WEBVTT 00:00:00.000 --> 00:00:02.859 Welcome to the Innovation Conversation, a podcast 00:00:02.859 --> 00:00:05.360 about innovators, both in business and real life. 00:00:05.860 --> 00:00:08.419 Hosted by myself, Ricardo Rescual and Harry McCona. 00:00:08.640 --> 00:00:11.660 This podcast is sponsored by openexperts .com. 00:00:11.919 --> 00:00:14.140 OpenExperts is a place to go if you're looking 00:00:14.140 --> 00:00:16.339 to talk with top experts from around the world. 00:00:16.539 --> 00:00:20.879 That is open -experts .com. This podcast is also 00:00:20.879 --> 00:00:24.539 sponsored by startupnetworks .co .uk. Startup 00:00:24.539 --> 00:00:26.820 Networks, it's an online forum where you can 00:00:26.820 --> 00:00:28.739 find all the resources you need to learn your 00:00:28.739 --> 00:00:31.460 startup. from grants to investors to tips and 00:00:31.460 --> 00:00:33.259 tricks on how to be successful when you start. 00:00:33.500 --> 00:00:36.740 This podcast is also sponsored by ODEV Tech. 00:00:37.420 --> 00:00:39.719 ODEV Tech is your premier software development 00:00:39.719 --> 00:00:43.159 partner. Make sure you check them out at odev 00:00:43.159 --> 00:00:48.079 .tech. Hi, and welcome to another episode of 00:00:48.079 --> 00:00:50.140 the Innovation Conversation. Today, we're joined 00:00:50.140 --> 00:00:53.079 by Simon Penson. Simon, welcome. Hello, and thank 00:00:53.079 --> 00:00:56.359 you for having me on the show. It's a pleasure. 00:00:56.820 --> 00:00:58.280 Simon, would you like to introduce yourself to 00:00:58.280 --> 00:01:02.420 the audience? Yeah, of course. Where do I start? 00:01:02.600 --> 00:01:04.700 I guess for the context of this conversation, 00:01:05.560 --> 00:01:09.060 it's probably worth me talking about, just very 00:01:09.060 --> 00:01:11.739 briefly about, you know, kind of business and 00:01:11.739 --> 00:01:14.019 career really, which I'm sure we'll go into a 00:01:14.019 --> 00:01:17.819 lot more detail, but in very short detail. I'm 00:01:17.819 --> 00:01:21.299 a kind of a career B2B kind of entrepreneur, 00:01:21.459 --> 00:01:22.939 I guess. Well, I've spent time in corporate, 00:01:23.159 --> 00:01:28.049 career entrepreneur in the B2B space. built a 00:01:28.049 --> 00:01:31.189 series of websites, content affiliate sites, 00:01:31.769 --> 00:01:35.909 sold those, and then built and sold a quite scale 00:01:35.909 --> 00:01:40.689 large independent agency, and then helped build 00:01:40.689 --> 00:01:44.049 a sort of early stage SaaS VC business as well, 00:01:44.049 --> 00:01:46.829 and now do some consulting and increasingly working 00:01:46.829 --> 00:01:50.269 with PEs. So there's a bit to unpick there. So 00:01:50.269 --> 00:01:53.189 you have the magic formula as an entrepreneur. 00:01:53.329 --> 00:01:54.969 You know exactly what works or what doesn't work. 00:01:55.239 --> 00:01:57.700 I wish I did. Yeah, I wish I did. I think, yeah, 00:01:57.719 --> 00:01:59.500 there's a, there's a simple answer to that. And 00:01:59.500 --> 00:02:01.920 it's a, I think it's called pigheadedness and 00:02:01.920 --> 00:02:04.040 determination, I think. This is quite interesting 00:02:04.040 --> 00:02:05.939 because you've obviously, you created multiple 00:02:05.939 --> 00:02:09.240 companies. What are the traits that you always 00:02:09.240 --> 00:02:10.699 think you need to have when you're creating a 00:02:10.699 --> 00:02:12.699 company that you know for a fact have made you 00:02:12.699 --> 00:02:15.379 successful? Yeah, I think about that a lot actually. 00:02:15.599 --> 00:02:19.500 And I thought about it a lot, particularly post 00:02:19.500 --> 00:02:21.819 exit of the agency business, which I'm sure we'll 00:02:21.819 --> 00:02:24.889 talk about a bit. because I had some time on 00:02:24.889 --> 00:02:26.669 my hands to reflect and actually work out what 00:02:26.669 --> 00:02:29.550 was next and all of those important things. And 00:02:29.550 --> 00:02:32.449 I think, because you'd question yourself sometimes, 00:02:32.569 --> 00:02:34.210 I think you think, you know, am I just lucky? 00:02:34.370 --> 00:02:36.129 Is this just luck or what is it that's actually 00:02:36.129 --> 00:02:39.009 doing it? And, you know, I have a lot of flaws, 00:02:39.169 --> 00:02:40.689 there's no doubt about that, a lot of things 00:02:40.689 --> 00:02:42.909 that I'm not good at. So actually, I think, firstly, 00:02:43.270 --> 00:02:45.129 understanding that and, you know, being really 00:02:45.129 --> 00:02:47.250 honest with yourself about those things because 00:02:47.250 --> 00:02:50.610 that enables you to build. great team and the 00:02:50.610 --> 00:02:53.229 right type of people around you. You cannot do 00:02:53.229 --> 00:02:56.770 it alone. That's really important. And then I 00:02:56.770 --> 00:02:59.849 think it really is determination. The way that 00:02:59.849 --> 00:03:03.310 I describe it to others is I think you have to 00:03:03.310 --> 00:03:07.479 do the things that most people think you should 00:03:07.479 --> 00:03:09.620 have given up a long time ago and just keep doing 00:03:09.620 --> 00:03:11.360 them almost to the point of, you know, like some 00:03:11.360 --> 00:03:12.860 people will think you're insane for doing it 00:03:12.860 --> 00:03:15.219 because I think it's nothing happens overnight. 00:03:15.340 --> 00:03:18.840 I think there is, you know, a belief, let's say 00:03:18.840 --> 00:03:22.819 that still, you know, things are solved in months 00:03:22.819 --> 00:03:25.120 or, you know, single digit years, but actually, 00:03:25.280 --> 00:03:27.460 you know, the saying of, you know, you underestimate 00:03:27.460 --> 00:03:30.479 what you can do in 10 years, but massively overestimate 00:03:30.479 --> 00:03:33.139 the rest is true. So I think it's the ability 00:03:33.139 --> 00:03:35.039 to just kind of get your head down and just keep 00:03:35.039 --> 00:03:37.020 plowing on kind of irrespective of the noise 00:03:37.020 --> 00:03:40.979 around you. What was your hardest moment? Because 00:03:40.979 --> 00:03:43.319 I'm sure, you know, all these companies, there 00:03:43.319 --> 00:03:45.039 must have been some very dark, dark moments. 00:03:45.080 --> 00:03:48.340 And how did you overcome those as well? Yeah, 00:03:48.419 --> 00:03:50.240 I think it certainly is a first time founder, 00:03:50.300 --> 00:03:52.379 they really hurt because I think you, you know, 00:03:52.439 --> 00:03:54.240 the first time you go through those kind of journeys, 00:03:54.400 --> 00:03:56.259 everything's new, isn't it? And I think you take 00:03:56.259 --> 00:03:59.590 it. you know, you have what you lack in experience, 00:03:59.590 --> 00:04:01.189 you're trying to have to make up and kind of 00:04:01.189 --> 00:04:04.030 not just, you know, like IQ, but also EQ. So 00:04:04.030 --> 00:04:05.830 a lot of kind of emotional intelligence goes 00:04:05.830 --> 00:04:08.310 into it as well. And I think a lot of emotions 00:04:08.310 --> 00:04:10.830 play a massive part because you're living off 00:04:10.830 --> 00:04:13.810 them, quite frankly. And, you know, so the first 00:04:13.810 --> 00:04:15.669 time you go through it, you spend a lot of time, 00:04:15.789 --> 00:04:18.430 I think, in quite dark places, to your point, 00:04:18.769 --> 00:04:22.829 and, you know, everything hurt. And so I've had 00:04:22.829 --> 00:04:25.889 lots and lots of those and made so many mistakes, 00:04:26.189 --> 