Asset-Light Bet

The record

1. 1899

   Coca-Cola

   Held in part

   Whether to grant away national bottling rights to Coca-Cola or keep bottling in-house

   • Grant bottling rights away — Hand near-national bottling rights to Thomas and Whitehead for a dollarchose this
   • Keep bottling in-house — Retain and fund bottling operations within the company

   Stated reasonCandler believed bottling would fail and thought the men were doomed

   What happened

   • 1920 bottling operations established: over 1,200 bottling operations had been established
   • 2002 U.S. bottler consolidation: 278 domestic bottlers in 1985 fell to 79 by 2002
   • 2024 concentrate share of net operating revenue: concentrate operations were 59% of net operating revenue and bottling 41%
   Read the full analysis →
2. 2015

   Wayfair

   Held in part

   Should Wayfair own fulfillment for bulky home goods or stay drop-ship asset-light?

   • Build owned fulfillment network — Own warehouses, inventory, and delivery for bulky goods via CastleGate.chose this
   • Stay pure drop-ship — Keep suppliers holding and shipping goods, remaining asset-light.

   Stated reasonOwning the supply chain for bulky home goods provides delivery speed and control that keeps Amazon from taking share.

   What happened

   • 2024 annual net loss: lost $492 million in FY2024, narrowed from $738 million in 2023 and $1.331 billion in 2022
   • 2024 net revenue: $11,851 million, down 1.3% year over year
   • 2025 CastleGate revenue penetration: about 25% of revenue ships from own centers, up about 400 basis points in a year
   Read the full analysis →
3. 2016

   Yum Brands

   Held

   Whether to convert from operating restaurants to a pure-play franchisor collecting royalties

   • Become pure-play franchisor — Spin off China and refranchise to a capital-light royalty modelchose this
   • Keep operating restaurants — Retain company-owned units and operating control of outcomes

   Stated reasonA franchised restaurant ties up none of Yum's capital and pays a royalty that falls to profit at a high rate

   What happened

   • 2024-12-31 Percent franchised: 98% franchised by December 31, 2024, easing to 97% a year later
   • 2024 Total revenues: $7.55 billion in FY2024, up roughly 7% from the prior year
   • 2024-12-31 Counterparty concentration: Over 15,400 units in mainland China — roughly a quarter of the footprint on one licensee paying 3%
   Read the full analysis →
4. 2017

   Hilton

   Held

   Whether to keep owning hotel real estate or spin it off and become an asset-light brand franchisor

   • Spin off real estate — Separate buildings into a REIT and become a brand franchisorchose this
   • Keep owning hotels — Double down on owning appreciating real estate and the property cycle

   Stated reasonFranchise fee cash flow is far steadier than the lumpy, leveraged property cycle, and each new franchised hotel adds near-pure-margin royalty with almost no added cost

   What happened

   • 2024 Franchise and licensing fees: $2,600 million in 2024, up from $2,370 million in 2023 and $2,068 million in 2022
   • 2024 Net unit growth: net unit growth hit 7.3% in 2024 with 973 hotels opened and a pipeline of 3,578 more
   • 2023 Owned/leased footprint: about 51 of 7,530 properties owned or leased at end of 2023 — under 1% of its portfolio
   Read the full analysis →
5. 2022

   Shopify

   Reversed

   Whether to build its own logistics network or stay asset-light

   • Build logistics in-house — Acquire fulfillment assets to compete with Amazonchose this
   • Stay asset-light — Sell software and take a toll on transactions

   Stated reasonTo stand up a logistics network that would compete head-on with Amazon's fulfillment empire

   Committed$2.1 billion (paid for Deliverr, its largest acquisition ever)

   What happened

   • 2023-05-03 logistics business divestiture: Shopify sold the entire logistics business to Flexport for a 13% equity stake, not cash
   • 2023-05-03 workforce reduction: cutting 20-23% of its workforce
   • 2023-06-06 deal completion: Shopify completed the sale of Shopify Logistics to Flexport
   Read the full analysis →
6. 2023

   Instacart

   Held

   Whether to go public and let markets price the asset-light model

   • File to go public — List on Nasdaq and face public-market pricing.chose this
   • Stay private — Retain the pandemic-era private valuation narrative.

