42. Is it possible to pivot to profitability?

Brandon 0:05

Hello everyone and welcome to another episode of the operations room a podcast for Seelos. I am Brandon Mensa joined by my lovely co host Bethany Ayres. How are things going, Bethany,

Bethany 0:16

I wish I could say they're great are they are good. But basically, I'm really stressed and really tired and really grumpy. So I go through periods of sleep eating and periods of just woke up at four wake up at five. So I gave up at like, quarter past five this morning and woke up that I have a really busy day, I am hosting the first webinar that I launched on International Women's Day, I think I get annoyed every international women's day because, one, it's annoying that we have to have international women's day when 50% of the population are women, and we're still just trying to be treated equally. And then secondly, there's just a lot of like, performative ally ship and look how great women are. And it's like, what you didn't realise that we were great until today. And now suddenly, it's worth celebrating the fact that we exist and have given birth to all of you. Everybody talks about it for the one day, and then it disappears. And so I thought, like, how can I give back? How can I support the next generation of women in something that lasts longer than one day. And so I decided to launch a series of free webinars for first time female execs and aspiring execs. And today is my first webinar. So today's topic is stop being the ascribe cake cutter and card buyer and take your place at the table, because of socialisation and our own fears of not being valuable enough. We want to be liked. We want to fit in, and we want to feel valued. And so therefore it's like yes, I'll raise my hand, I'll do that, yes, I'll do what's socially accepted of me, I won't even realise that it's what I'm doing it because it's socially acceptable, because this is what I've always supposed to do. And then what you don't realise is you're completely undermining yourself in the room, you are by doing all of these things, putting yourself in a subservient position, and you're not going to be listened to and you're going to be othered. Yeah,

Brandon 2:09

that's all very visible cues, that we are

Bethany 2:13

the caregivers and providers for the team rather than actual team members. And so then the next one will be choose the right life partner. So you can have that all.

Brandon 2:24

Oh, wow. That is where we're going from like, behavioural in office issue to like the biggest possible kind of macro decision you can make in your life that will either haunt you forever, or lift you up to your aspirations that you have.

Bethany 2:41

In a lot of ways, this was harder than stopping being the scribe at work or being a bit disagreeable at work. So Andrew and I reached a point where I was just doing so much in the house, overwhelmed full time job, young children, it was all too much. And we renegotiated all of the tasks at home and the things that I was overwhelmed with. And I hear you say like, oh, that's not a problem, or oh, that's easier. Yeah, I don't mind. And so we divvied up our tasks. And it took me a good two years, three years to stop feeling guilty, that I don't do the laundry anymore. And then may is you're not crazy, the world we live in is crazy. That topic came to be because the number of times that I am working with women and they start the conversation with I don't know, am I crazy? But blah, blah, blah, blah, blah? Or is it me, but bah, bah, bah, bah, blah. And it always ends up being something that's like around microaggressions, or the socialisation or your role, or am I being sensitive? And almost every time you hear the story, you're like, No, you're being 100% reasonable. But the construct in which we're operating, particularly as the only woman or the only couple of women in a room means that oftentimes, you just kind of lose your sense of reality. For me, one of those examples was I was in a leadership team meeting many, many years ago. And one of the people kept swearing and then apologising to me, like, oh, sorry, sorry for swearing in front of you. It's been going on for months, and then we just reached one day, and I was like, why does this make me feel so bad every single time he says it? And it's a certain like, he's a bit older, and he's mad, and he's being polite, but it's a really being polite, and it's just so weird. And I realised that like, in effect, it was a microaggression that maybe he didn't realise his aggressive ways, but he was. I was the only woman in the room and by apologising or pointing out every single time that he swears,

Brandon 4:55

yeah, he's treating you differently, for sure.

Bethany 4:59

And he's othering me And he's pointing out that I don't belong over and over again. Finally had a moment where I just lost it. And just was like, I know it might shock you that I've heard the word bollocks before. But even more shocking is the fact that I've seen them before. I do have two children. I'd had enough and I was like, You're othering me, you're not doing this out of politeness, you're doing it to make me feel different. Bah, bah, bah, bah, I was really angry. And then the whole group of them are like staring at their shoes, all chastised. And then one said, Sorry, Mom, I What do you do with that? Yeah,

Brandon 5:36

what do you do with that? You're not crazy.

