Vilfredo Pareto was a controversial Italian economist who lived from 1848 to 1923. While at the University of Lausanne in 1896, he published his first paper “Cours d’économie politique” , where he showed that approximately 80% of the land in Italy was owned by 20% of the population.

He also developed the principle by observing that 20% of the peapods in his garden contained 80% of the peas, and that 80% of all stock market gains are realized by 20% of the investors. The principle could actually be found almost everywhere.

Pareto’s Law can be summarized as follows: 80% of the results come from 20% of the effort and time. Recent studies show that employees don’t actually work 7 or 8 hours per day. They usually get 1 to 2 hours of productivity in any given day, the rest of the time being taken away by meetings, emails, phone calls, open space office distractions, and questions from fellow employees. That’s Pareto’s Law again.

The distribution is not always exactly 80 /20, it’s sometimes 90 / 10 or 75 / 25, but the idea is always the same: The results you get are never proportional to the time you spend on the task. Only a small portion of that time actually produces the desired outcome. In other words:

Working harder doesn’t help, but working smarter does

With Pareto’s Law in mind, you can start asking yourself:

  • Which 20% of sources are causing 80% of my problems and unhappiness?
  • Which 20% of sources are resulting in 80% of my desired outcomes and happiness?

Then you can eliminate all of the unnecessary burden and focus on what actually helps you:

  • The 20% of clients that bring 80% of your total revenue
  • The 20% of hobbies that bring you 80% of your happiness

You get the idea. Again, Pareto’s Law is not about working harder, it’s about working smarter by making the right decisions and focusing on what works for you, while eliminating what doesn’t.

Doing less meaningless work, so that you can focus on things of greater personal importance, is NOT laziness. This is hard for most people to accept, because our culture tends to reward personal sacrifice instead of personal productivity.

Timothy Ferriss

Using Pareto’s Principle, I now avoid clients that aren’t a good fit for me, basically the ones that would take 80% of my time for just 20% of revenue. I work from home as much as possible to eliminate commute time, meetings and open-space office distractions. It takes some time to adopt the Pareto’s Law mindset, but once you get there, you can achieve a lot more in a lot less time.

Sometimes it even makes you look like a superhuman. People ask me: How do you find the time to do all these things? How can you run marathons, write a book, write 3 blog posts per day, raise two kids, travel six weeks per year, consult for clients, etc. and still want more goals to work towards?

Well, now you know. I just have to thank Vilfredo Pareto, a pretty good hacker!


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