Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years…
Buy a piece of an understandable business at a rational price, when its earnings are almost certain to be materially higher in five, ten, and twenty years.
And this mode, which I at first put on with some violence to natural inclination, became at length so easy, and so habitual to me, that perhaps for these fifty years past no one has ever heard a dogmatical expression…
Adam Smith:The Wealth of Nations, Book II, Chapter IV, Paragraph 866
Adam Smith《The Wealth of Nations》· Book II, Chapter IV · Investing
In proportion as that share of the annual produce which, as soon as it comes either from the ground, or from the hands of the productive labourers, is destined for replacing a capital, increases in any country, what is called the monied interest naturally increases with it. The increase of those particular capitals from which the owners wish to derive a revenue, without being at the trouble of employing them themselves, naturally accompanies the general increase of capitals; or, in other words, as stock increases, the quantity of stock to be lent at interest grows gradually greater and greater.
And this mode, which I at first put on with some violence to natural inclination, became at length so easy, and so habitual to me, that perhaps for these fifty years past no one has ever heard a dogmatical expression…
Benjamin Franklin:The Autobiography of Benjamin Franklin, Excerpt 59
Benjamin Franklin《The Autobiography of Benjamin Franklin》· The Autobiography of Benjamin Franklin · Leadership
The business of the postoffice occasion'd my taking a journey this year to New England, where the College of Cambridge, of their own motion, presented me with the degree of Master of Arts. Yale College, in Connecticut, had before made me a similar compliment. Thus, without studying in any college, I came to partake of their honours. They were conferr'd in consideration of my improvements and discoveries in the electric branch of natural philosophy.
John D. Rockefeller《Random Reminiscences of Men and Events》· Chapter I, “Arguments versus Capital” · Growth · Decision · Action
It is always, I presume, a question in every business just how fast it is wise to go, and we went pretty rapidly in those days, building and expanding in all directions.
Every business must judge how fast it is wise to expand.
Context
John D. Rockefeller (1839–1937) founded Standard Oil in 1870 and built it into an integrated refining, transportation, and marketing empire. His key decision was to consolidate aggressively during a chaotic period, accepting rapid expansion in order to capture scale and efficiency. In Random Reminiscences he admits that every business must judge how fast it is wise to grow.
Today's question
Should your business accelerate now—or first strengthen the chassis that must absorb the speed?