Looking For the Next Big Stock? Look at Design

By: Boris_Dzhingarov

When it comes to market analysis, many investors know how to determine value by the numbers. Book value, P/E ratio, yearly revenue - these are all key numbers that value investors use to calculate a company’s intrinsic value. And while these factors are important and more investors should learn to use them, a numbers-first approach to analyzing a company for future growth potential leaves out some important observations. Perhaps most important of these is the company’s visual image, and how easy it is to understand and to use.

These are some of the characteristics that determine the quality of a company’s “design”. Design is the meeting of fashion and function. It’s attractive stuff that works well. In the American investment landscape, Apple continually stands as a beacon of design prowess, helmed by the innovative Jony Ive. To look at the Apple executive is to see design values in practice. Neat grooming, solid colors, sensible and functional combinations of fabrics and clothing types.

The products of Apple have a similar look in many ways. With a new Apple phone, it always seems as if there are not as many controls as you think you need, but you always end up being able to do far more than you would have ever imagined. Doing more with less is an axiom of great design, and it’s one that a great new company should know to incorporate into their branding and products.

People (customers) relate to great design for several reasons.

1. It is Intuitive. When a product is intuitive, you feel like you already know how to use it, even if you are picking it up for the very first time. This intangible quality is the result of a great deal of thought on the part of a designer. Designers oftentimes do more elimination than creation at a certain point in the creative process. All other aspects of a company’s branding and service should be similarly natural, even to the casual observer.
2. It is Useful. Good design solves a problem in the life of the user. This is how sticky products are created. They solve problems for many, and because they are intuitive as described above, they become essential to the way many live.
3. It is Attractive. As stated earlier, design is the marriage of fashion and function. Good design requires an awareness of the way things look, the values that people embody in appearances, and the role of trends and culture in the ever changing world of fashion. Fashion doesn’t just refer to clothes. It’s about how humans do everything. A great piece of design will make a user proud to associate themselves with it. Lame design makes people almost embarrassed to use a product, and envious of those with access to better-designed products.

It’s a financial reality that people want to buy well designed products and services, even if this is difficult to communicate through a balance sheet. Look for great design. When you find it, seriously consider investing.

To learn more about great design, take some time to ponder the devices, products, and services you use everyday. Many classic designs have melted into a permanent role within society. Even common kitchen and bathroom implements are ubiquitous specifically because of many generations of constantly improving design. A new company will be at the beginning of this process, but it should still be easy to see how much emphasis they put on design. If it is a priority and if early efforts seem to be accessible, it can be a sign of great things to come. We hope you learn to spot the best, even when a company is new!

By Boris Dzhingarov

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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