Important points
- The SaaS market is undergoing a transformation, leading to increased software spending.
- Despite strong revenues, Monday.com is undervalued in the current market.
- Market sentiment and business operations in the software industry are currently disconnected.
- Building comprehensive software involves more than just creating a user interface.
- Maintaining and evolving software over time is a complex and underappreciated task.
- Vibe Coding, despite its technological advancements, is unlikely to disrupt existing software companies.
- Investors don’t see Vibecoding as the main factor influencing the software company’s stock price.
- The expected dominance of companies like Amazon in enterprise software did not materialize. Instead, there is a boom in companies building their own infrastructure.
- Companies like Anthropic and OpenAI are focused on different opportunities and are not expected to capture all of the company’s value.
- Selling software to enterprises requires a guided approach, rather than relying solely on product-driven growth.
- The enterprise sales process is fundamentally different from consumer software sales.
- The adoption of AWS has led to unexpected growth for enterprise software companies building on its infrastructure.
Guest introduction
Eran Zinman is the co-founder and co-CEO of monday.com, a leading Work OS with $1.3 billion ARR. He previously served as the company’s chief technology officer from 2012 to 2020, where he led the rebranding of dapulse to monday.com in 2017, expanding from a team management tool to a comprehensive business operating system.
Transforming the SaaS market
The SaaS market is undergoing a major transformation, leading to a significant increase in software spending.
— Elan Zinman
Companies will spend 10 times more on software than they do today. The Saas apocalypse is real.
— Elan Zinman
- Changes in the SaaS market are characterized by increased economic pressure on software evaluation.
- Understanding these trends is critical to navigating today’s software environment.
- This transformation will be driven by both technological advances and changing market dynamics.
- Businesses are expected to significantly increase their software spending in the coming years.
- This transformation presents both challenges and opportunities for SaaS companies.
- The evolution of the SaaS market is changing the way companies approach software investments.
Monday.com Market Rating
Monday.com is significantly undervalued in the current market despite its significant revenue.
— Elan Zinman
It has nearly 1.3 billion in revenue, but is worth just $3.9 billion on the public market today.
— Elan Zinman
- The discrepancy between Monday.com’s earnings and market valuation highlights an important point for investors.
- Understanding market valuation metrics is essential to evaluating Monday.com’s financial performance.
- This undervaluation reflects broader market trends affecting software companies.
- Investors should consider both earnings and market sentiment when evaluating software stocks.
- The current market environment makes it difficult to accurately value SaaS companies.
- The Monday.com case highlights the importance of aligning performance with market perception.
Disconnect between business operations and market sentiment
There is a large disconnect between corporate activity and market sentiment.
— Elan Zinman
We need to distinguish between what is happening in the business and the change in sentiment that has occurred because of it, the negative sentiment that is directed toward software companies.
— Elan Zinman
- This disconnect highlights the complexity of current software market dynamics.
- Understanding this difference is critical to market analysis and investment strategy.
- Negative sentiment toward software companies does not necessarily reflect actual business performance.
- Investors need to distinguish between business fundamentals and market perception.
- This divergence can lead to inconsistencies in valuations and investment decisions.
- Navigating this situation requires a nuanced understanding of both business operations and market trends.
Software development complexity
There’s a big difference between creating a user interface and building comprehensive software that works effectively across your organization.
— Elan Zinman
I think there’s a big difference between vibecoding a user interface and building actual software that works across an organization with all the depth and functionality built into it.
— Elan Zinman
- Building comprehensive software must address your organization’s needs and capabilities.
- The challenges of software development go beyond creating the initial interface.
- Effective software must integrate seamlessly throughout the organization.
- Understanding these complexities is important for successful software implementation.
- Software depth and functionality are key factors for long-term success.
- Developers must balance user interface design with comprehensive software functionality.
Software maintenance challenges
People underestimate how difficult it is to maintain software over time.
— Elan Zinman
I think people underestimate how difficult it is to maintain software over time. I think it’s very easy to create the first piece of software, but changing it to be adopted over time requires a lot of effort and a lot of dedication.
— Elan Zinman
- Software maintenance is a complex and ongoing challenge for developers.
- Initial creation of software is often easier than long-term maintenance.
- Adapting software over time requires a lot of effort and dedication.
- Understanding these challenges is important to assess the viability of your software.
- Maintenance includes responding to evolving user needs and changes in technology.
- Developers must prioritize long-term maintenance strategies to ensure software success.
Limitations of vibe coding
Vibe coding does not disrupt software companies despite technological advancements.
— Elan Zinman
I think this technology is great, but there is a unique vibe coding feature within the product…this is my least favorite feature, but I don’t think that will happen.
— Elan Zinman
- Technological advances in Vibe coding are unlikely to disrupt existing software companies.
- The limitations of vibecoding have been recognized by industry experts and investors.
- Understanding these limitations is important for evaluating new technologies.
- Vibe coding has minimal impact on a software company’s reputation.
- Investors don’t see Vibecoding as the main factor influencing software stocks.
- Established software companies are unlikely to be disrupted by advances in vibe coding.
How AWS impacts enterprise software
The hope that companies like Amazon would capture all the value of enterprise software has not materialized. In its place, a boom of companies building on top of infrastructure has emerged.
— Elan Zinman
What actually happened is the exact opposite of what we saw as a boom in Amazon-based companies and exponential growth in software.
— Elan Zinman
- The adoption of AWS has led to unexpected growth for enterprise software companies.
- Amazon’s expected dominance in enterprise software did not happen.
- Understanding this change is critical to evaluating the evolution of the software industry.
- The growth of companies building on AWS infrastructure highlights new opportunities.
- AWS’s impact on the software industry has reshaped the dynamics of enterprise software.
- The enterprise software landscape is characterized by diverse growth opportunities.
The role of AI companies in the enterprise space
Companies like Anthropic and OpenAI don’t capture all the enterprise value because they don’t focus on fundamentally different enterprise sales processes.
— Elan Zinman
I don’t think they capture all of the enterprise value. Because they have bigger opportunities ahead of them and that’s not their focus.
— Elan Zinman
- AI companies are unlikely to dominate the enterprise software market.
- The focus on different opportunities limits corporate value capture.
- Understanding these limitations is important in assessing the role of AI companies in the market.
- The enterprise sales process is fundamentally different from consumer software.
- AI companies are focusing on broader opportunities and shaping market influence.
- The role of AI in the enterprise sector is characterized by various opportunities and challenges.
Complexity of enterprise software sales
Selling software to businesses requires a different approach than product-led growth. Organizations prefer a more guided adoption process.
— Elan Zinman
No one buys software for their entire organization based purely on PLG play…they want a handheld version, especially if they want to use the software across their organization.
— Elan Zinman
- Selling enterprise software requires a guided approach, rather than relying solely on product-driven growth.
- Organizations prefer a more structured adoption process when it comes to software implementation.
- Understanding these complexities is critical to successfully selling enterprise software.
- A company’s sales process involves responding to the organization’s needs and preferences.
- Product-led growth strategies are less effective in the corporate sector.
- Selling enterprise software requires a nuanced understanding of organizational dynamics.
