Daily Journal Annual Meeting Notes
A reader has generously shared his notes from the Daily Journal annual meeting which took place in Los Angeles on February 15, 2024.
A reader has generously allowed me to share his notes from the Daily Journal annual meeting which took place on February 15, 2024. This was the first annual meeting after Charlie Munger’s death. I did not attend the meeting and have presented the notes without any edits, except for formatting.
In May, I wrote an article about Daily Journal expressing concerns about the ownership interests of the board. In January, I wrote about the company’s latest 10-K filing. My most comprehensive coverage of Daily Journal is an in-depth report published in January 2023. I have never owned shares of Daily Journal.
Steven Myhill-Jones (Chairman & CEO of Daily Journal Corporation)
Recruiting for talent (software developers) was challenging a year and a half ago but things have gotten easier. We used to have attrition but that has largely stopped and we actually had some people come back. We’ve been able to recruit some great people.
What draws me and a lot of employees to Journal Technologies is that we are doing meaningful work. Rather than develop apps that make more people addicted to their phones, Journal Technologies is helping contribute to society. Charlie has talked about how critical a functioning justice system is to our civilization. Many of our employees are drawn to this mission.
We will announce what we plan to do with the securities portfolio. Charlie and I had a lot of conversations about this. We last had a conversation about this on November 13th. We are getting advice from a remarkable network of people on this—incredible folks I was surprised I’d get to speak to.
Charlie’s gift is being used to compensate employees in stock.
Used to manage a 140-person software company in Victoria. There’s a lot of talent there with 800 technology companies. We are pursuing business in Canada and also have talent there (Director of People Operations, Director of Customer Experience, a number of developers, etc.).
Historically, DJCO has been a professional services centric organization—product development happened in the context of projects that we won. Danny and I are focused on Journal Technologies 2.0—make the product more scalable—a highly repeatable product. Leverage and configuring a core product so that it’s repeatable and scalable. Have it be properly documented so that partners in the ecosystem can implement it—this is the model I like. With my former company, we had half of licenses sold through international distributors or implementation partners and the uplift to margins was remarkable. We think that model is transferable here. Historically Journal Technologies had not worked with a lot of partners but we plan to now.
We are working to improve the documentation process to significantly reduce the time to onboard new developers.
What does success look like in 10 years? I love being able to go to markets where there are no established players. A software model so compelling you can make great money and deliver great value. So, by doing these things right, people recommend us to others. In some markets you have an incumbent, and it’s very hard to dislodge them. With all due respect to the competitive landscape, I don’t see anyone who is like that in this space. We want to add modules that create a network effect. We want to steadily improve and be so good that people can’t ignore us.
There are international opportunities, but US itself is a huge market. GDP of CA is = France. We have a lot of momentum in CA.
It’s easier to grow quickly than well. I want to make sure we are scaling effectively and not denigrate our reputation by growing too fast.
“Rule of 40” – it’s in vogue, not a promise, but I use that as a rough guideline for where we want to be.
Trying to sell the adjacent building in LA – unique location in the Arts district. Been delighted so far by the interest.
Historically there was limited communication with customers, but that is changing. We now have a client advisory board. We have regional user groups. Actively seeking customer feedback.
Currently Journal Technologies has 270 installations. We have ~70 projects in the pipeline that we have won and contracted with.
Sherry Carter, former CEO of LA Superior Court and former Journal Technology customer joins us a couple days a week. Very well-regarded in the industry.
Journal Technologies 2.0:
We are building a modern, repeatable, scalable, profitable software company. We want to build a great, enduring company that treats customers right. Enduring profitability comes from great products and services. Great products and services comes from a motivated employee base. My job is to attract amazing people than write software.
Separating professional services and product development will be an important shift.
Many of our customers aren’t even aware of everything that we can offer—there can be significant add-on business.
Started measuring NPS scores last year – taking customer satisfaction more seriously.
Didn’t have a 401K program before but introduced this.
Institutionalizing the hiring process to hire great people.
Quarterly updates to all employees to keep all employees informed.
My goal is to almost get no customer churn. My old company had a 97-98% subscription renewal rate.
Danny Hemnani (CEO of Journal Technologies)
E-Filing Fees are the transaction fees that Journal Technologies gets when clients make filings (e.g., civil filings, traffic tickets, etc.). The $8m represents the money owed to Journal Technologies for this service.
In the last year, annual recurring revenue was $23m, $19m came from one-time fees.
~80-90% of the annual recurring revenue YoY growth is from growth in new customers (from the go-lives) and rest is from CPI increases (not much—2-5% per year). We are re-visiting how we structure our deals and want to follow “best practices” in the software industry.
Contracts are typically for 3-5 years first and then renew annually.
Most government agencies don’t change software often. Some of our customers have been customers for 10-12 years.
Major cost is payroll – out of the 240 employees working in Journal Technologies, 140 work in professional services. Smaller portion related to R&D and S&M. If we can find ways to capitalize on inefficiencies on customer applications can be powerful for our model.
There’s been a lot of press about problems with Tyler and their rollouts in North Carolina – do you see opportunities here? We try to do our implementation in a way where we try to avoid problems like that and learn from our own and competitors’ mistakes. Those mistakes can also happen to us. We try our best to protect ourselves from cyberattacks. Important to have good customer references. In California, we are getting a lot of traction right now with people wanting to switch software to Journal Technologies.
Australia – we have three contracts. South Australia is complete—the entire province is using Journal Technologies. Tasmania—ongoing. Melbourne in Victoria—live with two phase out of four. We have 15 full-time employees in Australia and a bunch of contractors.
We have more than 50% of the market in California.
Opportunities arise when courts / counties using old systems need to upgrade. There’s a steady flow of RFPs. We can’t bid on everything so need to be selective.
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