May 30, 2024 • 35 mins
In this episode, Gary Reeman interviews Pete Daffern, a three-time CEO and two-time president with a track record transforming fledgling companies into thriving unicorns. With $50 billion worth of software transactions under his belt, Pete’s insights are gold for any startup or scale-up looking to navigate the treacherous waters of growth and expansion. Currently, Pete leverages his extensive experience to serve on various boards and as an Operating Partner at PeakSpan Capital.
Pete delves into the pivotal lessons he has gleaned from decades of leading technology startups and scale-ups. From the early days of bootstrapping companies in the late '80s to the disciplined approach required to manage operational cash flow in more mature business, Pete emphasizes the critical importance of having the right people at every stage of a company's growth. He reflects on the transformative mentorship he received from industry stalwarts like Sue Lethbridge and the impact of building a stage-appropriate leadership team.
Pete explores the intricacies of scaling a business, the challenges of identifying the right talent and knowing when to make tough decisions about leadership changes. Pete shares a fascinating anecdote about Godfrey Sullivan's strategic approach at Splunk, illustrating the importance of focusing on winnable battles to drive sustained growth.
This episode also covers the crucial elements of defining an Ideal Client Profile (ICP) and how it should inform every aspect of a company's strategy, from product development to market positioning.
The conversation takes an interesting turn as Pete discusses the paradigm shifts that have shaped the tech landscape, from the advent of the internet to the current revolution in artificial intelligence. He shares his enthusiasm for AI applications that deliver meaningful, differentiated use cases, drawing on examples from his work with companies like Amplience.
As the episode draws to a close, Pete offers invaluable advice to founders of new AI businesses, emphasizing the importance of customer engagement and product-market fit. His stories and insights provide a compelling narrative that is both educational and inspiring for anyone involved in the tech industry.
Don't miss this episode filled with actionable insights and real-world examples of what it takes to scale a technology company from startup to unicorn. Tune in to hear Pete Daffan's journey and learn from one of the industry's most experienced leaders.
This episode of the Startup to Scale-Up Game Plan was brought to you by AlpinaSearch. Head over to www.alpinasearch.com for advice on scaling your technology startup and recruiting high-impact senior executives.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
The Startup to Scale-Up Game Plan is brought to you by Alpina Search,
Europe's premier talent search firm dedicated to helping technology startups
and scale-ups recruit high-impact executives.
Now over to your host, Gary Rieman.
Pete Daffan is a three-time CEO and two-time president.
(00:22):
He's helped grow many companies from virtually nothing and been instrumental
in creating at least four unicorns.
Indeed, Pete's been involved in $50 billion of software transactions,
and he, these days, really leverages his experiences to help scale-ups avoid
the stuff that kills off companies and do more of the stuff that creates really successful outcomes.
(00:48):
And he's currently serving on a number of boards, as well as working as an operating
partner for Peak Span Capital.
So, Pete, welcome to the Startup to Scale-Up Game Plan. Thank you,
Gary. I'm looking forward to this.
Likewise. We've been waiting all through the long British winter to get this
conversation live and kicking.
(01:10):
So what are some of the biggest lessons you've learned from your experiences
over the past few decades leading technology startups and scale-ups?
As you reflect on some of those learnings, I think about our first company,
for example, we were learning every day.
And now, as I kind of look back, and that's 40 years ago, 35 years ago,
(01:33):
we were just making common mistakes.
I see a lot of the companies out there making. I think the biggest learning for me is people.
And there's a whole bunch of stuff that we can talk about, about product market
fit and ground jewels and differentiators and how to execute go-to-market and a whole slew of stuff.
(01:55):
But it's so important to have the right.
In and around the business. When we got started, there were no such thing as investors.
This is 88, so everything we did was bootstrapped.
And we ran the company based on operational cash flow and people's personal overdrafts.
(02:16):
By the way, that's a really good discipline because it's so easy to spend investors' money.
But as I look around organizations today.
They've got a really good chance of being successful if
you've got good investors we can talk about that and
most importantly a good leadership team
(02:36):
that's stage appropriate that's got
the right mindset and the right team cohesion
to it and companies go
through many manifest manifestations from zero
to 100 hundred million in revenue or
however great the company becomes and
the person that's the best person
(02:59):
to run engineering at the beginning almost certainly is not going to be the
person to run it two years later if the company's doing pretty well but there's
absolutely highly likely that there's a role for that person in the business
but they're not going to be the person that runs a.
Team of 100 engineers or whatever. And you can say the same about sales.
(03:20):
And it's about recognizing it is a people business and people make all the difference.
And it's not the CEO that's saving the village and carrying the company on their his or her back.
It's about a great team dynamic with the stage appropriate people who all have the same goal in sight.
So I think that's the biggest learning. You talked about having no investors
(03:44):
at the startup and what a great learning experience that was when you founded your first business.
Did you have anyone giving you guidance, coaching you, mentoring you?
Well, that very first company was not me that founded it. It was a guy called
Derek Taylor, who I'm still in touch with today.
And I learned an enormous amount from Derek. And it was some of his personal
(04:08):
money, as well as everybody working for an appropriately sized salary so that
we could afford it from an operational cash flow perspective.
And in and around all of that, I learned a lot from Derek. It was how to make
the money go as far as it possibly could go, how to spend money very wisely.
(04:30):
But there were some incredible people in that company.
There was one person in particular who I probably learned the most from in my career.
It's a big statement, but it's probably not far off being true.
If it's not quite true, I'm thinking, who else might it be? But her name was Sue Lethbridge.
And I was a young lad who was a good sales guy.
(04:52):
I was running various countries and what have you. But I really didn't have
the discipline around me because nobody ever taught it to me, right?
But I had a lot of intrinsic skills as well as the work ethic to be successful.
But she really helped me. and she really helped me kind of put a bow around what I did well.
(05:16):
She totally pulled apart what I didn't do very well. And within a relatively
short period of time, made me a much more disciplined executive.
And it was certainly with a lot of her help, we did some of the biggest deals
in the company's history together.
Helped fuel the growth of the company, company
helped get me out to the us where i started running sales
(05:39):
and where years and years later i became president of
that company and yeah it was
just great and it did you know it is important to have these
folks around you that you can learn from we so often just kind of toss folks
in in the mix without the right enablement to their careers and you know some
amazing people there's a company i do some work with called cognizant and there's
(06:03):
some incredible folks that joined the sales team there.
And they do try very hard to get the right enablement around them.
It just shows how important it is to do all of that.
And then as I go on through my career, I spent a lot of time around some amazing
luminaries like Greg Kerfoot, who lives up in Vancouver.
We sold that company. Well, we took it from zero to 400 million,
(06:24):
sold it for billions and billions and billions.
Jeff Miller, who was CEO of Documentum, is chairman over at ServiceNow.
Now Godfrey Sullivan, CEO over at Splunk. He was CEO over at Hyperion.
Jeff Wiener, who was CEO at LinkedIn. I knew him when he was at Yahoo.
And you just sit down with these folks, and it's amazing how much you can learn
(06:47):
in a five-minute conversation with some of these people.
