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Common strategic "plays" in the last decade

We went through hundreds of businesses to find the 20% of strategies that explain 80% of the new business opportunities created in the last 10–15 years. Here are seven of them.

If you study enough companies, patterns start to emerge.

When we created the Pareto MBA, we went through hundreds of businesses across industries and geographies. We were looking for the 20% of strategies that explain 80% of the new business opportunities created in the last 10–15 years. The kind of plays that keep showing up, regardless of whether you're looking at a Swedish PE firm or a San Francisco SaaS company.

Here are seven of them.

1. DTC Category Disruption

The playbook: bypass traditional retail channels, capture the margin that used to go to distributors and retailers, and own the customer relationship directly.

This play was enabled by three things happening at roughly the same time. First, performance marketing on Facebook and Instagram made it possible to acquire customers at a predictable cost. Second, Chinese contract manufacturing (especially via Alibaba and later Faire-type platforms) gave small brands access to production capacity that previously required huge upfront investments. Third, influencer marketing created a new distribution channel that traditional brands were slow to adopt.

Daniel Wellington is the Swedish poster child here. Filip Tysander built a watch brand to hundreds of millions in revenue by sending free watches to Instagram influencers and tracking coupon codes. No retail stores, no distributors, no traditional advertising. Warby Parker did the same in eyewear, cutting out the Luxottica middleman and selling glasses online for $95. RevolutionRace went from zero to a publicly listed outdoor apparel company using the same formula: Chinese manufacturing, Facebook ads, influencer seeding.

The more recent wave of DTC brands looks a bit different though. The Facebook arbitrage window has closed (CACs have roughly tripled since 2020), so the newer success stories tend to have either a genuine product innovation or a built-in distribution advantage. Poppi, the prebiotic soda brand, scaled to over $500M in revenue and got acquired by PepsiCo for roughly $2 billion in early 2025. Liquid Death sells water in tallboy cans and hit $333M in revenue in 2024 by treating branding as entertainment. Skims (Kim Kardashian's shapewear brand) is approaching $1 billion in revenue by combining celebrity distribution with genuinely good product-market fit. And Feastables (MrBeast's chocolate brand) reportedly did $250M in sales by turning every product launch into content.

The lesson: the DTC play still works, but the cost of customer acquisition has gone up enough that you need either an unfair distribution advantage (a massive audience, a viral product mechanic) or a product that's actually better. The "generic product + cheap Facebook ads" window is probably closed.

2. Buy & Build with Multiple Arbitrage

This is one of the core private equity strategies. The logic: buy small companies at low valuations (say 5–7x EBITDA), improve their operations, bolt them together into a larger platform, and sell or list the combined entity at a higher multiple (10–15x or more). The gap between what you pay and what you sell for is called "multiple arbitrage," and it works because larger companies tend to trade at higher multiples than smaller ones.

The value creation playbook varies. In some industries, it's about centralizing back-office functions and purchasing. In others, it's about cross-selling between acquired companies. Sometimes it's just about professionalizing the management of a company that was run informally by its founder.

Constellation Software is probably the best example in the world right now. Founded in 1995 by Mark Leonard, they've acquired over 1,000 vertical market software companies as of 2025. Revenue hit $10 billion in 2024 (up 20% year-over-year) and they spent $1.8 billion on acquisitions in that year alone. The model: buy small, niche software businesses that serve specific verticals (think: software for managing public transit systems, or for running tennis clubs), keep the existing teams and let them operate autonomously, push the excess cash flow up to capital allocators who deploy it into more acquisitions. The stock has compounded at roughly 34% annually since IPO in 2006. A 100x return in about 15 years.

LIFCO, the Swedish serial acquirer, runs a similar playbook across industrial niches. And the broader Nordic PE scene (EQT, Storskogen, Indutrade, Addlife) has been one of the most prolific buy-and-build environments in the world.

The key thing to understand: the "value creation" in buy-and-build isn't just financial engineering. The best operators (Constellation being the gold standard) have developed genuine operational playbooks that make acquired companies better. The worst ones just pile on debt and hope the multiple expansion saves them. Knowing the difference matters.

3. Subscription Models

Salesforce pioneered the idea of selling enterprise software as a monthly subscription instead of a one-time license back in 1999. Since then, subscriptions have eaten the world.

The economics are compelling. Recurring revenue is more predictable than one-off sales. It allows you to spread the customer acquisition cost over many months (or years) of payments. It creates switching costs. And it gives you a continuous relationship with the customer, which means you can upsell and cross-sell over time.

What's interesting is how far subscriptions have spread beyond software. Spotify took music from ownership to access. Netflix did the same for video. Peloton tried it for fitness (with mixed results). Dollar Shave Club did it for razor blades. Even Volvo now sells cars on subscription.

