David Rosenthal: prediction

Transcript context

…All right, David, let’s dive into the playbook. One I’ll just highlight again real quick as we started at the top of the show. The power of immigration and people wanting to build things, come here, and do it here in Silicon Valley and in America. What a shining example [...] and you are, too, Santi, I mean, amazing. But I also want to say, Santi, you mentioned this, I want to highlight it again. In the beginning part of the episode, every big market or most big markets, I think, they go through cycles of disruption and cycles of innovation. It’s so easy to forget that. You look at the video conferencing market and you’re like, “Well, that’s done. It’s big but it’s done.” These big markets always go through these cycles and you need to know where you are in the cycle. Yeah, that’s a great point. I’ve got a couple. One is on the product side. I open this episode with, “So, what’s going on with this company? What makes it so special?” I want to talk about the product side and I want to talk about what’s going on with the business. On the product side, we danced around this, but basically what you have is something that people thought was a solved problem, which David, you alluded to is not. People thought it’s a commodity and Santi, as you alluded to it wasn’t. It was an actually good experience for an essential piece of doing business, that had a mandatory network effect built-in. I think when you mix those things together, that product is going to grow. That’s going to do very well. When you look at the business impact on that, what’s going on with the company now when Jake, Santi’s partner here at Emergence, joined us on the Limited Partner Show, made the comment that, “What we like to look for is triple-triple double-double in SaaS companies, that first two years it’s great to see it triple, second two years it’s great to see it double, and it sort of gets smaller after that,” Zoom is still a massive growth story. They grew over 100%, so more than doubling, year after year last quarter, and that’s eight years after the founding of the company. This is still a superstar growth story. The payback period, when Zoom pays to acquire a customer, right now is averaging around nine months. That’s an implied payback period from reading the S1. For reference, Dropbox is about 16 months and DocuSign is about 30. When you look at the efficiency of spending marketing dollars and getting that back from revenue, wildly, wildly efficient. That leads to a business that is cash flow positive, that is now net income positive, and you can just see in the stock price why everyone just believes that this is such an amazing business.…

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