P&L Investment Framework

A strategy for finding investment opportunities by looking at your company's expenses (P&L) and identifying tools that become essential to operations.

Core Investment Strategy

• Look at your company's expenses (P&L) to find investment opportunities
• Identify tools your company wouldn't want to cancel
• Find products other companies will likely need/use too
• Focus on products that solve real operational problems

Example Case Study: Retool

• Problem it solved:

  • Every tech company needs admin panels
  • Companies constantly build custom internal tools
  • Non-developers need to access/modify database information
  • Traditional solutions require developer time and maintenance

• Why it's successful:

  • Serves internal tooling needs (50-60% of all software is internal facing)
  • Grew from $500k to $2M ARR in 2018
  • Reached $100M ARR by 2024
  • Backed by major investors like Sequoia
  • Current valuation: $3.7B

Key Indicators for Good P&L Investments

• Tools that:
  • Solve universal business problems
  • Reduce developer workload
  • Enable non-technical users
  • Have clear ROI
  • Become essential to operations
  • Are difficult to replace once implemented

Investment Framework Application

• Identify pain points in your own business operations
• Look for solutions you personally use and wouldn't want to cancel
• Evaluate if other companies likely have the same problems
• Consider if the solution could become an industry standard
• Assess whether the product has network effects or high switching costs