There’s a financial misconception that products and business models are static rather than dynamic things. This is rooted in the DCF model construct, a staple of analysis that one way or another ties to all the value metrics.
It speaks of growth, and profit margins, but not of change. Its highly prized ingredient – terminal (or future) value – is a magnified version of the present, spanning into perpetuity (that is, forever).
But evidence is fading that what seemed to hold true for factories and stores one time still holds for digitized forms today. Growth now is driven by fluidity as much as increase, maybe more.
Sector boundaries fade, expectations change, converging tech and data dominate, offerings evolve… some are evolved away for failing to do so.
Future value, thus, is option value on reflection… which could be worth far more, or less, than you might think. The in-between is a narrow space that’s shrinking…
Capital is venture capital.
Related: Profit categories, Regulatory arbitrage, Network patterns, The bridge
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