Packy McCormick: belief

Transcript context

…Whoever bought it sort of assumed that it would solve their problems. I think this is an interesting time to move into pricing and conversation around they paid $27.7 billion. Let's contextualize that in the size of the business in revenue. Obviously, they're not profitable. Packy, you're one of the best educated people in the world on this, having just done a bunch of research. How big of a business is this and then how reasonable of a price is it for that business? They just release their numbers for this quarter, $235 million for this quarter. Next year, this is a billion-dollar run rate company with 86% gross margins that just became free cash flow positive and grew from $10 million (I think) to $36 million in free cash flow this quarter. That's a really nice improvement for the company and the thing that you’d expect to happen when you spend a lot of money to acquire customers upfront. Then over time, they retained, and more of the cash drops to the bottom line. It's a moderately-sized business. You're paying 27.7 times the next 12 months revenue. It's not a cheap multiple on the business there by any stretch of the imagination. What is cheaper expensive these days? I don't even know.…

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