Don't believe the "mission critical" snake oil
Musings: Lets define what it means to be mission critical
Financial media and fintwit often latches onto catchy phrases. They repeat these buzz words and evolve their narratives and reporting around them. And these metaphors change from month to month, season to season...from market rally to market dip.
The latest over-used and mis-used business nomenclature is "mission critical". In an attempt to provide a bull thesis on a company that they like, I am seeing more financial gurus refer to their favorite stock as being mission critical. For most investment recommendations, this is highly misleading and far from true.
What does mission critical mean
A mission critical task, service, or system is one whose failure or disruption would cause an entire operation or business to grind to a halt. It is a type of task, service, or system that is indispensable to continuing operations.
Let’s apply this litmus test to a few of our favorite growth companies
DDOG - mission critical? NO. Most companies can still operate without DDOG's infrastructure monitoring services. They could stop buying more subscriptions. They could start using free/cheaper out-of-the-box monitoring services provided by their cloud vendor. They can still stay in business and survive a possible downturn.
CRWD - mission critical? MAYBE. Companies, large and small, are ripe targets for cyberattacks on a daily basis. And we have seen how these incidents can shut down operations companywide or in a specific geographical region. Hackers steal corporate intellectual property and customer data files. Often they hold the victim's databases hostage until a ransom is paid. Businesses can survive without cybersecurity defenses until they are attacked and then they become disciples of the need for cyberprotection.
MDB - mission critical? NOPE. There are literally hundreds of database software vendors out there. And chances are that a company already owns/licenses 10-15 of them without needing to buy another one. In today's economic environment, a CIO will be challenged to justify a large database migration project and tie it back to the company's mission. About 40% of such projects fail to complete on time and within budget, with a typical cost over-run of about 30%.
SNOW - mission critical? NO. Customers facing budget cuts could decide that they need to reduce their consumption of SNOW's expensive data services. After all, customers own their business data and could make do with minimal analytics focused on their top strategic customers. When a business is stressed, it dispenses with chasing growth and gets back to the basics...retaining its existing customers while keeping costs as low as possible.
MNDY - mission critical? NO. Employee teams have been operating just fine without the need for project management and collaboration software. They can always use emails, schedule status meetings or pick up the phone.
In reality, the business world is not as black and white as I described above. While some companies will be in survival mode in 2022-2023, others will be looking to grab market share from their weaker competitors. While some are focused on the bottom line, the stronger few will invest in growth and new markets.
The point I am trying to make is that when we hear the term "mission critical", its best to step back and think about whether that is actually true, for which product and for which slice of the TAM.