McGurk: High multiples and ongoing losses drive SaaS bubble concerns
Jamie McGurk · a16z Podcast | Valuing Today's Fast-Growing Software Companies · Jan 2, 2019 · at 1:05
Jamie McGurk, member of Andreessen Horowitz's corporate development team, analyzes why public market observers view fast-growing SaaS companies as overvalued.
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“So I think there's two things that people look at and point to point, point to the bubble, and one is revenue multiples that a lot of these SaaS companies are trading at, and I think it's both current and future expected losses, so lack of profits of a lot of the current public SaaS companies that, that people look at those two things, and they say, holy cow, you know, Workday is trading at 1.20 plus times revenue, ah, and expected losses for years to come, and they say this has to be a bubble. I think those are the two metrics that, that people tend to focus on that, that leads them to conclude that it's, ah, we're in a bubble.”
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