Building A Business To Sell With Alex Fenton

Three exits in, Alex Fenton knows exactly what buyers look for, and it's not what most founders think. James and Alex talk through keeping every door open, why a three year plan beats a five year one, and the blunt piece of feedback from a manager that changed how Alex leads. Including the real difference between planting seeds and planting saplings when you're building a team built to last.

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Transcript

SPEAKER_01 0:00

If you think about it in life, like you go through your education, you go through your your life thinking, I think, how do I keep as many doors open as I possibly can? Well, when I've been running businesses, well, how do I keep as many doors open as I possibly can? Who will buy me? And then what will they buy me for? Because especially in the SME world, i.e., the outcome for shareholders, the commercial outcome for shareholders, there's not really a multiple. You know, you can sort of adhere to some sort of multiple model, but actually it's what somebody will pay for it.

SPEAKER_02 0:30

I think there's different types of control. And it sounds like there's like actual invisible control system, I think these sort of these operating rhythms of courty check-ins, and particularly you've got the right people. It's kind of building the trust, like how reliable are people to get it done. And so you build that trust over time.

SPEAKER_01 0:47

And especially when you've got 11 people reporting into you, the ranking of performance is basically on trust, right? Because you have to learn that 90% of your vision is way better if it if somebody else is doing it than 100% of your vision, but you're doing it four times.

SPEAKER_02 1:14

Hi, I'm James Johnson, founder and CEO coach, and this is the Pure Effect Podcast, where your peers will tell you what's unlocking their 10 million plus business. Today I'm joined by Alex, and we're going to find out what it takes to build your business to sell it and what this means about building it differently. Before we get started, remember to hit subscribe so you don't miss out on any episodes. Let's get started. So, Alex, welcome to the show. Thank you very much. So, when we're doing the research, this you've done so three successful exits, but only one successful cup final. That's true. That is true.

SPEAKER_01 1:49

Talk us through both. Well, the successful cup final was Norwich City against Middlesbrough, 2000, and I might get this wrong. I think 2015 playoff final at Wembley.

SPEAKER_02 1:58

Nice.

SPEAKER_01 1:59

But the other nine, I'm not such a good reader. I'm not an Arsenal fan, but I was in Budapest a few months ago as a group of Arsenal fans. Uh I watched England in the Euros finals twice. I've been to the Rugby World Cup final. Uh I went, I was in Moscow when Kieran Trippia scored that goal. That was a great moment. The other 117 minutes were not so good. And the list goes on. The list just goes on. So look at Alba Albatross for sports, basically. Exactly, exactly. I've seen us, yeah, lots of losses, lots of losses. So luckily, and we're recording this a day after England beat Mexico in the World Cup. I'm not going to America this year because one of my best friends is getting married.

SPEAKER_02 2:41

Enam might have a chance, is what you're saying. Exactly, exactly. But on the business side, you've had three successful exits.

SPEAKER_01 2:48

Yes, I have a mix of businesses. Uh but yeah, sold one to uh a sort of family office group, I suppose competitor-ish, but sort of a like for like sale, which was my first business company called GapCap. Um, the joke is that the mandate was to make factoring sexy and lend lots of money. Do you think factoring is sexy? So sexy. Yeah. Okay, great. Well, we definitely achieved both of those goals then. Um and uh and we lent a fair amount of money. We would lend uh free up the cash tied up between doing the work and getting paid on it in a slightly more fintech way than it had been done before. And we sold that business into um another lending business and kind of created a bigger group, which was good. Again, a kind of a long journey, first business venture, lots of things I would have done differently, um, but with a decent enough outcome. So that was good. And then subsequently, we've sort of bought some companies, shifted them operationally and then moved them on. Um, I would say that of the two that we've done subsequently, one is sort of mildly successful, and the other one was like, you know, I'm a crap business, get me out of here type thing. But we were able to do it without losing any money, which weirdly of the three, I feel most proud of, I suppose. Because yeah, it was it's good.

SPEAKER_02 4:11

But yeah, good. So what's interesting is like we're gonna talk today about building to sell. Like, so now that you've done this three times, it's interesting. What what are what are some things we say like to build a sell? What are the things that come to mind for you?