Bethany 5:40

The world we live in is crazy. And then I've recently come up with a topic for June will be, which is going to be a much more tactical one, which is how to present to a board, or how to speak to execs. Yeah,

Brandon 5:56

that's a great one.

Bethany 5:56

So that is my day. Well, I

Brandon 6:00

ility and the expectations in: 2024

Bethany 7:12

So the first thing would be to look at the strategy and see, are we doing too much? Are there areas that are obviously not profitable, or their product lines that we can cut, because we're the product line, you'll be cutting jobs as well, which is cost. That would be the first thing I would do. And then, at the same time, start to look at luxury roles. When is the lease and the office coming up? Go renegotiate with AWS, or Google or whoever your cloud supplier is, and look at your software budget, figure out the ones that you want to get rid of what you can get rid of what you're getting value from

Brandon 7:52

that, actually, it's funny that you say strategy at the outset, because that was my initial one as well, which is, are we actually making hard choices around focus for the company? Do we truly understand what business we're actually in? And does that filter through in terms of a really tight product strategy and product roadmap, and ultimately, your OKRs set that really defines your focus, and a real tangible way for the company at that point. And I guess the other little subplot that I was just thinking about was payback periods. Because often when you're thinking about strategy, you're making an investment bets, and some of which are more short term in nature, and some are longer term in nature, and just trying to distinguish if you're making bets, what is the right time series and a way to ensure that you can make that pivot to profitability without excessive spending on a future that may not happen? So just on that strategy front, any other thoughts? So

Bethany 8:41

it's not just a strategy in terms of what products you're selling? And where are you selling them? But to your point on payback? Which are your profitable channels in which channels should just turn off? Which actually

Brandon 8:53

d doing that, as we know, and: 2024

Bethany: 10:03

partners are in the resurgence and the Renaissance, and looking so the experiences that I've had with companies that I'm working with and looking at what people are talking about and LinkedIn, really figuring out who your right partners are, you didn't have to kiss a lot of frogs both for like, Who do you get on with and where do you actually have good synergy versus In theory, it should work, but in reality, it doesn't. And so working through your partner strategy testing quickly and seeing which ones actually drive pipe and which ones don't. And very quickly, choosing the ones that work and doubling down on those can make a huge difference, particularly for small unknown software brands, software companies alike, rather than building on your branding, it just doesn't matter right now, use AWS or whatever the big person in your space is. And then also, that's a good way of considering what your exit strategy can be. Because if you are a product that completes their offering, and you're working really well together, and you're growing pipeline together, guess who is going to be quite interested in buying you in the future, just cars on table, like the relationship that we had with Salesforce newvoicemedia made our go to market so much easier, because at Salesforce all the reps knew that if anybody needed a contact centre, we were the place to go. And we didn't have any other partners that we were going to take the business to. And that made lead gen much easier for us. And also, we only needed to build our brand and one ecosystem rather than loads, I see it working quite well for early traction, because it gets you into the bigger meetings, it gets you into companies that might not talk to you. Otherwise, you learn the market much faster. The problem is you can get so distracted by it. So what you really need to do is understand your place in the market, where you understand the market itself and the dynamics and which are the partners that are really going to make a difference. And where you're mutually beneficial. And sometimes you get that wrong. Once you figure out who those people are and who those companies are that really work, then you need to hire quality. And ideally hire people who are well respected within the company that you want to partner with. And you need to vet them, you don't want the person who just comes to you who wants to work with you because they're cool. And then you like talk to other people. And we're like, oh, yeah, Joe is a total liability and whatever, we'd be happy to get rid of him. Those are not the people you want to hire. You want to hire the people where you're like, Oh, if I hire this person, are we going to destroy the relationship? Because they're going to hate us so much? hire that person.

Brandon: 12:41

So this kind of leads into point number three? Do we have the right market strategy? And this question of, if we think through our segments that we're going after our audiences that we're going after, or the triggers that we're using to go after those audiences, pricing and packaging, how we're positioning ourselves, and so on, it feels like just going back to basics and rethinking all of that, in this pivot to profitability feels like a very useful area to look at. And oftentimes this area is shunted aside. If we're truly going to pivot to profitability, really understanding your segments and who was actually profitable, who's actually not profitable, and taking the time and effort to really filter through your packaging, and the pricing that you're providing? Does it all still make sense? Or do we need to change things?

