Skip to content

Is your growth actually compounding?

A number that goes up can be compounding (multiplying each period), straight (adding the same amount each period) or flattening, and those futures are nothing alike.

  • Three ways in
  • No account
  • Nothing you type leaves your browser

01 · The instrument

Your series against two paths

A built curve, not your numbers: its shape is known, so any misreading is the test's own.

○
Built curve

Not yet knowable

How much have you seen?Drag it, or play the points in.
Your series with the two best-fitting paths: one adding the same amount each period, one multiplying by the same factor each period

Paste at least eight values and the chart draws here.

Retype the misread value above and the chart draws here.

Both paths are the best fits to the points you have seen. Turn both off and judge the bare points yourself.

addingtoo close to callmultiplying

Both shapes still fit inside the margin you set.

If you watch all 64 points

points seen
n/a
grown by
n/a
doubles every
n/a
the fit numbers
gap on the values
n/a
gap on the logs
n/a
downward bend gain
n/a
gap the call uses
n/a
The test

How sure the test must be before it names a shape. Raise it: right more often, silent for longer.

02 · How it decides

Seven checks · the first to fire decides

How the verdict is decided

Seven checks, in this order. The first one that fires gives the verdict.

Gap how much better the compounding path fits than the straight one: its R² minus the straight path's, worked out on the values and again on their logs.

Margin the separation you demand, set on the test dial.

OrderCheckIf yes, the verdictWhy
01Fewer than eight points?Not enough yetEight points is our own unsourced minimum before any verdict is worth printing.
02Any value at zero or below?Cannot be readA zero has no ratio, and a negative value has no logarithm.
03Turned down inside your data?Turned downThe values rise and then turn down inside your data, so none of the three shapes describes them.
04Multiplying wins on both scales?CompoundingBoth gaps clear your margin towards the multiplying path, on the values and on their logs. If the straight fit dips to zero or below inside your data, the log gap has no score: it shows n/a and counts for compounding, because a line that goes below zero cannot describe numbers that never do. A shrinking series reads Compounding decline.
0512 or more points, rising, with a downward bend?FlatteningOn a rising series, a curve that bends downwards beats the straight path by more than your margin and explains at least half of what the straight path misses.
06Adding wins on both scales?StraightBoth gaps clear your margin towards the adding path.
07None of the above?Not yet knowableNeither shape wins on both scales by more than your margin. More points may move it.
The rules in full

The two gaps

Each gap is the compounding fit's R² minus the straight fit's R², worked out once on the values and once on their logs, so both shapes are always scored on the same scale. The test names Compounding or Straight only when both gaps clear your margin in the same direction (Flattening has its own rule, below); the needle shows the smaller of the two. If the straight fit dips to zero or below inside your data, it has no log score: that gap shows n/a and counts for compounding, because a line that goes below zero cannot describe values that are all above zero.

The third shape

Flattening: with 12 or more points (our own unsourced minimum) on a rising series, if a curve that bends downwards (the least-squares fit of a + b·t + c·t², with c below zero) raises R² on the values by more than your margin and explains at least half of what the straight fit leaves unexplained, the verdict is Flattening, unless the series has turned down.

Checked first

Turned down, checked before any shape is named: the values climb to a peak and then fall, with the points before the peak trending up and the points after it trending down, each by more than three times the slope's standard error, the fall after the peak larger than twice the scatter around it and at least a tenth of the rise before it, with at least 4 points on each side; or, after a climb of at least 4 points that trends up by more than three times its slope's standard error, the last two values both sit more than half that climb, and more than five times its scatter, below where the climb's own line stands at the peak (so a single outlying point cannot trigger it). Then the verdict is Turned down. A steady decline has no earlier rise, so it is not turned down.

On the chart

The straight path on the chart is the least-squares line through the values; the compounding path is the least-squares line through their logs, drawn back on the values.

Our thresholds

Every threshold on this page is our own unsourced choice: the eight- and 12-point minimums, the margins, the at-least-half rule and the turned-down tests. The calibration below measures how often they lead to a wrong call.

03 · Confidence

Clean curves, no noise

The price of confidence

How far a clean, noiseless curve must grow before the statistic commits.

Across growth rates the multiple barely moves, whatever the growth rate.

Across margins what certainty costs, paid in growth you have to sit through.

Each figure is the multiple the curve has grown by when the statistic commits, at each margin and growth rate a period.
How far a clean, noiseless curve must grow before the statistic commits, by margin and by growth a period
Margin1%2%5%10%20%30%Spread

Spread is each margin's lowest to highest.

From about 12% a period at the loose margin and about 18% at the ordinary one, the tool's own eight-point minimum binds before the statistic does, so in the marked cells it cannot speak this early.

A number that goes up can be compounding, straight or flattening, and those futures are nothing alike.

New tools and the essays behind them come with sources shown. Subscribing is free.

