Rule # 1: Learning to Lower the Frequency
In both the realm of life and the markets, understanding the concept of aligning with the right frequency is the key to achieving significant growth and effectively scaling up.
Rule Number 1: Modulating the Frequency
Let's take a moment to contemplate something extraordinary: in the course of our lifetime, we possess only 1 billion heartbeats. It's a finite resource that offers us the chance to learn, evolve, and savor every moment. What adds an even more intriguing dimension to this rule is how nature itself imparts the wisdom of harmonizing with life's tempo.
As we journey through life, we encounter challenges of diverse scales. Some require minimal effort, allowing us to move through existence with the vivacity of a marsupial, with its astounding 1,000 heartbeats per minute. But there come times when monumental challenges surface, and that's when we must draw from the resilience and composure of a blue whale, its heart beating at a leisurely pace of 4-8 pulses per minute.
This profound lesson from nature underscores the significance of adaptability and the art of synchronizing with life's rhythm on our voyage. It teaches us that when we face significant challenges that demand more energy, the most effective strategy may be to lower the frequency.
Analogous to Markets
Similar to life, the dynamics of the market adhere to the laws of frequency. Small and highly innovative companies often embark on ventures, and sometimes, they meet rapid setbacks. Only a select few emerge stronger. Consider this: out of the 28,853 companies that traded on the U.S. stock market from 1950 to 2009, nearly 80% of them, 22,469, had vanished by 2009 due to buyouts, mergers, or failures. Fewer than 5% of companies sustain their presence over rolling 30-year cycles.
In this grand narrative, thousands of small startups resemble the marsupials, pulsating with energy, exploring uncharted territories at a heart-pounding rate of 1,000 beats per minute. But only a handful succeed in their endeavor, evolving into trillion-dollar companies while learning to modulate the frequency. However, there's a trade-off, for as market capitalization, the number of employees, and business operations grow, innovation and exploration tend to wane.
Now, you might be wondering why this transformation takes place. The answer can be found in Rule #2: "A Duel with Growth and Mortality." It becomes apparent that, in both the realm of life and the complexities of the market, grasping the concept of synchronizing with the right frequency and modulating it is the key to achieving substantial size and effectively managing challenges that require scaling up.
Guillermo Valencia A
Brasilia, 31st October 2023