The MCM is a measure of a venture’s margin of safety—i.e., its ability to
absorb variability in operational variables and to absorb completely unintended
costs. It’s how the late Charlie Munger famously thought about investing.

Mathematically, the MCM is the distance between the estimate of customers’
willingness to pay and the estimate of total unit cost, including cost of capital,
expressed as a percentage of the total unit cost. In other words, the MCM can be
increased by one of two ways: by increasing the amount of value created for the
customer or by decreasing the cost to make, sell, deliver, and get paid for the
solution. Through Integrative Venture Engineering, both strategies are explored at every step and level of design.