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Half the people in this thread understand the capital allocator playbook. The other half do not. And Andrew is laughing all the way to the bank.

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Andrew Wilkinson

@awilkinson

Jun 3, 2020

What’s an easier path to wealth? PATH 1: VENTURE STARTUP - 95% chance of $0 - Tiny personal income while building startup until IPO/scale - Massive dilution (most founders end up owning 5-15%). $1BN market cap = $50-$150MM for founder. OR...

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Cedric Chin

@ejames_c

Jun 4, 2020

The capital allocator playbook is simple to grok. Build a free cash flow generating business. Wait. Take the FCF and then use it to purchase another FCF-generating business. Wait. Use those cash flows to buy yet another FCF generating business. Wait. Rinse and repeat.

Cedric Chin

@ejames_c

Jun 4, 2020

There are many variations of this, of course. The model I described above is pretty much the one

@awilkinson

uses; it's also the Berkshire model. Many more variations in amazon.com/Outsiders-Unco

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and

Ah I’ll need to reread this eventually. My first go round was about unconventional attitude but not strategy.

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and

Nah, it's about the capital allocation decision making process, and how, in the hands of the right people, can be done as high art. A more formal presentation of the ideas can be found in Aswath Damodaran's Corporate Finance textbook.

2:00 AM · Jun 5, 2020Twitter Web App