Instead, we see widening inequality and a market culture that prizes ‘boosted’ nominal prices over intrinsic worth. The system feels disconnected from reality, stagnant and underbalanced. This leads me to a deeper set of questions: How do we navigate a world where value has become so detached from price? And more importantly, where does the most meaningful thought reside today?

Most of mistakes come from our decision making.
Unfortunately, most of value destructive actions are justified in the longer term than we think it might endure.

I have spent the past eight years working closely with SMEs, primarily within the traditional service, construction and manufacturing sectors. Through my work advising on finance and capital policy, I’ve reached a definitive realization:

There is a clear ceiling to how much we can optimize SG&A—which typically accounts for only 20% of sales—through software alone (including GenAI). To achieve a true breakthrough, we must address the labor costs embedded within COGS, which represents a much larger 75% of sales. By intervening directly in the cost of production, the potential for margin expansion is immense.

More importantly, this is no longer just about profitability; it is becoming a matter of supply restriction. Without these improvements, SMEs simply won’t have the labor capacity to meet demand.

Historically, however, this has required significant capital investment. High-impact equipment—such as robotics and advanced automation—was almost exclusively the domain of mega corporations. This was largely because the industrial equipment sector focused on enterprise-level clients, with technology evolving specifically to serve mass-production industries like electronics and automotive.

However, looking at recent advancements in Physical AI, I believe the day has finally come for Japan’s 3 million SMEs to fundamentally improve their COGS. Given the vast market scale relative to their individual size, the ROI for SMEs will be exceptional—even if the scale of each investment is relatively small—once they can deploy effective CAPEX.

Less money, more gain

The population is shrinking, yet the cost of maintaining the legacy infrastructure is surging. This is not a cyclical dip; it is an irreversible contraction. To bridge the gap, the government has relied on debt, but the “cost of carry” is rising. Between a weakening currency, the globalization of debt holders, and the battle against inflation, Japan has entered a trap of debt-dependency.

If we look at Japan as a Corporation:

• Declining Productivity: Most corporations have failed to innovate. If you strip away euphoric government expenditure and real-estate investment, real GDP is in steady decline. The “growth” we see is merely debt-financed consumption.

• Surging COGS & Labor Shortage: Imagine a firm that cannot find enough workers, whose productivity is falling, and whose cost of goods sold (COGS) is skyrocketing. Would you invest in that company?

• Asset Liquidation for Survival: They are running out of cash to cover essential CAPEX and the mounting “annuities” of a retired workforce. The company is forced to borrow just to keep the lights on.

• The End of “Family” Rates: For decades, the “family”—the Japanese public—financed the firm at near-zero rates out of loyalty and lack of options. But the family’s savings are finally exhausted. Now, the firm must turn to outsiders—global markets—who demand a real rate of return.

The Delusion of Safety

The situation never improves because the “Board” refuses to acknowledge the root causes. On the contrary, they project a false sense of stability, aided by the very actors draining the system.

Why? Because rent-seekers are masters of flattery. They shower the company with praise—celebrating its “resilience” and “unique strengths”—simply to keep the board complacent and generous with its remaining wealth. They don’t just circle; they applaud the board’s “generosity” as they facilitate more lending, all while knowing exactly which assets they will seize when the balance sheet finally collapses.

Why is this happening?

Historically and culturally, there is a fundamental lack of literacy in finance and macroeconomics among the populace. This is a deep-seated byproduct of history and educational culture.

Consequently,

a “Chicken Race” is currently underway on the board of what was once the world’s largest economic powerhouse. The question is no longer if the crash happens, but who blinks first.

Ryo Endo
2026.3.22

[g>r] is the minimum philosophy I want to keep in my hand every single moment. It’s simple that I have to invest not only money but all resources into where it keeps growth.

At the same time, this also means to me that we should not ask too much return from growing something so as to help it grows continuously.

The best investment does not require lots of capital repeatedly. It will cover future investments needed for further growth by itself. Therefore, the original capital is compounded successfully.

“
DR：When you're doing these analyses, then and now, do you have computers that help you, or how did you actually read it all, did you just get printed materials, or how did you, in those days get the materials to read about the Washington Post, or how do you do it today?