Bethany: 13:27

I've been thinking about these things recently, and realised that I have way too much of a bias towards action. And I'll just like, get the spreadsheet, analyse it go here, my conclusions done, this should be the strategy. And what I don't do is spend the time to understand the why underneath it. First of all, is the data correct? And then secondly, why is this one profitable, and this was not profitable, okay, I might have a hypothesis, but I should go and validate that hypothesis. And I tend to not take the time to do the deep thinking in exchange for doing it really quickly. And so I'm just sharing that for anybody else who might have a real bias towards action, that this is a point where you need to slow down

Brandon: 14:08

spending the time and effort on the qualitative side to really take your hypothesis that correctly you've derived from the data, and then to flex test it, like with actual conversations with the cohorts that you're potentially making changes to, just makes a tremendous amount of sense. The fourth part that I was just thinking about was the classic operations pod, which is are we just operationally effective and efficient. It feels useful sometimes for the ops person within the company to take a step back in this shift to profitability and do an audit of the operations within the company and try to think through if we had to operationally be more effective. And if we do this audit to really pinpoint where we the highest value things to focus on, what would those things actually be? So I think sometimes, as professionals get lost to the forest of the trees type thing and ended up working on things that perhaps are the most important things for the organisation. So doing this audit reset. And just rethinking what is most important operationally seems like a useful exercise.

Bethany: 15:05

And at the same time, how much can you automate? So you're freeing people up to think, and not spend so much time doing the processes that you've designed perfectly, that might be nice to haves rather than need to house. Exactly.

Brandon: 15:19

Alright, so let's go on a quick break. And when we come back, we will have our conversation with Libby pen. First question to dive into, which is going from a bootstrap company where there's a real focus on p&l. That's really how you grew up in your career, especially early rules in your career, they tend to have a big stamp on the way you think about your craft and what you do for a living. So going from that real bootstrapping environment, straight up into competence burned through 100 million pounds. What popped in your head, as you join that business were like, What is going on here? Like why did they do a B and see? Definitely

Libby: 15:54

the movement Blippar was a lot of actually initially imposter syndrome, because I just kept sitting I go, do I not know something? I'm sitting here going, the numbers aren't adding up? How has anyone let it get to this point. And it was real lesson for me to go. Part of this is just a journey where investors back founders and trust that the founders have gotten back a big idea. And obviously, there's an acceptance in the VC community or there was and I think that's what's changing now, or failure. Now, that has obviously changed now. But it was really a sort of personal baptism of fire because it felt really uncomfortable yet, in blizzards case, I definitely saw the fact that they were riding very early wave technology, it genuinely was a bet on something that was perhaps 510 years too early. And so you can sort of rationalise why the growth had been pursued in that way, improbable. It's got some deeply exciting technology and a very visionary CEO behind it. And you see the ambition of the investors, and you see the bets that they're making. And I think I read a really interesting book by Annie Duke called Thinking in bets, and she's a World Poker champion. And actually, I found that really helpful to help me balance my thinking out to go, okay, obviously, I grounded myself in the world of bootstrapping, and really grounding yourself. And I can only invest if I've made the money to invest. But there is also that sort of piece around innovation sometimes comes from making really big bets. But the markets have changed. Investors are not thinking that way. At this point in time, I'm sure that point in time, we'll return again in the future, to how can we find that balance of taking risks, but doing it in such a way that we can deliver to hold a value with perhaps a lower risk of failure? I think it's such an interesting balance, as I see so many companies pivoting to profitability as fast as they can. You don't want to do that at the cost of innovation. But equally, you also have to build a business that can survive. So you've got to batten down the hatches a little bit, or quite a lot, but not so much that you stifle creativity and innovation.

