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Alan Williamson - How to Think Like a CTO
104 Plays2 years ago
Alan Williamson is an experienced Chief Technology Officer and provider of operating partner services in technical and data analytics for private equity and investment companies. In this episode of the First-time Founders Podcast Alan shares his experience from mentoring numerous CTOs who have been catapulted by private equity investment and acquisition from 'a founder's most technical mate' into being expected to deliver robust and elegant software for massively greater scale. Alan also offers really valuable insights on how non-technical founders can more effectively lead technology organisations and get the best out of their own CTO.
Interested listeners can reach Alan (https://www.linkedin.com/in/a1anw2/) at alan@alan.is and Rob (https://www.linkedin.com/in/robertliddiard/) at Rob@mission-group.co.uk
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Transcript
00:00:01
Speaker
Hello
Introduction to Alan Williamson
00:00:01
Speaker
and welcome to the First Time Founders podcast, the show where we talk about how to start a business for nothing and grow it into something meaningful. Today I'm speaking with Alan Williamson. Alan's a really well-regarded CTO that works with private equity organizations, typically buying founder-led businesses at the sort of 10 million, up to 100 million in sales mark. So serious companies, but that because they were born as entrepreneurial outfits, often led by non-technical founder CEOs, sometimes we'll have
00:00:30
Speaker
Let's say a little bit of technical debt that needs to be paid off for the new owners as they come in, when they think about growing the business two, three, 10 times to achieve their growth and exit aspirations with that business. Alan's
Inspiration Behind 'Think Like a CTO'
00:00:43
Speaker
book, Think Like a CTO, is an absolute Bible for first-time founders, particularly non-technical founders, when it comes to understanding how to inspire and hold accountable a technical team, what are best practices around
00:00:58
Speaker
development processes, disaster recovery, documentation, vision. It's really, really worth reading. I met Alan because I read the book and reached out to him and said, my God, I wish I'd read this book before I founded my first software company. So I hope you enjoy. I hope you learned something I certainly did. Without further ado, my conversation with Alan Williams.
00:01:23
Speaker
Alan, welcome to the First Time Founders podcast. Thank you so much for doing this. My honor, Rob. Looking forward to it. So Alan, we of course have become friends since I read your book, like a CTO and shamelessly reached out to you on LinkedIn to tell you how I wish I'd read this book before I founded my company. What made you write the book?
00:01:43
Speaker
for the exact same reason you picked it up. I mean, it was truly that I wish I had that guide when I first went in to being a CTO, because I was somewhat thrown in at the deep end. I had a great mentor that helped me and made sure I wasn't going to mess it up. But fundamentally, if I was a CEO or a CFO, even a salesperson, I had a ton of books looking at me, all giving me different pieces of advice.
Challenges New CTOs Face
00:02:06
Speaker
Even running an engineering team, there's a lot of good advice. But at the CTO level,
00:02:12
Speaker
crickets, tumbleweeds, pick your metaphor. There was nothing, right? And all of the sort of useful articles that would be out there were so frigging high level and watery, they had no detail whatsoever. So it was kind of one of those. And when I started asking around, I discovered that everybody had their own quite varying definition of what a CTO did, but there was a common thread amongst them all.
00:02:42
Speaker
And with my years of working with different technical leaders in the private equity space, et cetera, I was seeing definitely common threads whereby an engineer, usually the most senior engineer in a department or a company, was elevated to the point of we'll give you the CTO title. But nobody actually told them, what do you actually do for that CTO title? It sounds impressive.
00:03:11
Speaker
It's nowhere near as impressive as the other titles. Let's be honest. I mean, it doesn't help you pick up women in a bar. It's not that sort of title because people look at your CTO. I don't even tell my hairdresser when she says, well, what is it you do? I'm in computing because if I say I'm a CTO, nothing. So.
00:03:29
Speaker
It's not one of the sexier titles in the corporate world for sure. And ironically, depending on which level of organization you're in, a CTO is actually the chief transformational officer. If you get in, say, like a McKinsey or one of the big four, they call CTOs transformational officers, which have nothing to do with technology. It's more change management. But anyway, so from my perspective,
00:03:56
Speaker
I could see a lot of problems that each of these engineering leads were having as they lived and breathed the role of being the technical leader for a company. And most of my role at that point was helping them sort of focus and get them to say, getting a technical vision out, laying down a roadmap.