WB：Well, pretty much the same way, except there are fewer opportunities now, but I met Bob Woodward and he'd just come out with the president scandal and all of a sudden at all of thirty years of age, he was getting quite wealthy and we had breakfast or lunch over at the Madison Hotel and he said, "What do I do with this money?" and I said, "Investing is just about assigning yourself the right story. Imagine Ben Bradley, this morning said to you, "What is the Washington Post company worth?" what would you do if you had to write the story in a month? You'd go out and interview TV brokers and newspaper brokers and the owners and you'd try and value each asset".

I said, "That's what I'd do, I assign myself the right story and it's nothing more than that". Now there are some stories I can't write, if you ask me to write a story on what is some glamorous, but non-profit making business worth, I don't know how to write that story, but if you ask me to write a story on what is Potomac electric power, or something like, I can write the story and that's what I'm doing every day, I'm assigning myself a story and then I go out and do it.

DR：So you get the annual reports and then you read them, just like other people might read novels, you read annual reports?

WB：That's right.
”

Any great company continuously leverages the productivity of its people—whether through AI, software, or other innovations.

When I think about investment businesses, my role is clear: I must intermediate long-term, productive capital with highly productive people and companies. But why is this important? Why is this valuable to anyone?

Capital should always be deployed by the most productive people. This principle holds whether it’s institutional investors allocating funds to managers or managers allocating resources to entrepreneurs.

Many of these ideas align with venture capital. But why should they be limited to private markets? Public companies don’t stop investing in productivity just because they’ve gone public. The question is: how do we screen for those that continue to drive productivity? A key metric is gross margin per employee—does it continue to improve?

The public market is saturated with ordinary, non-entrepreneurial people. They operate under rules imposed by similarly non-creative individuals. My goal is to bring the energy and mindset of venture capital into the public markets—focused on relentless growth, problem-solving, and better service distribution.

This is my core philosophy. I practice alternative venture capital in public markets. No matter how large a company is, it should grow with astonishing momentum, accumulating continuous, small improvements forever.

The Brand I Should Build

The companies I invest in are the best-performing in terms of productivity. Even after going public, businesses should focus on long-term growth.

A $100 million company can become a trillion-dollar company. The key difference between stagnant businesses and compounding ones lies in their ability to continuously deploy capital into structures that improve productivity.

We often measure gross margin per employee as gross margin divided by the number of employees. However, the reality works in reverse:

• A company with $100K gross margin per employee and 100 employees generates $10M in gross margin.

• If productivity doubles with the same headcount, gross margin rises to $20M.

• If productivity increases tenfold, gross margin reaches $100M.

• Expanding to 1,000 employees while maintaining this profitability creates a $1 trillion business.

The company’s platform should remain as lean as possible, determined by the leadership’s vision. This principle holds within any truly profitable business.

A Fractal Approach to Productivity

Productivity should be approached fractally, with keen attention to every unit of business. Those who allocate capital must be highly sensitive to both human and financial productivity.

Every small unit of a business should be highly profitable and continuously improving. Once improved, profitability should be maintained for the long term. This applies to everything—meetings, communication, production hours, supply chain efficiency, sales effectiveness, and more.

Businesses often neglect these micro-efficiencies, leading to redundancy. The smallest inefficiencies compound into massive losses over time.

The Power of Intellectual Capital

True value creation occurs when human intellect meets real-world problems. Businesses should be deeply committed to evaluating intellectual contributions fairly and investing heavily in human capital. Every individual brings unique value, and companies must measure, recognize, and reward productivity and creativity accordingly.

The greatest leverage we have is human intellect.

Breaking the Mental Barriers to Productivity

Why don’t people act or strive for productivity? Is it against human nature? I don’t believe so. Instead, people are mentally blocked—by bad culture, bad processes, and bad rules. If we strip away cultural tediousness, we unlock true productivity.

Many entrepreneurs and managers face resistance from ordinary thinkers, causing them to lose momentum. We must break free from mental constraints. This is the only way to live a truly productive life.

#### Underinvestment

Japanese corporations, regardless of size, are often reluctant to invest in growth. The public market’s excessive sensitivity to consolidated financials discourages businesses from making bold investments. This issue is even more pronounced in smaller companies, where liquidity constraints and market expectations further stifle capital allocation.

