Watch expenses like a hawk

JC’s Newsletter #199

Dear friends,

Every week, I’m sharing an essay that relates to what we are building and learning at Alan. Those essays are fed by the article I’m lucky enough to read and capitalise on.

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Watch expenses like a hawk

Recently, I have read this excellent book Memos from the Chairman by Alan Greenberg, and some of my favourite quotes are about expenses:

• Watch the expenses like a hawk.

• The hors d’oeuvres had been upgraded considerably from peanuts. You will be happy to know that we are now back to peanuts. This may seem like a small saving, but it’s the thought that counts.

• I have just informed the purchasing department that they should no longer purchase paper clips.

  • This action may seem a little petty, but anything we can do to make our people conscious of expenses is worthwhile.

• We must continue doing our best to control expenses. Every dollar we save on expenses goes directly to the bottom line. That is what all of us should be concerned about, or you are at the wrong firm. Expenses should be watched at all times, but especially when business is good.

A lot of companies right now are focusing on becoming profitable. 

At Alan, our path to profitability is entirely in our control, and we are in the process of achieving it. 

It involves growth – the more profitable volume we have, the more we grow – and also managing our costs, including our acquisition cost, cost to serve, and of course, the cost of claims. 

We cannot afford to focus solely on one aspect. It is the sum of growth through innovation/differentiation + cost of claims + cost to serve that will make us win. 

It's also the sum of all the small actions of the Alaners that can make a difference. I know we are already scrappy and cautious, but imagine if each Alaner – and we are more than 500 – saves 2,000 euros a year on their costs (with the partners they work with, with the different tools they use), that's a million saved by Alan. 

This million goes directly into our path to profitability and is even magnified, multiplied in the company's valuation because it's a multiple of what we call the net result. Investors value the net result up to x40 (sometimes even more) for fast growing companies. Every euro we save is worth 40 times that in terms of valuation.

And of course, it is not only about valuation, there is something even more important. As Sam Waltman (founder of Walmart) said: “Every time Wal-Mart spends one dollar foolishly, it comes right out of our customers’ pockets. Every time we save them a dollar, that puts us one more step ahead of the competition—which is where we always plan to be.”

And I think this is very true for us too!

Some articles I have read this week

👉 Shreyas Doshi on new initiatives (Twitter)

• Allocating a Product Manager should not be a prerequisite for starting a new initiative or project. 

• Many companies these days seem to have forgotten this.

👉 2e baromètre du cabinet Empreinte Humaine avec OpinionWay (France Inter article)

• Psychological Distress: Nearly 50% of French workers report psychological distress post-pandemic, with those over 60yoe most affected.

• Workload and Burnout: Workloads have increased for 70% of employees, raising burnout rates to 32% and suicide attempts in workplaces.

• Telework's Double-Edged Sword: Telecommuting cuts commute times but adds workload for 50% of workers, complicating work-life balance.

• Company Strategy Deficit: 80% of employees see their company's workplace well-being policies as inadequate or counterproductive.

• Call for Preventative Action: Businesses urged to adopt better mental health strategies as 43% of workers consider leaving their jobs due to poor psychological health.

👉 Our Declining Tolerance for Friction & Wild Concepts Likely To Become Commonplace (Implications)

• “friction makes us feel experiences as they happen” while we are becoming more intolerant of every obstacle

• How do we approach micro-marketing in our context? 

👉 Tweet by Shreyas Doshi about Metrics (X)

• Care less about metrics. Track direction, use our brain. Our adoption metric is too complex, and it is likely my fault to push for complexity

  • “Exotic Metrics makes us feel smart, but if you really zoom out and are honest to yourself, it makes us act pretty stupid”

👉 Apple’s New “TV” (The Split)

• It is crazy how much Google has been ready to pay Apple to be the default search engine. I wonder how much of the economics they give away. 

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