became a best-selling book.


How to live a meaningful life?


Ride on the positive black swan events where inputs are highly non-linear to output like writing a book, creating a podcast, or a piece of art, etc. Don't shy away from failures, learn from them. Keep planting seeds so that they become acorns later in life. Avoid negative black swan events like debt, bad marriage, jail, drugs, etc. where the possibility of going wrong will wipe you out from the game.


So far, we have discussed Leverage, Pareto Principle, and Power law. It's time to apply them to improve our lives.


Decision-Making: People mistakenly think that their energy level remains the same throughout the day. The energy is not evenly distributed across the day. 20% of the hours gives 80% of the productivity. A healthy human being takes 8 hours of sleep. As per the Pareto principle, 3 hours(20% of 16) of work produces 80% of the output.


Which three hours among the sixteen hours give the most productivity?


Productivity increases when the glucose level is highest in our body. Glucose will be replenished after getting a good night's sleep. It enables a person to think clearly. Therefore, tackle the most important task in the morning. When the day progresses, the glucose level will keep on dipping as we confront more and more challenges. The energy level is lowest in the evening and we need a full night's rest to replenish the glucose of our body. Don't take any big decisions in the evening.


It is not a shortage of time that should worry us, but the tendency for the majority of time to be spent in low-quality ways. Richard Koch

Elite people like Barrack Obama, Andrew Ng, etc. wear the same dress every day. They don't spend their energy on menial decisions. They spend it on those areas that will create a significant impact in their lives. If you care more about your looks, then assign each dress to each day of the week and save your energy for the important tasks.


Exercise: It is very essential for our mental and physical health. It is a natural medicine to cope with contemporary stress. A healthy man wants many things but a sick man wants only one thing i.e. health. A man wants a fit body, a calm mind, and a heart full of love. Exercise produces chemicals like serotonin in our brain which makes us feel good.


How to do an exercise optimally?


People reap the maximum benefits of exercise when they start feeling discomfort. Spending two hours in your comfort zone won't yield substantial results. The intense 30 minutes in discomfort can yield enormous results. Don't push too much to avoid injuries. Listen to your body and spend an extra minute beyond a threshold. The time spent(20%) beyond the threshold has the potential to bring about(80%) of the results.


Finance: Let's understand the concept of leverage with the help of an example.


Case 1: Suppose you bought an asset worth 10,000$. The 10% increase in the value of an asset brings you a profit of 100$. Similarly, the 10% decrease in the value of an asset makes you lose 100$. But you still have 9,900$ with you.


Case 2: You have 10,000$ in your pocket and you borrow 90,000$ from your friends, relatives, and banks. You bought an asset of 100000 $.


Leverage Ratio = (Asset) / (Equity) = 10

Return = Percentage of Rise/Fall * Leverage Ratio.


Assume the price of an asset is increased by 10%. The 10% rise will give you a return of 100%. You returned 90,000$ to the friends, relatives, and banks. Now you have 20,000$ in your pocket.


Assume the price of an asset is decreased by 10%. The 10% decrease results in a total loss of capital. You are left with 0 $ in your pocket.


Now assume the price of an asset is decreased by 20%. The 20% dip will give you a return of -200%. You lost your money, and owe 10,000$ to your friends, relatives, and banks.


How much fall in value wipes you out of the game?


1/(Leverage Ratio)


If Leverage Ratio is 10 then a 10% fall in the value of an asset results in the permanent loss of capital. For a 20% leverage ratio, a 5 % fall is enough to wipe you out of the game.


If you are leveraged five times your capital, a 20% move in your preferred direction can double your capital, but a similar move in the opposite direction can wipe you out. Naveed Abdali

Leverage in finance means putting a small amount of capital( Small weight) by taking a huge debt( a large distance from the bar) will help you to earn a large amount(Heavy weight) over a short distance(by returning the debt). Without leverage, a 10% increase in the value of an asset helps you to earn a very small amount(100$) in case 1 whereas with leverage, a 10% rise in the value of an asset will help you to earn 10,000$ in case 2. The situation looks scary in case of a fall. However, the crux is to reap the benefits of leverage if and only if the odds are highly in your favor.


