look up any word, like hipster:
 
1.
1. the act of offsetting an error, defect, or undesired effect (such as a small penis, or lack of being fly) by being or doing something superfluously grandiose (such as flaunting a kick ass ride or building a third floor on a two story building to make its residents fallaciously feel hip).

2. see compensation, compensate
hot blonde girl: You think I should bang that guy with the lambourghini?
hot brunette girl: who? that short guy?!
hot blonde girl: yeah.
hot brunette girl: Ew! No! He's totally compensating.
hot blonde girl: Whatever! He's got a lambourghini.
hot brunette girl: I was talking about his penis.
hot blonde girl: Oooh...ew, never mind.

Endowed Resident 1: Why does that dorm have three floors when the other dorms only have two?
Endowed Resident 2: They're compensating.
Endowed Resident 1: For their picos pequeños?
Endowed Resident 2: That and cause they're really lame.
Endowed Resident 1: True.
by Kitchen President September 01, 2009