Business Model Leverage

Today's consumer subscription leaders are aggressively expanding the definition of what it means to serve their customers — Peloton's lofty vision in its S-1 and Daniel Ek's reframing of Spotify as an all-encompassing audio platform are the two most notable examples.

As these strategies develop, I expect that the growth metrics underlying the most successful Consumer SaaS companies will come to resemble those of the most successful Enterprise SaaS companies — specifically, a material portion of growth for the outperformers will be attributed to negative churn.

A company has Business Model leverage when — after reaching some degree of scale — its core business sets it up extremely well to grow into higher gross margin adjacencies with market opportunities large enough to meaningfully impact the broader business.