Time Arbitrage

People say this because the number of hours in a day serves as the great equalizer: something meant to remind us that at from a time standpoint, we commoners have the exact same resources as the well-accomplished people we admire. We are reminded that our productivity superheroes do not have the unfair advantage of more time resources available to them, and thus we too can achieve the same level of success.

Identical Resources ⇒ Equal Level of Output.

That’s the inspiring moral of the story, right?

So why is it that I feel so bad about myself whenever I hear this?

If I have the same time resources as Tim Cook, Elon Musk, Mark Zuckerberg, or Richard Branson, then why are these people running billion dollar companies while I can barely answer my emails? Am I really so incapable of utilizing my time, that I produce THAT MUCH less with the same raw material (24 hours)?

Why does it feel like for some people:

Identical Resources ⇒ Output Level Over 9000!

Put in another way, why do some people get so much MORE done with the exact same amount of time as I have?

Well, I’m writing to let you all in on a little secret: you don’t have the same amount of hours in a day as some people. What if I told you that the saying “We all have 24 hours in a day” is not actually true?

You may say that it is impossible to simply manufacture more time. That is technically correct, in that you can never make a day last more than 24 hours, and you can never squeeze more than 60 minutes into an hour. So what am I talking about? In the financial world, wealth and value can be created where before there was none, so by borrowing financial concepts we can find the key to “creating” time.

In the financial world, successful financiers understand the concept of arbitrage. Financial arbitrage seeks to exploit the different values that different markets place on identical assets and extract profit from this inefficiency.

More simply put: a dollar is not always worth a dollar.
(Forgive the oversimplification. I’m trying to make a point.)

What if you could take the concept of financial arbitrage and apply it to the 24 hours you have in a day? What if you could engage in “Time Arbitrage” such that an hour would be worth more than an hour?

Here’s the thing: most high performers already do. That’s why they seem to accomplish so much more in the same amount of time, because they arbitrage their time such that it returns more value to them than it otherwise would.

A Simple Example

In college, I used to stay up late frequently. Sometimes I’d be out with friends, other times I’d be cramming for exams, and sometimes I’d just be goofing off watching hilarious youtube videos and suddenly realize it was 3am and that I needed to go to bed.

I didn’t have class until the afternoon, so I would still be able to sleep for a good 8 hours before having to get up to go to class, but even after getting enough sleep I found myself tired, lethargic, unmotivated, and fuzzy-brained.

I would settle down to study in evening after dinner, and I would find myself unable to focus, constantly distracted, and generally unproductive. I would be at the library or coffee shop for 3 hours, and feel like I got nothing done.

Then I read something that changed my life.

“Every hour of sleep before midnight is worth more than an hour of sleep after midnight.”

This excited me, because if it were true, it could help to solve my issue of feeling like I didn’t get enough sleep.

So I tried it.

I would go to bed at 10pm and I woke up naturally at 5am, feeling like I had more energy than my former 3am – 11am sleep schedule. Fewer hours of sleep, but vastly higher energy levels. Not only did I feel more rested than before, I also gained an extra hour!

I felt like I had stumbled upon a cheat code for real life. I was hooked. But it didn’t stop there.

Because I was now waking up at 5am, I now found myself awake at a time when few other college students were awake. I needed to find things to occupy my newfound block of time, so I started going to campus early, getting breakfast, doing assignments, and reading course material. Those morning hours were completely free of distraction and I was able to think much more clearly. I was utterly amazed at how much I was able to get done in a mere one hour of work in the morning. In fact, I would get as much done in that one morning hour as I would in the three evening hours I used to spend studying, essentially netting me two “extra” hours I did not have before!

I realized that this was similar to the net gain in quality of sleep that I experienced simply by shifting my sleep time several hours earlier. I started telling myself “Every hour of work before noon is worth more than an hour of work after noon.”

Over time, my grades improved while my stress levels went down. Overall, I was much happier and more energetic than before, simply because I was finding ways to extract more value from the time I spent at certain activities, which had the effect of netting me more free hours overall.

