Sometimes, I feel like launching my own little company but being inherently lazy, I find it more fun to wager my money on others (with due diligence); companies that are growing incredibly fast and have some hard working CEOs at the helm.
Read this a little slowly and try and see if this perspective helps? I have used this thinking to determine what goes into my portfolio ( specially as we head into 2021).
[ Case Study: ] Let’s imagine that the legendary Saul launched a software service that has taken the world by storm and suddenly millions of users are using his service.
Now let’s try and see what magic Saul did to make his service so successful?
# Saul had an “Aha! moment” and came out with a brilliant idea and patented it ( no one can help you with this except Saul!)
# He hired a few really smart devs ( hope I’m one of them, since he has the resources) to implement his idea.
# The devs wrote the code and deployed the application/service on some public cloud (Azure, AWS, GCP); only a moron would go on-premises!
Saul was thrilled and being an astute businessman with a keen technical inclination asked his devs the following questions…
1. What about Availability and Performance? ?( As he wanted his users to have a great experience on his website and be engaged ); as consumers are really impatient these days!
2. What about Security? (Since he wanted his user data and his own website to be safe and secure.)
3. What about Monitoring? (Since he understands the importance of Monitoring and also that #1 and to some degree #2 are impossible without Monitoring)
4. What about Data Analytics? (Since Saul is smart and understands the value of the telemetry data from his site.)
5. What about Scalability? ( Customers can spike 10x for reasons known and unknown; think covid??)
The reason I illustrate the above “five key areas” is because all software companies that want to be successful have to care about them; there’s no opting out!
… back to the story…
The devs answered Saul’s queries as follow…
1. What about Availability and Performance?
Answer: FSLY, because they are the best in this category. NET was also a great choice and could use them both. (>> sidetracking…in my humble opinion NET has a rockstar CEO while the FSLY CEO fails to inspire.)
2. What about Security?
Answer: CRWD, Best player out there (and probably undisputed) for overall security. No one does Security better than them!
3. What about Monitoring?
Answer: DDOG, Unifies the developers, operations, and security teams into one platform ( and they are just getting started!)
4. What about Data Analytics?
Answer: SNOW, They’re the true Data Cloud and at the same time Cloud agnostic!
5. What about Scalability?
The public cloud providers take a lot of that load and is greatly aided by the CDNs ( FSLY & NET)
SO, WHAT DOES THIS ALL MEAN?
Suppose, let’s imagine that instead of Saul, the business was launched by Bear or muji or some fool like me… What changes?
…Only the business outcome… was that moment of inspiration really a “Aha! moment”? Businesses can go up and can go down “BUT” NOTHING CHANGES as far as the areas we’ve discussed above; which are Availability and Performance, Security, Monitoring, Data Analytics and Scalability.
That’s my “Pick-And-Shovel” play as we’ve already gone past this Paradigm Shift. And the way future businesses are headed. https://discussion.fool.com/paradigm-shift-has-happened-34663619…
If you’ve read this far…
The secondary part of this story is… “What important problem in this world does your application/service solve using software”?
This is where you can dump almost all companies in the market today( financial, health care, business, e-commerce, travel, fitness and whatever you can think of). However, the most important part is that no matter what problems these companies are solving, they HAVE to think about the five key areas above.
Also, did you notice something “very subtle” in that whole story?
Most of the choices were “Developer driven.”. In this age of the cloud, we just cannot ignore the developers ( anyone doing that is missing out the whole story. ). Almost everything that you’re using now ( including reading this page) is in some way dev-driven!
This is the rationale why I’m heading into 2021 in this order>>
(Tier 1: Foundations) CRWD, DDOG, SNOW, FSLY & NET,
(Tier 2: Solving Important Business Problems & built on top of foundations) ZM, DOCU, SHOP, Very small position in some SPACs ( IPOB, MP, INAQ,DM). I sold my PTON position as I needed more cash to increase my CRWD, DDOG positions.
Hope this helped convey my thinking process to some degree and in a small way my give back to this incredible board!
Anyways, the most important part is that this has been a unique year. It’s hard for me to call it good or bad or ugly; depends on the perspective. I once again would like to thank Saul and all of you who contribute to his awesome board! Personally, my portfolio has gained much more this year than I could have ever imagined. It seems almost magical to start the year with ZM and end it with CRWD!!!
At the same time, millions around the world are suffering and let all of us who can, do our little, lend a helping hand to help someone around us.
I’ll be away for a while and wish you all Happy Holidays and a great year ahead!!!
Cheers!
ronjonb
P.S. As I’m getting a little used to twitter I may post some little nothings @cloudandstocks.