00:04:29.529 it's perhaps unfathomable that we actually made 00:04:29.529 --> 00:04:34.490 it in the first place. But I think you come out 00:04:34.490 --> 00:04:36.250 of those things. At the time, they feel like 00:04:36.250 --> 00:04:38.810 the end of the world. But then a week later, 00:04:39.110 --> 00:04:40.970 you've made the decision and you've done the 00:04:40.970 --> 00:04:43.209 thing or whatever that thing is. And I think 00:04:43.209 --> 00:04:45.589 you have that new perspective then on not just 00:04:45.589 --> 00:04:48.949 that, but the wider kind of business experience 00:04:48.949 --> 00:04:52.459 and life and you become better for it. I try 00:04:52.459 --> 00:04:54.899 and learn from those things now and appreciate 00:04:54.899 --> 00:04:59.040 that they're not the end of the world. Tell me 00:04:59.040 --> 00:05:01.160 a bit more about the businesses you've started 00:05:01.160 --> 00:05:03.220 because there's multiple businesses. So which 00:05:03.220 --> 00:05:05.339 one was the first one and we're doing right now? 00:05:05.959 --> 00:05:08.899 Yeah, so in order, so originally I was a, so 00:05:08.899 --> 00:05:10.860 I'll start at the beginning. So originally I 00:05:10.860 --> 00:05:13.920 was very lucky in the sense that I was born at 00:05:13.920 --> 00:05:17.810 a very good time. I was kind of, you know, Coming 00:05:17.810 --> 00:05:20.209 into the workforce in the sort of mid to late 00:05:20.209 --> 00:05:22.990 90s when the internet was just becoming a thing 00:05:22.990 --> 00:05:26.009 And I think that was you know, so timing is important 00:05:26.009 --> 00:05:27.689 with these things. There's no doubt about that 00:05:27.689 --> 00:05:30.089 I think working in journalism to which I was 00:05:30.089 --> 00:05:32.670 doing initially in print journalism, you know 00:05:32.670 --> 00:05:35.209 working for a magazine kind of corporate and 00:05:35.209 --> 00:05:38.170 newspaper business and it taught me very quickly 00:05:38.170 --> 00:05:39.610 that you know, these beautiful print products 00:05:39.610 --> 00:05:43.389 were going like that and yet the You know the 00:05:43.389 --> 00:05:45.730 the kind of the the business, the sites I'd started 00:05:45.730 --> 00:05:48.129 to build sort of in the sort of late 90s were, 00:05:48.189 --> 00:05:50.050 you know, going that way. So like, you know, 00:05:50.069 --> 00:05:51.610 print, beautiful print products going that way 00:05:51.610 --> 00:05:53.670 in terms of audience, these terrible sites that 00:05:53.670 --> 00:05:55.730 I were building were going that way. So it was 00:05:55.730 --> 00:05:57.790 really obvious to me quite early that, you know, 00:05:57.910 --> 00:05:59.930 this, this thing called the internet was a seismic 00:05:59.930 --> 00:06:01.490 kind of shift in the way that people consume 00:06:01.490 --> 00:06:03.110 information. And, you know, obviously that's 00:06:03.110 --> 00:06:05.290 an obvious thing to say now, but less so then. 00:06:05.810 --> 00:06:09.850 And so I started building sites and you know, 00:06:10.069 --> 00:06:11.850 making a mess of them, building them again, you 00:06:11.850 --> 00:06:14.389 know, back in the days of Dreamweaver and Joomla 00:06:14.389 --> 00:06:17.629 and all of these kind of very early CMSs and 00:06:17.629 --> 00:06:22.009 they became ultimately a kind of a group of specialist 00:06:22.009 --> 00:06:24.610 content kind of affiliate sites as we would know 00:06:24.610 --> 00:06:26.990 them now. They gave me the wrong way of sort 00:06:26.990 --> 00:06:29.629 of shortening the story to leave the corporate 00:06:29.629 --> 00:06:32.769 world behind, which I did years in sort of, you 00:06:32.769 --> 00:06:38.110 know, by this point with 2008. And they did pretty 00:06:38.110 --> 00:06:41.209 well. I ended up selling some of those sites, 00:06:41.589 --> 00:06:45.430 not significant exit in real terms, but I guess 00:06:45.430 --> 00:06:47.750 it counts as an exit, right? We sold them to 00:06:47.750 --> 00:06:50.970 somebody else. And then that allowed me to kind 00:06:50.970 --> 00:06:53.649 of really double down on taking what we learned 00:06:53.649 --> 00:06:55.750 from building audience over here and actually 00:06:55.750 --> 00:06:58.629 selling that to other businesses. And that started 00:06:58.629 --> 00:07:04.420 in 2009. became an agency business, normal kind 00:07:04.420 --> 00:07:07.259 of agency story really. You start the corner 00:07:07.259 --> 00:07:11.160 of the kitchen table and use you and an idea. 00:07:12.139 --> 00:07:13.779 For the first few years, it was really tough 00:07:13.779 --> 00:07:16.779 because we were early in market. Even in 2008, 00:07:17.360 --> 00:07:19.600 Facebook certainly wasn't commercially relevant, 00:07:19.959 --> 00:07:22.860 so it was a very different time. But we believed 00:07:22.860 --> 00:07:25.420 in this content -led digital kind of marketing 00:07:25.420 --> 00:07:29.439 piece. Between 2009 and 2012, we got to about 00:07:29.439 --> 00:07:31.639 a dozen people, really hard work, quite frankly. 00:07:32.259 --> 00:07:33.879 So that was like chapter one, because what we're 00:07:33.879 --> 00:07:36.540 having to do is educate the market. So we became 00:07:36.540 --> 00:07:39.579 like sales and marketing first as an organization, 00:07:40.079 --> 00:07:42.279 which at the time, say, meant slower growth, 00:07:42.300 --> 00:07:44.300 but actually later on really helped us because 00:07:44.300 --> 00:07:47.019 we'd done the bit that most people miss. And 00:07:47.019 --> 00:07:49.160 yeah, then we started to accelerate because the 00:07:49.160 --> 00:07:52.199 market caught up. We'd obviously developed brands 00:07:52.199 --> 00:07:54.500 and a bit of network effect in there, you know, 00:07:54.500 --> 00:08:00.329 that kind of stuff. And then in 2015, we were 00:08:00.329 --> 00:08:03.110 getting quite a lot of inbound offers for acquisition, 00:08:03.209 --> 00:08:04.470 which obviously we didn't want to sell because 00:08:04.470 --> 00:08:07.149 we were scaling. But one conversation turned 00:08:07.149 --> 00:08:09.209 into a really interesting merger opportunity. 00:08:10.550 --> 00:08:12.509 And then we merged with another agency at that 00:08:12.509 --> 00:08:16.389 point in May 15 and created a really interesting 00:08:16.389 --> 00:08:20.670 kind of group that had a broader service offering, 00:08:21.350 --> 00:08:24.170 really strong senior team collectively, all that 00:08:24.170 --> 00:08:28.949 kind of stuff. Yeah, then we started to grow 00:08:28.949 --> 00:08:30.970 and immediately we put the PR out actually that 00:08:30.970 --> 00:08:35.070 we'd merged. The market kind of started and immediately 00:08:35.070 --> 00:08:37.009 came to us and said, well, you're perfect size 00:08:37.009 --> 00:08:39.889 and perfect shape for acquisition. So we ran 00:08:39.889 --> 00:08:43.190 a process and by August 16, it wasn't just the 00:08:43.190 --> 00:08:45.990 plan at the time, but it happened. By August 00:08:45.990 --> 00:08:50.009 16, we'd been jointly acquired by Vines Public, 00:08:50.909 --> 00:08:55.700 one of the Holocaust. We really backed ourselves. 