But there's nothing ever that somebody said to me that was just amazing.
Mind-blowing it's always been simple abc stuff
but the problem is when you're in a company it all
gets very cloudy very quickly and this clarity of mind is so important do you
(07:09):
remember one specific conversation that with one of those amazing leaders or
founders that really brought the clarity that blew away the clouds there was
a lot in godfrey sullivan was an intriguing one to me.
I'm going to take two minutes to tell you this story because Godfrey really
was an interesting chap.
I knew him when he was CEO over at Hyperion, which did really well.
(07:31):
Obviously, he sold it for a few billion to Oracle.
And I was golfing with him ironically down in San Diego and we're back of a
taxi and he'd just taken a call.
And it was the CEO of Splunk, or Splunk is the $28 billion company today,
a guy called Michael Baum, who happened Happened to be one of my neighbors.
And I'm like, oh my God, you're talking to Michael.
(07:52):
He says, yeah, this company's doing about 4 million ARR.
And I'm like, God, you've just come from a company that's doing 400 million
ARR. You're going to do a company that's 4 million ARR.
I said, yes, because I can see the product market fit with what Splunk are doing.
However, the way in which they're taking it to market is too dilutive and it'll never be successful.
(08:13):
They're trying to win every battle they fight. You've got to pick your battles,
make sure you win those battles.
And what he meant by that was they're going after enterprise deals,
mid-market deals, SMB deals in multiple of verticals and multiple of geographies.
And he said, we're going to go after this one vertical, enterprise in the United States only.
(08:35):
And when we've cracked that, we'll move on. And he went through some amazing times in his first year.
This was 2008, if I remember correctly. So all of the funding woes that were
around then, he'd only just joined the company.
He had to put $2 million of his own cash into fund payroll in the first few
(08:56):
months, doing, like I said, $6, $7, $8 million or whatever it was in ARR.
And exactly 10 years later, he was doing $800 million in ARR and built an incredibly
successful company just by doing this stair-step approach to go to market.
It's like, okay, this might be the goal that we want to dominate the world one
day in machine learning data analytics.
(09:21):
But we've got to get there in a stair-step process, and we've got to win each step along the way.
And if you see a lot of these companies today, they're just trying to do too much.
And I learned a lot from every one of my conversations, but that was something
I've kind of taken throughout every company I work with is, all right,
let's pick the battles that we're going to win, and we're going to win them well.
(09:43):
And let's win those first before we think about anything else.
So you talked a few moments ago
about the founding team often not
being the same bunch of individuals it's
going to be right to scale the business to the next
level or the next level but one so how
do you deal with your the companies that
(10:04):
you're mentoring or advising when
the founding team wants to
stay in place but maybe you've identified that
one or even two of those individuals aren't
right to take them to the next phase in their journey well there's two bits
to that one is identifying who those folks are and seeing if you're really identifying
(10:28):
them correctly and then if you have identified them correctly how are you going
to take the step so the first step,
identifying them correctly is really important because with the right help,
they might be the right person.
But if you're not giving them the right help, like Sue Lethbridge gave me, how do you know?
And make sure that you're doing all of that first, right?
(10:50):
You know, are we really laying out all of the paths to making this person successful?
And by the way, there is something about folks in the early days of a company.
They've also got to find their own way predominantly more than a little later
on. in a business, right?
That's part of the entrepreneurial juice, if you like.
(11:11):
But one of the things I do around all of that is I look at the functional leaders.
I look at what are the four or five traits that are important for that functional leader.
I mark them out of 10 in each of those functions.
And they've got to be at least an eight. They've got to be an eight,
nothing less than an eight, can't be less than an eight. And you go through
all of those and you do Do the average.
(11:32):
And if the average is less than an eight, but today you've got a problem.
So you then go back through each of those functions and go, okay,
can I take that six and make it an eight with the right help?
And if the answer is yes, get after it and make it an eight as fast as you can.
The answer is no, then you know you've got the wrong person, right?
(11:54):
If it is an average of eight, and if you can get everything to an eight,
then do the same assessment for 12 months from now to see whether or not you've
got some potential problems coming, right? Like head of sales.
Most heads of sales for a $4 or $5 million ARR business are really just,
I don't mean like this, they're sales managers, right? Right.
(12:15):
They they're in the deals.
They're helping the salespeople and their salespeople on steroids.
And they might not be the person to run a hundred salesperson strong organization
almost certainly aren't going to be.
So identify what do they want to do and can we get them on the right roadmap
with the right mentorship and what have you.
(12:36):
And the reality of it is if you do that process well and you manage that process
properly and you bring those folks into that process, like the head of sales
who wants to run a billion-dollar software company, and you agree what they need to achieve,
you put the right leadership around them or mentors around them,
then it becomes very obvious and very clear to everybody whether or not they're
(12:58):
failing or succeeding on their journey to scaling up in their career.
And most of the time, they're relatively straightforward conversations because
they're not in a comfortable position.
They're doing stuff they don't like anymore.
They don't want to be doing it. They're doing a bunch of paperwork and comp
plans and deal analysis that they just don't want to be in or whatever it happens
(13:23):
to be. The classic is the engineer, the guy or gal who's just a genius.
They come in, they write code a hundred times faster than the next person,
and their brain literally is the size of a planet, and they can solve problems
that other people just can't solve, and you make them the manager.
Well, all of a sudden, all they're doing is managing, and all of the creative
stuff that they love to do, they're no longer doing.
(13:45):
And you say to them, do you want to go back and write some of the really important
code we need in the product?
They're like, yes, please, let me add it. So it tends to be a management process.
There always are a few in there that are difficult.
Like sometimes the CEO just doesn't want to give up being the CEO,
even though they're just the wrong CEO for the company.
(14:08):
Company, they're super creative, they come up with a thousand ideas,
not enough depth to any of those ideas, but that's how they become successful as an entrepreneur.
And it needs somebody who can take the amazing ideas that they've created and
take a business, make a business out of them.
Godfrey Sullivan at Splunk being a perfect example of that, right?
(14:28):
Yep. Getting a founding CEO.
Move on from his beloved product and
company that he's created is that's always going to be
a challenge it is i tell you that jeff miller talked
to me about this once and jeff is now
on the board of service now who've crushed it right i mean i don't know their
latest valuation is 100 and some billion and i can't remember the name of the
(14:51):
guy but he was the ceo and sequoia were the backers And they asked Jeff and
some other CEOs to go and talk with the founder,
who was apparently begrudgingly trying to stick to his seat as a CEO.
And I might have bits of this a bit wrong, but you get the gist. And Jeff said,
(15:12):
after he spent three or four hours with this person and started talking about
all of the frameworks and strategy that needs to be put in place and how to
lead people and all of the stuff about being a CEO of a multibillion-dollar
company, At the end of the meeting,
the guy looked at Jeff and said, you guys are absolutely right.
I am not the CEO for this company.
And he looked at Jeff and said, how about you do it?
(15:34):
Jeff didn't do it. He joined the board.
