Ben Gilbert: evaluation

Transcript context

…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. Yeah. That’s an advantage that we have. We’ve been doing enterprise investment for the last 15 years. We’ve seen a lot of these companies. When we see those underlying metrics and when we do those cohort analysis, we can see which companies are doing incredibly well. We can also help shape that because now, with a lot of capital available, some companies are not even focusing on doing the right thing. They’re just spending a lot of money and focusing on growth at any cost. Ultimately—Zoom has shown us this—markets care about profitability. They do care about growth, but profitability is also important. That’s why, having send us where we play out in the past, we can also help a lot of entrepreneurs focus on the right metrics. A lot of entrepreneurs have no idea how those metrics stack up against other companies. There are a lot of things that they could do. Even if they don’t do it early on because they just want to focus on growth, you need to understand, at scale, what are you going to change to make sure that you continue growing and you continue delivering and building value?…

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