Non pushback pushbacks: (1) The 40% Fortune 1000 number does not seem to have change for some time. (2) no one gets fired for hiring D&B which means there needs to be justification for using CRMZ which you already discussed. Given the quality of the product “risk assessment” is something hard to evaluate, it puts downward pressure on pricing I would think. (3) other bigger companies had tried to break into the space before without success and there is competition in the new supply chain business, (4) cash reserve - I agree with Jerry that’s needed to show customers the company itself is solid and I think for the company to grow it takes entrepreneur efforts in Mike’s part which needs cash financing. Overall I agree it’s a good company but yet to be proven IMO. Thanks!
Thanks Jacques. Sorry, perhaps I didn't phrase it properly. What I mean by "trustworthy" is that I'm more comfortable that I understand their motivations, how they think, that they care about the minority shareholders and will keep all important info transparent. Unfortunately, there's no interview available with CBA's CEO and he's supposedly very hard to reach. But I don't have a problem with trusting Mr. Koo, as long as he's keeping that payout at 100% and running a business as good as CBA is
thanks, if I understand correctly, the key variable is betting on new management, that has a very solid business and with a clear way of increasing value.
You could say so. What happens to revenue per employee going forward as well as the cash pile will determine how good of a return shareholders generate
My guess is that a huge chunk of the SG&A is sales and marketing expense to keep existing customers and sign up new ones. NEO cash comp in the proxy is less than $1M so maybe $2M of total G&A our of $10M SG&A?
With a ~10 year avg customer life and such high S&M, what is the LTV to CAC here? Capital allocation also seems like a weak point here given the large cash balance.
Thanks, Manny. For the flagship product, they charge 11.5K for the first user but "only" 1.7K per additional one. For SCM they take 25K for 20 users but for each additional 20 users they give more discount. Both annually, of course. (this is the most recent data I have)
Non pushback pushbacks: (1) The 40% Fortune 1000 number does not seem to have change for some time. (2) no one gets fired for hiring D&B which means there needs to be justification for using CRMZ which you already discussed. Given the quality of the product “risk assessment” is something hard to evaluate, it puts downward pressure on pricing I would think. (3) other bigger companies had tried to break into the space before without success and there is competition in the new supply chain business, (4) cash reserve - I agree with Jerry that’s needed to show customers the company itself is solid and I think for the company to grow it takes entrepreneur efforts in Mike’s part which needs cash financing. Overall I agree it’s a good company but yet to be proven IMO. Thanks!
Very interesting read. I'm keen to understand your comment that you find the operators here more "trustworthy" than for CBA... mind expanding on that?
Thanks Jacques. Sorry, perhaps I didn't phrase it properly. What I mean by "trustworthy" is that I'm more comfortable that I understand their motivations, how they think, that they care about the minority shareholders and will keep all important info transparent. Unfortunately, there's no interview available with CBA's CEO and he's supposedly very hard to reach. But I don't have a problem with trusting Mr. Koo, as long as he's keeping that payout at 100% and running a business as good as CBA is
Thanks... just wanted to make sure I wasn't missing anything :-)
thanks, if I understand correctly, the key variable is betting on new management, that has a very solid business and with a clear way of increasing value.
You could say so. What happens to revenue per employee going forward as well as the cash pile will determine how good of a return shareholders generate
epic. can't believe this substack is free.
Thanks for the support Li!
Nice write-up
Thank you
My guess is that a huge chunk of the SG&A is sales and marketing expense to keep existing customers and sign up new ones. NEO cash comp in the proxy is less than $1M so maybe $2M of total G&A our of $10M SG&A?
With a ~10 year avg customer life and such high S&M, what is the LTV to CAC here? Capital allocation also seems like a weak point here given the large cash balance.
Nice piece. What do they charge for their service. Could be of interest for investors if not too expensive
Thanks, Manny. For the flagship product, they charge 11.5K for the first user but "only" 1.7K per additional one. For SCM they take 25K for 20 users but for each additional 20 users they give more discount. Both annually, of course. (this is the most recent data I have)
I guess they have somewhere between 1,000 and 2,000 customers.
Thx.