But I think with the right level of communication and interaction,
most people are probably dissuadable, but there still are some.
And I've had them where they're like, no, I'm the right person to run this company,
even though it's pretty clear to everybody else they're not.
Thinking specifically of the scale-up phase, what's the biggest mistake you've
(15:59):
made when you've been in a leadership role in a company that's getting into that scale-up phase?
What's the biggest mistake you've made and the lessons that you've learned from that experience?
There's quite a few in here. We've had situations where we, Crystal Decisions
was probably one of them, where we've
created our very first company. We merged with another company.
(16:21):
It was called Seagate Software, but it was really what became Crystal Decisions,
where it was an enormously successful company.
And we had a lot of money in the bank, a lot of money, like hundreds of millions in the bank.
And we were trying to grow the company as fast as possible.
I don't think there was anybody over the age of 40 in that company.
(16:41):
In fact, I think the oldest person was Greg, the CEO. He was I was probably the next oldest at 32.
None of us had done it before. And so we had all this cash. We genuinely believed
that the more people we hired, the more revenue we would create.
So we were just really on a hiring spree as opposed to really understanding
(17:03):
the metrics that drive the hiring spree.
And I see a lot of that still today
where it's not clear to
an organization optimization what drives the
next head higher in sales what drives the
next higher in engineering you know what do
marketing leads need to look like
(17:24):
what's the makeup of those marketing leads it's not just a lead it needs to
be a specific kind of lead and what's the conversion rate look like on that
lead how many of those leads do i need to convert into a decent pipeline therefore
How much do I need to be spending? Can we afford to do that?
Therefore, have I now got too many leads for the existing sales team?
(17:47):
So I should be looking to bring in more salespeople.
And what are the timelines around all of that? So it's this kind of capacity
model or whatever you want to call it.
But really, it's a math equation on how to scale the company.
And this is where great CFOs and great sales ops person people can really help
(18:07):
an organization out. And I would say, until you've got that in place,
you're wasting money. Because how do you know.
That you should be hiring that salesperson without having those stats in place.
In fact, I've seen the situation many times where the gut instinct is,
let's go and hire some more salespeople because that's what's going to drive more revenue.
And it actually creates a bigger problem than that because you're hiring more
(18:28):
salespeople, you've got less leads per salesperson, and the good salespeople
are now like, well, hold on a second.
This used to be pretty good and I used to be able to hit my number.
Now I can't hit my number because I'm not getting enough leads. I'm going to leave.
And you start kind of spiraling out of control, which is why it's really important
(18:48):
that you've got the math equation down, lessons learned, enablement.
How do you make sure that you are giving everybody the best chance possible of being successful?
And there's a couple of organizations where we've been hiring a lot of people,
and we just didn't have enough of a lens on how are those people really doing.
(19:13):
So at the end of the year, there's one company, and I don't know how many did
we hire that year. I don't know, 150 salespeople, whatever it was. It was a lot.
We were sitting around the board table. I've just seen your exec conversation.
And somebody said, how many salespeople did we let go this year?
Zero, zero. And it's like, well, it's just not possible that we've just hired 150 keepers.
(19:36):
And so we put in a process on the back of that, which was much more enablement,
much more certification, and making sure that at the end of month one,
we all still felt good about this person.
At the end of month two, we all still felt good about this person.
And at month three, we all felt good about this person.
And if we still were in the same situation, then it was on us to try and help make them successful.
(20:01):
But if there's any doubt, you need to remove them from the company because it's
diluting the performance of that business.
And then good enablement. We reckon when we did this next week,
we reckon we added 50 million to the top line the first year following good
enablement because it just made all the salespeople that we had that much more
productive. Isn't that amazing, right?
(20:22):
That's awesome. I know something else that you're passionate about is companies
getting their ICP sorted.
So do you have a model or framework that you use when you're sitting down with
the leadership team or the go-to-market team to help them define their ICP?
Yeah, I do. And I was just with the Chasm folks a couple of weeks ago,
(20:45):
and it was great to get reminded of all of this. We were doing a workshop with
a company I'm chairman of called Cognizant.
And ICP is so important for a bunch of reasons.
But really, there are kind of three things that feed into this multivariable
simultaneous equation.
ICP, ideal client profile, crown jewels.
(21:06):
What is it about your product that is differentiated? And is it meaningful to the buyer? Yeah.
Kind of important, but people will talk about it and you go,
so why would somebody buy that?
Oh, yeah, I've not really thought about that one. And it's also interesting
how many people don't really understand their own crown jewels.
(21:28):
You ask folks, and they come up with one recently, our crown jewels are we've
got the best people in the business, in the industry.
Well, that's not very scalable, is it? You might have 15 people who are all
super smart, but when you're 100, they're not going to be the smartest people going.
That's not differentiate, there's some algorithm or whatever it happens to be
at the core of the technology that truly differentiates over the competition,
(21:52):
but is super meaningful for the compelling reason to buy.
And that's the third variable here. What is the compelling reason to buy of your target audience?
And so all of that drives this discussion on what your time is going to look
like, how you're going to go to market.
So the ICP just flushes out of that conversation, and it's based on the compelling
(22:14):
reason to buy, based on the crown jewels.
Who is the ideal client profile for this product, also given a backdrop of whoever
your competition might be.
You know, I've seen plenty of situations where you've got an amazing ICP with
great differentiators, but they're going after a target market that's saturated
(22:37):
with competitors that are immovable.
I mean, we had that in NetSuite. As great as we were for these huge organizations,
they just weren't going to move off of SAP or Oracle anytime soon.
So it didn't matter that we were a better technological solution.
So it's like leave the enterprise alone let's go
(22:57):
after the big market which is which is what we ended up doing right
it's a really fun conversation when you sit down with
organizations on this one because it drives everything it drives product product
roadmap drives who you hire drives who you
sell to drives how you market i would say
it's the most important thing yeah and as it's such an important thing i'm wondering
whether you sometimes get frustrated with the companies you're dealing with
(23:21):
when they are maybe not coming around to your way of thinking and how you deal
with that and how you nudge them along?
I don't mean this arrogantly because it's not an arrogant thing.
I don't think I've ever had that happen.
I think it's more to what extent do they need nudging along, right?
(23:41):
Or to what extent do they actually take the concept and run with it?
So at one end, you'll sit down with the team and they're just all in.
They're lapping it up. When you finish sitting down with them,
they all sit down for another four or five hours afterwards and leave the building
at 10 o'clock because they've got so much out of the conversation.
(24:01):
And over the next few weeks, they come back to you with stuff that just blows your mind.
And one of the most fun experiences I had is working with a pal of mine called
Howard Bell, who ran products over at PayPal.
And he and I were helping facilitate, let's call it a workshop,
with the folks over at Unilever.
(24:21):
Will Saville and his team, just great folks, great folks.
And what they came back with was just brilliant. I mean, just brilliant.
Over the next couple of months, the strategy they came up with was fantastic
and the company's pushing it.
