[Founder Notes] The Dao of Capital

Capital should be thought of as a verb, not a noun. It is a method or path toward an end. The best path is often what appears to be a roundabout way.

The Examples

Robinson Crusoe: Normally you can fish 5 fish. But if you want to do more than just survive, you need to starve today in order to build a boat and net. Direct path: fish more fish. Roundabout path: build the boat and net to fish more fish later.

Henry Ford: One of the first to make hard-built cars. Went slow. Invested profits in factory so he could make cheaper cars. Afterward, exponential growth. Then optimized for speed.

Tortoise and Hare: Imagine if by going slow in the beginning the tortoise transformed into a super vehicle toward the middle — and then the hare slowed.

The Principle

Largest profit may be hiding in the future. Only by operating opposite to human nature can we achieve it. Everyone knows it is better to sacrifice now to benefit later. They just want to do that tomorrow, not today.

The Dao of Capital often lies in opposites:

• Think small in order to get big.
• Take time to learn a business A–Z in order to go fast.
• Cut price to increase profits.
• Give profits to R&D to make more profits.
• Don't listen to customers to give them what they want.
• Believe in yourself even in the absence of evidence of success.
• Take short-term losses to achieve long-term large payoff.

— Jay