Yet Another Value Podcast - Mostly Borrowed Ideas on Autodesk ( $ADSK)

Episode Date: March 22, 2021

Abdullah Al-Rezwan from Mostly Borrowed Ideas ( https://mbi-deepdives.com/ ​) returns to the podcast to discuss his latest research pick, Autodesk (ADSK). The company successfully did the transition from a licensed to subscription business model, and with that transition behind them, Abdullah discusses why the future is brighter than ever and why Autodesk will benefit from an infrastructure boom.Abdullah / MBI's first appearance on ETSY: https://www.youtube.com/watch?v=muhNdYcNHgk Chapters0:00 Intro2:00 Being a generalist versus expert7:15 Autodesk overview17:30 Breaking down Autodesk's different segments26:10 Discussing some more Autodesk bear points35:50 Can Autodesk use their distribution to launch new products?40:45 Analyzing ADSK's CEO and their LT targets53:35 Noncompliant user opportunity1:02:20 Valuation discussion

All right. Hello, and welcome to the Yet Another Value Podcast. I'm your host, Andrew Walker. And today I'm excited to have for the second time on the podcast, Abdullah from MDI Deep Dives. Addula, how's it going? Pretty good, pretty good. Thanks for inviting back, Andrew. I've enjoyed my first appearance, and I'm glad to be back. Well, look, you're a yet another value pod success story because you came on the pod last time. NBA Deep Dives, I think you were just about to put out your second issue. if I remember correctly, hadn't turned on the paid service since then. I'll just dive into the pitch for you, which is the way I start every pod, you know, since then you've turned on the paid service. It seems to be going really well. I'm a paid subscriber. I've really been enjoying it, not disappointed at all. You do one deep dive into stock per month, and it is a real deep dive. I think your last one on Autodes, which we'll talk about, was 24 pages or so. And, you know,

I think the highest phrase I could actually give is, as I was prepping for this pod, you know, I was rereading the report, and I would be writing out bear questions or pushback cases and all these types of stuff. And almost every time when I wrote one, the next paragraph would say, hey, I know the bear case to the point I just made would be this, but let me address it. So I was like, oh, gosh, darn it. My whole job has been done, but you were really doing a great job of anticipating the bear cases. And I think that is the sign of a really well thought out research service. And, you know, if you subscribe to NBI Deep Dives, which I would encourage everyone to do, I think that's exactly what they can and should expect. So I don't know, I'll pause there and, you know,

anything else to add to that? Or do you want to pump yourself up even higher? No, I think you have done, you know, more than a reasonable job. And you have been very kind and gracious, you know, from the very beginning. The one thing that I can probably add to what you have said is, you know, ever since I launched NBA give dives, I have come to appreciate how much people want to to know your opinion, right? So I think, you know, my subscribers clearly understand that I'm not an expert. I'm not an expert on Etsy. I'm not an expert on Autodesk, right? I'm a generalist. So if you're a generalist, you know, I'm pretty sure I'm speaking on behalf of all the generalists out there, it's uncomfortable, right? And you know that you don't know a lot of things that you probably

should know, but you still kind of deal with that discomfort and still kind of, you know, one to tackle the problems that you have. And what I really appreciate, you know, despite the fact that I may not have the, you know, a depth of expertise, what people probably much more appreciate that, you know, people want to know what my opinion is on a particular company I'm looking at. And sometimes they don't agree with my point of view, but that's fine that they're still getting my point of view. And, you know, if people think that you are a thoughtful, thoughtful, you know, intelligent

person trying to understand something diligently. And I think people appreciate that much more than your apparent expertise on a particular field or company or sector. You know, I really like that thought on generalist versus expertise. So look, I think there are some sectors where you have to be an expert, right? Like if you're investing in startup biotech and you're doing it with a general framework, like that's a prescription to get your Facebook. But I do think like Twitter is one that I have done a podcast on. We've talked a lot of that. And I do wonder, like, there are some people who are experts and they can go in and they can give you all of the stuff on all of Twitter's different, like very technical things and stuff. And I do wonder if almost taking a

generalist expertise to Twitter and a bunch of other companies is better, right? Like, it's not, hey, I need to know exactly how Twitter's, the back end of Twitter's ad product work. It's much more. Hey, I have a general understanding that Twitter has some technical debt that they're accumulating, but I can see the whole picture and come in and, you know, apply a bunch of different frameworks and see how Twitter strategically is working and how they're accelerating or not accelerating, but I do wonder for, you know, 80 to 85% if bringing that generalist's mindset, it can be uncomfortable because an expert will come to you and say, hey, but did you know like Twitter's map product? That's two years behind where Google's product is. It can be

uncomfortable, but I do wonder if that's really the way to approach most, not all, but most. You know, I absolutely agree. I think as a generalist, what I really insist upon is, like, not to miss the forest for the trees, right? That's like the number one goal for, I guess, most generalists out there. But you're absolutely right. You know, there are lots of, you know, details that, you know, we probably don't know much about, right? It can be uncomfortable. Like, you know, sometimes, you know, obviously everyone can be wrong.

most analysts will be wrong, you know, multiple or more than multiple times, like in their analyst carriers. So, and in many cases, you would find out that, you know, maybe what you thought was not so important turned out to be pretty important, right? That's how journalists usually get things wrong. Yeah. So that's why it's uncomfortable. Like, you know, is it really the, you know, you tend to kind of convince yourself, oh,

I'm looking at the, you know, forest, not the trees. But at times, you know, those trees can be important. that can burn down the whole forest. Yeah, yeah. So it's kind of, that's why I keep saying that it can be uncomfortable, but sometimes, you know, the specialist can get trumped by the generalist kind of in a broader view and just being able to like see multiple sectors,

multiple industries and not being tied to a particular industry throughout your life, you know, can be eye-opening and can be liberating at times. So there's a, you know, place for, both specialists and generalists in the world, I'm definitely not going to tell that everyone should be generous. And then all the biotech, you know, nobody is going to able to tell like what you should do with the biotech companies if everyone becomes a generalist. So there's obviously, you know, a place for both kind of, you know, group of people to coexist.

Well, speaking of specialists versus generalists, you know, I think you put it in your write-up on this company, but it is a little strange for you and I as investors to be talking auto desk apply appeals mean you know not appeals they are a product for engineers and architects and everything to design things and i have never used an auto desk product i feel like i have a good grasp of what they do in the fundamentals but it is a little weird to be talking about a you know an engineering company and not not have actually really used the product or or anything but uh that's the way uh let's you know what andro let me just stop stop you there and i want to give a full disclosure i'm not an engineer myself i have also

also never used AutoCat products. And if any engineer out there, you know, listening to our conversation, I'm pretty sure they are going to find a lot of faults, a lot of, you know, probably misstatements. But hopefully we're not going to, you know, we're going to see the forest pretty clear together, even if we get some details wrong in terms of the product. Well, why don't know, I think that's a great jumping off part.