The other end, you just get folks that, I mean, I have had a conversation where I've said,
(24:42):
hey, we need to figure out who are the strategic ICP clients that you should
be going after and how we should position in the product and working out all
of the SAM and basically a clear-cut go-to-market as well as clear-cut product roadmap.
And the answer back was, I'm too busy to do that.
(25:04):
And I'm like, okay, but what are you busy doing? Because it's got to be the
wrong stuff because we're in agreement that the strategy you've got is wrong.
But I don't get frustrated particularly. It's just like, can it not my problem, right?
Let's move away from what might have frustrated you, even though you said it doesn't.
(25:24):
Talking about the way you see the world and some of the things that are exciting
you. So what's really infusing you about the world of technology and innovation?
I think I've had four paradigm shifts or whatever you want to call them in my
career. First was the internet.
Second was cloud. Third was mobility.
(25:45):
And those are all interesting conversations as well, right? In that,
you know, I'll never buy things over the internet.
That's the feedback. Cloud, I will never put my software in the cloud.
I'll never put my data in the cloud. out.
And mobility, I was right in the middle of that. I mean, we were one of the
first applications out there.
We did this CEO of a company called Claremail, and we did mobile banking.
(26:09):
It was one of the things we ended up doing was this use case around mobile banking.
And literally, banks would sit and look at me and go, you've lost your mind,
Pete, if you think we're going to allow our consumers to bank over the mobile
device. I'm not kidding you.
Probably 90% of the responses in the early days were exactly that.
(26:30):
And then you got some of the kind of thought leaders like Wells Fargo, believe it or not.
The really big bank that you didn't think was going to be a thought leader was
Bank of America, Chase, Citi. They were the leaders around all of that.
And they just brought this storm behind them.
Those were three. And now the fourth is AI.
(26:51):
And you can go back over all of those. Cloud is still happening.
Still a boatload of companies that have not moved properly to the cloud with their software.
And that will happen eventually that all software, all software,
meaningful software is in the cloud because there's so many benefits to the
consumer and so many benefits to the vendor.
(27:11):
Mobility clearly has gone nuts. And then what's happening with AI?
What are you most excited about within the world of AI?
It's obviously a hot topic. It's on the back pages, front pages of every newspaper.
But what in particular is exciting you?
It's doing stuff that has a proper use case to it. So I see a lot of talk around AI.
(27:37):
I see boards talk about, you must have AI in your strategy.
Well, that's great. You can talk about it. And there's a bunch of stuff you
can do in AI that looks really cool.
But anybody can replicate it in four or five hours. Thank you.
What's meaningful is when you're doing stuff with AI that delivers way more
(27:59):
depth and breadth in the application use case,
and is truly differentiated because of some of the legacy elements of the technology
before they started layering AI on top of it.
For example, I'm on the chairman of a company called Ampliance Content Management.
It's highly directed retail organizations.
(28:21):
And one of the things that they've done is because
they know so much about the world
of retail they can highly inform these llms
to generate content that is
very specific for the use case of these huge retailers so all of a sudden retailers
are going from months and months and months and months to create all of the
(28:43):
content and all of the images videos and what have you for their website and
And they're doing this stuff in a couple of hours.
And it's just breathtaking, the quality and depth and breadth of what folks are able to consume.
So it's AI for use cases that really have meaning.
(29:03):
I mean, it's cool to go in and write some legal letter or whatever in AI, but anybody can do that.
And it's doing the cool stuff that not anybody can do that's heavily informed
by some of the legacy of these organizations. And it's going to be huge, right?
I'm not sure it is overblown. A lot of people are talking that it is overblown. I don't think it is.
(29:24):
Some of the things I'm seeing folks do in and around AI is mind-blowing.
We're using a legal piece of software, and I can't remember what it's called,
but I was in a board meeting last week, and the head of our legal team said,
we've just managed to ingest...
6,000 contracts, order them all, and give me the right legal view on each of
(29:50):
those contracts so I know the major details in two hours.
And that was going to be a team of five people for a year before this piece of software came along.
So has that made them, the existing team, more productive, hugely more productive,
or has it actually caused some of them to lose their jobs? What do you want to do?
(30:12):
There's absolutely going to be jobs lost here, but it's just part of the motion, isn't it?
We don't use canals anymore to move coal around. What do you want me to do?
It's just part of the formation of new markets, new trends. And I also think,
I know there's some panic around it, but I think there's plenty of jobs out
(30:34):
there that need doing that are not getting done.
And people will just repurpose accordingly, as they always seem to have done.
Yeah, so the positive way of looking at this is that people,
lawyers and so on, will become way more productive than they've ever been.
But there are a lot of people concerned either about the impact on work and
employment or about the lack of transparency of these AI models,
(31:00):
the black boxes, the hallucinations, etc.
What are your thoughts about the concerns that people keep flagging up about
the impact that AI will have on the world, on society?
There's one bit that worries me is AI kind of running away with itself.
And there's all sorts of limits and what have you that we can put around all
that. It's going to be very hard to do.
(31:21):
In fact, I don't know how you do it. So I think it's one of those where we've
got to let it evolve, see where we're at in a year, and then make some decisions around it.
On the job front, I know you were specifically asking it, but there's just so
many jobs that need doing properly that we don't do properly, or we could do more of.
How did you get on the last time you needed a plumber, for example?
(31:44):
How did you get on the last time you needed an electrician? my
dad was an electrician and that was there's just
tons of stuff to do out there that's just going to it might
just be different who knows what it's going to look like it's going to evolve
right i live in north yorkshire this was the heart of the wool grid 90 years
ago no wool processed here anymore you know i think you've identified a really
(32:07):
great use case there for some kind of AI robot that can handle my electrical,
plumbing, et cetera, challenges.
So yeah, maybe that's the business model we ought to sit down and have a look
at. I think that's, you see, that's the one that's going to be really hard to repeat.
And I'll tell you what, if I was going out again, some of the,
(32:28):
you know, smart homes and the stuff that they're building, it needs some real
incredible skill sets to put all this stuff together.
And it looks like fun stuff if you're asking me. So stuff has just evolved.
I'm sure it will evolve in the right way eventually.
Final question from me, thinking of the journey you've been on,
if you were sitting down with a CEO,
(32:51):
possibly a CTO, but one of the founders of a new AI business,
just on their journey, they got a great idea, maybe they got some initial models,
their pre-revenue, what's the one piece of advice,
or you have two, what are the one or two pieces of advice
you would like to give those founders to help
(33:13):
them navigate the exciting but challenging
journey they've got in front of them and it depends what their aspirations are
but making various assumptions that they want to build something that's used
by a lot of people it's how do you get it on people's desktops or people's home
screen or whatever it is so it's something that folks think about on a daily basis,
(33:35):
like ERP, CRM, whatever it happens to be. That's one element.
And then it's product market fit. And there's so many assumptions that these
CTOs make when it comes to product market fit.
And that might be grossly unfair to some folks that are listening,
but just sitting down with some CPOs and CTOs, it's like, okay, this sounds great.
(33:57):
How many customers have you visited with this idea in the last couple of months? Well, nobody.
That's where it all begins on this stuff. And you learn so much in those interactions.