SPEAKER_01 4:25

Just thinking about it all the time. Like what would uh I know you always think about like if you think about it in life, like you go through your education, you go through your your life thinking, I think, how do I keep as many doors open as I possibly can? Or when I've been running businesses, like, well, how do I keep as many doors open as I possibly can? Who will buy me? And then what will they buy me for? Because especially in the SME world, sadly, I'm not talking in the hundreds of millions here. And so therefore, actually, what somebody will pay for it, i.e., the outcome for shareholders or the commercial outcome for shareholders, is pretty much defined, you know, there's not really a multiple, you know, you can sort of adhere to some sort of multiple model, but actually it's what somebody will pay for it. So therefore, you've got to keep as many doors open as you possibly can. The only way to do that is to make sure that you think about it all the time. And I didn't do that the first time, but subsequently, and in the current iteration of businesses, I'm thinking about it all the time. I'm like, is that a good decision? Because does it shrink the amount of people that might be able to buy us, or does it actually expand the amount of people that might be able to buy us? And would it increase your multiple? You know, you build a piece of tech, and you're like, well, is there any value in this for a buyer? Would be one of the questions you'd ask alongside all the normal rationale.

SPEAKER_02 5:44

So yeah, so I was going to try like let's say that sort of if you have a North Star sort of like our business purpose to X, and then you have sort of a sec, is is the is this attractive to a buyer secondary or is it actually primary to that?

SPEAKER_01 5:56

It would be secondary, but you would definitely include it in decision making. We or we would. There's a couple of us in our team, and we would be thinking, is this a good decision for you know the end game here? And actually, to be honest, we're not always thinking about the end game. We're not, you know, it's not like, oh, well, we'll build this tech because it means that we are uh now a fintech rather than just a fin. You know, you wouldn't necessarily do that. But when you are thinking, well, what will we build? How will we build it? Well, okay, that that might add some multiple, or it might open some doors to some new buyers. Or actually, if we can, you know, let's also go for maybe launch an enterprise that's risk X hundred thousand on an enterprise sales division because we seem to be picking up some bigger customers by chance. Well, actually, is that risk a good idea or a bad idea? Well, one of the questions you'd ask yourself is well, does it open more doors? If you can also show that you're doing enterprise sales as well as your SME sales, does that mean that you can suddenly um you know be more attractive to buyer X as well as buyer Y? And we definitely would take that into account when we're thinking about, you know, really high-level strategy for sure.

SPEAKER_02 7:00

Because I was the most extreme example of this I heard was just talking to a founder, and they had they did they had a tech product and they did like a they did their own implementation and they realized that half their revenue came from the tech, half of implementation. And then he was like thinking his business has been going for like three, four years, and he realized that actually the buyer didn't care about the implementation thing. And implementation was like taking up more than half his time and actually he stopped, he outsourced all his implementation. He basically halved his revenue almost overnight because he thought actually when it comes down to sale and multiple, that was all waste effort, which actually played out as as the case. Well, good on him.

SPEAKER_01 7:39

Um but I yeah, I think Yeah, those are the sort of decisions that again we we've spoken about a little bit, but sort of focus narrower is better, but also making sure that you're thinking about you know, what is what does success look like? You know, some people have a a mission and some people and then alongside that have a commercial mission, they're not necessarily the same thing, but if they're not aligned, you're probably screwed. Yeah. I've always been quite honest that I'd quite like to not be day-to-day chief executive businesses, plural or even singular, to be honest, after my 40th birthday. Yeah. And therefore, that gives you a bit of a timeline. We're quite open with that in leadership. In fact, we're open that across the whole business or group of businesses. And so, therefore, that means one is you have to be thinking about making sure you've got the right team in place. Two, you have to make sure, well, you know, does that mean an exit, or does it mean, you know, just moving aside? Well, if you move aside, you've got to have a great team. If you exit, you've got to be set up to exit. And sadly, I'm not that far away from 40. So you really do have to be thinking about it. But yeah, that keeping it front of mind, I think, is very important and keeping as many doors open as you possibly can and thinking, will this be a creative either for your multiple or for the the who will buy you? I think is pretty key. I want to come back from the beginning of how that starts, which is this a lot of Norwich City 2015 victory against Middlesbrough.

SPEAKER_02 9:02

Or launching a business, like what that means for you, like terms of how embedded it is. But I'm thinking about this this let's say 40 deadline. Do you feel that that ever puts you under a sense of rush?

