This $100B Chairman Says Every Single Rule in Corporate Finance Is Changing — Here’s the New Model | by Petter Englund | The Capital | May, 2025

You’ve managed to stop the bleeding — but at a cost.

You’re no longer building resilience. You’ve made the business leaner, more exposed, and more short-term oriented— just to stay alive. And this isn’t a one-time fix. To stay in business, you now have to continuously offload your balance sheet, making sure capital never accumulates fast enough to decay beyond what your operations can cover.

That means you’re now permanently vulnerable to external shocks. Any disruption — a bad season, a supply chain delay, an unexpected closure — could threaten your survival. Ironically, the very risks you worked so hard to outgrow in the early years are now baked into your operating model, indefinitely.

Problem turns personal

But now a new problem emerges. You’ve saved the company — at least for now — and preserved the thing you’ve poured your passion into. But the decay hasn’t stopped. It’s just moved — from the business to your personal bank account.

At first glance, this might seem like a “good” problem to have. But as a business owner, you know better. The day may come when the company needs that capital again — and by then, it may no longer be there.

For a moment, you flirt with the idea of spending it. The temptation is there — maybe a new car, even though yours runs perfectly fine. Or buying a bigger house. But you love your house and don’t want to move. And purchasing real estate just to lease it out feels hollow — it would only add pressure to the same housing market your grandchildren already say is out of reach. Besides, being a landlord comes with headaches you don’t want. And outsourcing it? That just shifts the problem — you’d be paying someone else to manage it, and the capital would decay from management fees.

With no meaningful reason to spend the money, you settle on the default option: you park it in an index fund through your bank. The historical average return hovers around 7% — just enough to preserve its value against the silent decay. End of story — for now.

Levered to the teeth

Back to the business. You’re still running it — and still turning an annual profit of around $4,780. But things have changed. You’ve stripped down the balance sheet, which means there’s far less room for error.

Just like in the early days, one unexpected event can now break you.

To guard against this new reality, you’ve cut fixed costs to the bone. Full-time workers have been replaced with part-timers so you can scale hours up or down on short notice. Supply chains are maximally leveraged and timed to the hour to minimise storage costs — and to give you the ability to halt deliveries instantly if needed.

But this isn’t just happening to you. Every business in town, your country — even the world — is being forced to “decapitalise”, dumping their balance sheets just to survive. Holding capital has become toxic. Over time, this means everyone grows more fragile together.

The collective time preference — that is, the rational capacity to invest for the long term — is steadily eroding. A lower stock-to-flow ratio means weaker balance sheets. And weaker balance sheets make short-term survival not a phase, but the permanent mode of operation.

This shift has a creeping secondary effect: capital misallocation. When no one can afford to think long term, such investments dry up, quality suffers, and infrastructure weakens. Eventually, that decay feeds back into your business — through higher input costs.

This adds another level of pressure. You can try to pass some of it onto customers in the form of higher prices, but only so much before it affects your sales. The rest has to be dealt with internally — by cutting corners. Push down wages, defer maintenance, compromise on quality, and squeeze more out of less — just to survive.

What was once a race to build the most resilient business has become a contest of surviving on the thinnest margins, carrying the most debt, and quietly degrading products without being noticed. It’s not a matter of choice— it’s simply what’s necessary to stay in business.

The town still buys your juice, but the word going around is: “It’s just not the same anymore.”

And they’re right.

The customer service is not the same. The team you spent over a decade building is now scattered — replaced by a rotating cast of part-timers who offer just as much loyalty as they get in return. And the juice? It too has changed. Some of the organic ingredients you once took pride in have been replaced by a cheaper, artificial mix with a longer shelf life .

You tell yourself it’s temporary. But deep down, you know this isn’t the business you set out to build. Each night, you lie awake — caught somewhere between the stress of next week’s numbers and a quieter question that haunts you more and more: where did the joy go?

There’s a weight in your stomach. You ask yourself how it came to this. Why did the company’s buffer — its stock— suddenly start decaying so fast? Eventually, you trace it back to a government decision to abandon the gold standard. Supposedly, it was to fund a distant war or a sprawling new program — neither of which you ever felt the benefit of.

What used to be a 40-hour workweek is now 50. Sometimes 55. You’re not chasing growth — you’re chasing stability! Just trying to keep the business alive.

