software industry Archives - The Grassy Road

It’s not a bubble – the difference between valuation and long term value

Living in Silicon Valley, running a software company with big ambitions I hear the question a lot. Is this another tech bubble? Isn't is going to burst again? The short answer is no. Pundits covering tech tend to confuse valuation with long term value. We may well be in a valuation bubble but unlike the 2000 tech bubble the companies in question have deep, sustainable revenue models. There are certainly some high valuations - per Fred Wilson's view of frothy valuations in April - and these are driven by investor [...]

By Penny Herscher|2017-12-06T17:04:29-08:00August 22, 2011|Boards|1 Comment

Software is different from Hardware

To someone who spent 20 years in semiconductor and EDA, the recent meltdown of Cadence and removal of the executive team is a sad story. It's the end of a long story of great products, explosive growth, customers as partners, smart acquisitions and market leadership that was slowly eroded as the business model got ahead of the fundamental growth of the business.Gabe Moretti, a veteran journalist who covers the EDA industry wrote a thoughtful opinion piece on what happened in the last 4 years in EETimes Asia, and he raises [...]

By Penny Herscher|2017-12-06T17:22:20-08:00October 22, 2008|Career Advice|0 Comments

The power of ratable revenue – redux!

Cadence (CDNS) announced Q2 results today and, while they made the quarter, they've lowered Q3 guidance as a result of forecasting a change to a ratable revenue level of 90% (see primer on revenue recognition).It's like GroundHog Day for investors - perpetual changes in EDA revenue model that crater the stock - subsequent resets of guidance one after the other. Dire results as TheStreet.com reports. Then EDA companies wonder why there are so few sell-side analysts covering the space? It's happened before many times - when will all EDA vendors [...]

By Penny Herscher|2017-12-06T17:25:18-08:00July 24, 2008|Career Advice|0 Comments

Top 10 Laws for Being “SaaS-y”

One of my board members, Raman Khanna of Onset Ventures, sent me a terrific article on how to run a SaaS business - Bessemer’s Top 10 Laws for Being “SaaS-y”It's a really good list - and one where we've learned over the last 3 years to follow almost all these rules - in my words they are as follows - and the article gives some depth on each one:1. It's the 1 year committed annual value of your contracts that matters - anything else and you're fooling yourself2. Your sales [...]

By Penny Herscher|2017-12-06T17:28:58-08:00February 27, 2008|Career Advice|0 Comments

Confusing revenue recognition with SaaS

There's an article in Seeking Alpha today RightNow proves "Software as a Service" isn't perfect - but as often the case the article confuses the revenue recognition model with the service delivery model.Joe Panettieri is right - SaaS has had been advertised as immune to downturns - but this is only the case if it is pure SaaS - that is both the delivery AND the revenue recognition are treated as subscription (see my primer on revenue recognition here).RNOW is going through a tough revenue transition. For years they had [...]

By Penny Herscher|2017-12-06T17:29:41-08:00February 4, 2008|Career Advice|0 Comments

The power of a subscription revenue model

Synopsys announced Q4 results today and, apart from being very good, they illustrate the fundamental power of taking revenue ratably. Primer on the difference at the end of this post…Now, going to ratable (subscription) revenue is not a new idea, and both Cadence and Synopsys (the two leaders of the EDA industry) had been flirting with this idea for more than 15 years. Both had done a partial shift, reported what percentage of new business was coming in as subscription vs. term, postured at each other as to which was [...]

By Penny Herscher|2017-12-06T17:32:34-08:00December 7, 2007|Career Advice|4 Comments