Getting your pricing right, big telco M&A news, and Mike Jenkins

Table of contents

Aussie Broadband makes an offer

Merger talks between 2degrees and Orcon NZ

Meet undersea cable, Hawaiki Nui

Movers in the Telco space

Aussie Broadband makes an offer

There’s a fair amount of merger and acquisition activity across New Zealand and Australia at the moment. And today we’re going to kick off with the talk around the Aussie broadband acquisition of Over the Wire, which is an ASX listed company.

It’s a business focussed telco with about 100 million in revenue, and it’s headquartered in Brisbane. It’s important to note that this approach by Aussie, which just in way of comparison, has revenue of 350 million. It’s taken the form of an unsolicited, non-binding, indicative offer, which happens all the time across the ASX on a daily basis and often leads absolutely nowhere. Once the books have been reviewed, so at 5.75 a share, this could work out well for over the wire, who themselves actually listed in 2016 at a dollar per share.

So it would certainly represent a good result for co-founders Michael Omeros and Brent Paddon. A couple of guys who have done really well to grow their business through well targeted acquisitions in the six years since listing. For Aussie, Aussie broadband. This represents a quick way to scale in the more profitable enterprise space.

My only question really is in terms of value, would the overhead represented by integration that is yet to be realised between the various over the wire business units? Would that present a higher cost than perhaps the initial offer of 5.75 per share represents.

Merger talks between 2degrees and Orcon NZ

Moving across the ditch to NZ,  2degrees and Orcon NZ, which is basically Vocus NZ, are in talks to merge. Both had IPOs planned, which I think a lot of people will know about. They’d been pretty highly publicised, but these mergers are serious enough that those plans have been paused. The thinking is that they could unite to form a single entity with a market cap around two and a half billion and EBITDA of 200 million. And that’s before synergies again post-merger, which I think given the network overlap would be quite significant. So if all that plays out as expected, the new entity could list on the NZX and or ASX at an even higher valuation.

2degrees faces a future of 5G and 6G, which is something Telstra is already talking about, which is kind of crazy, which will require a huge amount of capital expenditure. So the access to funding that comes through a combined listing would be a huge help.

For Orcon NZ being able to compete with Spark and Vodafone in the mobile space rather than having to put up with the rubbish MVNO, which is a mobile. They have a virtual network operator agreement.

Basically a Tier two wholesale mobile agreement could see sales surge. That’s something that Vocus now Orcon NZ has been relatively vocal about for quite some time, just the lack of access to quality mobile data and mobile voice agreements for those that don’t have their own networks.

Meet undersea cable, Hawaiki Nui

In undersea cable news, New Zealand and Australia have another undersea cable coming, and this one is a bit different as it’s going to be the first to land on the South Island of New Zealand. It’s going to be called Hawaiki Nui, and it’s the second one for the Hawaiki team.

It’ll connect Singapore, Indonesia, Australia, New Zealand and the United States. It’s due to come online by 2025, and it’s going to offer 240 terabits per second in capacity, which is a massive jump from the 30 offered by Hawaiki existing cable.

This cable offers a nice level of protection, for Hawaiki, because it offers diverse international paths. It moves us away from the only scenario we have known ever in the telco, which is that of all international traffic leaving from the top half of the North Island, and who doesn’t like more diverse paths and who doesn’t like more competition. It can only be good for the industry.

Movers in the Telco space

Something that I was pretty happy to see come out in the last week was the New Zealand telco levy ruling for 2021. This is always interesting to me because it gives great insight as to how each NZ the telco is faring if an entity learns less than 10 million, that won’t be in the list and if they are in the list, we can see how they fared against previous year’s results. I’m happy to say that Lightwire, which I am the chief revenue officer for, grew by 22.2% over the last twelve months and as against an industry average across the list of 3.5% growth, excluding the fibre carries and just looking at the ISP’s in the list.

The other telcos that did really well were Now with 24.5% growth. MyRepublic with 45% growth and two degrees with 12.5% ISPs, it struggled were vital, which used to be collectively known through the brands CityLink, Araneo, and TEAMtalk, which went backwards by 18%, and Vector dropped 4% as well.

Devoli and Inspire, which was two ISPs to internet service providers that cracked into the list for the first time this year through continued organic growth. So well done to those people.