Bethany: 18:22

Yes, in theory, investors are saying we need to pivot to profitability, or at least see an underlying capability, there's a lot more focus on gross margin as well as there should be. But there's not just a focus on innovation, there's a focus still on growth, like there's not an appetite to lose growth. And so how do you balance, profitability and growth? And that, I think is the question really, that many of our listeners are struggling with. So let's create a scenario that I suspect we have, which is burning through too much cash, but still, you know, can make payroll. So let's say there's a 12 to 18 month Runway Left, nobody's seen good growth, unless you're in cybersecurity or a few other areas. Like there's not been a lot of really good growth in the last two years. So you don't have great metrics, your CIO or CFO, what should you do now?

Libby: 19:16

I think you've got start with product, ultimately. And it really depends on what you're selling. And I find a really interesting question. I had a great debate with somebody the other day, and we're talking about exactly this path to profitability, but they're in biotech, what they're building cannot be profitable within 18 months, the runway to build product that gets through the regulatory requirements is like five to 10 years. It's not one to two years. So I think you have to have realistic expectations of your timeline, and you have to have that conversation with investors first. So you need to be really clear whether profit is achievable. And I say this was real seriousness, because I see so many founders now So, okay, we're gonna get to profitability, we can make it happen. But there's simply being unrealistic given the nature of their product and the market in which they're innovating. So first and foremost, you have to have a realistic view of your opportunity to get your product to profitability. Now, let's say that actually, that is within sight within 12 to 18 months, I think you really need to double down on looking at the breadth of your product suite. Again, if you're selling one versus a set of products, you need to look at the cost of building and maintaining that product. Really simple things that actually have worked really well for me in the past is like looking at your cloud costs. These are the things that you actually let kind of run away in the background, and these costs can really escalate. And actually, if you go back and you renegotiate, you can start to find very, very significant savings, depending on your tech stack. So looking at the cost of servicing your product, looking at the profitability of your customers, and splitting them into cohorts, doing the same with your product set, if you have multiple products, so that you're really focusing on actually what is the better bet for making money. So come back to sort of thinking and bet cider. If you think, Okay, I've got three product sets, right. And one is really innovative, very disruptive. But as a result, it's not going to be profitable, necessarily within an 18 month period, I say it's got a 20 to one chance of profitability, I've got a slightly more mature products, the, it's got a five to one chance of profitability in that timeframe. And then I've got a decent mature product that is already profitable. So you need to start analysing, actually, which of your products can make money, and against which timeframe. And then with that, look at your customers and go which of my customer segments are most profitable, you have to look at everything over a timeframe, some are going to be more profitable. Now some are going to be more profitable in the mid term. So you have to start thinking about layering up your bets and not just now but next. So think about that 18 month timeframe. So I think really analysing the cost of delivering your product, the profitability of each product set and the profitability of your customer profiles. That's pretty fundamental to me. And that I think that's where you should start does that kind of tee up with your experience of what you've been seeing people do?

Bethany: 22:20

I am always a bit surprised at how unsophisticated a lot of internal systems are, and that the teams do not have the data. And I'm frustrated, and don't have a lot of empathy for it at this point in our world. Because we all have had data. Cloud CRM has been around for 25 years, there are tools that aren't that expensive, like you don't have to go for Salesforce HubSpot is almost equally as expensive now, but there are other tools regardless of the size, and how tech businesses are not naturally data driven, I really am surprised by and they clearly we need more rev ops professionals out there I'm a big advocate for hiring in a rev ops person earlier than comfortable. Because otherwise, how are you going to make these decisions and you know, so Libya completely agree that we should be doing this. But I think a lot of companies are going to have to spend the next three months gathering the data before they can do the analysis. A

Brandon: 23:21

lot of companies think they're data centric, when in fact, what they have is data paths that are siloed. And they're all over the place, nothing correlates together and they can't see the bigger picture with the data itself. They're caught in these little kind of minutia tactical campaign sets of data where they can see the forest for the trees. And I think the other part is the go to market motions that are on top of the product. There's kind of like blanket investments where they put a tonne of cash in a paid campaigns on Google spend or LinkedIn spend. They're not really tracking it in a way where meaningfully they can decide whether or not that channel is paying dividends in a real way from a CAC perspective similarily they've dumped a shitload of SDRs in play. And then again, they're not really thinking through the go to market motion in terms of with that go to market, is that actually sensible, given the CV values of the customers and what we're trying to achieve and so on?

