The Exchanges

Q Yup. The next one, it's a bit of a layup or even a commercial, but I always love to hear what a CEO has to say, which is, uh, what, which new Coupa product or feature are you most excited about?

A Well, the most exciting one for me is community intelligence, which is a set of capabilities that we discuss in the book, but they're in the entire fabric of the product set. So they appear, for example, in expense management, which we don't talk about as often, but we have the hundreds of customers using Coupa expense management. We are mitigating fraud in expense management. We're using the data set of our aggregated customer base and serving up, uh, individuals that are highest likely to be doing fraudulent activities so you can investigate. Rather than rigid kind of, you know, policies or a free-for-all, we found a way to use technology to be prescriptive, which is the P in Coupa, prescriptive to, uh, to, uh, individual, uh, controllers and people responsible for, for spending in a company, leveraging community intelligence. And that's just one example of, of, of many capabilities, leveraging community intelligence within Coupa.

AI assessment note: “Well, the most exciting one for me is community intelligence”

Q Okay, so good. So to the book in, in large part is, is it share a lot of learnings about how to build this community among your, your customer and, and partner base?

A Well, first of all, it frames what it actually means to have a community intelligence environment. What are the components to that? It explains why the time is now to strike, particularly if you have early stage companies that are watching this, why now is the time to really build up a platform that can have, to stand the test of time. In leveraging cross company committee insights. And then it shows a whole host of use cases and case studies of what we've experienced so far and asks the reader, as I did with values of service to comment on, uh, what they're seeing, uh, push back on some of the, uh, hypotheses in the book. And, uh, so that we can learn together as a, as a community of readers, frankly, of the book as well.

AI assessment note: “Well, first of all, it frames what it actually means to have a community intelligence”

Q And what's, it's, it's, it's interesting because it's different for different vendors. Since March 15th, was there a trigger point where maybe I had a project that I was talking to Coupa and I might, it might be a twenty-twenty-one, twenty-twenty-two, twenty-twenty-three long-term deployment because you have many enterprise customers. Was there a particular drama issue, shelter issue, a wedge issue that got projects pulled forward years?

A Well, interestingly enough, it was actually a bit of the opposite in the first month or so. And I mentioned that on the last earnings call, there was almost a deer in headlights moment amongst all of our, you know, the vast majority, I would say of our prospects around the world, whereas we don't know what's going to happen. So we actually need your help. You know, we need to get PPE equipment. We need to get things to sort it out so that if you come back in two, three weeks, you can do that. And, you know, it was really rewarding for us here at Cooper. You know, we, we, we have this, uh, You know, robust community of, of, of existing customers. And they came together, uh, on our platform to source, you know, personal protective equipment for their organization. So we were less oriented toward how do we, you know, close more and more business during that first month, the more oriented toward, how do we help this community kind of make sure that they're a going concern, which was, uh, which was very real in some industries for sure.

AI assessment note: “it was actually a bit of the opposite in the first month or so.”

Q Yeah. All right. So I'll, I'm going to post this on faster after the next one's out because it's, it's, it's, it's super fascinating. Um, okay. So, so book, so you got a book, your book, book, uh, I, I, is it out? I should know I'm going to buy a hundred copies, um, 50 copies. Tell us about the book.

A Well, this is really a book that, uh, is, um, the next step from values of service, a book, uh, that I did about three years ago. And this is really about. Uh, breaking the silos of traditional enterprise software, which was always deployed, you know, one customer time with one set of data and never being able to see anything across, never being able to take anonymized, sanitized, aggregated data. We're beginning to take that data, distill insights from it and push that back into individual customer environments so that we could be smarter together as, as a customer community. So I look at this book as really, you know, I don't have a PhD, Jason. I ended with my MBA. This is kind of my hypothesis or thesis or dissertation, if you'd like. And it's really a position paper on where we see enterprise software going, which is the breakdown of those silos so that we could be smarter together as enterprises and customers through the use of information technology. We're on the very bleeding edge of that with what we're doing here at Coupa. And every day we discover more and more interesting use cases that we employ for our customers to take advantage of. Uh, and I'm happy to share anything you'd like about that.

AI assessment note: “really a position paper on where we see enterprise software going”

Q bridge, but can you, can you see 10 X? Can you see the five billion now as crazy as that might've sounded a couple of years ago? How far can you see? And like, what do you see? Like, what do you see? What do customers want? How, how's the product going to change? Like, what do you see? What's the furthest you can see and what do you see?

A Well, I appreciate that question, Jason. So what I see is a fifty billion dollar plus total addressable market. And what I typically ask are two very, very simple questions of any prospect I interact with, frankly, anyone I interact with, whether it's over Zoom or before kind of in the physical world. Do you think, number one, your company is doing a great job in managing The spending that it's involved in for all the things and services that you need. You think it's done really, really well. I've rarely, rarely gotten an answer that says, oh yeah, we're, we're great. We know everything about how we spend money. We have control over it. It's compliant. Okay. And then I ask a second question. Do you think you're employing information technology in a way that's comprehensive and fully integrated and user-centric and deployed quickly that addresses some of the challenges described? And the answer is always no. So just about every company in the world can really stand to improve the way that they do their business spending and the way they manage their business spending. So I see a huge, huge opportunity. And I think this is in many ways, early innings for this category. We're proud to do our part in trying to lead a focus into this area and then fulfill that leadership with a real brand promise and real measurable outcomes for every one of our customers. I think that is why Uh, yo…

AI assessment note: “So what I see is a fifty billion dollar plus total addressable market.”

