Why debt is a form of time travel (and why high interest rates slow it down)
In the movies, time travel means ripping along at 88 mph in a DeLorean, listening to Huey Lewis and the News. In business, a form of time travel can be achieved using outside capital. (Kyle is weirdly on a Back to the Future kick these days, just humor him.)
When you take on debt or raise outside capital, you're pulling future capital into the present. You're accelerating what would’ve taken years of profit to build, and you're paying interest or dilution for the privilege of doing it now instead of later.
Which means interest rates and required rates of return don’t just affect your monthly payments. They also mess with your perception of time.
Does time travel feel like a super heady subject for a bunch of finance folks? Damn straight it does, but that doesn’t mean we’re tripping.
Outside capital = (a form of) time travel
Let’s start here: In a world without outside capital, businesses grow based on what they can earn and reinvest. You generate profit. You reinvest that profit. Slowly and over time. We nerds call it retained earnings.
Outside capital breaks that rule. It collapses the timeline. You borrow or raise what would’ve taken you years to accumulate. And the price of that acceleration is interest or dilution.
In short: debt (or outside capital in the form of equity) allows for the manipulation of time, and interest expense (or dilution if equity is raised) is the cost of that manipulation.
Cheap capital = faster time travel
When interest rates are low, the cost of acceleration drops (the cost of Doc’s plutonium is low…see what I did there?)
That makes it easier (and more tempting) to:
Invest in longer-term plays
Chase market share with blitz-scaling
Pull even more future growth forward
You see this across the board: venture-backed startups raising huge rounds, small businesses adding headcount ahead of demand, PE firms stacking deals on deals. In a low-rate environment, everyone’s playing offense.
Expensive capital = slower time travel
Now flip the script.
When interest rates rise, the cost of acceleration goes up. Pulling the future into the present gets more expensive, and the time horizon for performance shrinks.
Suddenly:
You hire slower
You delay investments
You shorten planning cycles
You expect results now, not three years from now
We’ve seen this shift with our own clients. Sales hires that once had 9 months to ramp now get 3. New initiatives are expected to show returns within 12 months. Five-year visions have been replaced with 12-month plans.
High rates don’t just hit the P&L. They change behavior.
What businesses feel like in high-rate environments
Beyond the direct financial impact, here’s what we’re seeing on the ground:
1. Shortened horizons
Leaders are focused on the next 12 months, not the next 5 years. Long-tail investments (like R&D, M&A, or big capex plays) are either on hold or they’re being underwritten with new requirements for payback and lower multiples
2. Increased accountability
We're being asked to help track sales rep performance, utilization rates, and short-term ROI more than ever. There’s less tolerance for “wait and see.”
3. Working capital over big bets
Clients are spending more time managing A/R and A/P, renegotiating terms, and incentivizing prepayments. The basics matter more than the big ideas right now.
4. Pressure on leveraged businesses
Clients with floating-rate debt are feeling the squeeze. Debt obligations are heavier, and sensitivity to interest costs is higher than it has been in years.
Who benefits when rates are high
Not everyone suffers in a high-rate world. We’re seeing some clients benefit from:
Sitting on large cash balances (hello 4%+ money market returns)
Having self-funded growth strategies
Competitors folding due to capital constraints (especially in startup-heavy markets)
If you’re steady, profitable, and disciplined, a high-rate environment can actually be less competitive, because the blitz-scalers can’t afford the blitz anymore.
What to do when rates are high
Tighten your planning cycles
Double down on operational visibility and accountability
Reassess any plans that assumed “cheap” capital
Maximize yield on idle cash (don’t leave money sitting in a 0.01% account)
Final thought
Erasmus said, “In the land of the blind, the one-eyed man is king.”
Right now, you don’t need to be a visionary. You don’t need to make perfect long-term calls. But you do need to pay attention to what matters today.
Because when interest rates rise, the timeline compresses. And in a compressed world, those who are willing to focus on the “boring” stuff – profit, cash flow, accountability – are the ones who come out ahead.
