I figured there would be a response like this, but I still believe what I said. I’m not talking generic label food manufacturer recession proof, but in general, these SaaS companies are SAVING the company money. That is the whole point of many of their existence.
They are not making equipment used in manufacturing (where orders can dry up).
They are not making luxury items.
They are not making building materials (where building can go down in a recession). They don’t depend on new builds whatsoever.
They are not in the advertising industry (aside from TTD), meaning they are not subject to ad spend cuts common in recessions. They don’t depend on advertising dollars like internet boom 1.0.
I know people are going to disagree and say that’s reckless behavior (I don’t care, I don’t do macroeconomics anyways so not plotting for a recession or making it a factor in my decisions, I’m only trying to rationalize the resilience they show during market drops). But those people who disagree should at least admit this group of growth companies are doing something materially different than many previous growth industries-saving companies money.
I also don’t care about subscriptions or “not having to start each year with $0 revenue.” Subscriptions can be cancelled and not renewed, there’s such a thing as backlog that carries over to each new fiscal year for virtually every b2b company. Texas Instruments has design wins that will see repeat orders year after year. Xilinx has design wins that will see repeat orders for sockets that can only use their chips. But they are making “stuff” which is generally an extra expense. But you tell me if you need to cut back on security spend how you get rid of ZScaler when the whole reason you bought it is because it saves you money.