00:08:55.879 --> 00:08:59.659 We took an urn out, which I think at the time 00:08:59.659 --> 00:09:01.899 most people thought we were mad for taking because 00:09:01.899 --> 00:09:04.679 we had offers that were bigger up front. So, 00:09:04.700 --> 00:09:06.220 you know, I'm not talking numbers, but it was 00:09:06.220 --> 00:09:09.179 a bigger number up front, shorter urn out, and 00:09:09.179 --> 00:09:11.740 we took the opposite. We took less up front with 00:09:11.740 --> 00:09:14.700 more opportunity on the urn out side and longer 00:09:14.700 --> 00:09:16.659 urn out, which everybody thought we were crazy 00:09:16.659 --> 00:09:21.049 for doing. But we backed ourselves, I think, 00:09:21.330 --> 00:09:23.509 because we'd really enterprise back office. We'd 00:09:23.509 --> 00:09:25.710 really invested in senior team. We got a great 00:09:25.710 --> 00:09:28.830 senior team. We knew that we had the people in 00:09:28.830 --> 00:09:31.769 the process to sort of double treble even down. 00:09:33.610 --> 00:09:35.509 And that's what happened through out and out. 00:09:35.669 --> 00:09:39.580 We grew really significantly. to, I mean, our 00:09:39.580 --> 00:09:42.419 run rate was more or less double digit million 00:09:42.419 --> 00:09:45.899 EBITDA by the end of 2020, which is when we exited. 00:09:46.279 --> 00:09:48.539 We obviously didn't post that because our compound 00:09:48.539 --> 00:09:50.879 annual growth rate was quick. So we posted a 00:09:50.879 --> 00:09:52.480 number that was slightly lower than that, but 00:09:52.480 --> 00:09:54.639 it was a, you know, we sort of more than tripled 00:09:54.639 --> 00:09:58.580 EBITDA, I think, during that period. And yeah, 00:09:58.679 --> 00:10:02.039 you know, it was a fantastic, fantastic experience. 00:10:02.120 --> 00:10:05.690 Very hard, obviously, but yeah learn a huge amount 00:10:05.690 --> 00:10:08.450 and then got fired out the cannon on the other 00:10:08.450 --> 00:10:11.269 end and I think that's a story all into itself. 00:10:12.710 --> 00:10:14.830 And now you invest in companies and you also 00:10:14.830 --> 00:10:17.070 advise them on what's the best way of moving 00:10:17.070 --> 00:10:19.970 forward because you actually you did quite a 00:10:19.970 --> 00:10:22.789 I guess a big gamble there because you had to 00:10:22.789 --> 00:10:25.590 not only sell what you're building, but also 00:10:25.590 --> 00:10:28.409 believe in the company to the point where you 00:10:28.409 --> 00:10:30.009 could have made more money initially. But then 00:10:30.009 --> 00:10:31.509 you actually said, you know what, I actually 00:10:31.509 --> 00:10:34.009 believe so much in what I've built, which I don't 00:10:34.009 --> 00:10:35.649 think that many people believe in that, that 00:10:35.649 --> 00:10:37.929 strongly that I'm going to continue here until, 00:10:37.929 --> 00:10:40.169 you know, it proves very successful. And that's 00:10:40.169 --> 00:10:44.470 exactly what happened. Yeah. And it felt like 00:10:44.470 --> 00:10:46.559 that. It really did feel like that at the time. 00:10:46.639 --> 00:10:48.480 I remember it very well. There was some sleepless 00:10:48.480 --> 00:10:50.679 nights in there thinking, is this the right thing 00:10:50.679 --> 00:10:53.519 to do? And actually, interestingly, I do a bit 00:10:53.519 --> 00:10:55.179 of work now with private equity because obviously 00:10:55.179 --> 00:10:58.159 they're more interested in agency and SaaS businesses. 00:10:59.679 --> 00:11:01.799 Trying to help them sort of buy the right businesses. 00:11:02.039 --> 00:11:04.500 And I think now knowing what I know about PE, 00:11:04.620 --> 00:11:06.139 I think I would have preferred to have taken 00:11:06.139 --> 00:11:08.720 a PE deal because then you still continue to 00:11:08.720 --> 00:11:12.279 own a little bit of the business to go. Of course, 00:11:12.320 --> 00:11:13.620 with the trade deal, which is the only option 00:11:13.620 --> 00:11:16.399 we had because PE weren't really into the market 00:11:16.399 --> 00:11:19.899 until 2018, we sold in 2016, that, you know, 00:11:20.000 --> 00:11:21.399 that deal would have really helped us because 00:11:21.399 --> 00:11:23.200 we still would have had a bit of a, you know, 00:11:23.480 --> 00:11:26.940 more or less, you know, 10 million, you know, 00:11:27.059 --> 00:11:29.059 a bit of our business, which would have been 00:11:29.059 --> 00:11:31.580 great. But, you know, as it was, we, you know, 00:11:31.659 --> 00:11:34.700 we walked away. But there's no doubt that we 00:11:34.700 --> 00:11:37.340 had a much more successful, you know, earn out 00:11:37.340 --> 00:11:39.299 than a lot of people talk about, right? Because, 00:11:39.399 --> 00:11:43.120 you know, the reality for most is that you know, 00:11:43.120 --> 00:11:45.639 it's a really tough period, but we had a great 00:11:45.639 --> 00:11:48.759 team. It's all about the people, isn't it? And, 00:11:48.759 --> 00:11:50.480 you know, probably leaning into a, you know, 00:11:50.580 --> 00:11:53.139 good time in the market as well. COVID was interesting 00:11:53.139 --> 00:11:57.320 in the last year and did not make net positive. 00:11:58.620 --> 00:11:59.779 You mentioned something about each thing, which 00:11:59.779 --> 00:12:02.200 was the, you know, the sleepless nights. And, 00:12:02.259 --> 00:12:03.740 you know, I talk with a lot of entrepreneurs 00:12:03.740 --> 00:12:06.080 and investors and everyone talks about their 00:12:06.080 --> 00:12:08.789 sleepless nights. So What tips can you give to 00:12:08.789 --> 00:12:10.750 people? How do you go through those moments? 00:12:11.230 --> 00:12:12.830 Because it's different for everyone. Some say 00:12:12.830 --> 00:12:15.149 it's friends and families. I know you have a 00:12:15.149 --> 00:12:16.590 dog because we were talking about the dog earlier 00:12:16.590 --> 00:12:20.769 on. Maybe just a long walk with a dog. How do 00:12:20.769 --> 00:12:25.149 you overcome those challenges? There is no doubt 00:12:25.149 --> 00:12:27.309 that it's difficult because at the time it feels 00:12:27.309 --> 00:12:30.330 all -encompassing, doesn't it? The challenge 00:12:30.330 --> 00:12:32.149 that the entrepreneur has as well is that if 00:12:32.149 --> 00:12:33.909 they are building something successfully, there 00:12:33.909 --> 00:12:36.070 isn't a lot of time for anything else. And so 00:12:36.070 --> 00:12:38.070 it's not like you can just switch on and go, 00:12:38.250 --> 00:12:40.350 all right, well, I'll go and play golf or I'll 00:12:40.350 --> 00:12:43.929 go and do my other hobby in pursuit because hats 00:12:43.929 --> 00:12:46.350 off to those people that can do both of those 00:12:46.350 --> 00:12:48.169 things together. But I always struggled to do 00:12:48.169 --> 00:12:52.200 it. I was kind of all or nothing really. Yeah, 00:12:52.200 --> 00:12:54.059 I think really it's talking about it. I think 00:12:54.059 --> 00:12:56.580 it's mentorship and I was, you know, I had no 00:12:56.580 --> 00:12:59.259 doubt. I was lucky to have had to had a couple 00:12:59.259 --> 00:13:01.860 of mentors really through that journey, personal 00:13:01.860 --> 00:13:03.940 business coaches that actually one of which has 00:13:03.940 --> 00:13:06.700 become a really good friend now that, you know, 00:13:06.759 --> 00:13:08.419 kind of really helps you through that. And whether 00:13:08.419 --> 00:13:11.120 it's a, you know, talk a chat over a beer at 00:13:11.120 --> 00:13:13.320 the pub on a Friday evening, or whether it's, 00:13:13.379 --> 00:13:15.559 you know, a kind of a sit down and, you know, 00:13:16.320 --> 00:13:18.620 proper conversation, I think the ability to be 00:13:18.620 --> 00:13:22.549 able to share that reality. with somebody