   Stated reasonInstacart had to face public markets after lockdown ordering normalized

   What happened

   • 2023-09-18 IPO valuation vs 2021 peak: IPO priced at $30, roughly $9.9B valuation, a fall of about 75% from the 2021 peak
   • 2023 net income/loss: net loss of $1.622B in 2023, the company's first full year as a public entity
   • 2024 net income: $457M of net income in 2024 on $33.5B of GTV
   Read the full analysis →
7. 1935

   Mars

   Held

   Should a candy company enter and hold pet care as a long-term adjacency?

   • Enter and hold pet care — Buy a dog-food canner and compound it for generationschose this
   • Stay a candy company — Focus on the core chocolate and confectionery business

   Stated reasonPermanent private ownership let Mars treat pet care as a habit it could compound rather than a bet on a schedule.

   What happened

   • 2023 share of revenue from pet care: Pet care accounts for roughly 59% of revenue - about $29.5 billion of more than $50 billion
   • 2017-09-12 deepening into veterinary care via VCA: Mars completed its ~$9.1 billion purchase of VCA, divesting 12 hospitals for the FTC
   Read the full analysis →
8. 2016

   Yum Brands

   Held

   Whether to refranchise from 77% to 98% funded by a leveraged recapitalization targeting ~5.0x EBITDA

   • Debt-funded refranchising — Refranchise to 98% and finance the trade with ~5.0x EBITDA leveragechose this
   • Keep owning restaurants — Stay at 77% franchised with equity-funded restaurant assets

   Stated reasonThe royalty economics are gorgeous—a thin take rate on enormous system sales with almost no cost to serve—and the trade let Yum return capital to shareholders

   What happened

   • 2024 franchise share of units: 98% of units operated by independent franchisees or licensees
   • 2025 franchise share of units: slipped back to 97% on a larger base of more than 63,000 units
   Read the full analysis →
9. 1991

   Seven-Eleven Japan

   Held

   Should the Japanese licensee take control of the bankrupt American parent that owned the 7-Eleven brand?

   • Acquire the licensor — Japanese licensee takes controlling stake in bankrupt American parentchose this
   • Remain a licensee — Continue operating under the license without owning the parent

   Stated reasonA friendly rescue of a failing American company that had defaulted and filed bankruptcy.

   Committed$430 million (for a 70% stake in Southland)

   What happened

   • 2005 ownership of 7-Eleven, Inc.: Seven-Eleven Japan bought out the remaining minority and folded 7-Eleven, Inc. into a wholly owned subsidiary under Seven & i Holdings
   Read the full analysis →
10. 2007

    Red Bull

    Held

    Build an owned content and media machine to defend a commodity drink, rather than renting brand meaning through conventional advertising

    • Own the content machine — Build a film studio, TV channel and magazine to manufacture brand meaningchose this
    • Rent conventional advertising — Buy TV spots and media from others to promote the drink

    Stated reasonContent is the cheapest way to move a can and to make a commodity product un-poachable

    What happened

    • 2024 net sales: net sales rose 6.4% to €11.2 billion, on 12.7 billion cans sold
    Read the full analysis →
11. 2021

    Subway

    Held

    Whether to tighten franchise terms or cut fees when franchisees asked for relief

    • Tighten renewal terms — Raise royalty or add exit penalties and compliance clauseschose this
    • Cut royalty to franchisees — Reduce the royalty from 8% to 4.5% as operators requested

    Stated reasonMaximize the fee stream extracted from franchisees rather than relieve them

    What happened

    • 2025 net income: net income rose to $688 million in 2025, up from $397 million in 2024 and just $15 million in 2023
    Read the full analysis →
12. 2024

    Marriott

    Held

    Whether to honor the contractual put option and buy the Sheraton Grand Chicago

    • Buy the hotel as obligated — Honor the 2017 settlement put option and purchase the property.chose this
    • Contest or refuse the obligation — Attempt to avoid the contractual purchase the owner exercised.

    Stated reasonA contract obligated Marriott to buy, via a put option granted in a 2017 litigation settlement from the Starwood acquisition.

    Committed$500 million total ($300 million for the leasehold and $200 million for the land)

    What happened

    • 2024 hotel ownership vs asset-light model: Marriott owns a $500M skyscraper despite owning or leasing less than 1% of its hotels
    Read the full analysis →