Potentia Capital’s boardroom, on level 38 of the Gateway tower at 1 Macquarie Place in Sydney, offers expansive views of Sydney Harbour. To the left sits the Sydney Harbour Bridge; to the right is Admiralty House, the Sydney residence of the Governor-General: His Majesty The King’s representative Down Under.

Just outside the boardroom, in the private equity fund’s foyer, is a large-scale mixed media piece by artist Joan Ross, whose work addresses the impact of colonialism on Indigenous Australians. The irony of this work and the view beneath does not escape Tim Reed, Potentia’s managing director. “We try not to be a traditional investment banking, pinstripe suit, private equity fund,” says Reed.

“We invest in software businesses, so we try and make sure the people who choose to work with us can relate to us.” A large photograph by Sydney photo media artist Tamara Dean hangs behind Reed, who, dressed casually in a jumper and jeans, doesn’t look like your typical private equity fund manager.

After 16 years running accounting software business MYOB – 12 as chief executive officer – Reed says he grew accustomed to not wearing a suit. One thing he does wear today is many hats. As well as his role at Potentia, which was founded by former managing director of Archer Capital, Andrew Gray, whom he worked with at MYOB, Reed serves as president of the Business Council of Australia (BCA), where he is credited, alongside chief executive Jennifer Westacott, with bringing about a shift in how big business is thinking about energy and sustainability. Reed also sits on the board of road operator Transurban, which manages and develops urban toll roads – “as opposed to software, which is completely intangible and always changing” – and has recently invested in Smart Ease, a fintech designed to help organisations fund smart, energyefficient technologies, reduce energy costs and lower their carbon footprint. (Reed also chairs the company’s advisory board.)

He has three adult children and exercises every morning, without fail. “Partly the variety is what keeps me engaged and keeps me busy,” he tells Acuity. “When I left MYOB I really wanted to find things that leveraged the experience I had. But I also knew I wanted to contribute to society. I wanted to be able to apply what I thought I had learned, and the experiences I had, in very different realms and very different frames.”

Pictured: Tim Reed spent 16 years working for accounting software business MYOB. He is now managing director of Potentia Capital, a private equity investor focused on technology
and tech-enabled businesses. Image credit: Nic Walker.

Investing in a smart future

With Potentia, the only tech-focused private equity fund in Australia and New Zealand, which used its first fund – A$458 million – to invest in eight Australian business-to-business software businesses, he gets the chance to work with business leaders on developing and operationalising their strategy, so they can deliver successful outcomes to clients.

On top of that, Reed has spent a lot of time during the past few years reading and studying climate change.

When he became president of the BCA in 2019 his plan was to set an agenda focused on skills and education. But two days into the gig, the first of many NSW bushfires was ignited, soon becoming a summer of bushfires followed by a global pandemic. “So a lot of the focus of the BCA has been through that time, frankly, just dealing with the emergencies that the nation has faced,” he says. “While I think many Australians had progressed their knowledge of what was happening on climate and had started to see there was a global movement towards recognising the science-based targets, the Paris Accord, our political system didn’t seem capable of delivering an outcome there.”

He adds: “The BCA, in advance of COP26 [the 26th UN Climate Change Conference of Parties in 2021], put out quite a large piece of work on our climate emissions policy. I believe that the timing and message in it was such that it really helped garner bipartisan support for a net zero 2050 goal, and also helped the Labor government settle on its 43% reduction by 2030, and the use of the safeguard mechanism to get there.”

Understandably, Reed’s focus shifted. “A huge amount of my time became starting as a software guy who really didn’t understand much about energy and emissions, because I’d never worked in a high polluting industry, to very rapidly having to be part of the national debate on climate.”

Reed is backing Smart Ease because he believes it’s working towards having an impact on two mega trends: decarbonisation and digitisation.

“But they’re doing it in a way that really helps small and medium businesses, and doing it in a way that really drives efficiency through the finance supply chain,” he says. “They are all things that get me excited.”

Reed’s interest in sustainability extends beyond Smart Ease. As someone who spent years working with the profession when he worked for MYOB, Reed believes sustainability roles are a smart move for accountants.

Why? “Because small and medium business owners don’t know who to turn to,” he says.

“They don’t understand how to do things, like measure their carbon footprint.

“Even with progressive business leaders who are running a 50-person company and want to go down that path, they may not know who to turn to and I believe their accountant would be a natural choice.”

“SMEs may not know who to turn to and I believe their accountant would be a natural choice.”

Tax, fire and fury

After the bushfires, when many organisations were looking for ways to contribute to the national response, there was no registered charity at the time through which businesses could support other businesses. The BCA worked with then treasurer of Australia, Josh Frydenberg, to put forward an amendment to the corporate tax rate in 2019. They established a charity called BizRebuild, set-up by the BCA for members to contribute funds to help small businesses in communities impacted by natural disasters. “We sent teams of people out into the field to work with small business owners, to help them think about how they could rebuild their business,” says Reed. “How can they re-equip?