The buy-out

Then one day, the phone rings. It’s a multinational conglomerate in the beverage industry. For some reason, they’re flush with capital — backed by investors from across the country. They want to buy you out so “you don’t have to worry anymore”. They show a vague, performative interest in your recipes, but you can tell it’s not about the juice. It’s about removing the alternative. You suspect they’ll just stop the production and swap the drink for a shelf-stable, mass-produced version with higher margins.

After the call, you check your portfolio. The fund you’ve been using to protect your savings has a 10% stake in the very conglomerate now bidding to buy you out.

The irony isn’t lost on you. The stripping of your balance sheet made your business cheaper to acquire. And the capital you offloaded — the money you had to invest somewhere— was injected upstream into the very giant now positioned to absorb you. Worse still, that same capital likely contributed to boost the conglomerate’s creditworthiness, granting it access to cheaper loans — the very loans they’re now using to buy you out! Put simply, the mechanism that fuelled the decay of your own stock is now being used to buy you out.

The new reality, once capital became toxic, has split the market into two tiers: eat or be eaten. What was once a vibrant marketplace of ideas, where businesses competed on merit and value, has become a zero-sum survival game. You either increase at all costs: reinvest every dollar into expansion, chase scale through acquisitions, widen your footprint, swell your headcount, and take on massive debt. Once you’re big enough, with enough employees and liabilities on your books, the government won’t let you collapse. You become “too big to fail”. And once you’ve reached that status, the rules bend. You can set your own prices (price hiking). You can squeeze wages. Because at that point, people no longer have real alternatives — they either work for you, or for one of the other giants.

Or you don’t do that. You stay small and principled — and get devoured. By inflation. By decay. Or by being bought out by someone who played the game you never wanted to play.

So you sign the contract, figuring the battle was lost long ago. You’ll be fine, personally — your retirement is covered. But it doesn’t feel like a win. It feels like something was taken from you. Like your dignity got stripped away, piece by piece. You think about the early employees who believed in you, and wonder where they ended up. You think about the pride you once took in doing things the right way — and all the hours you spent cutting corners you never should’ve had to. Time that could’ve been spent with your grandchildren — who, by the way, now stand little chance of ever owning a home, since real estate is no longer for living in, but for storing value in a world where capital itself is decaying.

The truth is, with only brief historical exceptions, we’ve never had a global economy that wasn’t built on toxic capital — money that decays over time.

While the degree of toxicity has varied, the underlying principle has remained constant: money decays. And because money decays, holding it is a liability unless it’s constantly put to work at a return that outpaces the rot.

Today, we live in a world that mirrors the second half of the juice shop story. The long-term trend has been to decapitalise companies — stripping down their balance sheets and loading them with debt — keeping them in a permanent state of fragility and short-termism.

This has led to the monetisation of real estate and index funds. Housing is no longer primarily for living in; it’s for storing value and renting out. Index funds aren’t used for genuine investing — they’re the escape hatch from decay.

The S&P 500, composed of the 500 largest companies in the U.S., has delivered an average return of 10% annually over the past century. That number now functions as a silent benchmark for the “cost of capital”. To be “attractive” to investors, any business not included in the S&P must promise more than this benchmark— often pushing against a 15% annual return.

Growing at that rate means doubling every five years and multiplying eightfold (!!!) every fifteen. No business can sustain that organically or ethically — let alone the economy as a whole. If you’re wondering where the root of both our social struggles and environmental crises lies — you should look no further. These aren’t separate problems. They’re both downstream from the same pressure: toxic capital that has redefined growth to mean one thing only — more, no matter what it is. If that phrase sounds familiar, it’s because it’s the philosophy of a cancer cell.

Where it leaves us

With the understanding that only a few hundred — perhaps a thousand — companies worldwide are monetised through major index funds, while the rest of the world’s hundreds of millions of businesses are not, and with the added understanding that toxic capital forces companies to hold as little as possible on their balance sheets, we can now ask:

If it’s of existential importance for a company to achieve a 15% return not only once, but to sustain it year after year in order to remain “attractive” to capital and stay in business — where must those returns come from?

Given the stock-to-flow ratios, the answer is obvious: it has to come from the flow side. The balance sheet does nothing but decaying and accounts for only a small portion of the business’s total value. In plain terms, that means the pressure falls entirely on operations — meaning the growth must be squeezed out by working harder, faster, and cheaper.

