Dennis Hong ( @DennisHong17) Framework For Understanding Optionality is a MUST READ.

S/O to @ClarkSquareCap for sharing!

Source: https://files.constantcontact.com/3b2a12b0701/26a3e1f6-a1ba-4aa4-937a-011361abb2da.pdf

Here are Dennis' Four Types of Optionalities

Optionality #1: New Business / Businesses

- Amazon/JD forming logistics businesses
- Tencent/Sea, Ltd forming payments businesses

In essence, using core biz to develop new (asymmetric) opportunities.

Where to find these options: in the business' operating cost structure

Optionality #2: Product / Category Expansion

- JD's "JD Health" business
- Tinder's "Boost" feature
- Square's "For Retail" and "For Restaurant"

How to find: focus on the customers’ objectives & determine whether the current or potential products/services fulfils objective

Optionality #3: Strategic Shift / Evolution

- NFLX from DVD to streaming
- Adobe's on-premise to SaaS

Optionality arises when a company recognizes a natural evolution away from (but still related to) their current business towards one with a superior customer value proposition

Optionality #4: Geographic Expansion

- Shopee in Brazil
- Starbucks into international markets

"Geographic expansion occurs when a company expands to a new region or country in hopes of replicating
its success from its core market."