This interview explains how investor Savneet Singh is building a 'forever hold' software company modeled after Berkshire Hathaway and Constellation Software. He believes 'boring' but mission-critical software (e.g., for dental clinics, compliance) has 99% retention and is a great long-term asset. Key holdings mentioned: SAP (customers stay 50 years, almost never leave), Airbnb (low usage among 35+ crowd, big growth ahead), and Coinbase (biggest crypto business but essentially a bank, risky).
Savneet Singh shared his investment and entrepreneurial philosophy on the Invest Like the Best program, with the core idea of building a "Berkshire Hathaway" for the software industry—through his co-founded Tera Holdings, which acquires and holds high-quality software companies for the long term. He
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Savneet Singh is a partner at CoVenture and co-founder of Tera Holdings. He previously founded the precious metals trading platform GBI and has invested in Spanish real estate, Uber, and early-stage cryptocurrencies. The core of this interview is his explanation of how he draws on the models of Berkshire Hathaway and Constellation Software to build a software holding company that holds assets permanently and actively empowers operations. The most weighty judgment in the entire episode is: Savneet Singh believes there is a vast number of "boring" yet incredibly "sticky" businesses in the software industry (e.g., software serving dental clinics, compliance departments), with customer retention rates reaching 99%. Due to extremely high switching costs, they are almost immune to disruption. This constitutes an undervalued investment area capable of long-term compounding.
Savneet Singh argues that replicating Warren Buffett's classic model faces challenges today, but the software industry provides fertile ground for building a new generation of "Berkshire."
Through his research on SAP, he found that despite constant user complaints, its customer retention rate is 98%-99%, implying an average customer lifespan of 50 years. This "stickiness" is a reflection of a strong moat. However, high-quality software companies are already priced at a premium in both public markets and private equity. Therefore, Tera Holdings' strategy is to seek out "boring" but "mission-critical" software companies. These typically serve stable industries (e.g., utilities, government, healthcare, dentistry) and have smaller total addressable markets (TAM, around $400 million), thus avoiding direct competition with giants like SAP and Oracle.
Savneet Singh emphasizes that Tera's core advantage lies in its commitment to "permanent holding" and proactive operational empowerment, which gives it a unique edge in transactions.
Unlike private equity firms seeking short-term returns, Tera commits to never selling. This attracts founders who care about their employees, customers, and legacy. Savneet notes that they are often the only bidder in a transaction because founders would rather accept a lower price than sell their company to a buyer who might lay off staff, raise prices, and flip it. Tera's value proposition is not just capital, but a detailed operational plan, particularly in sales and marketing.
Savneet Singh elaborates on his systematic methodology for sales and marketing empowerment, which is key to differentiating Tera from other holding companies.
He gives an example: a software company complained about a one-year sales cycle. Tera's solution was to change sales commissions from being based solely on final signings to being based on a series of quantifiable steps (e.g., number of calls, demos, meetings). Through data collection and analysis, they could even identify differences in a specific salesperson's success rate with different customer profiles, allowing them to reallocate sales territories. This data-driven, granular operational capability is the core value Tera promises to bring to its portfolio companies.
Savneet Singh holds a balanced but cautious view on cryptocurrency, believing its success is primarily driven by speculation rather than practical application.
He offers several bearish arguments: 1) After a decade, there is still no mainstream, mission-critical application reliant on a distributed ledger; 2) The use case as a "currency" is invalid because governments will not tolerate a parallel currency; 3) The biggest winners are centralized "banks" like Coinbase, which contradicts the original goal of decentralization; 4) Price increases stem from speculation driven by macro factors like low interest rates and anti-establishment sentiment, not the success of the technology itself. He specifically notes that the highly emotional reactions within the crypto community are themselves a sign of irrationality.
However, he also acknowledges bullish arguments: 1) Bitcoin has already acquired some "store of value" attributes, similar to gold, though its history is far shorter; 2) The world's smartest engineers are flocking to this field, and this concentration of talent has inherent value; 3) Cryptocurrency forces people to think about the inefficiencies of the existing financial system, driving innovation.
| Position | Guest's Stance | Key Data |
|---|---|---|
| Airbnb | Bullish | Already the world's largest hotel company, but usage among those over 35 is low, indicating huge future growth potential. |
| Uber | Neutral (mentions past investment) | Angel investment in 2010/11, considers it "pure luck." |
| SAP | Bullish (as industry case study) | Customer retention rate 98%-99%, average customer lifespan 50 years, almost never trades below 6x recurring revenue. |
| Coinbase | Risk Warning | The biggest business in the crypto space, but essentially a modern-day bank, contradicting the ethos of decentralization. |
| Constellation Software | Bullish (as a model to learn from) | 23-year history, known for disciplined acquisitions, requiring portfolio companies to achieve 40% cash flow margins. |
1. "Boring" software is a gold mine (Savneet Singh): "Mission-critical" software serving stable industries like dental clinics and compliance, with extremely high switching costs and customer retention rates up to 99%, is an ideal asset for long-term compounding.
2. Brand moats are weakening (Savneet Singh): The influence of traditional brands is declining in the face of new channels like Chewy and Instagram, challenging Buffett's classic investment logic.
3. Tera is the "sales and marketing version of 3G Capital" (Savneet Singh): Tera's core value is not cost-cutting, but driving growth through data-driven sales process optimization (e.g., redesigning commission structures, analyzing sales territories).
4. Cryptocurrency's success stems from speculation, not technology (Savneet Singh): After a decade, there is still no mainstream application; price increases are more a product of low interest rates and anti-establishment sentiment than the actual implementation of blockchain technology.
5. A founder's primary motive for selling is "legacy" (Savneet Singh): Many founders would rather accept a lower offer than sell to private equity that might destroy their culture, lay off staff, and flip the company. This creates a unique opportunity for Tera's "permanent holding" model.
6. "Being in the arena" is more important than "being right" (Savneet Singh): Quoting Theodore Roosevelt, he emphasizes the immense value of the process of action and trying. Even if the result is failure, the life experience far surpasses that of a mere spectator.
7. Cultural sustainability is a company's greatest moat (Savneet Singh): Whether a company can maintain its core values and operational methods after the founder leaves is key to judging if it can become a "compounding machine." 3G Capital and Danaher are exemplars in this regard.
8. Look for "derivatives" of the platform, not the platform itself (Savneet Singh): When everyone is chasing platforms like Airbnb, Slack, and Shopify, the smarter move is to find and invest in the overlooked "small businesses" that are derivatives within these platform ecosystems.