Libby: 24:06

You go into an organisation and you ask, who is accountable for that data? If you don't have a rev up function? Is it your sales leader? Is it your finance function? Is it your CEO? Is it your CRO? And I see the finger pointing in circles where you know, sales leaders are like, it's not my job to understand my cost of acquisition? And so they go well, it's finance and finance are like, Well, I'm not diverse and selling to the customers, I don't know, you know, and they're like, Well, maybe the CEO should have this view. And I'm like, but where are they gonna get it from? And if you can't do that level of roadmaps, get a really good ba get a good business analyst and who's hungry to do that? Because it's such an important foundation for your business because you genuinely cannot understand whether what you're building is going to make you money. And we've all witnessed or been in a situation where we've gone this this product or this feature within this product is really valuable. Let's put 1000 man hours into it, building it, and then nobody uses it, you have to learn. And some of that is through hindsight, right? So some of that is just through looking at the data, see what it tells you. But then it is also comes back on this proper investment on product is actually really researching what the customer wants and understanding what they want and what they need and what they're capable of using as well. You know, I think everyone gets quite carried away with big ideas. But actually, our customers very rarely LeapFrog. We think like that, because we're tech and it's our job to think big and think innovative. And our customers love the idea of innovation. But often they are not ready to take that big step. So actually focusing on delivering incremental improvements for them will probably make you more money in the near term, you may not seem sound quite as sexy, and your engineers might grumble a bit about it because they don't feel like shooting for the moon. But actually getting that really solid customer base where they the product is sticky, where they're using it where they're seeing value from it, I think is also just really important. So as you think about your product design, don't try to boil the ocean, I'd

Bethany: 26:19

like to add to it one element, which is customer success. So I am definitely in the Schlapman category of customer success, where I don't really think it should exist, I think there's three, possibly four distinct areas of CES, which are account management, so bringing in more money, implementation, voice of the customer. And then within voice of the customer, it might be like voice the customer back to the product, or ensuring that everybody in the business is customer centric, hence three slash four. But in my experience, what I've seen in the last 15 years with the rise of CES is so much of the issues around gross margin comes into the fact that actually, you have this cost base, which is customer success, which eats into your gross margin, whether you put it into pre sales or post sales are divided into lots of different ways. Like ultimately, you have this layer of expense that everybody says in the future we'll get rid of, but instead the future, we just get higher more and more CS people. And it's down to the fact that the product is not good enough. And up until this point, it has been with free cash cheaper to throw people at the issue than it is to make the product easier to use have a UI that people can understand. And to your point, not bridge the gap of customer maturity with your own staff that actually meet customers where they're at. Oh,

Libby: 27:45

interesting. I have mixed thoughts on that, actually, because I've worked with an incredibly good customer success team that really helped customer adoption and where the technology was a bit of a leap forward. It's moving from really stale enterprise tech into sort of cloud based, heavily UI LED technology, where by your user base and sort of in their 50s 60s, they're not tech forward thinking they're not tech adopters. So I've seen the value of really good customer success teams.

Bethany: 28:21

But just to be clear, like, first of all, I'm not saying that customer success teams, and the people in them aren't good. And I'm also saying that you don't need implementation. The problem is when it's not implementation, but it's a customer success team that augments your customers for life. And that's where the gross margin issues come in. So

Libby: 28:39

the flip side is where I really do agree. And I don't know how to solve this challenge, as I see that UI UX teams often really struggle to successfully deliver, not through any fault of their own. But I think there is a legacy sense of engineering, lead and customer services, lead businesses, who don't want to take the time to facilitate proper UX UI, and really take the time to listen to user research. Because often, leaders have in their mind what they think they want to design and sell and sales leaders promise, you know, the ocean. And so everyone's like, busy, busy, busy, we're delivering this. And then you've got a UX team coming back to you going, I've done some user research. And actually, this isn't really what the customer is going to use. And they don't really want this. But the machine is already so busy working with what they think they want to deliver and the customer success team have already weighed in with sales on how they're going to work together, that nobody wants to stop and go. Actually, we need to simplify this or we need to take more time to validate this. I've seen it time and time again, how frustrating it can be for UX teams to genuinely be allowed to do the job. And sometimes that isn't from an internal perspective. It's all Also from the customers who just don't want to engage in facilitating good product development by giving that feedback by giving that time. So I think it's a real conundrum and a really challenging one. And I really empathise with UX teams, you have to come in later to try and go, actually, we aren't building what we should be. And if you get really good UX team, and they will help validate what you're building, and they will help improve that profitability piece. But it's not perceived in that way. It's kind of perceived as a fluffy interface layer. And doesn't that look nice. And actually, it's a real value add.

