Software is a set of instructions that tells a computer (or phone) what to do 💻

You interact with lots of software products every day ☀️

Think about all the apps & websites you use to order food, buy clothes or invest your money -- these are all software!

Because of its nearly universal adoption, software has rapidly become one of the largest and fastest growing industries in the world in the last 25 years.

Many of the biggest companies in the world are software companies, like Google and Meta — both of which were started within the last 25 years! 👶

Software companies can grow quickly because once a piece of software is created, it can be distributed to millions, or even billions, of customers at low incremental cost. 📈

This is different from traditional industries.

For example, Nike has to pay money to produce each shoe it sells, but Meta incurs NO cost when someone downloads Instagram.

The direct cost to a company for the goods or services necessary to serve each new customer is called Cost of Goods Sold, or COGS.

With lower Cost of Goods Sold (COGS) compared to physical goods or services, software offers potentially higher profit margins and larger scale.

In this journey, we’ll explore how you can evaluate software companies as an investor, and focus on their most popular business model: Software as a Service. 🚀