SPEAKER_01 9:15

No, it does now. It didn't when I started thinking about it. No, because it everyone understands that that's flexible. I think you know, you you can't put a deadline on when this will be really done. It just is a, you know, it's a want, not a need. And um it just gives you a really tangible time frame. You know, when you're building business plans, you know, you don't fall off the edge of a cliff at the age of four, well, maybe you do, I don't know, yeah, to get there. But we've basically got three years. So therefore, you put in place a three-year business plan. The year before that, we had a four-year business plan, and the year before that, we had a five-year business plan. And so if you keep hitting your goals, you don't really need to extend that business plan out. And that can either be towards an exit. Now, I'm not naive enough to think that when you sell a company, you're not asked to stay on. I've had that problem once before, where I have been asked to stay on, and I'm not employable, unfortunately. And so, no, I don't think in the short answer is no, I don't think it puts you on a rush. I think it puts you on a timeline. And so long as you're really clear that look, it's a timeline to just what is coming next, and if it means I work 20 more years, but I'm more comfortable doing it either financially or that we've built such a great leadership team over that period that I can step away a little bit and I step away on my 43rd birthday, I'm cool with that. But it gives, I really think it gives you a focus and that gives you real clarity. And certainly, and also for the shareholders, the staff shareholders in our business, it gives them a bit of an end game. Now, don't get me wrong, some of the staff shareholders are thinking, Chris, what am I what job am I going to do after this? And you do have to do a bit of explaining to be like, well, the company doesn't disappear, and certainly I won't disappear on that day, but let's work towards that goal. And if it leaks one way or we get a really good offer on my 39th birthday, happy days, you know. So it's a little bit, yeah, moving feast.

SPEAKER_02 10:58

So when let's say when you start the business then, has this been at this time explicit from from day one?

SPEAKER_01 11:06

Yeah. And I suppose so we have uh a group and uh the the investment vehicle, so this the company that sort of sits atop the group, the goal is to buy or build companies within the sectors that we're really comfortable in, make them as efficient as possible, scale them to a point that we would define, you know, as you define the success, that's where you want to get to. And then you work towards that North Star, and every decision you make kind of goes towards that North Star. So across our group, we've kind of got different companies on moving at different paces, doing different things, different leadership, literally different jurisdictions of leadership, um, different involvement from me. There's there's various different things, but all the way through each, certainly each management team, and often all the way through to the right of the ground floor, everyone will know that sort of you're working towards a three-year plan, definitely. They might not necessarily know, you know, they probably don't know my age because I look so good for it, I reckon. But the uh 22. 22, yeah. My sister said last night, she said, I just if I did Botox, I just want to lock in 29. I was like, well, you're like four years past that.

SPEAKER_02 12:14

Anyway, yeah. So is every is every company within your sort of portfolio then, are they all on the same, roughly the same timeline?

SPEAKER_01 12:23

Yes, roughly. Um mainly because the timeline is the same, not necessarily because their trajectories are the same, in fact, they're actively not the same. But we won't probably during this cycle between now and four to three years' time, we probably won't go and buy more companies, probably won't found any more businesses. And if we did buy companies, there would be plugins to our existing business to make them more valuable so that we would be able to either get an exit or be in a position where the businesses are of a value and the leadership team is of a value that you can sort of make the decisions for the next step. And I think like, yeah, they're all on the same time frame, but the time frame is the thing that's set, not the trajectory of the businesses. That's you know, it is under your control a lot of it, but it's not you know, it's not quite as controlled as the space-time continuum, which which I can set that easily.

SPEAKER_02 13:14

That's what I think you do, if you do a speech like in 10 years' time when you go, this was my master plan, this is how it all played out perfectly.

SPEAKER_01 13:20

And here are my 42 businesses that I've failed to exit.

SPEAKER_02 13:23

So, how then do you so if we look at sort of building the scale, so it's building sales. Step one is kind of acknowledging that's what you're doing. Definitely. And having some form of timeline on it, and then having it as a question at the back of your mind as a secondary one, like, do I do this, do I not? So it's a useful sort of decision criteria, prioritization thing.

SPEAKER_01 13:44

Yeah, I think valuation as well, right? You've got to be thinking about so you can you can set your timeline, but if you don't set a goal to that timeline and it's got to be achievable, you can't be like, well, we have an employer of record business um which hires great um great South African people into UK businesses. And if we said, Oh, we need a hundred thousand people working, and you're like, well, we're at a thousand now, and it's like, well, we've got three years, let's go, you know, you it's totally unachievable. And so you've you've got to align, like they've they've got to align, otherwise you're mad. And also you've got to be thinking, well, what is it that we can do through that time to increase valuation, increase the commercial, um, you know, increase the multiple, what whatever you can do. I think the commercial side of it, if one of the missions is a commercial mission, like this is how much I want to make, or this is how much the company must be worth, or this is how much shareholders must return, whatever it might be, you must set that at the outset. And that's the key sense check. Because if your number is a hundred times where it is today and you're moving it, you know, you're doubling year on year, I can say for three you're not XT in three years' time for that number. And I think you you making sure that those three are strategically aligned, or not even strategically, just do these match? You know, are we going to get to this number by this time? And are we thinking about it? And is there anything we can do here that will make this faster or whatever? Yeah, you can't do it without having that number or that whatever it is that you've got at that end as well.

