Matthew Giampetroni
@matthewgiampetroni
Matthew Giampetroni
@matthewgiampetroni
Firms should invest in innovation while cutting losses when a strategy is unlikely to pay off. This is an explicit recognition of the value of quitting
People on the outside sometimes wonder why businesses with so few traditional assets seem to require so much financing. Well, they are accumulating assets: users are the new assets, and their use is what you’re out to monetize.Whatever your business model is, acquiring users is the new building factories.
M&A is by far the largest source of redistribution of corporate resources among the capital allocation alternatives. M&A deals in 2021 totaled nearly $2.6 trillion, or 13.5 percent of sales. The chart shows that M&A tends to be cyclical. Early movers tend to do better than companies that buy later in the cycle.
Capital allocation is ultimately about assessing opportunities and executing on the ones that are attractive. As such, it requires a willingness to be a buyer or a seller given the circumstances.
The primary job of senior management is to create value over the long term.
As a founder, the most valuable optionality you have is the equity you haven’t sold, and the dilution you haven’t taken. But the second most valuable optionality you can have is a valuation that’s not too high.