with 00:13:22.549 --> 00:13:25.169 experience that's appreciated things like that 00:13:25.169 --> 00:13:27.870 before and has got through it and has real business 00:13:27.870 --> 00:13:33.450 experience. I have no doubt in my mind that if 00:13:33.450 --> 00:13:35.710 I hadn't had that, I think some of those hurdles 00:13:35.710 --> 00:13:38.269 would have stopped me. So experience, I think, 00:13:38.330 --> 00:13:42.909 and mentorship is the answer. And now as an investor, 00:13:43.029 --> 00:13:47.389 because you also invest in startups now, what 00:13:47.389 --> 00:13:50.419 has that been bringing? What does your experience 00:13:50.419 --> 00:13:52.700 bring to the table for this startup? Do you actually 00:13:52.700 --> 00:13:54.460 just give up the money or you're actually saying, 00:13:54.460 --> 00:13:56.100 you know what, let me advise you the best way 00:13:56.100 --> 00:13:57.840 to move forward. Because there's always that 00:13:57.840 --> 00:13:59.700 dilemma when you're putting in investors, which 00:13:59.700 --> 00:14:01.679 is, do I just want the money or actually want 00:14:01.679 --> 00:14:03.659 the business advice that comes with this investor? 00:14:04.379 --> 00:14:05.899 Right? Yeah, I think that's a really good point 00:14:05.899 --> 00:14:09.019 because my investor journey obviously started 00:14:09.019 --> 00:14:11.960 in 2016 when we saw the initial tranche of cash 00:14:11.960 --> 00:14:16.159 from the second exit. And, you know, I'd always 00:14:16.159 --> 00:14:18.340 been fascinated in how things work. So for me, 00:14:18.519 --> 00:14:21.379 SAS then was the kind of the websites of 99, 00:14:21.419 --> 00:14:24.360 if that makes sense. So starting investing in 00:14:24.360 --> 00:14:26.960 it, I think very quickly I realized that, you 00:14:26.960 --> 00:14:29.019 know, that these founders had brilliant ideas. 00:14:29.100 --> 00:14:31.019 They often came from a place where they'd had, 00:14:31.019 --> 00:14:33.679 you know, fairly unique experience about a particular 00:14:33.679 --> 00:14:36.360 customer pain or a market. They, you know, they 00:14:36.360 --> 00:14:38.659 often were, you know, obviously developers or 00:14:38.659 --> 00:14:41.179 engineers. They built something that was semi 00:14:41.179 --> 00:14:43.740 -interesting, but And that's kind of their level 00:14:43.740 --> 00:14:46.419 of experience. And I came across these brilliant 00:14:46.419 --> 00:14:48.659 ideas that got me really excited to begin with. 00:14:48.700 --> 00:14:51.320 But then I think the reality bites once you're 00:14:51.320 --> 00:14:53.539 on the other side of the investment. And you 00:14:53.539 --> 00:14:56.879 realize that these people are fantastic at doing 00:14:56.879 --> 00:14:58.440 some things, but not others. And they don't know 00:14:58.440 --> 00:15:00.980 what they don't know. I was there. I've lived 00:15:00.980 --> 00:15:06.200 that reality. And so we've quickly really realized 00:15:06.200 --> 00:15:07.960 that actually that whole kind of early stage 00:15:07.960 --> 00:15:13.450 investment world was being run by finance people 00:15:13.450 --> 00:15:15.950 in the main that were brilliant at working out 00:15:15.950 --> 00:15:18.470 what a good idea looked like and investing in 00:15:18.470 --> 00:15:20.549 it. They were financial investors, but they didn't 00:15:20.549 --> 00:15:24.049 necessarily have that lived experience that was 00:15:24.049 --> 00:15:26.309 probably, well, I have no doubt in my mind that 00:15:26.309 --> 00:15:28.330 it's more important than the money, actually. 00:15:28.730 --> 00:15:30.370 Of course, you can't do things without the money, 00:15:30.509 --> 00:15:33.110 but equally, if you throw money at a problem, 00:15:33.570 --> 00:15:36.149 then often it creates a bigger problem. I would 00:15:36.149 --> 00:15:39.870 say that it's the experience. It's also the thing 00:15:39.870 --> 00:15:42.139 that I'm most passionate about, I think, you 00:15:42.139 --> 00:15:48.460 know, having come out the agency in 2020, I realized 00:15:48.460 --> 00:15:50.840 that, you know, that purpose becomes really important 00:15:50.840 --> 00:15:52.500 when you've kind of, you know, you've solved 00:15:52.500 --> 00:15:54.500 all the kind of financial, you know, initial 00:15:54.500 --> 00:15:57.559 financial motivations and challenges and problems 00:15:57.559 --> 00:16:00.000 to an exit. You know, you have to look at yourself 00:16:00.000 --> 00:16:01.700 really carefully in the mirror and go, what is 00:16:01.700 --> 00:16:03.340 it that I really want to do for the rest of my 00:16:03.340 --> 00:16:06.759 life? And what do I enjoy doing? And, you know, 00:16:06.940 --> 00:16:09.139 thankfully through that investment process, because 00:16:09.139 --> 00:16:11.679 I would started that in 2016, so it was overlapping 00:16:11.679 --> 00:16:13.980 a bit. I could throw myself into then helping 00:16:13.980 --> 00:16:16.759 some of the founders that I had been investing 00:16:16.759 --> 00:16:19.639 in during the earn -out period. And in that, 00:16:19.820 --> 00:16:22.340 it did two things for me, really. It really validated 00:16:22.340 --> 00:16:24.299 the lessons that we learned from building the 00:16:24.299 --> 00:16:26.139 business, because you were seeing it reflected, 00:16:26.299 --> 00:16:31.519 again, through other people. And it also taught 00:16:31.519 --> 00:16:34.460 me that I really loved doing it. And it, quite 00:16:34.460 --> 00:16:36.620 frankly, didn't feel like work. It still doesn't 00:16:36.620 --> 00:16:41.029 feel like work. And I think that's because you 00:16:41.029 --> 00:16:43.929 see the value, right? The value exchange is there 00:16:43.929 --> 00:16:46.230 that, you know, like being able to tell somebody, 00:16:46.409 --> 00:16:48.690 look, I can't tell you what to do because I'm 00:16:48.690 --> 00:16:51.029 a minority investor, but actually let me explain 00:16:51.029 --> 00:16:54.009 what happens if you do that. Yeah. You know, 00:16:54.009 --> 00:16:55.870 and I've done it this way, this way and this 00:16:55.870 --> 00:16:58.049 way, and this is what happened and this is what 00:16:58.049 --> 00:17:01.169 I've learned. And that, you know, feels like 00:17:01.169 --> 00:17:03.129 the most valuable commodity in the world, I think, 00:17:03.129 --> 00:17:05.829 at the time to both sides. And, you know, I just, 00:17:05.950 --> 00:17:07.750 you know, that makes me leap out of bed in the 00:17:07.750 --> 00:17:12.420 mornings. When you're looking at potential investment 00:17:12.420 --> 00:17:14.819 opportunities, what's the one thing that is a 00:17:14.819 --> 00:17:17.680 massive red flag for you? Like let's ignore all 00:17:17.680 --> 00:17:19.680 the financials because obviously those are very 00:17:19.680 --> 00:17:21.539 clear that there will be red flag or not. But 00:17:21.539 --> 00:17:23.079 what's the one thing you always look out for? 00:17:24.980 --> 00:17:28.440 I've seen a lot of them, right? So, you know, 00:17:28.559 --> 00:17:32.720 I was a partner at a really great EIS business 00:17:32.720 --> 00:17:36.680 school hatch, which we kind of started in 2018 00:17:36.680 --> 00:17:40.329 properly. And so, you know, that business now 00:17:40.329 --> 00:17:42.789 has gone on and is doing amazing things, invested 00:17:42.789 --> 00:17:46.970 in almost 100 kind of early stage B2B SaaS businesses. 