SPEAKER_02 15:11

Unless you follow your sister's approach and you have like 10 40th birthdays. Exactly. Exactly.

SPEAKER_01 15:16

And 40 again this year. Yeah, or 29, forever 29. Just another injection on that.

SPEAKER_02 15:23

She's gonna hate me. So we've got sort of set defining from the beginning what success looks like, saying it's important. What then do you think you do differently when you're running it to make it sellable?

SPEAKER_01 15:40

I'm very, very focused at the moment, for example, in management teams. So I'm annoying, I'm undoubtedly a micromanager, or I'm not, I've there's so much going on that I'm totally absent and then a micromanager, and that must be a massive pain. So making sure that I don't manage teams, making sure that I manage a really good senior person that then manages teams, particularly in we've got a big team in South Africa, a little team in India, medium-sized team here, making sure that that is set up, I think is really, really crucial. So if you're thinking about an exit, which you would be if you're thinking about an exit, if you're thinking about an exit, and ultimately in boring businesses that's different. And I run quite boring businesses. I'm not sadly not anthropic, you know. But companies like that can just go, you know, gangbusters and the the infrastructure doesn't really matter as much because you you go wild, you spend as much money as you can, and then you get bought out, or you do whatever we list, gain 50% in a day, whatever it might be, in a slightly more boring business like ours, making sure that you're as obsolete as you possibly can be. That's certainly my current focus because it got quite big on us this year over the course of maybe the back end of last year, start of this year. You know, we started looking at our group and thinking, Christ, well, I can't be involved in everything. Um, the three or four kind of I don't mean competent that everyone else is incompetent, but the three or four maybe closest conciliaries to me couldn't be involved in everything. I think the team, I think that's the thing you've got to be thinking about all the time. And I probably at the start of this journey, this this iteration of thinking about exit is plural. I probably neglected that a bit too much. Um and sort of let it kind of let it roll. Where I was like, Well, I'll take care of Team X and Team Y and Team Z. And I've got a really good manager who does team A. And it's like, well, yeah, but I've now got three teams. And if there's multiple companies, you've suddenly got nine teams, you know, you end up being like, Well, how many people report into you? You're like, Well, I know 32. And then I'm being like, Well, okay, I've got quarterly reviews. I mean, we're literally in the midst of quarterly reviews at the moment, and I'm down to 11, but I was at 30. Like, that's a lot, and you've got to really think about people because otherwise you're then not giving them the progression that they want and you know, giving them the feedback that they want and kind of doing them a bit of a disservice. It's like, well, you can't do that in five days, and then you think, well, it's 10 days or 15 days. Well, you think, well, 15 days over the course of the you do it four times a year, plus you've got your strategy stuff. How much time are you spending managing people? You're probably taking like three months of working time just managing your people, and then when somebody comes to buy you, they think, Well, this this guy, oh my god, how does he manage all these people? Uh he must be either really good or really crap, depending on what they what they think. Let's lock him in for three years. Yeah, so let's lock him, let's lock him in for 10 because it what a yeah. This so I think that's really, really important. That's a massive focus for me now, three years out, is making sure that when when we hire people, um, you know, maybe in the early days, budget means that you sort of have to really grow, you know, you you take on high potential people and you sort of, you know, it's not my first rodeo. So hopefully you kind of help to nurture and grow and people step up. And but now we're sort of thinking, well, actually, we probably don't have time for that. So that would be a bit more rushed, be like, right, will this person be really great if we were, if we were a buyer now and we interviewed the leadership team, for example? Would I, as if I were buying this company, would I sit in front of this person and say, oh, this is a great, this is a long-term, you know, high high talent quotient, you know, engaged, you know, but also still able to come in three years out from that and be part of the build. Um, and therefore you might have to change your budgets a little bit.

