Fifo Capital 2019 Q3 Australia

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Thinking ahead for success QUARTER 3 I 2019

Matt Mullenweg: conquering the internet How supply chain finance and invoice finance enables businesses to invest in themselves Facebook’s new currency represents growth opportunities for business Mary Barra: bringing the automobile industry into the 21st century Lyndon Rive: Making solar energy viable with SolarCity

When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability.

When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 1300 852 556

is a leading provider of business finance solutions, specialising in solving short term finance needs fast with purpose-fit solutions and one-on-one expert consultancy. With over ten years supporting clients across all industries, our specialists work with the unique complexities of business clients, to identify finance solutions that are appropriate for both short term needs and long term sustainability. Working alongside clients’ financial professional advisers and in harmony with their existing banking facilities, our finance solutions are very often bespoke to each client and designed to fit their specific need at that point in time. Since launching in 2004, Fifo Capital has established more than 70 offices across New Zealand, Australia, United Kingdom, Ireland and Canada, and provided business owners $1 billion growth capital finance.


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Welcome to the Q3 edition of Headway. There are many ways to approach any challenge. But doing the same thing that you have always done rarely leads to the results you desire. At Fifo Capital we believe that any obstacle can be overcome with a new kind of thinking. It’s why we have grown astronomically and opened offices around the globe. Unlike more traditional financiers who rely almost solely on your credit profile for information, we make financing decisions based on a comprehensive, 360 degree knowledge about your business and its operations. Entrepreneurship has many examples of people who have looked at things differently and dared to take a road less travelled. People like Matt Mullenweg, who made his Wordpress content management system open source, to create an ecosystem that provides for Wordpress developers around the world. In turn they effectively promote his platform, hosting and value-added services company that supports Wordpress’ 75,000,000 websites on the Internet. You can read more about his journey in this issue.

Finance has helped businesses grow for as long as there have been businesses. But there have been times when traditional finance approaches have not evolved as fast as business has desired. Technology is changing that. For instance, now it’s possible to fully finance your operations using off-balance-sheet finance tools to significantly reduce your cash conversion cycle. Your freed-up funds can then be invested in growth instead of simply keeping your business running. In this issue of Headway we look at Lyndon Rive, Elon Musk’s cousin who transformed the retail solar energy industry by making it viable for SolarCity customers; how to protect your finances using data security; Mary Barra who brought GM and the auto industry into the 21st Century, and more. I hope you enjoy it. Best regards, N igel Thomson Fifo Capital Founder and CEO




















Matt Mullenweg: conquering the internet Cash-strapped businesses need solutions to the FWC’s minimum wage hike H ow supply chain finance and invoice finance enables businesses to invest in themselves Businesses need to focus on data security to protect their finances Mary Barra: bringing the automobile industry into the 21st century Facebook’s new currency represents growth opportunities for business Diversity defines your business’ growth potential Off balance sheet financing is key to maximising growth Lyndon Rive: Making solar energy viable with SolarCity SMEs need protections against review blackmail

Published by Fifo Capital International Ltd. Headway magazine is published four times a year. Copyright © 2016 by Fifo Capital International Ltd. Email Visit All rights reserved.



“ Technology is best when it brings people together.” Matt Mullenweg

Matt Mullenweg: conquering the internet To most entrepreneurs, the idea of spending years developing a free, open-source content management system sounds like a poor way to make a living, much less to start a successful business. Matt Mullenweg, however, did just that in creating WordPress, and wrote himself into the history books in the process. With a net worth of over $40 million USD, Mullenweg’s software now powers over 75,000,000 websites, and he runs a business that directly hosts approximately half that number. WordPress is the single most popular content management system (CMS) on the internet, holding nearly 60 per cent of the CMS market share. The secret to Mullenweg’s success lies both in his personal talents,


and his unorthodox entry into entrepreneurship.

Early Life Mullenweg’s father was a computer scientist, meaning that he grew up around computers and programming. He did not, however, set out determined to launch a career using his coding skills, or to become an entrepreneur. Rather, he attended a high school for performing and visual arts, where he studied jazz saxophone, before studying political science at the University of Houston

in Texas. It was there that he, together with co-founder Mike Little, decided to develop WordPress using Michel Valdighri’s open-source b2 blogging platform in 2003.

How Mullenweg took over the internet Mullenweg grew up understanding that the Internet offered nearly unlimited potential with regard to how web pages could work, how content could be set up and formatted, and how different sites could interact. Simply knowing that he could change the b2 platform to suit his needs was the seed that eventually became WordPress. After launching WordPress, though, this attitude continued to allow him to transform his product to suit his needs, and to make WordPress into a uniquely useful and efficient tool. In 2004, Mullenweg co-founded the Global Multimedia Protocols Group (GMPG), which enabled the use of software to automatically

identify and gather data from web pages that used their microformats. By early 2005, Mullenweg and his WordPress team, working with CNET, delivered the theme system, moderation features, and a redesign of the front and back ends. This put Mullenweg’s CMS, and his new company, Automattic, on the map, but it was WordPress’ open-source background that ultimately made it the massive success that it is today.

Using open source to dominate the market Unlike its competing content systems, WordPress can be customised by third parties. As a result, users did immediately contribute to its development, and continue to do so today, making it incredibly customisable and versatile. There are over 3000 free GPL licensed themes available to users, and many thousands more available for purchase.

