Re:We Need a Warby Parker for Mattresses
by marklabedz on Friday September 14, 2012 @03:05PM
(#4523378)
At the risk of putting words in rscale's mouth, its not that PE creates these conditions or that PE is even necessary for these conditions. Instead, PE tends to find and play in highly attractive industries (See Porter's 5 Forces for a classic view of "attractiveness"). PE involvement in an industry can be a good signal...
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Ahh, very cool. That makes a lot of sense to me. Basically you're using PE as a proxy for a measurement of attractiveness.
Re:We Need a Warby Parker for Mattresses
by stcredzero on Friday September 14, 2012 @06:23PM
(#4524303)
> Basically you're using PE as a proxy for a measurement of attractiveness.
How about PE as a proxy for "incumbency?" That is to say, you're looking at companies who figured out a formula to "print money" then let themselves get complacent and fat, thereby becoming targets for PE. This would explain why they tend to be not so agile.
I just had an image of a cabal of attractive young women, somewhat resembling James Bond villainesses, but who are trained in business and economics, who seek out dalliances with PE firm executives in order to perform industrial espionage.
Freudian slip? free-cash-flow is attractive to pe (=$$$), even for plane-jane business =D tech is a counter-example.
Re:We Need a Warby Parker for Mattresses
by marklabedz on Friday September 14, 2012 @05:07PM
(#4523967)
Yes, that's a good way to look at it. Its really important to recognize the crux of rscale's point though - you have to render the high barriers to entry condition false. If you can't figure out how to enter, the remaining conditions don't really matter.