The earth used to be covered in ice. Practically all of it. Then it melted, refroze, again and again. Five times this happened in the last few billion years.
Scientists knew about ice age cycles long before they knew why they occurred. It confounded them. Then, a century ago, a Serbian scientist named Milutin Milankovic studied the earth’s position relative to the sun, and came up with the theory we now know is accurate: Our planet wobbles just enough to change how much solar radiation is let in, occasionally by enough to wreak havoc.
A few years later a Russian meteorologist named Wladimir Koppen ran with Milankovic’s work, dug a little deeper, and discovered a fascinating nuance.
The prevailing idea before Koppen was that ice ages occur when the earth’s tilt supercharges the wrath of cold winters. K0ppen showed that wasn’t the case. Instead, moderately cool summers are the culprit.
It begins when a summer never gets warm enough to melt the previous winter’s snow. The leftover ice base makes it easier for snow to accumulate the following winter, which increases the odds of snow sticking around in the following summer, which attracts even more accumulation the following winter. Perpetual snow reflects more of the sun’s rays, which exacerbates cooling, which brings more snowfall, and on and on.
You start with a thin layer of snow left over from a cool summer that no one pays much attention to, and after a few tens of thousands of years the entire earth is covered in miles-thick ice.
It’s an example of compounding in nature. And it shows what can be built off a freakishly small base.
Housel expands on this by highlighting Warren Buffet, specifically:
Buffett’s fortune isn’t due to just being a good investor, but being a good investor since he was literally a child. $80.7 billion of Warren Buffett’s $81 billion net worth was accumulated after his 50th birthday. … If, at age 30, Buffett was worth $24,000 instead of the $1 million he actually accumulated, and went on to earn the same returns, how much would he be worth today? $1.9 billion. … The punchline is that 97.6% of Buffett’s current success can be directly tied to the base he built in his teens and 20s.”
Housel offers other examples, ranging from consumer brands to the impact of 1940s Army engineers. The lesson is that compounding works in life and in reputation and in many measures of success—not just financial measures.
”Build a reputation through small, consistent acts. That’s where everything huge begins.”