why now?

7/16/24

I am focused on finding companies that have a compelling why now. The why now is often confused with the right now by many, and although similar, the two are distinctly different. 

why now: why can this company only exist today, rather than years earlier, and is primed to have an outsized upside/impact in the next 3-10 years? 

right now: what is the company doing now that makes it an appealing investment? 

While the right now strategy isn't inherently flawed, it cannot be universally applied across all asset classes. Every asset class has varying risk and return profiles, therefore, each asset class *should* require a different approach when performing due diligence. (some investors diligence each asset class the same → similar to comparing apples to oranges)

early stage venture: high risk/high return 

private credit: low risk/low return 

The right now strategy is typically indexed more heavily at the later stage (private equity buyout, public equities, private credit, etc). In this diligence process, financials and metrics matter most: revenue growth, margin profile, economies of scale, profitability, retention, and marketing efficiency. These metrics help estimate an investment's current value, while factoring in growth catalysts, with the goal of the future value (FV), being worth more long-term. This strategy has and can yield strong returns but has a capped upside – surpassing a return of 1,000x, 100x, 10x, or even 5x is unlikely.

right now example: 

  • In December 2022, Meta was significantly undervalued, trading at ~$115/share with a market cap of ~$300B and a revenue multiple of ~2.5x. Meta had an average revenue multiple of ~7.0x for fiscal years ending December 2019 - 2023. 

    Many investors placed positions into Meta given this low revenue multiple, believing that software multiples will ultimately bounce back. As of writing this post, Meta is trading at $489/share with a market cap of $1.24T, exhibiting a 8.70x revenue multiple. In just 2.5 years, Meta is worth +300% of what it was in December 2022. 


The why now is the question that needs to be answered when investing at the earliest stages, where the investment formula is often more art than math. The answer stems from a tailwind or catalyst, making the timing now more optimal than ever before. 

Venture investing indexes heavily on the founder and market. Does the founder embody all of the characteristics needed to win, and are they willing to do whatever it takes to succeed? Are they operating in a market with clear catalysts/tailwinds, making timing opportune? This investment approach and asset class are among the most risky, but they also have some of the greatest returns.  

why now examples: 

  • Snapchat’s why now is that it’s a beneficiary of technological advances. The Comapny was founded in the summer of 2011. The iPhone 4 (the first smartphone with a front-facing camera) was founded in the summer of 2010. Without a front-facing camera, there would be too much friction for Snapchat to have any true utility. If it were not for the front-facing camera, Snapchat would most likely not have been founded. Snapchat has a current market capitalization of $26B.

  • Coinbase’s why now is that Bitcoin was launched in 2009, drawing attention from investors and techno-optimists, but was difficult to buy. Coinbase initially sought to make it easier to buy, use, and store Bitcoins.  Coinbase made buying, using, and storing Bitcoin easier, leveraging broader blockchain advancements. Coinbase has a current market capitalization of ~$60B. 

  • Savage x Fenty’s why now is that the broader consumer in the U.S. was becoming more cognizant and supportive of brands that prioritized inclusivity. This movement was affirmed in 2019 when Victoria's Secret’s brand was under so much scrutiny that they were forced to cancel its notorious Fashion Show. The combination of shifting consumer behavior and the downfall of the leading incumbent allowed for Savage x Fenty’s success. 

I am focused on investing in the why now, backing companies that recognize the tailwind at their back and are moving full steam ahead. Areas within the consumer sector that I believe have strong why now’s include: 

  • Healthcare: healthspan/longevity 

  • Consumer Services: ai-powered personalization

  • Beauty Brands: prioritizing science & a clinical approach 

  • Software: reducing returns & overall churn

  • Apartment Hunting: making the process less painful (nyc broker fees are criminal)  

If you are building anything that fits any of these categories or has a strong why now, shoot me a note – let’s chat.  

-m