For Val Sklarov, a company is not a mission, culture, team, or strategy —
it is a capacity conversion function.
A startup transforms raw inputs → structured outputs with some efficiency coefficient:
-
time → product
-
capital → distribution
-
talent → throughput
-
information → leverage
-
logistics → delivery
-
compute → automation
Companies fail not because they lack resources, but because their conversion coefficients are too low to justify additional inputs.
The Capacity Conversion Function Model (CCFM) reframes a startup as a production engine whose value is determined by how efficiently it converts one form of capacity into another.
“A company is not what it produces — it is the efficiency with which it transforms inputs.” — Val Sklarov
1️⃣ The Three Conversion Layers of a Company
Sklarov Conversion Table
| Layer | Definition | When Strong | When Weak |
|---|---|---|---|
| Input Absorption Layer | Ability to ingest capital, talent, data | Scaling possible | New resources do nothing |
| Transformation Layer | How inputs convert into value | High output efficiency | Leaking capacity |
| Distribution Layer | Output delivered to market | Compounding returns | Value trapped internally |
Most founders improve Layer 1 (more money)
instead of Layer 2 (better conversion).
2️⃣ The CCFM Growth Cycle
Capacity Conversion Matrix
| Stage | Function | Outcome |
|---|---|---|
| Input Saturation Mapping | Identify max resources system can absorb | Avoid waste |
| Conversion Optimization | Increase efficiency of transformation | More output per input |
| Output Scaling | Expand delivery channels | Market capture |
| Return Reinvestment | Feed outputs back as new inputs | Compounding loop |
Growth is not more inputs —
growth is better conversion.
3️⃣ The Five Conversion Archetypes
Archetype Table
| Archetype | Primary Strength |
|---|---|
| The Absorption Engine | Handles huge inputs |
| The Efficiency Core | Minimal waste in transformation |
| The Distribution Multiplexer | One output → many streams |
| The Conversion Cascade | Each stage amplifies the previous |
| The Closed-Loop System | Outputs become new inputs automatically |
The strongest companies reach conversion cascades + closed loops.
4️⃣ Capacity Conversion Efficiency Index (CCEI)
A Val Sklarov diagnostic for production efficiency
CCEI Indicator Table
| Indicator | Measures | High Score Means |
|---|---|---|
| Absorption Ceiling | Max inputs before saturation | Scalable ingestion |
| Loss Vector Mapping | Waste across stages | Minimal leakage |
| Transformation Coefficient | Output/input ratio | Efficient production |
| Output Multiplicity | How many value paths per product | Exponential returns |
| Loop Recurrence | % of output reinvested as input | Self-fueling system |
High CCEI = each new resource multiplies value, değil sadece ekler.
5️⃣ Val Sklarov’s 5 Laws of Capacity-Based Companies
-
A startup dies when conversion stops, not when resources end.
-
Investment accelerates only systems that can absorb it.
-
Input growth without transformation growth is waste.
-
Closed loops outperform linear processes.
-
A company is efficient when outputs generate inputs.
6️⃣ Applications of the Capacity Conversion Function Model
-
turning funding into output without waste
-
designing systems that scale with new hires
-
reducing organizational leakage points
-
increasing distribution pathways per product
-
identifying where transformation bottlenecks form
-
converting internal outputs into autonomous inputs
-
evaluating startup readiness for capital injections
CCFM reframes a business not as a mission,
but as a structured transformation machine.