Opportunity Cost Minimization
"You should stop doing work that simply provides a positive return on investment and start focusing on work that minimizes opportunity cost." — Shreyas Doshi
What It Is
In high-leverage roles, there are infinite tasks with positive ROI. Focusing on ROI leads to picking small, quick wins. Instead, focus on minimizing opportunity cost—choosing the *best* possible use of time, not just a *good* one.
When To Use
- Quarterly planning and roadmap prioritization
- When team keeps filling roadmaps with "low-hanging fruit"
- When strategic bets are being neglected for quick wins
- To break the cycle of incrementalism
The Problem with ROI
Impact
ROI = ─────────
Time
The formula incentivizes:
❌ Quick, small things (reduce denominator)
❌ Easy wins that don't compound
❌ Avoiding hard, high-impact workCore Principles
1. The ROI Trap
ROI formula incentivizes doing quick, small things rather than hard, big things.
2. Define Allocation Buckets
Use a framework like:
- 60% Incremental improvements
- 30% Big bets / strategic investments
- 10% Infrastructure / technical debt
3. The Right Question
Ask: "Is this the optimal use of time?" NOT: "Is this a good use of time?"
How To Apply
STEP 1: List All Candidate Projects
STEP 2: Calculate Naive ROI
└── "Quick win: 2x return in 2 weeks = 1.0 ROI"
└── "Strategic bet: 10x return in 6 months = 0.83 ROI"
STEP 3: Ask Opportunity Cost Question
└── "If we do the quick win, we WON'T do the strategic bet"
└── "What's the cost of NOT doing the strategic bet?"
STEP 4: Evaluate 2-Year Impact
└── Quick wins: Often forgotten
└── Strategic bets: Compound over time
STEP 5: Force Allocation
└── Mandate X% of roadmap = strategic bets
└── Don't let quick wins consume 100%Common Mistakes
❌ Prioritizing "quick wins" because they're easy to justify
❌ Measuring team output by number of shipped features
❌ Neglecting difficult strategic bets that require longer timelines
Real-World Example
At Stripe, Shreyas shifted focus from small incremental fixes (positive ROI) to a massive, scary refactor of marketplace payments (Connect) because the opportunity cost of not doing it was huge.
*Source: Shreyas Doshi, Lenny's Podcast*