re: CMRC and ARBA
Malcolm, I don't mean to pile on here, especially since Bruce did such a nice job of explaining the b2b gorilla game that's underway and why gorilla gamers should take note. I just wanted to point out that the manual doesn't actually put a lot of emphasis on profits. It advises us to pay attention to discontinuous innovations, proprietary open architectures, barriers to entry, value chains, market share, chasms, and tornadoes (revenues). All of these things are present in the B2B sector.
I agree with you that in the long run gorillas will be profitable. But in the short run there's no rule of thumb since profits are based on rules of accounting rather than rules of gorilla gaming. Some companies, like CMRC, have to invest a lot in creating market exchanges and partnerships (value chains) while waiting for revenue to come in based on future transactions. Ariba earns more of their money up front in terms of sofware licencing. As Bruce suggested, one needs to study their business models to understand how they fit into a gorilla game.
I have decided to take the basket approach and own both CMRC and ARBA. As Bruce pointed out, while both companies are losing money currently, they have been very profitable investments based on their 52 week lows. So it is possible to have a successful investment based on GG criteria even if the company is losing money in the short term.
Also, I nominate Bruce to take all of the information he has in his head and has written on the subject over the past year and, once and for all, put it in the format of a project hunt report! |
