What is the best business to be in to create real wealth?
When people ask, “What is the best business to be in to create real wealth?” They often expect a timeless answer, because people have become business rich for generations. But the most successful types of businesses don’t belong to a static set. The businesses that generate extraordinary wealth in one era often look very different from those that dominate the next.
What doesn’t change, however, is the economic logic that determines whether a business can create wealth in the first place.
Business wealth creation in context
In the late 19th and early 20th centuries (the period Mark Twain famously called the Gilded Age) enormous fortunes were created in railroads, steel, oil, and finance. In 1901, Andrew Carnegie sold his steel company for more than $300 million, briefly surpassing John D. Rockefeller as the richest American. But Rockefeller, whose fortune was built in oil, is still widely regarded as the wealthiest American in history.
Later, J.P. Morgan and other financiers dominated an era of rapid industrial expansion, corporate consolidation, and capital formation. Fast forward to today, and these industries didn’t just disappear. But over generations, they matured. By 2021, only 15 members of the Forbes 400 had fortunes centered in manufacturing (and none in steel production), while just 14 members derived their wealth primarily from oil and gas, with nearly all ranked outside the top 150.
Similarly, traditional banking, once a dominant source of wealth, accounted for just one single name on the list. Meanwhile, nearly a quarter of the Forbes 400 was engaged in investment and money management, and technology entrepreneurs dominated the very top. These shifts from one generation to the next happen for a very specific reason.
Why business models rise…then fade
Industries like steel, oil, and banking did not decline because they stopped being useful, obviously. The decline as wealth-creation engines happened because those industries matured.
As sectors grow:
- Growth rates slow
- Competition increases
- Returns normalize
- Ownership disperses
The great companies built by earlier titans became widely held, and the opportunity to create new outsized fortunes in those markets diminished. This is the natural cycle of business life. New business sectors emerge → Existing sectors mature → Ownership spreads.
So the characteristics that once enabled extraordinary wealth creation become harder to replicate from scratch in those same industries. This is why it’s common today to see highly successful businesses that would not be nearly as successful if they were built right now. At least, not in their current form.
The constant beneath the change
While the “best businesses to be in” (aka the types of businesses that create wealth) change, the economic principles behind wealth creation do not.
Across eras, the most successful business models tend to share three characteristics:
- They address large markets, allowing them to grow very big.
- They generate strong current cash returns relative to what it costs to build them.
- They deploy capital efficiently enough to compound those returns over time.
This is the logic behind The Value Equation. The framework doesn’t try to predict which industry will dominate next. Instead, it helps explain why certain business models outperform others within their historical context. For example, The Value Equation can help make sense of why technology companies and investment management firms feature so prominently among today’s wealthiest.
They operate in large markets, tend to be asset-light, and often generate high unlevered cash returns on equity creation cost, even before considering leverage or financial engineering.
Choosing the “right arena”
More than choosing the best business to be in, a more important and under-discussed aspect of wealth creation is choosing the “right arena.” What I mean by that is that while execution, disciple, and leadership all matter, they aren’t all that matter. Even excellent execution in a mature, capital-intensive business model may never produce the same outcomes as competent execution in a business model designed for scale, leverage, and capital efficiency.
This does not mean founders should abandon viable businesses or chase trends to fit into the current era's definition of the best business to be in to generate real wealth. It means they should understand the structural limits of the models they choose. And design accordingly.
As we continue to explore the principles of The Value Equation here and on my YT channel, you’ll fully understand the difference between building a business that fits its time, and building one that’s best suited to its opportunity.
