CONCEPT
Disruption Premium
The two-to-four percentage point increment added to the discount rate of code-dependent companies, reflecting elevated competitive risk that backward-looking beta cannot capture.
The disruption premium is the explicit upward adjustment to the standard CAPM-derived discount rate for companies whose competitive moats have been weakened by the AI revolution. The magnitude — typically two to four percentage points — depends on the company's specific exposure to code commoditization. A single-product vertical SaaS company whose entire moat was its code warrants the upper end of the range; a broad-platform company with moderate code dependency warrants the lower end. The premium reflects a structural fact: historical beta cannot capture forward-looking risk from a disruption that did not exist in the historical data, and using uncalibrated CAPM produces a discount rate that systematically understates the risk and therefore overstates the value.
In The You On AI Field Guide
The premium is the symmetric counterpart to the durability discount applied to ecosystem-dependent companies. Together they implement the discount rate asymmetry that the AI disruption requires. The framework prevents the common error of applying uniform sector-average rates across companies whose actual risk exposures have diverged.
The size of the premium requires