Transcript of Chris Mele’s talk:
As an investor into a software company, there’s a couple of areas that you want to look at first. The first is you really want to get a bead on whether or not the technology is being licensed in a way that makes sense to the customers. The majority of software companies, publicly traded ones included, charge for their software in ways that kind of defy logic or don’t make a lot of sense. What you find is there’s underexploited opportunities in positioning how we charge for our software (how we license our technology differently than maybe the current dogma of what all the other competitors are doing).
Another place that I would look at as an investor, and take a really hard look at, is what the sales team is doing on discounting. This tells us a huge amount of information about what’s really happening underneath the hood of a software company. You know, do we have the Wild West where some sales people like to surcharge others like to discount? Is it a disciplined sales team? Is it a young sales team or a more experienced sales team? All of these factors in the form of how transactions have landed in the marketplace, tell us the amount of upside that we might be able to experience if we were to, for example, pay a premium on a business model.
If I was investing in a software company and I saw a really messy transaction summary in the form of some customers are getting surcharge and other customers are getting discounted. And there doesn’t appear to be kind of a rhyme or reason on the net price paid, I would get really excited, right. I get really excited because that tells me there’s a discounting discipline that’s missing. And if we get that infrastructure and that methodology and that discipline baked into the fabric of the software company, we can see huge upside with just that observation alone.