Valuations aren t ridiculously high. But perhaps the most compelling difference is the quality and the determination of entrepreneurs in this climate. You want the people who realize the risk but still want to do it. When times are tough, companies start looking for ways of cutting costs, and software is a good way to achieve this. Enterprises, in his view, also make better customers than consumers.
Sales are almost always through direct models, and they are customers for a long time.
Because of that, software companies generally require a much smaller up-front investments than other companies. You don t need manufacturing or assembly plants, it s just people and computers. This leads to amazing margins. The cost of goods sold is between 50 percent and 70 percent for most hardware companies. For most software companies, it's about 5 percent, Bhusri said.