BCG and Fortune Magazine joined forces to produce the inaugural Fortune Future 50. The list represents their ranking of the companies best positioned for “breakout growth”. The Future 50 comprises two lists:
- 25 Leaders (companies with a market value above $20 billion) and
- 25 Challengers (those with a market cap below $20 billion).
These lists, like the future, are notoriously inaccurate (remember the Nifty 50?). But they are a great reflection of the current zeitgeist!
Fortune Future 50 Methodology
You can read a complete description of the methodology here. The condensed version is :
- The list includes only publicly traded companies.
- Market potential and company capacity are the two factors considered in the rankings..
- According to Fortune,
- Market potential is measured as a company’s expected future growth as determined by the financial markets. This is determined by calculating the present value of its growth opportunities, which represents the proportion of market value that is not attributable to the earnings power of the existing assets and business model. That accounts for 50% of the overall score. (Pretty cool, huh?)
- Company capacity “is assessed by a score comprising 14 factors, which were drawn from a larger group of variables which were tested and calibrated against historical data for their ability to predict long-term growth. These were grouped in four clusters: strategy, technology and investment, people and structure.”
Believe it or not, details of the methodology include words such as: AI, natural language processing, “biological thinking”, adaptation, mutualism, sustainability, digital emphasis, and the Flesch-Kincaid score! It is an impressive list of buzzwords! I’m not sure any of it is predictive, but it sure sounds impressive.
Fortune Future 50 Results: Software Rules!
What stands out for me from the results are:
- The dominance of software companies on the list. By my count, almost 2/3 of the companies on the complete list are software companies.
- Platform or multi-sided software companies, in turn, comprise more than 2/3 of the software companies on the list.
- Enterprise software companies are very well represented:
- Salesforce, VMware, and Intuit were all in the top 10 of the 25 Leaders (the companies with market capitalizations greater than $20 billion).
- In the challenger list (those companies with market capitalizations of less than $20 billion), five of the top eleven companies are enterprise software companies: Veeva Systems (#1), Workday (#2), FireEye (#4), Tableau #8), Medidata (#11).
The Top 10 Challengers
| Rank | Company | Software? | Platform? | Enterprise? |
|---|---|---|---|---|
| 1 | Veeva Systems | Yes | No | Yes |
| 2 | Workday | Yes | No | Yes |
| 3 | Grubhub | Yes | Yes | No |
| 4 | FireEye | Yes | No | Yes |
| 5 | Zillow Group | Yes | Yes | No |
| 6. | Liberty TripAdvisor Holdings | Yes | Yes | No |
| 7. | Yelp | Yes | Yes | No |
| 8. | Tableau | Yes | No | Yes |
| 9. | Shutterstock | Yes | Yes | No |
| 10. | Arista Networks | No | No | Yes |
Conclusion
If Fortune and BCG are right, software looks like it will continue to eat the world! And enterprise software platforms will continue to be a nice place to be. I hope they are right!
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