Aligning CTO Vision with CEO Goals
00:04:19
Speaker
getting a lot of the housekeeping stuff that as developers, we don't find sexy. We just, there are irritations to be honest with you, but it's what's required to run a large engineering team and to run a large organization whereby the rest of the company depends on your output. So you don't get the luxury of
00:04:41
Speaker
you know, duct taping it and stringing it together, you kind of have to get this stuff right. You know what made me laugh when I read the book is it clearly was written to bring CTO wherever, you know, a technical leader is in their career. As you read your book, you can, it was, it was quite fun actually reading because you sort of, you know, you, you inhabit the body of a CTO for the time that you're reading the book. But I couldn't, every line that I read, I was thinking,
00:05:06
Speaker
My God, this book is written for founders of, non-technical founders of software businesses. And of course, you say early in the book, when you talk a bit about your own biography, you do a lot of work in private equity where you're coming in typically to first-generation buyers of entrepreneurial companies. Can you talk a little bit about what it's typically like when you go into a company that's just been acquired and has been run for the last 10, 15 years by entrepreneurial misfits, usually led by a non-technical founder?
00:05:36
Speaker
Yeah, and I mean, and there's no blame here. There's no fault that's had. I mean, it's really down from an organic growth of a very excitable entrepreneur that has this vision, has found this space in the market and is desperate to run after it and solve the problem. Now, historically,
00:06:00
Speaker
they may not be a technical based person. So for them, they've probably gone and hired somebody. A lot of the times it's the guy that they live next door to or somebody that knows somebody that knows somebody that has a son that just graduated. You couldn't go and help him with just knocking up a web page of some sort. And that poor guy has, and I use guy in an asexual manner because sometimes girls are in here too, et cetera. It is predominantly a male dominated industry. That's the reality of it is
00:06:30
Speaker
trying to get more in, but that person has been sort of evolved with the evolution of the company, but they have no real external help themselves because they're brand spanking you too, learning and evolving. So
Technical Debt in Startups
00:06:48
Speaker
what you get is a lot of the stuff you look at and you're thinking, huh, well on paper it shouldn't work, but you seem to have made it work.
00:06:59
Speaker
And then when you have a detailed conversation with them during due diligence, you realize it doesn't actually work. It does fall off more often than it doesn't. But that's okay. They have made a business and they've made a successful business with it. So celebrate the fact that they got there.
00:07:19
Speaker
Our job now is to help get rid of a lot of the overhead and technical debt that they've incurred by simply going after a problem without the right knowledge or the right experience to be able to say, am I solving a problem or have I created myself more problems in the process of it, even though the business still thinks they're getting what they need. What level of revenue would they usually have got to by the time you come in with a buyout crew? Anywhere between 10 to 100 million.
00:07:48
Speaker
Right. So like they, they have built software that's power. Oh, yeah. Is it, is it sometimes a stop? Like two, 300 people's salaries are dependent on this company's output. These are not small one or two man shops. Don't get me wrong. And, and, and the, and the team that they've evolved around them, again, this, this is probably an engineer's fault most of the time, but an engineer generally doesn't hire somebody smarter than they are. Right.
00:08:15
Speaker
So what happens is that the guy that thinks he knows everything, the people under him, they're in a worse state than he is because he thinks he's the master of the whole enterprise, but he's missing key parts of his knowledge. So therefore everybody underneath can't actually even ask him to fill out their knowledge. Anyway, it becomes a hodgepodge of stuff. Not everybody's like that, but that is mostly in the majority of it because the founders
00:08:45
Speaker
have been running hard, grabbing market share, creating a business, creating a stuff. They haven't had the time nor the experience to be able to say, stop. We need to refactor or we need to rewrite. We need to retool. It's just kind of evolving, evolving, evolving, evolving. It's kind of like, and you'll know because our UK readers and listeners, et cetera, know the great grand designs
00:09:15
Speaker
Channel 4 series. And sometimes they'll buy a house and you think, well, that house looks kind of cool. Why don't you just extend that house? But then they sort of just destroy it all and start again. It's very hard to get to that decision whereby, yeah, I have to destroy and I'm just looking at it from the plot of land and then I'm going again.
Role of Private Equity in Tech Growth
00:09:39
Speaker
Most entrepreneurs get real prickly and get real nervous when that happens. Because ultimately, that means the business stops evolving for that little period of time where they have to rebuild. They may not have enough money to parallel team it out. So therefore, they have to make do with what they've got. And this is why private equity typically matters. That's really interesting. So actually, Alan, I suggest that there's almost two tracks for this conversation, aren't there?
00:10:09
Speaker
There's the pre-sale phase of entrepreneurship and it sells out what you're saying, it's sort of tacitly endorsing.
00:10:15
Speaker
Just make that shit work, right? When a founder starts a business, in your view, even though your book is all about the best practice of running a technology organization, to some extent would you say it's sort of okay that as long as you can support the sales that you've sold as an entrepreneurial led organization, it's kind of okay to stick it together and make it work as long as when the company grows up, maybe with a change of ownership, then you move on to that different track.