Your post, you know, I think the headline was great. It's Autodes, the horse for the infrastructure decade. So why don't we kick it off, you know, for the other generalists out there, who and what is Autodesk? What do they do? And why are they the horse that will kind of drive the infrastructure decade? Right. So most people probably have heard about AutoCat, you know, more than Autodesk. You know, a lot of my friends who are like not in like software or like, you know, engineering space.

Like they told me, oh, AutoCat is actually Autodesk. product. I didn't know. I didn't know something like Autodesk even exists, right? So AutoCat is widely known, much more widely known than Autodesk. So I would say Autodesk is a global leader for computer-aided design, computer-aided manufacturing, computer-aided engineering space. It's a pretty global company. Sixty-seven percent of its revenue come from outside the U.S., right? So you understand the global nature of the company. It based on the software products that Autodusk has, and it's not only AutoCad, but also Ravit, which is also like, you know, pretty big commerce.

It's actually, Ravit is actually the single biggest revenue driver for Autodes. So, Autocad, Ravit, Maya, 3DS, Max, Inventor, Fusion, 360. So they have like 70, 80 products, software products, but essentially, these six, seven products are what they drive majority of the revenue. And these products basically allow you to design, fabricate, manufacture, or build anything by allowing you to visualize and simulate early in the design process to kind of be able to see what it will look like after kind of the thing is building. or manufactured.

So that's what, in general, what the software products do. And yeah, you know, it's actually a pretty old company. It's not some up-and-coming software company. It was like launched in 1982, John Walker, who is like founder of Auto Desk. He basically convinced like 12 other engineering friends to pull like $59,000 together. And, you know, 40 years later, it's like a 60,000. billion-dollar company. So, yeah, and from the very beginning, they were supposed, they were going after the CAD market, computer-a-design market, right? But from then on, from those early days,

it has kind of expanded its horizon to go into, you know, manufacturing, and construction, in engineering, architecture, as well as, like, media and entertainment space as well. So it has become sort of a global and like, you know, multi-industry-focused, you know, as a company over the last, like, three, four decades. So when I was in college, everyone used to always, and that is an increasingly long time ago, but everyone used to always feel bad for the architecture students because, you know, at the end of the semester, all the architecture students were pulling, you know, all-nighters constantly to get whatever their architecture products done were. And my understanding, tell me if I'm wrong, but my understanding is

they were almost certainly, I think it's Autodes, Revit is probably what they were using. But they were using an auto desk software to build whatever hypothetical building they were going to be turning in for their final project. So, you know, you could extrapolate that too. If you are an architect and you are designing a building, you are probably using an auto desk software to design that building. And that's what you're going to build all your plans on. Am I thinking about that correctly? Yes, you are absolutely thinking right. And that's a very conscious effort from Autodesk's part to kind of encroach into all the universities in the world to make sure all the individuals.

engineering students, all the architecture, you know, architects, future architects of the world, start using auto-disc products. And it's given for free for your student. It's free for you. The idea is to kind of, you know, get you used to that product. Think about like in Excel. Like if I ask you, like I have some better product that is much better than Excel. You just have to be able to like put in, let's say, two months of, you know, work to kind of learn how to use that software.

and then you can switch from Excel to, let's say, that, you know, up-and-coming software. My guess is you're probably not going to say yes to that, right, unless it's like, you know, 10x better product, right? So that's like the goal for Autodesse to kind of, you know, make sure every student out there starts using Autodes product and so that when they become professionals, right? You know, they don't want to switch to some competing product. And even the companies or the professionals in the workplace, they also understand that and people get used to that and they are also used to that.

So it's a kind of a high switching cost that's embedded. And it's funny because Pat Dorsey in his book, like, you know, five successful rules for investing, he specifically highlighted Autodesk as an example for high switching costs, right? And this strategy that you go into universities, colleges, and trade schools and give your software product for free so that they know how to use it. And once they know how to use it, that human inertia kind of takes over. So unless and until the competing products are like 10, it's better, you have very little incentive to kind of move to a competing product.

Yep. And it's, A, it's funny that, you know, the Autodesk model and the Excel model get the people trained when they're students and they grow up and they'll use your products. I mean, it seems like so many people like, I think Twilio is really big into get engineers trained when they're at a startup to use our products. Because when they go and do their next thing or when the thing grows, everybody will be used to that standard. But the other interesting thing is you mentioned Excel, which I agree with. And maybe we're jumping a little too far ahead here. But the other interesting thing about AuditS products is a lot of their files, you know, I think it's like dot RED is the thing, is the way they say it.

And very similar to Excel, hey, if you go make a startup that's cheaper, better than Excel, there's switching costs, but there's also anti-network effects, right? Because everybody else uses Excel, they sell them and send things in Excel files. I think Autodesk has a lot of that going forward to, too. Am I thinking about that correctly? Yes, yes. There's definitely, you know, network effects is certainly overused word at this point, right? we tend to probably see network if it's more than there usually is out there.

But it's hard to argue otherwise when it comes to Autodesk. You know, for generals like me, I think, and this example, I kind of came across again and again, it's sort of like Excel. Like, you know, if you are like a very proficient programmer and you can use to, you can use, like, you know, a higher functionality software that's better than Excel. But if you're dealing with, let's say, external, you know, clients or external people, or even, like, you know, people within the organization who probably are not as good as you are dealing with, like, you know, software tools, then you kind of want to lean towards more what is industry standard, right? What

everyone, you know, knows how to use. So, so for a for a up-and-coming startup, if you really want to encroach into Autodesk space, it's a very chicken and a problem. Like, you know, they have to kind of at once convince a lot of people together to switch to a competing product, right? So there's definitely network effects, an element of network effects for Autodesk products, you know, especially for AutoCAD, really, and things like that. And if I remember correctly, I can't remember if I read this from your thing or from some other anecdotes that I was reading

when I was brushing up, but I think a lot of contracts, like if I'm an engineering firm and I hire an architect to do this, I think a lot of contracts specifically state that the files have to be delivered in Autodesk format. Am I thinking about that correctly? Obviously, they have a format called .DWG file, right? So yes, and that's part of it. And it's funny because Autodex shared this data,

like on LinkedIn, so people have like seven million, seven million people listed Autodesk as their skill, and one million people mentioned Ravit as their skill, right? And the next best is like, you know, 250,000, right? The competing products, or 150,000. So there's like a huge, you know, gap between the market leading, like, industry, And kind of what you expect to see if you are dealing with an industry standard versus,

let's say, much small, you know, or like, you know, like an up-and-coming product. So there's a huge gap between, let's say, Autodesk products like Ravit and AutoCat and then the next set of competitors, which are kind of like compact together. It's not like, you know, the second alternative. The difference between second and hard alternatives are huge. It's not the case. They're like bunch, like, they're kind of bucket together and like kind of, you know, neck-on-neck of all the competing alternatives.

