CapitalLoss-as-a-Service

@swankywolverine This seems like one of those premature posts at halftime that won’t age well

Ohio State basketball is down by 15 to TCU at the half. It must have been fun for them to pretend like they actually cared about basketball for the last 3 weeks, get ready for all of them to fallback on the football talk.

@lfg_cap @satyanadella What firms can/will pivot the pricing model well? Hyperscalers have a head start with consumption models already, but the seat based guys seem years behind the curve.

I think there's still pain in Software to come. @satyanadella told you that you have to be willing to halve margins to address this much larger opportunity. I don't think most software companies will be able to pivot. You need: 1/ the willingness to take gross margins down to build agents and end-to-end workflows that actually don't break and handle context limits 2/ the talent to do it and get the tooling right 3/ the will to disrupt your own pricing model (worse impact to OP than perp license -> subscription in the near term). Very few of these can or will do all three at once.

@teostealth @chat_SBC Agree. Also, in a sense - software firms should be able to rapidly pick up these tools to further harden their existing products, no? If everyone else can create fast integrations, shouldn’t the incumbents?

@chat_SBC The getting people to stick around part is huge. We see this with clients all the time - they can build stuff but keeping users engaged is a whole different game

The moat in software is NOT the cost of building software. That’s key to why it was a good business to start with

@chat_SBC I’ve always sort of laughed at the bigger SW firms with huge Salesforce’s, bloated S&M, etc. but it does ring somewhat true: you can have the best product and not have a monopoly. You can have the best distribution with a shit product and have a monopoly.

@haridigresses @Workday You’re going to see a lot of this from all the SOR firms. Similar to AWS with egress charges that have started to go away competitively. You’re going to see license charges depending on volume of agents pinging SORs. It will get more complicated.

This is the beginning of the end for @Workday. Charging for data use and egress is the sort of rent-seeking behavior that companies employ when they've run out of innovation DNA. Hey Workday — it's not *your* data, it's your *customers'* data, and they can do whatever they want with it. If you want to block the "parasites", maybe just build a better product instead of engaging in anti-competitive practices (hi @FTC!). If you think you command the same pricing power with @HiBob_HR and @Rippling nipping at your heels, you're in for a rude shock. And just wait until someone builds an open-source Workday (I would bet this is a thing in the next few years). PS: Rippling also exhibits similar (in fact, worse) closed-platform tendencies, and I think it's a big mistake. I hope they change this philosophy. Open ecosystems tend to win in the end.

@tbpn @carrynointerest I keep seeing this FUD on here. I am not seeing it. I’m sure procurement mangers are angling for larger discounts, but have you ever seen how SLOW enterprises are at changing basic tools? Christ it would take them 2 years just to evaluate what else is in the market.

.@carrynointerest says the rumors that enterprise customers are no longer signing up for 3-year contracts — combined with "adjacency in the market map" — is way more of a threat to software private equity than vibe coding: "The entire basis of software PE being one of the best private market categories was that you had enterprise customers with 3-year contracts." "If every other enterprise customer says, 'AI is just so amazing now, and we don't know where we're going to be, and what it's going to look like, so we're only doing 1-year deals,' that has much bigger implications than someone vibecoding a Notion clone on a Sunday. That's a big deal." "And I think the reason they're doing that — and this is the bigger threat to a lot of these companies — is the adjacency in the market map." "If you look like Rippling, and you have a very talented group of people like their employees, they can attack so many parts of the HR platform space now that they simply couldn't 3 years ago." "That's a lot scarier than vibe coding, than somebody just whipping up [a clone] and going out with a bunch of cold emails. It's the adjacency threats in the market map. Because now, who's Rippling going to go after?"

@SeanMMasters @buccocapital Sure that’s the high level narrative. But Satya has also credited ballmer with actually starting the investments into Azure and public cloud before he himself became CEO. They picked the right new market to enter.

@buccocapital Also true in large caps. See: Microsoft under Ballmer (silos, fiefdoms, only doubled revenue in *15* years [!!!!], flat stock price) versus Satya (broke the silos, distributed authority and accountability, revenue skyrocketed, stock price slyrocketed).

90% of the bloat in midcap tech companies is the result of weak, ineffective leaders who are unable to stand up their their good VPs and fire their bad ones They let their good VPs build redundant and bloated fiefdoms. They promote them to CXO titles to retain them, which slows down the organization as everyone else becomes confused on who calls the shots Then, instead of firing their ineffective VPs, they build defensive and redundant scaffolding around them. This protects the organization from catastrophic failure but adds more bloat This all works (well enough, at least) when revenue is growing quickly and profits don’t matter. And it is catastrophic when revenue slows and profits matter At almost all of these companies the problem is the CEO. It is war time now. If you are going to bet on a company that is down 50-70% already, you had better be betting on the right jockey. If they are guilty of these sins, and many of them are, do you believe they have seen the light? Are they willing to do what needs to be done to fix it? I think the safe and correct assumption is that many are not up to task. It should have happened in 2022. Ask yourself: Why will it be different this time?

@graftedgs @ReubenR80027912 Still underpaid though no? VPs in their late 20s are clearing more than that.

@ReubenR80027912 they are probably using the finance definition of vp which corresponds to senior in tech.