00:10:40
Speaker
Or would you say to entrepreneurs, really, if you could do it properly the first time, you probably shouldn't? A little bit of both, a little bit of both. The problem gets when you are duct taping it, but you convince yourself that is the best solution, right? You're in complete denial that, yeah, don't be putting too much weight on the table. It's not going to cope, right? As long as everybody's going in it with that mindset,
00:11:08
Speaker
then yes, it's OK. Because at the end of the day, you need a successful business. It don't matter if you've got the best platform. If you don't have the right customers and the business isn't fluid with cash flow, it's a moot conversation. So at an early start of a company, yes, cash is king. Customers is king. Renewable income is king. And whatever you need to do to make your platform work, just do it.
00:11:36
Speaker
Hindsight's a wonderful thing and any entrepreneur and any CTO that's gone through that phase, they all know themselves which bits they wouldn't do again that it's so much easier to do when the house is all laid bare and you can put in the plumbing and you put in the electric cables instead of ripping open walls again to go after it. So therefore, those people have got a, their second
00:12:02
Speaker
Company is usually in a much better state, and the first company will. Hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence, hence
00:12:33
Speaker
Yes, it's OK, because when a private equity company comes in or an investment group comes in, they aren't coming in with their eyes blinkered. They're coming in with their eyes wide open. And that's part of the diligence process at all aspects of a company is figuring out, what is it we're buying? What do I really have? Which is why it's horrendously important to be honest
00:12:58
Speaker
with your potential buyer. Interesting. You never want to hide anything from them because the last thing you want to do is pretend that the organization is a well run, well oiled machine. They come in and they realize it's belching out smoke at the back here and saying, shit, I have to replace the engine. You've already lost the mistrust between your investment group and your management group. What else are you hiding? What else have you not told us now that we've bought this?
00:13:28
Speaker
I'm always a big believer in being honest and open. Because what we're doing, particularly from the PE side of the fence, is we're looking at that company and thinking, brilliant idea, brilliant market space. They've got a significant market capture. Technology, that ain't going to work. We're going to have to redo that one. But we'll put money in at the start and invest, knowing that we have to rebuild that out.
00:13:59
Speaker
We sometimes have to build out the back office because their
Forecasting and Delivering Product Updates
00:14:01
Speaker
accounting system, which was run on Excel, isn't going to grow. So we need to put in, say, QuickBooks or Sage or NetSuite from that perspective. Or the sales organization needs a little bit more modernization because everything needs the owner of the company to close the sale.
00:14:19
Speaker
And we can't scale a company if it's one person that's always there that's doing the negotiations. So every part of the ecosystem has to sort of grow up and grow beyond a single person in order for it to grow. And technology, the good news there is it can always be solved.
00:14:43
Speaker
Right. So we never get ourselves into a problem whereby it's just an impossible situation. If you've managed to grow a business based on whatever stack, whatever language, whatever it is you're doing, however clunky it is, can always be replaced. That's exciting. I'll tell you what's interesting. So as you talk about rebuilding platforms and things, one of the things that tortured me for
00:15:05
Speaker
My Yapster Journey, my SaaS business was eight years all in all. And I would say six years of that was utterly miserable in terms of forecasting, well, revenue, but that's another topic, but forecasting products, deliverables. In your book, you talk about the development process.
00:15:25
Speaker
How do you think about shipping product kind of to the right quality, roughly on time? Are you fairly prescriptive with your boards in terms of when you expect stuff to land? Or do you give yourself quite a lot of latitude? Because I think that's something a lot of first-time founders struggle with, right? They appoint their best mate as their CTO, and then they promise customers a whole bunch of stuff, and then they just pray to God that the tech teams ship it roughly when they said they were going to.
00:15:49
Speaker
Yeah, I mean, it's more art than science, to be quite honest with you. Everybody gets it late. And we just need to look at the world's richest man to realize that even Tesla does not get products out in time. I mean, we're still waiting for the Cybertruck. We're still waiting for the supercar, et cetera. He's the classic, never delivers, always promises salesperson. Software is plagued with this. There's no doubt about it.
00:16:18
Speaker
My, my take on it is stop delivering big, start delivering small, release small release often. And that that's a hard thing to get into because sometimes there are areas where you just need to get a good chunk done in order to unlock the next phase of it. What you never want to get into, and that's where it has to be a very close partnership with the CEO is.
00:16:45
Speaker
building a particular feature or milestone that is too far away, that the business is being hampered with sales and they can't close deals, or they're starting to lose the loyalty and the goodwill of customers because you're in the Elon Musk situation of you're never delivering, but you're always promising.
