KNBE - Knowbe4me

[Spekulatius]

This is a speculative position in a recent IPO that I established after the last earnings call. It is a cybersecurity play with a focus on training. They are the only public company in this particular niche that I am aware of, but there are several private competitors.

Market cap is $3B and revenues $2.8B and revenues are north of $200M, so it‘s not cheap, but almost reasonable priced for a SAAS play.

My thesis is first order thinking - the phishing scams are becoming an epidemic (Colonial Pipe, CNA) and very costly and now chief IT officers need to do something and offer better training to employees which might lead to KNBE‘s phones ringing hopefully.

There is no second order thinking or thesis; that’s it.

 

The question really is if above comes to pass and if so, is KNBE‘s software really differentiated to justify the lofty valuation? I don’t really know, but I think there is a chance that this is true.

FWIW, I learned about this stock/ IPO in MF Industryfocus podcast and they seemed to like the stock.

 

Twitter thread, where I threw this on the wall:

 

Edited June 16, 2021 by Spekulatius

[MattR]

Hi, I am working in IT, and they have a great product. However I don't see how they can built a moat around it, since every competitor offers very similar products.

[Spekulatius]

5 hours ago, MattR said:

Hi, I am working in IT, and they have a great product. However I don't see how they can built a moat around it, since every competitor offers very similar products.

Yes, this seems to be somewhat of a consensus. It is hard to create a moat in a product like this, but being best in class (or close) with tailwinds from getting higher priority with IT, might be enough to get this stock to work.

I have experienced phishing training programs that also address phishing amongst many other things and are really only generic multiple choice test that must be suffered through.

I think there is quite a possibility to create a good product, using behavioral science, drills and less cookie cutter training approaches and now I am sure there is a market for it. 

[Spekulatius]

WTH?

[Jurgis]

@Spekulatius iz CoBF meme stonk picker extraordinaire.

[Castanza]

On 5/22/2021 at 10:57 AM, Spekulatius said:

Yes, this seems to be somewhat of a consensus. It is hard to create a moat in a product like this, but being best in class (or close) with tailwinds from getting higher priority with IT, might be enough to get this stock to work.

I have experienced phishing training programs that also address phishing amongst many other things and are really only generic multiple choice test that must be suffered through.

I think there is quite a possibility to create a good product, using behavioral science, drills and less cookie cutter training approaches and now I am sure there is a market for it. 

Are there any samples of the training? What makes it different? In my experience, it is very difficult to get individuals to care about this. Especially non IT employees. At our company we send out “trick emails” every so often and if people fail the test the get punished with training. We’ve made the training so excruciatingly boring that people now over report emails as potential phishing scams. In fact this past Christmas we sent out Amazon gift card codes through encrypted emails and something like 10% of people opened them. 
 

 I guess that’s neither here nor there though as companies often fork over cash for new approaches. 

[Spekulatius]

3 minutes ago, Castanza said:

Are there any samples of the training? What makes it different? In my experience, it is very difficult to get individuals to care about this. Especially non IT employees. At our company we send out “trick emails” every so often and if people fail the test the get punished with training. We’ve made the training so excruciatingly boring that people now over report emails as potential phishing scams. In fact this past Christmas we sent out Amazon gift card codes through encrypted emails and something like 10% of people opened them. 
 

 I guess that’s neither here nor there though as companies often fork over cash for new approaches. 

The behindmost IT department of the company I works for started to do the same thing recently. I don’t know if they use KNBE or another software.

 

FWIW, I checked Reddit/WSB, but I don’t think the surge comes from this angle. Sold off 1/3 of my shares at $30, no .

[Jurgis]

2 hours ago, Spekulatius said:

Sold off 1/3 of my shares at $30, no .

 

I only had 1/3 of a share, so could not sell 1/3... I'm gonna ftw.

[Spekulatius]

10 hours ago, Jurgis said:

@Spekulatius iz CoBF meme stonk picker extraordinaire.

 If it can't be meme-fied, is it even worth investing?

 

I goddamn missed the $PLTR despite having a good handle on the pro's and cons. Doing better with this one.

 

Then there is $CNNE. It is trading below NAV with a pretty decent track record, but who cares? Cannae Holding sounds good and they have an war elephant on their website. Who doesn't like elephants? This is why we fight!

Edited June 18, 2021 by Spekulatius

[Castanza]

1 hour ago, Spekulatius said:

 If it can't be meme-fied, is it even worth investing?

 

I goddamn missed the $PLTR despite having a good handle on the pro's and cons. Doing better with this one.

 

Then there is $CNNE. It is trading below NAV with a pretty decent track record, but who cares? Cannae Holding sounds good and they have an war elephant on their website. Who doesn't like elephants? This is why we fight!

 

$CNNE has quite a bit of restaurant exposure doesn't it? Might be misremembering, but I thought I heard this mentioned on a podcast non long ago.