What’s Changed Since March 15 The Cloud at Hyperspeed. The World in Flux.

One.

Good morning everybody. Super excited for the next session at Saster Enterprise with one of my favorite CEOs and one of, I think one of the most interesting cloud companies, Coupa. And I'm glad to have Rob back at Sasser in general. He was kind enough to come a couple years ago when Cooper was still on fire. Maybe it recently ipoed. I don't know the timing. But I'm super glad to have Rob back now because Coupa, to me in the crazy world we're in is at a very interesting intersection. And there are what we've talked about as Covid beneficiaries, folks that have benefited from these crazy times and Cooper's one of them. Coopa's growing quickly and its stock price has done just fine and it has benefited. But at the same time, Coupa is the market leader in managing spend management and managing procurement and managing supply chains. And those are areas that are deeply impacted by the economy. Deeply impacted. It's hard not to walk down to downtown your mask impacted to see what's happening in healthcare, all over the place in financial services. And so Cupa is super interesting because it's benefiting as a software player, but yet it has this insight into the economy, economy of software and the economy of the real world that I can't think of another vendor that has. So I'm super excited to talk with Rob. And down at the bottom on the zoom, hit Q and A. We will save time for questions. We had a few already come in but click there, there I'll remind you at the end. So we can, we can chat and I can let Rob talk a little bit about Koopa and then we can chat about it. But managing almost 2 trillion of spend across basically all segments of our economy. Right, which we'll chat about coming up on 500 million in revenue, whatever the exact number is. No forward looking statements in this presentation. But what's interesting to make sure we talk about even here is that Coupa has redefined a category and now has more revenue in this category than ever existed. So what does that mean for the cloud? How do you change a category? And again, we've been talking about digital transformation for 20 years since probably Rob, since you and I started in software. But so much has changed. Right. So I want to dig into a bunch of things on the slide. But what are you seeing? What's changed the most since March 15? What's unexpected, what's expected? What are the number one things that have just shocked you or have been pulled forward years that you Weren't expecting.

Well, I think as everyone is saying, Jason, and again, thank you for having me on, there has just been a greater energy and focus in what was already happening, which is the move to digital. Right. I think in our case it's even more interesting because when you're in times of hyper growth, folks tend to focus a little bit more on revenue than they do on profitability and they do on operational efficiency, frankly. And our value proposition at Coupa has always been to help companies become more operationally efficient, to help them unlock all of their potential so they could pursue all of their missions and visions. And obviously we're doing that now for hundreds and hundreds of companies around the world. So it's an opportunity to engage in the same dialogue we've been having now for well over a decade. But the ears are perking up even more because they know that they need to move to a digital method of driving their operational efficiency, understanding how they're managing their spending as it pertains to everything they need for their business, how they're thinking about supplier risk, how they're thinking about their inventory levels, their sourcing activities and so much more. So it's really, really exciting for us to kind of have a greater emphasis into an area that we know is so important. Anyhow.

It'S interesting because it's different for different vendors. Since March 15, was there a trigger point where maybe I had a project that I was talking to Kupa and it might be a 2021, 2022, 2023, long term deployment because you have many enterprise customers. Was there a particular drama issue, shelter issue, a wedge issue that got projects pulled forward years?

Well, interestingly enough, it was actually a bit of the opposite in the first month or so. And I mentioned that on our last earnings call there was almost a deer in headlights moment amongst all of our, the vast majority, I would say, of our prospects around the world, whereas we don't know what's going to happen. So we actually need your help. You know, we need to get PPE equipment, we need to get things sorted out so that if you come back in two, three weeks, you could do that. And, you know, it was really rewarding for us here at coopa. You know, we have this, you know, robust community of existing customers and they came together on our platform to source, you know, personal protective equipment for their organization. So we were less oriented toward how do we, you know, close more and more business during that first month and more oriented toward how do we help this community kind of make sure that they're outgoing concern, which was very real in some industries for sure.

Yeah. We've all been through like four phases since March, haven't we? So I hadn't, I did hear that when you, when you said it before, but I didn't think through it. There were, there were vendors where the end of March into April were crazy. Right. Even zoom the next day. Right. Zoom the next day exploded. But even slack, it took a while for folks to figure out we needed to slack more. Right. And then slack took off. So you had this. The Chief Procurement Officers, CIOs and others just needed to like just survive. Right. For that first month. And then what was. Has there been like four waves? What are the next couple of waves that you've seen across your partners and customers?

Well, the most interesting thing for us is that we've taken dozens of customers live since this hit. Right. Because it's one thing to sell new prospects and of course we're focused on that. We're doing just fine there. But when you think about the existing in flight projects, when suddenly these people are, are operating from home and they've never operated in a virtual environment. And to take large global deployments live and have them see, see them start running massive amounts of spend through our system, seeing them control spend and we have a whole bunch of customers who didn't have control over their spend. They literally couldn't stop the company from spending money in certain places. Right. We're able to help them do that on their mobile phone through our integrated email capabilities within offered via coupa. So that was very, very rewarding and powerful. And then of course we reemerged and we started looking at how we can drive our global reach and expansion. Obviously we're well into that now, months after the crisis started for like a.