Q the Walmart of today where they're an amazing customer, but they, they school you a bit. So what is like for an Amazon, what do all your other customers benefit from? Like, what are some, that, that vanillaism, that bet, like, what are some things you've learned From really those, those mega customers like Amazon that, and how does that benefit the other? Like how have they leveled you up?

A Sure, sure. Look, the beauty of enterprise software, as I think every one of you viewers knows is can you, can you have minimal code that supports the massive amount of use cases as many use cases. That's the dream, right? That's the dream. So what we learned from our largest customers, Amazon being one and others is how to support massive complexity in the simplest way possible. And what we learned from some of our smaller customers is how to keep things very intuitive and user centric, but at the same time, abstract them from somebody complexity that they may never need to use and make everything configurable. So we're constantly learning about scale and stretching from the, our platform from the larger enterprise. And we're consistently saying, staying very, very true to usability and user centricity that we're picking up from, uh, the smaller growing companies. And that's a beautiful marriage to have on one platform.

AI assessment note: “what we learned from our largest customers, Amazon being one and others is how to support”

Q interesting. 43% of companies were worried about the ability to fulfill orders, right? At the beginning of COVID, You could, you still can't get a webcam, right? You couldn't get a monitor. I mean, we were worried there were some groceries you couldn't get at the beginning of this, right? So tell us what you're, what you've learned being at the, at the, at the, at the center of this.

A Well, first of all, retail, break and mortar retail absolutely is in trouble. And frankly, break and mortar retail to some extent has been in trouble well before this pandemic. When we're looking at our business spend index, if your viewers go to spendindex.com, they can see the data on that. I mean, we've been looking to retail for three, four quarters, and it's been trending down. We've seen a lot of very interesting data that I could share with you around Uh, the downward trend. But when you think about global supply chains, right? And this kind of massive globalization dynamic we've had in the world for the last, you know, six, seven, eight years, right? Uh, we're kind of getting into, let's call it globalization, two point O, which begins to balance global with local. Okay. And is, is, as this slide says, you know, is there some fragility in our supply chain? Yes. But I would argue that fragility is really in this, Uh, in the area of information technology, information access rather than in physical access because the goods and services exist. And as soon as there's demand, supply gets there. You look at PPE. There was a massive demand and within three, four weeks there was massive supply. The challenge wasn't, the challenge wasn't there. The challenge was having the information at your fingertips to hot swap suppliers, get access to the things you need at the right time, …

AI assessment note: “that fragility is really in this, Uh, in the area of information technology”

Q Q one, just remind me, Q one is calendar Q one, right? So Q one is through March. This retail one, this plummets dramatic, right? Even through one. So that trend, you can see it in Q four, right? Retail was already off deeply in Q four. Then Q one is down. Boy, it's just epic, right? It's, it's almost a step function. It's almost a step function here, right?

A Step function. And look, if we have to make predictions, I think they're pretty, uh, uh, pretty obvious, right? We're going to see real backward season retail. We're going to see a lot of consolidation. We're going to see brands get rolled up. I mean, it's going to happen. It's already beginning to happen, uh, because look, folks aren't going to the mall and not buying in a, you know, in, in, in those stores. So the ones, the retailers that are quick enough and nibble enough to get to consumers directly, To figure out different innovative ways to manage their supply chain. Uh, we'll stand the test of time, but, uh, it's a, it's a real struggling retail and no question about it.

AI assessment note: “Step function. And look, if we have to make predictions, I think they're pretty”

Q And is it, it, it, it, and, and there's a benefit at 50? Is, is 50 too much? I mean, obviously you're a proponent of it because you put it out, but where, Where, how do you set that guard? Like, what is, what is, what is too efficient versus too inefficient when you, when you're able to be efficient?

A Like, how do you think about it? I think, well, I think you have to combine backwards looking metrics. So when you just complete a quarter, you look at all your backwards looking metrics, and then you combine them with all your leading indicators as an executive, which is what does the pipeline look like? What does our talent look like? Where are we in terms of stage of pipeline? Where do we want to make investments geographically? When are we launching the next product release? And then use your gut to fine tune exactly how you're going to run out at the following quarter. So you have the guardrails, but you also don't hamstrung yourself as an executive as an executive. Otherwise you could automate the job of the CEO in that area. And that's, uh, probably not the best way to do it. Right.