Conclusion: The essence of the leverage, Pareto Principle, and Power law is to understand the opportunity costs of our actions. The time spent on pursuing an activity can't be spent simultaneously on other activities. When we say yes to one thing, we simultaneously say no to a hundred other things. Time is our most precious resource. Once it is gone, it is gone forever. Be highly specific to whom you are saying yes. Trade money for time not vice-versa.



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Once there was a wise man who lived in a small village with his happy family. He had a cute son and a beautiful wife. He loved them more than himself. His wife acted as a source of strength to him in all his expeditions. She was his true soulmate. A true soulmate shows you the true picture of yourself and accepted you with all the virtues and vices. One day his cute wife requested him to make a tool made of stone that will help her in crushing the ingredients while preparing supper. He accepted her request and start searching for a big stone. Luckily, he found a big stone in the backyard. As he was about to break the big stone with a hammer, his son arrived and interrupted him. "Dad! Let's play. I am feeling boredom." My dear son! I am building a tool that will assist your mom in preparing the food. We will play together once I will finish the task. The obedient son nodded and sat on the bench placed in the backyard. The son was very inquisitive and believed in learning by observation. He was keenly looking at his father with wonder to acquire the skills needed for creating a tool. His father started hammering the stone with great force. The stone was very hard and nothing seems to happen to it in the face of heavy blows. The son started counting the heavy blows made by his father on the stone. He kept on hammering again and again but was unable to make a single dent in the stone. When the count reached ninety-nine, his impatient son burst into anger and told his Dad, "Please Stop! You are unnecessarily wasting your energy. Nothing is happening to the stone. Let's play and have some fun." His father replied, "Oh! my dear son, wait for some more time. You are going to learn a very deep lesson in a short while." When he hammered the stone for the hundredth time, the big stone was shattered into pieces. His son was amazed at it and his father started smiling. The curious son started mulling over the following questions:


  1. Does anything happen to the stone until the ninety-ninth blow?

  2. Why does the stone break at the hundredth blow?

  3. Do such patterns found in other areas of life?

Before answering these questions, Let's understand the deep lessons hidden in the story.


  1. Patience and Persistence are the virtues. One has to cultivate these qualities to become successful in life. Persist but experiment in the face of setbacks. Obstacles make us creative by forcing us to think that has never been thought before.

  2. Never judge anything based on an outcome. Follow the process over the outcome. Willpower is fragile so don't rely on it. Create a system that will move you toward the desired outcome.

  3. Sometimes circumstances make the person very hard. Keep on hammering their hard hearts with good deeds despite their bad behavior. One day the softness will ensue.

  4. The most important insight is about the non-linear system. The system in which input and output are not directly related to each other. The critical mass is the underlying idea behind non-linearity that derives its origin from nuclear physics.

Let's spend some time understanding the fundamentals of the critical mass to apply the concept of non-linearity in our day-to-day life.


The minimum amount of nuclear mass required(Critical mass) to create a reaction in which the output of one reaction acts as an input for another to create a self-perpetuating reaction known as Nuclear fission. When a system reaches the critical mass, the last input changes the state(properties) of a system known as a tipping point, which can either make a system better or worse. In a nutshell, the underlying idea behind critical mass is the minimum amount of energy that changes the state of a system. It's like a proverbial straw that breaks the camel's back. A single straw will never break the back of a camel. As the weight goes beyond a certain threshold only then it will break the back of a camel. The last straw looks impressive but the change in the state of a system happens due to the buildup that starts by putting the first straw. The final result is an outcome of the small micro-actions.


The water changes its state at a hundred degrees celsius. Until ninety-nine degrees, it is in a liquid form. The last one-degree change in temperature (acts as a critical mass) changes the state of a system from liquid to gaseous. In a similar manner, the minimum number of people required to act as a critical mass so that the group gathering feels like a party. As the people keep on coming until a person comes which crosses the threshold that tips the system into high gear to make the gathering feels like a party.