Big coupe of customer. Pick one if you want or don't or just an example, but before March 15, what was a typical deployment to be fully into production? Not an agile, but maybe an old school type. Would it be a year, would it take a year from really signing and fully going live? And just how do you, if it was. Or whatever was. How do you compress that into weeks? Like how do you manage the team? How do you do the internal change management and the external. Because we're not necessarily wired that way until March were we?

That's right, that's right. Well the average is roughly six to nine months for enterprise customers, our mid market customers, you know, four maybe five weeks. So it's not bad. But you know what happened is that we gained a lot of efficiency ourselves in working with our customers remotely. You don't have the time.

We.

Well, we'll meet you on Thursday. We're going to fly in. We're all going to get into a room. Well, it's Monday. Let's just do it right now. Right. So you get the systems integrator on the Zoom session, you have the existing customer on the Zoom session, you have my Cooper colleague on the Zoom session. We're sharing as you are sharing this slide, the configuration setup and literally walking through it. So in many ways we stand to gain an advantage in the efficiency with which we can work together as long as we can overcome the kind of change management required for some folks, as you say, to be a little bit more tech savvy and and kind of be willing to work in this way. And we're seeing that happening without a doubt.

Where do you think? It's just. It's hard to. There's so much change, it's hard to even predict. But in some ways it's great that you can now deploy customers over Zoom. Right. It's so much more efficient. You don't have to get on an airplane, you don't have to book the hotel and all this. But some things are lost and some things are just different. Has enterprise buying changed? Do you think we'll swing back into the middle? Can we live this dream where we never have to get jets again? Where do you think we'll be on the other side of COVID You know.

It'S hard to predict that, Jason, of course, and probably it's somewhere in the middle. I don't think it'll be an extreme one way or the other if I had to predict. But what I will tell you that will be consistent is that enterprise software is really about driving change management. Driving change. Right. And one of our core values of coupa is focus on results. In other words, identify exactly what it is that you're attempting to achieve after your live a year after your life and then focus everything in an around that. So limitations like the inability to travel or advantages like the ability to get on a virtual session like this are just the methods of getting to that result. As long as we keep can keep people oriented toward that outcome, I think we're in fine shape and that's how we think about this approach.

That's good. Now let's. I want to talk about this because you have some great data. I worry about supply chains. I try not to worry in the world, but there's a lot going On, Right. You want to remain positive. But you know, I look back at some of the first Saster blog posts in 2012, and I wrote one in 2012. I was walking downtown University in Palo Alto, and the last retail store reopened, but it was four years downtown Palo Alto. It's a fairly gentrified community. There's a lot of money in Palo Alauta, tech money. But it took four years for the last retail, what's now West Elm to reopen. Four years. Right. So I'm worried about this. What are you seeing? And this one is interesting. 43% of companies were worried about the ability to fulfill at the beginning of COVID You still can't get a webcam, right? You couldn't get a monitor. I mean, we were worried there were some groceries you couldn't get at the beginning of this. Right. So tell us what you've learned being at the center of this.

Well, first of all, retail, brick and mortar retail absolutely is in trouble. And frankly, brick and mortar retail to some extent has been in trouble. Well before this pandemic. When we're looking at our business spend index, if your viewers go to spend index.com they could see the data on that. I mean, we've been looking at retail for 3, 4/4, and it's been trending down. We've seen a lot of very interesting data that I could share with you around the downward trend. But when you think about global supply chains and this kind of massive globalization dynamic we've had in the world for the last six, seven, eight years, we're kind of getting into, let's call it Globalization 2.0, which begins to balance global with local, as this slide says. Is there some fragility in our supply chain? Yes, but I would argue that fragility is really in the area of information technology, information access, rather than in physical access, because the goods and services exist. And as soon as there's demand, supply gets there. You look at ppe, there was a massive demand, and within three, four weeks there was massive supply. The challenge wasn't there. The challenge was having the information at your fingertips to hot swap suppliers, get access to things you need at the right time, make commitments contractually to people to know that you will fulfill your obligations. That's the world in which we play in at Koopa. So that was what makes it so interesting. And we've got customers literally hot swapping suppliers, moving them into certain areas where they never even thought they'd be buying from, creating contingency plans for categories of spend you need information Technology for that. And that's what's exciting about many of the things we're doing and seeing in our customer community.

Well, that's interesting. Yeah. I was following after right. When we got into this wonderful pandemic. Yeah. How Coupa was at the center of getting PP and identifying this. Right. But I didn't fully understand why. Like I didn't other than, other than it's a great thing to do. But I didn't, I guess, I mean it took a while for bank, but the supply got there. Right. Within a relatively short period of time, relatively speaking. But it needed help, it needed liquidity, it needed connection. And I guess Amazon works again. Right. We can still get Amazon products to our home. So I guess we don't need to worry as much the market will solve this no matter what global turmoil there is in the short term, as long as technology can connect us, I guess is the learning.

Yeah, absolutely. Information technology, access to the right data at the right time to make the right decisions and collaborate amongst the supply chain. And it's very exciting to see some of the largest companies in the world really reorienting themselves to fully modernizing their supply chain, their business spend management approach. I mean it couldn't be more exciting for us.

