# Marginal Dollar Test Before you invest, ask whether your dollar changes the outcome. - If the dollar changes nothing, you buy exposure. You have no edge. - The largest balance sheet sets the price at the centre of a capital war. - At a constrained point, a small cheque can buy a convex payoff. ```mermaid graph TD A{Does success need unlimited capital?} A -->|yes| P[Pass: the largest balance sheet decides] A -->|no| B{Does it happen without you?} B -->|yes| Q[Exposure only: you need a low price] B -->|no| C{Does it control a constraint?} C -->|no| R[Pass: capital buys no pricing power] C -->|yes| D[Invest: small dollars, convex upside] ``` ## Where constraints sit - Physical chokepoints, such as [[Packaging Capacity Bottleneck]]. - Scarce data. - Businesses that a new capability makes possible, one step past the capability itself. ## Founder's version - Does the plan need money you cannot raise? - If the answer needs one more round to work, the plan has no edge. ---- tags: #boat #investing links: [[Scarcity Migration]] [[Concepts MOC]] [[Friction Frontier]] [[AI Capex Super-Cycle]] [[Legibility Premium]]