The WordPress core contains over 430,000 lines of code, contributed by more than 70 developers. Since its launch in 2003, it has had an estimated 112 years worth of working hours dedicated to its development, much of which improved the user experience at no cost to WordPress itself. As a result, other content management systems simply can’t compete effectively. Paid WordPress features largely only serve to enhance a free open-source platform that is already better than what competing paid platforms offer.

What we can learn Matt Mullenweg is a rare entrepreneur in that he created the ecosystem within which his business operates., his for-profit hosting service and free

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blogging platform, is so successful not only because of its simple utility, versatility, and quality, but because of its association with the free opensource WordPress software (available via that he built. WordPress is the world’s default content management system, and any products Mullenweg’s business produces for it automatically become similarly incumbent.

Harnessing the power of free WordPress was open-source by default, because it was based on b2, but Mullenweg could have chosen to code his own platform from scratch, rather than going the open source route. His choice, whether it was deliberate or not, defined his success. While he couldn’t claim ownership of his software, and therefore couldn’t sell it, he effectively created opportunity for other entrepreneurs and developers, as well as his own business.


Other businesses like Yoast, ElegantThemes, and WPEngine developed WordPress products, enhancing the CMS without requiring any kind of investment or encouragement from Mullenweg or Automattic. In this way, the WordPress software continues to evolve, growing and becoming more relevant over time; even, in theory, without any ongoing effort on Mullenweg’s part.

His paid features and services, however, would benefit by association, effectively marketing his products to the world. This has placed him and his business at the head of a self-sustaining and self-perpetuating brand, ultimately powered and grown by the developers and users who rely on it for their own success.

Trust Fifo Capital to sort your seasonal cash flows A standby working capital facility ready to access when you need it most.

Simple preapproved facility sitting alongside existing finance arrangements. • Pay only if you use it • Fast and simple to activate • Peace of mind for unexpected cash flow interruptions • Small and large exposures • Treated on a case by case basis, and tailored to your needs

Contact Fifo Capital today for more information. 1300 852 556

Cash-strapped businesses need solutions to the FWC’s minimum wage hike The Fair Work Commission has announced a minimum wage rise of 3 percent starting on July 1. While businesses argued for the wage hike to be limited to match the 1.5 per cent inflation rate, it’s still just half of the 6 percent that the Australian Council of Trade Unions hoped to achieve. Even this relatively modest wage increase will create real difficulties for many businesses though, particularly those who rely most on low income workers, like the hospitality and the embattled retail industry. While the Australian economy is growing, and overall profits are high, businesses are reacting to the wage hike with alarm. This is because Australia’s most profitable businesses are in precisely those industries that don’t rely on low-income workers, while those who are affected by the wage hike have already faced years of declining growth. In order to afford a pay rise for their workers, these businesses need to find other places to make cuts, and innovate to boost their profitability going forward.

Affected businesses are those who can least afford it The industries who rely most on minimum wage workers are the hospitality and retail industries. Both of these are highly competitive, though the retail industry in particular has faced years of slow growth and record rates of company failures. These types of businesses often hire minimum wage workers specifically because they can’t afford to pay more. Going forward, that may need to change. Politicians who supported the wage increase largely quoted figures


which showed that the profits of Australian businesses have grown much faster than wages in recent years. Additionally, they stressed that low wages were contributing to low growth in consumer spending. This, in turn, has contributed to the difficulties faced by businesses who rely on consumer spending — most notably retailers. An increase to the spending power of low income workers should help the employers of those same workers to grow. Without the necessary profit margins to afford higher pay rates, though, this presents a challenge.

Managing increased labour costs Before any longer-term effect can manifest to improve economic conditions for these businesses, they need to find a way to deal with a 3 percent increase in labour costs. Some have already announced that they’ll be forced to lay off workers, though this will help little for businesses that already run very lean with regard to staff. Fortunately, there are better ways for businesses to cut costs in the near term to make up the difference. Reduce penalty-rate hours A simple way to cut costs in the near term is to identify unprofitable times at which your business is required to pay penalty rates. Trimming your business hours to remove just a few penalty rate-hours, or simply cutting your staff during those times, can go a long way toward making up the difference. Avoid layoffs to prevent overtime While many businesses will feel tempted to lay off workers in an attempt to cut costs, it’s important

to consider whether the business can actually do without the labour of those workers. Losing an employee might feel like it reduces labour costs, but this will actually increase them if another employee is forced to work overtime to ensure that the business continues to run normally.

Focus on stability and growth In the longer term, businesses need to find ways to become more profitable, to reach a point where

Rising labour costs are a natural part of a wages can rise organically. That means first ensuring that your business can deal with the cash flow difficulties that are driving record numbers of companies out of businesses, and then finding ways to drive growth. Improve cash flow stability Whether a financial shock comes in the form of a wage hike, an equipment malfunction, or low sales isn’t important; what matters is that businesses have access to the funds they need to get through and deal with the problem. Alternative finance tools like invoice finance and more recently supply chain finance are specifically designed to give businesses the time they need to smooth out short term cash flow problems, so you can focus on long term issues.