And because no company can sustain 15% growth organically over time, that growth eventually must turn unorganic. There is no other way the math can work out. If the desired growth is to be reached, it has to come at the expense of something else: from cutting wages, from overextending workers, from lobbying for subsidies, from exploiting loopholes, from replacing what’s natural with what’s synthetic, and from building ecosystems that reward overconsumption and waste at the expense of our environment.

Because if that level of growth isn’t available to everyone, then one company’s gain must come at the expense of others falling behind. And when the entire economy is racing to grow beyond what’s organically possible, it’s not just competitors that lose out — it’s also everything we fail to measure: the environment, social cohesion, human health, and much more.

The sheer difficulty of running a business in this environment has given rise to an entire industry of intermediaries — not focused on actually creating anything, but on managing money, or selling services to those who manage money or run a business.

This phenomenon is known as “rent-seeking”: extracting value from the economy without contributing to its productive capacity. These intermediaries earn their income through spreads and fees — and many are strategically positioned so that you have little choice but to use them, relying on lock-in effects.

Returning to the juice shop example from earlier, we can see this dynamic in action. Did the business owner really have a choice but to invest the surplus into an index fund — one the bank charges a yearly fee for? Sure, they could have picked individual stocks, but that would mean expecting every person in the world to become a full-time investor —which only reinforces the fact that today’s environment rewards managing money more than actually running a business! It’s simply a far easier path to follow, which helps explain why “consultant” or “fund manager” has become two of the most common job titles in the modern financial world.

The logic is straight-forward: why create something to be exchanged for money when you can just position yourself between the money and those who do?

While individual intermediary services certainly thrive — it’s one of the most lucrative industries out there — at the macro level, they’re often just shuffling capital around rather than growing it. The truth is, the vast majority of them don’t even outperform the S&P 500 (see below).

While it’s certainly true that financial intermediaries play an essential role — providing liquidity and helping allocate capital — we should recognise that something is clearly off when the financial sector consistently outgrows the real economy. These intermediaries typically charge a percentage fee on everything that passes through them. So when that fee structure consumes a growing share of GDP, it signals a system where extraction is outpacing contribution.

Put simply, if the finance sector has consistently grown faster than the real economy, then real wealth hasn’t been added — it’s been transferred. And more likely than not, it has been transferred from those actually producing something (businesses, wage earners) to those who don’t (financial intermediaries).

Diversifying vs concentrating

Let’s ponder for a moment and consider why, for example, pension funds have continuously underperformed compared to, say, private equity. Most — if not all — pension funds operate under modern portfolio theory — aka “diversification”. That means they buy, say, ten companies the portfolio manager believes could become the next digital monopoly.

Then, once one or two start outperforming the rest, their weight in the portfolio increases — prompting the fund to “rebalance” in order to “mitigate risk”. So what do they do? They sell the names that have proven to be superior to all others, and buy more of the underperformers — the ones that have proven to be inferior to all others (!)

To use an analogy, it’s like going on Amazon to buy a toaster and picking one from the bottom of the Top Rated list — then wondering why it’s terrible. The only reason many of these funds stay in business is due to lock-in effects and the high fees they continue to charge, despite consistently underperforming.

In contrast, private equity often operates in the opposite way. It makes highly informed, concentrated bets on a select few companies that they believe in — and frequently takes an active role in guiding them operationally and strategically in the right direction. In doing so, private equity firms usually have far more skin in the game — sharing both the upside and the downside. It’s a fundamentally different model from pure rent-seeking, which is built on the premise of extracting value regardless of the outcome. Traditional banks, for example, don’t really care what the companies they lend to do — as long as the interest payments keep coming in.

Valuations

To ground this in reality, take a look at some of the world’s most iconic companies. The chart below breaks down their enterprise value — which is calculated by combining its market cap with its debt and subtracting its cash — into two components:

• The blue segment shows how much of that value is driven by future expectations — anticipated flows.
• The yellow segment shows how much of that value is backed by net assets — the company’s actual stock after subtracting liabilities.

As the visualisation makes clear, these companies are overwhelmingly optimised for flow. A telltale sign? They actively surrender their retained income — either as dividends or stock buybacks! They can’t motivate holding it to their shareholders because it decays.

While it is indeed natural for public companies to trade at a premium to its book value based on future expectations, the deeper insight lies in recognising when that premium reflects true organic growth potential — and when it reveals the distortions of toxic capital.

