Software Company

“It's almost impossible for a software company today to keep any decent sales people to keep any different, decent product development people, because they all want to go work on AI.”

“There are a lot of categories where there never was an incumbent software company because the only job to be done was, like, actual human labor. And that's really exciting because now you don't have to worry about, like, oh, shoot, these guys are gonna come in…”

“What we've done with AI is when you make your existing teams 30, 40% more efficient and they can handle more customers it changes the whole mindset of the organization. Now you're growing, you look like a software company now where you're now growing with High…”

“Well, if you decide the software company is no longer a thing and may not have this recurring revenue, all of a sudden its value has to come down, and all of a sudden, therefore, they would have to lose all their money, and then if for the credit guys who loan…”

“So if you were to look at your average software company that goes public, You know, if you look at cumulative spend since inception, it's usually around, like, 30% is R&D. So like, a huge amount of these businesses are about, like, sales and marketing, distrib…”

“There was incentive for a long time for companies that, where their moat was not software, to say, we're a software company, we need to hire the best software engineers, Look at our open source projects, focus on all the cool tech that we're building when real…”

“Everyone will exit their business at one point or another. It's just gonna be up to them, or it's gonna be something that happens, and the business goes a different way, or it's just, it's very rare to pass a business along to your kids, or something like that…”

“So my thesis is that almost every software company has basically taken a filing cabinet and turned it into a database, and this is where the 2.2 trillion dollars of market cap has come from, this is where the three hundred billion dollars in annual software re…”

“Almost all the money that a software company spends is in people. It's the only expense big enough that you can move the needle.”

“Vibe coding is, like, super exciting for casual development, but, like, you know, at least right now, all of the really sharp, like, you know, technologists I know don't think that you could, like, vibe code a top-end, like, software company. Today.”

“I have a belief that the San Francisco Bay Area is still the world's capital of technology. If you want to start a company in, especially a software company, it still is the best place.”

“I don't personally. For see an environment where growth gets easier for the standard software company.”

“Sam Altman talks about the one person billion dollar tech company, but maybe there is the one person billion dollar company in general. It doesn't necessarily need to be a software company.”

“I think that generally people should probably go to wherever they are, like, on the frontier and they are among the most interested, like, top .1% of people interested in a topic. I think that that frontier for most people is where you end up having a lot of g…”

“A five million dollar ARR software company that's growing at 25% a year versus a ten million dollar ARR software company growing at 25% a year. The ten million dollar company is probably going to be valued at four or five times what the five million ARR is bec…”

“Today, the public markets absolutely care to an extent, right? And a software company really does need to have north of 70% margins.”

“And then over time, I think through pricing pressure and pricing and software commoditization, we'll see margins go even lower. Some people predict as low as 70 or 60% overall, which fundamentally changes the financial dynamics of a software company.”

“What AI enables is actually a very different unit of work that you sell, which is doing the work. And so you're almost a software company that looks like a services business that is able to sell like the full work product that the outcome, as opposed to sellin…”

“The capital intensity of that undertaking is very different than starting a software company, right? And so the risk reward to both the founders and the risk reward to the investors changes a lot.”

“If you apply that, like, drop style marketing to a software company, that is what I think Beehive does, and I think a lot of companies are going to start doing that, and to me, that is the modern version of PR.”

“Starting a software company and then being that attached to it, I think is, see the talk from Dr. Sherri Walling a few years ago where she talks about how founders look at their logo and it stimulates the same part of their brain as when they look at pictures …”

“If you're saying, yeah, I'm gonna build a software company. And you don't have a software co-founder, it just, you're not even in the ball game. You're not even in the stadium.”

“What you saw since November of 21 to now is you've now retraced that entire move, and now the average software company is selling for six times sales, which is at the lower end of the range, and so now you're at a point that you can, again, underwrite to much …”

“Anyone who gives you a passion pitch about why they have to found a software company is a little bit crazy, right?”

“Every software company that I know is re-forecasting down.”

“Every, every company, every software company out there, if you're not a C corp, like change to a C corp immediately. Cause you have to hold for five years as a C corp to get QSBS protection.”

“We have a software company, you know, where, where people, where they misplanned by 70%, right?”

“If you've never managed developers before, you're going to blow a lot of money. I'm trying to wrangle them in and build stuff. So like, you know, content sites or something like that, I think is a little easier, like a small content site to start.”

“If you go that route, then you got to be careful because if it gets too big, people are going to say, you're not a software anymore. You're not a software company, Nick. You're a services company pretending to be a software company, right? So you have to be ve…”

“Even in engineering education, if you talk about Indian engineering education, especially the tier three engineering colleges. So mostly your teachers or then those are the people, those typically could not get any job in a software company because software co…”

“I think when you when you buy somebody's software company, there is a certain level of humility that is often lacking Especially for somebody that's in my seat that is doing very little of the doing post acquisition.”

“You show me a software company where The product is flying off the shelves because the people on the other end really need and want the product and love the product, right? That company, even it has lower revenue, deserves a much higher multiple.”

“So, the main thing that I think about, and I'm working with both, I've, I have for years, is whether or not it's core to what you have to do, right? Like, if you have a software company, generally, that's kind of core building the software, improving it. It's …”

“What questions, what are the five questions you would ask to understand what matters for this company? If none of them are software companies, it's not.”

“The general idea of the American dream, right, the being successful, the white picket fence, all that sort of, like, just baseline level of success that many people aspire to, I think is really converging around the idea of running a, you know, profitable, rem…”

“So the rule of thumb just as a, for your listeners in my book is if you can build a 75 to hundred and twenty-five million dollar ARR company, you can be a billion dollar business. If you built it with healthy margins, which in most software-oriented stuff you …”

“One of the problems with marketing automation is that you give people a fishing pole and they still don't know how to use it. And that's a problem that as soft, that as a software company, it's very difficult for us to solve profitably”

“This version of the thesis is, in any industry as a result of this dynamic, in the long run, the winning company in the industry will be the best software company, right?”

“It is said that by the time a software company goes public, on average, they will go through 4.1 complete leadership teams. Which means that they will have to cycle through an entirely new team about every 24 months or so.”

“I do think a lot of consulting firms that try and go into software really struggle because it's a totally different effort in terms of building a company and getting in finance and hiring their team. There's just a lot more risk involved, and Building a softwa…”