My First Million
The best business ideas come from noticing what's working and doing it better, faster, or for a different audience.
Reinvestment Runway Analysis
Evaluating businesses based on how effectively they can reinvest profits back into growth versus needing to deploy capital elsewhere
Decision Rule
If $1 of profit can generate more than $1 of additional profit when reinvested, keep investing; if not, extract profits for deployment elsewhere
How It Works
Different businesses have different capacities for profitable reinvestment - identify this threshold to optimize capital allocation
Failure Modes
Continuing to reinvest past the point of diminishing returns
Not recognizing when a business has hit its reinvestment ceiling
Extracting profits too early from high-return businesses
Example Decision
“Warren Buffett stops reinvesting in businesses with low reinvestment potential and redeploys capital to acquire new businesses with higher returns”