Sky and Todd have also been added to the list sky due to the same ruling that so cordials obligations increase and Todd through its interests in Nova Energy. Total Consumer Services and Todd Digital. So there is the lay of the land for the NZ telco scene.

The Secure Equipment Act

I thought it was interesting as well after the piece we did last week around Huawei to see that Joe Biden has signed a new law. The Secure Equipment Act, which limits the Federal Communications Commission, which they call the FCC over there in the States from reviewing or approving any authorisation application for equipment that poses an unacceptable risk to national security. And I think it’s probably safe to assume that Huawei applications will be seen in that light.

The new law also enables the FCC to revoke previous approvals, which is pretty brutal. It passed the Senate with 420 votes for and 4 against.

Crypto and critical thinking

And lastly, something a bit different this week, just a reminder to be careful on the crypto front. A couple of weeks ago, when the squid games cryptocurrency creators who of course are anonymous in this unregulated environment, they pulled the rug by cashing out their coins for real money, draining the liquidity pool and crashing the price all the way to zero. Those scammers, they’ve made around 3.3 million because the price peaked at about 2.86. And even though some publications, Gizmodo is one that I know of were reporting that it was obviously a scam before the crash. As they pointed out, their coins couldn’t be sold, only bought.

So many people jumped in. With so many stories relating to people making huge sums of crypto, I can understand why people get excited. I personally know a few that have made extremely good gains. It can be hard to avoid irrational behaviour driven by FOMO, but this is just a good reminder that we’re still very much in the Wild West when it comes to crypto. We all need to apply critical thinking to our purchasing decisions.

Getting your MSP pricing right

Let’s talk about pricing, specifically how to determine the ideal price for your products or services through a structured approach. I’m sure we are all in the know at this point that inflation is a looming issue.

Make that a current issue. We’ve all seen it. There’s a shortage of goods. Prices are rising, yet new money continues to flood into the economy through quantitative easing programmes by governments across the world, which is driving demand.

So, there’ll be more pressure than ever on our margins. And if you’re looking to increase your prices in a crowded MSP or telco market, there will need to be based on a well-researched approach paired with some smart positioning.

I’ve completed two price and positioning reviews in the last twelve months, one for Lightwire’s rural residential services and another for our business services across NZ and Australia. At the outset, I had a minimal idea how I should structure those projects, but thankfully we engaged a guy called Ron Wood, who runs a consultancy firm called Pricing Insight.

He guided me really through the whole process, and that has paid massive dividends for us. And while we don’t have time today to allow me to get into all the detail, I wanted to give you the key points that I’ve learned.

When looking at pricing, it’s a good idea to start by understanding the risks you face. A few of the key questions to consider are do you have undefined value drivers? Meaning do you know what it is that gives you a value premium over the competition?

Have you got alignment at the management level? Does everyone agree on what it is you’re doing to drive value? Have you got a reliance on discounting to win or retain business? Are you dealing with procurement as effectively as possible?

In other words, is vendor management in hand? Do you have pricing and consistency across services or products? Meaning is the same methodology used, or has it got out of hand as time has gone by and different people have played around with the pricing?

Are you able to manage price increases if required? That’s a big one. Do you have a cost-plus pricing structure where you take whatever the inputs and add a percentage? One of the biggest takeaways in my pricing education was that your price should reflect your value premium position.

That means you need to dig deep and understand how you compare to the market, how you compare to the market by segment, and you can do that in a number of ways. You’re talking to your team through talking to current customers, talking to past customers, and talking to people that have not dealt with you at all.

You will gain a fundamental understanding of your brand, how it’s perceived and its position within the market. The next step is using all that detail everything you’ve learnt to develop real-world composite personas and using them as the basis for what’s called a customer value discovery scorecard.

This is probably the single most crucial process when looking to understand how you should price your services. The scorecard divides customers by type; for example, you may have three business sizes, one with 50 11 to 200 seats, another with 201 to 500, and a third with 500 or more seats within each of those.

You’re going to want to create personas so that you may have a CFO, a business owner or CEO, a salesperson or a finance contact. All of these people will have different drivers through which they perceive value to be created.

You may find that your finance contacts drive value from clarity around billing or a lack of variability and monthly charges. At the same time, your customers’ sales team may be much more focused on the feature sets within the service you offer. To create the Customer Value Discovery Scorecard, you need to speak with these types of people to understand them, which can be done in several ways. But ultimately, you’ll come up with a list of service attributes that define value in use and value at risk. Value in use relates to the tangible things that the service provides, so in the telco world, that would be things like speed, latency, uptime, data allowances, those sorts of things.

