Key takeaways from The Power of Optionality and the companies that wield it by Jeremy Chia
cc:@SteadyCompound @EugeneNg_VCap @FromValue @ValueStockGeek @MoS_Investing @HurriCap @JoinCommonstock @long_equity @heymaxkoh @MnkeDaniel @artofinvestmnt @joyofcompoundin
cc:@SteadyCompound @EugeneNg_VCap @FromValue @ValueStockGeek @MoS_Investing @HurriCap @JoinCommonstock @long_equity @heymaxkoh @MnkeDaniel @artofinvestmnt @joyofcompoundin
If a company has multiple ways to grow, it has optionality. This makes the company "antifragile", a term coined by Nassim Taleb.
Optionality allows the company to:
-build new revenue streams
-create a diverse business
-become resilient
Optionality allows the company to:
-build new revenue streams
-create a diverse business
-become resilient
Amazon is a great example of optionality. Amazon started off as a first party online retailer. Once it has amassed a huge user base, it leveraged that user base and easily pivoted into a market place. This created a new revenue stream with higher margins.
Here are 3 examples of companies which have the luxury of optionality:
1. Netflix
-Netflix has a lot of original content( eg. Stranger Things). Netflix can leverage this content to sell merchandise, create games and even have theme parks
1. Netflix
-Netflix has a lot of original content( eg. Stranger Things). Netflix can leverage this content to sell merchandise, create games and even have theme parks
2. Upstart Holdings
-provides software to banks that can predict default rates on loans. It however is currently mainly focused on personal loans
- if Upstart could go into auto loans and mortgages it would have hit the jackpot
-provides software to banks that can predict default rates on loans. It however is currently mainly focused on personal loans
- if Upstart could go into auto loans and mortgages it would have hit the jackpot
3. Square
-started off by providing shopkeepers with a device that can easily accept credit cards
-square can and has leveraged its user base to sell other tools
> cash app
>insurance
>Buy Now Pay Later
-started off by providing shopkeepers with a device that can easily accept credit cards
-square can and has leveraged its user base to sell other tools
> cash app
>insurance
>Buy Now Pay Later
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