Obviously I want to hit some of the data next, but on this last point in the slide, this is something I think about a lot. I mean, did we know that the cloud would be this strong after March, that there would be this boost? I mean it's crazy, right? I mean Koopa is on fire. But you talk about retail, look at Shopify. I mean Shopify is 120 billion dollar company today. It's crazy, right. And the growth vector is insane. Right. It's the maximum output of this trend that we've seen. But if we're in shelter, if we're in this world through the end of next year, can we have this divergence? Can we have a cloud on. Can cloud remain on fire when one out of three people are essentially unemployed in the country? Like how long can we remain divergent? Do you have any insights here?

Well, it's a tough question. It's interestingly Shopify and Amazon, I mean these are our customers. Amazon runs tens of billions. They managed to through coupa. So we're close to these customers. But the same value proposition that existed before this crisis exists now. It's just being seen as a higher priority. The ability to get greater speed, the ability to have information at your fingertips, the ability to embed Jason best practices into your deployments. Just about every CIO I talk to tells me, hey, we're going to go with Koopa, but hey, promise me you're going to deploy this in a way that's going to be quote unquote vanilla or best practice so that my team doesn't sort of start doing a whole bunch of end rounds that are going to make us unupgradable and slow us down. They want agility, they want access to community information hopefully we'll talk about. So I think there are a lot of dynamics that are really tailwinds for us in pushing cloud faster into the world at large. And obviously these are big, big markets we're all playing and I'm sure many of your viewers are playing in. So the opportunity is now really to accelerate our efforts.

No doubt. It's interesting the CIOs wanting this best practices, right? They don't want custom, they have this sort of on prem scars, right, of some hack, some hack, some bit of corner code written or weird workflow. I should have known Amazon was a customer. I didn't know it, but my mistake. But boy, you must learn a lot from Amazon, right? Amazon must be like the Walmart of today where they're an amazing customer but they school you a bit. So what is like for an Amazon, what do all your other customers benefit from? Like what are some. That vanilla ism, that bet? Like what are some things you've learned from really those mega customers like Amazon and how does that benefit the other? Like how have they leveled you up?

Sure. Look, the beauty of enterprise software, as I think every one of you viewers knows, is can you have minimal code that supports the massive amount of use cases, as many use cases. That's the dream, right? That's the dream. So what we learn from our largest customers, Amazon being one and others, and is how to support massive complexity in the simplest way possible. What we learned from some of our smaller customers is how to keep things very intuitive and user centric, but at the same time abstract them from some of the complexity that they may never need to use and make everything configurable. So we're constantly learning about scale and stretching from our platform, from the larger enterprise, and we're consistently staying very, very true to usability and user centricity that we're picking up from the smaller growing companies. And that's a beautiful marriage to have on one platform.

Yeah. So related to this, this is something I wanted to learn from you in the enterprise is like brands and you and I chatted right before we went live. I Asked you about competition. I had some fun talking about Ariba, which, you know, we're in 2020. Coupa isn't really an Ariba 2.0, but maybe in the early days there was some truth of that. I just had a lot of experience there and, and you said I don't spend some. Now that we're big enough, now that we're actually larger than this category used to be, I don't spend as much time thinking about competition. And I think one reason is you have this trusted brand, right? You become every deal is hard. You have to prove yourself to Amazon and Shopify. But you are this brand. I've all, you know, there's, there's, there's sweets and there's best of breed. Right. Which we thought about. But, but do, do folks want even more from trusted brands now in 2020 and even more after March 15th? And what does that mean like versus going more horizontal and where do we want to invest more in trusted brands?

Well, it's interesting, I'm looking at this slide and say do enterprises want more from vendors? You know, in some sense I would push back on the term vendors because I don't consider our company, any one of my colleagues working here, anybody that we offer, we're not a vendor. When I think of vendors, I think of hot dogs at a baseball park.

I would have hated it myself as the CEO. You're right, but it plays. But CIOs might still use the term.

It plays into your question. Well, look, it's a term that's grounded in a business that used to be a products business. It smells of commoditization. And the reality is that what customers really want is they want trusted advisors, they want partners, they want people to bring best in class technology, embedded best practices. And they want folks that are focused on value creation with them and measurable success. That's what they want more than ever. And that's what they deserve. They've always deserved. They just didn't have the chance to get that in the first run of this thing, you know, in enterprise software in the 90s and maybe well into, you know, the new millennium. So when you develop trust, and I, and I believe trust is built on transparency, you have to actually see measurably that we're delivering value for you. If a third party came in and said, okay, there's a relationship between coupa and one of their customers and here's what's happening, they will be able to point to measurable value X amount saved or X user adoption or X spend categories under management or X improvement in operational efficiency, whatever that may be. And once that's established, of course, of course those customers are inclined to want to tap into subscribing to more what we call value as a service from those partners of theirs. And we consider ourselves to be that type of partner for them. So we've benefited from that, and I hope we'll continue to benefit from that because we take every one of our customers very, very seriously. We want to keep them forever. We want to continue to drive more and more value for them.

Yeah, it's interesting, you know, like, I think at Salesforce, depending on how you look at it, CRM is either their 4th or 3rd largest category now. It's pretty crazy, isn't it?

