Compounding in the Cloud

The Business of SaaS, and How to Invest in It

Blue Lotus

Data anchor: June 30, 2026 · SEC EDGAR retrieval date: July 15, 2026

Preface: Why Software Is Still Worth Studying
Chapter 1 — From Disc to Cloud
Chapter 2 — A Seemingly Perfect Compounding Machine
Chapter 3 — The Economic Engine of a SaaS Company
Chapter 4 — The Cost Behind Growth
Chapter 5 — Where Does Revenue Growth Actually Come From
Chapter 6 — The Value and Limits of the Rule of 40
Chapter 7 — Cash Flow, SBC, and Shareholder Returns
Chapter 8 — From the Financials to the Operating Field
Chapter 9 — The Platform Contest in Horizontal Application Software
Chapter 10 — Data Becomes the New Workflow
Chapter 11 — Cybersecurity: Growth, Fear, and Consolidation
Chapter 12 — The Hidden Compounding of Vertical SaaS
Chapter 13 — Developer Tools and the Revolution in How Software Is Made
Chapter 14 — SMB SaaS: A Vast Market and Fragile Customers
Chapter 15 — AI for SaaS: Sustaining Innovation, or Disruptive Threat?
Chapter 16 — The End of the Zero-Marginal-Cost Myth: Inference Cost and the Repricing of Gross Margin
Chapter 17 — The End of Seat Economics? The Third Revolution in Pricing
Chapter 18 — The Battle for the Workflow Entry Point: System of Record, Agent Intermediation, and Value Redistribution
Chapter 19 — The AI-Native Attack and the Incumbent’s Self-Disruption
Chapter 20 — How to Value a SaaS Company
Chapter 21 — Why a Good Company Can Be a Bad Stock
Chapter 22 — Case Studies: Winners, Turnarounds, and Traps
Chapter 23 — Building and Continuously Iterating Your SaaS Research System
Conclusion: When Software Starts Doing the Work
Appendix

The Business of SaaS, and How to Invest in It

Contents