62. How to prepare for an IPO

Brandon 0:05

Music, Hello everyone, and welcome to another episode of the operations room, a podcast for coos. I am Brandon mensinga, and as always, joined by my amazing co host, Bethany Ayers, how are things going? Bethany,

Bethany Ayers 0:15

they're going better than they were a few days ago. Brandon, when I was just like throwing up all day long, I went out to dinner with somebody the night before. And so I was thinking maybe food poisoning, but he was absolutely fine. So I'm thinking some sort of bug. And it wasn't, you know, in terms of the the world of norovirus that I've experienced. It was on the much lighter end. I had a horrific experience once when I was on holiday in the Cotswolds, where I entered another dimension. Well,

Brandon 0:43

the Cotswolds is another dimension, to be honest. It's like the hobbit Land of the UK. We

Bethany Ayers 0:48

were at Waitrose buying stuff because, of course, we were at Waitrose buying stuff because, you know, that's what you do. I guess when you're in the Cotswolds,

Brandon 0:54

that's the only place to shop. It's all a premium Waitrose oriented, yeah,

Bethany Ayers 0:58

as to the Beckhams, and towards the end of the way of the waitress, I was like, Oh, I'm feeling quite tired, a little bit off. And by the end, like, by the time we got back to our little cottage, that was it. And then I was just somewhere else. But this time was not nearly so bad. So couldn't work Tuesday. Half worked yesterday. Today's Thursday, and I think I'm back. I always find

Brandon 1:22

it super frustrating when you stick like that. It's like you have plans. You know? I always feel like I have plans for my week, plans for my day, and now I'm totally screwed. It's like I can't do half the things that are expected of me and also that I want to do. Yeah. So I was quite frustrated. As unlikely as it seems, I actually went out to an event last night for networking purposes, which I feel like I rarely do these days, outside of the operation the nation conference that we'd gone to. So this one was called scaling to exit. And we were at the tech space building, the new tech space building. It was sponsored by a company called adapter. And adapter is a bit similar to talent full I guess I met the founder. Super nice guy. He actually kind of noted to me that 95% of how they win business is kind of outbound or coldish outbound. So what he was saying to me was that these events that they're putting on now are like a new strand of their marketing that seem to be yielding benefits to them in terms of trying to build relationships and referrals, these sorts of things.

Bethany Ayers 2:16

I'm surprised that they can actually have a business right now, just because so many talent professionals were let go in the last two and a half years, I would think the market would just be awash with them, and that most businesses who are looking to hire could just bring in a talent team rather than outsource. It wouldn't seem like now is the outsourcing time, but yet it is. Yeah.

Brandon 2:38

I mean, I didn't ask him that question directly. It's probably like a very good question to ask. Question to ask, to be honest, because I think talentful from some intimation, somehow they've struggled, or they've had to reduce headcount, to some extent, which may not be true. I might just be making that up,

Bethany Ayers 2:53

by the way. Heard it here first, maybe

Brandon 2:57

exactly, watch out for your jobs. But to your point, that is the reality that is so true. I have so many talent acquisition friends out there that are quite good, that are not finding jobs, or the jobs they are finding aren't the right ones, or the salaries aren't quite what they want, and so the market definitely is not

Bethany Ayers 3:12

great. But anything interesting happens the event the

Brandon 3:15

panel had one of the VCs from eight roads, which is always interesting. Eight roads tends to be quite a smart bunch of folks with interesting thoughts. One of the things that they talked about, and this is kind of very much like a venture capital talk track that I hear pretty consistently, is about how to go into the US market. It's fascinating to me, because when I hear people talk about this stuff and how seemingly big and challenging and complex it is. I always think to myself, like that is not true. There's so many other things that are more challenging and more difficult to do, to be honest, than going to the US as a market. There's kind of like, pretty straightforward playbooks to make the US expansion pretty successful. If your primary market in the US that you're going after from the outset is more New York oriented, I would say, in terms of the East Coast, and in particular New York City, as we all know, going into the US is very expensive when it comes to sales reps and marketers and these sorts of things. And that's the big bug barrel, which is just purely the cost associated to it. If you land in Toronto, that is the answer, because Toronto, in terms of talent, in the city itself, for B to B SaaS, huge amounts of talent, they actually produce a tremendous amount of high cost. Tremendous amount of high quality engineers coming out of the University of Waterloo. And the cost space is on average, and I experienced this myself, to my former company, is roughly 60% of what we would have paid if we had actually landed in the New York City area and hired sales reps and Customer Success reps in that space. So that's one part, which is the cause. The second part is the access, because Toronto, from a flight perspective, is like less than an hour. The airport literally is in Toronto, the city itself. And I remember my condo that I had at the time in Toronto, I literally could walk to the airport in 15 minutes. So that would be my two bits, which is, if you're going to New York City, don't go to Toronto. It's. A better idea. It's an