Implement a growth strategy While consumer spending isn’t growing very quickly in absolute terms, there is plenty of room for businesses to grow. Slowing spending has forced record numbers of retailers to downsize or shut down entirely, including very large businesses like Gap, Avon, and Woolworths. The customers they leave behind represent a significant growth opportunity for competitors.

healthy economy. The key to managing those costs is to ensure that your business is healthy as well.

Successful businesses are those who play to win, rather than just to avoid failure. That means developing a plan for attracting those orphaned customers and turning the overall situation to your business’ advantage.

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How supply chain finance and invoice finance enables businesses to invest in themselves


It’s difficult for businesses to determine how much to invest in their own growth, and how aggressively to pursue opportunities that present themselves. Driving innovation and product development, hiring and training new workers, expanding facilities, and other costs of growth ultimately draw on working capital that is needed elsewhere. Most importantly, a business’ production capacity is limited by the funds it can immediately invest in supplies and labour. By diverting funds to longer term growth efforts, businesses can temporarily lose the ability to fill large-volume orders. If this is combined with a cash flow interruption of some kind, such as an equipment malfunction, or late client payments, it could even disrupt the business’ operations. To limit this risk, businesses are using a combination of supply chain finance and invoice finance to fully finance their operations, allowing them to focus their working capital on driving structural growth.

Fully financing your operations In order to free up all of your working capital for growth purposes, a business first needs to find a way to fully finance its operations. To do that, it needs to reduce its cash conversion cycle (CCC) below zero. This means reaching a point where the revenues for any given product or service are collected by the business before the inputs that were needed to produce it need to be paid for. While long supplier payment terms can go a long way to achieving this, many businesses can’t get good terms, and those who do most often still need more time. Supply chain finance and invoice finance give your business the time it needs. Invoice finance brings revenues in sooner Invoice finance is a financing tool that allows businesses to get paid sooner than their payment terms require. Instead of waiting for a client to pay an invoice on or after payment is due, the business can trade it in to Fifo Capital for most of its value as soon as it is issued. Fifo Capital then collects the payment from the client when it’s due, before issuing the remaining funds. Effectively, this means businesses can collect the revenues they need to pay bills and fund their operations at the time that clients are invoiced, instead of when they pay that invoice. Supply chain finance delays outgoing payments Supply chain finance addresses the other side of the cash conversion cycle equation, by delaying the time at which businesses are required to pay for inputs. Instead of paying suppliers directly, they issue payments out of a separate credit fund. Payments on that fund can then be delayed by up to 90 days, giving businesses the time they need to

turn those inputs into products and services, and to sell these. As long as they can invoice the respective customers that buy any given product before those 90 days are up, their cash conversion cycle is then below 0, meaning their operations can be financed entirely using this process.

How closing the CCC enables growth Financing operational costs frees up all of the capital that was previously tied up in simply making the business run. Instead of focusing your efforts almost entirely on production, you can then apply those funds to growth instead. Whether that means setting up a research and development team to drive innovation, hiring and training new employees, acquiring new floor space and equipment, or building a first rate sales and marketing team, financing is ultimately what makes it possible for businesses to invest both in their current operations, and their future. Unlike more traditional Dealing with cash financiers who rely almost flow interruptions solely on your credit profile A business that’s for information, Fifo Capital already using financing to fund makes financing decisions its everyday based on a comprehensive, operations 360 degree knowledge may not have any additional about your business and invoices to its operations. finance to cover a temporary cash flow interruption. Fortunately, the most common of these, late client payments, is eliminated by the financing itself. Because Fifo Capital collects payments on its own, businesses no longer need to worry about ensuring that clients pay on time. Other types of cash flow interruptions might still represent a problem, however. Fortunately, Fifo Capital works with businesses to address these issues as well. Unlike more traditional financiers who rely almost solely on your credit profile for information, Fifo Capital makes financing decisions based on a comprehensive, 360 degree knowledge about your business and its operations. This allows you to work with a dedicated representative who knows you and your business to access business loans and other types of short term finance almost instantly, ensuring that your business continues to run smoothly, and effectively rounding out your business’ entire financing strategy.

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Businesses need to focus on data security to protect their finances 9

Every few months, another major data breach makes headlines, reminding us that cyber criminals remain a real and growing threat to businesses and private individuals. Despite these constant reminders, most businesses still have little or no protection from cyber security threats. As a result, the scale and frequency of cyber attacks has continued to grow in recent years.

Globally, the average cost of a data breach is $3.86 million USD. While individual impacts vary widely, with larger businesses taking much bigger losses, the impact of any data breach on a business’ cash flow stability can be devastating. Worse, a data breach can ruin a business’ reputation, and make its customers less willing to provide critical data. As a result, a data breach can not only directly impact a business’ available working capital, it can also impact its immediate earning potential, and its future growth.

Understanding how data breaches happen Before they can effectively protect themselves, businesses need to understand how data breaches happen. Criminals use a wide variety of methods to access sensitive business or personal data, as well as to directly steal money from victims. Most common among these are social engineering, hacking, phishing, DDoS attacks, and ransomware. While some cyber criminals engineer viruses and malware to crack passwords or create backdoors into secure systems that allow them access to data, or use a cyber attack to interfere with your system to use as leverage for extortion, others rely on entirely mundane methods. That might mean simply calling on the phone and impersonating an employee to get passwords or other sensitive information. A cyber attack can come in the form of an email, a phone call, a USB drive, a link on a website, an advertisement, or out of nowhere. It’s specifically because there are so many different ways to steal data, that makes it so difficult to protect yourself and your business from this kind of attack. A third of security breaches are accidental, due to human error Fully a third of data breaches were not the result of any malicious attack, but simple human error. Employees simply cc’d the wrong person in an email, attached the wrong documents, or failed to redact sensitive information from key documents before sharing them.

