This post was recently published on Medium.

Just as a caterpillar becomes a butterfly, some companies are capable of incredible transformation. At their start, they address a seemingly small or straightforward problem. But, in solving that problem, they unlock access to a greater one—building a more critical and profitable product in a bigger addressable market.

Companies that do this go through a type of metamorphosis.

Many companies grow and evolve over time, but only some of them are capable of undergoing a quick and dramatic transformation when certain requirements have been met. These companies — let’s call them “morph” companies — are particularly well positioned to unlock access to big hairy problems, many of which represent billion dollar opportunities.

Examples include Plaid (most recently valued at $13.4B) and Segment (acquired by Twilio for $3.2B). Many are found in SaaS, due to the complexity of the industries and the fact that many more niche opportunities exist (i.e., they don’t require the same scale that consumer businesses often do). Many of them are just getting started today.

What makes them different?

In tackling their first problem, morph companies establish a flywheel (or loop), where they aggregate suppliers and data. This loop establishes the foundation to address problems that were nearly unreachable previously. The transition is quick and dramatic, rather than a slow evolution.

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