Bethany Ayers 5:00

interesting one. We didn't go the Canada route, but we had everybody in Canada getting in contact with us for inbre development. So there was, like, the Federal Government of Canada trying to get us to invest. And then we had these competing ones. So we had the Montreal people, we had the Toronto people, every level of government, had some representative trying to sell us theirs. And they did have, like, they had special visas, really fast visas to get your UK people settled easily. They had visas where you could easily import tech talent from other countries quickly. I don't think there was like, an R D tax credit, the way there is in the UK, but I think there were some sort of financial incentives. They were really selling it hard. Yeah, I think in

Brandon 5:49

that respect, Justin Trudeau and the liberal government's been very progressive about ensuring that you can actually very easily get talent into the country. So if you're actually coming from the UK, it's not that difficult to get the appropriate visas for your staff versus the US, which is much more difficult, I think.

Bethany Ayers 6:03

And it wasn't just your staff. It was also like, if you found good talent in another country, you could hire them and bring them into Canada quite easily, like, even if they weren't pre existing staff, this is all pre COVID, so I don't know what's happened post COVID Canada. House was actually my final meeting, as London was shutting down. And I think it was like halfway through our meeting, we had to cut it early because the world had just ended. And so Canada house, for me,

Brandon 6:34

the memory is linked to COVID very directly. Yeah, part

Bethany Ayers 6:37

of the COVID moment.

Brandon 6:42

So we have got a great topic today, which is how to prepare for an IPO. We have an amazing guest for this, which is Drusilla Lobo. She is the former CPO Chief People Officer for Tier mobility, former SVP of people for benevolent AI and the former CPO for Receipt Bank. So a lot of wonderful tech companies that are built I interest so much, truly, is an expert in this space. So before we get to that, we will have a video chat back and forth, as usual, but we will turn the tables on Brandon, so we will see how this goes. But what

Bethany Ayers 7:11

we're going to talk about today is not IPOs. We're going to talk about your exit at swift key and experiences that you had within that Microsoft ended up buying you. But why did Google not you would think that Google would have to just sucked it into not the iOS, whatever the Android version is, you can tell I'm a real apple person, the Android operating system

Brandon 7:34

we recorded for acquisition, I think pre the series B, I think at that stage, by Facebook. And Facebook had come to us, and this is before they had a London office, and what they said to us was like, Look, we love your company. We love the product. We're just getting started with a lot of our AI initiatives. And we, at that time, Swift key was the comparable to Deep Mind, which is we both had real algorithmic prowess, I would say, when it came to massive sets of data, and manipulating that data using AI techniques and DeepMind had a wonderful skilled staff. So did we? So when Facebook was snooping around London to open up their office, they had come to us to make an offer. And apparently what happened, and this is me, the second hand story, which may or may not be true, but apparently the conversations got to a point where there was a term sheet, there was an offer made, there was a back and forth, there was provisional agreements for the acquisition. And then late, late, late stage, the founders of Swift key pulled out and declined the offer. What I heard was that they were primarily concerned about what they were going to do with staff, and I think for the founders, that is not what they wanted to do. They declined the offer, and then we continued. We raised our series B, continued the company, and at some later point, then the Microsoft part of it kicked off. But at least from a Google perspective, nothing occurred from those folks. So I'll leave it was Facebook that was courting us, which is

Bethany Ayers 8:56

also an interesting question. So the founders wanted to save staff and therefore turn down the Facebook acquisition were later bought by Microsoft. But how long did staff decide to stay at Microsoft? I just wondering, would it end up being the net same result