I don't have to convince everybody in the room. I just need a critical mass of the people in the room. Simon Sinek

A person's expertise is beneficial to him if he is working on an idea that is on the verge of critical mass to become a mainstream technology. Unlike a person working on an idea that will take ten more years to reach a critical mass to become a mainstream technology. The concept of critical mass is closely tied to the idea of non-linearity. In a linear system, X amount of input yields Y amount of output. Fixed deposit is an example of a linear system that yields a fixed amount of return per annum. In a non-linear system, the output is not fixed concerning an input. Investing in stocks is an example of a non-linear system. Invest in non-linear systems when it comes to intellectual and social domains.


The idea of critical mass is ubiquitous and used in a variety of domains. In astrophysics, critical mass is defined as the minimum amount of mass required to change the state of a system. In epidemiology, critical mass can be defined as the minimum number of populations that must be vaccinated to prevent the spread of a contagious disease. In the business world, critical mass is reached when the business is generating enough revenue so that it has no longer dependent on outside investments for proper functioning. In social trends, when a certain number of people start believing in an idea that upon moving a certain threshold becomes an acceptable idea and is implemented as a policy. Ideas move in progression from Unthinkable -----> Radical -----> Acceptable -----> Sensible -----> Popular -----> Policy.


After gathering a few facts about critical mass, it's time to answer the kid's questions. (Otherwise, his patience will soon turn into a wave of uncontrollable anger.)


Does anything happen to the stone until the ninety-ninth blow?


Of course, the bonds between the atoms of a stone are weakened by the repeated blows of a hammer by his Dad. The results are not apparent but an effort(foundation) to break the stone is piling up.


Why does the stone break at the hundredth blow?


The critical mass is reached at the hundredth blow. The bonds can no longer be glued together. Hence, breaking the stone. In other words, it changes from one state to another.


Do such patterns found in other areas of life?


In any system where nodes are interacting with each other either in the form of currency or sharing of information, the potential for critical mass or non-linear growth is possible. Consider a network of Uranium-235 atoms (atoms are acting as nodes), if enough atoms are present in a system where the decay in one atom releases neutrons causing the decay in adjacent atoms creating a self-sustaining chain reaction known as an atomic explosion.


The idea of critical mass is very important for entrepreneurs to understand the lifecycle of new technology. Everett Rogers, a well-known sociologist gave the diffusion of innovation theory which demonstrates that people belong to one of the five groups before adopting new technology. The five groups are as follows:


  1. Innovators: They are those who think differently and execute new ideas. They work very hard and take the maximum risk. A very small number of the population fall into this category. They are audacious and have no fear of traversing the unknown path. They figure out the optimal strategies as they move along the path. The emergence of a product is the result of excessive hit and trial methods.

  2. Early Adopters: They believe in new technologies and growth. They have inoculated themselves from the force of social proof. They have internalized the idea that there is always a scope for improvement in products. They adopt the minimal viable product and try to make it better by giving rapid feedback to innovators.

  3. Early Majority: As new features are incorporated into the product from the feedback of early adopters, it becomes more and more valuable. More people are attracted, start utilizing the product, and help it to reach the tipping point.

  4. Late Majority: These people are under the influence of social proof. They follow herd thinking and are not interested in wasting their time and money on new technologies. The product has got immense value proposition when they adopt the product.

  5. Laggards: These people adopt the product when it becomes impossible for them to live without it. It becomes their primary need. These people are highly risk averse. If they don't use the product they will feel left behind. The widespread usage of products in mainstream society forced people to adopt them.

The rate of diffusion of a product varies on the awareness level of society, its familiarity, ease of use, and the impact it will create on people who adopt them. Let's understand the concept of diffusion of innovation through a real-life example.


Facebook is initially used by students and professionals in educational institutions. Mark Zuckerberg is an innovator who developed it. Students and professionals are early adopters and the early majority that propelled Facebook to reach critical mass. When its usage moves beyond educational institutions, it is adopted by the late majority to share valuable information with their friends. Laggards finally adopted it otherwise they will be left behind among their friends.