So there's no clear winner, even for the competing alternative, right? So there's Autodesk and there's like all the rest in like, you know, like, you know, after like in a six-speed dip. So that's how you kind of realize that Autodesk has a huge strong goal in this, at least in the AEC market, which is basically architecture, engineering and construction market compared to any of the potential alternative. Great. I think almost just by letting the conversation flowing, I think at this point we've probably done a nice job of establishing

like kind of the moat that Autodesk has built around their products. Do you think there's anything? We're going to go into other upside things in a second, but do you think there's anything about the moat or just how strong the Autodesk business is that we've kind of missed in this initial discussion? Yeah. So when I think about Autodesk, it's almost like two different companies,

like within a single company. So at one hand, you have AEC. So let me just go back and probably explain how we do. So Autodus basically reports is revenue in like five different segment. So one is AEC, there is architecture, engineering, and construction, right segment. Then is manufacturing, design and manufacturing. Third is media and entertainment, right? For this AutoCat and Autocat LT, LT is basically the light version of AutoC

which is cheaper but also provides fewer functionality. The reason they, although AutoC is basically part of AEC, most AEC professionals use AutoC product, but it's also, it has like wider functionality, so even like design and manufacturers would also use you know, some AutoCat products. So that's why it's like reported separately. And so that's like the fourth and the fifth one is basically the others or miscellaneous, right? And so if you think about like AutoC and AEC is like in a single bucket,

again, let's imagine that's like a one company, AEC and AutoC and AutoC. And that's basically almost 70% of the revenue, right? And 20%, roughly 20, 22% is basically design and manufacturing. 6% is media and entertainment. And whatever that is rest, that is others, right? And, you know, it's very strange when you kind of do a deep dive on auto desks. It almost feels like they have a very different DNA within that auto, auto desk, you know, company for AEC and AutoC and AutoCad and design and manufacturing. manufacturing, right? So in design and manufacturing, they are the laggard, right? They are trying

to kind of compete with dissolved, solid words, and PTC, and AutoC is basically the third player in that space. And like AEC and Autocat, they are like the quasi-monopoly and like they have a very strong hold. And so they have a very different approach in terms of how they think about these two markets, how they kind of go to market and how to approach, you know, like in a dealing with customers. So when you talk about modes, you know, it almost feels that we need to have separate discussion for AEC and like, you know, manufacturing.

So I guess the kind of discussion that we had so far is largely relevant for, let's say, AAC and not as relevant for, let's say, manufacturing. And the way AutoC thinks is, like they believe, you know, they're going to be able to protect AutoC and AAC, it's already in the bag. And it's like a very high margin, you know, segment for them. And this is what that's driving like 70% of their revenue. But autodesk beliefs for them to grow faster, they have to kind of be a much bigger player within the manufacturing sector, right?

And their approach is very different. It's almost like an, you know, startup mentality that they have within that sector. And they came up with this platform named Fusion 3. 360, and when you see the functionalities fission 360 provides and compare on an apple-to-apple basis to competing products like in the dissolves, solid works, or PTC, the price point is just ridiculous, right? So it's almost like, you know, 15 to 20% of what the competing products are charging, right? So the idea is very, actually the idea is not very different.

from Autodes' perspective. So although Revit is kind of, you know, has a quasi-monopoly at this point, that wasn't the case like 20 years ago. Yeah. 20 years ago, they started, Revit was a small startup and Dassau's Ketia and like, you know, Bentley, Graphysoft, those were like the leading players at that point in the, in a building information modeling space, which is where Revit is dominant. And Rivett's approach was to collaborate and work with a small set of customers and really, you know, serve that niche so well that you end up becoming, like, you know, attracting a lot, you know, a lot bigger customer set.

It's sort of like the classic innovator's dilemma, like, and Clayton Christensen talks about in his book. and they started with a niche and the competing products of like, you know, DeSalt's Ketia or like in other other companies, they were not willing to lower their prices, right? They were charging the tens of thousands of dollar and Revit was basically a fraction of that compared to competing product. So, you know, over a long period of time, what ended up happening is Revit became the industry standard and other players kind of left so far behind. They're trying to do the same.

So Fusion 360 arguably is a better product, is a better product compared to competing alternatives. But it's charges like 15 to 20 percent of the competing products, right? So it's obviously not as high-margin product or as high-margin, like, you know, segment for Autodes, compared to, you know, Autocat or AEC. So the idea is basically milk, AutoC, and AC as much as you can and reinvest aggressively into the manufacturing segment. The bet is that they will be able to protect the AEC and Autodes, sorry, Autocat segment, and in the meantime, and simultaneously, they will be gaining share, which is what they are doing.

They have been outsold, they have been outselling DASO for last three quarters. as a unit perspective, not in terms of revenue dollar, because like I said, they charge, like, you know, 15, 20 percent of the competing alternatives. So overall, I think, you know, I would strongly suggest anyone who is listening to this to go and read Berengar's recent design conference transcripts, so Autodesk participated in that conference, and they kind of laid out their strategy and elaborated deeply, how they think about Fission, physics, and why they think about Fission. they think they would be able to encroach into manufacturing space and be able to compete

with, you know, desult solid works and things like that. You know, they did a pretty good job kind of outlining their philosophy. And the point about switching costs that we mentioned for AutoCAD and AC, that's true for, you know, dissolved solid work as well. So I had the same question, like, you know, why would Autodes be able to kind of encroach into solid workspace. And obviously, Auditors also understands that.

And the way kind of they're building the platform is, they're not trying to convince people to switch, right? They're saying, we have built a platform that, you know, you can use SolidWorks as well. Like if you update your SolidWorks model, that can also be updated automatically into Fusion 360. So you start using Fusion 360 for some projects, right? or some like, you know, some parts of the project.

