On the list of investments that I should have recognized, but ultimately failed to recognize in real time, is the success of Adobe, Inc. (ADBE) as a software as a service company. Back in 2011, when Adobe stock was at $27 per share, Adobe was the type of business where you would pay a one-time fee to acquire.
Want to access, edit, and highlight a PDF? Pay Adobe $99, and boom, you’ve got the privilege to do so for life. That was a great business model. It turned Adobe into a billion-dollar company because it didn’t cost anything additional to acquire a customer. Nothing wrong with that.
But then, Adobe took an action that changed its business model from “great” to “phenomenal.” It changed the way it charged for Adobe. Instead of having to pay a one-time fee, customers would buy a monthly license in which they had to pay … Read the rest of this article!