YouSaid · the spoken record

Jake S. Cohen

lines on the record: 17
first: 2021-02-23
most recent: 2021-02-23
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Record or order that customer record or order is maintained consistently regardless whether the customer just bought a product or wants to be serviced or wants to be marketed, et cetera, right? As these companies accumulate data over a long period of time, they have tremendous insight. They have 360 degree view of your preferences and taste what's likely to be attractive to you, what is not likely to be attractive to you. They understand you and me really, really well. Not in a creepy way, but in a good way, right? And if you apply artificial intelligence filters on top of this treasure trove of data, how can we go about making experiences for these customers and make money at the same time, but offer value to you, offer value to me? That is a part of the discussion that has been lost. And that is a trend that people seem to be interested in a couple of years back and all of a sudden there's been not much attention, but I think it's going to be very, very significant.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely, yes. There are a couple of things. One is artificial intelligence and the other is IoT or Internet of Things. So this whole pandemic, we just got so caught up on identifying companies that benefit from work from home and extending the thesis into what if work from home, what if I'm not saying that it will. And I'd rather prefer go to the office any day love home. But I think we need to get back to a more normal situation. But I think investors have been extrapolating work from home into the next three to four years and are assembling a basket of companies and stocks that will benefit from this theme. However, in that process, what has been lost is the attention to artificial intelligence and Internet of Things, particularly artificial intelligence. What fascinates me is that these established companies, they're innovating, they have what we call in the tech industry common data models. That is once they pop in a customer.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Slow growth, but they're also growing pretty rapidly. So, if you look at this middle section of the barbell, investors seem to have lost epitome a little bit. And so that's where the opportunity is that when you look at very high valuations for a reasonable chunk of the sector, when you look at the middle part of the bar belt, you still have opportunities. Very good opportunities.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. Yes. I mean, the concern and valuations are a very legitimate one. However, what we see is a bit of a barbell. That barbell, you've got one another barbell that has an orientation towards value stocks. That's not just technology, but just overall, how do you gravitate towards value and cyclically exposed parts of the economy and how do you go along those sections of the economy? That has nothing to do with software. And then the other side of the barble, what people are buying is high growth technology companies that are trading at very high valuations because they've learned the lesson that during a pandemic these trends got accelerated. So why do I want to wait to bet on some of these younger companies that are going to be the winners of tomorrow? So let's just get really aggressive. But that's led to some big multiples. What has been ignored is the middle of that barbell where you've got very high quality companies that have been around for a very long period of time that are very established franchises, very profitable.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Given the backdrop and the acceleration in this digital transformation, we've seen a big run up for many technology stocks over the past couple years. Has that changed the way you think about finding opportunities in the sector and how you value these shares?”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“They come to the conclusion that look, I don't need to buy space to build buildings, I don't need to enter into a new lease, I don't need to spend as much on TE that I did before. Travel and expenses are roughly 200 to 300 basis points of a company's revenue. And they're looking at this and saying, I can save a lot of money here. At the same time, how do I build great enduring customer experience? Not just customer employee experiences. How do I do this all in the digital world? So they're shifting their emphasis from investing in hard dollar capex and hard dollar buildings and spending on things to being more digital. And how do we still get the same efficiency, the same satisfaction, the same output?”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“That's a great question, very topical. What we found to be really interesting was even CEOs and executives that have been through multiple cycles, like the mainframe cycle, these are not extremely young entrepreneurs. These are very seasoned veterans of the technology industry. And you would think that they would take a little bit of time to change their thinking towards adapting to the new world. Not really at all. They're looking at everything. They're looking at, for instance, I joined Goldman Sachs late December. I was onboarded virtually. I've not actually met anybody in person officially just as yet. Now, how do you go about making the process of onboarding a virtual but a good experience? How do you go about the process of assimilating this person into your firm's culture? How do you make that as much as possible digital, right? And how do you go about managing your office space? How do you go about managing your travel and expense budgets? All these things are big factors that executives of big software companies are grappling with.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Context of numbers. Pretty stunning, I have to tell you. Entirely, the cloud is what we call the cloud industry. I know you refer to a trillion dollar TAM. And the way we come up with... If you look at traditional enterprise information technology, it's about 1.4, 1.5 trillion. It's about 175, 200 basis points of global GDP. If all we did were to just merely substitute the old with the new, that alone is about a 7x. We think it's actually going to be even bigger than that. And I can throw an additional couple of perspectives. When I joined the sell side, started covering software in the US, software was about 50 basis points of US GDP. Today it's about 300 basis points. The relative share is up about six X, right? So numbers, regardless of how you look at it, are just so low in the context of a broader market and the context of a world that is getting more and more digitized.