I categorize portfolio companies into three groups:

1. **Large enterprises with undervalued growth potential** – Companies with strong fundamentals but trading below intrinsic value due to market inefficiencies.

2. **Post-IPO companies with insufficient investment** – Businesses that struggle with depressed prices, liquidity and size constraints, limiting their ability to reinvest in growth.

3. **Undervalued growing small caps** – Smaller firms with significant upside potential but underappreciated by the market.

Addressing these structural challenges requires a shift in mindset—one that prioritizes long-term productivity and sustainable growth over short-term financial optics.

Any great company continuously leverages the productivity of its people—whether through AI, software, or other innovations.

When I think about investment businesses, my role is clear: I must intermediate long-term, productive capital with highly productive people and companies. But why is this important? Why is this valuable to anyone?

Capital should always be deployed by the most productive people. This principle holds whether it’s institutional investors allocating funds to managers or managers allocating resources to entrepreneurs.

Many of these ideas align with venture capital. But why should they be limited to private markets? Public companies don’t stop investing in productivity just because they’ve gone public. The question is: how do we screen for those that continue to drive productivity? A key metric is gross margin per employee—does it continue to improve?

The public market is saturated with ordinary, non-entrepreneurial people. They operate under rules imposed by similarly non-creative individuals. My goal is to bring the energy and mindset of venture capital into the public markets—focused on relentless growth, problem-solving, and better service distribution.

This is my core philosophy. I practice alternative venture capital in public markets. No matter how large a company is, it should grow with astonishing momentum, accumulating continuous, small improvements forever.

### The Brand I Should Build

The companies I invest in are the best-performing in terms of productivity. Even after going public, businesses should focus on long-term growth.

A $100 million company can become a trillion-dollar company. The key difference between stagnant businesses and compounding ones lies in their ability to continuously deploy capital into structures that improve productivity.

We often measure gross margin per employee as gross margin divided by the number of employees. However, the reality works in reverse:

- A company with $100K gross margin per employee and 100 employees generates $10M in gross margin.

- If productivity doubles with the same headcount, gross margin rises to $20M.

- If productivity increases tenfold, gross margin reaches $100M.

- Expanding to 1,000 employees while maintaining this profitability creates a $1 trillion business.

The company’s platform should remain as lean as possible, determined by the leadership’s vision. This principle holds within any truly profitable business.

### A Fractal Approach to Productivity

Productivity should be approached fractally, with keen attention to every unit of business. Those who allocate capital must be highly sensitive to both human and financial productivity.

Every small unit of a business should be highly profitable and continuously improving. Once improved, profitability should be maintained for the long term. This applies to everything—meetings, communication, production hours, supply chain efficiency, sales effectiveness, and more.

Businesses often neglect these micro-efficiencies, leading to redundancy. The smallest inefficiencies compound into massive losses over time.

### The Power of Intellectual Capital

True value creation occurs when human intellect meets real-world problems. Businesses should be deeply committed to evaluating intellectual contributions fairly and investing heavily in human capital. Every individual brings unique value, and companies must measure, recognize, and reward productivity and creativity accordingly.

The greatest leverage we have is human intellect.

### Breaking the Mental Barriers to Productivity

Why don’t people act or strive for productivity? Is it against human nature? I don’t believe so. Instead, people are mentally blocked—by bad culture, bad processes, and bad rules. If we strip away cultural tediousness, we unlock true productivity.

Many entrepreneurs and managers face resistance from ordinary thinkers, causing them to lose momentum. We must break free from mental constraints. This is the only way to live a truly productive life.

When we have strong conviction in the potential for significant returns—due to both the discount rate and growth rate—we’ll increase our position to 20%.

If the price rises well beyond fair value, we’ll reduce the position back to 1%.

The minimum criteria for our investment decisions are whether a company’s gross profitability per person is growing, whether this growth is sustainable, and if it can continue. This directly relates to evaluating their business model.

If a company cannot meet these criteria, its competitive advantage will likely erode in the near future.

Japan has long made the mistake of not evaluating people in a fair manner.

This personal way involves repeated exposure without greed. Understanding happens naturally, without ego. True comprehension often arrives suddenly, like an insight emerging from deep immersion.

To achieve this level of understanding, I must immerse myself in the company.

Does a particular company trigger my immersion?