And I guess the philosophy, the idea is once you start using it, you see that it's a better product. You see that it makes more sense to kind of, you know, to incrementally increase market share for the future projects. And once you do that overall, if you do that for a long period of time, like five to 10 years basic, all in a sudden, you can become the industry standard, which is what they have done with Revit, right? I don't expect it to be easy.

I don't think market is pricing on the design. in a way that they are going to be winner in the manufacturing space. You know, we don't have to believe in that to, let's say, buy our desk at this price. But it's a nice little possibility, optionality that if it pans out, you know, that can be pretty significant. So as you did in your write-up, you address a lot of the bare points that I was going to bring to what you were saying earlier. But let me just back up a second. So basically, with the fusion product with manufacturing, they're trying to do what they did with Revit. about 20 years ago, right? There's legacy players who charge a lot of money. They're going to go after

the lower to middle end with a better product that's priced lower, try to take share, and then they'll use that and grow over time and eventually kind of subsume the, you know, it starts where the other products price 5x is you and you're better, but you've got a lot less distribution. And then all a sudden, once you've got 40% of the market and you're 20% of the cost, that legacy player is in a lot of trouble, right? Because people are fleeing from them left and right. And if they cut their cost, they destroy their whole business. It's a really weird thing. So I guess my three questions here would be, my first question is, you know, it sounds like the salt, their competitor and them both combine manufacturing with, you know, the architect auto desk side. Why do these two businesses

belong together? It seems like these are separate businesses attacking separate markets. Like they are software and design, but it seems like architecture and manufacturing design should be very separate. So why are they together? No, so architecture, construction, and engineering, like a separate segment, and design and manufacturing is a separate segment, right? No, no, actually, why are they together under one roof? Because it's not just AuditS that does this. Their competitor has these two segments, right?

Are there synergies? Is there software synergies? It doesn't seem like there should be, but obviously if everybody's got these two businesses under one roof, like what's the advantage of there? And that would also apply to if there are synergies, the synergies with Auditess being largest and it might help kind of drag the small one up over time, if that makes sense. I mean, there is an element of synergy in the sense that, and that's why I mentioned, like, you know, auto cat products are used not just by AEC professionals, but also like

design and manufacturing and, like, you know, media and entertainment and some other, you know, segments as well. So there is an element of synergy, but it's not like a significant part of it. But I think, you know, what probably many of these companies thought, like, you know, once they kind of, you know, got better in a particular industry or segment, they thought about adjacent industries or sectors they could get into for future growth, right? And that's why probably most of these players ended up going after these adjacent sectors. Okay. So then the other thing you mentioned is with Fusion, they're trying to attack it and they're saying, hey, you don't have to give us all of your products at once. Use a couple products.

Use it for a thing. we're a lot cheaper. Just try it. And we can take the other people's, anything that you start in the other people's formats, we can take them and put them on. And I think your most obvious question is, okay, if they can do that with manufacturing, why can't someone come along, why can't a competitor come along and do that with Autodesk on the AutoCAD side, right? Like, hey, yes, everybody used the AutoCad, but we're fully complying with them. We integrate. Use us for cheap products. If you're a startup looking to save a lot of money, use us because we're compliant and people can switch into AutoCat easily. So, why isn't what they're trying to do in a different business a risk to their core business? It is a risk. It is a risk. And I think, you know, when you today share on Twitter, like you are going to chat with me and someone, I think, posted a question like, you know, 10 years from now, if it is 50% down, what happened, right? And my answer would be, most likely what happened was Autodesk neglected AEC and Autocat, you know, segment so much. and the customers ended up like being, like, you know, so angry at them that they ended up, you know, going to competing products or, let's say, someone else kind of, you know, came up with a better product that kind of, you know, solves these issues that they have.

Right now, you know, Autodesk is definitely try, Autodesk has absolutely no incentive to kind of make it compatible, right? So it is a competing company's incentive and, like, owners to kind of come up with a product that is compatible with Autodesk or AEC, right? And that's a possibility. That's a potential risk. And that is why I also mentioned this in my write-up, that Autodes should not really test the limit in terms of how much more they have on AEC and Autodians. at segment. And part of the reason they did was they were transitioning business model from,

you know, legacy perpetual licensing model to subscription model. So the revenue was definitely, you know, was not there, you know, took a beating. And if you think about the income statement, like, as a percentage of, like, you know, revenue, R&D was like 40 percent, uh, sales and, uh, sales, sales and marketing was also like 40%. So if you look at Autodesk's income statement, like it lasts five years, it looks pretty messy, and it looks pretty, you know, it doesn't look comfortable for anyone.

Like if you just superficially go through the income statement, right? Don't consider the fact that they were actually transitioning a model, you know, from Bigasi to a subscription model. So, and Autodesk, you know, also provided some long-term pre-cash flow guidance to kind of calm investors that we know what we're doing, you know, this is the way to go and this is the future. And I absolutely agree that this is the future and this makes a whole lot of sense to move to subscription model. But at the same time, what happened is because of those like long-term free cash flow guidance, they were very,

you know, cautious in terms of managing expenses. So they were kind of, you know, they were going off from manufacturing, which required a lot of R&D efforts, a lot of sales and marketing efforts. but they were not doing as much for AEC, right, or AutoC segments. Hopefully, once kind of this building transition is complete and, I mean, we're almost complete, it's pretty much complete by this point. So hopefully going forward, they will go back and start investing with Revit and, you know, Autopat and AEC segment overall. And the reason I'm hopeful is, in last year, you know, middle of last year, there's like, you

know, some of like 15, 20 architecture farms based in the UK issued a press release for Autodesk that, you know, they have all these complaints about Ravit and Autodesk about in terms of pricing, in terms of like, you know, this business model transitioning and all that. And that, you know, may sound like a pretty, that may sound pretty ominous for shareholders, for customers, for everyone, for every stakeholder. But I think, you know, in the long run, that's probably, that will prove to be very helpful for shareholders. Because now Autodesk knows that they cannot neglect as much as probably they did for AutoCAD and AEC. And within Autodesk, AEC, you know, employees were not overjoyed how much Autodesk was focusing on manufacturing for like future,

which is, in my opinion, the right decision. They should focus more on manufacturing. But at the same time, there's a balance. which perhaps Autodesk missed a little when they were focusing too much on manufacturing. So hopefully going forward, they will kind of make that balance clear and make the balance more conducive for customers and shareholders.

