Despite this challenge, he said businesses are better placed to access capital than in previous years and fewer companies are reporting difficulties with finding investment, with incentives put in place for angel investors as part of former prime minister Malcolm Turnbull’s innovation agenda now seeing results.
“We are starting to get venture debt firms… that capital market is starting to mature. I do think that on the angel side, the work that PM Turnbull did when he was in office, now we’re starting to see that grow.”
“It’s required courage”
Mr Reed has spent more than a decade hearing stories from thousands of smaller operators, growing users of MYOB products from fewer than 100,000 to the 800,000 strong base it is today. Between 2015 and 2018, MYOB’s revenue jumped from $327 million to $445 million, or 36 per cent.
Three months after private equity firm KKR closed a $1.6 billion private equity takeover of the company, Mr Reed announced he would be stepping down in September. Praised by former colleagues for his strong communications skills, he has been touted as the next leader of the Business Council of Australia.
However, he has not confirmed interest in the role and said he would take time off to consider his projects.
“I am considering a wide range of things and I think that to do justice to that decision, I probably have to give myself at least until the new year to work out what that is. I’m going to have some down time, let thoughts flow through me, see what resonates.”
Having steered MYOB through more than a decade, including two private equity takeover processes and an ASX listing, Mr Reed said courage had been a significant asset in an environment where investment in new skills was needed.
“At times it’s required courage just to go and make the case for resource and extra investment,” he said.
Transitioning the company and team from a desktop accounting system to online and cloud based options has come down to transparency and quarterly reviews of strategy, he said. It has meant the company has ditched products that its customers enjoyed using and invested significantly in retraining staff while competitors gained traction elsewhere.
“It has meant at times that we’ve shut down the lines of business — we still had some customers that were wedded to and enjoying that software but it was an anchor to the past and holding us back from moving forward.”
It’s also been a time of fierce competition within the cloud accounting sector. While MYOB is targeting 1 million users, competitor Xero has already hit this milestone.
Mr Reed said his only regrets around the business in this competitive landscape were around not moving fast enough. He said investment in online offers should have started sooner.
“It’s not what we did, it’s that we should have gone harder, faster,” he said.
He will leave the business in the hands of former REA Group chief executive Greg Ellis from next month.
Emma is the small business reporter for The Age and Sydney Morning Herald based in Melbourne.