What F1 and software companies have in common...
Recently, we had the pleasure to speak with Marcin Droba on The Dutch Investors Podcast. Mr. Droba is the Head of Investor Relations at Text S.A., a Polish SaaS company of offering various customer service solutions. During our conversation, one particular insight stood out:
Software companies are like Formula 1 cars - Marcin Droba
This analogy is not only true for Text S.A., but for software companies in general.
For those of you who want to understand this unknown Polish software company better, the entire conversation is available on Spotify & Apple Podcast:
Formula 1 and software
Let’s use a familiar example; our fellow Dutchman Max Verstappen and his Red Bull team in Formula 1. At the start of each season, F1 teams launch their cars with high expectations.
On paper, the car (or product/service) is supposed to be perfect, but as the season progresses, adjustments are necessary. Teams tweak their cars to improve speed, reliability (same goes for a product/service), and stability based on the feedback from their drivers (customers) and the performance of the car during races (the product’s performance in the real world).
Similarly, Text S.A. begins each new customer relationship with a product (a service) that, in theory, works flawlessly. But just like in F1, reality often shows that tweaks are needed over time. Marcin shared an example: a massive update rolled out a few months ago, which, on paper, promised to be a game-changer for their customers. However, the rollout was slower than expected.
It was a great upgrade, but like any major change, it came with its challenges. This highlights a key point in the SaaS and software environment, success is a continuous cycle of speed, research and development, and constant adaptation to changing needs.
That’s the real competitive edge for software. Not a static moat, but a living, breathing system that constantly evolves. In fast-moving industries like SaaS, where the product is never truly finished, this mindset is crucial. It’s about being in permanent beta, always one update away from irrelevance or a breakthrough. The winners aren’t the ones who build walls around what they have, but those who build engines that keep getting better, faster, and smarter. A relentless pursuit of progress where agility beats size, and learning trumps legacy.
This is where another F1 analogy comes into play:
The business is the car, and the management team is the driver. If either one isn’t up to par, there’s a good chance your investment ends up in the wall.
Below, you’ll see how Text’s management is steering the car through a fast-changing and competitive AI landscape.
Staying ahead
Maintaining an edge in software has never been more challenging, especially in today’s rapidly evolving (AI-driven) technology landscape. New tools are popping up all the time, apps, and websites can be built with the click of a button, and customer service is being reshaped by AI technologies. In this dynamic market, Text S.A. focuses on two core strategies to stay competitive:
Be extremely customer-centric
Embracing change and being ready to adapt
Customer-centric approach: Text S.A. goes to great lengths to stay deeply connected with its customers. By listening to their pain points and incorporating feedback into their product development, they ensure that they are always aligned with customer needs. Interestingly, the company also implements its services internally, using their own products in-house helps the team identify areas for improvement quickly. This "eating your dog food" strategy gives them first-hand insights into what’s working and what’s not.
Embracing change and adapting: Text S.A. clearly understands the AI revolution could either be an incredible opportunity or a significant threat. The management team is unambiguous about it, if they don’t embrace change and use AI to their advantage, they risk falling behind.
AI is reshaping how businesses interact with customers and how people find information, which is particularly relevant for Text’s core product, Livechat. As customer acquisition and communication methods evolve, Text S.A. is adapting by integrating AI technologies. For example, many new customers are now discovering Text S.A.'s solutions, such as their Knowledge Base and Livechat products, through platforms like ChatGPT or Gemini, which actually increases exposure to the company’s offerings.
Double-edged sword
The arrival of AI is a double-edged sword for Text S.A. (and many other software businesses for that matter). On one hand, it presents a massive opportunity to enhance the company’s products and deliver more value to customers at an accelerated pace and lower headcount. On the other hand, it poses risks to their traditional business model. The shift in how people search for content and interact with digital platforms can disrupt existing systems, such as Text S.A.’s Livechat solution, if not adapted quickly.
This uncertainty is reflected in the company’s current stock price.
However, Text S.A. believes that the larger players in the industry, like them, are well-positioned to lead and benefit from the transformation AI is driving. One of their strategies for staying competitive is to move toward a suite model, similar to Adobe’s Creative Cloud. By offering a broader range of integrated solutions, Text S.A. aims to deliver more value to its customers while ensuring that their products remain indispensable in a rapidly changing digital world.
The road ahead
Will AI be the force that drives Text S.A.’s future success, or a challenge that threatens their business model? The answer is still to be determined, and only time will tell. However, it’s clear that Text S.A.’s management is aware of the risks and is moving strategically to embrace the opportunities AI offers while mitigating potential threats.
In conclusion, the journey of Text S.A. offers a powerful lesson in how businesses in the software and SaaS space can navigate the evolving landscape. It’s a highly innovative industry, where lots of R&D spending is a necessity, rather than a luxury. This benefits larger players, since they can re-invest more into R&D, compared to smaller players. The company’s focus on continuous improvement, customer-centricity, and adaptability provides a solid foundation for weathering the challenges of an AI-driven world. For investors and entrepreneurs alike, the strategies employed by Text S.A. are worth keeping an eye on as they continue to evolve and grow.
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Universal laws and how they apply to investing | Part 2
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The Dutch Investors
As I have Text in my portfolio, the thesis is obviously bullish.
I love this company and have its in the portfolio.