Welcome to the Mclowd Newsletter, our monthly communication to Investors, Marketplace participants and Partners.
“If you knew then what you know now, some may not have proceeded because the rate of return on our estimates is below what we think is needed to justify going ahead.”
Gas crash blows hole in budgets, The Australian, 15 January 2015
I recently received an email from a firm in India offering software development resources at $7 – $9 per hour.
While the per unit cost of development at Mclowd is higher than that figure, the harsh reality is that geographic boundaries between employment markets are dissolving quicker than an ice-cream on a hot summers day, and as a consequence the cost of software development (alongside other knowledge-based roles) is in freefall.
It is capitalism that is driving this relentless process of deflation because it is capitalism that drives us towards zero marginal cost.
The above quote from The Australian newspaper refers to the $200 billion in capital that has been deployed into the gas sector in Australia over the last ten years. These investments have underpinned national income and employment during that time and are just now starting to yield export revenues.
However those investments were based on questionable assumptions about the future price of fossil fuels.
The shareholders of one of Australia’s largest oil and gas producers Santos have seen their share price decline by 40% over the last 6 months, which is of a similar magnitude to that witnessed by listed accounting software vendor Xero.
While (in the short term) these outcomes are unrelated to the Third Industrial Revolution, in many respects Santos and Xero are in a very similar situation: they both sell products at prices which bear no relationship to marginal cost. (As many people are now finding out we have access to almost unlimited amounts of renewable energy at zero marginal cost, just as the marginal cost of someone using cloud-based accounting software is also zero).
As equity markets (public and private) come to realise the inevitability of our journey towards zero marginal cost the residual value of companies like Santos and Xero (along with countless others) will simply evaporate, and ‘capital remorse’ will be widespread.
Accounting Platform Update
Version 3.3 will be live early next week, including the following functionality:
- The ability to edit opening bank balances
- The ability to edit opening balance receivables and liabilities
- The ability to edit investment opening balances
- Investment holding report
- Removal of the default date for bank transfers
Version 3.4 is scheduled for release on March 31st, and will include the following:
- Bank data feeds (public beta)
- Support for transition from accumulation to pension at year end
- A revamp of the chart of accounts
- The ability to dispose of multiple parcels of shares in a single transaction
As always detailed release notes will be available on the website. In addition we have now published a detailed comparison of Mclowd’s current functionality vis-a-vis BGL SimpleFund 360, with the gaps correlated to upcoming releases (up to and including ATO integration).
There are a number of other initiatives now under way:
- Integration with specialist SMSF document company BMR Corporate Solutions (which will support the process of setting up an SMSF from within Mclowd)
- The development of a unified dashboard – which will sit above the accounting software and product / services marketplace
Integration with third parties such as BMR and SISS Data Services is an important part of the evolution of Mclowd into an end-to-end workflow solution for the asset management industry, and will amplify the role of the Community in driving down costs across the entire value chain.
Mclowd Pty Ltd