Growth Rates & Duration

Growth rates and duration. You've heard us talk about duration before and the fact that it beats everything. Here's the reason why. If you make a dollar for a million years, you made a million dollars. If you do it just one time, you've only made a dollar, right? So great investors know that the duration of cash flows really, really matters. So revenue of $100 minus expenses of $50 leaves you with $50 of excess Profit, sort of the same thing as cash flow, but we won't get into that. So 50 times every single period, right? That's duration. What does growth have to do with it? Well, that $50 can increase every period. So instead of 50, 50, 50, 50, you're getting 50, 55, 60, 75, 100, 150, 250. So that growth rate becomes very important because it begins to compound. So it's really just what's that percentage growth rate and how long can that growth rate compound for? Which is why you hear a lot of investors talk about holding and why Buffett has talked about holding and why many people talk about, you know, the greatest compounding feature that, quote, Middle America has is their home because they don't buy and sell as much as they do with other more liquid assets like stocks. So if you can set up a business or a system where that income continues to grow every period, every month, every year, whatever it is, at that same growth rate or even an increasing growth rate, now you've got something very special on your hands. And that is the magic that venture capitalists are looking for. So if you're going out trying to raise money, They're looking for one in a million business that has very long duration, a high growth rate, and a growth rate that continues to grow. So, uh, can you design that? Well, that takes some skill. All right, have a good day. Thank you.