No. of Recommendations: 4
But when you have so many alternatives to docusign do you really have pricing power?

Most businesses thrive without pricing power. The market's job is to eliminate all unnecessary profits. So how do you thrive without pricing power? By controlling your costs better than the competition. One way is to have a larger client base to distribute the cost to! It pays to be number ONE!

If a company has 70% market share at best it can grow at the speed of market growth pegged at 27% recently. Is'nt it?

Yes, but no! Tinker posted an article about market penetration, how it follows the "S" curve. In a mature market all you get is vegetative growth -- that's why countries like the USA grow at three or four percent. During technology adoption growth is much faster, 27% for eSign? But that's revenue. In a well managed, growing company the bottom line grows much faster than the top line. Net margin grows faster than revenue. If stock options are not abused, EPS grows faster than revenue. At the end of the day share price is closely tied to EPS and how far along the "S" curve the technology adoption is -- margin expansion at the bottom, margin compression at the top.

If you have higher margins than your competitors you have more free cash flow. With wildly expensive stock and free cash flow you can grow by acquisition, which is what Cisco did to become number ONE.

BTW lots of esig reviews in these links. Docu is well reviewed but don't see anything special stated. Do you? But it does have 65% marketshare.

I have not read the reviews. I ignored DOCU until my broker used HelloSign. That opened my eyes to the need and desirability of this technology. 65% marketshare is FANTASTIC for a non-Gorilla!

Why "don't see anything special stated?" Maybe there isn't anything special but first mover advantage and path dependence are still at work. Positioning and brand name are at work. Size is at work.

The ones who need something special are the newcomers trying to break in. Price? Probably not good enough.

Denny Schlesinger
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