Sure, it sure is. Well, look, understanding every component of your customer, how you market to them, how you sell to them, how you service them, how you interact with them on the web is super important. But I argue it's just as important to understand your entire supply base and how you buy from them, how much you spend with them, how you can collaborate with them, whether or not you can mitigate risk when they have risk. So we're really operating on the exact opposite side of the equation. We're helping people, companies who spend money, do it in the most operationally efficient and thoughtful way.

And now, so you're so. And related to this. And at the bottom point, when I listened to the last analyst call, you said inbound demand is up from your base. Right. So your customers want more and more from you from a trusted vendor. A related question, because it's like, so you're coming up on 500 million in revenue whenever it. Exactly. I don't know exactly. ARR. It doesn't really matter for this. But how far can you see? Can you see? You obviously can see to a billion. You can see it right behind you going across the bridge. But can you. Can you see 10x? Can you see the 5 billion? Now, as crazy as that might have sounded a couple years ago, how far can you see? And like, what do you see? What do you see? What do customers want? How's the product going to change? Like, what do you see? What's the furthest you can see and what do you see?

Well, I appreciate that question, Jason. So what I see is a $50 billion plus total addressable market. And what I typically ask are two very, very simple questions of any prospect. Interact with or frankly, anyone interact with, whether it's over, zoom or before, kind of in the physical world. Do you Think, number one, your company is doing a great job in managing the spending that it's involved in. For all the things and services that you need, you think it's done really, really well. I've rarely, rarely gotten an answer that says, oh yeah, we're great, we know everything about how we spend money, we have control over it, it's compliant. Okay. And then I do you think you're employing information technology in a way that's comprehensive and fully integrated and user centric and deployed quickly that addresses some of the challenges described. And the answer is always no. So just about every company in the world can really stand to improve the way that they do their business spending and the way they manage their business spending. So I see a huge, huge opportunity and I think this is in many ways early innings for this category. We're proud to do our part in trying to lead a focus into this area and then fulfill that leadership with a real brand promise and real measurable outcomes for every one of our customers. I think that is why we've seen more sort of inbound interest and more capabilities and additional features and functions and modules that we can deliver for our customer base.

Of course, a couple things, this is more a tactical point and I want to make sure we get a couple couple things on the data you have. But this is a bit of a mystery to me. I should know the answer to this, but I don't. Right? Why are payments so hot now? I understand the innovation of stripe of two lines of code back in the day, right? But why you're seeing this, why is this all coming together now? And why couldn't payments be as hot five years ago? And I put hot in quotes, right? But what's so much more valuable today than it was? Or what's changed in technology? Because I'm missing a bit of why now?

Well, first of all, he's saying the value proposition has been there for a long time. It's been there for a long time. The question is, has the value proposition been fulfilled?

Why now? Why now?

Well, look at what's happening in the consumer world. The value proposition's been there a long time too, but it's only now starting to be fulfilled with Square and Apple pay and Google Pay. Now if you look at B2B payments, my gosh, first of all, it's much bigger. There's a lot more money flowing there. But secondarily, the technology, the capabilities there are really archaic, old school technology. A lot of manual, a lot of paper in the United States, right? Nearly half is paper. Based checks. I mean, are we, what are we kidding ourselves? These systems are rigid. You have monthly batch jobs running out of incumbent solutions. There's no ability to collaborate with your supply base around payment rails, around dynamic discounting, around virtual credit card payments transfers. Cross border is still super old school and complex. There's just so much we could do here. You got third parties enter to do supply chain finance. I mean we're in the very early innings of a huge market and it requires leadership and requires incredible tech. Some of the approaches that have been taken in the past here have largely been driven by banks. The approach we're taking is partnering with banks. But we're bringing what we're really good out to the equation. A highly scalable, robust transactional platform. What we know about usability and how important user centricity is to that problem and we're starting to really get somewhere. You know, we have, as I mentioned on the last earnings call, you know, nearly 100 customers leveraging components of Cooper Pay and that's, and that's growing.

It's really exciting and just, you know, if you look at, if you look at what's happened with Shopify and how big payments have gone there, if you look at the very low end adjacent to like Bill.com didn't used to have any payments revenue. Right. And then it became like one of their key drivers of growth. Right. So what do you see a few years out here in the enterprise? Like how core is this? It's obviously core to coupa, but how big how is this? Is this flip around and become one of the, one of the most essential parts of what we're doing in terms of managing this business to business commerce or are we just, you know, in five years will this just be massive?

You know, it's hard to make a detailed prediction. You know, the way we like to do our business is do it very organically. You know, our customers are asking for these capabilities of us. We didn't come up, wake up, they say we're going to do payments. Our customers said we're doing procure to. Okay, to pay through your platform. How about we do procure to pay, right?

Got to do the last mile, right?

Yeah, let's do the last mile and pick off a bunch of use cases that we're struggling with. So we see a big opportunity here. We're going to co develop with our customer community. We're going to take the same approach we've taken with every other modules, set of modules we've deployed and we'll see where it goes. But the likelihood of us being able to capture a real, meaningful portion of this market based on what everyone's saying, I think that's. Objectively looking at this appears to be quite high. Right?

