The Limit of Labour and Why Capital/Equity Builds Empires

When it works, it is magical. In South Africa, it worked for one company named Naspers, Africa’s most valued company across all subsidiaries. Naspers’ greatest investment, based on current valuation, is its early investment in the Chinese technology firm Tencent, which was valued at over $175 billion at one point, stemming from an initial investment of $32 million. A few years ago, I wrote about it: “The World’s Greatest Venture-Capital Investment Ever, is Africa’s”

But it did not stop there as when Uber went public, people who invested $5k saw that to become $24.8m. In other words, $5,000 became $24,800,000!

We expect the IPO season to return and as that happens, financial lives would be transformed. Oliver de Coque sang “good music comes from God”; my friends, wealth comes from equity and not just labour. Labour weakens and retires as we become older, capital/equity does not. That inherent ability of capital/equity is the most powerful component of its leverageability because unlike labour, it can earn income from generations to generations. In a more zen-like statement, drawing from my junior secondary school courses, labour has diminishing returns while capital/equity enjoys accelerating compounding returns.

So, do not be confused due to the effervescence of promotions which companies reward labour with.  Note this: great wealth belongs to capital/equity because labour serves capital when you evaluate factors of production. Simply, with capital, you can purchase labour, and that is why most agile HR organizations call labour a “human capital”. Let me drop these words: capital/equity builds empires, and it has been like that for centuries; plan to own something!

The Limit of Labour and Why It Cannot Compound Wealth With Huge Leverage

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