Businesses need to address data security comprehensively For many businesses, cybersecurity measures are extremely basic, often extending no further than a basic virus scanner, and instructions that employees avoid clicking links in suspicious emails. If businesses want to get serious about stopping costly data breaches, they need to attack the issue from multiple angles.

Provide security training The most preventable type of data security breaches are those based on simple human error. Businesses need to take the time to create security procedures, and train employees in how to handle sensitive data. That means not only teaching them how to identify suspicious emails, but also exactly how to store and transmit information in-house, as well as to third parties without accidentally exposing it to the wrong recipients. Additionally, it means ensuring that all team members are aware of the different ways that people can attempt to access sensitive information, so that they won’t be caught off guard by someone attempting to scam them over the phone or in person. Purge sensitive data regularly Part of the reason that data breaches are so incredibly expensive to businesses is because of the sheer amount of data criminals can often access with a single successful breach. The data recovered often gives them the information they need to access other systems to steal even more data. Worse, if a business such as an online retailer, which stores consumer data, is hacked, it can effectively expose thousands or millions of individuals. To limit the scope of any such attack, and prevent this dangerous knock-on effect, businesses need to regularly purge their sensitive data. Anything that isn’t currently in use should be kept offline, or deleted entirely. Come up with action plans Cyber criminals often rely on shock and panic to get them what they want. DDoS attacks and ransomware, for example, are both used to prevent a business from operating properly until it pays the criminal a fee. Not knowing what to do, and losing revenue every second that its systems are down, businesses nearly always pay. Ransomware and DDoS attacks can both be rendered mostly inert with the proper preparation and investment. Working with a cybersecurity professional, businesses can come up with answers to these kinds of attacks, so that their operations can’t be interrupted as easily, and so that they can’t be extorted without much greater effort and cost on the part of the criminal. Businesses often view cybersecurity as either futile, or too abstract or complicated to be concerned with. Because of that, attacks are becoming more common every year, and enjoy a very high success rate. To fight back, businesses need to understand how cyber crime works, and be willing to put forth the same kind of effort and investment that they would put into preventing more mundane crime.

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“ My definition of 'innovative' is providing value to the customer.” Mary Barra

Mary Barra: bringing the automobile industry into the 21st century Since starting out as a co-op student at GM in 1980 at the age of 18, Mary Barra has become the highest paid, and arguably most successful, CEO in the automotive industry. Unlike many of her counterparts, her educational and professional background are centered around engineering, and her approach to leadership has reflected that of an engineer.


Since assuming her position as the CEO of General Motors, Barra has been named the 5th most powerful woman in the world by Forbes, received an honorary doctorate from Duke University, and was featured on the cover of Time’s “100 Most Influential People in the World”. Her career is an inspiration to business owners and aspiring entrepreneurs, and has a lot to teach us about the value of efficiency, integrity, and a willingness to drive change in

creating a successful and influential business of any size.

Early career Barra began her career at GM as a coop student to help her pay her tuition at Kettering University, where she

studied electrical engineering. After graduation, she joined the company full time, and later earned a Master’s degree in business administration at Stanford University. In the following years she moved through a number of engineering and administrative jobs at GM, slowly working her way up the ranks. After holding several high level positions, including Vice President of Global Manufacturing Engineering, Vice President of Global Human Resources, and Executive Vice President of Global Product Development, she was appointed as GM’s chief executive in 2014. This made her the first female CEO not just at General Motors, but in the entire automotive industry.

Cleaning house Immediately after her appointment, GM and Barra were faced with an enormous challenge. Faulty ignition

switches in GM vehicles were causing fatal accidents, and Barra needed to act quickly to save lives, resolve the situation, and protect her company. Recalling the crisis in an interview with Stanford Business, Barra said: “We were guided by three principles: doing the right thing for the customer, being transparent, and doing everything in our power to make sure it never happened again.” Barra reacted swiftly and comprehensively, creating a compensation package for crash victims. GM issued 83 safety recalls that involved over 30 million cars, and took action to prevent future issues, manage its reputation, and pave the way for the future of the company. Barra then moved on to simplify GM’s bureaucracy, and to modify the business’ company culture to better enable workers to come forward about potential problems.

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" The diversity of thought is where you can make better business decisions. What I always say is, 'Do every job you're in like you're going to do it for the rest of your life, and demonstrate that ownership of it.' Our goal is to make General Motors the most valuable automotive company." Driving innovation forward In working to create a stronger company culture, Barra wasn’t just pursuing better communication, transparency, and product safety. She was also aiming to turn the centuryold company toward the future and to breathe new life into a large and relatively conservative enterprise. She believes that employees come to work every day aiming to do a good job, and a good leader’s task is to ensure that their environment promotes their success rather than getting in their way. Unsurprisingly, her leadership has, in fact, promoted innovation and new development at General Motors. In 2017, she successfully pushed for the creation of the Chevy Bolt EV, finally beating Tesla in developing


the first electric car with a range of over 200 miles. The development of self-driving cars, while still relatively early, has also thrived under her leadership.