Yep. Now, this next slide is something I picked out of your. I think, of your investor report, because it's just interesting to me, you know, as a founder, what is. What do you. How do you. Fiscal discipline is super interesting. Right? I mean, you turn around, you probably can't believe all the unicorns you read about on TechCrunch each day that are raising 400 million. And you don't even want to know what the bottom line looks like, because it doesn't matter. Right? I mean, Cooper is a generation. You know, we're generations ago in terms of thinking about this. And then you look at weird things like Zoom. You know what Zoom's burn rate was the year before its IPO? You know what it was?

I don't. I don't.

Zero. It wasn't minus $1. Or like Eric literally said to the marketing team, you can spend every dollar we have. But it's the funniest thing. It's like 414 million in revenue and, like 414 million of losses, and it's literally a zero. Like, it's the fun. You. You can get it right. You can imagine that conversation. You. Here's your allowance. But what is this thing? What's.50 is the new 40? And when should software be profitable? I mean, we're supposed. It's supposed to. Shouldn't it be really profitable? You need, like. You need, like, you know, the X number of engineers and everyone can buy. But what is. What does this all mean? What do you. What are you saying about this 50 is the new 40?

Well, first off, let me say I love how Eric thinks, and I think similarly, in the sense that there need to be guardrails on your business. The idea of spending at all costs. And by the way, we've had some pressure as a public company, certain quarters where people say, well, why don't you just press further, further in sales and marketing and just grow?

That's on the gas.

And then you'd have the other side. As soon as there's a little bit of downturn, hey, why don't you accelerate the pace to profitability? Look, we all know in software as a service, what really matters is cash flow. Cash flow is what matters. That's what fuels the business. So we have put guardrails on the business now for 45% quarters, we've had guardrails on the business. Very, very careful and thoughtful growth. Not overextending ourselves, but at the same time careful management of sales and marketing efficiency and then getting scale into the model on the bottom line. And that's. Those are the guardrails we've had every quarter for 45 quarters. And just as Eric does it, here's what it's going to be for the next quarter. We got 12 weeks go. Then we see what exactly what happens. We distill that. We look at all the metrics by business unit, by geography, by product line and then we unlock the investment we're going to have for the next quarter, go and do it over and over again. And when you do that for as many quarters as we've done, you get into the situation where you can have this kind of rule of 50 dynamic that my colleague and CFO came up with I think when he became 50 years old. But we are operating at this level now and it's exciting.

And is it, there's a benefit at 50. Is 50 too much? I mean, obviously you're a proponent of it because you put it out, but where, where, how do you set that guard? Like what is, what is, what is too efficient versus too inefficient when you, when you're able to be efficient like, well, how do you think about it?

I think. Well, I think you have to combine backwards looking metrics. So when you just complete a quarter, you look at all your backwards looking metrics and then you combine them with all your leading indicators as an executive, which is what does the pipeline look like, what does our talent look like? Where are we in terms of stage of pipeline, where do we want to make investments geographically, when are we launching the next product release? And then use your gut to fine tune exactly how you're going to run out at the fine quarter. So you have the guardrails, but you also don't hamstrung yourself as an executive. Otherwise you could automate the job of the CEO in that area and that's probably not the best way to do it.

Right, good. Let me skip. Oops, we had this slide, maybe we lost one on the different segments. I want to talk about some of these points, but we might have taken some of this out. But tell me what you're seeing across different industries because you do have some data on this. So one of the most interesting things from some coupa data I've seen is like I read the Wall Street Journal, I read the New York Times, it seems like many banks are Doing very well in this crazy environment. Right. But like Koopa shows financial services under a lot of pressure. Health care. Right. It's hard to get a handle on what's happening in health care. Some hospitals are at the edge of bankruptcy. Right. On the other hand, other segments of health care are on fire. Right. They're literally on fire. So walk me through some of the data you see of different segments and maybe some things that are counterintuitive that you're seeing in different parts of the economy.

Well, I think one of the biggest things that I think most people now understand is that given the, the amount of liquidity in the market, it's very hard to gauge the extent to which financial services firms are doing well, and healthcare, et cetera. So you have to kind of have that context in mind. But I really do. You know, it's very difficult to answer that question in two sound bites. I really do urge your audience to go to spendindex.com here's what we've done, Jason.

We had a slide on it here. I think I just lost it. But yes, it is a great one.

Let me tell you what we've done there because we have created an index that is a real leading indicator. Let me tell you why. We're looking at things like what are the approval cycle times in the current quarter? In other words, did it take longer for people to approve something before they even bought it, before they even ordered it, before anything happens? We have a leading indicator in terms of how long by industry folks are thinking through purchases. That's never been seen before. In an aggregate level, with nearly $2 trillion worth of data, we're looking at rejection levels. What percent of things are getting rejected? You never see that in the gdp. Now, if there's an increase in rejection levels, of course there's a likelihood that that industry has concerns. We're looking at average spend per employee at companies, and we put that into an index to give leading indicators. Now, we launched this every quarter and when we backwards tested this to 2016 against the GDP, we saw a very real and meaningful correlation. So we think this could be a real enabler for people to get a sense for things. But if you look at the last one, where we shared at the last earnings call, of course, significant retail slowdown. Slowdown across the board, frankly, but much more so on pronounced in retail. Will you look at financial services slowdown there as well, whether that's seen or not in stock prices? So I'd urge people to go to spend index.com, we're sharing this openly. We just want to be a good corporate citizen. We're not gaining anything from sharing this other than maybe a little bit more awareness about Coupa. So I'd urge you folks to check it out.