SPEAKER_02 19:27

If you had your time again, it's not like you you say you've come to this almost later than you would have done. There's definitely this stage, it's about bringing in people who can have enough impact within this time frame. What would you have done differently at the beginning?

SPEAKER_01 19:40

We sort of landed on four or five people, particularly in our set. We have a South African team of about 80 across our group. And we landed upon some really, really good people. But actually, it's really gratifying gratifying, it makes you sound like it's on me, it's not, it's on them, but they've sort of grown into their roles. So if you change it, they probably wouldn't have that space to kind of grow into their roles. So then when you either exit or you sort of change the business or move things, you may be, yeah, I think loyalty is a rubbish word. Like it, you're not asking for loyalty, like if you know people turn up to work and they get paid to turn up to work. Like there's lots around that, but I don't really believe in loyalty. Like if you treat someone badly, they're gonna leave, or they should. But you get the loyalty and the kind of brand identity and the company identity and the ways of working and the like, not necessarily what would Alex do, but what would the company do? What would we, you know, how would we react to this sort of issue in the past? You kind of get that sort of robustness. And I suppose if we changed the way that we were working, we went for 15 really competent leaders at the start. One, maybe you wouldn't have the budget to go quite as quickly because you don't hire as many people on the ground. And two, is that now that you start making tweaks as you do in any business, you maybe wouldn't have the sort of the grounding and the foundation of the people, you know, the not the lifers, but the people who've been there long term who can be like, well, actually, last time we went through a restructure of our sales department, this was really important, or we screwed this up, so let's not screw that up again, or whatever it might be. So I think those are whether I would necessarily change things, I'm not sure, but definitely it's got to be a focus now because it as it as the business grows and you know, you really, you know, there is possible exit on the horizon because there isn't on day one, you really have to think about it. You have to be like, well, Christ, I really can't manage, but I cannot have 11 managers reporting into me. That's wild.

SPEAKER_02 21:32

So what I'm saying from that is that there's actually if you did a retrospective framework on it, almost you say the early years you can take a bit more risk and go like plant your seeds of like high potential people. You don't know who's going to make it through, but you hope if you hire right, some of them might. And that allows you to celebrate later. But at some point, there's this kind of time window that I need to have a management team or like key people identified. And if I bring people in then, I maybe don't have as much room to bring. Plant seeds, it's now about planting like saplings rather than seeds.

SPEAKER_01 22:05

I think so. I I think so. And I yeah, I think so. And actually, irrespective of my own timelines, there also is a there also is a business need as well, because you have a sales team of 12 young, energetic, I was gonna say high testosterone, but they're not that's a good mix of people, but you know the the type and you have that team. Well, actually, if I'm managing them, because they will take up a lot of my time because they're sort of a type people. Well, actually, I'm not sure the other part of the business will necessarily get my focus. But if that sales team was two or three, well, maybe it you wouldn't necessarily need a leader at that point, and you'd hope that someone would kind of come to the fore. But actually, in you know, in an early stage hierarchy, you can be as flat as you like and sow the seeds and water them and again take a lot of time. But everything now, I I don't have the time to personally to sort of everyone's very has to be very self-driven if they're managed by me. And therefore, you it's a really high-risk strategy to get a you know, a 23-year-old with a hugely high ceiling and just kind of hope, you know, hit and hope, whereas you can do that in a much smaller enterprise. So I think that leadership function is really, really key. And I got that historically. I've I don't I I've learned my lessons there.

SPEAKER_02 23:25

Because it sounds like the danger that you become the bottleneck because you have like say large team, like there's a time cost even with 11, but certainly at say at third director court, there's a lot, there's a lot of time caught uh time cost. Even 11, that feels like. Oh, yeah, it's got to be three.

unknown 23:38

Yeah. Yeah.

SPEAKER_02 23:39

How do you feel then that as a leader you would change as you're building these managers and management teams? How do you feel that changes the way you would lead?