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Let's talk about what's driving that shift during this pandemic and also even prior to the pandemic, there has been a big shift towards doing more things online. Why did this digital transformation thing even get started in the first place? Everybody looks up to Amazon and says, you know, if they were able to digitize the process of buying and selling things, how does that impact my industry as I distribute my product? How do I get customer affinity? How do I keep track of customers online? How do I cross-sell? How do I understand customer behavior? How do I mine these patterns? That's the catalyst for this whole process. So as a result, what you're finding is customer relationship management, supply chain management, the process of even doing accounting, the process of planning, workforce scheduling, massive conventions, kickoff meetings, ordering food, all these things are being digitally transformed, right? And that is the big picture thing that's going on as to what do you do when you put this in the”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“So you put together a presentation for investors called The Trillion Dollar Cloud, which is a good catchy title. How much growth is still left in software moving to the cloud and what's driving that shift?”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“That's another thing, whereas that leaves software? Is it going to be less desirable as an investment category? The fourth and final is big valuations. We've seen extraordinary valuations. The kind of valuations that I've not seen in my 25 years of covering software except during the dot-com bubble that we would all like to forget from 1990 to 2000. But barring that, you've got some big valuations. Is this sustainable? These are the big questions on investors' money.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Great question, Sheikh. I thought about that myself as I joined Goldman Sachs. Did we see a big pull forward of spending in 2020? The group obviously has had a huge run. In 2020, Goldman Sachs Software Universe was up about 90%. It's very rare to see that kind of a move, right? The questions, therefore, on investors' minds are, we see a pull forward of spending? Did we do a lot of Zoom, a lot of collaboration, a lot of security software buying? And are we going to be holding tough comparisons in 2021? The other big question that investors ask is if the vaccines do their work and we get back to a normal economy, what does that mean? Are people going to buy less software? Is digital transformation going to revert itself? And we go back to the old days, right? Thirdly, what do you make of this rotation? There's a big call to be made by several houses that we're going to be rotating and we are already rotating from growth stocks to value stocks.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“It'll be hybrid. We won't be all working from home all the time, but maybe a couple of days, three days, four days. So there is a view that we're going to be doing more and more of these meetings digitally. We're going to be flying less. We're going to be spending time at airports a whole lot less. And we're going to be doing fewer conventions, not on absolutes, just fewer than what we did before. So their view is, depending upon who you talk to, we had the opportunity to pull a variety of CEOs of software companies not too long ago. One CEO said he expects 0% of travel to come back. That's an extreme outlier. Now the CEO said 70% of travel is expected to come back. So you got a range of responses in between. There's certainly an underlying assumption that this is more or less the way we're going to operate with some modest changes.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Interestingly, software companies that have been articulating and advocating the cost of digital transformation are finding themselves in, and I hate to say it, we're going through a very unfortunate setting here, but their businesses are actually exceptionally well positioned, have been exceptionally well positioned to go through this pandemic. So part of their behavior is somewhat self-reinforcing in that the trends that accelerated the adoption of whether it's online customer support or online e-commerce or collaboration or Zoom video conferencing, audio conferencing, et cetera, they expect this to continue. Now, we may think, and we wish really in our industry particularly, where it really is very productive to sit around the table and discuss cool ideas, innovative ideas, teamwork, and all that is hugely useful, not to say that it's not useful in the software industry, but there is a view that is predominantly skewed towards, hey, you know, this is more or less the way we're going to be working.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Gain wallet share as you go through this transformation. And a few companies really stood out here Microsoft, Okta, ServiceNow, Workday, Slack, et cetera. These companies all stood out with respect to how customers view these vendors as strategic providers that they think will gain more of their precious wallets”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Was what are your priorities? We asked them, you know, coming out of the pandemic if the vaccines do their work and we get a normal economy or semblance of a normal economy. What are the things that you've been holding back that you're going to be spending money on? And a few things popped up there, which was number one, public cloud, which is a big topic in technology. Not a big, it's the biggest topic in technology, probably one of the biggest topics in the world. So depending on the public cloud is an important priority according to this survey. Number two, business intelligence and analytics is a huge item as well. Security and compliance, obviously it stands to reason that given that we're digitally transforming ourselves, we are opening up ourselves to more security portals and that needs to be invested in particularly. And there's a whole bunch of priorities beyond that. But those are the things that really stood out in this particular survey. And then finally, I'll say we also really care about individual companies. And we ask them, hey, who are the companies that are likely to”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. So this trend called digital transformation has been underway for quite some time. So it's been on for several years now. And what we saw was the pandemic started to really inflect the tone of digital transformation. We said given the big run in the group, why don't we do a survey to see how customers are actually prioritizing or maybe they're not prioritizing digital transformation? What's the real truth here, right? So what we found from the survey, which again is an anecdotal survey, we talked about 50 customers. It's not the entirety of the world, but these surveys are generally nonetheless useful at giving us some insights. And what we found was that people expect to accelerate their spending on digital transformation in 2021. So for instance, if 11% of IT budgets were dedicated to digital transformation in 2020, that number on a composite basis is going to about 15%. So pretty decent growth, right? A few other things that we found.”
2021-02-23 · Goldman Sachs Exchanges · Digital Transformation and the Future of Software · IDENTIFIED FROM THE TRANSCRIPT