Different Friday thinking for you: Wall Street is asking the wrong question.
Different Friday thinking for you:
Wall Street is asking the wrong question.
(And you might be too.)
They’re asking: Is the company performing?
The real question is: Is the category on the good or bad side of the S-curve?
This is why Salesforce is down $135B in market cap with great earnings. This is why Micron is up 6x with earnings most software companies would kill for.
Same economy.
Same AI boom.
Completely different outcomes.
Here’s the frame that explains it: There are two types of investors.
Performance investors buy companies because of what they earn today. Reliable. Predictable. Lower multiples.
Potential investors buy companies because of what their category could become. Uncertain. Explosive. Higher multiples.
When Potential investors decide a category has matured.
They sell.
The multiple compresses. The earnings don’t change. The category story changes.
That’s the SaaSpocalypse in one sentence.
Software didn’t die. The SaaS category got knowable. The TAM became visible.
Potential investors handed it off to Performance investors.
Meanwhile, memory chips. A commodity business left for dead 18 months ago. Just became AI infrastructure.
Micron: 196% revenue growth.
67% operating margins.
7x forward P/E.
Palantir: 85% revenue growth.
46% GAAP margins.
95x forward P/E.
Micron has the better performing business.
Palantir has the better multiple.
That gap is going to close.
One direction or the other.
This is what Category Design does.
It’s not about better products or better execution. It’s about designing a category that sits on the right side of the S-curve.
And making sure the market knows it.
Benioff sees this clearly. He’s buying back stock. Acquiring at compressed prices.
And repositioning Salesforce out of SaaS entirely into AgentForce.
Same business.
New category label.
New multiple.
New shareholders.
That is the move.
Two questions.
Is your category on the good or bad side of the S-curve?
Is the risk of staying the same greater than the risk of change?
Answer those honestly and you’ll see around corners most people can’t.
That’s Category Design.
That’s the unfair advantage.
We broke all of this down on the first-ever episode of the Pirate Street Journal: business news through the category lens.
Salesforce.
Micron.
Palantir.
The Mag-7 becoming the Mag-10.
And why the biggest equity bull market in a generation might be just getting started.
🏴☠️
Hi all, I like this but think you can make the different thinking and the non-obvious stronger. That thinking is one of your many super powers. I want I have really liked about using the Pirate Christoper and Pirate Eddie bots is that they think different and make non-obvious connections differently just like the real Christopher and Eddie. I think you can make this more piraty. My two cents for the morning.