Brandon 9:18

at the end of the day, when large corporate acquisitions happen, you look at yourself in the mirror and you're like, Okay, what is it that I want to do? Do I want to be part of this Microsoft organization? Do I want to continue down that path? I would say during the first I don't know what it was, the first year period of the acquisition, there was a fair number of folks on left swiftly at that point. And I think we all recognize the same thing, slowly but surely, things were going to change. And we saw it, you know, I was there for nine months, and I could see it happening at that point where you knew ultimately, what was going to happen for the business, which is the passion, the innovation, all of it was going to be sucked out. All of it was going to be consolidated back in headquarters for Microsoft. Initially, they had done the right thing. And I'll just do a quick digress. Generics. I think it's kind of useful or interesting in terms of how Microsoft approaches this. But they had said to us very clearly, historically for acquisitions, we've made a mistake, a fundamental mistake, which is we've come in, we've acquired the company, and Microsoft, with efficiency, wrapped their arms around that organization, and Microsoft eyes them essentially. And by doing so, they kind of squeeze the company's culture. They squeezed the passion and innovation out of the company, very, very fast. So what they said to us is, we're not going to do that with Swift key. You're going to run as a product, you're going to run as a brand. You're going to run as a separate entity, effectively, for some indeterminate time period, which we did so over the course of my time there, for the nine months, we ran as a separate org, effectively, and the initial steps to integrate us were kind of the basic steps of, kind of some back office stuff, some infrastructure related things. But effectively the staff and how we were set up in terms of reporting lines were identical. There was no changes at all post my departure. What I then understood, which kind of makes sense, they got rid of the building. They moved into the actual London office with the other Microsoft team members, and mostly it was kind of mobile app teams that were co located with. So that kind of made sense. And eventually all the decision making and all the key roles all got put back in headquarters back in Seattle. And I think that was the final stake in the heart of the passion and innovation around the business at that point, and that was some time on. So I think what they did was like a slow roll, effectively, but in doing so, the remaining people that still work with Microsoft today that are swift gears, I would say there's a handful of them.

Bethany Ayers: 11:27

How long did the founders last? I think they were

Brandon: 11:31

locked in for, I want to say, two years, maybe three. So they were there for some time, but it was purely lock in related and post their departure. John Reynolds, from my perspective, least, kind of disappeared for a while, which kind of makes sense. He was kind of building a family at that point. And the other founder also quasi disappeared. He came back in a different form, working for benevolent AI, so there's kind of a connection there as well. And he was there more as like, I don't know what his role was exactly. It was more like r, d type stuff happening. And then he was there for a couple years. And then years, and then he left from there, and I haven't seen him pop up anywhere else at the stage. So the founders, I suspect, are sitting on there millions of pounds charting a course of leisure, that would be my suspicion.

Bethany Ayers: 12:14

And then why did you leave after just nine months?

Brandon: 12:19

I was very fixated. In a way, I was like, I am not a big corporate person, you know? I remember they had come in, started making their changes, and in my view, they had not made it clear to any of us why it was useful for us to stay. There was all the benefits and the comp benefits, and they had some fabulous programs, which financially were very attractive. It was unclear to me what value there would be in my career to stay there over the long term, I suppose. And the other bit of it is Microsoft, in my opinion, at the time, at least with my boss, who was the Chief Commercial Officer, he had made a play back into Microsoft headquarters, saying, Look, we have a fabulous team here that has basically created license agreements for distribution and revenue across every handset maker on the planet, basically. And we were the only company that had that many licensees and that much volume being shipped through these handset partners. And we had a well oiled machine of commercial folks, including myself that ran it, that knew how to do that and had great relationships in place. And what they should have done is said to me and to my Chief Commercial Officer, said, Look, you guys should take the entire mobile app install portfolio, take it all, own it and to make that work and do what you've done with swiftly for the rest of these apps, basically. And if we'd been offered that at that time, that would have made me think, and I think that could have made me stay at Microsoft, to be honest. So I think for acquisitions like this, there has to be a value prop that you articulate, and whether it resonates or not is a different question. But I think putting the time and effort to make it clear that there's something appealing to be done to keep key staff members outside of paying them more money, I think, is an important thing

