Dollars and Multipliers

Multiplier Effect: “the effect of a relatively minor factor in precipitating a great change”

This essay is the story of a single dollar’s journey through the world — and how its lessons can be applied to innovation.

When I get my haircut, I pay my barber with a single dollar. My part of this transaction is over, but my dollar’s journey continues.

My barber uses that dollar to pay his milkman. The milkman uses that dollar to pay for craft cider.

The cider maker breaks the dollar: he saves fifty cents and uses the remaining money to pay his plumber.

Indirectly, my dollar had a cascading economic impact on the milkman, cider maker, and plumber.

This principle, when applied to innovation, is supreme.

Why?

Because not everyone is a dollar. Some people are fives, tens, and twenties (works the other way, too).

In other words, a top performer can have exponentially more impact than the average person.

When thinking about co-founders or new hires or critical partners, ask yourself not only if that person can do their primary job. Ask yourself if that person can have exponentially more impact than her title.

By definition, the answer will almost always be no.

But as a wise man once told me, hold on to your twenties.