Yeah, everyone go to that because it's pretty awesome. Spendindex.com and I'm on it on my iPad. I had a screenshot in here but I think maybe, maybe we took it out because it was backwards looking. But let me just ask you one or two questions because it is great. Everyone should check this out. It is great to see this data and granted there's a little bit of a lot. It's not up to the minute it takes you, you've got to get that data. So it's through Q1. But one one that surprised me is high tech was down. How you define high tech, right? That was down in Q1. So what is when the cloud's on fire but in the spend index, high techs down. What are we seeing there? What should I, should I see something? Is there a story behind the story there?

Well, you see what you see which is in that Q1 report. When you look at the index purchases for hardware and software in the first quarter of the year, when you look at time to approve, when you look at number of rejections, we look at average spend per employee was down. And that's just, that's just a reality of what happened there. Now whether or not that's measured in the stock prices of many of these companies, probably not. But again, you could argue that the current liquidity environment and the longer term opportunity in the digitization area is very, very real. Look, investors are looking for places where they're going to get yield. They're not going to get in U.S. treasuries, right? So they're looking for places to get yield, they're looking for longer term bets. And there's no question many things my colleagues and I, like Eric and others are doing have the opportunity to really stand the test of time and develop into very, very meaningful long term businesses. That's what we're doing here.

I want to chat about your book next, but on the spend index, the Q1, just remind me, Q1 is calendar Q1, right? So Q1 is through March, this retail one, this plummets dramatic even through Q1. So that trend, you can see it in Q4, retail was already off deeply in Q4 and then Q1 is down. Boy, it's just epic, right? It's almost a step function. It's almost a step Function here. Right.

Absolute step function. And look, if we have to make predictions, I think they're pretty, pretty obvious. Right? We're gonna see real bankruptcies in retail. We're gonna see a lot of consolidation. We're gonna see brands get rolled up. I mean, it's gonna happen. It's already beginning to happen because, look, folks aren't going to the mall and they're buying in those stores. So the ones, the retailers that are quick enough and nimble enough to get to consumers directly to figure out different innovative ways to manage their supply chain will stand the test of time. But it's a real struggle in retail, no question about it.

Yeah. I would literally encourage everyone listening now or watch the thousands that will watch this later. Go to spendindex.com, it's fascinating. Coupa has a massive. It has almost 2 trillion of spend thrown through the platform. So if nothing else, this is a fascinating data point that you can segment across financial services, healthcare, high tech, manufacturing, retail. And it's a slice. But you may see right now a story that is worrisome of our economy. Right. There is some optimism in this. I mean, actually health and life sciences outperforms more than I would expect from the press because our hospital's not taking ordinary patients and our dentists at a lay level. I felt like that's under more pressure than the spend index suggests. But outside of that, it's a bunch of more worrisome trends. And maybe we're all ballooned by the massive liquidity injections, the trillions of dollars in the economy, the planes flying nowhere, and the extra unemployment checks. But the real signals underneath our economy are very worrisome on these charts.

Yes, perhaps. I'm looking forward to next quarter's release. We're actually going to start slicing by category of spend. So what are the categories folks are spending on? Where are they? Increasing, decreasing as part of large enterprises. So we'll have more robust data, greater fidelity of data as we go, and hopefully it'll help folks understand what's going on in the world, frankly.

Yeah. All right, so I'm going to post this on Sasser after the next one's out because it's super fascinating. Okay, so book. So you got a book. Book, Book. Is it out? I should know. I'm going to buy 100 copies. 50 copies. Tell us about the book.

Well, this is really a book that is the next step from Value as a service, a book that I did about three years ago. And this is really about breaking the silos of traditional Enterprise software, which was always deployed one customer time with one set of data and never being able to see anything across, never being able to take anonymized, sanitized, aggregated data. We're beginning to take that data, distill insights from it and push that back into individual customer environments so that we could be smarter together as a customer community. So I look at this book as really, I don't have a PhD, Jason. I ended with my MBA. This is kind of my hypothesis or thesis or dissertation if you'd like. And it's really a position paper on where we see enterprise software going, which is the breakdown of those silos so that we could be smarter together as enterprises and customers through the use of information technology. We're on the very bleeding edge of that with what we're doing here at Coupa. And every day we discover more and more interesting use cases that we employ for our customers to take advantage of. And I'm happy to share anything you'd like about that.

Well, it's interesting. It's communities. So SASTR is a community, right? I mean I never knew much about community before this. I'm still learning. There's a lot of talk about communities, right. And how customer, you know, vendors, technology, solution, I mean people build communities, communities are out there. It's communities around. What is, what do you mean by communities? What are you seeing? What have you learned at Cooper in general? What does this mean?

There's so much. But I would give you the metaphor that I love, which is ways. You know, I was very proud that Noam endorsed this book after having kind of thought through our concept of community intelligence here.

That's a space. You didn't imagine community would exist, right. On maps, but it sure does.

