Efficiency

Two very different senses of efficiency converge on this tag across Kyle’s reading. In Berkshire Hathaway Annual Letters it is financial/capital efficiency — Kyle’s marginalia treat “every line item on the P&L” as “an efficiency monitor,” flag the ratios for measuring different types of efficiency, and call Warren Buffett “a true believer in capital efficiency.” The recurring lesson is that earnings growth is meaningless without asking how much additional capital it required: “the average American business has required about $5 of additional capital to generate an additional $1 of annual pre-tax earnings,” set against See’s Candies’ astounding capital-light returns. Kyle extends the idea to startups — “measuring capital efficiency on a cumulative basis (e.g. cumulative cash burn to get to ARR)” — and to operating leverage, GEICO as an “efficiency engine that can absorb spend.” See Capital Efficiency.

In Gordon B. Hinckley: Go Forward With Faith it is operational/personal efficiency — decide and don’t re-litigate, phone the person rather than call another meeting, start and end meetings on time. Hinckley “became known for his efficiency, his capacity for work, his compassion, and his sense of humor,” clustering with running a meeting and Operational Skills. But the book also supplies the counterweight Kyle marks twice: “People are more important than programs and efficiency” — efficiency as a means that must never become the end, the same nerve as the Elder Klebingat “ministry not a program” note.

Where this appears

• Berkshire Hathaway Annual Letters — Kyle’s #Efficiency tag on capital-efficiency passages: P&L line items as efficiency monitors, capital-per-dollar-of-earnings ratios, cumulative cash-burn-to-ARR
• Gordon B. Hinckley: Go Forward With Faith — efficiency as Hinckley’s operational discipline (decide-and-don’t-relitigate), counterbalanced by “people are more important than programs and efficiency”