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Create non-linear value

  • By Alan Knott-Craig
  • April 11, 2024

There are two ways to create value: Linear & non-linear.

Linear means your rewards are correlated to your efforts, in other words: Your upside is capped by the amount of hours you work.

Non-linear means your rewards in not correlated to yours efforts, in other words: Your upside is uncapped, regardless of how hard you work.

Working in an audit firm creates linear value. Practicing as a lawyer creates linear value. Being a doctor creates linear value. Being a corporate employee creates linear value.

Only equity creates non-linear value.

You can get equity by buying it (on the JSE or in a private company).

Or you can can get equity by starting your own business.

The ultimate source of non-linear value creation is equity in an annuity-revenue business.

Not only can you sleep whilst your equity increases in value, but your business can sleep whilst annuity revenues keep coming in.

Create non-linear value.

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