The subscription model has also fundamentally changed how companies are valued. A SaaS company with $10M in annual recurring revenue might be worth 10–20x that revenue. A traditional company with $10M in one-off sales? Maybe 1–3x. This valuation premium has driven an enormous amount of business model innovation (and, to be fair, some silly pivots where companies tried to force-fit subscriptions onto products that didn't need them).

Understanding the mechanics of subscription businesses (LTV, CAC, churn, net revenue retention, payback period) is essential no matter which industry you're in. Because even if you're not running a subscription business, your competitors or suppliers probably are.

4. Regulatory-Driven Tech Companies

There are hundreds of examples of businesses being created as a direct result of new regulations or government subsidies. Tesla is the most obvious one: it probably wouldn't exist in its current form without the US federal EV tax credits, California's zero-emission vehicle mandates, and the ability to sell regulatory credits to other automakers (which generated billions in revenue during Tesla's early years).

But Tesla is just the tip of the iceberg. The EU's GDPR regulation created an entire industry of compliance software companies. PSD2 banking regulation in Europe opened the door for fintech companies to access bank data and build new financial products. Carbon credit markets (created by regulation) spawned hundreds of climate tech startups.

The biggest recent wave of regulatory-driven business creation has been in the green transition. The US Inflation Reduction Act (2022) committed roughly $369 billion in subsidies for clean energy investments. The EU's Green Deal Industrial Plan, Net-Zero Industry Act, and loosened state aid rules have been channeling hundreds of billions into batteries, solar panels, heat pumps, and hydrogen technology. Every one of those subsidy pools creates opportunities for new companies, and creates demand for the companies that supply them.

That said, the green transition is also the best recent example of what happens when regulatory-driven enthusiasm collides with execution reality.

Northvolt, once Europe's flagship battery company, filed for bankruptcy in Sweden in March 2025 after raising over $15 billion in total funding. The company managed to reach roughly 1 GWh of production capacity at its Skellefteå gigafactory, against a target of 16 GWh. BMW cancelled a $2 billion supply contract. The core problem: Northvolt couldn't match the production efficiency of Asian competitors (particularly CATL and LG Energy Solution), who had a roughly 30% cost advantage.

Stegra (formerly H2 Green Steel), another Swedish mega-project building a hydrogen-powered steel plant in Boden, is now facing the same challenges. The company has raised around €6.5 billion, but its funding gap has reportedly tripled in recent months to roughly €1.5 billion. Its CFO resigned, it hired the same restructuring firm that handled Northvolt's collapse, and co-founder Harald Mix stepped down as chairman. The pattern is familiar: capital-intensive green infrastructure, ambitious timelines, and the uncomfortable reality that Chinese competitors can do it cheaper.

And at the regulatory level itself, the EU hit the brakes in early 2025 with its "stop the clock" directive, delaying the CSRD (Corporate Sustainability Reporting Directive) by two years for most companies and weakening the scope significantly. The number of companies subject to CSRD reporting could drop by roughly 80% under the proposed amendments. The European Parliament voted it through 531–69 in April 2025. The message was clear: even the EU itself acknowledged that the regulatory burden had gotten ahead of what businesses could absorb.

The pattern is still worth studying, because it's predictable. When governments announce large regulatory shifts or subsidy programs, you can map out which industries will be affected and which types of companies will need to be built. The people who read regulation carefully (boring as it sounds) tend to spot these opportunities first. But Northvolt and Stegra are reminders that subsidies alone don't build viable businesses. You still need to execute, and you still need to be competitive on cost.

5. Vertical Integration & Private Labels

The logic is simple: instead of selling other companies' products in your store (or on your platform), you launch your own.

Costco's Kirkland Signature is the classic example. Kirkland generates over $60 billion in annual revenue and is one of the largest "brands" in the world, despite only being sold in Costco stores. Amazon has done the same thing with AmazonBasics (and dozens of other private labels). IKEA has been doing it since the 1950s.

But this play extends well beyond retail. Many marketplace businesses eventually integrate vertically. Booking.com started as a pure middleman connecting hotels with travelers, but now also offers its own payment processing, insurance products, and connectivity solutions. Spotify started as a music distribution platform but has invested heavily in original podcast content (paying hundreds of millions for exclusive deals). Netflix went from licensing content to producing its own, and now Netflix Originals account for a massive share of viewing hours.

The strategic logic is usually about capturing more of the value chain. If you're already the distribution platform, you know exactly what's selling and at what margins. Launching your own version of the best-selling products is relatively low-risk because you already have the demand data. The moat you build is that you control both the shelf and the products on it.