What we can learn Unlike many of the most successful business leaders we discuss, Barra hasn’t founded any businesses, didn’t come up with any disruptive new innovations, and hasn’t gone out of her way to cultivate the kind of entrepreneurial celebrity that many others such as Mark Zuckerberg or Richard Branson have. Instead, through her understanding of her industry and her company, and in representing her own values, she’s become one of the world’s most successful business leaders.

When examined, Barra’s actions boil down to a few simple values that mostly reflect her background as an engineer. Throughout her career, she has strived to make GM more efficient, to create an innovative work environment, and to bring a higher level of integrity to the company. Her success in pursuit of these goals are key to her success as a leader, and show us that developing and representing our values is an important part of leading a business. It also shows us that excellent innovators can come from anywhere. While Barra isn’t trying to personally transform the world like Jeff Bezos or Elon Musk, she is an important driver of progress and innovation in her industry. For entrepreneurs who primarily look up to Silicon Valley tech startups, this can feel surprising, even though it makes perfect sense considering her background. Just as tech entrepreneurs innovate by inventing entire new industries and developing unexpected products, innovators like Mary Barra transform existing industries and update the technologies we already know.

When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability. When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 1300 852 556

Facebook’s new currency represents growth opportunities for business


Facebook pointed to On June 18, Facebook announced that it is forming a new subsidiary by the name of Calibra, that will begin issuing its own digital currency starting in 2020. While this might look like just another blockchain currency at first glance, it comes with legitimacy, accessibility, financial backing, and centralised control that most lack. For businesses, it may represent an important opportunity. In its announcement, Facebook pointed to developing countries as its target market, indicating that it intends to improve access to financing and banking services for businesses and individuals who currently lack access. This larger goal is one that should catch the attention of business owners in the developed world. By introducing a stable user-friendly currency, the potential for financing, and potentially free international transactions, Facebook promises to provide vast numbers of businesses and individuals direct access to the global marketplace.

Opening new markets to global business To consumers and businesses in the developed world, Calibra doesn’t seem like anything particularly unique or groundbreaking. It’s simply another way to pay for things, just like any other blockchain currency, or electronic wallet. For the developing world, however, it promises to be a game changer. Over 3 billion people in the world have no bank account at all. Many of these people do, however, have a smartphone. With a bank account, and the promise of access to credit, these individuals will have the ability to invest in themselves, their businesses, and consumer products. It would effectively represent a massive injection of capital to individuals and businesses in developing countries. The resulting increase in spending, business activity, and growth this might spur on in those countries could be nothing short of extraordinary.

The world has a lot of untapped business potential According to Facebook’s research, over 70 per cent of businesses in the developing world have no access to financing of any kind. This creates a massive barrier that prevents these businesses from competing against those who do have access to financing, which reduces overall economic growth, and limits competition and innovation as a result. Businesses in Australia, the EU, and the rest of the developed world need access to low-cost labour and foreign suppliers. Currently many businesses who could fill those needs have no way to interact with foreign clients. Managing international payments can be very difficult, expensive, or entirely impossible depending on transaction costs, or whether the supplier even has access to a bank account. By solving these problems, Facebook is making it possible for businesses to access labour and suppliers who they otherwise would neither be able to find or pay.

What makes Calibra uniquely useful Many of the features offered by Calibra are already available through other means. For example, legitimate international digital bank accounts already exist, as do various blockchain currencies that aren’t tied to any physical currency. What hasn’t happened until Calibra is an independent blockchain currency regulated by its own central bank that is also user-friendly and accessible to anyone with minimal hassle. Accessibility and legitimacy Calibra will be integrated with Facebook and Whatsapp, allowing users to securely send money using apps that they already have on their phones. This means there is practically no barrier to entry, because users don’t need to know anything at all about blockchain technology, and don’t need to download any strange new apps. They

developing countries as its target market, indicating that it intends to improve access to financing and banking services for businesses and individuals who currently lack access.

also don’t need to engage in anything that feels illicit, which is a real concern with regard to blockchain currencies. Unlike Bitcoin – and other cryptocurrencies – Calibra is explicitly above-board, without any association to illegal black market trade and other dark web dealings. The general user-friendliness Facebook promises should also make it far more attractive for people and businesses in the developed world, who may have less prior exposure to digital commerce of any kind. Stability Businesses everywhere have been slow to adopt blockchain currencies, and for good reason. Besides being mostly unnecessary for traditional commerce, Bitcoin has undergone numerous boom and bust cycles. This made it less reliable than traditional currencies. The Libra, Calibra’s currency, will be regulated, preventing sudden inflation or deflation from occurring. This makes it possible for businesses to budget and do business using the currency almost exclusively, which is likely to be important for businesses in developing economies. Whether this potential is ultimately realised depends strongly on Calibra’s implementation of its new currency, how affected governments respond, and how businesses ultimately respond. Considering the competitive pressures businesses face to cut production costs and find new markets to grow into, the Libra could ultimately become an important step in integrating developing economies into the global economy.

