Welcome to the Mclowd Community Newsletter.
Since its founding in 2003, Android’s business model has been essentially unchanged: give away the operating system free and then provide extra services on top.
How tiny Android became a giant in the smartphone galaxy, FT.com April 21st
Introduction
For the last few years the Mclowd Newsletter has been published using a cloud-based tool called Mailchimp.
Over that period growth in the Community has been reflected in:
- The number of subscribers (now in the thousands)
- The fees charged for access to that software
This month the Newsletter is coming to you via an alternative platform that costs 80% less, and Mailchimp no longer receives any revenue from Mclowd.
While I’m sure in the short term they won’t miss those fees, at the core of the longer term problem for Mailchimp is that:
- Its revenue model bears no relationship to marginal cost (which is zero)
- Its revenue model reflects a governance structure that will simply not support pricing at – or even near – marginal cost (while privately held the company has more than 350 staff)
- New entrants are able to deliver an equivalent outcome for a price that is 80% less (and therefore trigger migration behaviour while spending next to nothing on marketing)
Just as importantly for Mclowd, migration took only a matter of minutes.
The exact same process of deflation is now playing out across a raft of industries, and there is no evidence to support the hypothesis that accounting software is somehow immune from this harsh microeconomic reality.
Administration Platform Update
Compared to incumbents Mclowd has taken a fundamentally different approach to governance, and one that is designed to support marginal cost pricing (to the greatest extent possible).
As the Community has grown this is being reflected in an increasingly collaborative (and capital-light) approach to the development of the underlying technology, as illustrated by the following examples:
- Trustee user Lorraine Cobcroft from NSW is driving the development of a comprehensive User Manual
- FIIG Securities client and trustee user David Bennett from Victoria is assisting us to draft a spec relating to integration with FIIG
- Product Partner Andrew Noble from Western Australia is helping us to deliver online lodgement via his ATO integration tool LodgeIT
All of this is happening while Mclowd Pty Ltd has just $429,000 in equity capital on its balance sheet (in stark contrast to the valuation of Class Super, which is now approaching $300 million).
The above approach has also been codified in the draft Community Charter, on which feedback is welcome.
Training Seminars
Mclowd held its first Training Seminar in Sydney earlier this week, and it was great to see both trustees and practitioners attending.
Our next Seminar will be held in Melbourne on May 20th, and there are a number of places still available. Click here for further information and to register.
Postscript
While access to the core software is and will always remain free, based on the current rate of progress I expect that by the end of the year Mclowd will have delivered an integrated solution (incorporating those elements for which marginal cost does not equal zero) that is suitable for SMSF practitioners now using BGL Desktop or SF360, including:
- Automated feeds for bank data and contract notes
- Macquarie CMA
- End-of-day data for listed securities
- Online lodgement
- Basic workflow tools
However as a consequence of its unique governance structure this outcome will be made available at a price point that is more than 50% less than SF360 (and more than 70% less than Class).
Regards
Ashley Porter
Managing Director
Mclowd Pty Ltd