00:17:47.690 --> 00:17:50.069 And so we've seen a lot of pitches. I mean, we've 00:17:50.069 --> 00:17:52.470 probably got well over a thousand decks a year, 00:17:52.549 --> 00:17:55.049 I would say, you know, to kind of initially work 00:17:55.049 --> 00:17:56.710 through. And then obviously there's, you know, 00:17:56.990 --> 00:17:59.069 various stages of, you know, I see in decision 00:17:59.069 --> 00:18:01.849 making through that. So you have to develop a 00:18:01.849 --> 00:18:05.359 very methodical approach, I think, to working 00:18:05.359 --> 00:18:07.819 out what good looks like really quickly. And 00:18:07.819 --> 00:18:11.519 over the years, I think, we've learned that particularly 00:18:11.519 --> 00:18:14.720 in SaaS, what usually happens a lot is that you 00:18:14.720 --> 00:18:17.160 have a CTO engineer, software person that has 00:18:17.160 --> 00:18:20.180 a great idea, but actually what they really need 00:18:20.180 --> 00:18:24.359 is somebody alongside them, or ideally a leader 00:18:24.359 --> 00:18:26.279 in their own rights that's much more commercial, 00:18:26.539 --> 00:18:28.779 because it's the commercialization of the idea. 00:18:29.490 --> 00:18:32.509 Obviously as well as the idea, but the idea can 00:18:32.509 --> 00:18:35.869 fall very quickly flat if you cannot sell it. 00:18:36.130 --> 00:18:39.990 And develop really good go -to -market sales 00:18:39.990 --> 00:18:42.569 and marketing, and actually create a bit of product 00:18:42.569 --> 00:18:45.950 market fit quickly. So people obviously is the 00:18:45.950 --> 00:18:47.750 key part because that's really what you're investing 00:18:47.750 --> 00:18:51.150 in. But then it's like, what type of characteristic 00:18:51.150 --> 00:18:53.430 are you looking for? And commerciality I think 00:18:53.430 --> 00:18:56.750 is probably top of the list. Interesting. It's 00:18:56.750 --> 00:18:58.769 funny because you mentioned SaaS and investing 00:18:58.769 --> 00:19:01.849 in SaaS, but I was thinking about CRM systems, 00:19:01.869 --> 00:19:05.009 for example, a very basic example. But in a nutshell, 00:19:05.410 --> 00:19:07.349 none of them are particularly complex. They all 00:19:07.349 --> 00:19:10.150 pretty much do the same thing. However, the way 00:19:10.150 --> 00:19:12.920 that we know about them is because of their go 00:19:12.920 --> 00:19:14.960 to market strategy, right? There's a reason why 00:19:14.960 --> 00:19:16.920 we know more about HubSpot than we know about 00:19:16.920 --> 00:19:19.259 Zoho, for example, also depends on a region. 00:19:19.640 --> 00:19:21.079 But there's a very good reason because of that, 00:19:21.119 --> 00:19:22.579 because they have different approach to how to 00:19:22.579 --> 00:19:25.019 go to market. HubSpot support a lot of startups 00:19:25.019 --> 00:19:26.940 initially, and they still do. So it's a really 00:19:26.940 --> 00:19:28.259 good thing because they grow with the startups. 00:19:28.400 --> 00:19:29.900 Zoho, on the other hand, probably has a completely 00:19:29.900 --> 00:19:32.279 different strategy. So it's things like that 00:19:32.279 --> 00:19:37.210 that really do make a difference. What do you 00:19:37.210 --> 00:19:39.470 invest in right now? Is this just B2B SaaS businesses 00:19:39.470 --> 00:19:42.670 or you're spreading out to other variables? Yeah, 00:19:42.789 --> 00:19:44.490 so I mean, that's certainly what Hatch does. 00:19:44.950 --> 00:19:47.730 I've started, you know, I'm playing a slightly 00:19:47.730 --> 00:19:49.769 different role now. And I think is I think I've 00:19:49.769 --> 00:19:52.650 learned over the last few months is that, you 00:19:52.650 --> 00:19:54.569 know, if I go back to the kind of the purpose 00:19:54.569 --> 00:19:57.849 piece, it's very difficult once you get to 100. 00:19:58.429 --> 00:20:00.950 um, investments to, um, to spend lots and lots 00:20:00.950 --> 00:20:02.490 of time with those businesses and really help 00:20:02.490 --> 00:20:04.210 them. And that's kind of the moment for me. So 00:20:04.210 --> 00:20:06.329 I'm sort of in the process of swimming up, you 00:20:06.329 --> 00:20:09.210 know, upstream a little bit and spending more 00:20:09.210 --> 00:20:11.410 time with private equity because, you know, like, 00:20:11.529 --> 00:20:13.309 obviously they put bigger checks into slightly 00:20:13.309 --> 00:20:15.190 later stage businesses and you can, you know, 00:20:15.190 --> 00:20:18.049 you have fewer deeper relationships and that 00:20:18.049 --> 00:20:20.170 really plays into that purpose for me. And so 00:20:20.170 --> 00:20:22.450 right now that's kind of what I'm doing. So I've 00:20:22.450 --> 00:20:24.349 got, obviously, you know, we've got a number, 00:20:24.410 --> 00:20:26.569 you know, almost a hundred investments in Hatch, 00:20:26.569 --> 00:20:30.130 um, you know, which which most of them are doing 00:20:30.130 --> 00:20:32.430 really, really well, which is fantastic to see. 00:20:34.069 --> 00:20:36.509 But I'm now, and obviously I've got some personal 00:20:36.509 --> 00:20:38.690 investments as well, so I'll continue to double 00:20:38.690 --> 00:20:41.630 down into those businesses. And they are B2B 00:20:41.630 --> 00:20:45.049 SaaS. All of those that I've invested in personally, 00:20:45.269 --> 00:20:49.390 for instance, sit in that space. And then in 00:20:49.390 --> 00:20:51.930 PE though, I think, and this comes down to a 00:20:51.930 --> 00:20:53.869 little bit of the mentorship piece that I was 00:20:53.869 --> 00:20:56.509 talking about earlier is that you know, that 00:20:56.509 --> 00:20:59.490 my mentors have spent a lot of time in PE themselves. 00:20:59.829 --> 00:21:02.150 And, you know, I think it's helped me understand 00:21:02.150 --> 00:21:03.890 that, you know, sticking to what you're good 00:21:03.890 --> 00:21:06.150 at is really good advice, what you know best. 00:21:07.670 --> 00:21:09.710 And so I'm increasingly spending more and more 00:21:09.710 --> 00:21:11.829 time investigating, you know, slightly later 00:21:11.829 --> 00:21:15.130 stage agency businesses, you know, on a fairly 00:21:15.130 --> 00:21:18.150 broad basis and sort of tech enabled service 00:21:18.150 --> 00:21:22.849 businesses. But also obviously, you know, the 00:21:22.849 --> 00:21:25.430 kind of slightly late stage kind of opportunity 00:21:25.430 --> 00:21:28.089 as well. So, you know, I'm in that process at 00:21:28.089 --> 00:21:29.849 the moment as I think, you know, kind of moving 00:21:29.849 --> 00:21:33.430 and spending my time much more upstream in that 00:21:33.430 --> 00:21:36.529 kind of, you know, let's say that PE space. There's 00:21:36.529 --> 00:21:40.150 a lot of PE. There's always talks between founders 00:21:40.150 --> 00:21:42.509 about how hard it is to raise investment now. 00:21:42.809 --> 00:21:44.349 Now, you've been in this ecosystem for quite 00:21:44.349 --> 00:21:47.230 some time now. Do you think it's much harder? 