I am writing today about investing. When we talk about investing, it stands in contrast to spending (or doing nothing). Investing is what we do when we allocate time or resources into an asset or endeavor of lasting, intrinsic value – e.g., we invest in our children’s education. Spending, on the other hand, tends to be short-term oriented, where we allocate resources to an obligatory expense or perhaps satisfying an at-hand desire. E.g., we spend to pay our internet bill or take a vacation.
At AQ, we have many discussions about how we should invest our capital to create maximum value for our customers – e.g., should we add more Customer Success Managers to support customers, should we improve our billing system, should we advance our search technology, etc. I arrived at AQ in June of last year, so it was my responsibility to make those allocation decisions for 2020. We decided to invest across our business, but the most significant allocation went to Research and Development, or ‘R&D.’ R&D is where we come up with new product or feature ideas, test them in the market, and engineer and build them - while simultaneously improving our legacy products.
In 2020, we will invest nearly $4,000,000 in R&D. That’s an increase of almost 70% over 2019 and more than the total revenue of some other technology players in the FES space. And that is just our software and technology platform; we have made a separate, very significant investment in curating and maintaining our product content. Why would we allocate this much money to R&D during a global pandemic? Why would we allocate this much money to R&D instead of to sales and marketing (and in fact, we reduced these costs to free up budget) and miss out on short-term revenue? Because we are investing, not spending, and we believe in the future of FES. This is a terrible situation that has negatively affected much of the FES value chain. But we believe it is temporary and – together – we will collectively come back stronger. We hold steadfast to our vision of creating order, reducing friction, and making connections for this industry. Investing in new and better technology will help us to enable you to operate more efficiently and more effectively in what we all know will be a more digital-first world going forward.
We’ve made another meaningful investment in 2020 that wasn’t in our plan, which was finalized in late 2019 before COVID-19 struck. The pandemic and accompanying recession have since had a devasting impact on many of our customers. That is why we created and announced the AQ Cares program in March. Our objective was to do our part to soften the blow for those hardest hit. We wanted to help our customers continue in the race. Since then, we have invested over $2,200,000 in deferrals, payment plans, and fee adjustments. We are a small company, so that is a big blow to our short-term outlook. But we’re in this for the long-term, so to us, it seemed like a good investment.
In the coming six months, you will see a steady stream of announcements about new and improved products – some of those incremental improvements and some ground-breaking developments. We hope you will agree that our $4,000,000 (and $2,200,000) are wisely invested in our industry. As always, I would love to hear from you directly – you can find me at jcontardi@AQ-FES.com or @JimContardi.
Related Links: Quarter 2 Update from AQ’s CEO, Jim Contardi, New Normal Leads to New Innovation in FES