Bethany Ayers: 13:54

that's interesting, because I think so many people will just default to the money. And it might also be why you join a corporate versus why you do a scale up. So my husband and I, he has always been a corporate guy, and we met at the FT, so we kind of crossed over in the corporate and I was very clearly like, what is this? I loved the ft from the outside, and I was so excited on my first day, but within a year, I was just like, I don't know who these people are. There doesn't seem to be a lot of structure here, which is odd for a corporate and yeah, and there are people there who like, 20 years, and I just could not imagine myself there for 20 years, and I couldn't really see a super clear career progression either. I don't know. I think I did a little bit of other corporate stuff, but not loads, and just didn't suit me. And I am looking for being a big fish in a little pond versus a little fish or a medium sized fish in a big pond. And also stability and money aren't my driving factors, whereas my husband, he loves the slower pace. He loves the stability. He thrives in that. And so I think there's a certain element of corporate mindset, which is, okay, the people I'm hiring are people like me, and what I care about as a senior person is good long term like an L tip. So long term incentive plan, solid stock that is valuable, and I know is always going to be valuable. Really good retirement fund, and not a lot of change, and it's not around like the actual meaningfulness of it or the romanticism of it. And so I think you have people who have chosen self selected Microsoft who are like, but look at all these reasons why I chose it. Isn't it amazing, and not understanding that people are motivated by different things? No, I

Brandon: 15:40

think you're exactly on point here. I think there's just a categorical DNA mindset that makes one of the other appealing in ways for personalities post Microsoft. Now I've very clear sense of why people stay there for 2025, years, and it's exactly what you said, which is they continue to layer on Share option, whatever they call them. There no point now the L tip stuff, but they layer them on year on year in different ways. So by the time you're there for like, 10 years, 12 years, 15 years, you have such a massive vested stake to continue to stay with Microsoft. It's incredible. So the first couple years, it's not, you know, opportunistically, it's not that bad to opt out. But if you're there for a decade, there's a massive hit that you take by opting out of that stage, which means that, financially, people don't, so there was a real glue, I guess, for employees over a certain time period. Well,

Bethany Ayers: 16:27

I guess there's two things, like, don't mind the slower pace, don't mind not having as much influence. But also, because everything is just a magnitude larger. You could have somebody who doesn't have a lot of influence running a team of 150 and a P and L of 100 million or 60 million, or whatever. So it's like, actually, in the scale up world, a massive company, and in Microsoft, it's a department head. There's benefits to the corporate world. We just don't happen to like those benefits, although I guess you're ruminating and reminiscing that maybe you would have liked them better had you stuck. Yeah,

Brandon: 17:05

it's funny, because even as I'm just saying it right now, I'm sure I would have hated it. I would have hated my life for the entire decade. It's funny how your mind works. Sometimes, when it comes to financial things, you're like, Okay, you know, I don't know, trying to like, balance your desires and aspirations and what you like versus the financial side of it, always, I think,

Bethany Ayers: 17:22

and also like, How much money do you need to be happier? You know? Because I definitely feel like there's a certain element where you definitely need money to be stable, have a nice life, and people who have money are happier than people who don't have money. When you reach a certain amount, and then after that, it's a very rapid diminishing returns. And it's kind of like figuring out where's your diminishing returns moment where the money brings happiness and stability until it doesn't, because how you get the money kills your soul?

Brandon: 17:57

Yeah, I think it's bang on. Once you get to that threshold, it kind of doesn't matter in terms of your happiness index, I guess this way, what is that amount? You know, because I feel like everything creeps up on you as you get older, which is what you thought was a fabulous salary that would be like, more than enough becomes not enough when you have dependents and other obligations and these sorts of things. And it's not because it's like, I'm sitting here spending money on, I don't know, nice shoes and clothes, which I never buy anymore. Anyways, it's all to do with, like, family oriented type activities, I guess, and kind of expectations around them. It's so

Bethany Ayers: 18:28

true. I remember being in my 20s and being offered a job, and it was just like, I can't remember how much money it was, but it felt like an insane amount of money. And I was like, How could I possibly spend that? And then suddenly, like, bigger house mortgage. Then the kids come around, and we chose a house in an area where we could do state schools, but then the kids have learning difficulties, and so state schools aren't going to work, and then suddenly you're in private schools, and suddenly all that money that you thought was going to be an insane amount that you could never get through is just not enough, and you have to go for your next salary. And it really in the same way that they say that a task will expand to the full amount of time that you have will expand to your salary and without even noticing it. What is interesting is, what do you do when you exit? Do you stick? I suppose the

Brandon: 19:17

financial part was part of your contemplation, isn't it whether you stick or how long you stick, and

Bethany Ayers: 19:22

is the money enough to make you stay, which I guess there's lessons for if you're the acquiring company and you want people to stay, what do you do beyond tying them in with money? Because clearly, money is not enough.