And if that's the case, I think it will be even harder than it already is for competing products to kind of encroach into Autodespe's. And what's really encouraging, Despite the fact that there has been all these complaints from customers and Autodesk has actually was gaining share. Like, you know, other alternative pro coer, which I think has already, I think he has already,

I think it's filing for IPO. And basically their revenue expansion rate was 120% for the last, you know, I think two, three years. And Autodesk has been around 125 to 130% within AEC. So it means that they're not losing market share. And I actually talked to someone, a by said analyst, who talked to those like architecture farms

that wrote that in a letter or press release. And basically they pretty much told that analyst that they could not get out of revenue they wanted. And they tried and they all came back because it's just too cumbersome. It's just too complicated. And yes, I think, you know, even even an article that I was reading basically mentioned that they could not find a single

you know, architecture farm that actually moved away from rivets. So you can understand how entrenched the product is in that industry. And there's almost no better sign of, like we can discuss all we want, the hypothetical switching costs, but there's almost no better sign of a moat in a business that is sticky where your customers come out and they say, this product sucks, it's overpriced, they put like multiple firms get together to put out a press release and then you go talk to them like so you guys left the firm right and like oh no we can never do that it would be way too difficult for us like there there's just no better sign uh you mentioned the long term free cash for guidance the investments and stuff and i i want to talk about those in a second one especially when we get to the bear case actually but but i do want to talk a little bit more about the upside you know i think there's two upside cases the potential upside cases we haven't talked about so far the first would be i mean what auto audodisk owns the architecture construction side. Like, we've talked about, again,

we just talked about how people can't switch off. You know, I can't remember where this idea got in plenty, it might have been the scuttle blur right up, but, you know, Microsoft has constantly used their distribution dominance to launch new products, right? Like, historically, Internet Explorer, you think Microsoft Outlook. The new one is Microsoft Teams has absolutely,

has taken so much share from Slack because they integrate into everything if you're a business user, which is very easy to use teams, right? So I think a lot of people think the long term for Autodesk is some type of construction cloud, right, or architecture cloud where it's not just using Autodesk. They use it to just expand into all these things and they kind of own the everything construction software and the service. How do you think about that type of, obviously that's very pie in the sky, kind of ephemeral,

but how do you think about that outside and the possibility they get there? That is a dream, right, for Autodes shareholders that it eventually turns out. into Microsoft of, like, you know, this construction industry. And I like to think that's not a pie in the sky. It's probably in the realm of the possibility. And part of the reason is, and, you know, like for any, I think companies are for any, I guess, you know, investment, a lot depends on management, right? And when I think about what's going to happen for the next 10 years for Autodes,

I built a very conservative model, and as per my model, that's like, you know, Autodesk will probably generate like roughly $30, $32 billion of free cash flow next 10 years. So that's like more than half the market cap of Autodes right now. So that's a lot of free cash flow that you have to deploy, either deploy or buy back shares, like things like that. My guess is they'll probably not be super aggressive in terms of buying that shares. So there will probably be a lot of acquisitions, a lot of talking acquisitions, right? So that's why, you know, I mentioned that the lot will be dependent on management's capacity

and ability to kind of make those talking acquisition integrate to that, you know, current platform and continue to deeply penetrate the market across the globe, right, so that you become sort of the Microsoft of the, you know, engineering and construction sector, manufacturing sector for the world. To what extent? And, you know, it's not a risk-free thing. When you do those acquisitions, like on a yearly basis, if one or once or twice, you also increase integration risk, right?

So, you know, that's why it is dependent, you know, probably like most investment in the, you know, SaaS space or in the software space these days, it's dependent on the management capacity to kind of deploy all the free cash for that we generated. And I have spoken with, you know, a bunch of people on Andrew and Admos, you know, the CEO. And he's widely loved. He's widely revered within the industry and what he has done with Autodesk. He has been with Autodespo since 1997, I think.

And he's been CEO since 2017. So he became CEO and he kind of, you know, turbocharged this billion, like, business model transition costs from legacy perpetual model to subscription model, which in my opinion requires fair amount of courage because you are destroying the look of income statement and like it looks pretty messy and unless you're really confident that this is the way you should go and unless you have a sense of ownership, right, that I want to have a legacy, I want to leave a mark on this company by doing what's great for this company in the long term. You know, he could have done probably something like, you know, keep the legacy model, you know, grow like, you know, high single digit rate and like three, four years down the line.

He retires and that's it, right? But he chose not to do. So my guess is it's possible that, you know, and given his reputation, I definitely, I'll be rooting for him that he would be able to kind of, you know, do this stocking acquisitions, being able to integrate that the possible. that the possibility of being a Microsoft for this industry may become a reality maybe in the 10 years from now. Well, so actually the last thing I was going to talk about was capital allocation and you front ran me again. So you actually stick on the management, right?

So you say management's beloved, he's been with the company for a long time, everybody likes him. You know, it's tough to look at the Audit S. Cereprice from 2017 to 2021 and really criticize anything he's done, right? but I'm going to try. You know, I look at, I look at him and I say, hey, the switch from from license to subscription started before him, right? So it's not like he's the one who drove this. In many ways, he's reaping the fruits of that past success. And I think the biggest red flag I saw when I read the report is R&D spending at Autodesk peaked in FY16. And then it came down for the next

three years and it started to come up again, but you know, as a percentage of kind of sales or opportunity here, it's nice that R&D has kind of scaled as the company's grown. But when I think of a growth company like Autodesk, seeing R&D come down this much, this quickly, like it does raise red flags. And you mentioned the free cash flow target and how they're cautious on expenses so they can hit that free cash flow target. Like a lot of bells are ringing in my mind saying like, hey, this is how past tech companies have kind of gotten into trouble, right? They've focused too much on optimizing and engineering their financial statements versus actually delighting customers and actually growing business value.

So I think that would be my first and biggest pushback. I was very broad there, but I'll just flip it over to you. How would you respond to that pushback? Yeah, no, that's a valid pushback. And I mentioned a lot of it in my guide up as well. I was not pleased to see this long-term HC of guidance. Like, I intend to be a long-term shareholder for Autodesk. And I really don't need to know what they're going to earn, like two, three years down the line for pre-cash flow.