Brandon: 30:35

The businesses that have done extremely well in this regard, have a commercial monetization incentive, which is these product led growth companies where they recognise that their pathway to success is the onboarding, experience being fabulous for the user, because the user is coming out, there is no hand holding outside of the product, and their time to value and getting that as tight as possible and creating that experience whereby they're upselling themselves, and advocating on the part of the company to refer them to others within the organisation that they work for. That's the model by which there's attention paid to this in ways that you just don't get another company's because there's no commercial motivation to do. So that's direct. So it feels like those plg companies, the derivative benefit is exactly this, where I think they're in a position to lean on ces less lean on the product much more, but they're doing so because there's a massive commercial incentive to do so which is the business acquisition and you know, immediate expansion in that case, as a quasi recommendation, that mindset, whether it's appealed to your company or not, then has to be translated across all organisations in some respects.

Bethany: 31:39

And it goes back to the data driven element. Exactly right,

Libby: 31:43

stop building stuff, based on what the salesperson has promised in the room because they saw a customer's eyes go, oh, that sounds exciting. And actually take the time to validate what you're building, that it's going to drive value for your customer, and therefore, it's going to be valuable for you to continue to sell.

Bethany: 32:01

We often think about AI in terms of how can we make our employees more efficient and effective. But it's also an amazing opportunity to make our products easier to use. And I'm really looking forward to seeing how AI is moved into enterprise level UI.

Libby: 32:22

It's enhancing the user interface to support successful adoption of a product. The general intuition or sort of anecdotes around people using AI is oh, well, it's replacing functions like HR, or it's enhancing, you know, people whose job it is just to write a long summary. Actually, that's not a particularly useful endeavour. So

Brandon: 32:48

maybe just taking a step back for a second, going back to Bethany's example of this generic SAS company has 18 months runway, there's profitability that is possible. And they're under pressure to do so with the board right now. And they know that future cash funding isn't going to happen based on the metrics that that they have. What do you consider to be the easy wins when it comes to accountability and controls within that company, understanding

Libby: 33:11

your cash flow and having a really reliable cash flow that you're looking at on an appropriate cadence, I wouldn't even say monthly, I would say maximum sort of fortnightly, if you've got a tight runway, so get a strong view of your cash flow, understand where your costs are going, and then be transparent with the business. Now, that can be a real challenge, because people don't understand money. It's not your receptionist job to understand your p&l. And they're often not equipped to, you know, we're business leaders, we've had to learn it as part of our roles. But my personal commitment to any business I go into is to build that financial acumen across the team, help them understand actually what it is to run a business how money works within a company. And you know, it's as simple as really understanding the opportunity cost, right, which is, when somebody comes to you and says, I really want to hire two more customer success, people, you go great. But you've also said to me that you really need this feature delivered to hit your revenue targets. So would you rather I invested in software engineers here to build up? Or would you rather, we had CS teams to support that customer journey, and I think building in a language around how money is spent within the business, how it comes in, goes out capex or OpEx. Also, just people don't seem to understand the nature of cash flow. You know, they hear that you've won a big contract, but actually, that may be delayed payments, it may be upfront payments. You just don't know. We've all sat there going gone by can everyone just stop asking for more. But actually, I think we have to turn that question around on us and go, Well, how do we equip our teams to understand how do we build On that common sense of financial acumen that will allow them to make better decisions day to day within the business will allow them to, if they do come to me and ask for an increase in budget, they're doing it because they genuinely understand that it needs to be committed to revenue growth. So one of the first things I do is focus on building out a bit of transparency, but equipping the team to genuinely understand that the lesson learned at Blippo was as we were facing administration was actually being honest and open with the team meant they kept coming to work, even though we hadn't paid payroll. And, you know, I gave them the choice, I said, there isn't a certainty, there isn't a definite future. Here, we're working through funding options with investors. Now, you can choose to not come to work, because I can't guarantee that your paycheck is going to come in this month. So I totally get it. If you don't want to come in at all, you can come in, you can help build this business. And I think everyone was a bit nervous, the investors were a bit nervous about that level of transparency. But because we really took them through everything, here's how much money we're trying to raise. Here's what we're trying to unblock here are the cost improvements that we've made. And we empowered them to have a choice, actually, the team did come to work. And it was a really high performing team at that point, because everybody was leaning in, they all knew why they were doing what they were doing. I think, to me, giving that foundation of knowledge, and the ability to understand what they're looking at is critical, particularly if you've got a shortening runway, but it feels counterintuitive. Lots of people go, we shouldn't share that information. Because we'll scare people and they'll leave well, then if they're going to leave, they're not going to help you build a business. So they're in the wrong space.