So you just can't do enough of that. And Godfrey was a great example of this.
I would say to him, he was traveling like a crazy man.
Where have you been this week? With customers.
(34:20):
What do you mean? Shane, sit here, I do three weeks of the month and I'm with
customers and prospects.
Well, why? He said, because I just have a really good ability to understand
what they want and make sure that we're building the right stuff.
I'm like, there you go, right?
Hard to AI that stuff, isn't it, you know? Get out and speak to customers and
(34:41):
prospects. Wonderful advice.
Well, Pete, it's been a real pleasure having you on the show today.
Thanks for sharing your journey, your learnings and your passion for the whole technology sector.
Clearly, it's a lot of exciting things happening in your world and look forward
to hearing how you and your portfolio companies, Cognizant, you've mentioned
(35:03):
a few times, how they progress over the next few years. Yeah, thank you. Enjoyed it.
This episode of the Startup to Scale Up Game Plan was brought to you by Alpina Search.
Head over to www.alpinasearch.com for advice on scaling your technology startup
and recruiting high-impact senior technicians.
(35:24):
Music.
The Startup to Scale-Up Game Plan is brought to you by Alpina Search,
Europe's premier talent search firm dedicated to helping technology startups
and scale-ups recruit high-impact executives.
Now over to your host, Gary Rieman.
Pete Daffan is a three-time CEO and two-time president.
(00:22):
He's helped grow many companies from virtually nothing and been instrumental
in creating at least four unicorns.
Indeed, Pete's been involved in $50 billion of software transactions,
and he, these days, really leverages his experiences to help scale-ups avoid
the stuff that kills off companies and do more of the stuff that creates really successful outcomes.
(00:48):
And he's currently serving on a number of boards, as well as working as an operating
partner for Peak Span Capital.
So, Pete, welcome to the Startup to Scale-Up Game Plan. Thank you,
Gary. I'm looking forward to this.
Likewise. We've been waiting all through the long British winter to get this
conversation live and kicking.
(01:10):
So what are some of the biggest lessons you've learned from your experiences
over the past few decades leading technology startups and scale-ups?
As you reflect on some of those learnings, I think about our first company,
for example, we were learning every day.
And now, as I kind of look back, and that's 40 years ago, 35 years ago,
(01:33):
we were just making common mistakes.
I see a lot of the companies out there making. I think the biggest learning for me is people.
And there's a whole bunch of stuff that we can talk about, about product market
fit and ground jewels and differentiators and how to execute go-to-market and a whole slew of stuff.
(01:55):
But it's so important to have the right.
In and around the business. When we got started, there were no such thing as investors.
This is 88, so everything we did was bootstrapped.
And we ran the company based on operational cash flow and people's personal overdrafts.
(02:16):
By the way, that's a really good discipline because it's so easy to spend investors' money.
But as I look around organizations today.
They've got a really good chance of being successful if
you've got good investors we can talk about that and
most importantly a good leadership team
(02:36):
that's stage appropriate that's got
the right mindset and the right team cohesion
to it and companies go
through many manifest manifestations from zero
to 100 hundred million in revenue or
however great the company becomes and
the person that's the best person
(02:59):
to run engineering at the beginning almost certainly is not going to be the
person to run it two years later if the company's doing pretty well but there's
absolutely highly likely that there's a role for that person in the business
but they're not going to be the person that runs a.
Team of 100 engineers or whatever. And you can say the same about sales.
(03:20):
And it's about recognizing it is a people business and people make all the difference.
And it's not the CEO that's saving the village and carrying the company on their his or her back.
It's about a great team dynamic with the stage appropriate people who all have the same goal in sight.
So I think that's the biggest learning. You talked about having no investors
(03:44):
at the startup and what a great learning experience that was when you founded your first business.
Did you have anyone giving you guidance, coaching you, mentoring you?
Well, that very first company was not me that founded it. It was a guy called
Derek Taylor, who I'm still in touch with today.
And I learned an enormous amount from Derek. And it was some of his personal
(04:08):
money, as well as everybody working for an appropriately sized salary so that
we could afford it from an operational cash flow perspective.
And in and around all of that, I learned a lot from Derek. It was how to make
the money go as far as it possibly could go, how to spend money very wisely.
(04:30):
But there were some incredible people in that company.
There was one person in particular who I probably learned the most from in my career.
It's a big statement, but it's probably not far off being true.
If it's not quite true, I'm thinking, who else might it be? But her name was Sue Lethbridge.
And I was a young lad who was a good sales guy.
(04:52):
I was running various countries and what have you. But I really didn't have
the discipline around me because nobody ever taught it to me, right?
But I had a lot of intrinsic skills as well as the work ethic to be successful.
But she really helped me. and she really helped me kind of put a bow around what I did well.
(05:16):
She totally pulled apart what I didn't do very well. And within a relatively
short period of time, made me a much more disciplined executive.
And it was certainly with a lot of her help, we did some of the biggest deals
in the company's history together.
Helped fuel the growth of the company, company
helped get me out to the us where i started running sales
(05:39):
and where years and years later i became president of
that company and yeah it was
just great and it did you know it is important to have these
folks around you that you can learn from we so often just kind of toss folks
in in the mix without the right enablement to their careers and you know some
amazing people there's a company i do some work with called cognizant and there's
(06:03):
some incredible folks that joined the sales team there.
And they do try very hard to get the right enablement around them.
It just shows how important it is to do all of that.
And then as I go on through my career, I spent a lot of time around some amazing
luminaries like Greg Kerfoot, who lives up in Vancouver.
We sold that company. Well, we took it from zero to 400 million,
(06:24):
sold it for billions and billions and billions.
Jeff Miller, who was CEO of Documentum, is chairman over at ServiceNow.
Now Godfrey Sullivan, CEO over at Splunk. He was CEO over at Hyperion.
Jeff Wiener, who was CEO at LinkedIn. I knew him when he was at Yahoo.
And you just sit down with these folks, and it's amazing how much you can learn
(06:47):
in a five-minute conversation with some of these people.
But there's nothing ever that somebody said to me that was just amazing.
Mind-blowing it's always been simple abc stuff
but the problem is when you're in a company it all
gets very cloudy very quickly and this clarity of mind is so important do you
(07:09):
remember one specific conversation that with one of those amazing leaders or
founders that really brought the clarity that blew away the clouds there was
a lot in godfrey sullivan was an intriguing one to me.
I'm going to take two minutes to tell you this story because Godfrey really
was an interesting chap.
I knew him when he was CEO over at Hyperion, which did really well.
(07:31):
Obviously, he sold it for a few billion to Oracle.
And I was golfing with him ironically down in San Diego and we're back of a
taxi and he'd just taken a call.
And it was the CEO of Splunk, or Splunk is the $28 billion company today,
a guy called Michael Baum, who happened Happened to be one of my neighbors.
And I'm like, oh my God, you're talking to Michael.
(07:52):
He says, yeah, this company's doing about 4 million ARR.
And I'm like, God, you've just come from a company that's doing 400 million
ARR. You're going to do a company that's 4 million ARR.