Exactly. And with ways we're truly smarter together as we travel from destiny from A to B. Because we're leveraging immediate access to data and that data requires almost no friction, in some cases zero friction, to collect aggregate and distill insights that can be pushed back to the individual driver they could find their way through. The exact same concept applies to everything happening in business processes. Best practices for how many people you should have in your workflow, Jason. I mean, you know, there's companies out there, 60 people in their workflow to approve something that's $200. If they knew how far out liar they are in real time, they could fine tune that. Right? They're overpaying for categories of spend all over the place. They're exposing themselves to risky suppliers and not leveraging community insights to figure out which suppliers they should be considering working with. I mean, the list goes on and on of all these use cases where we could truly be smarter together. And proudly as a platform, we're enabling that for our customers. So with every release of our product, we're turning on more and more of these community intelligence capabilities that allow them to be smarter together.

Okay, so good. The book in large part does it share a lot of learnings about how to build this community among your customer and partner base?

Well, first of all, it frames what it actually means to have a community intelligence environment. What are the components to that? It explains why the time is now to strike, particularly if you have early stage companies that are watching this. Why now is the time to really build up a platform that can have to stand the test of time in leveraging cross company committee insights. And then it shows a whole host of use cases and case studies of what we've experienced so far and asks the reader, as I did with Value as a service, to comment on what they're seeing. Push back on some of the hypotheses in the book so that we can learn together as a community of readers, frankly of the book and as well.

Okay, it's great. Well, let's everyone let's. I'm going to do a deep dive. I think community for business software is super powerful, right? It's so important and it's something we're just learning today, right? Just like payments, maybe everything in enterprise sometimes is four to five years later than consumer. Maybe payments is there and maybe community is there too, right? Waze hit this five years ago, but we need to learn this as leaders. So let's all read this. And Rob, if you want, maybe whenever you want, we could do a deep dive on community on the podcast to 130,000 people because I think this is a great topic on its own, right? Just how building this community thing because. All right, this is a great book. Let's all read it and I will share some learnings on it on Saster in a bit. Let's make sure we have. There's more I want to talk about. Let's make sure we have a few minutes of questions before we end. Actually hold on. How are we doing on there was. Let me make sure I grab apologies for one second. There was one very specific I wanted to hit and then we'll go into the zoom and these are specific to procurement, but I think these are good ones to hit for. Rob, what are the three pain points for chief procurement officers excluding just generating Savings and reducing supply chain. What are the top pain points in 2020 for CPOs?

One of the biggest pain points is ensuring that the cfo, the CEO and the CIO become their truly connected colleagues in solving many of the challenges that they've been thinking about for a number of decades. If you go to a CPO conference of any kind, the conversation is typically, how do we get a seat at the table? How is it that the whole organization doesn't understand all the value that we can offer? Now is just the time to strike, to showcase that value. And that value is in every possible way, of course, from savings, which is very obvious, but it extends to supplier risk mitigation, which is obvious. Right. And all the way through managing the entire integrated way with which a business manages its spend through information technology. So now is the time to strike. Look, if we have a phenomenal CPO and we use our own platform, but if my CPO kind of pinged me on Zoom email or walked into my office and said, look, hey, I need a budget of X because I'm going to make sure we're going to mitigate our supplier risk, I'm going to save us this much money. I'm going to give us a platform that's going to help us be modern and scale into the future. Why in the world would I not support them if they were a trusted advisor? And so that's the opportunity.

Yep, the next one. It's a bit of a layup or even a commercial, but I always love to hear what a CEO has to say. Which is which new coupa product or feature are you most excited about?

Well, the most exciting one for me is community intelligence, which is a set of capabilities that we discuss in the book, but they're in the entire fabric of the product set. So they appear, for example, in expense management, which we don't talk about as often, but we have hundreds of customers using coupa expense management. We are mitigating fraud and expense management. We're using the data set of our aggregated customer base and serving up individuals that are highest likely to be doing fraudulent activities. So you can investigate rather than rigid kind of policies or a free for all. We found a way to use technology to be prescriptive, which is the P and Koopa prescriptive to individual controllers and people responsible for spending in the company. Leveraging community intelligence and that's just one example of of many capabilities Leveraging community intelligence within coopa.

This one from Nikhil, you probably don't know the answer, although it'd Be wonderful if you did. I know Koopa works with many hospitality companies and how many corners do you think bars and restaurants, hotels, airports will rebound? If you knew that, I mean you'd be, you could probably be on CNBC any night. Everywhere, any night anyway. But do you have any insights or do you have a model? Do you even have an operating model? Like when will these hyper impacted hospitality businesses recover?

Well, I love the second part of question, Jason, because of course I'm not a fortune teller. In fact, the big unknown is when some of these things will happen. But we have a very clear scenario based model for, for V, U and L. And then we execute accordingly based on where things work out. Right.

So, so V I get. Are we past V or is there still a chance for V?

Well, depends on how far you step back and looking at the. But I think where. I think, I think in many ways you're right. We are pretty much past V. I think that's a fair assessment in my view.

Yeah, this one will take you back, but let's just at least do one and have some fun. Right? Because we did chat about this before we started. What were the biggest challenges early on when Kupo was a startup? Procurement folks hadn't quite heard of you, didn't have the brand and we're replacing or competing with solutions like Ariba.

