Before I start yakking here’s the TL:DR version of this long post: After taking a deep dive into Coupa I’m impressed with this company and bought a good-sized position. What they do - help companies manage ALL spending makes them particularly well-suited to weather this storm. I love their focus and the CEO strikes me as ultra elite. I’m in for the long haul. For the geezers - TL:DR (Too Long: Didn’t Read) is a wisecrack the youngins make if you send a text with over two well-crafted sentences, they just send back TL:DR.
Below I’ll provide all kinds of helpful links to introduce you to the company.
But first I want to add …
On buying in stressful times
For those of you who are new to these chaotic times never forget the way it is now is NOT the way it will always be. Life changes. Time passes. Always, in every way. After 9/11 every day the media put out scenarios - each more terrifying than the one before. The world was collapsing. Terrorist cells were impossible to stop. They were going to attack our power grid, water supply, internet, etc… But though some bad incidents have happened they were nowhere near what we feared.
Okay, onto business…
I am NOT a numbers guy. So here are what Fools who can do math have had to say about Coupa…
NOTABLE SAUL BOARD POSTS ON COUPA
Saul’s End of February 2020 write-up
In his Coupa write-up, Saul quoted Bert Hochfeld…
Coupa is a leader in the e-procurement space. It has continued to exceed its targets for growth, earnings, and free cash flow. It has built a substantial competitive moat that may not be fully appreciated. It has grown its TAM prodigiously by expanding into ancillary spaces that enhance the value of e-procurement. At this point, it seems destined to become the absolute leader in its space and to achieve the kind of profitability that leaders often deliver in the enterprise software world.
Link to cgall75 write up
Link to MajorFool20 write up
Link to Muji’s write up
ABOUT THE COMPANY
From the Coupa Site…
At Coupa we have a higher purpose. From our own operations to what we offer clients, we are focused on one thing: business value. It’s more than how much you paid for something or what a new solution saved. Value is the quantifiable, measurable improvement that a solution or process delivers. It’s explicit, but it isn’t a singular achievement or a moment in time.
At Coupa, we are transforming the way that businesses manage their spend. In partnership with the Business Spend Management (BSM) Community, we are co-creating new and unique capabilities that empower our customers, partners, and suppliers with increased visibility, actionable insights, and solutions to manage their spend. Over the past twelve months alone, we have co-innovated hundreds of new capabilities with our BSM Community, setting the pace of innovation for the industry and helping businesses deliver real measurable value.
If you study their site - you see a laser-focused company that emphasizes four key areas: Procurement, Invoicing, Payments and Expenses. The goal is to make it as simple as possible to see every penny spent, get the best deals, make it as simple as possible for partners/suppliers to work with them, identify fraud, score the best deals and more. The CEO seems fanatically devoted to making all these processes as effective, measurable and simple as can be.
What I love so much about this business is that the services they provide are mission critical. I can’t see companies cutting their relationship with Coupa during this downturn (unless they go under) and I can still seeing them buying it - even more enthusiastically - as belts tighten.
Video overview of the company
Video of CEO talking about corporate culture
Video about Expense Management
Video aimed at prospects
An actor plays Accounts Payable and an actress plays Accounts Receivable in couples therapy. I found this a clever way to clearly articulate the pain points for prospects.
Spend Smarter Ad
What I see here are ads/videos that do a good job of articulating what Coupa does and they captures a playfulness that seems to permeate the culture. Every organization on some level has cultish qualities. Coupa’s culture seems a bit intense and quirky in this area - they have dance parties and film elaborate dances. While this might grate on some nerves of more conservative folks it seems like it works for them. On the surface it looks like people really enjoy working there and the company, especially CEO Rob Bershteyn, get rave reviews on Glassdoor.
