In essence, using core biz to develop new (asymmetric) opportunities.
Where to find these options: in the business' operating cost structure
Optionality #2: Product / Category Expansion
- JD's "JD Health" business
- Tinder's "Boost" feature
- Square's "For Retail" and "For Restaurant"
How to find: focus on the customers’ objectives & determine whether the current or potential products/services fulfils objective
Optionality #3: Strategic Shift / Evolution
- NFLX from DVD to streaming
- Adobe's on-premise to SaaS
Optionality arises when a company recognizes a natural evolution away from (but still related to) their current business towards one with a superior customer value proposition
Optionality #4: Geographic Expansion
- Shopee in Brazil
- Starbucks into international markets
"Geographic expansion occurs when a company expands to a new region or country in hopes of replicating
its success from its core market."
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Recurring revenue is great. Recurring mistakes, not so great. Here were our biggest mistakes:
1) Too slow to act on a high conviction thesis 2) Overly constrictive trade management 3) Not sizing up (within limits) on higher conviction opportunities
2/ Error 1: Slow To Act on High Convictions
We come across a fantastic setup that has a Trifecta of tailwinds (sentiment, fundamental, technical) behind it.
We pitch it, write it up for the group.
And then don’t take the first entry and watch as our thesis plays out to the T