Value at risk may be related to things such as lost productivity from downtime or the risk of not being able to work from home, if, say, service latency was too high if you then associate a number between one to ten with each of those values to indicate the importance those customers associate with each value driver and then compare yourself to various competitors giving yourself and them a ranking between one and ten against each of those value drivers. To indicate your capability to meet those customer expectations, you’re going to start to get a really clear picture as to how you compare with the competition across various segments and across the various people that purchase your services within each of those segments.

So look, this can, of course, be a bit subjective, but if done properly, it can provide precious insights. The outcome will be that you end up with a positive or negative value premium against the competition for each segment, and your pricing premium should match your value premium.

If you, in theory, hold a 10% value premium against a competitor but don’t think you could provide the same service at a 10% higher price point than them, you need to go back and check your assumptions.

The following key point is that your positioning needs to reflect your value drivers. At this point, you will know which clients value your specific offering and why. Your next step is to ensure your public-facing persona, your website, marketing material and the actions of your team, of course, reflect those as they’re going to form the basis of the price you expect your customers to be happy to pay.

Having clarity around what drives your value is really like it’s genuinely liberating. It brings your required messaging into sharp focus and makes the job of marketing just so much easier.

You’ll know who you’re focussing on because they’re the ones who see the most value in what you do differently. What they specifically see value in and what price that means they are prepared to pay. As with anything, you want to lead with bullets, then move to cannonballs, test with the limited release if possible, and carefully measure conversion and churn rates while you do it.

That may mean initially introducing rates to a subset of new customers only or moving rates on selected services while leaving others as they are. I suggest doing this for three months to gauge the impact.

One key point that I can’t forget to mention is that you’ll have no basis for setting your rates if you don’t understand your competitors’ offerings. You’ll have to ask somebody in your business to trawl through competitor sites, talking to friendly customers who have been approached in the past and maybe have some of those competitors quotes whatever you can do to come up with a comprehensive list of market rates.

At this point, you’ll understand if your price over or underestimates your value premium. Lastly, if you can back the claims you make around value on offer with guarantees, you should, they will be far more compelling if backed up.

We are in a period of perhaps not high inflation yet, but certainly increasing inflation. So, the ability to justify a price increase based on a well understood and well-positioned value premium may be key to your business succeeding or thriving in the coming twelve to 24 months.

And I know I’ve only scratched the surface here, but if anyone wants more detail on the process, we followed a lot. Why? Because I know this has been very wordy. Please get in touch. I’ll drop my contact details at the end of the show, and I’m always happy to talk.

Interview with Mike Jenkins

Now we’re going to finish off our conversation with Mike Jenkins, CEO and co-founder of The Instability. We had part one last week. Today we’re going to wrap it all up. It was a really good and I’d say strong finish to the conversation where we covered off things such as keeping a focus on key competencies as a start-up, how to scale cost-effectively, focussing on the metrics that matter and when to back your gut versus the data. So let’s get back to the interview

Brendan Ritchie

You’ve got this this one customer, you’re probably on the back of that making some hires. I assume you’re going right, let’s beef up the skills at what like how hard was it during those early days when someone would say, Hey, do you want to take on?

I don’t know, support desk. Or, Hey, do you guys have Wi-Fi like, I don’t know, but other things that came up, how hard was it to go? Not our focus, not our core business. Let’s stay on the mission.

Mike Jenkins

So important. So important, so important. We really wanted to make sure we were laser-focused on our core business. And for us, that meant a lot of things.  First and foremost, we wanted to lead cloud.

But again, these are pretty early brave new times for us to be going out and saying that hyperscale cloud wasn’t the new data centre as a core concept quite challenging for a number of people, right? And so for us.

Brendan Ritchie

I still don’t understand it.

Mike Jenkins

You know, I mean, you’re we’re one of many, you know, it’s not for everybody. It’s not for everybody. Our purpose is that we felt genuinely duty-bound to help unlock Kiwi businesses and government agencies on these legacy expensive and super and inflexible I.T. constructs and contracts.