SPEAKER_01 23:48

Well, to be honest, I'm I've been quite a slow learner historically because as sort of a I've one business where I'm kind of a co-founder and he's more experienced than me and is happy to tell me how it is, which I enjoy, to be honest. In the other businesses, I'm definitely the founder, and the sort of um the power balance is very much that I'm the boss, I suppose. But these guys are starting to be able to feedback to me. And actually, I've literally last week I had a meeting with the group head of marketing, marketing, whatever job title it is, marketing manager, senior marketing manager, relatively new guy, experienced manager, um, came in from a not dissimilar sector where he'd grown through this company, got to like been part of the build, then was part of the execution, and then wanted to move on for whatever reason it was. And I picked up the phone to him and he said, Look, you give really good feedback, but if you can stop slacking me and my team, that'd be great. I was like, sure. And he's like, Because everyone jumps. If you say jump, they start jumping. And I'm trying to run it, run a function here, and I'm trying to run a function that can scale and grow. And I think that that's not the first time I've been told that, but it hopefully will be the last. Like I really think like if you bring these people in where you maybe pay them a little bit more, or you you hire a bit more experience, or you know, you you kind of got to at least take the risk that you've got the higher right and give them that empowerment to be able to do it and therefore communicate with them in a way that is sort of appropriate to the level that you're trying to get the business to. And so that just last week he sort of said that to me. He's like, please stop slacking me and my team. Certainly change your Slack from an enter to a control enter so that you just send one big thing rather than like hi, how are you? Um, and I was like, Thank you very much for the feedback. Because you have the cap locks as well. Yeah, yeah, yeah. Please just stop being a twerk. But continue the memes, the memes are great. Yeah, yeah, exactly, exactly. Yeah, if you just yeah, keep thumbs-upping us, that's fine. Like, you know, call us out on the weekly call, but then but apart from that, just leave me alone.

SPEAKER_02 26:00

I had come to believe that actually the biggest gift you can give your team is three month certainty. Okay. Obviously, stuff changes, but I think if you can give them three months certainty, they can really focus on doing their job. And if the leaders, you can get like three months out. By three months certainty, what do you like if they know what they're going to be doing for the next three months? Yeah. Yeah. Then and like the priorities aren't going to change, you're not going to have a good idea. And like, I used to give one in my team a Twitch, I think. I was coming on Monday morning and go, I've had a great idea over the weekend. And she's like, I hate your ideas. Like, because what it really means is you're kind of like you're jerking the steering wheel kind of on a weekly basis.

SPEAKER_01 26:35

Yeah. Although I think the thing I do struggle with, without a doubt, is feeling a bit out of control. And I think that is a, you know, the founder business, you know, business leader characteristic, and certainly stereotypical characteristic, is that you're a massive control freak. I definitely am, and and have been. And through my companies, it has undoubtedly been a constrictor of growth. But I'm not sure I would change it necessarily, which is weird because I think that's like the the more I think about it, the more kind of mature I get, the more experience I get, clearly, the more obvious it becomes that you you are the bottleneck here. As you sort of build a business, you've I suppose you what I've definitely learned is there's got to be a point to do that. And I wouldn't say, even though I've had these kind of exits, the first one, I never gave that up ever. And then was tied in for three years, found out I was unemployable after about 15 minutes, and lasted less than less than a year, less than half of that, which left a load of money on the table, a load of opportunity on the table. I sort of did it quite petulantly as well. Like, you know, I didn't fall out with anyone, but you know, I certainly could have sat there and done the employee thing for a little bit had I not. But because I was very control freaky, I suddenly was like, well, hang on, you know, I'm supposed to make those decisions. So yeah, but we've now got a team of 15 marketing people. So you don't need to make that decision, you can shut up, you know. Um, and being told that was quite tricky. But I yeah, I think there's like learning that is something, and I think it's very easy to sit opposite you and say, Well, I've learned that. I definitely haven't, I definitely don't execute on that every day for sure. But yeah, that's like empowering people, giving them the certainty, giving them the clarity. Um, and also they have to be able to drive that too. So putting in struct in the structures to sort of say, okay, right, we're at the end of a quarter now, whatever the middle of July. We've done our quarterly reviews, apart from me, but most people have done their quarterly reviews. You've we've done up, we do a quarterly like strategy document and a monthly report for all through the business for each operating company or each kind of big department. So sales operating company one would be a big department. And you've got some changes, you get a to-do list, you then go and kind of do it. You have to be able to sort of see that, you know, as a control for you have to see that work a couple of times with somebody else executing it. And that does mean getting involved. And I suppose a big part of that is then the relationship you've got with the person leading it. And certainly in one of our operating companies, I've got a really great relationship with the guy. We get on really well. His weakness is probably like he's not very good with a blank sheet of paper. My weakness is I'm not a complete finisher. Perfect. Like it works really nicely. I say my weak, one of my weaknesses. And so that sort of thing, we get a really we go and we sat in my house, sat in the garden on one of those roasting days. Um, whilst my two whilst my small child was asleep and the nanny was sick, we sat in the garden and we put together this strategy, and now we wrote it down, I wrote it down, he added to it, and he will go and execute on that. But it'll be the first time that he will be truly kind of leading that. And I feel deeply uncomfortable to be honest.