A Telephone is another example to get a good grasp on the concept of diffusion of technology. Graham Bell is an innovator who invented the telephone. Doctors are early adopters as it helps them to do their job quickly. They are willing to pay high prices for it. When new use cases like text messages emerged, it is adopted by the early majority and pushed the product to reach a critical mass. The late majority adopted them because it helps them to connect with their family members easily. The newly launched product has gained momentum in society. Laggards are forced to use them otherwise, it becomes difficult for them to connect to their family members.



Critical Mass is an important idea to get deep insights from the social system. In the social system, it implies that when an idea is endorsed by enough people its growth can sustain itself. People's minds don't change drastically in a day. It is usually the accumulation of small actions that yield big results. Overton window is an idea that demonstrates when an idea is accepted by a sufficient number of people to propose it as a policy. Fringe ideas become mainstream and mainstream ideas become fringe over the decades. It means ideas or opinions are not static. They kept on evolving with time. Change is the only constant.


A huge amount of effort is required to overcome the inertia and to create a new change. When the system moves beyond a certain threshold, the last input has a disproportionate impact on the system and tips into a new state. A similar thing happened in New Zealand during the Women's Suffrage movement. In 1893, New Zealand became the first self-governing country that gave the right to women to participate in Parliamentary elections. It seems as if higher authorities suddenly changed their minds and gave women the right to participate in elections. The change doesn't happen overnight. The gradual movements from time to time nudge the people to change their minds. Some of the factors are:


  1. The population of New Zealand is very small. The majority of them came from European countries. They wanted to create a fairer society than the one they had left behind. The male population supported them at the beginning and helped them to gain a foothold in the parliament to protect their voting rights in the elections.

  2. The higher officials of New Zealand wanted to educate their females also. The first girl's school was opened in New Zealand in 1871. In 1893, the ratio of boys vs girls became 1:1. Better education paved the way for more employment opportunities other than customary domestic duties. Females started influencing the domains like teaching, journalism, medicine, art, etc. Upon facing the worst working conditions, they started to unionize which kept them together.

  3. The temperance movement also bought them closer to each other. The aim of the temperance movement is to prohibit the consumption of alcohol in New Zealand. The men drank away their weekly wages leaving their wives and children bereft. However, alcohol was not banned in New Zealand but still it helped them to raise their voice against brutality and violence. They became more aware of their basic rights and the temperance movement gave them thurst to forge the skills like administration, collaboration, and organization. Now they knew if they work collaboratively towards a common goal, they will create a fairer society in the near future.

Kate Sheppard filed several petitions and presented them to parliament in 1890. Despite initial failures, she kept on trying. In 1893, she amassed 32,000 signatures that ultimately passed the law. Now women have the right to actively participate in elections. The women's suffrage movement acts as a tipping point and after the second world war, many countries gave their women the right to vote to participate in elections. It implies when any system reaches a tipping point, the state of the system changes which can either make the system better or worse.


The network effect is the root cause behind the critical mass that tipped the system into a new state. Robert Metcalf who invented the ethernet gave the idea of the Network effect. According to the network effect, if there are N nodes present in a network then the value of the network is equal to the square of the number of nodes present in a network. It is also known as Metcalf's law. Let's understand this idea through the example of a telephone. The value of some products or services is proportional to the number of users who use them. If you have a telephone in your home and no one among your relatives uses it then the value of your telephone network is zero. When the number of users increases then the value of a network increases non-linearly.




Wherever the network effect applies, the addition of each user increases the value of a network. The rate of growth of a network is greater than the growth of users in the network. The network effect has a variety of applications in our lives.


Reading is a foundational skill to learn anything in life. Reading a good book gives the maturity of at least forty to fifty years because the author has lodged his life experience in writing a book. Let's assume reading a book gives ten ideas to a reader. When the reader reads the second book, he got ten more new ideas. When the ten ideas from the previous book are connected with the ten ideas of the second book then the total number of connections becomes a hundred. By the time, he will complete his tenth book the number of connections between ideas increases to 100000000000000000000. That's why reading makes people creative and smart. Read as much as possible to create a better life for yourself and for your loved ones.


