Sustainable compounding is not a lucky event — it requires three powerful engines working together: a high-quality business model, excellent promoters, and strong reinvestment opportunities. When these align, a business compounds value year after year.
1. A High-Quality Business Model
The business must scale easily, require low capital, and defend itself from competitors. Such companies grow fast without heavy investment.
2. Great People Running the Business
Ethical, disciplined, and intelligent promoters allocate capital wisely and avoid destructive decisions.
3. Reinvestment Opportunities
A business should earn high returns and reinvest profits back into the business to generate even more returns — creating a self-reinforcing growth cycle.
When all three factors are present, the company becomes a compounding machine that strengthens every year.