We felt that because we were so small as an organisation if we were to go out for the shiny thing over there whatever it might be in such a short timeframe because we had customers asking us to do that right, they wanted the same experience that we’re getting from datacentre evacuations and DevOps deployments into other parts of the business. We just felt it would probably break us.

And to be honest, we haven’t. We had a few attempts of breaking out to things like cloud connectivity and cloud security. And then quickly coming back because you’re not building out teams of tens and twenties.

At this point, you usually have one very good strong person and there might be a B team player at best. Yeah, because that’s how these things are built. Building services companies, particularly professional services companies, is bloody hard.

And so again, the demand for us to do that was there. But the customers understood the reason why we just focussed on cloud migrations to start with. It was really only then when we got a bit of scale and that organisation, you know, north of 10 million that we started looking at other opportunities and that was largely focussed around listening to our customers.

The learnings and IP that we developed from doing 100 plus migrations of big businesses and government agencies and actually looking at the roadblocks that were, I guess, stopping us from going faster.

A couple of those things were cloud connectivity. I mean, you guys know this better than anybody. If your servers and storage are in Australia and your users are in Invercargill, Hamilton and Tauranga, then why would you be hair pinning your trip to a data centre in Wellington or Auckland, only to let it burst out over there?

Concepts like secure access edge software-defined WAN came out and we were doing instant breakout, hitting the site and connecting users directly to apps.

Just like the cloud conversation with our belief that the network and the internet more specifically is the new corporate WAN. We wanted to take baby steps and only bite off one at a time, but it was all about driving velocity for our customers. If we could help own that turnkey experience for their cloud migration and automation, cloud connectivity, security, and privacy, we felt we could give them the best possible experience and be in control alongside them of their own destiny without having to wait on a Big four audit or a traditional legacy telco provider to set something up in 8 weeks or whenever they feel like.

Brendan Ritchie

I want to make sure I didn’t let you default here to your marketing talking points too much. I might ask you a different question, which is when you were, I guess, let’s say, sub ten mil and you were, I guess, balancing customer demand with the supply side.

How did you balance that, that being capacity led in terms of employing before you necessarily had the workload for those people based on perhaps sales projections with actual going, we actually need cash flow in the door, we need the sign contracts and the demand, and then we’ll get a hire to match that.

Like, how did you balance supply? 

Mike Jenkins

Yeah, really. Data-driven. Yeah, we are a cloud company. We started with everything. I believe IBM and Cisco taught me a lot about sales methodology and sales forecasting. Salesforce is a real critical tool for us in the early days of The Instillery.

And so literally we looked at our funnel, but also we were punters as an organisation. It’s a challenge in this route. We knew we had to invest ahead of the curve. So like I said, as much as we relied on data and insights from that data, you got to rely on gut feel and we had a number of customers on the back of some of the foundation want to.

I actually we want to do what they if we want that experience, we want that Instillery effect. And so literally as opportunities came up to hire new people because we started to get a bit of a reputation and market as well, we get not just the push out of this is who we are, what we stand for. But actually, the inbound demand from people that came to me and told me “I like your style I want to be part of that journey”. And so as those opportunities presented themselves.

I had governance really early as well, established in the form of a board with a number of key people that I have massive respect for and trust to this day. Even though it was my money and Andy’s money at the time, we decided, Look, let’s go and hire these people early, and then we just got to…

Brendan Ritchie

Yeah, I’ve just got huge respect for people like yourself who have invested everything and yet can go, look I’m going to get independent directors on who I trust. I acknowledge that I don’t know everything and I’m looking for that guidance.

And I remember actually getting involved with Lightwire Andrew Johnson did the same thing. You know, he’s like yourself. He was the owner, but he had that independent insight. In previous companies, I worked in. That was not the case.

Very closed minded owners who felt that it was their money, their decision, and they weren’t interested. So but I guess you’re an interesting mix of following your gut but being data-driven. Can you give us some examples where perhaps an example, maybe where in the early days? Maybe you shouldn’t have followed your gut or you shouldn’t have been held back by the data, is there any sort of insights or lessons you would give to someone in that position now around, you know? 

Mike Jenkins

I would say a couple of things. Sometimes the data lies. That’s what I learnt. Sometimes the lies when you get, when you get, when you get into a business and there’s all sorts of personalities, particularly as a company grows larger like The Instillery now.

50million and 200 stuff. Everyone can put a spin on the data. So as the CEO of a leadership group, we only get the data that people really want us to see, with a narrative, you can shape the data to suit any narrative.

