Over the last few years, I've had a front-row seat to two very different realities in high-growth businesses: one hitting $100Bn+ GMV, still growing 30%+ YoY, accelerating product velocity, deepening moats, and compounding operating leverage + FCF; the other — similar sector (partial overlap), multi-$Bn+ scale, top talent, endless strategies over 10+ years but still struggling to make ends meet.
I've lived this globally, across public and private markets.
The Hard Truth
As an operator and investor obsessed with business models, I've learned one thing: the gap between winners and losers comes down to how ruthlessly a company manages trade-offs.
Capital and organizational attention are finite. I've steered millions across performance marketing bets, pricing/promo experiments, new logistics builds, strategic partnerships, build/buy/partner calls, and market expansions.
I always aim to pressure-test against a dual lens:
- Short-term reality: Hitting quarterly/annual metrics
- Long-term value: Maximizing terminal value
The Missing Lever: Executive Incentives
But nailing those conversations requires one thing most companies get wrong: executive and key-leader (functional heads / key personnel) incentive structure.
Most companies fail to treat this as the C-suite's most powerful strategic lever. This requires deep, first-principles thinking about what you aim to drive and related fair-value-sharing vs. the standard, straight-line, time-in-business based equity vesting framework.
Charlie Munger nailed it: "Show me the incentive, and I will show you the outcome."
If your business keeps making suboptimal trade-offs, stop staring at budget spreadsheets. Start auditing how you structure the incentives for your leaders and key personnel.
Case Study: dLocal (One of My Favorite Holdings)
Take dLocal as a masterclass in deliberate trade-offs creating a monster business.
They consciously accepted a lower net take rate (down to 0.88% in Q4 2025 from 1.09% in Q4 2024) to land and embed with the highest-volume global enterprise clients in e-commerce, ride-hailing, streaming, remittances, and fintech across emerging markets.
The Outcome
- Deep API integration across 40+ emerging markets drove massive stickiness
- NRR (Net Revenue Retention): 145%
- TPV retention: 158% in 2025
- Existing merchants expand countries, methods, and products (new add: BNPL), turning dLocal into indispensable infrastructure
They chased absolute gross profit dollars ($403M in FY2025, +37% YoY) over margin %, while they scaled TPV to a record $41 billion in 2025, up 60% YoY.
This has unleashed operating leverage and exceptional FCF +110% YoY.
Result: Dividends declared, buyback authorized — while still investing aggressively in growth.
The Pattern
When leaders win on:
- Volume (Transactions)
- Stickiness (customer retention + MOAT)
- Operating leverage (FCF)
They embrace painful-but-right trade-offs that build compounding machines.