- SaaS stocks, as measured by the Bessemer-Nasdaq cloud index, closed at a 1,484.93 yesterday, a record, and just a hair under its intraday high of 1,491.59.
- The raw numbers matter less than the index’s movement. From highs of around 1,400 in March, the index dropped to 892.60 during the early-year market selloff. Since then, SaaS and cloud companies have come roaring back. This is reflected in the new, higher valuation multiple that the companies are priced at by investors today, namley an enterprise value/revenue multiple of 14.7x.
- Briefly, we observe movements in the value of public SaaS and cloud stocks because they inform private market investors about possible exit values for startups.
- So is the run-up in SaaS stocks, therefore, good for startups? Yep. Now let’s get into why clouds shares are going up.
Meta-data is really, really really special. If you haven’t taken time to understand it in depth, you should. Why?
Here are the key points of why, IMHO:
- Meta-data is constantly searched by the most powerful compute clusters and semantic engines on Earth, and Google is the most used.
- By organizing, scoring, matching, and optimizing all types of content, meaning, and context, search engines help power commerce (and even life) across trillions of dollars of transactions around the world.
- We use search every day without thought.
- Search engines are found in almost every software-based application we use, and we use software more in our daily lives than ever in the course of human history.
- Search engines are powered by some of the most advanced machine learning and artificial intelligence algorithms ever written by some of the smartest engineers in the history of the world. Search engine investments have provided one of the most prolific returns of any in history.
Why do I care about meta-data?
One of the things I am most passionate about in life is the ability to change human behavior and help direct it on to paths for growth. Search engines already help do this by matching life experiences. For example, experienced professionals can offer advice to younger professionals, who can search and find it. Therapists can do the same with people seeking help. Husbands and wives can do the same. Search even helps to predict our mates.
Our future is a wonderful probabilities and optimization problem, which is driven by meta-data, search, and machine learning. Today, I believe our growth as humans is powered mostly by a) search technology andb) other humans…and it will transform to another state in the future…transforming lives.
Yes, this post is a little intellectual, but I am trying to find the voice in my passions, and I was trying to make a point about meta-data : ).