00:17:05
Speaker
Okay. And that's a very hard thing to get back on. And at least if you're Elon Musk, you might've delivered one or two successful models to buy you a little bit of time. Whereas when you're the average first time founder with your small subscale startup, you don't have any of that goodwill in the bank, do you? No. And that's why you need a couple of really close
00:17:28
Speaker
partners or customers, whereby you maybe not even be charging them, but they're there more as your beta testers to really flesh out what's needed, what doesn't work. And again, I think a lot of, a lot of sort of particularly young startups, they're led by what they think the customer wants.
00:17:51
Speaker
They think, this needs all these shiny bells and whistles. Whereas if they truly had the empathetic view of what the customer needed, they'd probably only need to deliver 20% of what they were aiming for, because that's all the customer's really going to use on a day-to-day basis. Yeah, for sure. Everything else is just fluff or window dressing that may evolve to a core feature at a later date.
00:18:14
Speaker
But are you actually solving the original problem that we're trying to get after? Alan, to what extent you talk in your book a lot about the need for a CTO to have a vision. Does this overlap in any way with the context of vision or have I misunderstood that? Yes, no, it does. It does. But again, the vision is in support of what the CEO's vision is. Can you give me an example of what a CEO's vision might be and then what a corresponding CTO's vision might be?
00:18:40
Speaker
So CEO Vision may decide that they want to, let's think about this, there's different market spaces, but let me give you an example of one of our portfolios at the moment. Say for example, they want to provide a given service within the three adjoining states of where they're located and they want to make sure that all of their customers are no more than 20 minutes drive away from a location.
00:19:11
Speaker
OK, so we've got a various number of health care type businesses, from therapy to eye surgery to ear and nose and throat, et cetera. And that's one of the criteria is we want to make sure that we're nowhere geographically located quickly. So that's the CEO's vision. So the technologist's vision has got to be, how are we going to build a platform to make sure that we are coordinated and that we can actually reach and achieve
00:19:41
Speaker
the CEO's vision of being within this close. So
Evaluating and Aligning Tech Decisions
00:19:44
Speaker
therefore, the decisions that we're making, the products that we're building has got to be in full support of that. Now, the vision at some point, once we're successful there, he's clearly going to say, we're going to expand that now to multiple states. We're going to go elsewhere, OK? So the vision has got to think ahead of the CEO in a number of areas to figure out, OK,
00:20:10
Speaker
Now that he says we're going to go with the full Eastern board of the US, do I have to go back to the drawing board here? Or can my vision evolve to cope with that? That may be somewhat of a contrived example given you hit me on the spot with that one. But the premise is still the same. Am I choosing the right technical stack? Am I choosing the right team? Am I choosing the right architectural design patterns that will in actual fact support
00:20:39
Speaker
the business is where they're needing to go. Another example may be that the CEO says, we want to get a closer relationship with our partners so that they can be a lot more self-serve. Great. A technologist hears that and screams, I got to provide APIs.
00:20:56
Speaker
In order for us to integrate with third parties, then I got to be able to either call their APIs or have them call my APIs. So from that perspective, my vision is to build a micro-serviced API-driven architecture that can keep up with the scale of the business. So everything that we deliver has got to be in pursuit of creating that set of APIs that's well-documented, that's well-secured, it's logged, it's got audit trails, it's got billable stuff if we're going to charge people in the number of times they call us, et cetera.
00:21:26
Speaker
That's the technologist's vision. No, the CEO can look at that and say, holy crap, that's a phenomenon. Now I can sell this. This is something that will actually help me grow my company. How would you recommend a first time non-technical founder validate that their CTO's vision
00:21:48
Speaker
technology vision is in fact gonna be able to service the CEO's higher vision. The reason I ask you, I'll be specific, so I'll confess some of my own sort of dirty laundry. When we founded Japster, right, it was all about being a GDPR compliant secure mobile communication system for frontline people who typically didn't get access to Office 365 or whatever, right? And so the challenge was we needed to build a consumer grade communication product that also had kind of enterprise security features and integrations.
00:22:16
Speaker
And at the time React Native, the platform popularized by Facebook that of course now supports desktop, Android, iPhone, lots of consumer products are built on that, at the time didn't support desktop, I think, and we thought we needed to be across three. So we picked, my co-founder CTO picked Cordova.
00:22:35
Speaker
And we built a pretty good business and we're proud of what we did. But the thing that always held us back was that we couldn't quite get to the true consumer grade experience that we kind of pictured when we visited the business at the beginning. Because the technical limitations just meant that like it was never going to catch it. It was never going to feel consumer-like to the end users because none of the consumer products they were using in their personal life were built on Cordova.
