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Column 1Hi writer:
1) Confidentiality – it is naïve for anyone to believe that a company is always able to talk openly about everything that is going on all the time. I’ve been as up front as I can possibly be about the state of the Buddy business, and the customers we work with and hope to work with. However, there are things we’re working on that I’m not able to share publicly right now, and customers we’re working with who have explicitly prohibited us from sharing specifics on our relationship with them. Shareholders might find this frustrating at times, but surely hearing this is better than me pretending we just don’t have such customers? Remember also that we have continuous disclosure obligations by way of the ASX listing rules, and we will ALWAYS comply with those, so striking that balance is incredibly important in winning the business of customers who need to place trust in our discretion.
2) I think I’ve been very, very clear on how I measure success and in my guidance to shareholders on how success should be measured. Starting from the investor roadshow in Oct 2015, and in every shareholder communication since, I’ve underscored that Buddy is not focused on revenue or profits and won’t be for three years from the re-listing. I’ve never wavered from that, and have been extremely consistent on this point. Our goal is to build up a volume of connected device data traffic flowing through the system, which we will then monetize. Will we have revenue in the meantime – yes of course, and we’ll continue to see that number grow – but when presented with an opportunity to drive traffic or drive revenue, traffic will win for the time being. No investor should be confused on this point – I don’t know how much more clearly I can communicate this.
The team at Buddy have all worked at Microsoft, Amazon, Google and other companies building at-scale software as service offerings. This is how it is done, and this is how you build a significant asset from which very meaningful revenue can be driven. That is why our published metrics are all traffic related (transactions per day, new device connections per week). We also publish data on our customer pipeline – which of course is an indicator of future metrics, but we also do that to assuage investors who want to keep an eye out for revenue potential and opportunity. To be abundantly clear, I’m absolutely not saying that revenue isn’t important – of course it is, hugely so. I’m simply saying that our strategy from day 1 has been to build an asset we can monetize at scale, rather than focus on short term drips and drops of $$.
In terms of how I measure our success – well, I covered that at a high level during the AGM. We’re well ahead of plan on data traffic and I’ll go into that more in my end of year report for shareholders that I’ll publish towards the end of December, however clearly I’m less pleased with our M&A execution this year. While Zentri was a complete blindside for us, there’s always things you look back on that could have been done differently – maybe they’d have had an impact, maybe not. Our team has a TON of experience in corporate M&A (probably 50+ deals not including Rick, who’s probably done 350+) and even with that depth of experience, it wasn’t smooth sailing on that front this year. We must draw lessons from that.
It would be remiss of me to comment too much on the share price other than to reinforce what I said at the AGM, which is that I’m not excited about the share price being where it is, but also believe it reflects some uncertainty around Noveda that should be cleared up shortly. Remember also that the market on a pip-by-pip basis isn’t necessarily rational. We had a big run up when we announced our collaboration with Facebook on Parse – arguably one of the least exciting announcements we’ve had this year on a long-term company-building basis (vs. the really meaningful stuff like Noveda, customers, traffic volume milestones, etc…). We also had a big run up in the days prior to Zentri withdrawing from our transaction with them, presumably based on the market feeling less uncertainty about our M&A activity.
My point is just that we’re building a long term, sustainable business with a foundation of data and processing capabilities. That doesn’t necessarily make for exciting day trading or flashy news-less ASX releases. Investors have every right to hold us accountable against the expectations we’ve set – I deeply encourage that – but not to hold us accountable to speculation or sometimes-ill-informed HC chatter. That’s an echo chamber that can often hurt more than help.
As always – my door remains completely open to any shareholder who has questions or wishes to reach out.
Thanks for your question!
Cheers, Dave.
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