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Welcome. This is Scott Cooper from Andreessen Horwitz, and we're here with Ron Gill, the CFO of

NetSuite, among other, you know, phenomenal accomplishments in his career. And we're going to talk

a little bit about SaaS. And in particular, since we've got the benefit of Ron being here,

a little bit of kind of, you know, the intersection and some of the differences potentially

between how public companies think about SaaS and managing their businesses and also, you know, kind of how private companies think about running it.

So maybe just to get the conversation started, let's talk a little bit about kind of the valuation

environment today. And, you know, unless you want to, you don't have to tell us whether you

think, you know, things are wildly over or undervalued. But probably at a more, you know, high level kind of, you know, what's the argument for why

SaaS businesses actually, you know, ought to have valuation premiums relative to kind of what

their traditional, you know, subscription or sorry, you have, you know, perpetual license

businesses have.

Right.

Yeah.

I think there are some fundamental reasons why a dollar SaaS revenue is more valuable than a dollar of non-recurring revenue. I mean, there's the fundamental aspect that it recurs is valuable. That's probably the first thing I would say. It's just the annuity aspect is so valuable. If you look at a company like NetSuite at a high retention, low churn,

SaaS company, and you do a cohort analysis, you'll get a year over year increase in value of

the entire install base of customers. So more than 100%, even after attrition, after churn,

a year later the install base is worth more than it was the year before.

And that means that acquiring a customer is a huge value.

You're acquiring better than a perpetual annuity every time you acquire a customer.

So that dollar of revenue that's on the P&L this year, this quarter, represents better than a perpetual annuity of that revenue, which is fantastic. So that's the first reason.

The second reason is really because that annuity is not very expensive to maintain, a company

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