The risk, of course, is that you piss off your suppliers. Amazon's private label strategy has been a constant source of tension with the third-party sellers on its marketplace. But for the companies that execute it well, vertical integration tends to improve margins and increase customer lock-in.

6. Product-Led Growth Flywheels

This is the strategy where the product itself becomes the primary driver of customer acquisition. Instead of relying on a sales team or advertising budget, you build a product that "spreads itself" through usage.

Calendly is the textbook example. When you schedule a meeting with someone using Calendly, they see the product in action. If they like it, they sign up. Every meeting booked is a marketing event. Calendly grew to over 10 million users and $100M+ in ARR this way, with minimal sales effort in the early years.

Slack did the same thing: one person on a team starts using it, invites their colleagues, and suddenly the whole company is on Slack. The free tier removes all friction from adoption, and the paid features kick in when usage gets serious enough. Slack went public at a $23 billion valuation in 2019 without ever having a traditional sales team for most of its early growth.

Mentimeter (a Swedish company) grew globally because every time a presenter uses it in a meeting or lecture, the entire audience sees the product. Spotify's free tier serves a similar function: every free user is a potential paid subscriber, and the social features (shared playlists, "what your friends are listening to") create organic distribution.

More recent PLG success stories include Figma (collaborative design tool that spreads through design teams), Miro (online whiteboard that grows as teams invite collaborators), and Notion (workspace tool where sharing a page means sharing the product). ChatGPT might be the most dramatic PLG story of all: it reached 100 million users in two months, entirely through word of mouth and the product experience itself.

The pattern: these products solve a genuine pain point, offer immediate value on the free tier, and have a built-in mechanic where using the product naturally exposes new potential users to it. When all three conditions are met, growth can compound at rates that traditional sales-driven companies can't match.

7. AI-Native Businesses

This is the newest play on this list, and it's moving faster than any of the others.

OpenAI went from roughly $200 million in revenue in early 2023 to a $13 billion annual run rate by mid-2025. Anthropic grew from $87 million to $7 billion in annualized revenue in under two years. Cursor, an AI coding tool, went from zero to $100 million ARR in 21 months with about 20 employees, then hit $500 million by mid-2025, and reportedly crossed $1 billion by the end of the year. Midjourney did $200 million ARR with 10 people.

Data from Stripe shows that AI companies reach $30 million in annualized revenue in a median of 20 months, compared to 60+ months for traditional SaaS companies. And they're doing it with a fraction of the headcount.

There are several distinct "layers" of AI businesses being built right now. At the infrastructure level, you have the foundation model companies (OpenAI, Anthropic, Google DeepMind) and the picks-and-shovels players (Nvidia, CoreWeave). One layer up, you have the application companies building AI into specific workflows: Cursor for coding, Abridge for medical documentation (reportedly saving physicians 300+ hours per year in charting), EvenUp for legal case preparation. Then you have the "AI wrapper" debate: companies that build on top of someone else's model via API. The question there is whether there's a durable moat, or whether you're one API price change away from having your margins wiped out.

Enterprise spending on generative AI grew from $1.7 billion in 2023 to $37 billion in 2025, and 64% of US venture capital dollars went into AI startups in the first half of 2025.

This play is different from the other six though.

DTC disruption mostly affects consumer brands. Buy-and-build is a PE strategy. Product-led growth is a SaaS playbook. Most office workers can go their entire career without needing to understand any of these plays in detail.

AI is different. AI is affecting almost every person who works at a desk.

If you're a consultant, your junior analysts are using AI to do research and build slide decks. If you're a developer, you're probably already using Cursor or GitHub Copilot (and if you're not, you're slower than the developer next to you). If you write for a living, you've already had the conversation about what AI means for your job. If you run a customer support team, you're looking at AI agents that can handle 80% of incoming queries. If you're a doctor, AI is starting to do your clinical documentation.

This isn't a strategy that applies to one type of company or one department. It's changing how work gets done across almost every function: writing, coding, analysis, customer service, design, legal review, sales outreach. And 76% of enterprise AI use cases are now being purchased rather than built in-house, which means there's a growing market for AI-native tools that serve specific workflows.

The strategic questions are still open. Which AI application companies will build defensible moats? Will the "wrapper" companies survive, or will the model providers eat their lunch? How fast will AI agents move from "helpful assistant" to "autonomous worker"? Will the current wave of AI coding tools (Cursor, Lovable, Bolt) fundamentally change what it means to be a software developer?

Nobody knows the answers yet. But understanding how AI businesses work (the unit economics, the infrastructure stack, the buy vs. build decision, the productivity implications) is probably the most useful strategic thing you can learn right now if you work in an office. The other six plays on this list aren't even close in terms of how many people they touch.