What I love about this company is they seem to genuinely reflect the ideals of Conscious Capitalism that David Gardner often talks about. Bershteyn often talks about the Business Spending Management Community and realizes that we can all win - management/workers/partners/customers. Toward the goal of being thought leaders in this community, Coupa regularly hosts a big splashy, often star-studded (Schwarzenegger, Richard Branson, Woz) event called Coupa Inspire. They call themselves the “Salesforce of Business Spending” and that seems accurate. For those who don’t know, Salesforce puts on a gigantic event each year called “Dreamforce.” And Coupa is clearly emulating that whole vibe.
STORY OF THE CEO
The CEO is, by far, the most essential ingredient of any company. Bershteyn strikes me as a long home run. He came to the USA as a child with his family. They left Communist Russia and came to my hometown of Brooklyn virtually penniless. Bershteyn remembers living in crime ridden neighborhood, scrounging for discarded furniture with his dad and hearing stories of the miserable life his father lived in Russia - one not based on hard work or merit but some idiotic notion of total equality. He talks, movingly, about the time he realized kids in America have paper routes and that he could too. And not only that but the harder and smarter he worked the more money he could make. He then went on to build a business selling baseball cards though he didn’t know what baseball even was.
Of note, Bershteyn did not found Coupa, but he did take the CEO role early and by all measures I can find - Gartner Magic Quadrant, reviews online, winning Saul’s approval - he is a fantastic CEO. Personally I put a higher value than others on the alignment between the CEO and the company. Jeff Green of TTD has spent his life in Advertising, thinks he can reinvent advertising and is a legit man on a mission. Bershteyn put himself through college and graduated with an MBA from Harvard. What better biography could you ask of a CEO whose company manages spending than a guy who has, in his DNA, the feeling of how precious every cent is. And how incredible free markets and meritocracy really are?
INTERVIEWS WITH BERSHTEYN
Interview on CNBC with Jim Cramer
Lessons Redefining a Really Big Category with Coupa
Another Interview with Cramer: Optimizing Spend - CNBC
BERNSHTEYN AT INSPIRE EVENTS
2017 Keynote – Rob Bernshteyn
2018 Interview done by CEO with former DocuSign CEO
2019 Interview with CEO Rob Bernshteyn
THE BOTTOM LINE
Coupa’s story is crystal clear - they help businesses manage spending. This is well run company with a clearly articulated culture that is likely to build a workforce uniquely suited to getting their oars in the water and rowing vigorously in the same direction. They’re led by an inspired, aligned, exceptional CEO and its services are mission critical, particularly during a bear market/recession. The market for their services is obviously gigantic. And they also seem fantastically innovative. My intention is to hold this for the ultra long term.
BONUS THOUGHTS ON A KEY INTANGIBLE - VALUE OF A NAME
When Juliet is tormented by her inability to openly love Romeo, who comes from a rival family, she mocks the idea of names and says “A rose by any other name would still smell as sweet.” I think she’s wrong. I think names matter. If a rose was a called a Reeking Butt Poppy I actually think that would make experiencing its scent somehow less sweet. Coupa is the least popular, not disliked - just not popular - stocks in the current crop of “Saul” Stocks.
I think this is 100% because the name Coupa is absolute crapola. Just terrible. It sounds like a cheap couponing company. I once read interview with CEO of Trulia (can’t find it) who said he’s convinced that if he had better name he would have sold it for much more money or even won the race to be #1 in online real estate.
But Peter Lynch said that he loved companies with lousy names - like Pep Boys: Manny, Moe and Jack - because he felt that while a bad name can keep a stock’s price down as fund managers don’t want to explain the lame name to clients in case the stock tanks, he felt that business performance always wins out. So for Lynch a lousy name gave him a built-in discount.
I really think that the reason Zoom, Crowdstrike, MongoDB, Datadog and Alteryx are more popular is that they have slicker, or even just more memorable names. Heck, even Red Violet - which I think is absolute caca - is memorable. Coupa is right up there in quality with all these stocks and may very well whip them all in the end. Yet… crickets. Interesting. If I have missed anyone’s critique of the company my bad! But I could not find one.