Imran Khan

No, revenue multiple is a BS multiple, right? Like, why would somebody give a shit about revenue multiple? Why do we spend so much time on it then? And why is it a BS multiple? So when I look at a business, so let's say a business does $100 revenue and they're losing money. If I look at the business and say that, okay, they have a sustainable growth path of, let's say, 25%.

No, revenue multiple is a BS multiple, right? Like, why would somebody give a shit about revenue multiple? Why do we spend so much time on it then? And why is it a BS multiple? So when I look at a business, so let's say a business does $100 revenue and they're losing money. If I look at the business and say that, okay, they have a sustainable growth path of, let's say, 25%.

So over a decade, that $100 will become $1,000. Because if you grow 25% in a decade, it's 10x return. And we think that the incremental margins are 50, 60% of that business. So that business in a decade will do $500 million profit. Then I know that market trades at 17 times earnings. Let's say this business trades 17 times earnings or 20 times earnings.

So over a decade, that $100 will become $1,000. Because if you grow 25% in a decade, it's 10x return. And we think that the incremental margins are 50, 60% of that business. So that business in a decade will do $500 million profit. Then I know that market trades at 17 times earnings. Let's say this business trades 17 times earnings or 20 times earnings.

So over a decade, that $100 will become $1,000. Because if you grow 25% in a decade, it's 10x return. And we think that the incremental margins are 50, 60% of that business. So that business in a decade will do $500 million profit. Then I know that market trades at 17 times earnings. Let's say this business trades 17 times earnings or 20 times earnings.

So then that business is worth, you know, 500 times 20 is $10,000. So now I have to look at it. What is my required rate of return to invest in that business? And I'm willing to underwrite a revenue multiple based on that. And that's why we look at revenue multiple. But the challenge is very few businesses.

So then that business is worth, you know, 500 times 20 is $10,000. So now I have to look at it. What is my required rate of return to invest in that business? And I'm willing to underwrite a revenue multiple based on that. And that's why we look at revenue multiple. But the challenge is very few businesses.

So then that business is worth, you know, 500 times 20 is $10,000. So now I have to look at it. What is my required rate of return to invest in that business? And I'm willing to underwrite a revenue multiple based on that. And that's why we look at revenue multiple. But the challenge is very few businesses.

And this is why I think one of the most important thing to look at it, what is the gross margins of that businesses? Because if a business has 20% gross margins, you know, giving them revenue multiple is a crazy thing to do. You can, but it has to be very, very low revenue multiple because when you start with 20% gross margins, ultimately gross margins is very hard to control. It is what it is.

And this is why I think one of the most important thing to look at it, what is the gross margins of that businesses? Because if a business has 20% gross margins, you know, giving them revenue multiple is a crazy thing to do. You can, but it has to be very, very low revenue multiple because when you start with 20% gross margins, ultimately gross margins is very hard to control. It is what it is.

And this is why I think one of the most important thing to look at it, what is the gross margins of that businesses? Because if a business has 20% gross margins, you know, giving them revenue multiple is a crazy thing to do. You can, but it has to be very, very low revenue multiple because when you start with 20% gross margins, ultimately gross margins is very hard to control. It is what it is.

You know, maybe you can get 100 basis point, 200 basis point improvement in a cost, but the people cost is very easy to manage. So when a business that starts with a low gross margins, it's really hard to give high multiple on a business. When I was an IPO analyst at Google, I had a buy rating on the stock. Google had a very high incremental margins.

You know, maybe you can get 100 basis point, 200 basis point improvement in a cost, but the people cost is very easy to manage. So when a business that starts with a low gross margins, it's really hard to give high multiple on a business. When I was an IPO analyst at Google, I had a buy rating on the stock. Google had a very high incremental margins.

You know, maybe you can get 100 basis point, 200 basis point improvement in a cost, but the people cost is very easy to manage. So when a business that starts with a low gross margins, it's really hard to give high multiple on a business. When I was an IPO analyst at Google, I had a buy rating on the stock. Google had a very high incremental margins.

so you can look at the business so what we didn't know at that time how big that search business could be and can them maintain the search market share like i was thrown out of it's a true story uh google went public and i had a buy rating and i went to blackrock new jersey office and they These investors were a big Yahoo shareholders and I was catching Google and they got really mad at me.

so you can look at the business so what we didn't know at that time how big that search business could be and can them maintain the search market share like i was thrown out of it's a true story uh google went public and i had a buy rating and i went to blackrock new jersey office and they These investors were a big Yahoo shareholders and I was catching Google and they got really mad at me.

so you can look at the business so what we didn't know at that time how big that search business could be and can them maintain the search market share like i was thrown out of it's a true story uh google went public and i had a buy rating and i went to blackrock new jersey office and they These investors were a big Yahoo shareholders and I was catching Google and they got really mad at me.

They said, you don't know anything because people will come to Yahoo for content and they will end up searching. Why do I need to go to a webpage that doesn't have any other content only for search? They're going to lose search market share and look at the capex they're doing. They're spending like a drunken sailor. Why would you?

They said, you don't know anything because people will come to Yahoo for content and they will end up searching. Why do I need to go to a webpage that doesn't have any other content only for search? They're going to lose search market share and look at the capex they're doing. They're spending like a drunken sailor. Why would you?

They said, you don't know anything because people will come to Yahoo for content and they will end up searching. Why do I need to go to a webpage that doesn't have any other content only for search? They're going to lose search market share and look at the capex they're doing. They're spending like a drunken sailor. Why would you?