Michael Gilroy
speaker
885 appearances
1 recordings
1 series
first heard Jul 2026
last heard 20 Jul
Michael Gilroy’s voice in public audio — every appearance, attributed to the second.
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recordings per month · last 12 monthsRecordings per month over the last 12 months — 1 in all, peaking in Jul 2026 with 1.
Appearances
I think if you really...
took a step back and looked at it, you could get there even at the seat.
One of my favorite topics right now.
So let's think about if we were sitting in a business school class right now, which was a very long time ago.
where did revenue multiples come from and why do we use them?
We look at revenue because gross profit was virtually the same across most SaaS businesses, right?
Let's put it in a band of 65 to 80%, but the mental model was at scale and maturity, this company is gonna get to 80% gross profit.
We take out all of the cogs, which I think we know well.
And then I come from the world of FinTech and payments.
As you look across FinTech, there are so many different business models out there.
In fact, if you look at the multiple variants in the public markets, the variance of financial services from a multiple standpoint is larger than any variance across any other sector.
So healthcare, internet, consumer, software.
And so in FinTech, we only use gross profit multiples because I can be looking at a business at 70% gross profit or 10%.
It doesn't mean the 10% gross profit business is any worse, but it does mean they're different.
So taking revenue multiple there makes zero sense.
today as we're looking at software this is now the same thing as it was historically invented right i can be looking at a company that's at by the way negative 10 gross profit which we'll probably stay away from all the way up to 70 80 for the folks that have a business model that lends itself to that
From there, why are we using multiple A or anything above earnings multiples to begin with?
Many of these companies aren't earning it.
And so it's my job, particularly at the early stage, to say, hey, today we're at, call it 50% gross profit or 80.
For both of those companies, I'm going to say, what is the net income conversion off of that gross profit?
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