The world is unfair. Pareto has taught us that most things in life are unevenly distributed, whether it be wealth, success, or even happiness. However, he couldn't explain exactly why this is the case. As if there is an invisible force that drives an imbalance in almost all aspects of life and society, giving way to the old adage that the rich keep getting richer and the poor keep getting poorer.
Yet the answer had been right in front of him. In the New Testament Matthew tells us:
“For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath” — Matthew 25:29
In other words, those who already have (money, status, happiness, etc.) will magically get even more of it, whereas those who don't have (money, status, happiness, etc.) will get taken away from them even the little (money, status, happiness, etc.) they have.
This secret force - often referred to as the Matthew effect - is the reason why some products become bestsellers, why certain personalities reach unrivaled celebrity status, why social media posts go viral, why some people get ridiculously richer than others, and why some companies skyrocket from being the underdog to become unicorns.
Take Airbnb for example. Thanks to its sophisticated platform, verification features, and reputation the company has managed to establish a huge network of hosts and travelers, which has made the company the biggest accommodation provider in the world. I.e. Airbnb already has huge success. However, the company can only be expected to grow. Why?
This is where the Matthew effect comes in.
Imagine you are a traveler looking for accommodation for your next holiday. Chances are that you are going to check the platforms that have the biggest network of listings, which includes Airbnb since that gives you the greatest choice and therefore the greatest chances to fulfill your desires towards the accommodation. Equally, if you are a new host looking for the best platform to list your property on, you are probably going to choose the one with the biggest network of travelers, i.e., the biggest customer base, which will increase the likely number of bookings you can generate to maximize your income.
This creates a cycle.
As new travelers join Airbnb, they grow the potential customer base, making it more attractive for potential hosts to list their properties on the platform. That, in turn, increases the network of listings, i.e., the choice for travelers making the platform more attractive to them. This grows the number of travelers signed up to Airbnb even more, making Airbnb even more attractive to potential hosts and so on. This relationship leads to an upward spiral, growing Airbnb's success bigger and bigger, even though they are already the market leader.
This is the power of the Matthew effect.
But here is the thing, you can harness this secret force for yourself. Let me show you how.
Arguably the biggest opportunity for harnessing the power of the Matthew effect is by accumulating knowledge.
Imagine for example you built a knowledge base for yourself in the areas of self-awareness and psychology. You start to understand how your brain works, how you make decisions, and where your behaviors come from.
Next, you start learning about physical health and well-being. You start to understand what a good diet looks like, what types of workouts there are, and how important good full-night sleep is.
Lastly, imagine you are interested in entrepreneurship and business development, so you start to learn about marketing techniques and different business models.
All of a sudden you start seeing opportunities for combining the knowledge that you have within the different domains with each other.
Your understanding of psychology helps you build discipline in eating healthily and avoiding cravings. Your self-awareness and knowledge about how to craft good routines ensure you engage in regular exercise and get enough sleep.
At the same time, the workouts in the gym are the perfect way for you to watch yourself and learn more about how you react to situations of stress when you are being physically pushed to your limits, thereby building your self-awareness.
Further, your knowledge in psychology helps you not only understand yourself better but also those around you. You also start to understand how people behave as consumers and how you could use that to set up a successful business and effective marketing campaigns. Doing so also improves your communication and negotiation skills which apart from business scenarios you can also use in your personal life.
Moreover, while learning about physical health, you realize that effective sleep is crucial for improving your emotional intelligence, memory, skills, and creativity, which directly adds to your understanding of psychology, self-awareness, and how to create unique business ideas.
All the knowledge you build within the different areas of interest start working together to skyrocket your expertise in all areas even more. It's like you are connecting the dots in ways that you didn't know were possible, creating a cycle in which you use the knowledge you already have to generate an even greater abundance of knowledge.
Connected to having knowledge about self-awareness, you can also use the Matthew effect to maximize your happiness.
For that purpose, you have to learn how to take control of your thoughts and how to provoke positive thinking. (Learn more about how to take control of your thoughts and maximize positive thinking by reading my blog post about the thinking cycle.) ****
Your thoughts are more powerful than you think. They determine your emotions, your behaviors, and ultimately, the outcomes you create for yourself on a daily basis. Hence, if you maximize positive thinking, you will feel happier, show positive behavior like gratitude, helpfulness, or productivity, which creates positive outcomes, like better results at work, greater likeability amongst your family, friends, and colleagues, and all the therewith connected benefits, like better career chances, support from others with your personal projects, and lasting friendships.
In turn, these outcomes will add to your happiness, prompting you to think positive thoughts more often and start that cycle again, bringing you even more happiness.
Let's finally turn to how you can use the Matthew effect to take the money you have and receive even more money and accumulate an abundance of wealth.
Generally, you can do three things with your money:
Most people either spend or save their money. However, in either case, spending or saving your money diminishes your wealth. Yes, even if you save your money, your wealth diminishes. It is being stolen away by a vicious thief called inflation.
The "rich" know how to fight this thief. These people make their money work for them and invest it. More importantly, they reinvest their money, thereby harnessing another form of the Matthew effect, namely, compound interest.
Imagine you have got £10,000 and you invest your money in the stock market and after one year the value of your investment has grown by 10%, i.e., £,1000. You will then have £11,000. Now you decide to reinvest these £11,000 and within a year, the value of your investment has grown by another 10%. This means that your investment will have grown by £1,100 to £12,100. If you reinvest this amount and your investments gain another 10% in value, then next year your return will be £1,210, and so on. Every year your gains will get bigger and bigger, growing your money faster and faster.
Bear in mind that this little excourse is barely scratching the surface of the area of personal finance. However, it demonstrates the pervasiveness of the Matthew effect.
Be it accumulating your knowledge, your happiness or your money, become aware of what you have already got and harness the power of Matthew effect. May the force be with you.
My Story
My name is Stefan, and just like you, I had (and still have) this little voice in my head telling me that I'm not good enough.... continue reading
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