00:21:47.440 --> 00:21:49.140 to raise investment now that it was a couple 00:21:49.140 --> 00:21:51.279 of years ago, or on the contrary, it's always 00:21:51.279 --> 00:21:53.339 been hard. It's just a matter of, you know, learning 00:21:53.339 --> 00:21:58.119 the game. It is hard. Yeah, I would say actually, 00:21:58.119 --> 00:22:01.640 it's probably easier because the markets outside 00:22:01.640 --> 00:22:04.759 of the COVID bubble was a weird time because, 00:22:04.980 --> 00:22:06.960 you know, for some, it was really easy to raise 00:22:06.960 --> 00:22:10.039 money. For others, it was impossible. So I think 00:22:10.039 --> 00:22:12.079 you kind of have to park that because it was 00:22:12.079 --> 00:22:14.119 a unique moment in time. But I think, you know, 00:22:14.119 --> 00:22:18.480 if you look more macroeconomically, from the 00:22:18.480 --> 00:22:20.519 investor side, first and foremost, because obviously 00:22:20.519 --> 00:22:23.079 these funds can only invest if they have the 00:22:23.079 --> 00:22:25.440 money to be able to invest. And certainly in 00:22:25.440 --> 00:22:28.759 the early stage stuff around SEIS and EIS in 00:22:28.759 --> 00:22:33.099 the UK, there was a lot of nervousness and actually 00:22:33.099 --> 00:22:36.059 investment in those schemes really dropped for 00:22:36.059 --> 00:22:39.700 a while, but it is now coming back. And so there 00:22:39.700 --> 00:22:41.700 is now more money to invest. Obviously on the 00:22:41.700 --> 00:22:46.190 PE side, sitting on record amounts of unspent 00:22:46.190 --> 00:22:48.670 capital. Now everybody's raising bigger and bigger 00:22:48.670 --> 00:22:51.170 funds and so their problem is actually getting 00:22:51.170 --> 00:22:55.029 it away. But of course, there is a limit on the 00:22:55.029 --> 00:22:57.549 number of sort of slightly later stage quality 00:22:57.549 --> 00:22:59.849 businesses they can invest in. So their problem 00:22:59.849 --> 00:23:02.269 is sorting the wheat from the chaff and finding 00:23:02.269 --> 00:23:05.049 enough really good quality businesses to invest 00:23:05.049 --> 00:23:09.990 in. On the earlier stage, I think it has been 00:23:09.990 --> 00:23:12.410 a capital challenge. But now I think the capital 00:23:12.410 --> 00:23:16.170 challenge is solving itself, but there are less, 00:23:16.170 --> 00:23:19.829 again, better, really good quality businesses 00:23:19.829 --> 00:23:22.130 to, you know, to kind of invest in. There's a 00:23:22.130 --> 00:23:23.950 lot of me -too businesses. So there's a lot of 00:23:23.950 --> 00:23:25.190 people building, for instance, at the moment 00:23:25.190 --> 00:23:27.730 in sales tech, for instance, you know, as one 00:23:27.730 --> 00:23:30.009 example. And so, you know, you've got to sort 00:23:30.009 --> 00:23:32.549 through a lot of those ideas to really find and 00:23:32.549 --> 00:23:34.589 back the right team with, you know, the right 00:23:34.589 --> 00:23:37.309 commercial ability, you know, and, you know, 00:23:37.309 --> 00:23:40.890 all of that kind of good stuff. So, yeah, I would 00:23:40.890 --> 00:23:45.660 say it is... It's as hard or as easy as the quality 00:23:45.660 --> 00:23:50.480 of what you're creating. By that I mean idea, 00:23:51.400 --> 00:23:56.259 business plan, go -to -market, team. Interesting. 00:23:56.779 --> 00:23:58.839 What do you think about this AI thing? Because 00:23:58.839 --> 00:24:01.440 obviously it's not going to go anywhere. I talked 00:24:01.440 --> 00:24:03.099 with a lot of founders and they all say, if we 00:24:03.099 --> 00:24:05.119 don't have AI, no one's going to invest in us. 00:24:05.519 --> 00:24:07.859 But at the same time... I also talk with a lot 00:24:07.859 --> 00:24:10.480 of investors to say, actually, yes, AI is important. 00:24:10.859 --> 00:24:12.799 But if you just put in AI for the sake of putting 00:24:12.799 --> 00:24:15.400 AI in your company's name, then we still can 00:24:15.400 --> 00:24:17.680 reach through the lines and say, this is not 00:24:17.680 --> 00:24:19.299 relevant for AI. So what do you think about the 00:24:19.299 --> 00:24:23.519 whole thing? Yeah. I mean, I wish I knew. I don't 00:24:23.519 --> 00:24:25.740 wish that any of us knew because obviously it's 00:24:25.740 --> 00:24:27.880 the first time in human history that we've got 00:24:27.880 --> 00:24:32.529 something that has kind of an improvement. curve 00:24:32.529 --> 00:24:35.130 that truly is exponential, right? I think that's 00:24:35.130 --> 00:24:36.529 the difference is that, you know, in six months 00:24:36.529 --> 00:24:39.150 time, what is it going to look like? So the pace 00:24:39.150 --> 00:24:41.250 of change is, you know, even greater than it's 00:24:41.250 --> 00:24:45.509 ever been, you know? And I equally, I mean, this 00:24:45.509 --> 00:24:47.170 is an entrepreneur's curse as well, I think, 00:24:47.349 --> 00:24:50.029 is that, you know, it's very easy, and I've fallen 00:24:50.029 --> 00:24:54.009 for all of this myself, to get very, really excited 00:24:54.009 --> 00:24:56.470 about new technology, and then think it's going 00:24:56.470 --> 00:24:59.579 to change everything immediately. And, you know, 00:24:59.579 --> 00:25:01.059 I think we're already starting to appreciate 00:25:01.059 --> 00:25:03.740 the fact that AI isn't doing that, but it is 00:25:03.740 --> 00:25:05.980 accelerating change faster than anything before 00:25:05.980 --> 00:25:09.640 it. And obviously there's a regulation kind of 00:25:09.640 --> 00:25:11.220 angle to this as well. But, you know, I think 00:25:11.220 --> 00:25:14.099 my view is that, you know, AI has a part to play 00:25:14.099 --> 00:25:16.779 in the middle. So I think, you know, good, good 00:25:16.779 --> 00:25:19.400 use of AI and AI strategy. And obviously, you 00:25:19.400 --> 00:25:21.160 know, through my consulting work, spend a lot 00:25:21.160 --> 00:25:23.079 of time talking to people about this is that, 00:25:23.099 --> 00:25:25.859 you know, you need to work out how it plays a 00:25:25.859 --> 00:25:27.980 part, you know, like human at the beginning. 00:25:28.750 --> 00:25:30.970 strategy, you know, all that kind of good stuff. 00:25:31.289 --> 00:25:33.369 How can you help it and use it to become more 00:25:33.369 --> 00:25:35.029 efficient and effective and do heavy lifting 00:25:35.029 --> 00:25:37.849 in the middle at the moment, then human at the 00:25:37.849 --> 00:25:41.549 end to do the kind of the QC and the key touches. 00:25:41.769 --> 00:25:45.049 So it absolutely has a part to play. And I think, 00:25:45.049 --> 00:25:47.450 you know, any business of any kind, particularly 00:25:47.450 --> 00:25:51.230 in B2B where say I spend my time, it was foolish 00:25:51.230 --> 00:25:54.390 not to have a strategy of, you know, kind of 00:25:54.390 --> 00:25:58.259 watch, listen, you know, and think. But equally, 00:25:58.460 --> 00:26:02.099 I wouldn't say some people jumping into it and 00:26:02.099 --> 00:26:04.220 thinking it's going to take over the world. I 00:26:04.220 --> 00:26:07.559 think that may happen in time, but we're not 00:26:07.559 --> 00:26:11.119 there yet. It's a watching brief with some action, 00:26:11.160 --> 00:26:14.319 I think is probably the way that I'm advising 00:26:14.319 --> 00:26:16.500 people on it at the moment. There's definitely 00:26:16.500 --> 00:26:18.440 ways that you can create operational efficiency 00:26:18.440 --> 00:26:22.519 in all of those things already. For instance, 00:26:22.680 --> 00:26:25.950 the consulting business that you know, I've founded 00:26:25.950 --> 00:26:28.609 and called Scaled is, you know, we've been building 00:26:28.609 --> 00:26:32.190 a really interesting tool to help with, you know, 00:26:32.329 --> 00:26:34.029 kind of outbound and outreach, for instance. 00:26:34.549 --> 00:26:37.029 And it's been really good for helping us personalize 00:26:37.029 --> 00:26:40.450 that at scale and, you know, understand and test 00:26:40.450 --> 00:26:44.230 and create matrices around testing, messaging 00:26:44.230 --> 00:26:46.630 and targeting and all of those kinds of things. 