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What industry secret are you aware of that most people aren't?
(programming.dev)
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this post was submitted on 24 Jun 2024
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They do care, %100 they care. If you take longer to do task X because the SaaS solution crashes or is unavailable, or causes issues in finance, or a dozen other things then the company will very much care. I literally work at a SaaS company and hear complaints from clients. Money is all that matters, if your solution isn't as good at making/saving them money as another solution, you get dropped. And reliability is a big part of that. A solution that frequently has issues is not a money-making/saving system that can be relied on.
It's not about looking like a fool; it's about what your P&L looks like. That's what actually matters. Say you made a nice slide deck about product X and got buy-in. Walking that back is MUCH easier to do than having to justify a hit to your P&L.
What experience do you have to be making these claims?
I have 30 years of work experience on both sides of the equation with companies of varying size. Once a company gets to somewhere between 500 and 1000 employees, the 2nd level managment starts to attract professionally ambitious people who prioritize thier career over the work to a more a more extreme degree. They never walk anything back. Every few years they will often replace a solution (even a working one) so that they can take credit for a major change. Anyway, you get enough of these and they start to back each other and squeeze out anyone who cares about the work. I have been told in one position that it doesn't matter if you are right, you don't say anything negative about person X's plan. And many other people from other companies and such have echoed that over the years. Now small companies often avoid this. But most software targets the big companies for the big paydays. Of the ones I have worked at, some even openly admitted that financially they couldn't justify fixing a user issue over a new feature that might sell more product because the user issues don't often lead to churn, where as new features often seal a deal.
You seem to be basing how the entire industry works on some people you've encountered who want to climb the ladder. Again, when you stand in front of a board and have to justify your EBITDA, it doesn't matter how good your PowerPoint slide was. They don't have to walk it back, the P&L is numbers, they have to justify those numbers or deal with not hitting budget. A company runs off numbers not initiatives people want to push.
You seem to be ignoring the fact that you have to report metrics to investors. Spend, rev, output, etc. And a poor SaaS solution that has poor quality negatively impacts those numbers. Numbers don't lie, no matter how much spin you put on them. You say you have 30 years of experience both consuming and delivering SaaS solutions but seem to ignore that you have defended your P&L and your performance, all numbers, not office politics. Investors only care about money, dollars and cents, numbers. So what happens when solution X that Bob pushed and no one can talk bad about tanks your topline, or your EBITDA? Then what? You tell the board not to say anything bad about it? That just doesn't make sense.
I haven't been in the board room, but I have seen the department heads deflect by focusing on different numbers that do look good for unrelated reasons. Then blame the poor performance that was the result of a bad decision as an expected outcome of a long term decision. These people at those levels are pros at this. And the board cares about the stock price. Guess what, the stock price is not based on numbers, it is based on speculation. If the ceo can spin it, it doesn't matter what it is. Like how layoffs often make the stock price go up. "We are reducing expenses to accelerate progress and be more nimble..." no they are firing people because they can't manage to use those people to make money.
And I wish it was just me who has encountered these people... but sadly it isn't. If you want an example. Look at Google, and read up on how the culture changed over time as it got bigger. It probably staved off the change longer than most and grew faster, so the number of employees that triggered the change is a lot higher than average, but it's easy to read about.
So you've seen dept heads, not been one, and that's make you confident is saying how all businesses operate?
The stock price is not just based on speculation, Jesus dude. Your revenue massively impacts stock price, saying it doesn't is just straight stupid.
You seem to be giving a lot of options that on their face make no sense while never having been in a position where you would actually have to understand and manage these things.
Stock price is all speculation. Revenue yesterday doesn’t mean revenue today. And you don't buy stock in a company that stays the same, you buy stock in a company that you speculate will go up in value. Revenue can be going up, and the stock price down because people think the price will go down. How do layoffs make revenue go up? Yet they often make the stock price go up. If the stock prices was super dependent on metrics, algorithms would be making soo much money we wouldn't have anything else picking stocks. But the algorithm traders can't predict human speculation. So they tend to work much better on smaller companies where there is less attention and less speculation.
And not all companies by any means just the big ones. And I am sure there are some exceptions, there always are.
The stock price is perceived value. Many things go into that perceived value, such as number of clients and revenue. I mean it's not just a random roll of the dice like you seem to be implying.
Sure, revenue can go up and stock price go down, but that would be a very small dip that would recover ASAP, that's how the stock market works, off of numbers. And showing YoY or even MoM growth bumps the stock price, almost every single time. If you disagree I would love to see examples showing the counter.
"How do layoffs make revenue go up? Yet they often make the stock price go up."
See this is kinda what I'm getting at, again no offense, but you're speaking on topics you don't fully understand. Layoffs does not make revenue go up, but it makes EBITDA go up, which is the actual number most companies care about. Topline rev doesn't mean much on it's own. If you make $1 mil in a year, that's great topline revenue, but if it cost you $980k to make that, you're not doing well. You can make that $980k go lower through layoffs. Your revenue will be the same, but your EBITDA will jump because you reduced expenses. That's how value can go up with rev changing. It costs you less money to make the same amount of money.
"If the stock prices was super dependent on metrics, algorithms would be making soo much money we wouldn’t have anything else picking stocks."
No..... I mean, it's just frustrating I have to explain all this to someone acting so confident. The stock market runs off metrics, yes, it does. But the things that effect those metrics are not just some alrogithm. You can't anticipate how the tech sector will react to new technology, but if you see a company's revenue going up because of new tech, that's a good enough reason to invest. It's not that the stock market is all guesses, it's that it's driven by metrics that are not always clear to everyone engaging in the stock market. For example, the stock markets can run off real estate revenue, and invest based on that, what it could not magically compute with an algorithm is how COVID would impact that revenue. Hence it is "perceived" value, not actual value.
So I know layoffs don't make revenue go up. But in your previous comment you said revenue drives the stock price.
You are so sure of yourself, anyone who disagrees must be an idiot. And you then miread what they are saying because they must be idiots.
But at this point you have just validated what I am saying. You said there is no metric for covid. Correct it was people perceived evaluation that drove the price. Which is what I have said all along. Everyone can see the numbers, so the numbers no longer matter. When you buy a stock, you are betting others will too, but for a higher price. And if you both have the same numbers, then it isn't numbers that would make the difference, it is perception.
Revenue is one of the metrics that since stock prices. There are many, but the point is it's not just all random speculation, it is metric driven.
Maybe I "miread" what they're saying because they're not expressing it correctly. You said quality doesn't matter in products, the stock market is all just guess work, and that you can't run a 4:1 QA to dev ratio. All that is just clearly wrong. You're saying these things so matter of fact like but they make no sense to anyone who's worked with those things.
No.... People's perceived value did not make the stocks go up. You said I misread, you clearly didn't read what I said. COVID impacted revenue in an unpredictable way, that impact to revenue effected the market. Lots of crazy stuff happened during COVID, not all of it effected revenue. You act like the stock market is a bunch of people guessing, like there isn't a massive skill to it. Knowing what to look for and what to track, that's how a lot of investment firms work. Hiring people who watch market behavior and metrics.
When you buy stock you're investing in a commodity, just like gold. The value of that commodity is then impacted by many factors that can effect the value of that commodity. It's not just guess work and make believe lol.