I said, yes, because I can see the product market fit with what Splunk are doing.
However, the way in which they're taking it to market is too dilutive and it'll never be successful.
(08:13):
They're trying to win every battle they fight. You've got to pick your battles,
make sure you win those battles.
And what he meant by that was they're going after enterprise deals,
mid-market deals, SMB deals in multiple of verticals and multiple of geographies.
And he said, we're going to go after this one vertical, enterprise in the United States only.
(08:35):
And when we've cracked that, we'll move on. And he went through some amazing times in his first year.
This was 2008, if I remember correctly. So all of the funding woes that were
around then, he'd only just joined the company.
He had to put $2 million of his own cash into fund payroll in the first few
(08:56):
months, doing, like I said, $6, $7, $8 million or whatever it was in ARR.
And exactly 10 years later, he was doing $800 million in ARR and built an incredibly
successful company just by doing this stair-step approach to go to market.
It's like, okay, this might be the goal that we want to dominate the world one
day in machine learning data analytics.
(09:21):
But we've got to get there in a stair-step process, and we've got to win each step along the way.
And if you see a lot of these companies today, they're just trying to do too much.
And I learned a lot from every one of my conversations, but that was something
I've kind of taken throughout every company I work with is, all right,
let's pick the battles that we're going to win, and we're going to win them well.
(09:43):
And let's win those first before we think about anything else.
So you talked a few moments ago
about the founding team often not
being the same bunch of individuals it's
going to be right to scale the business to the next
level or the next level but one so how
do you deal with your the companies that
(10:04):
you're mentoring or advising when
the founding team wants to
stay in place but maybe you've identified that
one or even two of those individuals aren't
right to take them to the next phase in their journey well there's two bits
to that one is identifying who those folks are and seeing if you're really identifying
(10:28):
them correctly and then if you have identified them correctly how are you going
to take the step so the first step,
identifying them correctly is really important because with the right help,
they might be the right person.
But if you're not giving them the right help, like Sue Lethbridge gave me, how do you know?
And make sure that you're doing all of that first, right?
(10:50):
You know, are we really laying out all of the paths to making this person successful?
And by the way, there is something about folks in the early days of a company.
They've also got to find their own way predominantly more than a little later
on. in a business, right?
That's part of the entrepreneurial juice, if you like.
(11:11):
But one of the things I do around all of that is I look at the functional leaders.
I look at what are the four or five traits that are important for that functional leader.
I mark them out of 10 in each of those functions.
And they've got to be at least an eight. They've got to be an eight,
nothing less than an eight, can't be less than an eight. And you go through
all of those and you do Do the average.
(11:32):
And if the average is less than an eight, but today you've got a problem.
So you then go back through each of those functions and go, okay,
can I take that six and make it an eight with the right help?
And if the answer is yes, get after it and make it an eight as fast as you can.
The answer is no, then you know you've got the wrong person, right?
(11:54):
If it is an average of eight, and if you can get everything to an eight,
then do the same assessment for 12 months from now to see whether or not you've
got some potential problems coming, right? Like head of sales.
Most heads of sales for a $4 or $5 million ARR business are really just,
I don't mean like this, they're sales managers, right? Right.
(12:15):
They they're in the deals.
They're helping the salespeople and their salespeople on steroids.
And they might not be the person to run a hundred salesperson strong organization
almost certainly aren't going to be.
So identify what do they want to do and can we get them on the right roadmap
with the right mentorship and what have you.
(12:36):
And the reality of it is if you do that process well and you manage that process
properly and you bring those folks into that process, like the head of sales
who wants to run a billion-dollar software company, and you agree what they need to achieve,
you put the right leadership around them or mentors around them,
then it becomes very obvious and very clear to everybody whether or not they're
(12:58):
failing or succeeding on their journey to scaling up in their career.
And most of the time, they're relatively straightforward conversations because
they're not in a comfortable position.
They're doing stuff they don't like anymore.
They don't want to be doing it. They're doing a bunch of paperwork and comp
plans and deal analysis that they just don't want to be in or whatever it happens
(13:23):
to be. The classic is the engineer, the guy or gal who's just a genius.
They come in, they write code a hundred times faster than the next person,
and their brain literally is the size of a planet, and they can solve problems
that other people just can't solve, and you make them the manager.
Well, all of a sudden, all they're doing is managing, and all of the creative
stuff that they love to do, they're no longer doing.
(13:45):
And you say to them, do you want to go back and write some of the really important
code we need in the product?
They're like, yes, please, let me add it. So it tends to be a management process.
There always are a few in there that are difficult.
Like sometimes the CEO just doesn't want to give up being the CEO,
even though they're just the wrong CEO for the company.
(14:08):
Company, they're super creative, they come up with a thousand ideas,
not enough depth to any of those ideas, but that's how they become successful as an entrepreneur.
And it needs somebody who can take the amazing ideas that they've created and
take a business, make a business out of them.
Godfrey Sullivan at Splunk being a perfect example of that, right?
(14:28):
Yep. Getting a founding CEO.
Move on from his beloved product and
company that he's created is that's always going to be
a challenge it is i tell you that jeff miller talked
to me about this once and jeff is now
on the board of service now who've crushed it right i mean i don't know their
latest valuation is 100 and some billion and i can't remember the name of the
(14:51):
guy but he was the ceo and sequoia were the backers And they asked Jeff and
some other CEOs to go and talk with the founder,
who was apparently begrudgingly trying to stick to his seat as a CEO.
And I might have bits of this a bit wrong, but you get the gist. And Jeff said,
(15:12):
after he spent three or four hours with this person and started talking about
all of the frameworks and strategy that needs to be put in place and how to
lead people and all of the stuff about being a CEO of a multibillion-dollar
company, At the end of the meeting,
the guy looked at Jeff and said, you guys are absolutely right.
I am not the CEO for this company.
And he looked at Jeff and said, how about you do it?
(15:34):
Jeff didn't do it. He joined the board.
But I think with the right level of communication and interaction,
most people are probably dissuadable, but there still are some.
And I've had them where they're like, no, I'm the right person to run this company,
even though it's pretty clear to everybody else they're not.
Thinking specifically of the scale-up phase, what's the biggest mistake you've
(15:59):
made when you've been in a leadership role in a company that's getting into that scale-up phase?
What's the biggest mistake you've made and the lessons that you've learned from that experience?
There's quite a few in here. We've had situations where we, Crystal Decisions
was probably one of them, where we've
created our very first company. We merged with another company.
(16:21):
It was called Seagate Software, but it was really what became Crystal Decisions,
where it was an enormously successful company.
And we had a lot of money in the bank, a lot of money, like hundreds of millions in the bank.
And we were trying to grow the company as fast as possible.
I don't think there was anybody over the age of 40 in that company.
(16:41):
In fact, I think the oldest person was Greg, the CEO. He was I was probably the next oldest at 32.
None of us had done it before. And so we had all this cash. We genuinely believed
that the more people we hired, the more revenue we would create.
So we were just really on a hiring spree as opposed to really understanding
(17:03):
the metrics that drive the hiring spree.
