Cybersecurity Talk With Muji

Investment Analysis Clubs Saul’s Investing Discussions
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There was a very interesting talk on Cybersecurity this morning on Twitter @convequity @investiAnalyst. Muji was one of the panelists. I missed the “S vs. CRWD” part of their conversation, but heard most of their “FTNT/PANW vs ZS” and whether SAAS is in a bubble. A few things I gleaned (forgive me if some doesn’t make total sense. I’m new to this so maybe someone can help fill in the blanks):

  1. Is SAAS in a bubble? Who knows? But comparing the gross margins and revenue growth decay of software companies now vs. 2007 (pre-SAAS) showed that gross margins are about 850 basis points higher with SAAS and revenue growth decay is slower. Duh. But it explains why companies like SNOW are still near their 52-week highs. Money managers realize the stability of their growth and don’t want to miss out. All things Saul has stated before.

  2. A couple of the analysts think ZS is over-rated and were very high on PANW and FTNT. What are the problems with ZS? a)According to them, ZS has aging architecture (Muji disagreed) and guys like FTNT are catching up. b) Chaudhry is an excessive micro-manager with extremely high TO, especially in marketing, which is what the comp excels at. c) Pricing is murky (none on website). d) High friction deployment (Muji agreed but thought this was a plus. Seems to me this would create a moat) e) One guy even questioned the “SAAS’iness” of ZS, not cutting edge like NET. f) They said ZS is known to have deployment issues.

  3. Muji said basically the numbers speak for themselves.

Unfortunately, I couldn’t re-listen to the talk to flesh out some of the points. Maybe someone else who heard it can add.

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“Chaudhry is an excessive micro-manager”

Very happy to hear Muji’s positive opinion on ZS products.

With regard to the dissing of Chaudry, doubt those guys know what they are talking about.

The references you site sound very much like the Convequity SA article i read about 6 months ago. The article was quite good to excellent until they stepped outside their area of competency and came up with this attack on Chaudhry’s managerial effectiveness. Obviously, the results since that June 22 SA piece have favored believers in Chaudhry’s leadership. But i wasn’t so sure they were wrong about ZS technology, one of my many areas of ignorance, so your report on Muji’s opinion is reassuring.

What i don’t need help on is managerial leadership. That is my area of expertise. IMO, Chaudhry rates at a very high level, as do Prince (NET) and Arora (PANW) in that space.

BTW, people who micromanage, do so when they are more well suited for a lower level job and not among those seeking more complexity via rapid expansion. That they raise micromanagement as Chaudhry’s weakness tells me they don’t know the territory, and probably obtained their conclusions from rationalizing former ZSers, to put it politely.

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According to the ZS Glassdoor reviews, out of 1245 reviews, Jay got a 98% approval rating, with a 4.6 overall company rating.

I don’t think people like micromanagers very much. So we would have a discrepancy in this case.

https://www.glassdoor.sg/Reviews/Zscaler-Reviews-E359434.htm…

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