AI assessment note: “combine backwards looking metrics... with all your leading indicators as an executive”

Q I started in software, but so much has changed, right? So, um, I want to dig into a bunch of things on the slide, but, but, but what are you seeing? What's, what's the, what's changed the most since March 15th? What's just, what's, what's unexpected? What's expected? What's, what are the number one things that have just shocked you or have been pulled forward years that you weren't expecting?

A Well, I think as everyone is saying, Jason, and again, thank you for having me on. There is just been a greater energy and focus in what was already happening, which is the move to, you know, digital, right? Um, I think in our case, it's, uh, even more interesting because when you're in times of hyper growth, Folks tend to focus a little bit more on revenue than they do on profitability and they do on operational efficiency, frankly. And our value proposition at Coupa has always been to help companies become more operationally efficient, to help them unlock all of their potentials so they could pursue all of their, uh, missions and visions. And obviously we're doing that now for, uh, you know, hundreds and hundreds of companies around the world. So it's an opportunity to engage in the same dialogue we've been having now for well over a decade, But, uh, the ears are perking up even more because they know that they need to move to a digital method of driving, uh, their operational efficiency, understanding how they're managing their spending as, as it pertains to everything they need for their business, how they're thinking about supplier risk, how they're thinking about their inventory levels, their sourcing activities, and so much more. So it's really, really exciting for us to kind of have a greater emphasis into an area that we know is so important anyhow.

AI assessment note: “greater energy and focus in what was already happening, which is the move to, you know, digital”

Q How do you manage the team? How do you do the internal change management and the external? Cause we're not necessarily wired that way until March, were we?

A That's right. That's right. Well, the average is roughly six to nine months for enterprise customers, our mid-market customers, you know, four, maybe five weeks. So it's not bad, but you know, what happened is that we gained a lot of efficiency ourselves and working while our customers remotely, you don't have the time. Well, we'll meet you on Thursday. We're going to fly in. We're all going to get into a room. Well, it's Monday. Let's just do it right now. Right? So you get the systems integrator on the zoom session. You have the prospect, the existing customer on the zoom session. You have my Cooper colleague on the zoom session. We're sharing, as you are sharing this slide, the configuration set up and literally walking through it. So in many ways, uh, we stand to gain an advantage in the efficiency with which we can work together. As long as we can overcome the kind of change management required for some folks, as you say, to be a little bit more tech savvy and And kind of be willing to work in this way. And we're seeing, we're seeing that happening without a doubt.

AI assessment note: “we gained a lot of efficiency ourselves and working while our customers remotely”

Q trend that we've seen, but, Can, can, if, if, if we're in shelter, if we're in this world through the end of next year, can we have this divergence? Can we have a cloud on, can cloud remain on fire when our, when one out of three people are, Essentially unemployed in the country. Like how long can we remain divergent? Do you have, do you have any insights here?

A Well, it's a, it's a, it's a tough question. You know, it's interesting with Shopify and Amazon. I mean, these are our customers, you know, Amazon runs the tens of billions they managed through Coupa. So, so, uh, we're close to these, uh, these customers, but the same value proposition that existed before this crisis exists now. It just being, you know, seen as a, as a higher priority, right? The ability to get greater speed, the ability to have information at your fingertips, The ability to embed, Jason, best practices into your deployments. Just about every CIO I talk to tells me, hey, we want to, we're going to go with Cooper, but hey, promise me you're going to deploy this in a way that's going to be, you know, quote unquote vanilla or best practice so that my team doesn't sort of start doing a whole bunch of end rounds that are going to make us unupgradeable and, and slow us down. They want agility. They want access to community information. Hopefully we'll talk about. So I think there are a lot of dynamics that are really tailwinds for us in pushing, you know, cloud faster into the world at large. And obviously these are big, big markets. Uh, we're all playing and I'm sure many of your viewers are playing in so that the opportunity is now really to accelerate our efforts, no doubt.

AI assessment note: “lot of dynamics that are really tailwinds for us in pushing, you know, cloud faster”

Q it's through Q one, but one, one that, that surprised me is high tech was down, how you define high tech, right? That was down in Q one. So what is when, when the cloud's on fire, but in the spend index high techs down, what, what are we seeing there? What should I, should I see something? Is there, is there, is there a story behind the story there?

A Well, you see what you see, which is, uh, when you look at the index purchases for hardware and software in the first quarter of the year, uh, when you look at time to approve, when you look at number of rejections, we look at average member employee was, uh, was down. And that's just, that's just a reality of what happened there. Right now, whether or not that's measured in the stock prices of many of these companies, you know, probably not, but again, you could argue that Uh, the current liquidity environment and the longer term opportunity in the digitization area is very, very real. Look, investors are looking for places where they're going to get yield. They're not going to get in use at us treasuries, right? So they're looking at placing a yield. They'll look, they're looking for longer term bets. And there's no question, many things, you know, uh, my colleagues and I like Eric and others are doing, uh, have the opportunity to really stand the test of time and, and, and, uh, develop into very, very meaningful long-term businesses. That's what we're, we're doing here.

AI assessment note: “that's just a reality of what happened there. Right now, whether or not that's”