Finding 10x companies
Finding a company that increases 10 times its value is a bit of an audacious goal. Here are some things to look for:

  • Has a smaller size. The bigger a company is, the harder it is for it to multiply in size.

  • Doesn’t have to be profitable. Because going from not profitable to profitable will get rewarded by Wall Street

  • Revenues are growing quickly and you believe will continue to grow.

  • Rapidly improving fundamentals.

  • Recurring revenue is enormously important

  • Large and increasing margins
Joshua's avatar
Hey Nathan, love your content. Do you see similar 10x returns in other markets (not stocks)? Curious about niche marketplaces and investments there.
Nathan Worden's avatar
Thanks Joshua! 10x returns are pretty hard to find, whether its in stocks or elsewhere. You run into the problem of scams and pyramid schemes when people are shooting for those lofty returns, especially in a short time frame. I should probably add to my post "Has many years if not decades of growth ahead of it." Anything aiming to 10x in the span of only a couple of years is a big red flag.

If you think about other asset classes, pretty quick I would say you're aren't going to find 10x potential in bonds, commodities, or cash. Probably not real estate either... although some commercial real estate deals in certain metropolitan areas may have 10xed on a 30 year time frame(?) But those kinds of deals wouldn't have been available to normal investors like you and me, and would have been extremely lucky to buy in the right location.

The other assets that have 10xed would be luxury markets like fine art. Those haven't been available to normal investors either, although that is starting to change. (See Masterworks, link below)

Cryptocurrency is an area where those kinds of returns have occurred, but honestly those have been pump and dumps. If you're going to seriously look into crypto, I would start by learning a lot about assets that have a hard cap on their supply (i.e. Bitcoin). Bitcoin is an interesting case because it has a legitimate, (albeit small) chance at being an open, permissionless, neutral, censorship resistant form of holding wealth. But it does currently have problems with scalability and could definitely be targeted by governments in coming years, so there is huge risk there. Not something to put a lot of money into if you do end up liking what it has to offer. If it ends up not working out, a little is all you want, if it makes it big, a little is all you need.

Owning a business or investing in a small business is probably the best, lowest risk, highest probably chance we have at 10x returns, and even then you have to expect the odds to be quite low that you will find one.