I was listening to a podcast featuring Greg Reyes, the former CEO of Brocade (now a subsidiary of Broadcom), in which he outlined the 6 keys to identifying a company with massive upside potential.
An interesting exercise is to score POET on his 6 criteria:
1) Must be focused on a huge and growing TAM (total addressable market) - so the TAM has to be in the tens of billions of dollars
2) Does the company solve an acute customer pain point? Is the technology critical in helping the customer save money or make money?
3) Does the company have novel and defensible core intellectual property?
4) Does the company have an experienced and competent management team that can scale?
5) Is the company well funded?
6) Does the company have a robust board of directors, with no customer sitting on the board, that can control the outcome?
My score?
1) yes
2) yes
3) yes
4) Yes for the most part (80%?)
5) Funded yes, but not well-funded (60%?)
6) Yes, but this needs work (75%?)
The 3 criteria that need work are easily addressed. The first three that scored very well, are also the most difficult to achieve.
Another criterion is that the stock should be over $5 to attract institutional attention.