And so all I would say is a big lesson for me is if staying close enough to the inner workings of the business to be able to call bullshit when you think the data is wrong and that’s really the gut feel.

But in the same vein, I’ve always believed in empowerment, you know, we hire absolute weapons. So my role largely is to get the fuck out of the way and let them do what they do best. And you’ve got to trust, that trust and empowerment

It’s critical. So as long as you can do that, I think you’re onto a good thing.

Brendan Ritchie

You mentioned a couple of things. one employee numbers and two revenue. What metrics better if you like? I mean, there’s there’s vanity metrics. There’s metrics that you know, shareholders care about this and stakeholders, I guess. What do you kind of, what metric do tie success to?

Mike Jenkins

We live or die two two metrics. It’s eNPS, which is an employment satisfaction and customer NPS. We live or die by those those two things. We’ve got a number of goals and, you know, green light, red, light orange, yellow, all that sort of stuff.

But the reality is, I’m a fundamental believer is if we’ve created a psychologically safe, fun empowered environment for our team working on cool shit that matters. And we’ve got happy customers that are getting an amazing experience and it’s unique and they see value in the partnership.

Then we’ve created something really special and as a leadership group management group. But everybody. Everyone understands the role that they play, regardless of who you are right at the front of the house and our customer experience full time all the way to our most senior consultants, managers, the leadership and I think that combination is really, really important to understanding why those metrics matter and how they can move them positively.

Brendan Ritchie

I think I agree completely because a) our particular business runs with the scaling-up methodology, which is all about having the right people on the bus. So if your eNPS is nice and high, then chances are those people are happy and you’re doing something right.

But two, I think customer experience from the outside is what drives your ability to price at a point that drives profitability. If you’re leading with price as opposed to experience, it’s a very different equation. I guess on that, do you guys work to a particular business framework, like is there a particular model that you’ve either got external help to abide by or was this something you personally different that you’ve really.

Mike Jenkins

We set out to do this thing. We wanted to create something brand new. Yeah, we felt that, yeah, I love reading and particularly around business and business strategy and models and different leaders that have done things good, bad or indifferent.

But again, I really wanted to create something new. So this is very organic, is what I would say about The Instillery business model. But we have created an operating model that I’m super proud of and I’m like, I said, even if one day we would write it down.

I think it would be quite difficult to repeat because a lot of it was based on the early days around individuals and the personal experiences of some of our key leaders in the organisation. Which you now, are now, we are very thankful and grateful.

It’s not really reliant on any one individual, me or me or anybody. It’s embodied a culture and DNA of its own that sort of help us move forward, constantly move forward. And it’s and it’s largely to do with our strong core values Brendan, and that’s around a real desire across the business to challenge and be curious.

We’re constantly not only challenging our customers and our partners, but ourselves to be better and to do the right thing and to also look at ways to optimise. And so I think those as core values really inspire the next evolution of our operating model.

But everyone’s so bought into it, and so it doesn’t seem like a lot of big change. It’s a lot of small changes that get us to where we need to go.

Brendan Ritchie

But I imagine during your lifetime, you know your growth to date, there are words there that would be better than the ones I’ve used. But during your journey? Let’s run with that. You’ve had a number of acquisitions and one particularly big merger.

How? I’m really interested to sort of understand the lessons you’ve learnt from that. But just touching on your last point, though, sort of incremental changes. I imagine at some points during that journey through those mergers, those acquisitions, you’ve had quite punctuated points where you know, there’s been.

A rapid change, perhaps, or a more rapid change?

Mike Jenkins

Yeah, absolutely. And some of it is tied to the growth, really, and it gets to a point where I’ll give you an example. Finance is a critical function, right? For the first three years. I was The Instillery CEO, founder, accountant, sales manager, marketing manager, you name it. You wear so many hats in an IT start-up. And I loved it. I loved the variation of every day, but we hired a finance manager and it’s tied to some of the advice and lessons learnt at the start know we hired a phenomenal finance manager.

She was amazing. And even just the basics like going through the monthly billing and into them, I used to love it because it helped me stay close to the business. But yeah, there’s some stuff you just got to let go and let the people you hire the amazing talent come in and let them put their mark on it. And like, I see what the evolution of the operating model. A lot of it came down to the lessons and experience of the epic talent that we were bringing in. And so that was really important to the let go of the finance function.

