In your year end review you posted:
I had said that I would never exit Mongo again because of FUD, only if their results warranted it. Well their last results warranted it as I saw it. Their rate of revenue growth dropped sequentially from 67% to 52% (since 52 is 78% of 67, that means their rate of revenue growth fell by 22% in one quarter). From two quarters ago sequentially it fell from 78% growth to 52%. That means it dropped by a third, 33%, in just two quarters. Their subscription revenue rate of growth also fell by 21% sequentially. Their operating loss worsened to $14 million from $8 million a year ago. Their adjusted net loss of $15 million was more than double their loss of $7 million a year ago. Their free cash flow loss of $13 million worsened from a loss of $10 million. And those were adjusted: Their GAAP net loss was $42 million! And worsening from $22 million! Everything was worse and going in the wrong direction.
It’s no secret that I have been one of the folks who has repeatedly voiced a strong favorable opinion of Mongo. But, not that long ago I did voice a little doubt as the numbers they have turned in are just not very encouraging.
One of the most important lessons I’ve learned from Saul is to have the guts to eat some crow when it turns out you’re thesis was wrong, no matter how strongly you may have supported an investment position. It is a bit humiliating to admit that you’ve just been wrong, but maintaining a position based on pride is simply folly.
So, I’ve been reconsidering my investment in Mongo. Some time ago I decided that in most cases it does not make sense to sell if you don’t have a target for the proceeds of the sale. Of course, if a company is tanking or something drastic has happened, get out and worry about reinvestment later, but if it’s more or less business as usual, figure out how you will complete the action before initiating it.
So, on the second trading day of the year, I sold half my position in Mongo which had been my second largest position not far behind Alteryx. I turned around and reinvested half the proceeds in Crowdstrike and the other half in Datadog. I won’t take credit for the good timing, that was pure luck.
The point I’m trying to make is not that I made a very good, timely decision. I won’t wax on exactly why I settled on adding to my CRWD and DDOG positions. Actually it should be quite obvious to anyone who reads this board regularly.
No, the point of this post is don’t ever be reluctant to contradict yourself if the facts take you in that direction. I still think Mongo will rule the DBMS world in the future, but I don’t know when the future will arrive. For the here and now, there were better choices. It’s a little difficult to climb down from a strongly supported position (note, I still hold a significant position in MDB), but that’s one of the things that makes a good investor. I think a great deal of Saul’s success can be attributed to his decisions on selling. More than once I’ve seen Saul reverse himself and sell a position in an investment that he not long ago expressed a lot of support for.
You can teach an old dog new tricks if the dog is willing to learn.