00:26:47.889 --> 00:26:50.869 As I said, it can definitely add value, but I 00:26:50.869 --> 00:26:54.289 don't think yet it should be your main focus, 00:26:54.390 --> 00:26:57.170 if that makes sense. It makes a lot of sense. 00:26:57.829 --> 00:26:59.650 It's always funny because I always see founders 00:26:59.650 --> 00:27:02.349 obsessed with the whole AI thing. I keep on thinking, 00:27:03.049 --> 00:27:05.210 if it's not relevant to put AI in your name, 00:27:05.329 --> 00:27:07.730 don't put AI in your name because why would you, 00:27:07.809 --> 00:27:10.410 right? It's just going to hurt you in the long 00:27:10.410 --> 00:27:13.920 run. And it's a bit like saying you have, I don't 00:27:13.920 --> 00:27:15.859 know, it's a bit like saying you own a plane 00:27:15.859 --> 00:27:17.400 when you really don't own a plane, you just fly 00:27:17.400 --> 00:27:20.819 with Ryan there all the time. So why would you 00:27:20.819 --> 00:27:23.740 want to say that? You definitely see that in 00:27:23.740 --> 00:27:25.599 the startup space a lot is that there are a lot 00:27:25.599 --> 00:27:27.819 of people that, you know, most pictures you see 00:27:27.819 --> 00:27:30.759 now are AI something. And when you look into 00:27:30.759 --> 00:27:32.640 it, there's probably a bit of machine learning 00:27:32.640 --> 00:27:37.049 in there, but it's not true AI yet. It's just 00:27:37.049 --> 00:27:43.089 an overcomplicated spreadsheet, I think. We actually 00:27:43.089 --> 00:27:44.609 mentioned something quite interesting, which 00:27:44.609 --> 00:27:47.670 is a common myth here in the industry and everyone 00:27:47.670 --> 00:27:50.210 struggles with this, which is how long should 00:27:50.210 --> 00:27:52.549 a pitch deck actually be? because Y Combinator 00:27:52.549 --> 00:27:55.410 says 11 slides and that's more than enough, then 00:27:55.410 --> 00:27:57.430 I've seen some amazing pitch decks which are 00:27:57.430 --> 00:28:00.269 like 30 slides long, but it just flows very easily. 00:28:00.549 --> 00:28:02.529 So you probably take as long to read them as 00:28:02.529 --> 00:28:04.910 you would take 11 slides. So you told me you 00:28:04.910 --> 00:28:08.250 just read a thousand pitch decks last year. So 00:28:08.250 --> 00:28:11.150 which one is your favorite? What actually works 00:28:11.150 --> 00:28:13.750 best? Yeah, I think I am definitely fun. And 00:28:13.750 --> 00:28:16.029 obviously in the agency world, you learn this 00:28:16.029 --> 00:28:18.990 very, very, very quickly as well. I mean, how 00:28:18.990 --> 00:28:23.940 to put together. a really effective story about 00:28:23.940 --> 00:28:25.299 what it is that you're trying to sell, because 00:28:25.299 --> 00:28:27.140 that's really what a pitch deck is, isn't it? 00:28:27.160 --> 00:28:28.839 It's a story, and I think some people forget 00:28:28.839 --> 00:28:30.500 that, and they're just like, right, well, we 00:28:30.500 --> 00:28:31.940 need to make sure we mention this, this, and 00:28:31.940 --> 00:28:34.400 this, and all of a sudden you are at 30, 40 slides. 00:28:35.420 --> 00:28:36.839 And so I think, you know, you can start with 00:28:36.839 --> 00:28:38.700 a process like that, get everything in that you 00:28:38.700 --> 00:28:40.519 want and feel like you need to mention, but then 00:28:40.519 --> 00:28:43.140 think about the narrative through that. And for 00:28:43.140 --> 00:28:45.839 me, it's really about you know, starting off 00:28:45.839 --> 00:28:47.619 with a, you know, I think it's always really 00:28:47.619 --> 00:28:49.000 interesting to start off with something that 00:28:49.000 --> 00:28:50.859 we always used to call a lean -in slide, so a 00:28:50.859 --> 00:28:53.160 lean -in moment. It's like, we want to get your 00:28:53.160 --> 00:28:54.940 attention immediately and we want to explain 00:28:54.940 --> 00:28:57.900 the value that this brings, you know, in monetary 00:28:57.900 --> 00:29:00.380 terms or in numerical terms. So if you can say, 00:29:00.440 --> 00:29:03.880 for instance, that, you know, doing this for 00:29:03.880 --> 00:29:06.480 a year could on average save the average business. 00:29:06.890 --> 00:29:10.009 $10 million or try to put a number on it that 00:29:10.009 --> 00:29:13.769 makes people sit up and take notice, or we can 00:29:13.769 --> 00:29:18.029 make 50 % more efficient, so X, Y, and Z. I think 00:29:18.029 --> 00:29:22.329 that really starts to help people value the pain, 00:29:22.490 --> 00:29:26.829 if that makes sense. Starting with that and then 00:29:26.829 --> 00:29:29.440 obviously working through problem solution. you 00:29:29.440 --> 00:29:31.059 know, is really important, that makes sense. 00:29:31.299 --> 00:29:33.160 So, you know, this is the problem we've seen. 00:29:33.640 --> 00:29:35.579 This is how we've seen it as well, because some 00:29:35.579 --> 00:29:38.279 context on, you know, what's the unique insight 00:29:38.279 --> 00:29:40.720 or the unique kind of journey that you've been 00:29:40.720 --> 00:29:43.599 on to understand this and notice this gap in 00:29:43.599 --> 00:29:46.480 markets, this inefficiency in the market. So 00:29:46.480 --> 00:29:49.059 bring that to life a little bit. Explain the 00:29:49.059 --> 00:29:50.700 problem and then explain how you're going to 00:29:50.700 --> 00:29:53.299 solve it. Obviously, then as well, you need to 00:29:53.299 --> 00:29:55.299 make sure that you talk of you know, talk about 00:29:55.299 --> 00:29:57.980 team and, you know, as I said, ideally, you find 00:29:57.980 --> 00:30:00.039 that balance between, you know, technical and 00:30:00.039 --> 00:30:02.980 commerciality and a good understanding of go 00:30:02.980 --> 00:30:05.160 -to -market sales and marketing is, I think, 00:30:05.220 --> 00:30:07.700 music to early stage investors' ears. Well, actually, 00:30:08.400 --> 00:30:10.160 you know, every investor's ears, quite frankly. 00:30:11.660 --> 00:30:14.099 And, you know, then ultimately a really good 00:30:14.099 --> 00:30:16.319 understanding as well of what you're raising 00:30:16.319 --> 00:30:18.660 and why and where it gets you to and what it 00:30:18.660 --> 00:30:21.240 buys you, because I think not enough people bring 00:30:21.240 --> 00:30:23.390 that to life enough is that You know, and they 00:30:23.390 --> 00:30:25.670 don't, you know, they'll produce financial projections, 00:30:25.829 --> 00:30:28.309 which quite frankly, and understandably are often, 00:30:28.309 --> 00:30:31.150 you know, just, you know, test the air because 00:30:31.150 --> 00:30:32.730 it hasn't been built yet. Or, you know, you've 00:30:32.730 --> 00:30:35.450 had three, you've got three customers. So I think, 00:30:35.470 --> 00:30:37.849 you know, every investor at early stage, you 00:30:37.849 --> 00:30:39.910 know, understands that financial projections 00:30:39.910 --> 00:30:42.089 are what they are. You know, they're best guess, 00:30:42.190 --> 00:30:45.609 aren't they? But what you want to get an understanding 00:30:45.609 --> 00:30:47.990 of is that you've spent some proper time really 00:30:47.990 --> 00:30:50.910 costing out. what it's going to cost and what 00:30:50.910 --> 00:30:53.349 you're going to invest in and building a picture 00:30:53.349 --> 00:30:59.910 of where you're going to be by when. From an 00:30:59.910 --> 00:31:01.589 investor