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Diversity defines your business’ growth potential Businesses often scout for talent, and hire candidates, based on a simple principle. The more technically qualified a candidate is for a role, and the better they fit into the company’s existing culture, the better. In the short term, this makes perfect sense. New hires who can culturally integrate into the team and their new roles with minimal effort can become productive more quickly than less qualified candidates could. In the longer term, though, businesses are forced to deal with a cost that comes with this strategy. By pursuing the path of least resistance with regard to integrating new hires, businesses sacrifice diversity. Diversity is, in several ways, the key to any business’ long term success.


The more diverse a team is, the broader the range of experience and perspectives that it can draw upon becomes. The result is a business that simply has more growth potential than one that isn’t as diverse. By developing that diversity, alongside a company culture that’s designed to take advantage of it, businesses can innovatively outclass more homogenous competitors.

Diverse businesses perform much better than competitors A 2015 study by Mckinsey & Company found that businesses in the top quartile for gender diversity outperformed competitors by 15 per cent. The most ethnically diverse companies, for their part, outperformed other businesses by a staggering 35 per cent. A wide range of other studies over the past several decades have similarly indicated that these, as well as diversity in age and professional and socioeconomic

background significantly improve performance. The critical factor isn’t a particular type of diversity, so much as diversity itself.

Diversity drives innovation The more diverse a business becomes, the larger its range of perspectives, and its collective body of knowledge, experience, and talent grows. It can explore, experiment with, and use this to innovate new and better solutions to problems that allow them to outcompete other businesses. For example, a business that hires two engineers who are the same age, went to the same university, and worked at the same companies together in the past will get exactly what they were hoping for: Two virtually identical professionals who will do the same kinds of jobs in the same way, who look at problems with the same perspective, and who have essentially the same skills and capabilities. They’ll work well together, but the chances of something disruptive occurring are minimal.





A company that actively pursues diversity, on the other hand, might opt for two very different engineers. While one might have a top-notch education from a prestigious school, plus a few years’ experience with a well-funded tech startup, the other might be a 50 year-old immigrant from Russia who has spent decades solving complex problems with relatively limited resources. The chances that combining their knowledge and perspectives will result in something new and potentially profitable is relatively high. Where the first business can expect seamless integration and predictable performance, the second can expect an adjustment period, followed by a highly productive exchange of ideas.

Culture is key to making diversity work for your business It’s no secret that diversity is good for business, so it might seem odd that so many companies don’t make

any significant effort to encourage it. The reason is that a diverse workforce needs to be backed up by a healthy company culture to provide any real benefit to the business. Applying diversity to drive innovation and growth is only possible through the exchange of ideas. Different people with different backgrounds need to be exposed to each other, and need to collaborate to combine their expertise into something greater than its constituent parts. This isn’t possible with an unhealthy company culture, where workers are too stressed and too focused on protecting their personal interests to communicate or collaborate effectively with co-workers.

Building a healthy company culture In order to develop the kind of culture in which a wide variety of people with very different personal backgrounds can cooperate, businesses need to actively cultivate a strong inclusive

and collaborative mentality in their workplace. A business that wants to profit from its diversity needs to find ways to cultivate curiosity, tolerance, and a thirst for progress. That means ensuring that employees benefit from working together, and rewarding teamwork, communication, and mentoring behavior. The business’ leaders should model these values to their employees, and create policies that reinforce and structurally encourage them. Embracing diversity, and developing a culture that is able to make the most of it, requires more work and up-front investment than hiring a homogenous, and therefore more limited team. By taking on that challenge, however, businesses make themselves more innovative and productive, boosting their ultimate growth potential.

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Off balance sheet financing is key to maximising growth


To compete and drive growth in a competitive environment, businesses need to access all the funding they can get their hands on. The more working capital a business can come up with, the better it can secure top quality talent, develop and produce competitive products, and market those products to accelerate its growth.

day funding solution can be dangerous, as it’s very easy to gradually lose perspective and eventually to overborrow. The result is a high debt-to-equity ratio, which makes it much more difficult to secure further loans when they’re most needed, such as when a business is gearing up for expansion.

Traditionally, businesses rely on bank loans and investment to provide the capital they need. More savvy businesses, however, additionally take advantage of off-balance sheet financing to complement these tools. Used correctly, off-balance sheet (OBS) financing allows businesses to access financing more quickly, and to better manage their debt-to-equity ratios. As a result, they can weather financial stresses more easily than competitors, even while pursuing an aggressive growth strategy.

Additionally, a high debt-to-equity ratio can signal a business’ poor financial health to investors, which translates to reduced investment, and lower stock prices for publicly traded companies. That, in turn, further impacts the business’ ability to secure funding in the future, and makes it much more difficult to maintain stable cash flow and to fund growth going forward. Using OBS financing allows businesses to keep their debt-to-equity ratios lower, by giving them the means to quickly access the working capital they need without taking on any new liabilities.

How OBS financing works

OBS financing maximises working capital

OBS financing is any type of financing that doesn’t need to be listed on a balance sheet, because no debt or equity is created. Instead of taking out a loan, businesses effectively access capital that was already theirs, but was also previously inaccessible —often due to issues of timing. The clearest example of this is invoice financing.