Like, you know, I would like to think that that's part of my job to kind of figure out, right? You know, what's the potential Arnhem's power is. I don't disagree with you. It's funny, like, I don't disagree with you. But at the same time, anytime one of my companies comes out and says that, like, it does kind of excited me, right? Like, one of the things that got me excited about Dropbox is I was like, oh, this is a $10 billion company and they say they're going to do a billion dollars in free cash flow in three years. Like, that's pretty cheap. That's pretty interesting, right? So it's

funny how it cuts both ways, but sorry, I interrupted you. Continue. Yeah, I mean, it's probably hard to kind of put a blanket statement there because, yeah, I mean, let's say if your company is not being, is not appreciated enough by the market, then you have to kind of teach the market, hey, that's a, you know, FCF potential, like three years down the line. Like, what do you guys are doing, right? So, so, you know, it's, it's probably fine if you kind of, you know, notch the market to the direction you were thinking. But you worry about the, like, IBM's what pops into your head, right? Like, they always had that EPS roadmap. And I think even Buffett bought in on that, right? But basically blew the, I mean, it's not bankrupt, but they, they destroyed any

hope that company had because everything they did was, we need to hit the EPS target. And again, they forgot about the business, all the catch went into buying shares so they could hit their EPS target. But financial engineering, I love financial engineering, but if you're not getting the business right, you're just kind of levering up a zero. Especially in the technology sector. Like, you know, if you are focused on financial engineering, you're probably not going too far. So here's how I think about, you know, this potential issue is I don't blame Andrew and Agnizd or the senior management for providing financial FCE of guidance, let's say, for 2020. Like, you know, so in 2017, they had this investor day and they provided this, you know,

three year FCE of guidance. I think that makes perfectly reasonable sense to me because they are undertaking like a huge business model transitioning. Like, you know, he basically, you're right that, you know, he basically turbocharged the process that was already started. He basically made sure it's a successful transition from what was. started. And I would say, you know, that was perfectly fine to provide 2020 free cash for guidance. I did not quite enjoy having that guidance for 2023, right? And if they again

put out, like, if they have like another investor day in 23 and they provide another like three year guidance, I'll probably enjoy it even less, right? I think, you know, once you kind of once your business model transition is complete, I think the, like, you know, the biggest fears are gone from the investors mindset, right? So right now, we kind of know, we kind of understand the earnings potential this company has. So you don't have to tell me, like, you don't have to, like, put down a specific number. Like, you know, they have provided $2.4 billion pre-cash flow target for 2023, financially at $2,23, right? Which is January 23. But does it really, matter if they have like $2.2 billion or $2 billion, I wouldn't worry too much if they decide to,

you know what, we need to ramp up my investment in Revit, right, so that we can milk it for another 20 years, right? That's perfectly fine by me, right? But if you have like $2.4 billion target, it will be harder for you to kind of do that, right? So I definitely did not enjoy having that guidance and I would, like I said, I would enjoy it even less. But I think, you know, they probably felt there's also an interesting dynamic because COVID happened in 2020. They, their investor day was in June 2020. So we are still kind of reeling with what COVID will happen, what implications are. And there's all, you know, there are a lot of beer cases out there in terms of in market softness and how that will impact, let's say, Autodesk and, you know, whether the long-term

free cash flow is, you know, lower than many people think. So maybe management felt the urgency a need to kind of calm investors nerve that despite all these, you know, uncertainties around COVID and construction sector, we may still, we are still on track to kind of, you know, get those lofty free cash flow target in the out tiers. So 2.4 billion in free cash flow, I don't disagree with you. Like, I think free cash flow, I think providing a financial target. is always hard because as you said, like, if you have an investment staring you in the face, that could return 50% return on capital, but it's going to cause your free cash flows to go from 2.4 to 2.2 to 2.2 billion in 2023. Well, if you make that investment, you can go communicate

it to the market and say, hey, here's why I'm doing it. And a lot of people will do that. But you have just searched your credibility a little bit. And you do like, you've anchored in your mind, this is what I'm going to do. So you might say, oh, you know, maybe it may, maybe, it's not a 50% maybe it's a 20% of me you know so i'm with you what would you what would you prefer if they're going to give long-term guidance would you prefer hey this is just what we think the business can look like in a steady state in the long term is that what you prefer how would you prefer companies provide a long-term framework to shareholders i so if we talk about it's hard uh to kind of come up with a single framework that will be applicable for every single company out

there so let me just stick to autodescare and and tell you what i would prefer I would prefer auto desk to, like, I have high confidence in my mind that it will be extremely high fee cash flow generating company, right? And they will generate, like I said, you know, 30, 35 billion dollar of free cash for in the next 10 years. What I would like to see is, you know, a framework, how they want to spend that money, right? If it's talking acquisitions, what are the kind of gaps that they see, which in this, you know, like within the broader construction?

engineering or manufacturing space, what are the gaps they have and whether the accusations are the primary mode of kind of, you know, making sure that gaps are filled or whether it's going to be increased R&D, right, or whether it's going to be, or they think they have kind of pretty much in the locked-in, they have all the acquisitions they need and they would just go for, you know, like a buy-back spree. So, and even like when they are doing these accusations, I would like to know like, what's the framework they have in mind, how they are evaluating themselves internally, right? So just a brief framework.

Think about what Danaher does, right? It's a pretty clear message they send to the market how they think about acquisitions. And, like, if you think about Danaher, like, you know, it has always been so, you know, like, freaky, freaking expensive and optically because market, like, investors believe in their ability to kind of do this acquisition and extract value out of it. of those acquisitions, right? So there's a huge value out there in the market if you are building a platform and if you have an incredible credibility that you can acquire companies and extract value out of those accusations, right? So those sort of messaging will be more fruitful or more,

you know, encouraging for me than let's say a particular free cash program. I mean, I think if you spend some time on an auto-desk business, you understand like this is a 30% operating margin business at scale and it will reach a scale. The real question is, you know, whether they will be able to protect their AEC mode, you know, or AutoC mode, and how fast they are likely to grow within manufacturing space. And those are the questions that, you know, people really discuss or people should discuss. What's their like FCF margins? Like it is a 30% operating margin business.

There's like very few doubt in my mind when it comes to profitability of the business. Yeah, I just want to comment on that and not to get into a turn this podcast into a long-term target podcast, but like you mentioned Danaher, right? And I do agree with you. And the market has given them credit. And another one I think about is Constellation Software put out a And, you know, Constellation Software for my American friends who don't know, including me, they are a software roll up in Canada, one of the best performing socks of the past 10, 15 years, I would say. And over the summer, they put out a letter that said, hey, we've been holding ourselves to, I'm going to pull numbers out of my butt here.

but we've been holding ourselves too. We will only make an acquisition if it can do 30% return on capital. And that's meant that we can't make some of the larger acquisitions because maybe we're seeing a $50 billion acquisition that we think is a 22% return on capital. And we pass on it, but 22% return is great. Right. So they put out that letter and I remember a lot of people were saying constellation is buy because they just increase their acquisition target. And this is a company that you want to do. And you want to do acquisitions. They're going to do great. And I agree. I would agree with that. I don't have a position, but I would agree with that. But at the same time, When you're talking Dana Heur and Constellation, you do think, oh, the flip side is the Valiant, where, you know, valiant five years ago, people would have said, oh, my God, like do acquisitions, take all of our money. You are the best acquires in the pharma space you've ever seen. And obviously that blew up and there's plenty of other famous roll-ups. So there is a line there, and it's tough to, I'm not sure, probably management ethics and stuff come into it, but I'm not sure where the line is. I didn't really make a point there. Anything you want to add to that, or I do have more questions on it. No, no, no, I hear your argument. I mean, in many cases, investing, I think they're almost, you know, opposing statements, right? And both can be valid, right? And that's why we kind of have to kind of look into a case-by-case basis.

