Siddharth Kapoor

Investing in businesses with pricing power

[Siddharth Kapoor @SiddharthKapo]

Two investors on opposite ends of the spectrum. One backs start-ups pre-revenue. The other holds mature companies for decades. They barely speak the same language.

𝗠𝗮𝗿𝗰 𝗔𝗻𝗱𝗿𝗲𝗲𝘀𝘀𝗲𝗻 said that one of the simplest tests of a company's competitive advantage is its ability to raise prices.

"𝘙𝘢𝘪𝘴𝘪𝘯𝘨 𝘱𝘳𝘪𝘤𝘦𝘴 𝘪𝘴 𝘢 𝘨𝘳𝘦𝘢𝘵 𝘸𝘢𝘺 𝘵𝘰 𝘧𝘭𝘦𝘴𝘩 𝘰𝘶𝘵 𝘸𝘩𝘦𝘵𝘩𝘦𝘳 𝘺𝘰𝘶 𝘢𝘤𝘵𝘶𝘢𝘭𝘭𝘺 𝘥𝘰 𝘩𝘢𝘷𝘦 𝘢 𝘮𝘰𝘢𝘵. 𝘐𝘧 𝘺𝘰𝘶 𝘥𝘰, 𝘤𝘶𝘴𝘵𝘰𝘮𝘦𝘳𝘴 𝘸𝘪𝘭𝘭 𝘴𝘵𝘪𝘭𝘭 𝘣𝘶𝘺- 𝘣𝘦𝘤𝘢𝘶𝘴𝘦 𝘵𝘩𝘦𝘺 𝘩𝘢𝘷𝘦 𝘵𝘰. 𝘛𝘩𝘦 𝘥𝘦𝘧𝘪𝘯𝘪𝘵𝘪𝘰𝘯 𝘰𝘧 𝘢 𝘮𝘰𝘢𝘵 𝘪𝘴 𝘵𝘩𝘦 𝘢𝘣𝘪𝘭𝘪𝘵𝘺 𝘵𝘰 𝘤𝘩𝘢𝘳𝘨𝘦 𝘮𝘰𝘳𝘦."

𝗪𝗮𝗿𝗿𝗲𝗻 𝗕𝘂𝗳𝗳𝗲𝘁𝘁, testifying before the Financial Crisis Inquiry Commission, said it even more plainly:

"𝘛𝘩𝘦 𝘴𝘪𝘯𝘨𝘭𝘦 𝘮𝘰𝘴𝘵 𝘪𝘮𝘱𝘰𝘳𝘵𝘢𝘯𝘵 𝘥𝘦𝘤𝘪𝘴𝘪𝘰𝘯 𝘪𝘯 𝘦𝘷𝘢𝘭𝘶𝘢𝘵𝘪𝘯𝘨 𝘢 𝘣𝘶𝘴𝘪𝘯𝘦𝘴𝘴 𝘪𝘴 𝘱𝘳𝘪𝘤𝘪𝘯𝘨 𝘱𝘰𝘸𝘦𝘳."

Some are drawn to Andreessen’s worldview. Others to Buffett's approach. But on this question, there is no disagreement.

12 Flags Global builds on this simple idea: we invest in businesses with pricing power.

[Siddharth Kapoor @SiddharthKapo]

@CrosscheckC @bucketshopcap GOAT tweet

[Henrick Johansson @compliantvc]

A European founder asked to meet up with me

His startup is only 7 years old but just hit €7,000 MRR

Incredibly fast growth

I applied for a meeting permit with the EU government to ask permission to meet him for coffee

5 months later, the EU government gave the go-ahead and charged a €75 VAT fee

We finally met up yesterday and had an insightful, yet quick 4 hour coffee chat during business hours

I decided to invest €15k into his business

Just got word that it's the 4th-largest venture investment in the EU this year

I expect he'll do great things and turn this startup into one of the EU's largest businesses

I could even imagine it breaking the €500k annual revenue mark someday (yes, it's a long shot, but it could happen)

Never been more excited to be building in the EU

[Siddharth Kapoor @SiddharthKapo]

@sidecarcap Great post

[Siddharth Kapoor @SiddharthKapo]

@WTCM3 🙌👏

[Siddharth Kapoor @SiddharthKapo]

@morganhousel Goat tweet

[Siddharth Kapoor @SiddharthKapo]

@ozanktarman Have a great time!

[Siddharth Kapoor @SiddharthKapo]

@RishiGosalia Counterpoint would be that confirmation bias increases with time spent

[Siddharth Kapoor @SiddharthKapo]

@emergingintel @ozanktarman English version please!

[Siddharth Kapoor @SiddharthKapo]

@ozanktarman Druck says buys stocks whenever banks fail

[Siddharth Kapoor @SiddharthKapo]

@BazCap 😂

[Siddharth Kapoor @SiddharthKapo]

@justbrosef 😂

[Siddharth Kapoor @SiddharthKapo]

@ozanktarman Congrats!

[Siddharth Kapoor @SiddharthKapo]

@BazCap Breathing exercises

[Siddharth Kapoor @SiddharthKapo]

@BazCap @161phi Equities front running fixed income mkts?

[Siddharth Kapoor @SiddharthKapo]

@BazCap A lot of other pts made in the thread are valid also, hard to attribute/disentangle which was most/least important

[Siddharth Kapoor @SiddharthKapo]

@BazCap One of the drivers was lower velocity of money, due to increasing reg requirements / capital adequacy ratios. So CBs printed $ but it sat on bank balance sheets. V diff in 20/21

[Siddharth Kapoor @SiddharthKapo]

@BazCap this is a good take

[Siddharth Kapoor @SiddharthKapo]

@Post_Market @honam @aashaysanghvi_ Not in the past decade but $Veev comes to mind

[Siddharth Kapoor @SiddharthKapo]

@MadThunderdome @Keubiko @BagholderQuotes Iconic