00:23:01
Speaker
As a non-technic founder, is there any way that I could have known that or been a better partner to my co-founder to sort of help him through some of those technical decisions? Because I feel like he was a better partner to me, interrogating some of my sales and marketing ideas, because you didn't need to be a sales and marketing expert, you could just be intelligent to have an informed view. Whereas I felt like I never added any value to him, helping him think through some technology decisions. Well, I think, I mean, that's always a hard, hard one to answer that one, Rob, but I would say that
00:23:31
Speaker
In your heart, you knew you didn't have that consumer-based quality, okay? So from that perspective, as the CTO, I would have kept asking you, then who's your benchmark? Which app is the one that you consider to be consumer grade that I should be interested in? And Craig did say that to me, to be fair, and I said, what's up? Okay, that's fair news. So because then I would have said, great,
00:24:00
Speaker
We probably don't have the budget and we don't have the skill sets at this precise moment to do native apps for Android and iOS in order to get us to that full stuff. Because that's effectively two separate development teams. What I've given you now is a watered down version that will work across both platforms without having to redevelop specifically for these platforms. So what I've given you now is effectively a proof of concept. It's enough for us to prove the business and to prove the nature of the stuff.
00:24:30
Speaker
And to go back to the original question, a good vision from both the CTO and the CEO, they should sort of egg each other on. Because you'll say, here's where I want to go. And he'll say, well, I'm going to get you to here. And you'll go, wow, well, shit, well, if I get to here, then I can get to here. Because you've unlocked more possibilities for me.
00:24:56
Speaker
You know what's interesting Alan? He did in fact do everything that you suggested he should. And you know what's interesting? Rather than really hearing what he was saying, it's a bit like how customers always gave me some really interesting insights that at the time I thought I was listening to, but now when I look back, I wasn't listening nearly as well as I should have done.
00:25:13
Speaker
And actually, what Craig said, we could have pivoted into being a learning platform and an HR system, then would have meant that we didn't have to match consumer grade experience for the messaging components, because we would have gone into a different territory. Or we could have sought to raise a gazillion dollars and maintain native teams to be a pure play communication platform that was closer to WhatsApp.
00:25:34
Speaker
I as CEO have to live with the fact that I didn't do either of those things. I just plowed on through the middle trying to be a pure play messaging system on angel funding, right? That then wasn't able to go and rebuild or move on to the platforms that could deliver that. So it's quite confronting, but it's interesting to hear you kind of role play and say to me what a great CTO would and should have said in that situation, realizing that he did in fact say that, and I'm the fucking idiot that didn't listen and changed the strategy.
00:26:04
Speaker
Well, I didn't want to point the finger there, Rob, but since the finger seems to be wiggling in your general direction, uh, yeah. And I think, but, but, but again, it speaks to the partnership of both of those roles is, is making sure that, that each one is keeping the other one honest.
Venture Capital vs. Private Equity
00:26:20
Speaker
Right. And, and, but you had a different objective, so you cannot be held fault there either. But again, it's, it's that maybe you needed a mentor.
00:26:32
Speaker
that was outside to say, OK, Rob, you need to get to this position before we start talking about this level first. Now, what do we need to do to get to this level? And yeah, you're in angel funding, et cetera. Maybe there was a point where you'd say, well, let's get in private equity or let's get in VC funding, two different routes, two different paths. But fundamentally, they are external help that's sort of been there and done it.
00:26:56
Speaker
not on your specific product, but in terms of building and growing and scaling a company, i.e. they're not scared of the large numbers to bring in investment and say, right, well, okay, you clearly need two teams to do blah, blah, blah, blah, blah. We're going to fund that. And here's what the money is because we know how much this usually costs. So don't stress about the fact that, oh, shit, I'm spending $2 million in development for the next three years.
00:27:19
Speaker
That seems a big number to you, but to those guys, it's nothing because that's they know what it takes. And they can see different paths to success as well, can't they? I mean, one of the things Craig and I laugh about now is 18 months after founding Yapster, where we had very, very limited functionality, a business called Superjoy. Do you know the brand Superjoy? Supergroup? Yeah, so Supergroup rolled us out internationally across 5,000 employees across about 50 countries.
00:27:49
Speaker
And we were like hot building like basic notification functionality. We added the sort of Instagram style newsfeed after the thing had been rolled out across these 50 countries. And at the time we were just so desperately just trying to keep up rather than thinking Christ, this is a signal that we could be really onto something here. We should go speak to somebody that's done this before has got deeper pockets than we have that can help us take some of the chaos out of this early success.
