If this is your first time visiting my site, there’s something you should know: I love reading. As subscribers of my monthly reading recommendation newsletter know (if you’re not a subscriber, what are you waiting for?), I have an eclectic taste in books. My recommendations run the gamut from psychology and war history to novels and science or math books.
From the title of this post, you might be thinking that I have a utilitarian view of reading. For the record, that is not true. By no means should you be looking at reading purely from a return on investment (ROI) standpoint. Reading is first and foremost a pleasure. That being said, a useful book is one of the best investments you can make. In fact, reading is one of the very, very few areas of life which offer the potential for 100x or higher returns.
There is so much knowledge just sitting there in books, waiting for someone who can communicate the ideas effectively and take them into the real world. In fact, a large percentage of the people we consider highly intelligent may just be more well read than us. Many of the problems that companies, governments, and individuals face on a regular basis have been in existence for hundreds, if not thousands of years, and have been solved over and over.
The clever innovator or highly accomplished consultant who can solve all your problems may just be pulling their solutions from a better set of sources (books) than you are. And those better sources are the reason they’ve been able to differentiate themselves and get out of the commodity workforce. It’s clear – books can give you a competitive advantage that few other things can. But it requires an investment of both time and money.
There’s a quote I love by the Dutch Renaissance scholar Erasmus that really drives this home:
“When I get a little money, I buy books; and if any is left, I buy food and clothes”
I’m not recommending you starve yourself to read – we do have libraries after all. But if you want to buy your books (and I recommend you do), it isn’t too difficult to justify the investment. Because that’s what a book is – an investment.
Let’s assume that a book will cost you $15 (you can buy books for much, much less than that but I’ll save those tips for another post). If you buy three books per month, you’re spending $540 per year. If you choose your books wisely (which isn’t easy), you’ll get through 36 books over the course of the year – far more than the average person. Compound this advantage over a few years and you’ve pretty strongly differentiated yourself.
In fact, it wouldn’t be surprising if just one of the books you read leads to an insight which results in your next company, a consulting contract, or a promotion at work. I’ve experienced this firsthand – a $12 book plus a few cold emails once led directly to a $10,000 consulting gig. There aren’t too many investments that can beat that ROI.
And therein lies the similarity to venture capital. Since books have the potential to lead to such high returns, you can afford to be wrong about books many, many times in your search to get it right. In fact, if I never again see a dollar of return from reading, the one consulting gig I earned covers the cost of over 830 books.
This is similar to (but even better than) venture capital economics. VCs fully expect a large percentage of their investments to go to zero. Their entire job is to find the one or two companies which will drive the returns of the entire fund. This means finding the company that can deliver the 100x return. The same applies to buying books. In my case, the ROI of that one book was 833X. While I won’t be competing with Andreessen Horowitz in the venture game any time soon, knowing that reading books can lead to huge payoffs helps me justify the amount of time and money I spend on reading.
Of course, not every book you read needs to get you a consulting contract or a new job. Some books, fiction or nonfiction, are just an absolute pleasure to read and have no (direct) impact on your earnings potential. If you’re fortunate enough to find one of these books, lucky you. They’re more difficult to find than the 100x return books.