Brandon: 19:35

What are the motivations? And I think very specifically, if it is a scale up company that has Series A, B, C, those people have a very particular mindset for what they want in companies, and it's different from a corporate company. So how that corporate company deals with that, what kind of value prop they deliver back to those people, to keep them and to attract them, outside of the money piece of it, I think there's some space there for people to be smart and do some kind of interesting make some interesting argument. It's back to the employee base saying, Look, this can be fabulous for you, and here's the reason why. So let's Park it here, and we will move on to our conversation with Drusilla Lobo. What is unique about the IPO journey that is distinctly different than an exit or a fundraising event?

Trecilla Lobo: 20:18

So the IPO journey itself can take months, if not years, to prepare, and for me, that was one of the key things that I learned. So in my previous companies, we've been through funding rounds several times, it didn't take as much time to prepare. They weren't as many complexities as the IPO journey. So one of the key things, if I look at it internally, a funding round is not necessarily an exit event for employees. So if you look at it from a people lens, actually an IPO is a liquidity event for employees. So it's pretty big, I would say, on that context.

Bethany Ayers: 21:04

And does that mean that you have to worry about staff attrition after the event? Does everybody run away?

Trecilla Lobo: 21:11

It depends on what's in it for them. So I would say a post IPO company may not be necessarily what people want to like. A lot of people are excited about startups, scale ups, and once you get to IPO, it may not necessarily be what people a company that people want to work for, or it could be, you know, the journey that people want to do. And one thing I definitely learned along the way is you can't assume for sure. So really, considering the retention piece is quite key of your critical talent, but also assessing what it means for individuals. So if it's a liquidity event and they're able to pay a part of their mortgage by that new Ferrari, which may be the case may not be the case. Are they going to stay? And if so, are they going to rethink the career, their own journey, and probably maybe a time at which they would exit? So those are the considerations that you have to have an M IPO journey for sure.

Brandon: 22:16

So the company's decided we're not going for more fundraising. We're not going to exit, per se, to for a strategic acquisition. In this case, we've decided that business is in a state whereby we believe we can actually pull off an IPO. So from a people lens, when that decision is made, what is it that you then do to start planning out and mapping out that IPO to happen?

Trecilla Lobo: 22:36

So I would say the IPO journey itself is a collaborative effort, collaborating with CFO, CEO, CEO, chamber council as well, and the chief people officer, the people leader. So it's basically your whole exec team and the board involved as key stakeholders in the whole process. As a people person, one of the key things that we had to do is really think about what are the key project streams involved in terms of preparing for the IPO journey, and then who should own those elements? And whilst you're going through the IPO readiness journey, you also have to deliver business as usual, so you still have to meet your targets, you still have to scale, you still have to grow, and you still have to deliver on the results. So really carefully, considering the resources that you need, the expertise that you need, so you don't have a team that's overstretched and under delivering is quite key. What

Brandon: 23:40

are those work streams? So if you had to kind of package up the playbook of the 345, work streams, what is that? So

Trecilla Lobo: 23:46

you have the financial performance element that you have to consider. You have the regulatory compliance because depending on where you're going to list, there are whole regulatory and compliance requirements. There's the corporate governance requirements as well. So for instance, things like board structure, executive compensation, and then the internal controls you have, internal relation, investor relations that you have to consider, there's the people work stream, so you're looking at internally what does this mean to your people, succession planning, equity liquidity event, and then most important of all that runs across all those streams is comms, and communication, both internally and externally.

Bethany Ayers: 24:36

Although How much can you share along the journey?

Trecilla Lobo: 24:40

Whatever you're sharing externally, you should share internally first, because it's all about building that trust and transparency with your teams. So we took the view that actually you wouldn't share anything internally that you couldn't comfortably share externally. So. One of the complexities that we had with the IPO journey that I went through, we did it through COVID. So that made it even more difficult, because all your communication and your project teams had to come together remotely. But in some ways, it made it easier, because you weren't taking up meeting rooms and people weren't double guessing what you're working on, but to some extent, that made communication quite difficult. So yeah, so we had to be really, really careful about what we communicated, both internally and externally. And we had the rule that said, if it's not something that you can share externally in an open market, we'd have to be careful about what we should internally do, in retrospect,

