Software Businesses

“The better AI gets, the more some businesses that have nothing to do with AI, I think will be harder to compete with because we'll really want these like authentic non-technological experiences, or we'll care more about Sports teams or whatever. So no, not, no…”

“One of the challenges is that these token businesses have essentially turned a lot of software businesses to service level margin, and if you play the game the same way you did two years ago, you can blow up and you can burn a lot of cash in the process”

“Really becoming a requirement in the AI era because your costs are so volatile and changing every day, and the margin profiles of software businesses have completely changed with how expensive their costs are and how those costs scale when their users use them…”

“And I do think that software businesses that have a very simple product offering are in trouble for sure.”

“I think many software businesses will have a reckoning with the fact that their cogs is gonna soar, their customer acquisition cost isn't gonna fall, And they have a lot more competitors, and so then they don't hit that escape velocity”

“First of all, software businesses are HR, right? They are HR businesses and it's your biggest cost structure. It's your biggest leverage of getting return. It's all that matters.”

“In the 19 nineties, if you said, hey, let's go get some software businesses and lever them up, and that'll be a great way to do a buyout, people would have laughed at you. That was not the buyout industry, and now it's the single biggest sector in all the buyo…”

“And also, why do I think that software and agency multiples will converge? Short answer is I believe the business is The agency business will look a lot better in the age of AI.”

“When you look at a burger shop, which traditionally has not been something that, you know, our LPs would know us for, and you see that it can, you know, it costs, it can generate a hundred You realize that that payback and life after payback is really interest…”

“I think there are lots of businesses out there that don't fully understand that they're predicated on the expense of creating pixels. And so similar disruption is in the works.”

“But overall, it's been proven that software businesses are fundamentally better businesses on average from a unit economics perspective, and even today, like in 1999 and 2011, There are just bad software businesses, just like there are bad media businesses, pr…”

“The idea that software businesses generate long-term profits is so far, unfortunately been a fallacy.”

“If Warren Buffett was 30 years old, he'd just be buying software businesses, because they have every aspect of a great business that he talks about. They've got massive moats. You can raise price every year. Customers are happy. It's this beautiful flywheel of…”

“Engineer led businesses typically are priced poorly. And if you just double the price it works.”

“Network effects are One of the few ways we have left for software businesses to have a moat, to create a moat around their business so that competitors can't eat away at their margins.”