perspective, what you've got to realize 00:31:01.589 --> 00:31:04.069 is that what we're thinking about whatever stage 00:31:04.069 --> 00:31:06.049 is that we're not buying into what you've built 00:31:06.049 --> 00:31:08.650 so far. We're buying into getting to the next 00:31:08.650 --> 00:31:11.549 stage. It's the next story, isn't it? What we 00:31:11.549 --> 00:31:14.710 also want to be really sure of is that you can 00:31:14.710 --> 00:31:18.289 get there because that's either liquidity and 00:31:18.289 --> 00:31:22.890 exit event or its reinvestment event. So the 00:31:22.890 --> 00:31:24.529 challenge with a lot of businesses is that they're 00:31:24.529 --> 00:31:26.630 only thinking about the next three steps ahead 00:31:26.630 --> 00:31:30.450 and you need to put yourself in the mind of the 00:31:30.450 --> 00:31:34.029 investor and tell that story. I think a lot of 00:31:34.029 --> 00:31:36.089 people miss that. Yeah, it makes sense because 00:31:36.089 --> 00:31:38.170 I think some people, especially if you're raising 00:31:38.170 --> 00:31:39.910 pre -seed, they always think, oh, it's just pre 00:31:39.910 --> 00:31:42.329 -seed and that's it. But actually you're building 00:31:42.329 --> 00:31:44.690 a business and the investor wants to see it grow 00:31:44.690 --> 00:31:47.309 all the way to, you know, maybe IPO or maybe 00:31:47.309 --> 00:31:50.150 a successful exit. So yeah, you need to build 00:31:50.150 --> 00:31:52.430 a business for that. Yeah. Not just that little 00:31:52.430 --> 00:31:54.410 moment. You know, that sort of, you know, early 00:31:54.410 --> 00:31:56.490 stage PE, you know, they might be buying a business 00:31:56.490 --> 00:31:59.289 that's doing two, three million EBITDA, you know, 00:31:59.289 --> 00:32:00.990 and they want to get it to 10. So you've got 00:32:00.990 --> 00:32:03.339 to tell that story. And you've got to convince 00:32:03.339 --> 00:32:04.779 them that that's going to happen. You've got 00:32:04.779 --> 00:32:06.759 a decent idea of how to do it, not just the fact 00:32:06.759 --> 00:32:08.519 that you've well done for doing building something 00:32:08.519 --> 00:32:10.160 that's doing a couple million quid of EBITDA, 00:32:10.299 --> 00:32:13.140 right? You know, it's what comes next. It's the 00:32:13.140 --> 00:32:17.440 key bit. It's always about the vision. Now, I 00:32:17.440 --> 00:32:18.940 have this very interesting question to ask you, 00:32:18.940 --> 00:32:21.559 which is, you know how startup founders can have 00:32:21.559 --> 00:32:24.720 a little bit of an overinflated ego. Is that 00:32:24.720 --> 00:32:28.619 a red flag for you as an investor or not? No, 00:32:28.619 --> 00:32:30.480 I think it depends on what shape it comes in, 00:32:30.480 --> 00:32:35.339 really. For me, the key is the ability to understand, 00:32:35.339 --> 00:32:38.680 to know and have the thoughtful awareness that 00:32:38.680 --> 00:32:41.079 you don't know everything and you are willing 00:32:41.079 --> 00:32:43.839 to listen and take on advice from people with 00:32:43.839 --> 00:32:46.640 more experience. I think that's really important 00:32:46.640 --> 00:32:50.559 because I go back to my own experience that we 00:32:50.559 --> 00:32:53.480 would never have got as far as we did without 00:32:53.480 --> 00:32:56.259 me having that ability because I didn't know 00:32:56.259 --> 00:32:58.460 what I didn't know. And yes, I was, you know, 00:32:58.640 --> 00:33:02.799 the young punchy entrepreneur building that, 00:33:02.819 --> 00:33:06.279 even the agency business. I thought I knew it 00:33:06.279 --> 00:33:09.099 all, but really didn't. Sometimes you need to 00:33:09.099 --> 00:33:12.380 have the ability to be able to externalize that 00:33:12.380 --> 00:33:14.380 view of yourself, look back and understand the 00:33:14.380 --> 00:33:17.319 other person's perspective and appreciate that 00:33:17.319 --> 00:33:19.500 they have been there and that, as I said, is 00:33:19.500 --> 00:33:21.299 probably the most valuable commodity in business, 00:33:21.420 --> 00:33:24.259 actually. I agree with you full heartedly. To 00:33:24.259 --> 00:33:27.680 be able to have that awareness and self -analysis 00:33:27.680 --> 00:33:29.619 is one of the strongest tools you can have in 00:33:29.619 --> 00:33:31.380 our arsenal. Because you can just say, you know 00:33:31.380 --> 00:33:33.359 what, have I done the right thing here? Is this 00:33:33.359 --> 00:33:35.880 actually the right way forward? What about this 00:33:35.880 --> 00:33:37.420 advice I'm getting? Is this the right advice? 00:33:37.579 --> 00:33:41.460 If yes, then I need to change. I used to call 00:33:41.460 --> 00:33:43.599 it coachability. it's actually something quite 00:33:43.599 --> 00:33:45.420 important to have, isn't it? Yeah, that's the 00:33:45.420 --> 00:33:47.400 nice way of putting it, actually, is its coachability, 00:33:47.440 --> 00:33:50.220 isn't it? That is key. Because you're not going 00:33:50.220 --> 00:33:53.059 to manage an entrepreneur, are you? But you need 00:33:53.059 --> 00:33:56.859 to be able to coach them, I think. Simon, if 00:33:56.859 --> 00:33:58.880 people want to reach out to you and you're going 00:33:58.880 --> 00:34:01.259 to be flooded with multiple startups asking for 00:34:01.259 --> 00:34:04.269 investment now, how can they do so? A couple 00:34:04.269 --> 00:34:07.150 of ways, I guess. LinkedIn, I'm pretty more active 00:34:07.150 --> 00:34:10.230 than I used to be now. I'm trying to share a 00:34:10.230 --> 00:34:12.889 bit of insight there. So obviously, forward slash 00:34:12.889 --> 00:34:16.750 Simon Penson, you can find me there. And also 00:34:16.750 --> 00:34:20.570 email. So really welcome to email me at Simon 00:34:20.570 --> 00:34:25.269 .Penson at scaled. So S -C -A -L -E -D .co .uk, 00:34:25.429 --> 00:34:28.150 which is the consulting business. So yeah, really 00:34:28.150 --> 00:34:30.429 happy to chat. And as I said, it doesn't feel 00:34:30.429 --> 00:34:32.230 like work to me. So if people do want to reach 00:34:32.230 --> 00:34:34.929 out. You know, I always welcome it. I spent my 00:34:34.929 --> 00:34:37.530 days now talking to, um, you know, either sort 00:34:37.530 --> 00:34:40.250 of clients who are entrepreneurs, investments 00:34:40.250 --> 00:34:42.070 who are entrepreneurs or, you know, people that 00:34:42.070 --> 00:34:44.429 just want a bit of advice. So it'd be great. 00:34:44.809 --> 00:34:46.170 Simon, thank you so much for your time. I really 00:34:46.170 --> 00:34:47.929 appreciate it. Thank you, Ricardo. I really enjoyed 00:34:47.929 --> 00:34:51.829 it. Thank you. All right. This podcast is sponsored 00:34:51.829 --> 00:34:55.130 by OpenExperts .com. OpenExperts is a place to 00:34:55.130 --> 00:34:57.250 go if you're looking to talk with top experts 00:34:57.250 --> 00:35:00.670 from around the world. That is open -experts 00:35:00.670 --> 00:35:04.630 .com. This podcast is also sponsored by startupnetworks 00:35:04.630 --> 00:35:08.210 .co .uk. Startup Networks is an online forum 00:35:08.210 --> 00:35:10.250 where you can find all the resources you need 00:35:10.250 --> 00:35:12.730 to run your startup, from grants to investors 00:35:12.730 --> 00:35:14.909 to tips and tricks on how to be successful in 00:35:14.909 --> 00:35:17.690 your startup. This podcast is also sponsored 00:35:17.690 --> 00:35:21.250 by ODEV Tech. 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