The Acquired IPO Bull/Bear & A+ to F Grading Framework
Separate the optimistic and pessimistic cases, then define what future success or failure actually looks like.
- Difficulty
- Moderate
- Time to result
- ~ongoing to results
- Steps
- 6
- Confidence
- 70%
This is the recurring analytical method Ben and David use on Acquired to evaluate a newly public company. Rather than issuing a single verdict at IPO time, they first build out the strongest bull case (growth comps, margin structure, unique market position) and the strongest bear case (competitive threats, market size ceilings) as two independent narratives. Then, instead of grading the IPO itself, they project forward and describe what an A+ outcome would concretely look like several years out, contrasted with what a C/D/F outcome would look like. This forces discipline: it separates 'is this a good business' from 'was this IPO priced well,' and it creates a falsifiable benchmark they can revisit later rather than a vague one-time reaction to the stock pop.
Origin
Extracted from Acquired
Core principles
- 01Always construct the bull case and bear case as separate, complete narratives before forming an opinion
- 02Grade the underlying business and strategy, not just the one-day stock price move
- 03Define success/failure as a concrete future scenario, not an abstract letter grade at t=0
- 04Revisit the grading criteria years later against actual outcomes
How to run it
- 1
Build the bull case
Compile the strongest evidence for optimism: growth rate versus comps, margin structure, unique competitive position, and monetization trajectory.
Pro tip Use real comparable companies, not the market in general, e.g. compare Pinterest's user growth directly to Twitter and Snap.
- 2
Build the bear case
Compile the strongest evidence for pessimism: competitive threats from larger platforms, addressable market size limits, and structural business risks.
Watch out Don't let the bull case bias how seriously you take the bear case.
- 3
Weigh market structure
Determine where the company sits on relevant spectrums (e.g., search vs. social advertising) to understand if it's competing in a large or narrow lane.
- 4
Define the A+ scenario
Describe specifically, in business terms and a time horizon, what has to happen for this to be a massive long-term win.
- 5
Define the C/D/F scenario
Describe specifically what stagnation or failure looks like, e.g., flatlined monetization or a competitor replicating the core product.
- 6
Revisit later
Come back to the original bull/bear framing after several years and grade the actual outcome against the scenarios you defined.
Pro tip Write the grading criteria down publicly so you can't retroactively move the goalposts.
In the wild
Ben and David built a bull case around Pinterest's 23% user growth versus declining Twitter/Snap numbers and its near-term profitability path, and a bear case around Instagram's collections feature and Pinterest's niche, female-skewed user base. They then defined an A+ outcome as 'cracking international monetization' to become a $20-30B company, versus a C/D outcome of a break-even $700M-$1B business.
→ Gave listeners a falsifiable, revisitable framework instead of a single subjective grade at IPO.
Common mistakes
Grading on day-one stock pop
First-day trading pops (or drops) are noisy and don't reflect long-term business quality; the framework intentionally looks past this.
Only building the bull case
Skipping the bear case creates blind spots about real competitive and market-size risks.
Vague grading criteria
An A+/F scenario that isn't specific and measurable can't actually be checked against reality later.
Is it for you?
Not ideal for
Quick trading decisions where you need an answer today rather than a multi-year thesis.
From the transcript
“what we decided to do in these IPO episodes is um walk through what the bulls are saying and what the bears are saying”
“the way that we grade these IPOs is rather than issuing a grade, we discuss what uh a few years from now an A plus…”
From the episode
The Pinterest IPO