And I see a lot of that still today
where it's not clear to
an organization optimization what drives the
next head higher in sales what drives the
next higher in engineering you know what do
marketing leads need to look like
(17:24):
what's the makeup of those marketing leads it's not just a lead it needs to
be a specific kind of lead and what's the conversion rate look like on that
lead how many of those leads do i need to convert into a decent pipeline therefore
How much do I need to be spending? Can we afford to do that?
Therefore, have I now got too many leads for the existing sales team?
(17:47):
So I should be looking to bring in more salespeople.
And what are the timelines around all of that? So it's this kind of capacity
model or whatever you want to call it.
But really, it's a math equation on how to scale the company.
And this is where great CFOs and great sales ops person people can really help
(18:07):
an organization out. And I would say, until you've got that in place,
you're wasting money. Because how do you know.
That you should be hiring that salesperson without having those stats in place.
In fact, I've seen the situation many times where the gut instinct is,
let's go and hire some more salespeople because that's what's going to drive more revenue.
And it actually creates a bigger problem than that because you're hiring more
(18:28):
salespeople, you've got less leads per salesperson, and the good salespeople
are now like, well, hold on a second.
This used to be pretty good and I used to be able to hit my number.
Now I can't hit my number because I'm not getting enough leads. I'm going to leave.
And you start kind of spiraling out of control, which is why it's really important
(18:48):
that you've got the math equation down, lessons learned, enablement.
How do you make sure that you are giving everybody the best chance possible of being successful?
And there's a couple of organizations where we've been hiring a lot of people,
and we just didn't have enough of a lens on how are those people really doing.
(19:13):
So at the end of the year, there's one company, and I don't know how many did
we hire that year. I don't know, 150 salespeople, whatever it was. It was a lot.
We were sitting around the board table. I've just seen your exec conversation.
And somebody said, how many salespeople did we let go this year?
Zero, zero. And it's like, well, it's just not possible that we've just hired 150 keepers.
(19:36):
And so we put in a process on the back of that, which was much more enablement,
much more certification, and making sure that at the end of month one,
we all still felt good about this person.
At the end of month two, we all still felt good about this person.
And at month three, we all felt good about this person.
And if we still were in the same situation, then it was on us to try and help make them successful.
(20:01):
But if there's any doubt, you need to remove them from the company because it's
diluting the performance of that business.
And then good enablement. We reckon when we did this next week,
we reckon we added 50 million to the top line the first year following good
enablement because it just made all the salespeople that we had that much more
productive. Isn't that amazing, right?
(20:22):
That's awesome. I know something else that you're passionate about is companies
getting their ICP sorted.
So do you have a model or framework that you use when you're sitting down with
the leadership team or the go-to-market team to help them define their ICP?
Yeah, I do. And I was just with the Chasm folks a couple of weeks ago,
(20:45):
and it was great to get reminded of all of this. We were doing a workshop with
a company I'm chairman of called Cognizant.
And ICP is so important for a bunch of reasons.
But really, there are kind of three things that feed into this multivariable
simultaneous equation.
ICP, ideal client profile, crown jewels.
(21:06):
What is it about your product that is differentiated? And is it meaningful to the buyer? Yeah.
Kind of important, but people will talk about it and you go,
so why would somebody buy that?
Oh, yeah, I've not really thought about that one. And it's also interesting
how many people don't really understand their own crown jewels.
(21:28):
You ask folks, and they come up with one recently, our crown jewels are we've
got the best people in the business, in the industry.
Well, that's not very scalable, is it? You might have 15 people who are all
super smart, but when you're 100, they're not going to be the smartest people going.
That's not differentiate, there's some algorithm or whatever it happens to be
at the core of the technology that truly differentiates over the competition,
(21:52):
but is super meaningful for the compelling reason to buy.
And that's the third variable here. What is the compelling reason to buy of your target audience?
And so all of that drives this discussion on what your time is going to look
like, how you're going to go to market.
So the ICP just flushes out of that conversation, and it's based on the compelling
(22:14):
reason to buy, based on the crown jewels.
Who is the ideal client profile for this product, also given a backdrop of whoever
your competition might be.
You know, I've seen plenty of situations where you've got an amazing ICP with
great differentiators, but they're going after a target market that's saturated
(22:37):
with competitors that are immovable.
I mean, we had that in NetSuite. As great as we were for these huge organizations,
they just weren't going to move off of SAP or Oracle anytime soon.
So it didn't matter that we were a better technological solution.
So it's like leave the enterprise alone let's go
(22:57):
after the big market which is which is what we ended up doing right
it's a really fun conversation when you sit down with
organizations on this one because it drives everything it drives product product
roadmap drives who you hire drives who you
sell to drives how you market i would say
it's the most important thing yeah and as it's such an important thing i'm wondering
whether you sometimes get frustrated with the companies you're dealing with
(23:21):
when they are maybe not coming around to your way of thinking and how you deal
with that and how you nudge them along?
I don't mean this arrogantly because it's not an arrogant thing.
I don't think I've ever had that happen.
I think it's more to what extent do they need nudging along, right?
(23:41):
Or to what extent do they actually take the concept and run with it?
So at one end, you'll sit down with the team and they're just all in.
They're lapping it up. When you finish sitting down with them,
they all sit down for another four or five hours afterwards and leave the building
at 10 o'clock because they've got so much out of the conversation.
(24:01):
And over the next few weeks, they come back to you with stuff that just blows your mind.
And one of the most fun experiences I had is working with a pal of mine called
Howard Bell, who ran products over at PayPal.
And he and I were helping facilitate, let's call it a workshop,
with the folks over at Unilever.
(24:21):
Will Saville and his team, just great folks, great folks.
And what they came back with was just brilliant. I mean, just brilliant.
Over the next couple of months, the strategy they came up with was fantastic
and the company's pushing it.
The other end, you just get folks that, I mean, I have had a conversation where I've said,
(24:42):
hey, we need to figure out who are the strategic ICP clients that you should
be going after and how we should position in the product and working out all
of the SAM and basically a clear-cut go-to-market as well as clear-cut product roadmap.
And the answer back was, I'm too busy to do that.
(25:04):
And I'm like, okay, but what are you busy doing? Because it's got to be the
wrong stuff because we're in agreement that the strategy you've got is wrong.
But I don't get frustrated particularly. It's just like, can it not my problem, right?
Let's move away from what might have frustrated you, even though you said it doesn't.
(25:24):
Talking about the way you see the world and some of the things that are exciting
you. So what's really infusing you about the world of technology and innovation?
I think I've had four paradigm shifts or whatever you want to call them in my
career. First was the internet.
Second was cloud. Third was mobility.
(25:45):
And those are all interesting conversations as well, right? In that,
you know, I'll never buy things over the internet.
That's the feedback. Cloud, I will never put my software in the cloud.
I'll never put my data in the cloud. out.
And mobility, I was right in the middle of that. I mean, we were one of the
first applications out there.
We did this CEO of a company called Claremail, and we did mobile banking.