Brandon: 25:42

when you look back on the benevolent IPO in this case, what are some of the gotcha this where you're like, man, we should have done this and not that, and some of the issues that you encountered,

Trecilla Lobo: 25:50

everyone gets excited about IPOs. I think the key thing to consider is, is IPO the right journey for the stage that the company is at and for the maturity of the company is at the right stage. So fundamentally, are you going to be able to deliver to the IPO expectations, not just there and then, but even post IPO? So that's more deeper consideration on that and the time and the effort that it would take. So in the context of all those is IPO the right thing to do. I think the other thing we would do is also probably prepare our internal teams a little bit more in terms of the culture change and the culture shift. So to give you an example, obviously benevolent. AI was a drug discovery company, and obviously have clinical trials and assets that you you know, obviously a pipeline of clinical trials, and previously, AI team or scientists would be able to go to conferences and talk about some of these things, but host IPO, the comms team, had to go through all the communication and the slides to make sure that the market sensitive information wasn't actually shared publicly, and that was a bit of a culture shock to the team, because they weren't used to that level of scrutiny by the comms team and that level of scripting, and so in hindsight, perhaps we should have prepared the team more in advance for those kind of things, because that can be a culture shift. I loved one of the sayings. It was actually in one of the index kind of rewarding talent book, and it said about IPO kind of being a bit like a wedding, everyone's very excited, everyone's celebrating. Then post the wedding, you have this wonderful relationship that you're building. And it takes some work. Takes building that relationship post the wedding is equally important.

Bethany Ayers: 28:04

So we're talking a lot post IPO, if we move back to pre IPO, because I think a lot of businesses end up wanting optionality. So it's not like you've necessarily decided that it's 100% IPO that you're going but there's going to be some sort of exit event. Everybody's a bit tired, ready to make some money out of this business that they've been building for the last five to 10 years, and prepare for either an IPO or a trade sale. How much of that work stream ends up being the same? Because when we were at new voice media, they definitely we weren't really IPO sized yet, but we figured if we prepare that way, it'll make whatever we do easier,

Trecilla Lobo: 28:49

yeah, so I would say a lot of similarities. We probably don't have the elements of, like the corporate governance or compliance, for instance, as you know, you don't have to go as deep into those aspects, and also your exec comp and your board composition may not have to change versus an IPO, because there are some requirements. But for listing where your board composition has to, you know, your board members have to have certain experience, and you know, from a governance perspective, whereas that's not necessarily the case for an exit. But fundamentally, a bulk of the things are likely, are the same, like I'm I'm reflecting back on when the sifty got acquired by Microsoft, for instance, a lot of the preparation there, certainly, from a people perspective, was very similar to the IPO journey. It didn't take as long, you know, you could do it over a few months, versus months of preparing for an IPO, right? I would say that the timelines are different, and

Bethany Ayers: 30:02

that's because of the regulation. Yes,

Trecilla Lobo: 30:05

that's because of the regulations. It has to be thoroughly audited, and also with the IPO, it's this is similar to an exit to a certain extent. It may, may not happen. So you put a lot of effort on preparing, and the market conditions might change, and you may not IPO, and the same could happen. Then exit event, you literally go down to almost signing, you know, the term sheet. And that might not happen.

Bethany Ayers: 30:36

That is also just part of what we do, or, you know, a fundraising round that almost happens and then doesn't, and then you you lick your wounds and go again, yeah. And

Trecilla Lobo: 30:45

you go, God, I've at least got all my paperwork in order, and I know exactly who owns what shares. You know which I didn't know previously. Yeah, that

Brandon: 30:53

always seems to be the common one, isn't it? It's the option grants, and the shares are all over the map in some form. And you're like, oh my god, we have to pull this together.

Trecilla Lobo: 31:00

Another good lesson for me was when you or post IPO, obviously, they trade to build shares. So quite often, what you find is companies or scale ups have share scheme systems that don't allow you to be able to allow your shares to be traded or to cater for close periods, etc. So we ended up having to switch systems. We only had six months to prepare for IPO, and honestly, it was pretty much work. So

Bethany Ayers: 31:36

let's dig into that, like, which system did you have and what did you move to, I mean, if you can talk about it, that'd be interesting, because everybody cares about systems, yeah,

Trecilla Lobo: 31:47

so a lot of the chess game systems aren't able to deliver so we, I think we had cap desk at the time. We

Bethany Ayers: 31:55

looked at CAP desk, and then we chose ledg, although we found LED G really hard. I don't know how much of it was user error and how much of it was us with leggy. And also I think we were a bit early, although I don't know what year you were using it. So last year, yeah, we rolled it out COVID time. So I think it was a very less featured product. Four years ago.

