With over 28,000 expert calls at your fingertips, Stream ensures you’re able to understand company, industry, and market trends relevant to your investment thesis. Sometimes, though, you may find an expert in our library that fits your research needs, but they haven’t been asked the exact questions that you need answered. As you read call transcripts to get up to speed on a new sector or name, following up with the best experts is as easy as clicking a button. I mean that literally. At the top of every transcript, you’ll find the “Talk to this Expert” button, a core feature of Stream’s Expert Call Services.
I pulled a couple of transcripts to show you the value of “Talk to this Expert” in action. Both interviews are with the same expert, a former account director at NTNX (Nutanix), an enterprise hybrid cloud infrastructure (HCI) business based in San Jose, California. To read the transcripts, you’ll need access to the Stream library, which you can request access to here. If you’re already a subscriber, then add Expert Call Services to your account to conduct 1:1 expert calls at a fraction of the cost of traditional expert networks.
I wanted to understand why the initial interview caught the analyst’s eye and triggered a follow-up interview, and how they compared. The first interview, Former Director Believes Digital Transformation Service Companies Generally Have Higher Profit Margins Over a Shorter Time Horizon Than Traditional IT Service Companies, covers a lot of ground. It’s clearly early in the development of the analyst’s investment thesis, as it’s more focused on the business case for the industry as a whole, and what sector trends imply about areas for investment. Reading the transcript, my initial hypothesis on what caught the follow-up interviewer’s eye: the breadth and depth of this expert’s knowledge. Here’s a small sample:
Analyst: Is there a shift back towards in-house and if so, why?
Expert: There’s a couple of major trends right now. 1) The cost of resources in India are almost on par now with Europe. We’re seeing a lot of IT expenses spinning up in Romania and Bulgaria, in those kinds of countries. 2) In some sectors, specifically banking and public sector, there’s been a massive shift away from outsourcing back into insourcing. That’s now leading to a much more fragmented outsource model where core IT and commodity IT is outsourced because it can be delivered cheap. Specialist skills are being brought back in-house.
Could you walk me through how a service IT contract works?
Traditional IT outsourcing, “run my infrastructure for less,” is very much around a total cost of ownership model. Outsourced contracts are generally signed for 5, 10, 15, or 20 years. Typically the bidder will win on the lowest viable price. The reason they do that is because those outsourcers know that change is inevitable over a five to twenty year period. They make their money on change control. A typical outsource contract loses money for the first 30% of its life. It will actually recover and become profitable in year four or year five if it’s a 10-year contract.
In new transformational style contracts, the delivery organization doesn’t lose money. They are making money from day one because they are charging for their expensive consultancy from day one. The delivery of IT infrastructure software services are part of the face delivery. They will have a massive partner ecosystem, but they won’t actually be delivering and managing a lot of the components of themselves. What they’re delivering is the journey to the outcome. That creates a big competitive market for the partners to then deliver. That’s why again it’s opening up for those tier two organizations.
What do you believe will change in the next five years within IT service?
There’s going to be consolidation in this marketplace because there’s been a big boom. The change in dynamics has meant a lot of smaller companies, two or three years old, sub 500 full-time employees that are delivering a great service but are struggling now to scale are vulnerable to being bought by larger companies who want to add to their portfolio.
That’s only a page of highlights from a 15-page transcript. This is one of those experts where it’s not so much “what do they know really well?,” as “what don’t they know, really?”
Now let’s look at the follow-up call, specifically I’ll share the table of contents.
Former Director Believes COVID-19 Sped up Digital Transformation Hugely Globally
- NTNX (Nutanix) – Public Sector Account Director (Prior)
- Interview Date: 07/28/2022
- Table of Contents
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- Changes in workloads for HCI and customer receptiveness
- Nutanix versus public cloud
- Skill shortages for cloud-certified versus Nutanix-certified
- Nutanix’s scalability challenges
- Challenges in acquiring new customers
- Opportunities in Nutanix’s infrastructure
- Nutanix innovations when COVID hit
- Clients’ adoption of AHV
- Nutanix’s key limitations
- Features that Nutanix should focus on
- Strategic ELA-type relationship with customers
- Nutanix as a strategic vendor versus an ancillary provider
The answer to the question, “Why this expert?” is not obvious to me based on the topics. The initial interview focused mostly on industry dynamics, while this interview is a deep dive into NTNX in particular. Only one topic is common to both interviews (the skills shortage), and even that question is framed differently (as NTNX vs market instead of a broad sector trend).
Here’s what I think is going on. The second analyst recognized a shared understanding of the sector with this expert, and decided that meant the expert could be trusted to fill in true gaps in the analyst’s knowledge. The combination of transcripts and follow-up calls solves the eternal problem for generalist investors trying to understand technology: how do you know if you’re being snowed? The bottom line: you can conduct fewer, higher-quality interviews when you search across 20k+ transcripts to better prepare for calls and prequalify experts.
It’s worth reading the follow-up interview. It’s an excellent call end to end. Perhaps more importantly, on the day of the interview NTNX closed at $14.95, and on Oct 13 (pre-acquisition rumors) NTNX closed at $21.54 (+44%). I hope this analyst put the position on! We love it when our clients make money. If you’re interested in joining them, then request access to the Stream expert transcript library here.
Give the “Talk to this Expert” button a push.
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Austin’s primary experience is in consulting and private equity, though he’s also a published author.
Read all posts written by Austin Moorhead
