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Key takeaways
- Is it possible to increase enterprise value by converting a standard business into SAS?
- Software is not inherently valuable, just like a standard service business isn't inherently not valuable.
- The thing that makes software valuable are business characteristics that software companies when done right typically have.
- But if you think about any business that had high gross margins, high revenue retention, and lots of growth, you would want to invest in that business.
Chapters
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0:00
Abschnitt 1 Is it possible to increase enterprise value by converting a standard business into SAS?
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0:44
Abschnitt 2 Typically has when done right all three of these things.
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1:28
Abschnitt 3 And I broke each of these down by eight different functions of the business, what the constraint feels like, like what are the symptoms of it when you're going through it and then
Full transcript
Locally archived YouTube transcript with timecodes. Speakers are assigned heuristically and may be corrected editorially.
0:00Is it possible to increase enterprise value by converting a standard business into SAS? All right, I'm going to answer this question for you, Luke. Software is not inherently valuable, just like a standard service business isn't inherently not valuable. The thing that makes software valuable are business characteristics that software companies when done right typically have. And so they will typically have high gross margins. They'll typically have high revenue retention and ideally some sort of viral coefficient that allows them to grow quickly. But if you think about any business that had high gross margins, high revenue retention, and lots of growth, you would want to invest in that business. And so software or SAS s software as a service, right?
0:44Typically has when done right all three of these things. If you take a service business and then have an identical software business that has the same characteristics, let's say you have shitty retention, shitty gross margins and no growth, that is not inherently valuable and probably not even more valuable than the service business. If anything, might be less valuable because now you have this whole dev team that you have to maintain where a service business you can just keep going and it's less operationally complex. So no, software does not inherently make anything valuable. It just has characteristics that when done right can be incredibly valuable. Real quick, I'm going to show you the exact 10 stage road map from zero to 100 million plus that less than 1% of companies finish I've now done multiple times. And so I can say with a lot of confidence that these are the stages as headcount increases that you need to get through.
1:28And I broke each of these down by eight different functions of the business, what the constraint feels like, like what are the symptoms of it when you're going through it and then what steps we actually took to graduate. And we've done this across software, physical products, uh, service businesses, brick and mortar, all of this, and it works. And it's my gift to you. It's absolutely free. And so the link's in the description, but you just go acquisition.comroadmap. Just enter your info and it'll spit it right back to you. offering.