Runway Capital Formula

A framework for deciding between investing capital vs using it for entrepreneurial pursuits, particularly for those early in their wealth-building journey.

When Not to Invest (Early Stage)

• If you have limited capital:
  • Better to invest in yourself than traditional investments
  • Use money to buy back your time
  • Take multiple "shots on goal" with entrepreneurial ventures
  • Small investment returns won't meaningfully change your life

Example Case Study

• Young entrepreneur scenario:
  • Monthly burn rate: $2,000
  • Desired runway: 12 months
  • Required capital: $24,000
  • Even with unrealistic 50% annual returns:
    • Would only generate $12,000 in profit
    • Not enough to meaningfully impact goals
    • Better to use capital for entrepreneurial pursuits

Three Forms of Leverage

1. Human Capital

   • Having others work for you
   • Delegating tasks and responsibilities

2. Media

   • Content that scales without additional effort
   • Example: 1 hour podcast reaching thousands of listening hours

3. Capital

   • Way to allocate resources to opportunities
   • Can influence world outcomes through investment choices
   • Two main investment goals:
     • Maximum financial returns
     • Supporting meaningful change

Warning Signs of Poor Investment Choices

• Purely mechanical investment decisions
• Investments that are just "spreadsheet numbers"
• Focus only on metrics without meaningful impact
• Passive investments with minimal engagement
• Prioritizing small optimization over meaningful change

The framework suggests that early-stage entrepreneurs should focus on using capital for growth and development rather than traditional investing, until they reach a scale where investment returns become meaningful.