For instance, it makes perfect sense for a growth company to trade heavily — sometimes almost entirely — on future expected earnings. By definition, a growth company is growing, and its ability to do so often depends directly on how quickly it can reinvest profits. In such cases, building a large balance sheet is secondary to compounding operational returns.

But what about companies that have already reached market saturation? Why are businesses with steady, satisfied demand still forced to load their balance sheets with debt and surrender their capital just to survive? That’s when you know something is off.

Given everything we’ve just walked through — the cascading effects stemming from decaying, toxic capital: the fragility imposed by toxic balance sheets, the pressure to expand at any cost, the rise of rent-seeking— this is where Bitcoin enters the picture as a revolutionary new form of digital capital that doesn’t decay, and is therefore non-toxic.

Its pseudonymous creator, Satoshi Nakamoto, essentially solved one of the most persistent problems in computer science: the double-spend problem — how to maintain consensus over a shared monetary ledger without requiring special permission structures (trust). In doing so, he invented a way for cooperation to emerge even in the most trustless environments — enabling mutual benefit without requiring mutual trust.

Because that’s the thing — it’s very obvious that the vast majority (95%) is worse off when capital is toxic, yet that’s the inevitable outcome when the only form of money we’re allowed to hold is one issued at the discretion of a privileged entity.

On top of embodying properties that make it immune to decay, Bitcoin as digital capital is highly liquid — able to move across the world in seconds at almost no cost. It’s hard to overstate how profound this shift is. Bitcoin isn’t just a new asset — it’s a new foundation for capital itself, unlike anything we’ve seen before.

Below is a chart showing how Bitcoin has performed against legacy assets since August 2020, measured in dollar terms. Remember: the dollar itself — a textbook example of toxic capital — has been devaluing at roughly 7% annually. That means any asset yielding less than that isn’t preserving value; it’s quietly bleeding it.

While it would be unwise to predict a fixed annual return for Bitcoin in dollar terms going forward, we can still point to some key observations.

First, Bitcoin’s supply is permanently capped at 21 million — which is precisely what makes it non-toxic. In contrast, the U.S. dollar has expanded at an average annual rate of around 7% for over a century. And due to structural factors we won’t dive into here, the debt-based nature of fiat currency means it simply cannot stop expanding.

Second, if we examine every rolling 10-year period since Bitcoin’s inception, the lowest recorded average annual growth rate is 50% in dollar terms.

Without speculating on exact price projections in dollars going forward, we can say that Bitcoin, as a capital asset, resets the baseline. It establishes a new “zero” — a new “risk-free” rate of return.

Another way to put it is that any business staying on a traditional treasury standard would need to first outperform Bitcoin’s relative dollar gains just to break even with a Bitcoin-based competitor. For example: if Bitcoin appreciates 30–50% a year in dollar terms, that becomes the new hurdle rate for companies not on a Bitcoin standard. That means starting every year deep in the red.

Additionally, as companies that avoid adopting a Bitcoin standard continue to offload their balance sheets and remain in a permanent state of fragility (due to toxic capital), those operating on the new standard will do the precise opposite: their balance sheets will grow stronger, not weaker.

Earlier in this piece, when we first talked about this, some of you may have noticed (or perhaps even reacted to) the fact that as a business’s stock-to-flow ratio increases, the Return on Equity (ROE) declines. Isn’t that a bad thing from an investor’s perspective?

Only if you fail to understand that the baseline is not the same. In the old system, stock decays — so yes, as your stock grows, your flow (profit) must grow even more just to keep pace. But under a Bitcoin standard, your stock is no longer eroding — it’s appreciating in dollar terms (remember!). So while ROE may appear to decline relative your stock, the shareholder’s real return is growing in two directions relative the dollar: both through operational profits (flow) and through the rising value of the retained stock. The game is different. The value proposition for investing in a Bitcoin-company is twofold. What looks like inefficiency in one system is something completely different in another.

But a reasonable investor might still ask: if a company is simply holding idle capital in Bitcoin, why take on the additional risk of investing in the business at all? Wouldn’t it make more sense to just hold Bitcoin directly yourself? And if the capital isn’t being actively deployed by a given company, wouldn’t shareholders eventually demand it be paid out in dividends?

