This is a quick starting point for evaluating growth stage private or public companies. There is obviously a lot more that goes into a full investment decision but this framework helps to hone in on the important qualitative drivers of growth and market power for high growth technology companies.
Invest in companies where the business equation¹ creates the potential to develop an “economic ecosystem” by bringing business model leverage², responsive instrumentation³, and native empowerment loops⁴ to an underrated market opportunity⁵.
Below are a few areas where I have publicly applied or further explored this framework:
- The Merits of Bottoms Up Investing
- Spotify: The Ambient Media Company
- Peloton’s Business Equation
- Kahoot (see below)
Kahoot Investment Thesis
Kahoot is on a path to become one of Europe’s next €10b+ “Supercompanies” thanks to three key factors:
- Empowerment loops native to the culture and the offering that have an expansive effect on the market size and monetization potential. The company is broadening the “expressive range” for educational content which will drive massive impact across educational, professional, and media use cases.
- Responsive instrumentation that has helped accelerate the company’s growth relative to peers in the midst of the Covid-19 pandemic and will give it an advantage regardless of how fast we return to in person work and learning.
- An underrated market opportunity created by the “frivolous” nature of the company’s product and an “unattractive” user base as well as a long term orientation that has allowed the company to prioritize engagement over revenue, feeding a viral growth loop.
Taken together, these factors create significant business model leverage for Kahoot, and unlock the potential for the company to become the “central utility” of an entirely new communication, publishing, and credentialing paradigm around which significant economic activity will orbit.