A business is based on rents to the extent it does *not* require ongoing investment of thinking to keep it going. Ie if all you need is capital goods and formulaic labor that can be performed by interchangeable people, your business is based on rents.
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Two factors can force you to think: 1. The presence of real competition (I suspect this guy was a local monopoly in Roseville) 2. The business being a knowledge work business where the basic output requires thinky labor that cannot be done by interchangeable parts people
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Interestingly by this definition, even a super hardworking street food vendor is a rentier. Small cart capex, interchangeable formulaic labor, local monopoly on one street block. Look at say New York street food. Why do they all follow 2-3 patterns? (hotdogs, shawarma...)
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I guess I have low sympathy for people who try to build businesses with the goal of being able to stop thinking at some point. This is why I kinda detest the internet equivalent — the holy grail of “passive income”
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It’s okay to want to stop thinking about one aspect of a business, via automation or figuring it out once and for all, but if you seek to eliminate all thinking input, you kinda deserve the risk exposures you get. Even if you’re working 14 hour days rather than idling in Bali.
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Replying to @vgr
both automation and figuring it out once and for all create intellectual property viz "capital" to collect rents on you're missing the obvious here
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Replying to @vgr
for one, that capital is 'stored labor' and its maintenance expenditures require rents to be sustained. so rents need to be charged for its upkeep then, if you want to accumulate more of it, you need to constantly apply thought into optimizing yet another tiny detail . . .
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. . . you hadn't thought about before. your competition isn't sleeping, either; if you don't you go under. e.g. if all your fellow landlords start upgrading their houses' insulations and go up in energy label class, you will have to as well: your future customers won't . . .
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. . . tolerate above-market communal bills; they'll either demand lower rents to compensate or go take their business elsewhere. there's more details for me to grok around capex-heavy businesses, i'm due learning that in the present decade.
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The point is that the maintenance cognition is far lower than you're capable of in a rent... to derive "rent" from my archive of published articles, I pretty much have to think full time. Many businesses are... not like that.
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Replying to @vgr
something to do with positioning, mayhaps.. it's not near the flows of water, more 'oasis' with a spring inside welling out
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