00:28:20
Speaker
Yeah. Yeah. And that's what, I mean, for the subtle difference between VC and private equity, is it VC is more of a, we're going to roll the dice because you haven't proven yourself yet. And we only need one in a hundred to be successful. PE is more of a, we need one in every, we need all a hundred to be successful.
00:28:40
Speaker
We're not betting on anything. We're investing in a sure thing. You've established customers. You've established a market space. There is growth. And there's a lot more runway that you haven't even begun to explore. That's where PE is going. Now, it's always a good litmus test that when you get to a certain level, if you start shopping yourself around PE firms, getting yourself a good investment banker to do that, if nobody's taking your calls,
00:29:07
Speaker
then they're clearly seeing something that you're not and maybe you're just too far out. Because they're not stupid, are they? They're not stupid, but sometimes they don't often take a big risk. You know, PE wouldn't got involved in say Uber or Dropbox because
00:29:23
Speaker
Those are perfect examples of where you need the network effect to kick in. Uber doesn't work if there's only one taxi driver in the city. It needs a significant amount of investment in order to build up the network. Same thing with Airbnb and those type of companies where you see, I need a large user base to be able to make this thing work.
00:29:46
Speaker
Because their own investors are quite demanding. Yeah, their own investors are really demanding as well, aren't they? So it's not just that they're being jerks, it's that they can't be taking punts. No,
Adjusting to Private Equity Dynamics
00:29:57
Speaker
no. And PE's usually coming from like school endowments, pension funds. They're the real sort of powerhouse when it comes to investment, i.e. you don't lose that money.
00:30:08
Speaker
And we make sure that we try everything to make sure that we don't lose that much. So let's assume that some of the people listening are interested in building up their business and selling it to private equity. A couple of areas from your book that jumped out on me that I thought was sort of interesting and instructive. Dealing with boards, because I guess whether you're a CTO or whether you're the co-founder, you're the founder CEO, dealing with the private equity board is probably quite different to what you've done previously, right? A little bit intimidating. Yes, it can be a little bit intimidating, but
00:30:37
Speaker
We like to think of that as, if it's intimidating to you, then you're probably looking at it from the wrong angle. The board is usually once a quarter, and it's a wonderful checkpoint for everybody to make sure that we're still heading in the right direction. We're still going in the right, because sometimes you get, we see this in our daily lives all the time. We have great goals as to what we're going to do.
00:31:02
Speaker
And then daily life kicks in and before you know it, two weeks has gone by or three weeks has gone by and the kitchen table that I was going to rebuild is still sitting there, not touched or the garden hasn't been done, et cetera. It's the same thing at a company level, just at different magnitudes of growth. We get caught up in the daily grind of running the business. We sometimes forget about
00:31:30
Speaker
running and managing and evolving the business. And a board is a good check in every so often to make sure that, hey, are we still going after those big goals that we're going after? What changed? What didn't get there?
00:31:46
Speaker
And from a PE perspective, yes, you're playing with other people's money. So therefore, we have to keep a check on literally the checks to make sure that the spending is going in the right direction, the revenue is going in the right direction. Why haven't we hit those goals? Is there a good reason for that? Is this a short-term thing, or have we discovered something a little bit more epidemic? So you're always evaluating. And sometimes the CEO or the founder
00:32:15
Speaker
If they don't have that level of check, they'll convince themselves things are a lot healthier than they really are. They have the delpo mentality, okay? We'll be millionaires tomorrow. We'll be millionaires tomorrow, right? I tell you what, don't name any names. I know you couldn't anyway, but have you ever seen people really fail to adjust to a private equity run sort of board culture? What does that look like? A CEO or a CTO just cannot hack it in a private equity backboard environment?
00:32:45
Speaker
Well, here's the harsh reality of it is we kind of don't tolerate it for too long and then you're removed. And that's not because we're suddenly bullies or we're sort of stuff here. Again, it's about having empathy for the PE firm. So somebody has given the PE firm a large chunk of money to invest in a fund to make the money back.
00:33:12
Speaker
It's that simple. If you were to write a million dollar check and give it to somebody else to invest, you want that person to take as much care and as diligent over that spend as possible.
00:33:24
Speaker
You don't want them going, I'll be fine. I'm sure they know what they're doing. They'll figure out. Does that look like in practice? Because of course, the listeners to this are going to be founders rather than private equity funds. And for some of them, they probably shouldn't sell to private equity if they don't have really what it takes if they want to carry on participating. What does that look like then when somebody just falls behind them before they get removed? You literally get told.