Trecilla Lobo: 32:21

Obviously, they were very early stage company then, and they're continuing to build on the post IPO proposition. We at the time with benevolent, because led you didn't have the features, but at benevolent, we went with inter trust. They're pretty small, but they cater more for IPO transactions and transitions, but, yeah, that was quite a lot of work, actually transitioning. And then the other pieces we had. The same with 50 as well, Brandon is that, and particularly with Gen Z, you know, you have a lot of employees, a lot of your people who will be there for a short space of time, maybe two years, three years. So they have vested options or vested shares and vested equity, and you don't often keep in touch with the levers, right? So there was an element of like, I have to confess, social media stalking for me to find people and kind of get their up to date personal email addresses. Thankfully, some of the share scheme systems now enable this. I mean,

Brandon: 33:29

people leave the company, they have vested shares, just you lose contact, and you're like, Alright, I need to find these people now, because you know something's happening, and I've been through that a couple times, yeah.

Trecilla Lobo: 33:38

And so one of the big things that I now do, particularly for the share scheme systems, is as they're marked as a lever, it flips to their personal email address, so that's the individuals can update it, you know. But it's simple things like that. You can prepare.

Bethany Ayers: 33:55

My question is Carter, because Carter seems to be buying everything and everybody. Have you had much experience with because I think they bought cap desk. They bought another thing that does SPVs called bobbin. That was French. They seem to be stalking me all the time. Any good?

Trecilla Lobo: 34:12

So I thought cap desk bought Carter. Oh, maybe.

Bethany Ayers: 34:15

But then do they rebrand as Carter? I get emails from Carter, not from CAP desk, but okay, I've

Trecilla Lobo: 34:22

used Carter as well previously. Again, limitations in terms of the IPO journey, I've not seen them deliver that element share box is another one that I've used great system, not great functionality reporting. It also depends on locations. So how many locations you have your share schemes complexity. So a lot of companies, as they scale, will have one main plan and then loads of different sub plans based on different locations. And so can the. Systems cater for those complexities is another aspect that I would really consider, and if they can't switch pretty early on before it starts getting too complex, you know, otherwise, all you're doing is just a lot of work around

Bethany Ayers: 35:17

that is the rule of thumb for everything in a startup. Because you're always like, Oh, is that a big enough problem? To address today? No, no, no, there's something that's more of a problem. I'll address it tomorrow, and I can guarantee you, no matter what that is, once you address it, like, Why? Why didn't I do this 18 months ago? It's talking to founders of a company where they know they need to change their name. And this actually happened to the new voice media. We didn't want to change our name. It was long. It was bit old fashioned. We had the longest email address in the world. And when we first went nvm, we just figured that would be an easier one. The domain for nvm, because it's a three letter domain, somebody owned it, and they wanted, like, 150,000 they're like, Oh, my God, that's so much money. No, we'll never buy it for 150,000 and then we raised money, and then we went to they're like, Oh, you've raised money 300,000 like, no, no, we'll take it for 100 Nope. And we never, ever, ever bought the domain, and we never ended up switching our name, because it just got to be too long and it would just be too much effort. So just like a general piece of advice is, if you think you should do it, and you know you're going to have to change it at some point. Now is the time to do it? Yeah,

Trecilla Lobo: 36:24

and honestly, I would say, go through your IPO checklist and actually make sure that it can meet all those requirements, because it really is. It's a lot of work, and going through an IPO journey itself is quite a lot of work, and there's a lot of communication. You don't want this to be an additional piece of communication, you know, right at the last stage. So things that you can preempt early on, just give you, or I see, so much more time to do the other important things that you should be focusing on. So some

Bethany Ayers: 37:01

of those preemptions, because I am thinking there's the Chinese it just remind me the Chinese proverb of, when was the best time to plant a tree 20 years ago? When's the second best time to plant a tree today? And this is what we're doing. So for those of us, earlier in what should we do tomorrow in preparation for the IPO that might be happening in four years time. What can we do today to make our lives easier in the future? Let's

