meteing capital

On the difference between full and incremental capitalisation systems:

In full capitalisation games a little money creates and controls twice as much money. You invest $500 and get to control $1,000 and only half the income. In incremental capitalisation games there is no inflation of capital. Instead it is about income: a small investment controls a larger income flow. $500 controls $500…and 100% of the income. You don’t get free money, you get control of twice as much income. Which is why high pars are so difficult (you can’t get enough of the income you control to buy more shares quickly enough) and cross-investing rather than a gift of capital is a direct attack (your investment has stolen their income and fundamentally weakened their company for the long term).

Which in sum shows what’s needed for a successful second company: enough opportunity (usually time but can be track etc) for enough income to out-perform other opportunities.