Recently, I was pondering my ability to forecast cyclical businesses (which is very low, I might add), and had to return to Ray Dalio’s “How the Economic Machine Works” for a little inspiration. This is a terrific 30 minute video-infographic explaining the foundation of economic cycles. I have enjoyed viewing the video numerous times over the last few years and have read most of the paper that backs it up (sorry Ray for not finishing every line.) The reality of the very simple rules playing out over a macro scale is something I find terrifically fascinating and utterly true. Human nature drives the economy one transaction at a time.
Another realization occurred this morning when considering our unique, innate purpose. I believe that we are created to reflect a singular, holy God but are each formed uniquely. We each have unique skills and abilities. We each develop at different rates over time and steward our resources with varying objectives. My personal history has merged a few areas of science, economics, literature and philosophy and I find audiobooks a terrific way to consume other’s thoughts at a rapid clip, as a means to develop myself at a faster rate. Anyways, this morning I was listening to Charles Koch’s The Science of Success and it hit me that the pure simplicity of “Create Value for Others” was something of a mantra for many entrepreneurs.
Little Engine Ventures’ name derives in part from this philosophy. The children’s story of the humble locomotive speaks to helping others in a time of need. LEV serves a number of different individuals. For years, as an entrepreneur, I’ve said “the customers are my boss.” I still believe this to be the case. I also believe that the customer must derive a higher value from our products and services than their cash would otherwise provide if held, invested or spent elsewhere.
To this end, both our customers and our limited partners are exchanging future value (opportunity cost) to place their resources under our stewardship. This is something I do not take lightly on either account.
Furthermore, our ability to perform at an absolute return must be higher than alternatives they have elsewhere. I’ll have to write about “risk adjusted” returns another time, but fundamentally, I believe risk is not volatility but the potential for permanent loss. In this way, our creation of value for others is something of a mantra for LEV. The creation of value originated from solving the customer’s problem as moves through the market to the owner of that solution.
LEV takes up the privilege of owning businesses so that value can continue to be created for others.
Why do you work?