Bethany: 36:45

People aren't stupid, they know something's going on. And it's scarier when you don't know what it is. And when you do, how long did they go without pay? Like, how many payrolls did you not make?

Libby: 36:55

There were a number of payrolls we didn't make. And everybody stuck through it, too. They

Bethany: 37:00

are those who could did,

Libby: 37:01

I would say, 95% stock.

Bethany: 37:05

If you're really busy leader, he's like that financial education sounds awesome. I don't have time to build it. Do you either have the resources that you would suggest somebody go to? Or do you have the ability to help or anything pre made that you'd like to share?

Libby: 37:25

I think it's about looking around your organisation go who has got good financial acumen. And it is just a question of taking the time for people to understand investment, convertible loan notes, why would an an average software engineer understand what a convertible loan loan, so they just go, Oh, we've had money coming into the business, it isn't, it's a loan note. So you know, it's debt coming in, that is hopefully going to get converted to equity at a future round. But 14, they just don't understand that. So you need to find somebody within your organisation. To do it, it doesn't need to take a huge amount of time. When I first did it, we did it over a couple of lunch hours. And then we changed it to be a mandatory part of onboarding for every employee coming into the business, which was just a hour with the finance function, talking through how the business has been funded, what the p&l looks like, but also what the cash flow looks like. And then just talking through really useful examples of, we could upgrade all of our machines, but that's going to cost us 200,000 pounds, but we also need to move off it and that isn't just rent, it's a deposit. So that to underground could be the deposit on on a bigger office and asking people, What would you do in that situation, do some force exercises with people, I don't think it has to be particularly complex. Typically,

Brandon: 38:47

in companies, the VP of Finance or head of finance tends to be introverted or shy, but their financial acumen, obviously he's off the charts. And if that individual wants to grow their skill set and truly become a CFO, at some point in their future, they have to be upfront with the organisation and holistic across the company, being able to take financial concepts, and make sure they're understood by the rest of the business and the investors and so on. So I've always put this back to the VP of Finance or head of finance, in the sense that look, this is part of your career path, you need to get out front, you need to be a leader of the business right now. And I need you to lead the business, not me in this case. You know, I want VP of Finance That was phenomenal at doing this. He had just finished his Toastmasters and he was super psyched on this. But it can work if you have the right person with the right attitude and they're on the right career path. My

Libby: 39:35

advice is you've got to build it into your onboarding process. Every employee needs to understand how you make money and how you spend money. So I think cash flow, get a really strong grip on that transparency of the financial performance of the business. Equip your employees to genuinely understand that. Look at the products costs, as we were talking about earlier, look at your client for testability and do some cohort analysis. And of course, then it comes back to also looking at your people. So you need to build a strong culture. And personally, I believe that the sort of transparency and broader investment in broader skills of your people is a really good place to start. But you also need to think about how can I unleash more potential from the people that I have. And again, I say that with a certain sort of fragility to it, which is, it's not meant to say like, we need more from you for less, which is what I think employees will hear by default, when you say that it's because people are sceptical and nervous. Tech is going to be focused on burnout. But actually, it is whether that's through your HR leader, whether that's through getting your managers together and saying, who are the the up and coming a players who are the people that we really ought to invest in that rep and empower to make better decisions in our organisation, find that talent, and present them with the problem, which is we've got 18 months of runway, we want to extend that to 24 months, let's articulate it as a simple question, how would you employee X, Y, and Zed? I'd get a few people in the room who aren't your established leaders. But they're the ones who you think will be the next round of leaders and say, What would you do to improve this situation? And actually, you get incredibly interesting answers. And I remember I had an employee who we did this for tech sides over lunch, we had a really interesting conversation, nothing particularly solid came out of this. And I was like, Well, look, at least I'm getting FaceTime with these people. And then she came back about a week later, with this unbelievable spreadsheet around a totally new pricing strategy for product that we had, that improved our gross margin significantly, that I hadn't come up with, I didn't see it coming, she was probably five years into her career, if that incredibly smart young woman. And she just said, I've done loads of analysis, actually, I've looked at what our competitors are pricing ads, I've looked at our roadmap and how I think our product is going to be increasing customer value over time. And I think we can make these price changes. And I would package it up in this way. And we did it. And it made us more money. And it was such a great moment. I think it's about empowering everybody in your business to help, particularly in the space that we work, you know, so many of our organisations are mission led. And that's what our employees connect to, you know, empower them to help you build the business. So

