The market’s biggest winners are playing a different game entirely.

Finding 10x investments isn’t about running the best DCF model or guessing next quarter’s earnings better than the next guy.

History shows that the market’s biggest winners have gotten their strategy right early and simply ridden massive waves to incredible heights. Maybe they didn’t know what they were doing at the time (ex. Google’s founders didn’t know what they had on their hands early on, whereas Uber $UBER ( ▲ 0.49% ) founder Travis Kalanick did), but we can learn from the last two decades of investing to project out the next 10x (100x?) stocks.

Today, I’m going to dive into how we should understand changes in discovery and distribution should be understood by investors and why, sometimes, going for scale above all else is the best strategy.

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We like to talk about a company’s products and the brand as the drivers of success, but the truth is, the sales & marketing side of the business is more important than product design. And if you don’t get distribution right, you’re sunk before you begin.

But how products are discovered and how they’re distributed has changed dramatically over the past 30 years.

Growing up in the 1980s, there was no long tail of niche brands. We all wore Levis, ate Kraft Mac & Cheese, and drank either Coca-Cola or Pepsi products (depending on where you lived).

The process of discovery and distribution was straightforward.

Product companies (brands) used mass media (TV, radio, print) advertising to reach customers and make them aware of their products. This is how they reached eyeballs.

They then leveraged that brand awareness through distributors and retailers to earn and maintain shelf space. Celebrity endorsements and the constant drumbeat of advertising built trust and familiarity with brands, and we didn’t even realize it.

The image above doesn’t really show the power dynamics if you go back to say 1990. A big brand like Coca-Cola $KO ( ▲ 0.34% ) or Procter & Gamble $PG ( ▲ 0.1% ) had brand awareness and market share in their categories, and that gave them power over distributors and retailers, who were relatively weak in the supply chain. If you didn’t have Kraft products or Old Spice, customers would wonder what you were doing.

I like telling the story of a friend who distributed Budweiser products.

He walked into a bar, saw a new local tap handle, and asked how many kegs they sell in a week.

The owner says, “one or two.”

“How many kegs of Bud Light do you sell per day?”

“8 or 9.”

“If you want your delivery tomorrow, you’ll rip that tap out right now.”

That was the power of brands and distribution.

Big brands acquired complementary big brands and created consumer goods conglomerates that won by buying consumer mind share and having the best distribution, NOT the best products. Imagine how much power the Pepsi distributor had when they brought half the products in the drinks and snacks aisle to a retailer. You don’t mess with that guy!

As brands got stronger and consolidated, the natural response on the discovery side was to consolidate around this model.

In media, Disney acquired ABC and ESPN and paired them with Disney’s own assets, including TV and radio. Brands could advertise across all their properties and maintain customer mindshare (aka brand awareness). Fox, NBC, and Paramount (CBS) had similar models, bundling media assets to gain some bargaining power with customers (brands). But the value was being the path to eyeballs.

In retail, imagine how hard it was to make money without scale. Enter big-box retailers who can negotiate better prices from even the biggest brands. Eventually, Walmart reached a scale where it could dictate terms to supply.

The point here is that the end state of the pre-Internet consumer goods market was very predictable and stable by the late 1990s.

Brand companies consolidated to maximize distribution power over retailers.

Media companies provided eyeballs for brands to reach.

It was all going according to plan until the internet came along and ruined everything. Over the last 30 years, owning big brands has been a path to underperforming the market.

If you think I’m cherry picking by using a 30-year chart, look at the 20-year chart…

What happened to big brands sometime between 1996 and 2016?

They lost their power!

Time watching TV declined and moved to the internet. Netflix $NFLX ( ▲ 1.06% ), Facebook $META ( ▼ 3.83% ), Spotify $SPOT ( ▲ 1.27% ), and Google $GOOG ( ▼ 0.58% ) ate up more and more of our attention.

That may not have mattered if the cost to reach eyeballs remained prohibitively high for smaller companies, but the opposite happened. Discovery and distribution have converged in one place, and the ability to reach a small number of targeted customers has improved.

In other words, discovery has been democratized. I can start a shoe company in my garage and advertise next to Nike on Facebook or Google. No one is muscling me out with their distribution power or pricing me out of discovery.

Power was with the company that owned the discovery and the distribution.

If you’re shopping on Amazon, product companies need to advertise to get discovered on Amazon.

If you’re a driver, Uber $UBER ( ▲ 0.49% ) is both your distributor and how customers discover you.

That big brands no longer have power over retailers because there’s infinite shelf space online.

Brands have been commoditized. Power now lies with the apps people choose to interact with.

To Walmart, it matters that they have shelf space filled with Pepsi and P&G brands.

On Amazon or Meta, it doesn’t matter if the big brands are there. They’ll fill digital ad space or, in the case of Amazon, real shelf space with smaller, niche retailers. For the longest time, Nike wasn’t on Amazon. Did that hurt Amazon or Nike more?

This dynamic has happened time and time again in consumer products, but it’s only now making its way to slower-moving industries like healthcare and housing. But it’s coming!

If you take one thing from this article, I hope it’s this: Power on the internet is held by companies people CHOOSE to interact with.

Before I get to the companies I think will win long-term, we need to go over why these companies aren’t profitable (yet).