The first answer is what we just touched on; namely that the capital isn’t idle — it’s strategic. It functions as a financial foundation, giving the company the resilience to navigate volatility, downturns, or unexpected disruptions without having to compromise on wages, quality, or long-term vision. It frees leadership from permanent crisis mode and allows them to focus on sustainable, long-term development.

The second answer leads us to the next section: volatility — why, in the case of bitcoin, it’s not a bug, but a feature — and why that matters especially for shareholders.

Volatility

Bitcoin is famously volatile in dollar terms — especially when compared to traditional assets. While its volatility has steadily decreased as adoption has grown, it’s natural for Bitcoin to remain somewhat more volatile than legacy assets. But this isn’t a flaw. It’s a feature.

Money is, above all, a signaling system. In a healthy market, you want that signal to be maximally responsive — which means sensitive to ever-evolving, real-time conditions. That’s exactly what Bitcoin provides. Because its supply is fixed and cannot be manipulated, changes in prices measured in it must stem from either supply surpluses or shortages, or from rising or falling demand. And these are precisely the signals a market should respond to — because they communicate real supply and real demand.

Suppressing these signals — as we do today — is a byproduct of maintaining a system where volatility is treated as the arch-enemy to stability. This is because, in an economy built on excessive leverage, even minor fluctuations can spiral into systemic crises, so constant intervention (monetary expansion or contraction) becomes necessary to smooth things out. But this comes at a cost: it sends false signals to market participants, distorting prices and leading to widespread misallocation of resources, thus inflation.

The larger insight here, then, is that volatility only has a negative connotation in today’s economy because we operate in a debt-based system — where individuals, companies, and institutions are necessarily all highly leveraged, and therefore extremely sensitive to fluctuations. If you remove the incentive for leverage in the first place, volatility becomes far less threatening. In fact, keeping volatility in money preserves the integrity of market signals, which supports better decision-making — not always by being convenient, but by being honest.

Bitcoin’s short-term volatility relative to the dollar (and goods and services) is real, but its long-term trajectory is upward. In other words, it’s volatile in the short term, but directionally stable over the long term. Much of the volatility associated with using it as a treasury asset is naturally mitigated by the mere fact that you’re not buying it all at once — you’re accumulating over time. This means you’re effectively dollar-cost averaging, which cements your average cost basis over time and makes you less exposed to short-term price swings.

But there’s also another way that companies can turn the volatility of Bitcoin into an advantage for their shareholders (while simultaneously mitigating its risks) — one that explains why investing in a company holding Bitcoin on its balance sheet, even if it appears “idle”, can be more attractive than holding it yourself.

Unlike individuals, companies can issue securities. That means they can construct a range of financial instruments beyond just common stock — such as convertible bonds, preferred shares, or fixed-income products — and effectively transfer volatility from those who don’t want it to those who do. This flexibility allows each participant to take on the exposure that suits their risk profile, which is exactly what an efficient capital market is meant to enable.

For example, a company could potentially manage its capital structure so that customisable combinations of options offer anywhere from 5x to 10x+ leverage to its underlying Bitcoin holdings; its common stock might carry a 2x premium to its holdings, while simultaneously offering convertible bonds with lower exposure — say, 0.25–0.5x.

In this way, the company transforms its treasury into a refined capital stack — moving volatility away from those who don’t want it to those who do, effectively turning raw capital into tailored financial products that serve different risk appetites.

This is very much analogous to how an oil refinery takes crude oil and refines it into various outputs of different potency — jet fuel, gasoline, diesel, all the way down to bitumen (asphalt). The only difference is that, in this case, the refining happens within the treasury division of a company— complementing its core business.

A new outlook

So where does this leave us?

Bitcoin is digital, non-toxic capital — and it’s poised to fundamentally reshape how we think about growth. It redefines the baseline. What we measure against. And it offers a way out of the velocity trap — a way off the treadmill of running faster and faster just to barely keep up. It kills the incentive to “grow at any cost”.

Instead, it invites transformation. It allows us to lift our gaze — to think further ahead and plan for a future beyond the next quarter. For the first time, we have a type of digital capital that enables true resilience and long-term thinking. It allows businesses to strengthen their balance sheets instead of constantly draining them — building lasting durability to weather storms.

The implications go far beyond business owners. While this article hasn’t explored it in depth, the same logic applies to employees earning in Bitcoin: their financial base becomes stronger each year, not weaker.