Bethany: 42:31

I was that young woman earlier in my career. And there were businesses where I flourish in businesses where I didn't, and what I found was in the ones where you have the ideas, but you don't know who to go to. Nobody's really empowered. So it's not just whether or not I'm empowered, it was like, No, it was like, Okay, that's cool. But I don't know, I don't have managers who were able to introduce me to the right people, or have the right influence themselves. And that was very frustrating. Versus the organization's where, and I don't actually think it was that the organisation was better was maybe I just had closer access to power accidentally. And that made a huge difference for both the influence I could make it made my career. And just because you all have that experience. And so a couple things, what you said I think are worth taking away. One is when you hear about investing in people, you immediately think and you're in this like cash constrained environment, well, great, I can't do any more lnd I don't want to have to pay for coaches, mentors, whatever, but you can invest in people for free. And that is giving them the information that they need in order to contribute, and then giving them access to power or creating an environment where everybody has power. And so the de facto you have access to power, where those ideas can come to life, it's very exciting to know that you can make a difference, and that you're heard. And also, I think, being like one of those high achievers who left university thinking I could conquer the world. And like before created before World has conquered me, it was a very big learning experience, professionally and emotionally. Like, particularly when you thought they were good ideas, and they weren't just gonna say. And

Libby: 44:13

so I guess a call out to leaders listening to this is find a way to open your door, whether that's a monthly drop in come and have lunch with the CEO. I used to run cross functional working groups where if you're interested in what's happening across the business drop in and we'll talk to you about what we're investing in and what we're not. And that forum is exactly about those choices. But it's also as you say about a call to arms to your employees to say actually take ownership assert yourself go knock on the CEOs don't be afraid to and frankly if you go and you get knocked back, evaluate whether that's the right place for you right and and hear the feedback If you've been knocked back because they're going, actually, thanks. But let me explain to you why that wouldn't work, they have a conversation with you, that's one thing. But if the door is just shut when you knock on it, then maybe that's not the right environment for you to be working. So,

Bethany: 45:14

before we go, I'd like to ask if our listeners can only remember one thing, what is it,

Libby: 45:21

understand how a company makes and spends money. If you can genuinely understand that, and you the data there is accurate, then you can make better decisions if you don't understand that. And it's not just about understanding your cost space, it's about understanding where your revenue comes from, where your investment comes from, and when and how that cash lands. If you don't understand that you cannot make well informed decisions around where you should be spending your time and effort. No,

Bethany: 45:56

you feel like you don't have the time to slow down and get all of it. But sometimes you need to, and it's okay to spend the next three months getting your data in a position that you can trust it and make decisions with it.

Libby: 46:09

Yeah, absolutely. And it's painful on picking up particularly when you've got lots of models, as you were saying that don't quite talk to each other. Because, you know, they've been added by different people, different systems. But as soon as you get your arms around that you are free to make better decisions. And you know, if you have to go and raise money, you get to have clearer conversations with investors around the state of your business. It will unlock everything.

Brandon: 46:38

So unlocking everything, I'm wrapping my arms around this conversation, pivot to profitability. Love it. So thank you Louis pan for joining us on the operations room. And if you liked what you hear, please leave us a comment or subscribe and we'll see you next week.