'“…it’s better to think of it in terms of how much more $100 in current revenue is worth in a company if it can compound growing at 50% per year. In four years will be up 406%. If you compare it to a company growing at 10%, which in four years will be up 44%, of course it is worth a much higher current market cap. And especially if it has twice the gross margin and thus keeps twice as much of that revenue, that doubles its worth again. (Not even thinking about a company growing at 60% or 70% or more.)…”
I can understand the math and the growth. What I can’t get past is what prevents someone else from coming in and doing the same thing?
My two random thoughts on the matter is:
- It has to make something physical, like AAXN. AAXN is shifting its business from hardware to SaaS. However, it still makes the police body cameras, stun guns, etc., which will work in unison with their SaaS. So making something physical puts a more understandable moat to their SaaS.
and 2) All the internet stocks tanked in 2000. Who lives and who doesn’t?? Taking a page from Michael Murphy? (who had a Tech newsletter), R&D helps give a clue. It does not guarantee survival, but it does help the odds.
DoesMIWork