“We had $2000 equipment vouchers – to tradies who’d lost their tools, business owners who’d lost their laptop and couldn’t file an insurance claim – and gave them the funding to take that first step. And also $500 service vouchers, where they could then go and meet with their accountant, could go and meet with a marketing expert, whomever they wanted, to help build a plan as to how they were going to rebuild their business: really practical things where big business can help small businesses.”

Rebuilding and educating

Helping businesses is not Reed’s only passion: he is a big believer in education. As a high-income country, he says the only way Australia is going to sustain that and continue to build higher wages is through productivity gains. “The real opportunity in a world where capital is relatively cheap is to enable each person to be the best version of themselves, to fulfil the highest value creating job that they possibly can,” he says. “And that comes through education and the development of skills.”

Reed grew up in country Victoria and studied commerce with honours at Melbourne University. His first job was with a strategic consulting firm called LEK which encourages international studies. He was exposed to people who’d been to Stanford University, Harvard Business School and the London School of Business and Finance.

“Every opportunity I got, I asked them about what it was like and what the differences were,” says Reed, who spent nine months perfecting an application to Harvard University, writing and rewriting essays, before ultimately being accepted and graduating with an MBA.

“I got there and immediately found myself immersed at the business school, in an amazing community of people and thought leaders debating and discussing ideas that frankly had never even crossed my mind – and that I didn’t think were part of the business conversation at that point in time.”

He then spent eight years in Silicon Valley, ultimately deciding he didn’t want to be a consultant but wanted to be in an operating role where he could own a product and an outcome, and have responsibilities to customers.

“But I also wanted to be somewhere that was forward facing, somewhere that was fast moving, and in an environment that attracted big thinkers. So tech very quickly became the thing I focused on.”

Disrupting the status quo

With fingers in so many pies – and as someone who genuinely wants to get things done – does Reed see himself as a disruptor?

“That’s an interesting question. I do consider myself someone who challenges the status quo, and I consider myself somebody who’s always building for the future,” he says. “If someone thinks of a disruptor as the outsider who is trying to agitate for change, I tend to be more somebody who builds coalitions and builds consensus and drives change from the inside.”

To back this up, he points to his decision to become part of a growth equity and private equity business, rather than a venture capital business. “We take what we think are good businesses with good market positions and make them great businesses,” he says, adding it’s a bit like saying, “‘I see opportunity here to do something that is much better than what’s being done.’ But it’s not necessarily destroying what’s there, it’s building on what’s there to take it to a better place.”

His varied career might be attributed to this maxim. “I tend to be someone who works with people, who tries to build constructive paths forward. And there’s room for both in the world.”

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Tim Reed’s thoughts... on leadership

“I think it’s a real privilege to hold a position of leadership. It comes with a great responsibility to serve those who you have the opportunity to serve, and to positively impact those you have the opportunity to impact. Good leaders, particularly in business, have to be able to develop great strategy. You need to have a plan, you need to know where you want to take an organisation, and you need to be able to bring people on that journey. “I would hope I was a leader who could see the big picture, who was able to develop strategy, but most importantly was able to make that really relatable to people so they know what success looked like and were then held to account to achieve it.”

On how covid-19 changed things

“I would’ve been on planes three times a week, on average, and that meant getting up at 4am to get a 6am flight and getting home at 11pm became quite normal parts of my week. I always thought I was a person who didn’t need a lot of sleep; that I could run on four plus hours and I would be OK. One of the things COVID taught me is, actually, I’m very good at sleeping and I’m much better when I do sleep.

“Every quarter I would go to every MYOB office: I did for my entire 12 years as CEO. I did every company update. I was there at people’s farewells. I was very physically present. The first thing I recognised is just the actual huge personal toll that the way I lived had on me, and then secondly what it had on my family. I’m fortunate: I’ve got three great kids and I’ve got great relationships with them. But that came at a real cost. So the biggest difference for me now is to travel less frequently. When I go, I go somewhere for a few days, I line-up all the meetings that I need and everything else I do on Teams or Zoom.

“I started listening to podcasts a lot because I would walk the dog. The poor dog, I think got sick of walking by the end of COVID. I now listen to books on Blinkist. It’s a great service, particularly for non-fiction books: they summarise business books in about half an hour for you and give you all the key points. Then you choose whether you want to listen to the full audiobook or read the book.”

On continual learning

“You’ve got to remain contemporary, you’ve got to continually be pushing your own boundaries. I think it’s healthy too. It’s humbling. It reminds you of what it’s like to be a new employee or the person who’s the least knowledgeable in the room. I think everyone should put themselves in circumstances where that’s how they feel. It allows for better decision making.”

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