Trusted enterprise software may hold up as AI reshapes SaaS

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 35:54

   episodes, pointing out, hey, how durable are these revenues? So... what's your take? I think the low end of the market is basically finished. I think there is no safe space. I think the high end of the market where Mark operates, where the large monoliths operate is quite safe. And the tell was this week. The deployment company deal basically shows you what OpenAI is running into. So, you know, you have to put in $4 billion, you get all of these folks, you gave them a 17.5% preferred guaranteed return. For what? Essentially to stand up a competitor to Ernst & Young, Anderson, Deloitte, PwC, Cognizant, etc.

2. 36:42

   et cetera. If you just look at that, that doesn't actually mathematically make that much sense if you look at what those companies are actually trading at. But why is OpenAI doing this? I think why is because at the high end of the market, where all the action is, what people are finding is, hey, hold on a second, this is a lot harder than we thought. It's not like, boop, boop, boop, put in a prompt and beep, bat, boop, it all works. It's not how it works. And so I think we're a point i think we're a little oversold and i now i think this consolidation and the re-rating can happen in the opposite direction so what is the opposite trade the opposite trade is who has constructive net dollar retention who has negative churn that's been really predictable which is a way of saying who has the best relationships meaning they're inside the cxos

3. 37:34

   and the c-suite they have relationships with the ceos and they're trusted and they've been around for 20 years. Those guys, I think, are positioned to crush. Because eventually, Jason, the next trade that has to happen is when the public markets become a little bit less breathless about AI. And they ask one simple question. Okay, guys, you've spent $3 trillion in the last four years. What is the ROI of these tokens? And what's going to happen is they're going to have to go to guys like Mark and other people and say, please sell my tokens. And that's the next shoe to drop if you if you had to ask me so I think you're going to see these revenues, which are like way out of whack, like the multiples on revenue, multiples on assets, multiples of they're not even multiples of EBITDA yet. Those will come way back down. And I think these go

4. 38:24

   back up and you'll find a balance. Yeah. And you've initiated what could only be described as an unprecedented massive stock buyback mark 50 billion i think it's the one of the largest in history yeah we were you know we we want to buy back as much as we can and i would just say that you know look at a high level look there's awesome new capabilities like these coding agents are awesome anthropic is awesome like i am gonna probably use 300 million dollars of anthropic this year at Salesforce, coding, everything's going to be cheaper to make. It's more efficient.

5. 39:02

   I can do things that I just could not do before. I can go faster than ever before. I can implement my software and sell it at the same time. I've never been able to do that before. I can break through obstacles that I've had, you know, just by focusing because I have coding agents and humans together, working together. Today, I have humans, agents, and headless platforms all interoperating. never before. So the opportunity for my own company and the efficiency that I have in my own company in service and support and distribution and marketing across the board is unprecedented. What I can do for our customers, unprecedented. And, you know, to that point, my gosh, have you seen Anthropic? I mean, it is a rocket ship that will not stop because you can use this product to do these incredible amazing things and then and complement it with platforms

6. 39:57

   like ours it's you know it's It's impossible to describe what we're going to be able to do for customers. It's going to be awesome. And never waste a crisis. You've been super focused on the efficiency of the company, headcount, share buybacks, and I'm guessing you're looking at M&A. So it's not your first time. We just finished up one of our biggest deals ever, Informatica, I think it was $8 or $9 billion.

7. 40:23

   It's been awesome because none of this stuff works if you don't have context. You know, the AI is very probabilistic. That is, it can kind of kind of figure things out, but it needs to be grounded in real data and it needs to have that semantic layer that it needs to be locked down into the truth, into a single source of truth, or it just cannot work well. And so our customers want more harmonized data, federated data, integrated data.

8. 40:50

   So we bought Informatica. Our customers want our apps to use those large language models to be able to provide not just automation to their employees, but also to their agents, just like we just said. So if you call 1-800-NO-SOFTWARE right now, for the first time in 27 years, you talk to AgentForce. Hey, AgentForce, what's happening? But then after it authenticates you and you get in the system and it doesn't know who you are, then boom, it'll auto-escalate you to a human being who says, oh, I can see everything you've been doing. Oh yeah, you just need to resolve this, this and that. And so that trinity of the phone, the web and the human being are all together.

9. 41:30

   It's all made possible by this AI. We just could never do that before. That is awesome.