Thread by @joelgascoigne

Very insightful thread into the journey as a @Buffer shareholder for @awilkinson / Tiny, and their original thesis for making the investment 4+ years ago.

Thread to add a few of my thoughts to this awesome information:

https://twitter.com/awilkinson/status/1211440446590734336

Andrew has consistently been one of the most helpful shareholders we have, ever since that investment. I don't say this lightly, as we've had many unhelpful investors over that time period too. Case in point, we've spent $7m+ buying back stock since 2017. open.buffer.com/buying-out-inv…

Andrew / Tiny have been a fantastic addition to the shareholder base, as they truly understand a long-term approach for a tech company. They are fully on board with getting a return over a long time horizon through dividends and/or stock buybacks.

It's been very valuable to balance out our shareholder base which was fairly skewed towards short-term minded VCs / angels, add Tiny Capital and a few others who have a very different approach, and then also buy out some of the folks with shorter term liquidity needs.

The result is that this work (which has been painful at times) over the last few years means that Buffer is now positioned to be fully able to operate for another decade or more.

I plan to lead the company probably for life, and the only thing that could end our run will be market forces and poor execution, not investor's need for an singular exit event.

It really is possible to separate liquidity from exit, something that very few founders consider.

Thinking in terms of decades is very liberating and exciting for me. Long-term decisions and bets, high focus on financials and culture. It's really about building the most solid company we can across all dimensions and disciplines.

I was impressed by Andrew's very methodical and unwavering thesis to growing Tiny's shareholding in Buffer. They were very clear about their valuation mindset (different than silicon valley investors), and they loved our approach of being profitable (again different).

And, what Andrew shared in his thread has played out fairly accurately. We're now a $22m a year business with 20%+ profit margin. We're growing around 15% per year. These numbers aren't necessarily a success for a company on a VC path, but are great for us on our path.

I feel inspired and plan to share more about some of the further liquidity we've provided shareholders since our $3.3m stock buyback in mid-2018. We've now done it a few times and established a precedent that we can provide liquidity without an exit, and continue to grow.

One thing I've been asked a few times is: how are we able to be profitable?

My answer is simple: control growth of expenses (salaries, tools, etc) in terms of desired profit margin. Only grow expenses if you can.

Another way to put this:

These days I think less about spending cash, more about spending margin.

When you have a 20% profit margin and want to keep it that way, I find it easier to pause hiring for a few months, grow margin to 22% and then spend that 2% of margin we earned.

Sometimes it does make sense to spend in advance of growth. The beauty of software is that input is often not correlated with output. That said, in tech we often blindly convince ourselves that spending will drive growth, and margins are an afterthought if considered at all.

I'll leave it there for now, but aim to share more on this general topic throughout 2020!

If there are any specific questions, please reply and I'll either try to answer in the next couple of days, or use them as inspiration for the future.