SPEAKER_02 29:51

So we'll see how that goes. But I think that's I think there's different types of control. And it sounds like there's like after we have an invisible control system, I think these sort of these operating rhythms of court to check-ins, and particularly if you've got the right people, it's kind of building the trust, like how reliable are people to get it done. And so if you build that trust over time.

SPEAKER_01 30:10

Yeah, and especially when you've got 11 people reporting into you, you almost can kind of like the ranking of performance is basically on trust, right? Because almost, you know, you have to learn that 90% of your vision is way better if it if somebody else is doing it than 100% of your vision, but you're doing it four times because you're constricting somebody in their management leadership role, and it's probably taking five times as long.

SPEAKER_02 30:37

Yeah.

SPEAKER_01 30:37

And I I definitely learned that lesson. It's just a case of how do you be really consistent on that without having certainly from my perspective, like, you know, at what point do you end up having a heart attack because you go in and look at something and it's at 70% rather than 90%. You're like, oh my God, we're going bust tomorrow, you know. Like which I think, again, that's path of the course, isn't it? Like if you run companies, you're going bust every day, I'm pretty sure.

SPEAKER_02 31:00

Like I do think running a company, it's kind of like it's it could almost fall apart. Like you think you think, oh, just if these three things happened in a row, it could all fall apart. And it's just amazing that you run it for like five years, and those three things never happen around. If they do happen, actually it requires four, five, and six.

SPEAKER_01 31:16

And it's like, wasn't Trump and trust like sort of six months apart? Like, if if if we're gonna survive, like you know, these drive them. Yeah, these enormous like political booms like this. I mean, this year you get like you get you have Iran, you have what does that do for like we have a uh business that is a debt advisory company, so a lot of the success is based upon appetite for funding, like companies that want funding and appetite for lending, i.e., the companies that are doing the lending and their appetite. Well, I can tell you for free that 15 minutes after the ayatollah is is uh you know, is is bombed uh into what is not a submission, you are thinking, oh my god, like this the whole thing's gonna go to pot here. But we didn't panic. You know, you have to be quite it's a very sporting analogy, hopefully in the next final, but I don't go too, you don't get too high and you don't get too low. And I do think that's a big lesson. And certainly I've learned that over time is not to be quite such a sharer in the office. I was like, oh my God, can you believe you know, this Iran thing is gonna mean that interest rates do this and the oil price does this and logistics companies are going bastard? Oh my God. Like the less of that you can share, and the more like, no, trust the like, trust the process, keep doing this. Like we know that we're gonna be okay. And these things last a matter of months, and we've got a good company. So in a few months' time, which it has, it will flip around. And and the pent up, you know, people still need money, the pent up desire, the pent-up need to lend because you've got LPs, it will just free up the capital system again and it will be okay. And like you you kind of got to do that, I think, a bit. And certainly too high, too low is a big Christ, a big lesson. First five years, not so much.

SPEAKER_02 33:02

How how do you combine, let's say, to to sort of wrap up the the uh building to sell and the team? Do you find that that clarity helps with the team? Like if if if if allowing you to step back, making you sort of not the bottleneck is the goal to help you build on this vision, do you find this sort of setting the scene, all right? This is what we're doing helps with that or hinders it?

SPEAKER_01 33:25

I'll tell you in six months. I I don't know. Um, I assume it would help it actually, because that's what we've done. Um, I don't know. I would like to think it will help. And again, I think people like clarity, even if the answer is the answer they don't want. People want that answer. I think the moment you create any opaqueness, people panic. And we've we've got we've got some people in our business that are remote working, and if you create any level of um any lack of clarity at all, you almost go like productivity on the floor, sort of the you know, gossip, so to speak, and everyone gossips in the office, but you normally walk around the office and you have a bit of a gossip, you grab your coffee and you're back to your desk. If you're remote, you're doing it, you're thinking about it, you're beating yourself up about it, and you're having a phone call. And some because we've got a little bit of like because of the way we've put the businesses together, we've got a few people like that, and then they end up in a bit of trouble themselves because I think, oh my god, like what happens if this and you're like, what a lesson. Like, just be as clear as you possibly can, even if the answer is no. You know, like and I think that definitely stands you in good stead. And I think that's from the cleaner through to the managing director, for sure for sure. Like it has to be.