What most investors don’t understand about the industry dynamics above is how important scale is to the equation.

In the physical retail world, having one more store was nice, but it didn’t change the game. Being successful in New York didn’t necessarily mean you would succeed in Michigan, much less India.

Scale was nice, but it wasn’t the be-all, end-all.

Walmart leveraged scale, but Target, Sears, Woolworth’s, and so many others have either struggled or are gone, despite having scale.

On the internet, scale is EVERYTHING!

Notice, I wrote about the value generated by Netflix, Google, and Meta. I didn’t mention Paramount, Yahoo!, and Myspace.

Win and scale, or you have nothing!

This is why founders of some of the biggest companies in the world focused on growth and scale at all costs long before turning the money machine on. They knew attracting a new customer today was infinitely more valuable than having a dollar of profit.

So, they spent years, sometimes decades, burning cash to reach a global scale. Once they won, they turned on the money machine.

Uber understood this early on and only recently increased the take rate to start making money.

Netflix has been playing this game for decades and only recently decided to start raising prices and cutting content spend.

Amazon was famous for trading profit for growth…until it didn’t.

One of the reasons I focus on non-financial metrics, like the number of users, when I look at companies is that I’m asking whether they’re winning in their market and building scale. That’s often more important to the asymmetric thesis than the profit margin today.

Someone will build a global scale in markets like autonomy, healthcare, housing, AI, etc. I want to own those stocks before the market realizes how valuable they are.

Over the past few weeks, I’ve seen the market misunderstand everything I’ve written here. Let’s look at three examples from the Asymmetric Portfolio.

The market has focused on the Novo Nordisk lawsuit and Hims & Hers $HIMS ( ▲ 3.9% ) being the enemy of the pharma industry, but I see something completely different.

Hims & Hers pushed compounding so hard because it allowed the company to attract users with a low-cost GLP-1 option that was differentiated by cost.

Legality aside, strategically, this was amazing because it helped the company grow to 2.5 million users and enabled the acquisition of Zava and Eucalyptus, which will bring the company over 4 million users globally.

Novo could have fought Hims & Hers’ actions for years in court, giving up potential revenue along the way. But it’s already losing market share to Eli Lilly $LLY ( ▲ 0.8% ) and needs to attract customers based on price, not differentiated performance.

It is more important for Novo to get access to Hims & Hers’ user base and its discovery mechanism than it is to “win” the patent case. It had to give in on the lawsuit and distribution deal because customers aren’t going to Hims & Hers demanding Ozempic; they’re going to look for weight loss solutions.

Supply is being commoditized and forced to compete on price.

Remember, people choose the Hims & Hers app for healthcare solutions.

And that drives Hims & Hers’ incentives in this deal. What matters for Hims & Hers right now is winning with customers, which in this case means offering branded solutions as long as they’re at a low price. It needs to go from ~4 million users today to 100 million a decade from now.

Losing market share to Ro (as has happened recently) would be terrible, so its incentives were to make a deal with Novo Nordisk even if the cost is a lower margin short-term. They don’t need to have the money-making machine turned up high; the customer magnet is more important.

What you’re seeing in real time is the change in discovery and distribution in healthcare. No doctor or individual pharmacy can/will say boo to pharma companies about their high prices. Hims & Hers did…and big pharma blinked.

Next thing you know, a million new customers go to Hims & Hers looking for weight loss solutions, and a dozen options will compete for their dollars on the platform. Customers will have a balance of performance and price as they’ve never seen from a doctor. Supply in healthcare is being commoditized, as consumer goods brands have been over the past 30 years.

The only way Hims & Hers gets to a position of power is with scale.

Scale is everything.

Who cares about 2026 margins?

What matters is becoming the healthcare platform of the future and attracting/acquiring the next million users.

The money machine can be turned on later.

If you’ve read Asymmetric Investing for long, you know I think Zillow is one of the highest potential stocks on the market for the exact reasons I’ve highlighted here.

We’re going from a fragmented world where realtors hoarded information and leveraged the “complexity” of buying a home in order to extract massive fees from home sellers.

Zillow can disrupt the status quo over time, but it needs to have a dominant market position first! Costar fumbling with Homes.com is great, and Redfin selling to a mortgage company was a sign they weren’t going to take enough share to matter. So, Zillow continues to lead in the traffic that matters.

How profitable can Zillow be if they’re the #1 place to list/discover a home, apartment, mortgage, home insurance, etc?

I don’t know, but it’s worth more than the company’s $9.9 billion market cap today.

And one place where I think I see the future clearly, and most investors get the market completely wrong, is ride-sharing. Maybe I’m wrong, but if I’m right, the upside is high.

Uber (and to a lesser extent Lyft) is simply a marketplace matching transportation options with users.

Does autonomy change that? No, it makes the opportunity bigger.

I think Uber has been a great example of going all-in to reach scale and then turning on the profit machine. It’ll do the same in autonomy, bringing autonomous supply from Lucid, Nuro, Waymo, Wayve, and more to the platform.

Who cares what kind of autonomous vehicle you get in as long as it’s fast and cheap?

Distribution and discovery are what matter in ride-sharing, and Uber has the scale to win.