00:33:54
Speaker
Well, because like, so basically they come to a board meeting. The numbers don't look right. It's excuses, excuses, excuses. It's awkward. And the board director just says, this just isn't good enough. I'm sorry, but we're going to need to change. Is it just, is it not much more to say than that? It can happen. It can happen as quickly as that. It can also happen before the board happens. Uh, but again, from a PE perspective, we generally hold a company for three to five years.
00:34:24
Speaker
OK, not long at all. And actually, that goes very quickly. Now, we've got two or three stages inside of that, which we can go into a separate podcast, actually, go into that, because it's quite interesting from that perspective. But ultimately, we don't have time to wait to happen.
Ensuring Business Continuity
00:34:42
Speaker
So if something's not happening in the first year,
00:34:44
Speaker
We usually have a bit of a gut check, a litmus test to see, is this the right team? Oh my God, and that must be so hard for a sort of super cerebral engineer type. I can only imagine the cultural shock. Usually though, in all fairness, the CTOs are the, we have the least, we're the least problematic at the bottom. God, unpack that. What do you mean by that?
00:35:10
Speaker
Right, by the time the CTO gets hard then something has horrendously gone wrong. So who's being held accountable at board level for the CTO's performance then?
00:35:19
Speaker
The CEO has to be held responsible. They are at the end of the day. But the CFO and the CFO are the two strongest pieces on the chessboard. And they're the ones that are ultimately responsible for everything. Then it's using the CTO and the marketing and the sales chiefs at that point. But again, if the company is a technology-based company, then of course the CTO has more responsibility.
00:35:45
Speaker
But if the companies say a service-based company and technology plays a part in that, then there's a bit more latitude regarding the CTO. But if the CTO doesn't have the vision and is not keeping up or is holding the business back, the CTO will be told
00:36:01
Speaker
And if they don't get significant changes or demonstrate that they are heading in the right direction, then they will be replaced. One of the things that I found fascinating as I sort of matured as a first time founder was understanding the role that how business continuity sort of disaster recovery planning
00:36:18
Speaker
can actually kind of help you with holding the organization accountable, plays into your point about documentation in the book, right? You can, as the CEO, responsible for putting the right people in the right seats and then making them perform, you really don't want to get yourself in a position where you actually can't let someone go when they're not performing because you have no idea how they do what they do, and nor would a capable successor. Can you talk a little bit about that? Completely. Yeah. I mean, first,
00:36:47
Speaker
Companies coming into the PE space, we get this all the time. We call it key man insurance, which is basically, who are the handful of people that really knows how this business runs and without them, we'd be humped, right? And they're the guys that, A, have maybe got the deep relationships with the clients, and the clients have said, I'm only ever dealing with Rob. If Rob goes, and I'm taking my business elsewhere, right? So there's that side of the fence. And then you've got the technology side of the fence, and we've all been here.
00:37:16
Speaker
There's that one guy that he's the only one that knows how to rebuild that server. Takes his laptop, he can't even go on holiday, right? And that's your litmus test. Can your key engineers, not all at the same time, but can any one of them leave for two weeks without a laptop and this business still succeeds? If the answer is no, then you've got a problem.
00:37:43
Speaker
Of course it is. And that's okay because that's part of the evolution to get there. So again, it's okay. But you got to get to a point where you say, this is no longer acceptable, guys. We've got like a hundred people who's relying on this company's output to pay their salaries, to pay their bills, to put their children through school. We can't mess this up. And what if your laptop dies?
00:38:09
Speaker
Are you telling me we're completely humped? So yes, we truly have to get ourselves to an evolution of where somebody has to say, stop, I need to get this right. Now, everybody that's been through it before and you go at the second company,
00:38:25
Speaker
They put in the small breadcrumbs along the way to make sure they don't get to this horrendous pivot point where the buyers are saying, oh shit, I've got a lot of ketchup to do in terms of housekeeping. But the first time person that comes along...
00:38:40
Speaker
They're just caught up in the passion and the excitement of getting shit done that they forget about some of this stuff. And to them, restarting a handful of servers and they know which order they have to do it in and da da da da da. It's like sneezing for them. They don't even think about it. It's so funny. One of the things I found is that once you started taking QA documentation, once you started taking that stuff seriously, at first it was really hard because you realize you're paying like a 20%, what feels like a 20% productivity tax.
00:39:10
Speaker
I guess it's like little forms of debt, right? But like once you just start factoring that, it puts you in so much happier place as a non-technical founder CEO. Oh, completely. And here's the thing that I always ask my engineers and also CEOs is picture yourself lying in a hospital bed and you're hooked up to a life support machine. If that life support machine goes wrong, you're dead. Okay.