Yeah. Even then, under the finance manager now our finance team under our Finance Manager Rach “Money” Bond, is massive. We’ve got four or five people, relatively speaking to the big boys. But for us, having a dedicated five-person finance team is huge, and they make our business.

So seamless and frictionless when it comes down to the lethargic processes we initially had and it’s now fully automated with integrated apps because we’ve got a team of specialists executing that function and providing visibility and advice to the business so we can continue every other facet of the organisation.

I think this visualisation and investment has been really critical to our success as well. But like I said, core to the values of being curious and challenging the way traditional organisations do it to find shortcuts and paths, of doing a bit to give us those little incremental advantages over the competition, which the customer see and feel quite readily.

Brendan Ritchie

So your merger was with Origin, right?

Mike Jenkins

Yes

Brendan Ritchie

Yes. Right? So how hard was it for you as the co-founder? Kind of the name behind the brand, the more visible guy to kind of, you know, park the ego. Is that the right term? I don’t even know, but like to just kind of go, This is no longer just mine.

Mike Jenkins

This is where for the greater good of the business as a whole, we’re going to go through this and Michael Russell comes in and he’s he’s kind of got his team and he’s an energetic, you know, entrepreneur in his own right.

Brendan Ritchie

Like how much how hard was it to go through that process of going? I’m now part of something much bigger rather than, you know, it being part of me.

Mike Jenkins

If that makes sense, yeah, I had 100% and that was a crazy time. I would like to say it was really character building. It was a real character building because we went from a 50 person organisation to 120 overnight.

I thought through the merger we moved to Aukland for that period of time. We were still digesting the acquisition and merger with the Vo2 with a number of regional offices.

Waikato, Bay of Plenty, Taranaki, Welly, as well. And so we’re just really come off the back end of that, and then we had the opportunity with Michael to bring our two businesses together. The thing for me, it’s always been about scale, for us to have the impact we desire and we want, which we talked about amplifying The Instillery effect,

We needed to have scale and we needed to evolve from being a professional services organisation, like I said, really hard, consulting and engineering, to manage and operate because number one, our customers were demanding it, but also number two, we needed to get some surety around recurring revenue to allow us to double down to invest further

To go get in the business on this to grow. And so the Origin thing for us was was really special and I’ve got a lot of respect for Mike and he’s a good friend of mine and a lot of trust there.

He has built a business over 20 years that’s been a cornerstone of I.T. in New Zealand. And one of the things that I learnt really quickly when we started kicking it around was when they took me into meeting some of their core customers and the customers loved them.

Absolutely love them. They loved the experience. I was about the partnership, not supply. It was genuine partnership and genuine challenge and genuine desire to push and do more go above and beyond. And then when Mike introduced me to some of his key people, individual contributors and managers alike.

I remember sitting down with these people and they just blew my mind because they reminded me of my team. And, you know, I didn’t think anybody else had that. So that was quite a humbling moment when you’re like, Oh, actually there’s some phenomenal talent around the market.

So, yeah, particularly with those two things, one, I guess once I got it through my own head. I was just really excited to pull the trigger and do the thing. And so for all the Origin customers, it gave them a roadmap over the horizon, taking advantage of cloud and DevOps and all the cool stuff that The Instillery could bring.

For us, we’d had a couple of misfires being real honest here around trying to build out and operate a managed service practise 24/7 enterprise-class with all security and privacy requirements that you need to manage this critical data tower as well, taonga which is really important around Maori data sovereignty. And so when we bought these two things together, it was the best of both worlds.

And so Mike and I really early on, I remember we were sitting up at a conference in Singapore together once we had already done the deal before we had announced it, and with a number of our peers and colleagues and we sat down, we actually just worked out how we were going to work because you know what had been a leader in his own right as MD at Origin for 20 – 21 years. And so, yeah, I mean, to be honest, he was amazing. He was like, Look, you do the CEO thing you do. And out and up, inspire motivate, challenge and grow.

And he said, And I’ll run the day to day and man is he a great operator, and I’m just so proud of the partnership and business that we’ve been able to build together, albeit not without a few challenging times across the last couple of years and a couple of COVID pandemics in lockdown.

Brendan Ritchie

Yeah, that’ll trip you up. Yep.

