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Video Series

Watch the Value Equation come to life.

The series that turns corporate business-model dynamics and wealth creation into something anyone can follow — no business degree required.

What do value investing and becoming a multi-millionaire have in common? Most multi-millionaires in the United States achieve their wealth through stock ownership — most often in companies they started or work for. The financial alchemy of wealth creation is inseparable from business-model design, and that’s where value investing and business wealth creation converge. This series of 27 short videos makes that understanding broadly accessible.

You’ll learn fast 27 videos · step-by-step · just over four hours

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What you'll learn
  • 01 The most certain path to becoming a multimillionaire.
  • 02 Making equity worth more than cost (Equity Valuation Multipliers).
  • 03 The five components of business returns.
  • 04 How to compute current returns on equity.
  • 05 Speeding up current equity return calculation with the Value Equation.
  • 06 The three corporate efficiencies: operating, asset and capital.
  • 07 Characteristics of the best business models.
  • 08 Business minefields and opportunity costs.
  • 09 The Value Equation Universal Business Model.
  • 10 Using the Value Equation Framework to evaluate public companies.
Most recent
Episode 19 · 11:15

Costco, part 1

Peels back S&P 500 member Costco’s (NYSE: COST) 2024 financial statements to reveal its first three Value Equation business-model variables.

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Getting “business rich”

A kickoff that introduces the Value Equation channel and how most of the richest Americans got that way: by owning meaningful stock in businesses they help start or work for.

Equity Valuation Multipliers

Introduces Equity Valuation Multipliers — how many times a company’s market value exceeds its actual creation cost. A multiplier greater than 1 is the hallmark of a financially successful company.

The four sources of investor return

Introduces the four foundational sources of investor returns. The first is dividends; the next three are captured in internal and external cash-flow-per-share growth.

The fifth source — multiple arbitrage

The turbocharging fifth source of return: cash-flow multiple arbitrage — which kicks in when the first four sources exceed investor return requirements, making a company worth more than it cost.

The six drivers of current returns

Introduces the six essential financial drivers of current investor returns. Current returns make dividends possible and are central to future cash-flow-per-share growth.

How the six drivers are determined

Examines how each of the six drivers of current returns is determined — financial concepts that generally aren’t labeled on company financial statements.

The Value Equation

Introduces the Value Equation itself — a quick-math shortcut that computes current equity creation returns from the six essential drivers.

Operating, asset & capital efficiency

Allocates the six Value Equation variables into Operating, Asset and Capital efficiencies that together drive current equity returns.

Characteristics of the best models

Explores the financial characteristics of the best business models. Few businesses have them — so the leader’s job is to do the best with what you have.

The levers to improve a model

Uses the Value Equation and its efficiencies to illustrate the financial levers leaders have to improve their business models. Efficient design is a creative act.

Opportunity cost

Explores opportunity cost, where management inflexibility — often from restrictive borrowing or lease agreements — can damage business-model quality and destroy value.

The risks of growth

Explores the risks of accelerating growth through M&A or excessive organic growth. Growth is the quickest way to elevate returns — but it has downsides.

Capital-stack minefields

Examines capital-stack design minefields — the mix of borrowings, lease proceeds and equity used to finance a business and optimize capital efficiency.

Deconstructing the Value Equation

Deconstructs the Value Equation to show the many levers leadership has to serve the primary objective: maximize shareholder value.

OPM equity

Introduces OPM equity — starting a company with outside equity when you lack the personal resources — and how to decide how much of your company to give up.

The Universal Business Model

Introduces the Value Equation Universal Business Model, adding growth and market-value variables to predict total investor return expectations.

The real power of multipliers

Shows that the simple approach of Episode 4 understates the real potential of Equity Valuation Multipliers — the fifth, turbocharging source of returns.

External growth

Incorporates external growth — issuing new shares to fund growth — into the Universal Business Model. Most great models don’t need it; some do.

Costco, part 1

Peels back S&P 500 member Costco’s (NYSE: COST) 2024 financial statements to reveal its first three Value Equation business-model variables.

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