00:39:41
Speaker
Do you want your engineering team maintaining that life support machine? And to the engineer, do you want your code writing that and that stuff? And then the others go, no, no, I don't take me off of it. I'll take my chances.
00:40:03
Speaker
Right? Because people generally don't think about the consequences of stuff going wrong. Yes, most businesses' lives will not be lost. However, customers will be lost. Revenue will go down. Jobs will be lost. Lives will be affected. So yeah, there's a trickle down. That's a worst case scenario. But everything has. It's the butterfly effect. Everything has a consequence.
00:40:26
Speaker
So you're right, once you get that level of QA, that level of documentation, that level of reliability, we're producing a product that people can actually build their business on top of. Because
Evolving Leadership Roles
00:40:39
Speaker
if we go down, that means that company has gone down. We can't accept that. Can you imagine if AWS was built with some of the girl lucky type that some of our engineers sometimes play with? It would be a disaster.
00:40:57
Speaker
or if Netflix was like that. And every time you went to look at a Netflix stuff, it would just crash. Hold on, I need to go and reboot the Netflix server. Don't worry. It'll be back up in two seconds. I think we would tolerate that. I think a lot of non-technical founders, they...
00:41:12
Speaker
they might do to begin with then they get used to being the front person for investors employees customers and they sort of get used to covering defending the indefensible and then that becomes that actually becomes a habit it's why i'm telling everybody that i know that's in this space to read your book because
00:41:32
Speaker
It's the first step to me in sort of beginning to understand how to free yourself from using your willpower and charisma to defend the indefensible, at least when it comes to technology. Yeah. And it, you know, you never want to get to a state where you're pointing fingers, but you do have to point the finger back at yourself and say, okay, well, maybe I've got the wrong person in the role.
00:41:56
Speaker
Maybe that person isn't servicing me and my needs for the business today. They were yesterday because the business was in a different state yesterday. But today, hmm, you haven't grown with the business. So therefore, and again, this happens all the time, particularly at the CEO level. What we find is that the CEO that bootstrapped the company from zero dollars to like a $50 million company.
00:42:24
Speaker
That's a skill set. Huge skill set. They've done phenomenally well. That skill set does not mean that they're going to be able to take a $50 million company and turn it into a $500 million company.
00:42:37
Speaker
because that's a whole different set of problems, a whole different set of scalability, a whole different set of regulations and all that sort of stuff. So maybe we need a CEO that's more apt in that space, but it's no ding on the one that took us from 0 to 50 because that's what they do. It's the same thing with technologists. The CTO of Amazon isn't probably the guy you want to do to start up with.
00:43:02
Speaker
Right? And likewise, the startup CTO isn't the one you want to be running Amazon. Right? Everybody's got their sort of defined space. Now you can always argue, how the hell do I get to that space? Could you evolve up? You grow up? That's interesting. So I suppose for again, for first time founders listening that do have a fantastic entrepreneurial CTO that maybe doesn't want to or isn't going to be able to become the sort of CTO that you articulate in your book.
00:43:28
Speaker
actually having that conversation early on, and kind of defining what they love and are good at, you can actually create career pathos, they can be a sort of what event, you know, tech visionary or something that's actually quite different to being the CTI, I assume, when they get to that scale. Yeah, and it's funny, because, and I'm sure you had this problem as well, when you were looking at it, the cap table of a founding company,
00:43:53
Speaker
is usually a mess by the time you start bringing in PE and all that sort of stuff. You're thinking, right, we're going to have to write certain checks to get certain people away because this cap table is nowhere near right to go forth and to take the business to the next evolution. Why does the CTU have 80% of the company? Because I couldn't afford his salary.
00:44:13
Speaker
yeah but still wow okay it's interesting i think it's one of the benefits of being a second timer that you you you can think a little bit more about the whole life cycle of the company and plan accordingly of course one of the problems is a second timer is you can see all of the pitfalls that you might fall in and die in and therefore you get much more reluctant to pull the trigger so there is some magic yeah you're more risk aversive at that point yeah i get it i mean it's
00:44:42
Speaker
Rob, there's no magic bullet to this stuff. Otherwise, everybody would be doing it. As I say, I do recommend to everybody that they buy and read your book. And similarly, advice goes out to all listeners here.
Connecting with Alan Williamson
00:44:51
Speaker
We've obviously become friends because of my shameless fan mail to begin with. Are you happy for people to? Well, if people read the book and they like it, what is the best way to follow you and engage with you?
00:45:03
Speaker
Just hop over to allen.is and then you'll get my LinkedIn and my emails and all that stuff from there on in. And I think I've shamelessly plugged it all over the book as well. So you'll be able to find it. But Rob, it was absolute pleasure and I'm looking forward to many other conversations with you.