Trecilla Lobo: 37:30

start with basic housekeeping, even things like look at your share schemes. Look at whether you have the right records of people who have left. What's vested, what's invested, the system that you're using? Have you got the right kind of tools in place to deliver this? If I'm thinking of it, former people lens, I would say, Have you got the right share scheme system? Have you got the right payroll system that can talk to, you know, the share scheme, system to your HRA is get those basics in place. And then there are other things that you can do, like, for instance, you can start looking at your policies, your frameworks, your procedures from a compliance perspective, your company will be audited, and is it audit ready? And so what are the steps that you need to have in place to really help with that? So, you know, even things like code of conduct, policy, boring stuff, I would say, education as well, around equity. So things like, what is an insider? Will you be classed as an insider in that event? Because people find it quite difficult. I know this information, hence I can't trade closed periods. You might go through the IPO journey, you run the gong and everything's done, but you can't sell your shares because we're in a close period, and what does that mean. So setting those expectations early on, I think, is quite key. It avoids disappointment. And also getting your share scheme really in a place that it's it caters for post IPO wealth is important. So you may not give equity to everyone in the company, but actually thinking about what your compensation philosophy and structure looks like is something you can prepare in advance. How do

Bethany Ayers: 39:32

you prepare your share option scheme for post IPO? What are the things to think about again,

Trecilla Lobo: 39:37

because you have different kind of tax implications if you have like things like EMI, or if you have options versus actually shares in the listed company. So you may need to switch them to RSUs, if you haven't already, for instance, you may have an employee share scheme, Save As You Earn scheme that you might. Want to offer to employees so you can offer different things post IPO that you may not have been able to do pre. So really thinking about that, you probably, you know, in startup scale ups, you you provide more equity and low base so you might give a lower base salary and more equity. In a post IPO world, you may not be able to do that because you have limitations in what equity you can offer. So in which case you may have to offer a higher base but lower equity. So that blend and that your reward philosophy will be and framework might be different. Where

Bethany Ayers: 40:40

are the areas where you absolutely need to invest in expertise, outside expertise?

Trecilla Lobo: 40:46

So I would say legal. I would say Remco advises, so advising the board on executive compensation, long term incentive plans, the remuneration policy itself, which is part of the IPO framework, compliance framework. So enlisting like a Dan Harris, for instance, you know who are experts in this area, it's really quite key. So the ones I would say that we really enlisted are legal advisors. Obviously you may have, like, Investor Relations experts, depending on the expertise that you have internally, we also engaged with comms experts, so external comms company, and actually we ended up speaking with Deloitte, because I didn't know Dan Harris at the time, because you have to do a lot around exec comm. I think a big chunk of my role ended up being focused on exec COMM And Remco. So getting benchmark for exec compensation, exec equity, because they are also subject to shareholder votes, and you do need those expertise, external expertise there. So

Brandon: 42:02

when you think about the CEO, what is it the CEO should be doing to get ready for that? IPO, so if you had to call out three tasks or three areas of focus for the CEO, what would that be?

Trecilla Lobo: 42:13

They could be the glue to bring everyone together. Be great to have a CEO oversee and bring people together, but having somebody who could bring all these project streams together and really kind of run this, I would say the other piece would be post IPO strategy, so perhaps working with the CEO CFO to oversee what that would look like whilst this team is just preparing for the IPO, perhaps overseeing that post IPO strategy part would be quite key. And also look not all people leaders get as involved on the compensation or equity side, so depending on the CEO strengths, you know and what they like doing, that could be an area as well. If there are gaps,

Bethany Ayers: 43:06

if our listeners can only take one thing away from our conversation today, what's the one thing they ought to remember? Just

Trecilla Lobo: 43:17

prepare early on, even if it's not the journey that you embark on, I think it'll make your life so much easier. Most scale ups, in fact, all I think, aim for an exit event. And that exit event could be an IPO. And so take the view that that's what it could be. And I would say, prepare now rather than wait, because you never know the market conditions might be great, and you might need to IPO in the next six months, like we did at benevolent, or the market conditions may not be good. So you have a 12 month, 24 month runway, perfect.

Brandon: 43:57

So on that note, we will plant the tree here the Chinese proverb, as it were, I think it's my biggest takeaway from this conversation. So if you like what you hear, please leave us a comment or subscribe, and we will see you next week.