(26:09):
It was one of the things we ended up doing was this use case around mobile banking.
And literally, banks would sit and look at me and go, you've lost your mind,
Pete, if you think we're going to allow our consumers to bank over the mobile
device. I'm not kidding you.
Probably 90% of the responses in the early days were exactly that.
(26:30):
And then you got some of the kind of thought leaders like Wells Fargo, believe it or not.
The really big bank that you didn't think was going to be a thought leader was
Bank of America, Chase, Citi. They were the leaders around all of that.
And they just brought this storm behind them.
Those were three. And now the fourth is AI.
(26:51):
And you can go back over all of those. Cloud is still happening.
Still a boatload of companies that have not moved properly to the cloud with their software.
And that will happen eventually that all software, all software,
meaningful software is in the cloud because there's so many benefits to the
consumer and so many benefits to the vendor.
(27:11):
Mobility clearly has gone nuts. And then what's happening with AI?
What are you most excited about within the world of AI?
It's obviously a hot topic. It's on the back pages, front pages of every newspaper.
But what in particular is exciting you?
It's doing stuff that has a proper use case to it. So I see a lot of talk around AI.
(27:37):
I see boards talk about, you must have AI in your strategy.
Well, that's great. You can talk about it. And there's a bunch of stuff you
can do in AI that looks really cool.
But anybody can replicate it in four or five hours. Thank you.
What's meaningful is when you're doing stuff with AI that delivers way more
(27:59):
depth and breadth in the application use case,
and is truly differentiated because of some of the legacy elements of the technology
before they started layering AI on top of it.
For example, I'm on the chairman of a company called Ampliance Content Management.
It's highly directed retail organizations.
(28:21):
And one of the things that they've done is because
they know so much about the world
of retail they can highly inform these llms
to generate content that is
very specific for the use case of these huge retailers so all of a sudden retailers
are going from months and months and months and months to create all of the
(28:43):
content and all of the images videos and what have you for their website and
And they're doing this stuff in a couple of hours.
And it's just breathtaking, the quality and depth and breadth of what folks are able to consume.
So it's AI for use cases that really have meaning.
(29:03):
I mean, it's cool to go in and write some legal letter or whatever in AI, but anybody can do that.
And it's doing the cool stuff that not anybody can do that's heavily informed
by some of the legacy of these organizations. And it's going to be huge, right?
I'm not sure it is overblown. A lot of people are talking that it is overblown. I don't think it is.
(29:24):
Some of the things I'm seeing folks do in and around AI is mind-blowing.
We're using a legal piece of software, and I can't remember what it's called,
but I was in a board meeting last week, and the head of our legal team said,
we've just managed to ingest...
6,000 contracts, order them all, and give me the right legal view on each of
(29:50):
those contracts so I know the major details in two hours.
And that was going to be a team of five people for a year before this piece of software came along.
So has that made them, the existing team, more productive, hugely more productive,
or has it actually caused some of them to lose their jobs? What do you want to do?
(30:12):
There's absolutely going to be jobs lost here, but it's just part of the motion, isn't it?
We don't use canals anymore to move coal around. What do you want me to do?
It's just part of the formation of new markets, new trends. And I also think,
I know there's some panic around it, but I think there's plenty of jobs out
(30:34):
there that need doing that are not getting done.
And people will just repurpose accordingly, as they always seem to have done.
Yeah, so the positive way of looking at this is that people,
lawyers and so on, will become way more productive than they've ever been.
But there are a lot of people concerned either about the impact on work and
employment or about the lack of transparency of these AI models,
(31:00):
the black boxes, the hallucinations, etc.
What are your thoughts about the concerns that people keep flagging up about
the impact that AI will have on the world, on society?
There's one bit that worries me is AI kind of running away with itself.
And there's all sorts of limits and what have you that we can put around all
that. It's going to be very hard to do.
(31:21):
In fact, I don't know how you do it. So I think it's one of those where we've
got to let it evolve, see where we're at in a year, and then make some decisions around it.
On the job front, I know you were specifically asking it, but there's just so
many jobs that need doing properly that we don't do properly, or we could do more of.
How did you get on the last time you needed a plumber, for example?
(31:44):
How did you get on the last time you needed an electrician? my
dad was an electrician and that was there's just
tons of stuff to do out there that's just going to it might
just be different who knows what it's going to look like it's going to evolve
right i live in north yorkshire this was the heart of the wool grid 90 years
ago no wool processed here anymore you know i think you've identified a really
(32:07):
great use case there for some kind of AI robot that can handle my electrical,
plumbing, et cetera, challenges.
So yeah, maybe that's the business model we ought to sit down and have a look
at. I think that's, you see, that's the one that's going to be really hard to repeat.
And I'll tell you what, if I was going out again, some of the,
(32:28):
you know, smart homes and the stuff that they're building, it needs some real
incredible skill sets to put all this stuff together.
And it looks like fun stuff if you're asking me. So stuff has just evolved.
I'm sure it will evolve in the right way eventually.
Final question from me, thinking of the journey you've been on,
if you were sitting down with a CEO,
(32:51):
possibly a CTO, but one of the founders of a new AI business,
just on their journey, they got a great idea, maybe they got some initial models,
their pre-revenue, what's the one piece of advice,
or you have two, what are the one or two pieces of advice
you would like to give those founders to help
(33:13):
them navigate the exciting but challenging
journey they've got in front of them and it depends what their aspirations are
but making various assumptions that they want to build something that's used
by a lot of people it's how do you get it on people's desktops or people's home
screen or whatever it is so it's something that folks think about on a daily basis,
(33:35):
like ERP, CRM, whatever it happens to be. That's one element.
And then it's product market fit. And there's so many assumptions that these
CTOs make when it comes to product market fit.
And that might be grossly unfair to some folks that are listening,
but just sitting down with some CPOs and CTOs, it's like, okay, this sounds great.
(33:57):
How many customers have you visited with this idea in the last couple of months? Well, nobody.
That's where it all begins on this stuff. And you learn so much in those interactions.
So you just can't do enough of that. And Godfrey was a great example of this.
I would say to him, he was traveling like a crazy man.
Where have you been this week? With customers.
(34:20):
What do you mean? Shane, sit here, I do three weeks of the month and I'm with
customers and prospects.
Well, why? He said, because I just have a really good ability to understand
what they want and make sure that we're building the right stuff.
I'm like, there you go, right?
Hard to AI that stuff, isn't it, you know? Get out and speak to customers and
(34:41):
prospects. Wonderful advice.
Well, Pete, it's been a real pleasure having you on the show today.
Thanks for sharing your journey, your learnings and your passion for the whole technology sector.
Clearly, it's a lot of exciting things happening in your world and look forward
to hearing how you and your portfolio companies, Cognizant, you've mentioned
(35:03):
a few times, how they progress over the next few years. Yeah, thank you. Enjoyed it.
This episode of the Startup to Scale Up Game Plan was brought to you by Alpina Search.
Head over to www.alpinasearch.com for advice on scaling your technology startup
and recruiting high-impact senior technicians.
(35:24):
Music.
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