23rd May, 2021
Q: How do you measure your influence?
I love it when I hear other people use words or ideas I’ve given them as their own. That’s real influence.
I have to keep reminding myself: You can achieve so much more if you don’t constantly worry about who gets the credit.
While it’s flattering to be recognised as the original source1, I’ve learned that often when people quote you it’s because they don’t quite believe the idea themselves yet - they prefer the safety of using others’ words.
So if you agree with the things you read here, please feel free to reference me. But don’t feel obliged2. The bigger compliment you can give me is to believe what I’ve said so much that you want it to be your idea too.
I've been involved in a few of these bigger deals now and it's always a weird feeling when the news becomes public.
There is a huge amount of work that goes into negotiating and closing a complicated transaction like this, so that creates a long lag between when you realise that something great is happening and when it's actually completed. And then that gap then suddenly slams shut with the press release.
But it is always delightful to see the positive reactions when everybody is finally able to celebrate together.
As I mentioned on Twitter I've been involved in a few of these now:
Trade Me was the first.
Xero became the biggest.
But Timely is easily the most satisfying of the ventures I've been privileged to work on over the years. I’m stoked for everybody involved as we pass this milestone this week. As Ryan mentioned many of the team share in the spoils too, and that feels bloody good (it’s actually a repeated patten across all four of the ventures on that list and that specifically has a huge impact).
Sharing this list and seeing the reaction made me realise what a terrible job I've done at talking out loud about what I’ve worked on for the last ten years or more3.
Those four companies I listed are just the biggest and most recognisable names.
Let's keep going (in no particular order this time) ...
Sonar6 was the early exit that informed my whole investment strategy.
Gelato was the fastest.
Rabble had the best name.
ThisData was acquired but is still illiquid.
OneMetric is the one most recently built by my own information-worker-hands.
But even that list is sugar coated, because those are just the exits (so far!) When we only talk about the successes we often miss the most interesting things. It’s actually worse than that because even when we talk about the wins we usually only ever point to the full stop at the end, when there is always so much more to these stories (I’m going to come back to that idea in a couple of weeks).
So, let’s dig even deeper into the list…
Pacific Fibre was the most ambitious.
Wynyard was the most expensive.
PlanHQ taught me important questions to ask in advance of investing (and introduced me to Koz and Nik and Amiria and Nat, who have each had influential roles in at least one other venture on the list above, and hopefully more in the future).
Valuecruncher taught me about product market fit.
GoVocab had the best merch (somebody once told me that the t-shirts that investors get given by the companies they invest in are the most overpriced clothes they will ever own, but in this case it was worth it).
Every single one of these ventures created scar tissue and muscle that explain every thing that followed.
Spoiler for next week: this is how ecosystems actually grow… one tree at a time.
Anyway, this week I get to celebrate another full stop and it feels good.
I've often said the best founders choose their investors carefully, and I'm grateful that Ryan, Scoff and Will chose me.
I can't wait to see the second degree impact, once all of the folks who have learnt heaps at Timely roll on to their next things
Also this week, Xero announced their results for FY21 (that covers the period 1 April 2020 to 31 March 2021).
I’ve previously shared a One Metric dashboard I created to show some of the key numbers. This is now updated to include these latest results.
These are the three things I have highlighted in the past…
When I wrote about hockey stick growth a few weeks ago, one of the examples I used was the number of Xero subscribers.
You can see a similar pattern in the graph of operating revenue (basically the money they are paid by subscribers) over the last ten years:
Compare that to earlier versions of this graph, for example the first ten years:
First ten years
This is how things get really big - they grow constantly (even if the numbers are small in the beginning) and that growth compounds.
By comparison one of the metrics that has been remarkably static over the years is Average Revenue Per Subscriber (ARPU). In the 14 years I’ve been tracking this the range is $23.18 (in 2010) to $30.15 (in 2008). In recent years the band has been even more narrow - it has been between $29 and $30 since 2016. This year it dropped 2.1% to $29.30, partly explained by the discounts that were offered to some subscribers due to COVID-19.
It’s interesting to note that of all of the SaaS Metrics that Xero report in their annual accounts, ARPU was the only one that deteriorated in 2021.
Revenue per FTE
When I wrote about Paul Callaghan a few weeks ago, one of the metrics we considered as a way to compare companies and sectors was Revenue per FTE (the amount of revenue earned per each equivalent full time employee).
I mentioned then that Xero had increased this metric every year. The streak is now broken - this year Revenue per FTE decreased slightly to $233,053.
Even so, it’s still an impressive result, and gives a good benchmark for other companies to compare themselves to.
Top Three is a weekly collection of things I notice in 2021. I’m writing it for myself, and will include a lot of half-formed work-in-progress, but please feel free to follow along and share it if it’s interesting to you.
Except, there are no original ideas. Every time I think I've had one Google will quickly disabuse me of that.
See Derek Sivers post: Don't Quote - and, yes, I appreciate the irony of pointing to what Derek has to say on this topic!
Should I have made more noise about my role in all of these things? Over the years a few people who I respect have challenged me on that. But I don’t know - maybe keeping my head down was itself the secret sauce?
Consider this exchange just this week, with a successful founder-turned-investor:
Them: Congrats on the Timely exit. I know the deal and the company have been a long time in the making, but credit to another long game well played.
Me: Thanks mate. Quietly proud today.
Them: Why be quiet? (The proud bit I endorse)
Me: Why change a winning strategy?
Them: To win by a bigger margin
Me: Mercy Rule just saying!