[nemo44x]

The SaaS business model is just such a growth machine. If you have limited churn, expansion with existing customers, and sustained high growth you're going to be making a lot of money down the road. There's just so much lifetime value from SaaS customers and although the initial revenue is low per customer, it snowballs over time as more and more customers are added and services expanded. $CRM is a prime example of this phenomena.

It's also hard to use traditional metrics like EBITDA in a fast growing, expanding SaaS company. So much is based on future growth and revenues and getting over that hump to where the business becomes a raging cash geyser. Some will make it and some will not. But no one really knows who will make it and where they'll tap out today. For all we know many of these companies are unbelievably undervalued.

Additionally, I think there's a belief that there will be consolidation and many of these SaaS companies will be acquired. This has happened to an extent. Hell, the Mulesoft acquisition looks like a bargain today.