value creation

This morning I went on a cross-country mountain bike until the world’s end, in Maldon, Essex, UK; here’s a picture and a map.

On the left was the sea, and on the right farmers’ fields.

One hour in, I came across a sign, no exit from sea wall for 4 miles (6.44 km); when you exit, it’s another 4 miles to the main road; consider turning back, 3 miles (ca. 5 km).

Every hundred meters, I was greeted with a trail that would take me back to civilisation along with a ‘private, no access’ sign. It might as well have said trespassers would be shot.

I was desperate to get back to the main road; I was supposed to take the kids to school…

It got me thinking about the value that could have been created if these farmers had done something different.

There is a significant footfall on this long coastal path and a lot of nothing in the middle.

What if instead of ‘turn back now’ the sign said, “access to the main road here, via our farm shop and café”? Or what if they sold maps and rented bikes for the intrepid traveller who might have walked there!

What a difference would that make to the weary traveller looking for a quick drink or a spot of lunch?

When it comes to technology value creation, the value of doing something different is massive.

Challenging the technology status quo in 2022 typically falls into three categories:

Improving the overall customer experience

Increasing practice efficiency

Acquiring and onboarding new firms, brands, or customers.

How will you challenge the status quo?

What value could you bring to your customers?

What might you not even know they are missing?

What’s your farm shop equivalent?

Keep leading; it matters!

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Thomas

This week, I watched a friend pitch for investment on Dragons Den (the original British version of Shark Tank).

Their company offers online accessibility tools to help disabled users use the internet in a way that works for them.

Their pitch was high quality, coherent and well-executed.

Their business model didn’t work for the dragons.

Peter Jones, Dragon – suggested they offer their service for free, build an affiliate model, and charge companies per transaction. I liked this idea.

But, as they say on the show, they left with nothing.

We talked a few week’s ago about how rapid growth can often create structural technology challenges

You can read that article here.

The same applies to the cost of supporting these transactions for a SaaS business.

The Growth paradox.

Imagine my friend’s company could grow their user volumes by, 20000% overnight, but with no revenue for 12 months, that without capital wouldn’t be possible.

On the other end of the scale, the demise of Fast, the one-click checkout.

As recently as last week, Fast was inking deals such as one with big companies to implement one-click checkout for its customers (TechCrunch, 2022).

They had forecast growth upon growth but failed to deliver, leaving them with little to no fund-raising options. As a result, they decided to call it a day.

When you talk about growth with your portco tech leaders. How do you perceive its impact?

What concerns do they have, and what plans are they making?

• Do they look at the impact of changing business models at different scales of their growth journey?
• Do they look at ways to reduce the scaling cost impacts using technology?
• Do they have a well-defined strategic plan for this?

Keep leading; it matters.

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Thomas

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Last Saturday morning, I landed In Rome with my wife, ready to run the Marathon Sunday morning.

We had a simple plan. Collect the race number, drop our bags at the hotel, and buy my wife one of those new Swatch x Omega watches.

After lunch, we arrived at the Swatch store to find that the whole world had been queuing overnight.

Instead, we went for gelato.

While these watches were available globally in only a few stores; their website saw considerable increases in demand!

Their website kept going even though traffic, according to cloud flare, had increased 20000% in the last 24hrs.

What’s the point of all this, and what does it have to do with Technology value creation?

One of the biggest challenges for portco tech teams is technology performance at scale.

While occasionally, your website failing is a good thing.The value is in choosing how to deal with extraordinary events without worrying about what the underlying technology is doing.

Great PE firms run strategic technology performance programmes with their portco tech leaders to create the flexibility to do extraordinary things like Swatch.

How would you benchmark your pottos technology performance capabilities?

How would their tech platforms deal with a 20000% increase in demand?

What cool things will your technology programmes enable you to do?

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Thomas

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Early this morning, delivered to my house by a crane where all the parts you’d need to build a wooden deck in my garden.

I spent far too much time measuring, re-measuring, re-measuring with a friend, re-measuring with a family member, drawing a scale model of the deck before ordering parts needed.

Here are some pictures of the model if you are interested. Top picture. Base picture

You are probably thinking, nice pictures, but what does building a wooden deck and technology value creation have in common?

Here’s a short story based on first-hand experience. PortCo A decided that all current apps and data needed to be migrated to AWS. AWS pitched an approach to them, 12 months, lift and shift, we start tomorrow.

After six months, they had migrated 10% of their applications and data into AWS.

This 10% accounted for 30% of their total technology spend. Straight-line math would have seen them increase technology spending from $20m P.A to $60m P.A.

When they reassessed their position, they found that they already had 4x the capacity they would ever need in their data centre. This migration project was shelved after 12 months.

The message here, measure five times, cut once or twice.

Had Portco A spent more effort measuring, re-measuring, getting a second opinion, they might have saved themselves $10m, 12 months of project time and the time to hire a new technology leader.

Where do you see the next value step-change created for your portcos? Is it with cloud migrations, or it is somewhere else?

Keep leading; it matters.

Until next time

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Thomas

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Now that the Saharan dust has settled, we’re in for a heatwave here in England, at least for the next few months! A rare occurrence.

The other week, on the subject of heat, someone told me ‘the M&A market is so hot now’. If someone has to tell you something is hot, how hot is it?

We’re currently in a market where people are paying significant revenue multiples.

Typically, your portcos will be chasing these increased revenues aggressively; it’s considered sexier or perhaps more straightforward for firms to go after more revenue. With M&A, you can even buy yourself more revenue.

This might be OK for the growth investor, but surely, you can’t solve all your problems with revenue?

Rapid growth can often create structural technology challenges, compounded by M&A

These structural challenges can manifest themselves as bottlenecks in how applications function. Performance issues at scale. Slower or more complex product development cycles.

When you talk about revenue growth with your portco tech leaders. How do they react, what concerns do they have, what plans are they making?

Do they know the scaling limits of their systems today? Do they have well-defined non-functional requirements? Do they look at ways they can meet growth targets using technology?

Keep leading; it matters.

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Thomas

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