Chapter 8

The T Algorithm

AT SOME POINT, there will be a Fifth Horseman, a company that
combines a market valuation of one trillion dollars with sufficient
market dominance to define its corner of the world. Or more likely,
one of the Four will be replaced. Can we identify companies more
likely to join this elite group?
While history may not repeat itself, it does rhyme, as Mark Twain
purportedly said. Among the Four, these eight factors are prevalent:
product differentiation, visionary capital, global reach, likability,
vertical integration, AI, accelerant, and geography. These factors
provide an algorithm, rules for what it takes to become a trillion-dollar
company. In our work at L2, we use the term T Algorithm to help
firms better allocate capital.
Here are the eight factors:

1. Product Differentiation

The key competence around building shareholder value in retail used
to be location. People didn’t have the opportunity to go much farther
than the corner store. Then it was distribution. The railroads gave
consumers the opportunity to enjoy different products produced at
scale, which lowered prices and gave them brands they could depend
upon.