There’s plenty of successful businesses chugging along growing at about the rate of inflation. It’s really hard to grow a business at 10 or 500 times that rate.
Why would it be surprising to value the latter kind of business higher than the former?
Why would it be surprising to value the latter kind of business higher than the former?
Even outpacing inflation by 1.2 - 2 times. It's not insane growth, but it is consistent. Better yet is that they tend to have a decent number of assets too.
> It’s really hard to grow a business at 10 or 500 times that rate.
How often is 10 to 500 times growth seen in reality? I think most start-ups fail before the second year.
> Why would it be surprising to value the latter kind of business higher than the former?
Highly stable and proven growth as opposed to highly unstable and unreliable growth.
If you either create a brand new market, or are taking on a drastically undeserved market... you absolutely need to be growing faster than inflation. Or your brand new company would be worth $1 the first year, $1.03 the second year..