Well, I can give you a very long list of challenges, but I think, I think the biggest is to get folks to give us a chance. Okay. If you look at some articles that came out in 2009 when I was raising money, our first raise that I was involved in was 15 million and a half post. Right? It was I think $7 million raise, 15 and a half post. It was getting folks to try. So we did things like we said, look, give us a year annual subscription. If we don't deliver this quantifiable value to you within 12 months, you could cancel and we'll give you your money back. You know, that was a big, big risk to take in 2009 and 2010. But we delivered for these customers and they became fans and they became highly referenceable and they gave us a chance to go to the next customer, next customer and grow our ECV and grow our renewal rate. So it was very, very hard during the days, of course, but that built the foundation and the right culture, I think in this company because we don't take anything for granted.

Did any material number of customers really ask for their money back?

No, not even that material. None asked for the money back.

I love them I personally love the money back guarantee hack. It's always one that asks for their money back and it doesn't matter because if you don't keep the customer for life, it doesn't matter if you give one year of revenue back. Right. Even though it's stressful, it doesn't matter.

But you know Jason, the beauty of it is even if, let's say they were to ask at the end of the year, if you're objectively looking the data that said you're paid us, you know, on a mid market customer, you paid $100,000 a year. Well, we've saved you $700,000 this year. I mean, isn't it a little egregious for you to ask for your money back? I mean, is it obvious we delivered value for you? Are we not a values service partner for you? So frankly we didn't have that. But that doesn't mean it wasn't easy to get those deployments, to configure the product, to build new features, to do what it took to get it done. I mean, no question, very hard.

Let me ask just one related early question and then we can wrap up with a few more current questions. But one of the reasons in the early days that I got very, very from afar I was interested in coupa is back at Adobe Sign Echo Sign, I would meet with a lot of folks and mostly on the contract side we would deal with sell side of course in the early days, but there'd be a lot of buy side conversations, a lot of them. And we would go in and we built an Ariba connector early. It was very hard to do because it wasn't an open platform. But, and I mean this is no disrespect to anyone at seb, but I never heard so many complaints. Okay. People would just complain about Ariba and people complain like, I mean obviously you're biased, but it kind of lit up the hair on the back of my neck because I hadn't heard this. When you're selling in those early days and you don't have the brand, can you looking back on it without bias, how do you leverage those complaints? Like how do you turn those into an asset? Do you bash the competitor? Do you not? Does that create a bigger wedge than if they're happy? And maybe you didn't see it, but I just heard this again and again at so many Global 2000 companies I would meet, it would be their least favorite vendor.

Well, look, to be frank, we did some bashing early on and I'm not Sure. Whether it was right or wrong, but that bashing wasn't grounded in logic, it was grounded in facts. You know, when you talk to a customer that's getting 4% of their spend running through an incumbent system, you know, the bar is not that high to get them to 8, 9, 10, 15.

It's not that high.

Right, it's not that high. But it's a matter of bringing that to the forefront. I mean, bringing facts to the forefront that everybody could look at so they can make the right choices. And those are early day things you have to do. But obviously now, you know, thankfully we're well beyond that. Right.

Alright, maybe the last one or the penultimate one. So we. Maybe this will be the last one. But this is probably more from a founder perspective. They think about in these uncertain times, some deals go more quickly, but some go more slowly. Any tips you've learned to accelerate closing of deals in this shelter area?

Yeah, I think it's in the shelter area, but I think it's more broadly. What I notice now, you know, we work with so many different. I've had the chance to work with so many hundreds of, of sales professionals in my career, certainly hundreds of Cooper as well over this time. What you find is folks tend to pivot a little bit more towards being a bit aggressive. In other words, look, we're great, we're the best. You know, nine out of ten people use us. I don't love that. And then you have the other extreme, which is they're a little bit overly passive. In other words, they chase balls. Yeah. Let me give you 15 references. 50 references. Let me show you a customer exactly like you. What else can I do for you? And our mindset at Cooper is you don't want to be too aggressive and you don't want to be too passive. You want to be assertive. Focus on the facts, become a trusted advisor. Get Vision Lock on what it is you're attempting to achieve in working with us. And if we agree to that Vision lock, perhaps I'm the right player to help you achieve it. If I'm not, you can go find another player to help you achieve it. So we try to be very, very assertive in our dealings. And always, Jason, always grounded in integrity. You know, that's very, very important to me. I never wanted an environment where the salesperson would sell something and then they'd be afraid to sort of interact with that prospect. That's horrible. We want a lifetime relationship with this customer. They should be proud of what they've done and they should know they have now thousands of people behind them. They're going to deliver for that customer. So this is value as a service. It's a different way of thinking about a traditional products based business into the business that it is today. I mean, Saster, right? This is what it's about, I think.

Yeah. No churn and burn deals, right? No, they're the worst. Okay. Well, Rob, this was incredible. Thanks for giving us the full 50 minutes. I love spendindex.com, go to it. We'll talk about more about it on sastr Spend Index. There'll be another quarter of data coming out shortly. Right. I assume. But you will see things that are fascinating, that are data driven, which I love. So check that out. And also smarter together. This community in B2B I think is super powerful for the next five years. So hopefully we can continue the conversation there. But grab your copy. And Rob, again, this was wonderful and thanks for taking the time out.

Don't mention it. Cheers.