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Startup Building: Challenges & Opportunities

The Ben & Marc Show

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Shifting Motivation from Earnings per Share to Return on Investor Capital

Earnings per share are considered a bad motivator as it tends to focus on revenue targets rather than efficiency. To drive continuous efficiency improvements, it is suggested to shift compensation focus to return on investor capital. By measuring every dollar entering the business as equity dollars and evaluating the actual return on those dollars, companies can encourage a culture of continuous efficiency improvement.

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