And that's why the stock picking skills and, like, those sort of things have still value in the world out there. So, yeah, I mean, by no means I'm saying that, you know, it's a given that, are going to be Danahar, Microsoft, or Constellation softwares of the construction or, you know, architecture world, we have to keep our eyes open whether they are going to be, you know, Constellation, Dan, Microsoft, or a valiant, right? So, I mean, auto risk is not, is yet to be generating all those, you know, big pre-cash the number that I'm talking about. They generated like $1.2,3 billion last year. They'll probably do $1.6 billion next year, like this year. So those are not eye-popping numbers.

Those numbers will come probably two, three years down the line. And once those numbers come, I think we will have a better understanding how they are really spending those pre-cash flow. And depending on how they choose to spend, we may have to kind of update or believe positively or negatively depending on how they choose to spend. Let's talk. So a big piece of Autodesk, and I can see how it could be part of the bear case as well, But a big piece of the bullcase for Autodesk is this thing called non-compliant users.

And a non-compliant user is a person who's using auto desks. They're basically the Netflix user who borrows their neighbor's pack. And Autodesk comes out and says, hey, there are 7 million non-compliant users who are using our product multiple times for month and who aren't paying anything. And a big upside is, hey, we're going to get those 7 million users on. And I think you even described, they could use the nuclear option where they just say all this non-compliant software. I don't know the math, how they would do it, but basically shut out all the non-compliant software next day and everyone would either have to go use a competitor, pay it for audit desk, whatever. So I guess my two questions on this would be, A, why is that a nuclear option?

Why would forcing non-compliant users to pay be a bad thing? And then B, I mean, everybody's been pointing to the non-compliant users as a full case, but as a bear case, if so many people can use this for free and so many people, and you feel like, using the nuclear option actually would be bad. Like, why is there so much upside in the non-compliant user? And doesn't the fact there are so many non-compliant users who won't pay, doesn't that show that Autodesk might be budding up against kind of the limits of their pricing power? So flip it over to you.

Right. So they actually, like, you know, just to give you a context, currently they have 5 million paying subscribers, right? And they actually think roughly 12 million non-compliant, non-paying subscribers out there, who they think are potential target. The actual number is actually more than that, like 15, 20 million probably. But, you know, those are probably not as regular in terms of using the products or maybe they're not really, you know, targetable. But all of those things, there's like, you know, the number you mentioned, 7 million, these are the these are the, these are the, have several million customers who have used auto-dust products 11 plus times, right, in the last 90 days.

And they have used, like, you know, the version that has been released like in the last one to five years, right? So they are definitely the primary target. Like, they are the most likely to kind of convert from non-compliant, non-paying customers to paying subscribers. But obviously, they're not the only set of customers. So, all these things overall, I think it's probably 12 million customers that are potentially reachable. So just again, their current base is 5 million. So their current base is 5 million and they think there are 7 million who use these frequently and in total 12 million who may at some point they be able to.

So, I mean, we are talking the huge, huge numbers of non-time. Yeah. So it's a huge number out there for sure. And, you know, I mentioned my writer, like, if you just convert, like, 15, 25% of these non-compliant users, you are looking at, like, 30, 40% of last year's revenue, right? Which is, like, your product, think about, you know, you are releasing a product and, you know, there are millions of people out there who are using it, and you are getting absolutely $0 out of it.

Right. So, and yeah, I mean, like you said, you know, some people think about this is the BR case, right? you know, that they can't get, you know, any revenue out of these, all these users. So the reason Autodes does not want to use a nuclear option, and I feel the same, even like, you know, while building like my subscription business, right? Internet is all about scale, right? You should always lean more towards reaching scale than, let's say, thinking about how, much I can really, you know, charge for this service, right? So you would always want to,

like in any internet business, you should always leave money up, you know, on the table, right? As long as you have this sense that there is a potential bigger market out there. And for Autodesk's case, that market has been the people who are not paying anything to them, right? right, so that they can remain the industry standard, right? So if they use a nuclear option, think about, you know, the base is actually larger than the paying customers. So if all the, you know, users decide to go to a competing alternative who are not as stringent, then even the paying subscribers may have reason to kind of go to that customer,

right? That's a great point. That's a great thing. Yeah, they have to be very cautious in terms of how to. approach this. I discussed some strategies that they currently use to kind of convert these non-company users. And those are really a nudge. It's not something, hey, you are illegally using my product, you know, you should be in jail. That is not the attitude in Autodesk has. And obviously, like, hey, you are using my product anyway. Would you like to use the latest

version, right, and paid a subscription, right? So it's a very little notch that they are going to use. And there are lots of low-handed fruit that they were not using. So, for example, student licensing, which is free, right? And earlier, it used to be, once you have a student license, it used to be for three-year period, right? And right now, they have to update on an annual basis. My wife is making her first appearance on the podcast. Elisa gave to the video subscribers. if you want to. Sorry about that. That was our first appearance. No problem. No problem. Yeah. So yeah. So and there are also things like, so they are going, you know, they're purchasing more and more direct sales rather than like in the resellers. So I really what used to happen is

resellers, like they have some target and commission and all that. And they would go to the end customer and they would sell, let's say, five seats and look the other way, allegedly look the other way. the customers actually are using, let's say, eight or ten sips, right? But for auto, they can, the more and more Autodys goes direct to the customers, those possibilities will also be, you know, diminished. So it's not, I don't think, I don't expect that Autobesk will be able to convert 80% of them, right?

So it's going to be low number. But once you have like a subscription model and think about it earlier, you used to pay the whole license for the whole license, right? So that's a lot of upfront cost that you have to deal with. Now you were like, you know, you're using the product for one month and see, oh, there are a lot of new functionalities that I was not using. So, you know, then you use it a little more and then you become kind of used to it. And that's much more likely.