Making a business financially healthier for the benefit of lenders and investors isn’t the primary point of offbalance sheet financing, of course. Rather, it’s about helping businesses get the largest possible amount of working capital as quickly as possible. This can be enormously useful for a business that’s looking to implement a very aggressive growth strategy.

Invoice financing Invoice financing is the practice of exchanging or selling an outstanding invoice to a financier. In exchange, the financial institution issues an upfront payment to the business, followed by a second payment of the remaining value when the invoice’s payment is collected. The financial institution takes a predetermined fee out of the value of the invoice, leaving the business with liquid funds where it had an unpaid invoice before (which may not have been due for payment for weeks or more).

Even after taking on a significant debt load, a business can use OBS financing to come up with even more capital. This allows it to make investments in its own growth and development that are disproportionate to its current size, and which otherwise similarly situated competitors can’t match. On top of that, it allows businesses to get access to funds almost instantly when needed.

Supply chain finance Supply chain finance is a tool that businesses can use to extend payment terms of up to 90 days for themselves, while providing earlier or timely payment to suppliers. This might appear like a loan at first glance, but it isn’t. Supply chain finance does not issue any funds to the business using it. Rather, its primary purpose is to extend financing to that business’ suppliers, which happens to improve its working capital position by extending the payment term for a liability that already exists.

Unlike more traditional forms of finance, off-balance sheet financing like invoice finance and supply chain finance are incredibly fast. Instead of waiting weeks for a loan to be approved, businesses can finance an invoice in a matter of hours. Similarly, supply chain finance, once set up, can be used to pay suppliers almost instantly. This means that businesses can react almost instantly to seize time-sensitive growth opportunities.

Keeping the debt-to-equity ratio under control Using OBS financing makes it easier for business to avoid a risky overreliance on loans for managing everyday cash flow issues. Using debt as a day-to-

Timing is critical for cash flow management

While some forms of OBS financing are controversial, others, like invoice finance and supply chain finance, play a vital role in every successful business’ financial toolbox. Used strategically, these types of financing allow businesses to better manage cash flow, to maximise growth investment, and to promote their overall financial health.

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“ We want others to come up with a product as good as ours. We want the costs to drive down. You have to get the big manufacturers to chase this technology.� Lyndon Rive

Lyndon Rive: Making solar energy viable with SolarCity The cost of renewable energy, particularly solar power, has dropped dramatically in the past two decades, to the point where 80 percent of new solar projects in 2019 are projected to outcompete even the cheapest oil, natural gas, and coal projects.


The average cost of installing new solar panels in 2019 is just over $3 USD/watt, down from $12/ watt 20 years before. While the dramatic fall in solar prices in the 21st century is the result of a broad combination of factors, Lyndon Rive and the business he founded with his brother, Peter Rive, can take credit for aggressively driving consumer prices down as rapidly as possible. Through SolarCity, Rive brought solar technology into mainstream use, driving demand, and ultimately making it accessible to everyday consumers. In the process, Rive realised his entrepreneurial vision of making clean energy cheaper than fossil fuels for everyday consumers, while building a net worth of over $65 million in the process.

Early life and background As the son of a business owner, and the cousin of famed billionaire entrepreneur Elon Musk, Rive comes from an entrepreneurial family. He started his career as an entrepreneur in South Africa at the age of 17, nearly dropping out of school to pursue his business if not for the lenience of his school principal. In the late 90s he moved to the United States to co-found a software company, Everdream, which was ultimately acquired by Dell.

Transforming the solar industry In 2006, Lyndon and his brother, Peter, decided to launch SolarCity with the encouragement of their cousin, Elon Musk. Their premise was simple. Instead of selling costly solar

infrastructure to environmentally conscious upper middle class or wealthy consumers, they would bring affordable solar energy directly to consumers. They did this by introducing the concept of solar leasing, where customers wouldn’t own the solar panels installed on their homes, but would instead purchase the energy produced by those panels at a lower rate than that offered by their conventional energy provider. By selling energy instead of solar panels, SolarCity could eliminate large up-front costs for customers, and compete directly with traditional power companies. The result was dramatic. The massive demand

Leveraging customers to drive sales Over the years, customers repeatedly approached SolarCity asking for discounts for bulk installations, where multiple homes in the same neighborhood switched to solar at the same time. To further reduce prices, Rive built on this idea, offering increasingly significant discounts for larger groups of homes. This, in turn, only accelerated demand even more. Today, direct referrals are the single largest source of new customers for the company. The resulting disruption to the US energy industry was so significant that, after heavy lobbying, 6 US states passed anti-solar laws designed to protect coal and oil companies, and issued thinly veiled fines and taxes on consumers who opted to use clean energy. Despite this, SolarCity has enjoyed massive success.

Moving forward

generated by this approach over the following years allowed SolarCity and its suppliers to grow and benefit from economies of scale, which quickly drove costs down further.

In 2016, Elon Musk’s Tesla acquired SolarCity, in an ongoing attempt to build a fully integrated clean energy infrastructure that unified clean energy production, better battery storage, and electrified

transportation. Shortly after, early in 2017, Rive announced his departure from SolarCity, since the company was now well out of its startup phase, and he sees himself as an entrepreneur more than a CEO. After keeping a low profile for a few years, Rive reemerged in 2019 as chairman of the board of directors of ZOLA Electric, a well-funded startup aiming to bring affordable off-grid electricity to millions of people in rural Tanzania and Rwanda. His goal is to help developing countries skip the traditional electric grid entirely, democratizing renewable energy globally.

