For non-software engineers like me, the topic of software can be extremely difficult to grasp. The mechanics and use case of a company’s software, where it is hosted, how the software is used or how it is different from the competition, can be complex. This is especially so for enterprise software that non-tech folks never have the chance to interact with.
Although I’ve read my fair share of IPO prospectuses and annual reports of software companies, many terms may still confuse me. But not investing in software companies because you don’t understand them can severely handicap your returns. Software companies today are highly prized due to their highly recurring revenue model, rapid growth, and expanding addressable markets.
As such, I occasionally turn to blogs and websites from experts who are able to explain the technicalities more clearly. Here are three such sites that I turn to understand software companies.
Software Stack Investing is a blog run and written by Peter Offringa. Peter has a rich history in the software space, leading software engineering teams for Internet-based companies for 20 years and serving as CTO at a number of companies.
His blog posts are long and highly technical but he tries to explain as much of it as simply as possible so that even the layperson can understand.
One of the highlights of his blog is his transparency. He states what stocks he bought and sold and he also incorporates his own personal views on companies and how he thinks they will perform five years out.
Peter does a thorough competitive analysis for every company he covers which gives the reader a better understanding of how one company’s software compares with another.
In his blog, he covers stocks such as Datadog, Alteryx, Fastly, Twilio, Cloudfare, MongoDB, Elastic, Okta and Docusign.
Most of these stocks offer enterprise software, which may be more technical than consumer software companies. As such, Offringa’s blog post helps fill a huge information gap for non-tech experts.
Stratechery is probably of the more well-known blogs focused on technology and media businesses. It is run by Ben Thompson, who worked at Apple, Microsoft and Automattic.
His blog covers much more than pure-play software companies. But when he does cover software companies, he does a great job in breaking down what they do and how they match up to other software.
Some of his work requires a subscription. Nevertheless, the free content on his blog alone already provides great analysis and tools if you are looking for a place to read about tech and software companies.
The Investor’s Field Guide is a website run by Patrick O’Shaughnessy who is also the CEO of the asset management company, O’Shaughnessy Asset Management, that is founded by his father, Jim.
The website contains a collection of podcasts (and transcripts) on his interviews of some of the world’s top professionals in their respective fields. He has interviewed leaders of venture capital firms, CEOs of tech companies, psychologists and other business experts who provide deep insight into their area of expertise.
Naturally, software is one of the topics that he has covered. Some of the more recent podcasts on software include an interview with Eric Vishria, a partner at renowned venture capital firm Benchmark Capital, and joint interviews with Chetan Puttagunta, another partner at Benchmark Capital, and Jeremiah Lowin, the founder of Prefect, an open-source data engineering software company.
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Note: An earlier version of this article was published at The Good Investors, a personal blog run by our friends.
Disclosure: Jeremy Chia does not own shares in any of the companies mentioned.