Tech VP…$275k 🤨. The median person has no idea how much $ the petite managerial class makes (this is by design b/c then you’d REALLY see anti tech sentiments 😆)

@WisemanCap Anybody looking at EV/S in this environment needs to be added to the spam folder

$TEAM attractive entry point amid 'overly bearish' valuation - Truist We had a call with TEAM to discuss the impact of the company's recent lay-offs, changes to the model, their outlook for FY26 & 27, and more. At current levels, we believe that the valuation reflects an overly bearish growth outlook for the company... We see an attractive entry point with shares trading at 3.1x EV/CY26E Sales, well below the peer average of 5.9x, despite Atlassian’s mid-teens subscription growth profile and an expanding enterprise footprint. The recent restructuring enhances visibility into margin improvement and creates a clearer path toward GAAP profitability, which we believe is underappreciated in the current multiple. We also believe that TEAM possesses unique enterprise data assets, including workflow, collaboration, and system-of-record metadata across Jira, Confluence, and JSM, that could drive incremental value in the AI era. While the company still needs to execute on cloud migrations and broader AI monetization, we see a more efficient cost structure, strengthened enterprise motion, and AI-driven product opportunities supporting multiple expansion over time. PT $150

@HighyieldHarry Imagine some of the rug-pulls we’d see though

The loss of quarterly check-ins is so dangerous. This does not help the professional or retail investor.

@HighyieldHarry Still love how the article mentioned that he asked if he was on the record or not… apparently no one clarified and WSJ makes it the front page lol

Hot take - I think John Zito made some great points in that WSJ piece.

@DannyOcean555 This has to be ZoomInfo right? Can’t think of anyone else sub 90%. Imagine upselling and cross-selling your customer base, and still ending up with less water in the tub than when you started 😂

Woof. Blood from a stone. Also, IR just asking for some brutally pedantic questions with this one.

@HtK_zambies @luxuffa @Sacramentium @0xleegenz Bro don’t it hurts too much

@luxuffa @Sacramentium @0xleegenz alr bro I’ll bite why was it the worst month of all time

Top 5 male bottom events - Seeing your parents struggle - Pet dying - Your crush have a crush - 1x12, 4x12, 8x12 - October 2023

@amendandpretend I’ll believe it when I see it. Not seeing it currently.

@buccocapital CRM has over 83 now. And they’re trying to hire more sales folks 😵‍💫

And so it begins…

@TechFundies Seems like while vibes are negative, enterprises dipping toes into actual SaaS AI use cases. I’m really curious how pricing/discounting discussions are going between G2000 firms and their SaaS contracts. The threat of shifting still likely yields GM% pressure.

Interesting $CRM / $NOW / $WDAY check with large company in the alcohol space. Another large company that prefers to buy AI via SaaS incumbents, and highlighted their failed Open.AI efforts. I have to include the $CRM coversheet updated for the accelerated buyback bc it's so interesting. Not even giving that much credit for AI so just sustaining 9% organic cc yy subscription growth w/ some margin expansion. Results in ~20% GAAP operating profit growth which is 50% faster than EPS growth in QQQ. Trades at 16x profits (includes SBC and removes amortization, gives credit for strategic investments). So now stock potentially benefits from leverage in 1) operating margins, 2) multiple, and 3) financial leverage. Going to be one hell of a case study in either direction. Highlights -AI strategy is give preference to built-in agents in big SaaS vendors – WDAY, NOW, CRM, etc. CRM -Use consumer goods cloud, data cloud, marketing cloud (promotional assets, etc.) -Use data cloud with data from retailers, distributors, etc. to look at sell-in and sell-out data -Using AF to query data – where is their inventory gap, etc. Resolving this quickly is big ROI as far as driving revenue. -Using AF to take pics sales reps take of shelves and then do audit – is product missing at eye-level when running a promotion, etc. AF will automatically let distributor know they didn’t fulfill promise when running a promotion, big banner should be outside, etc. Reduces week of work to instant. -Started these 2 POCs last year, lasted 4 months and now going into production piece by piece -ROI definitely there – if can save 10 hours a week per field rep across 200, then saving a big chunk. -Will pay 20% more on base license for AI. Consumption units could go up another 10-20% on top. NOW -Using for ITSM. AI improved first-call resolution for some tickets by 50% and reduced outsourced helpdesk by 10% (moved number of reps to tier 2 support). -ROI positive out of the gate and increased morale for users. WDAY -Use for talent recruiting, perf mgmt., comp, payroll, benefits -Using AI within HiredScore and Peakon for employee surveys. Lot of data / surveys / insights are AI impacted. -Employees in HR in some cases saving 30-40% of time from faster data collection from third parties on recruiting, open positions, etc. -ROI clearly there as far as employees moving their time to more productive tasks Open.AI -Worked on some projects but “gone out of control in terms of cost overruns”. -“What we built and how we built it and everything .. it’s not all there. It’s our fault but isn’t optimal.” -Had some regular ChatGPT premium enterprise licenses. This has fallen through and now moving towards [$MSFT] Copilot for enterprise search and building AI agents. Moving bc of relationship, price discount, etc. Multiple reasons – it’s just pre-built. Even free co-pilot works well for 80% of the population.

@P_Remarks @gitlab Ouch. I recall years back in multiple customer checks they said GTLBs sales teams moved fast, quicker/more eager than GitHub.

What is wrong with your dogshit company @gitlab

Remember when PLAN got taken out at like 14x revs? Pepperidge farm remembers.

@buccocapital @omooretweets ChatGPT losing 20% market share in 2 years? Send it to zero

@omooretweets Oh did you not get the memo? We are in a narrative economy. If you are accelerating you are alive. If you are sustaining you are dead. If you aren’t number one you are dead.

I've never seen a perception -> reality gap as big as the tech crowd narrative that "ChatGPT is dead" 🤔 I pulled data across every AI product globally - what's actually happening? 👇

@MRatable I still remember when the IPO was oversubscribed and Sell side had 40x+ rev multiples on this old boy

I’ve always been a GTLB hater but it’s gotta go up from here