Mike Jenkins

Yeah, it could. It could. But I’m just really proud of the stickability of Mike and the team and our ability to put our customers first and our team first and ride out what’s probably been the most challenging operating conditions of my entire career, but also come out on top and still achieve our goals.

I think I’m really proud of it.

Brendan Ritchie

Yeah, you should be. And I think that NPS focus you mentioned earlier on is kind of clear that talking about that merger story and you being prepared to kind of dilute your ownership. I mean, of course, you stand to gain longer term big picture.

You know, bigger business with more publisher share probably works out better, of course, but it sounds to me like it’s driven by customer requirements and your desire to deliver a great customer experience. And if you could do that by going, you know what?

I don’t know everything. We don’t have everything sorted. Mike and his team have got this kind of in spades. So it sounds like really good framing from where I sit.

Go on that. On that front, though, you’ve now made, I think as it should be like collapse was at the other recent acquisition.

Mike Jenkins

Yeah, that’s right. Yeah, that’s right. 

Brendan Ritchie

So just on that, on the merger. What have you learnt about integrating businesses?

Mike Jenkins

This is something near and dear to my heart. What I would say is some analogy about a snake eating a goat and then another goat walks past, don’t try and eat the 2nd goat. not calling Origin a goat, a big fan of the Origin guys, but you know.

But what I would say is it takes longer than you think. And as much as you can say, we’re going to smash these things together within a couple of months and happy days. My biggest learning is you’ve got to take the people on a journey and we’ve done this badly and we’ve done this well and our learnings over the years.

You’ve got to bring the people on the journey and you’ve got to help them as I said at the very beginning. Understand the why. What’s the purpose? What’s in it for them? What’s in it for our customers?

And again, when you probably by the time, by the time you’re tired of telling people why, they’ll only just be getting it and understanding. And so in addition to the why the comms a critical comms are critical, and it’s probably been reinforced through COVID and lockdown.

Having our 200 plus members of the whanau all over New Zealand, we’ve gone to VIDEO, but it’s not about short-cycle calls or email anymore. This is about connecting on a really human level live not pre-production, no makeup room there and really going to them with really honest frank conversations and being open and transparent.

I think as soon as we got there, as soon as we got that right, we saw, we saw everyone lift. Yes, physically, mentally, mentally and performance lift as well. And it was really that connection of purpose and a strong comms plan and execution that really, really catapulted the success of all the mergers acquisitions that we’ve delivered

Brendan Ritchie

There’s a guy much, much smarter than me called Paul O’Dwyer does some consulting with us through his business and he’s awesome. But, you know, one of the simple messages he gave me a while ago is when it comes to leadership repeat, repeat, repeat, which ties back to your message, you know, just when you think you’re sick of saying it.

People are just starting to hear it. And it’s amazingly simple but true. You can’t say the key things, often enough or in enough different ways. When it matters, you get to keep saying it. So yes that very rings very true.

What about the cost of integration when you look now at opportunities, how much do you factor in the intangible cost of people’s time, you know, the people have already flat out they’re going to have to drop what they’re doing and work on integrating systems to, you know, to recognise or to realise the required synergies or savings to make the deal worthwhile. How do you factor that into the opportunities you now look at?

Mike Jenkins

Yeah, it’s a really good question. And like I said, historically with the very early M&A that we did I worked with the board quite closely. And I’ve got a wealth of experience between Jason, the old man and Bill English as well.

And doing this type of thing. And so for us to engage our leaders of our respective divisions, get in and have a look with me very early. Obviously, that means a few more people in the know and NDAs up the wazoo.

But by bringing in the respective leaders, the other experts, like I said, get out of the way, get the experts in the room quickly and we quickly come up with a plan. And now we’ve got a bit of a template for what’s good and what’s not.

And we pretty much give each section a bit of a score and then we apply a burden cost which is also factored into the EV, the enterprise valuation, and/ormultiplier, depending on how it comes out of the calculation.

That gives us a view of here’s what we think the value is worth based, less the cost of doing the deal. So here’s the total investment, and does the business case still stack up?

Brendan Ritchie

Yeah, it makes sense to me. I like the burden cost as a concept as well. I haven’t heard that one before. All right, Mike I reckon that’s a pretty great place to leave it. That’s been a good, solid chat, and I feel like there’s actually some new stories there for me, which is a surprise after many, many long nights with you. Appreciate it. Thanks for taking the time out.

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