SPEAKER_02 34:40

What about when you're hiring? Are you explicit on this when you're hiring as well?

SPEAKER_01 34:44

Not so much. Uh by this, you mean we're thinking about exit. And I think we're quite explicit that there's that the business will be built to exit. Certainly, when we're hiring leaders, we wouldn't, you know, you hire a social media intern, you wouldn't necessarily talk about the five-year strategy. But again, we're not necessarily building it to exit it. We're building it for me to exit it. And that doesn't mean the business disappears. And actually exiting it doesn't mean the business disappears. Like our our intern in our in our first business, Danny, um she's still with, she's the last woman standing in the company that we then sold, and that's seven, six or seven years on. Plus the four or five years that she had, and she's probably 12 years into her job there, and she came in as a 16-year-old kind of intern. So it doesn't like longevity doesn't disappear, and stability doesn't necessarily disappear with an exit of sorts or a realization moment or you know, some sort of event, you know, and that's probably a really good example of it. But explaining that to people maybe who aren't in leadership, haven't necessarily been through cycles with businesses before, that's a bit tricky. And we're we're not, we'd never lie to people, but we wouldn't sat here talking about it, you know, like um, yeah, we wouldn't ever lie to people, but I think that you wouldn't necessarily interview somebody for a social media management job and be like, hey, we've got three more years, because I'll be like, well, what about my career? Like, which obviously isn't the case, but um, you know, three more years for this iteration of the business so that the current chief exec or you know director can make a decision around the value proposition of that company and what the next stage is. So therefore it's more like setting like hurdles for that time frame, I suppose.

SPEAKER_02 36:30

It's quite an interesting distinction, like sort of it's it's not say the business X thing, it's you X thing. Yeah. And it almost feels like sort of a refunding round of sort of a private equity is kind of like we're gonna go to an event, it's not really changing anything other than maybe leadership and some of the way it's funded.

SPEAKER_01 36:46

Maybe I'd like to see how it plays out, to be honest. I'm sure in honestly, in five years' time, I'll still be sat doing the same thing. I'm and I'm not scared of that, but I do think setting really clear time, time-related, value proposition-related exit goals, because it will make an exit isn't is also a decision, right? You you make a decision, you have agency through that entire process from before you even get an offer on the table all the way through to the end. You you have the decision to be like, I'm I'm out of here. Like I don't, I don't fancy this deal. And actually, I think where we where we talk about an exit is just the easiest way of saying, I would like to be in a position where we can start making decisions, which means that you've you've got to get the business to this sort of size. And that means either you can sell it, you know, I can step back, we can promote somebody internally, we can do this, we can do that. Like you can make a raft of new decisions at that point in time. Um, but exit is probably the best way to characterize that because it's the easiest way to explain it to as many people as you can, I think.

SPEAKER_02 37:42

And what if for founders listening, what's the one thing after listening to this that you think they could do around this would be the most helpful?

SPEAKER_01 37:49

I think a clear mind, like set a time. If you if you want to exit, because I mean, in my case, it's that I don't have I hate the word bandwidth, but I'm about to use it twice. Um, the bandwidth to have a young family and be as present as I want to be, and have a growing business and be as present as I want to be. I don't do both of them at the moment. And I certainly do not have a social life. My fitness is in the dogs. So you you can't run, you can't have a life that is necessary. And and I I'm ambitious enough to think, and I think pragmatic enough to think that you need the capital to be able to go and live your life however you want to. Clarity is the key thing. And it doesn't have to be an exit, doesn't have to be something, it's just be clear about where you want to go. What does success look like? Why? Why does success look like that? And what's the time frame around that? And is that realistic? And if it is, then keep as many doors open as you can, whatever that looks like.

SPEAKER_02 38:41

That's a great summary. I would normally summarise, but actually, I think you've you've nailed it.

SPEAKER_01 38:45

Is that because it's flashing?

SPEAKER_02 38:49

Alex, thank you so much for coming on today. And uh this is gonna be very helpful for people listening. Great. Well, thank you very much for having me. Such a good episode today with Alex. I really love the insight about clarity and just being really clear on what success looks like. And exit doesn't necessarily mean selling, but just as a state of mind thinking about what's going to add value. Really helpful. Remember, hit subscribe, send us any messages at hello at peer hyphen effect.com. We'll see you next Monday for a peer effect postback episode or Wednesday for another founder episode. Happy scaling and thanks for listening.