I began looking for other ways that I could “gain extra time” and I found plenty.

I found that by taking one of the morning hours I had gained by sleeping earlier, and “investing” it in exercising for one hour every day, I was much more productive for much of the rest of the day, and I calculated that I gained the equivalent of three extra productive hours for the one hour that I invested in exercise.

Only 24 hours in a day? Not anymore! Morning hours may seem identical to evening hours, in that they all comprise 60 minutes, but they have vastly different value depending on how you spend them. The hour after your big turkey dinner may be identical to the hour after your morning coffee, in that they both comprise 60 minutes, but they have vastly different productive worth. Why not use hours that are more optimal for sleeping to sleep and hours that are more optimal for output to work?

By exploiting the fact that activities are more optimal at certain times than others (different values for identical assets) you can figuratively “create” time in your day (extract profit). You can then invest this “extra” time in activities that will further optimize or increase the quality of your day.

This is time arbitrage.

Getting Started with Time Arbitrage

So how do you get started with time arbitrage? If you are reading this blog, chances are that you already are employing some form of time arbitrage.

1. Understand Your Activities

Before anything else, identify your responsibilities and the most important activities in your life. What are the things that bring the most value? Which are the things that are truly worthwhile? These are the activities that align with your values. Chances are that you may find some misalignment in terms of how much time you spend doing things that don’t align with your values and lack of time doing things that really contribute to the things your care about. Ask yourself the hard questions about whether certain things really add value to your life, and whether you can eliminate them in favor of activities that contribute to your goals.

This first step is crucial, because without it, you may be just getting more efficient at doing the wrong things.

2. Understand the Quality of Your Hours

Everyone’s working styles and biorhythms are different. Personally, I work better in the early morning than I do late at night. For some people, their most productive times are after midnight. This may take some experimentation and a deep sense of self-awareness. When do find yourself most focused, doing your best work? When do you feel most tired? Can you identify any patterns? Do you work better in short bursts or long sessions? Take a look at your key activities. When were the times you accomplished those activities most effectively? When have you had the most success?

3. Align Your Key Activities With Their Most Optimal Times

I’d recommend doing this both at a daily level and at a weekly level, because just like certain hours of our day are more optimal for certain activities, certain days of the week also carry more value for different activities as well.

Try this out for a week and take note of your productivity and how you feel. Adjust as necessary. Tweaks and adjustments are encouraged because you will learn that some of your assumptions about yourself and your most optimal times may be inaccurate. You will better understand how you work and maybe even discover that some of your key activities should be changed. Life is not static. You are not static. You are allowed to make changes.

4. Calculate Your Time Created

A hugely motivating factor for me was tangibly seeing how many hours I gained by arbitraging my time among my activities. I began to estimate how many hours I created, both at a daily and weekly level. As I saw the minutes and hours add up, I grew even more motivated to find additional ways to arbitrage my time.

For example, I estimated that every hour of sleep before midnight was worth about 1.5 hours after midnight. I also found that every hour spent working on a Saturday morning was worth the equivalent of four hours working during a Friday afternoon. Restricting the times I checked email and social media to dedicated time slots rather than randomly throughout the day gained me roughly two productive hours. You will have to experiment and evaluate yourself to figure out your own calculations. but this will be worth it, because it will motivate you more to find ways to create more time.

In Closing

The premise of time arbitrage is that you can extract more value from your time. People cannot literally have more than 24 hours in a day. You knew that. But the fact still remains that your activities have different values at different times in your life, and by structuring your schedule to exploit these different values, you can make one hour worth more than one hour. You won’t be able to make the hour last more than 60 minutes, but you can effectively create more time in your day and week by arbitraging your time.

This was a guest post by Kevin Au. He is a longtime Asian Efficiency reader and self-professed productivity junkie. He currently works at a privately held Internet software company in Silicon Valley.