This may sound too intuitive and subjective, but it’s an important filter. If a company does not naturally draw me in, it is likely not suitable for me to invest in.

So, what causes immersion?

• Genuine care from others. Deep and meaningful communication fosters immersion.

• Thoughtful writing. Books or texts that feel as if the author is speaking directly to me create a deep connection.

Warren Buffett summed it up well: "Delight your customer."

If someone deeply cares about a company, there is an important reason behind it. However, the reverse is not necessarily true—just because I believe I should care about a company does not mean it is inherently important.

Future Cash Flow and Business Longevity

Valuing future cash flow is the golden rule for valuation. However, current cash flow may be reinvested for growth, while future cash flow is inherently uncertain—even if today's financials are strong, then it causes people’s afraid.

Future cash flow depends on:

• People’s willingness to maintain contracts.

• People’s willingness to repurchase and use products repeatedly.

• Management’s commitment to capital efficiency.

These are natural outcomes of a company’s culture—its operating system.

Why discount the future? Because it is quiet, implicit, and looks uncertain.

Even when no explicit reason is immediately visible, if I cannot help but care about a business, there is a strong possibility that something truly important is happening beneath the surface.

The Presentation for LPs must demonstrate

1. A significant UPSIDE potential

2. Limited DOWNSIDE risk

3. BECAUSE X and we should invest NOW, and WHY our investment can REALIZE that return

It’s also crucial to balance What we want to say and What they want to hear.

1. Identify mispriced profitable assets

   1. Profitability is measured by gross profits-to-assets.

      1. gross profits-to-assets is decomposed into SalesAssetsGross ProfitsSales

         1. Levered sales without much assets

         2. Pricing power and cost efficiency

   2. Mispricing is caused by bias towards accounting performance. Mostly recognized as low Price to gross profit ratio.

2. Avoid paying risky prices

   1. Depressed and low volatile prices reduce drawdown risk.

   2. Undervalued to intrinsic value.

3. Compound risk adjusted returns

   1. The low volatile profitability is identified as a high Sharpe Ratio of the business.

   2. Structural stability of the business.

      1. Recurring, repetitive transactions

      2. Low debt

      3. Low accruals

Principle

1. Identify mispriced profitable assets

2. Buy at risk reduced prices

3. Compound risk adjusted returns

Strategy

1. Engage with board of directors and control capital efficiency

2. Shareholder Activism

3. Reaching out to Strategic buyers

Background

1. Effissimo Capital Management Pte Ltd

2. Venture Capital

3. Specific purpose vehicles

4. Management of Recurring business

5. Advisory to IPO companies

Moral

1. Buffett approach in Micro

2. Druckenmiller approach in Macro

3. Swensen approach in Management

One of my new friends, from India, said after our first meeting, “I’ve never seen another person walk around with printed letters from Buffett. You definitely left a big impression on me. It’s like we found our tribe.” I felt the same but couldn’t express it better than he did! While he focuses on listed stocks in India, I mainly focus on Japanese corporations. Still, we were able to share a philosophical perspective on what a good investment might be. Of course, it all comes down to “compound and long.”

In other meetings, a very nice gentleman from Australia and I discussed how our capital markets are becoming increasingly cross-categorical, breaking down borders for all types of investors. Yet, marketing unconventional ideas remains a challenge. Despite these difficulties, we concluded that staying true to our beliefs is essential. What matters most is identifying the best businesses, buying them at a fair value, and holding them for the long term. This discussion also encouraged me to embrace being unique.

By the way, I had this printed paper with me throughout. It reminds me that rigid categorizations like “growth” or “value” don’t produce returns, but an honest understanding of the underlying business and its intrinsic value does. GEICO, after all, has been a valuable growth stock over the long term.

I hope to contribute by publishing something valuable to read that can help others over the long term. Besides that, I prefer the word ‘capital’ to ‘investment’ because it conveys a broader meaning: the effective use of capital. I often remind myself of the importance of understanding how efficiently and actively capital flows, both within underlying businesses and across the macro economy.

The company is built on the entrepreneur’s vision.

The people working there shape a culture that guides them.

The product, the primary goal of the company, embodies the collective efforts of everyone involved.

They are all engaged in a recursive process, continually defining and influencing each other to keep everything functioning.

I'm interested in how they endure in the best possible way.