Subscribe opens Substack in a new tab with your address. Nothing you entered in the tool goes with it.

04 · Limits

Eight, and what each assumes

The limits of the reading

Where it stops, and what it assumes.

You cannot tell which shape by looking: at the ordinary margin, even a clean compounding or straight curve has to roughly triple before the test can say; noise can bring an earlier call, and an early call can be wrong.

  1. 01Three shapesThe test compares two shapes, a path that multiplies by the same factor every period and a path that adds the same amount every period, and checks for a third: a rising curve whose rises shrink, which it calls Flattening.
  2. 02Shape onlyA reading of the curve's shape. What drives your business is yours to judge.
  3. 03Eight points, all above zeroIt says nothing before eight points, and it cannot read a zero or a negative value (checks 01 and 02).
  4. 04Even spacingIt assumes the points are evenly spaced in time.
  5. 05Short or noisy seriesWith fewer than 12 points, or noisy data, a levelling-off curve can still read as Straight: read Straight as “the straight path fits better than compounding”. On the test curves most wrong Straight calls were levelling curves (section 05).
  6. 06Shifting growthA business whose growth rate shifts month to month fits none of these shapes exactly.
  7. 07Steady shrinkingA series that shrinks by a steady factor reads as compounding too, because the test detects multiplication in either direction; the page then says “compounding decline”.
  8. 08Running totalsA running total whose additions grow by a steady amount (new signups up by a similar number each month, say) curves upward without multiplying. In our checks of 3,888 such totals at 64 points, 19% read as Compounding, 11% as Straight and 70% as Not yet knowable: on a running total, Compounding is not evidence that the business compounds. Test the additions as well: the switch under the paste box does it.

05 · Calibration

270,000 series · measured 27 Oct 2026

How often it is wrong

Measured on 27 October 2026 against this page's rules, on 270,000 series whose true shape was known: 90,000 each of straight, compounding and flattening curves, generated with noise added, each 64 points long, and not real businesses. A wrong call names a shape the series was not built as.

A Straight call is the one to doubtHow often each call named the wrong shape at the ordinary margin (0.020), by how many points it had seen.
The callAt 12 pointsAt 24 pointsAfter all 64
Compounding8.2%3,760 of 46,0741.2%722 of 60,0400.03%21 of 78,496
Straight56%34,385 of 61,64142%31,758 of 75,55624%20,093 of 84,940
Flattening16%675 of 4,0910.03%6 of 21,6840none of 41,062

A levelling curve looks straight until it bends. Of the flattening curves the test named, it called 86% Straight first, and of those it named at point 64 a third were still Straight (20,080 of 61,142). Almost every wrong Straight call was one of them (98% at 24 points). Compounding and Flattening calls were rarely wrong once 24 points were in.

The margin is the price of being sure270,000 series at each margin, all three shapes.
MarginWrong at the endNo verdictFirst call wrong
Loose 0.01013%28,848 of 225,67216%49%
Ordinary 0.0209.8%20,114 of 204,49824%40%
Strict 0.0500.50%795 of 158,37241%21%

“Wrong at the end” (after all 64 points) is a share of the series given a verdict. “First call wrong” is a share of the series that named a shape (219,636 at ordinary). Almost all of the wrong calls at the end are flattening curves read as Straight. On the straight and compounding curves alone (the 180,000 of 9 October), wrong at the end is 0.45%, 0.02% and none, and first calls are wrong 26%, 15.5% and 1.7%.

Best case Real series can be noisier or differently shaped than these, so treat the figures as the best case.

Settles (in the reading above) means the verdict is unchanged through the data you have; one more point can still move it.

Reproduce the measurement
Shapesstraight 1000 × (1 + r·t), compounding 1000 × (1 + r)t, or flattening 1000 × (1 + 16r(1 − e−t/16)), for t = 0 to 63
Growth r1, 2, 3, 5, 8, 10, 15, 20, 30 or 40% a period
Noise5, 10, 15, 20 or 25%
Noise kindproportional: each value times 1 + u, with u drawn evenly between minus and plus the noise level · fixed: a normal draw added, with standard deviation equal to the noise level times 1,000, the starting value
Floorvalues below 1 were set to 1
Volume300 series per combination make 90,000; three runs make 270,000
Seeds1, 2 and 3; each run draws from one mulberry32 stream
Draw ordershape (straight, compounding, then flattening, so the first two are the draws of 9 October), growth rate, noise level, noise kind (proportional, then fixed), 300 series, 64 points
Proportionalone draw per point: u = (2d − 1) × noise
Fixedall 300 × 64 first draws of its combination, then all 300 × 64 second draws, each pair turned into a normal value with Box–Muller, √(−2 ln d₁) · cos 2πd₂

Built for The Durability Curve · live since 31 July 2026. There is no companion essay: the method, its calibration and its limits are all on this page.