And also the other thing that I want to mention, it's not about just non-compliant users. It's also, there's like also two million legacy compliant paying. customers, right, that Autodesk is trying to convert to paying subscribers. So that's probably 50 to 75% of them are probably likely to convert to be paying subscribers. So there's like two levers here. One is non-compliant users who don't pay anything. And there are other set of customers who pay paid at some point at DordaS, but they just don't use the latest version.

They're just lagging behind in terms of the new functionalities. And eventually they will, you know, be paying subscribers at some. Yeah, no, I just love the point you made about, hey, these paying subscribers, like, if they went nuclear, that would be actually be an opportunity for competitors because maybe they go to a free competitor and all of a sudden it's not 12 million people are in this ecosystem, seven million of whom are not paying $5 million. It's $7 million might go over there and you've almost destroyed your ecosystem, right? Because the $5 million might look and say, oh, we used to get value from those $7 million, right? because it's an ecosystem, and now there's 7 million art here, the ecosystem's diminished. And I think of Netflix with password sharing. You know, recently I think they're starting to crack down a little bit.

But for years, people said, you know, five people will use password. Why wouldn't anyone? And yeah, you know, it's an issue. But it also takes away a lot of oxygen from other competing services where you could share one subscription among 10 people and you get extra data that way. You get, you know, if somebody comes out with a new product, all 10 people look and say, why will we go sign it for that new product? We're sharing one Netflix. So I love that. Let me, I'm cognizant of time here. So I want to end with the last bare case. And that is just a

flat mathematical valuation. You know, this is, you mentioned it several times. This is a 30 year old business, right? More than 30 year old business. That is trading at 15 times forward revenue. And the business has gotten better. The growth has been good. But, you know, 15 times forward revenue for a 30-year-old business, you know, that's a pretty strong multiple, what, 50 times EBITDA, again, a 30-year-old business. I think it's 25 times their three-year-out free cashler number that they target. None of these are cheap numbers, right? So if I told you, hey, I convinced this is a good business, but my goal is to outperform the stock market, right? Like, why is buying Autodesk at these multiples, how am I really going to outperform?

Yeah, yeah. Bill Gurley had a great, you know, blog, which is probably probably 10, 12 years ago. All revenue multiples are not equal, right? So maybe something like that, I may be misremembering the exact title, but that's probably the gist of the title. And that's exactly it for Autodesk as well. Like, think about what you are buying, you know. when you are, let's say, buying Autodesk, you are buying an asset that has, that derive 70%

of their revenue from a segment where they have quasi-monopoly, right? And it has, and even the one where they are competing, it's an oligopoly, right? So it's like the whole ecosystem is basically oligopolistic to monopolistic, right? And it's a 90% gross margin business, right? So to me, and it has like pricing power, it has high switching costs, it has network effects. Like when you think in those terms, it feels almost like the closest thing to superpower a business can have, right? And when you have like 90% gross margin, when you have and plus you have pricing power, then you have a lot of leeway to kind of, you know, invest in your sales and marketing and research and development, right? And that is very hard unless management does a terrible job, right, for the competing products to compete with.

And the free cash for potential, like you are saying 25 times three years from now, right? Just, you know, I would encourage anyone who's listening to just, you know, model the business out for like, you know, five, 10 years and think about, instead of thinking like, you know, oh, right now they are generated 1.2 billion and let's say they are going to generate 2.4 billion like in 2023. Just think about what you have to assume from 2023. Let's imagine they hit that number, 2.4 billion in 2003. And then model it out what you have to assume from 2023 to 2030, let's say.

It's that seven-year free cash flow gather, right? it's actually, you know, pretty, pretty nominal, right? You know, like, as per the current market price, market is expecting basically 7, 8% pre-cash pro-cagger, which I believe it's pretty low. Like, you know, they have pricing power. So, 4 to 6% of growth, top-line growth, that can probably continue for two decades, right?

And this decade will probably have a lot of incremental growth opportunities because of this conversion of non-compliant users, legacy users, you know, growing renewal base from resellers to direct sales, mix, right, from higher market sharing manufacturing segment. So it will probably end up like in a low double-digit to mid-teens growth for this decade. And if you think about beyond 2030, we still have like embedded 4 to 6% growth on the top line. And if they can manage like one or two percent extra, that you're still looking at like, you know, seven, eight percent growth rates beyond 2030, right?

And so in my mind, it's actually not expensive, you know, having seen some of the software businesses, you know, it feels like, you know, we are much closer to them, like, you know, the potential margin state that you all talk about in the software space. We're much closer to that. Like in two years, we'll probably be closer to that. And beyond that, market is expecting a very plain. vanilla sort of grow, which I don't think is the case. Even after 2023, I think this business has the capacity to grow at a, you know, like I said, you know, mid-teens probably peak cash flow

cagher. So if that's the case, market is definitely not pricing in those potentials. And even the cases of like in the non-compliance, conversion of non-compliance users, these are not one of factors. When you have like, you know, 10, 12 million of people who are not paying you anything, it will take time and you're not willing to use a new trade option. It will take you years to kind of, you know, nudge those people and come to your ecosystem to be a paying customer. It will take a long time, but it will happen gradually, which will probably continue way beyond 233. Yeah, no, I just think the coolest thing is 7 million non-compliant users who are using this multiple times per month versus a 5 million paying base. And, you know, that just over time

capturing that, there's just, there remains so much optionality from capturing that. And yeah, you're never going to capture 100% of it. You might not even capture 50% of it. But, you know, if you capture 10% of it, that's, it's enormous versus the current financials. And that's going to be basically 100% profit, right? Because, yeah. Yeah. Anyway, I think we've covered a lot. I think this was great. But I do want to, is there anything that you wish we had hit on? You think we kind of miss? Any last words or last thoughts from you here? no i think we have been speaking for much longer than we spoke like last time around so i think we kind of discussed all all many different aspects last time we were getting the the free version of

you but this is this is you with a paid service to sell so we got to dive a little deeper spend a little more time on it well look again i i've been a real big fan of the subscription service i it's very reasonably priced what is it 120 a year 100 a year i can't remember 100 for year yeah Yeah, you know, look, if you get one audit desk and you get it right, it's going to pay for itself many times over. So I think anyone who listens to this podcast and enjoyed this would really enjoy a subscription. Looking forward to having you back on in the next couple months when you put out another one and you're already to chat. But Abdul, from MBI, mostly borrowed ideas. Thank you for coming on.

Looking forward to having you in the future. Thank you so much, Andrew. I've enjoyed speaking with you again and hope to come back sometime in future. Fantastic.