CONCEPT
Discount Rate Asymmetry
The recognition that AI's competitive impact is asymmetric across business models — and the corresponding requirement that discount rates diverge between code-dependent companies (premium) and ecosystem-dependent companies (discount).
Discount rate asymmetry is the technical mechanism by which the code-vs-ecosystem framework translates into valuation. The standard CAPM approach uses a single discount rate per company, calculated from historical beta and sector-average risk premiums. The approach fails during the AI transition because beta is backward-looking — it captures historical sensitivity to market movements under the old competitive regime, not the company's exposure to the AI disruption that has restructured competitive dynamics. The asymmetric correction: code-dependent companies warrant a disruption premium of two to four percentage points above the standard CAPM rate, reflecting elevated competitive risk; ecosystem-dependent companies warrant a durability discount of one to two percentage points below the standard rate, reflecting enhanced moat resilience.
In The You On AI Field Guide
The mathematical consequence is large. Because the discount rate applies to every year of projected cash flows and to terminal value, even small asymmetries compound into substantial valuation differences. Two companies with identical projected cash flows of $500 million per year growing at