If we create networks with the sole intention of getting something, we won’t succeed. We can’t pursue the benefits of networks; the benefits ensue from investments in meaningful activities and relationships. Adam Grant

When the idea of the network effect applies to technology, it tends to create a natural monopoly or oligopoly. One can't find too many social networking sites because of a few apps like Facebook, Whatsapp, and LinkedIn. They have dominated the entire market. Suppose a new social messaging app comes along and offers better features than WhatsApp. An intrepid user starts using it but he found no value in it because all his friends and relatives are on WhatsApp. To make it valuable, he has to convince all his loved ones to abandon WhatsApp and use the new one. His friend's friend should also be convinced otherwise his friend's friend would be on WhatsApp and they no longer can communicate with each other. The network effect creates a barrier for new entrants. To become dominant, the new ones have to replicate the existing network or at least come close to it. The network effect will create very high switching costs for the users.


The fax machine exemplifies the idea of the Network effect very well. It came on the market in 1840 but was not popular among people until 1970. It took the time of around one and a half centuries to gain sufficient critical mass to become a mainstream technology. Once the number goes beyond the threshold, its growth becomes non-linear. The key lesson to learn here is not to give up when the results are not apparent. Keep on putting the effort in the right direction and one day upon hitting the critical mass you will start seeing tangible results.


The success of the linked In app is also due to the strong network effects. LinkedIn has a large number of recruiters. Therefore, people who are looking for jobs sign-up on Linked In. Linked In got the maximum resume which attracts other recruiters who are looking for job applicants. It creates a positive feedback loop and thus makes Linked In a successful recruitment platform. Similar is the case with dating apps like shadi.com.


The network effect plays an important role in growth and relationships. If you are part of the right alumni network then it becomes helpful for you to get the right answers to esoteric questions and maybe you will be landed on the dream job through your contacts.


The idea of the network effect applies to the companies that gather data. The one that will make the first move will take all the advantages. Amazon is a dominant player in the e-commerce market. If a new e-commerce site will come along, it will still remain the dominant player. Convincing the buyers and sellers to use a new site is a very daunting task. If somehow they will convince them, still the new site is not effective because the buyers will not be able to take advantage of the product ratings available only at amazon.


Google is the dominant search engine. It gives the best possible result in response to any query. The best results will attract more traffic to it which means more user data will be available to Google. It provides free service to users and in turn sells the user's data to advertisers. Advertisers will be able to sell the right product to the right customers due to the availability of their data. Advertisers earn profit and thus more advertisers are attracted to google creating a positive feedback loop. Duckduckgo is another search engine that keeps the privacy of its users intact. Still, it won't be able to make any dent in the market of google. Once the network effect kicks in, it creates tremendous inertia for newcomers and the existing technology will retain its momentum for a longer period of time in the market.


The idea of network effects is very important for entrepreneurs. If they are working on a technology that has the potential for network effects then it follows an S-shaped curve.



To make it a mainstream technology, they have to ponder over the following questions.


  1. Where does my product lie on the S-curve?

  2. What is the critical mass for my product?

  3. What acts as a catalyst to achieve an early tipping point?

An important thing to keep in mind while dealing with critical mass or network effects is cascading of failure. These universal laws like critical mass, network effects, tipping points, etc. are applied to a system that consists of multiple subsystems. A failure in one part of the system causes a failure in an adjacent system that leads to catastrophic failure. A major blackout in the power grid is an example that happens when a subsystem fails, increasing the load on the nearby subsystem which also gets failed due to an overload increasing further load on other subsystems causing the entire grid to halt.


The housing crisis in 2007-2008 is another example where the failure of subprime mortgages brings down entire financial institutions. The species like Panda and Koyala feed on bamboo and eucalyptus. If somehow bamboo or eucalyptus becomes extinct so do the panda and Koyala disrupting the entire food chain. Similarly, some habits like adequate nutrients, meditation, sleep, etc. play a key role in our lives. Failure to incorporate these habits will disrupt the balance leading to a stressful and worrisome life.


These are the natural laws that can be either used for good or bad. Using these laws in the right way will help us to lead a better and more joyful life.


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