What we can learn The secret to Rive’s success as an entrepreneur is rooted in his passion and goal orientated approach. Rather than simply pursuing material success, his goal was first to bring solar power to the masses. His willingness to prioritise this was ultimately how he drove the price of solar energy down below that of coal. This, in turn, gave him access to the massive markets that allowed for the scale needed to justify those prices. By adopting a specific goal beyond simply generating wealth, businesses can better drive the kind of disruptive, meaningful change needed to build a meaningful enterprise that gets the attention of both consumers and investors.

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SMEs need protections against review blackmail Online reviews have become increasingly relevant to online, and increasingly also brick-and-mortar businesses in the past decade. Initially they came about as a way to get a feel for the quality of a product or service online, where customers couldn’t interact directly with products or businesses. Over time, their popularity has increased, and 4 out of 5 online consumers now consult online reviews before making a purchase. As a result, online review sites have emerged as a battleground.

Small businesses, especially startups, often rely on their online reputation to maintain their bottom line. As a result, negative reviews, or harsh blog takedowns by industry influencers can have devastating consequences.

In some cases, a single, particularly offensive review could destroy a business. To help manage this threat, many businesses began engaging in producing fake reviews for themselves to boost their ratings. Seeing this, customers and competitors alike soon realised that they, too, could game the system. In recent years, reviews have become a popular medium for blackmail. Bloggers and consumers produce false damaging claims, and demand compensation, discounts, rebates, or other benefits to retract and take them down. Businesses, for their part, often comply with these demands, knowing that defending themselves is as hopeless as it is prohibitively expensive.

SMEs have no real defense against blackmail In Australia, only individuals and businesses with fewer than 10 employees are able to take legal defamation action in cases like this. Those who have the option to do


Businesses currently rely on review websites for protection With little to no legal protection, businesses are forced to rely on review websites themselves to protect them. While some, like Yelp and Facebook, allow businesses to report defamatory reviews and make some limited effort to remove them, others have taken a less reputable tack, offering to remove bad reviews for a large fee. This has even led to claims by some businesses that those review sites generate bad reviews in order to boost their incomes. Those who do try to fairly manage and take down some bad reviews are accused of doing so falsely, effectively choosing winners and losers among businesses. Regardless, businesses are forced to engage in extensive reputation management to protect themselves, particularly those in vulnerable industries like hospitality and retail. By directly engaging popular reviews sites, they can appeal for support in combating malicious reviewers. Unfortunately, this is still an imperfect solution, requiring a significant investment of time and resources for only limited protection. In addition to this, many businesses engage in creating fake reviews to boost their online ratings to compensate for current or anticipated bad reviews. While this might work in the short term, it further undermines the efficacy and purpose of online review systems as a whole. All of this goes to show that the overall state of online reviews is abysmal and extremely overdue for improvement.

Starting a conversation so often don’t, because the legal cost of doing so is often much more expensive than simply paying off the offending party. As a result, a stunning 43 per cent of retailers, and 35 percent of surveyed service businesses complied to eliminate the threat to their business. As is typical with cyber crimes of all types, there are practically no existing protections for businesses. Moreover, legal protections that do exist are primarily designed to protect offenders, not small business victims. A business that chooses to sue a blackmailer is likely to lose under a protection that allows customers to express “honest opinions” about matters of public interest. Proving that a review is not an honest opinion is, of course, nearly impossible, and the public interest encompasses most of any business’ affairs. Further, it’s not illegal for a “wronged” customer to ask a business to rectify that perceived wrongdoing, and to remove their harsh review of them in return.

A silver lining to the issue of both blackmailers and businesses attempting to game review sites for their own purposes is a growing public awareness of the problem. While a large majority of online shoppers do rely on reviews to make purchases, they are increasingly aware that many of these are untrustworthy. All parties involved, including reviews sites, customers, and businesses, are seen as part of the problem to some extent. What is undeniable is that the price for all of this confusion is paid first and foremost by businesses. False negative reviews can have devastating consequences for newer businesses that are just establishing their reputations, and it’s unacceptable to expect SMEs to simply submit to blackmail. To protect their small businesses and their consumers, governments need to work harder to understand this issue, and to work with businesses, review sites, and consumers to keep people honest, and to hold criminals accountable.

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We’re here to help. Business finance when you need it.

Working capital to support and grow your business We know that the working capital your business needs to support and grow can easily exceed what other financiers can approve. And that’s where we can help, with flexible financial options from $10,000 to $1 million. We understand, because we’re business owners like you When you talk to us, you’re talking to a business owner like you. We’re a privately held finance company, which means we can be innovative in our approach and work closely with our customers. We’re all about keeping things simple – from a single point-of-contact who’s also the decision maker, to a 24-hours turnaround time… all with minimal paperwork. We don’t require long term contracts or property security – and it’s up to you when you choose to use our services and when to stop. All with no impact on your existing lending arrangements In fact, banks often recommend us as preferred short-term funding option. And because we work as a complementary service, there’s no need to refinance your current funding facilities. Contact Fifo Capital today for more information

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