November 12, 2024 • 45 mins
Dan Balcauski interviews Roan Lavery, founder and CEO of FreeAgent. Roan shares his journey from a solitary PhD in physics to leading a collaborative team at FreeAgent, an accounting platform serving nearly 200,000 businesses. The discussion covers the challenges and strategies of early growth, including the co-founders' lack of sales and marketing experience, and the bootstrapping approach taken before securing initial funding. Roan reflects on the measured growth strategy as opposed to rapid scaling, lessons on managing a growing organization, deploying capital smartly, and maintaining alignment with effective frameworks like 'The Advantage' by Patrick Lencioni. Key insights include the importance of embedding core values and strategies into daily processes, avoiding the 'set and forget' mentality with OKRs, and differentiating KPIs from OKRs for focus and success measurement. The episode also touches on FreeAgent's financial journey, from crowdfunding to IPO, handling market challenges, and the critical role of self-awareness and mentor influence in shaping the company's direction.
01:45 From Physics to Product Development
05:06 The Birth of FreeAgent
07:52 Early Challenges and Bootstrapping
11:40 Gradual Growth and Fundraising
17:24 Leadership and Organizational Health
21:41 The Power of Business Fables
22:36 Implementing OKRs: Challenges and Solutions
24:27 Embedding Principles into Company Culture
27:39 Scorecards and Measuring Success
35:07 Navigating IPOs and Public Markets
41:05 Reflections on Leadership and Growth
Guest Links
FreeAgent.com
Roan Lavery on X
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dan Balcauski (00:20):
Welcome to SaaS Scaling Secrets, the podcast
that brings you the insidestories from the trailblazers of
B2B SaaS growth.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today, I'm excited to speak withRoan Lavery.
Roan is the founder and CEO ofFreeAgent, an accounting
platform founded in 2007, usedby nearly 200, 000 businesses.
Over the past 17 years, Roan hasled FreeAgent from inception IPO
(00:41):
to an acquisition by NatWest,demonstrating deep expertise in
bringing products to market,accelerating growth, and
building high performing teams.
Let's dive in.
Welcome Roan to SaaS Scaling
Roan Lavery (00:50):
Thank you, Dan.
Thank you for having me.
Dan Balcauski (00:52):
Really excited for our conversation today.
Look, Roan everybody goesthrough different
transformational moments intheir life.
I like to think of it as thesuperhero transformation.
For example, you're PeterParker, normal high school
student, just living your life,you get bit by a radioactive
spider you wake up the next day,you're Spider Man.
(01:13):
In your journey of your life,what's been your superhero
transformation moment?
Roan Lavery (01:17):
Maybe nothing as dramatic as being bitten by a
radioactive spider.
Um, I think it was, for me, itwas more of a, There's a gradual
evolution of figuring out whatmade me happy, what sort of gave
me a sense of motivation and asense of purpose.
Uh, and I think that's somethingthat sometimes it takes a little
while to figure that out.
(01:38):
Especially if it's like a youngperson, it wasn't like, when I
was like 18 years old, I didn'tknow what I wanted to really do
with my life.
I left school, I went touniversity, I did physics at
university, it was originally Iwas a scientist.
I ended up doing a PhD.
Uh, and condensed matter physicsand then quite quickly figured
out that wasn't really somethingthat I enjoyed.
(01:58):
It was quite a lonelyexperience.
It was quite an isolatingexperience.
I essentially spent four yearson an underground laboratory
with no windows.
In the dark.
And so it was quite a solve.
Yeah, it wasn't the mostsociable.
It wasn't the best for themental health.
And so I learned then that Iwanted to do something where I'd
(02:18):
be working with a team ofpeople, we're working on
something that we could reallytry and make a difference with,
that we could, build, ideallysomething together.
I ended up being a product.
Put it out into the market andreally see if we could benefit
people with that.
And so I learned that as part oflike, doing my PhD and then had
opportunity to train in webtechnologies, which was in about
(02:41):
99, 2000, which was a weird timeto get into tech.
It was essentially just when thefirst dot com bubble burst, but
it was still, an interestinginflection point.
And really that's when I startedmy journey into technology, into
tech and the web.
Dan Balcauski (02:55):
I love that wallet.
Also, I happened to graduatehigh school, entering into a
computer engineering degree in1999
Roan Lavery (03:02):
yeah,
Dan Balcauski (03:02):
be a.
Roan Lavery (03:03):
Yeah, yeah, it was,
Dan Balcauski (03:04):
right.
As soon as I graduated andgraduated to the oh three down
cycle, so, feelings go out foranybody in the current down
cycle.
It'd be to be SaaS.
This too shall pass.
Well, I love that.
So along the way it sounds like,you were You're sort of doing
this PhD and in this dungeon
Roan Lavery (03:22):
it was,
Dan Balcauski (03:22):
it was very isolating.
I can imagine.
Was there a certain point thatyou were sort of in that where
you're just like, yeah, this isjust I realized you wanted to
kind of go in the your currentdirection of working with a
team?
Roan Lavery (03:34):
um, I mean, I think we, the thing about PhDs is, is
very much a sort of solitaryexistence, you're working on
this incredibly So, specializedpiece of research that pretty
much nobody else in the worldcares about, or there's maybe
like four people in the entireworld, on different parts of the
planet, that actually care aboutthe same thing that you do,
(03:57):
because it's so specialized.
And so there's no way to, Bounceideas of people, or there's
limited ability to sort ofbounce ideas.
And I really, that's when, andalso be creative as well,
because I was, quite, quite acreative person.
And so that idea of like, youhave an idea you want to bounce
off other people and you want toget some feedback on that.
(04:17):
You want to come together andbuild something, but ultimately
you want to manifest this thing.
You want to build it.
You want to put it out there andyou want to see what other
people think of that.
Um, that was very challenging.
I think I probably learned thatin my second year.
It took me four years to do myPhD and by year two, I was like,
yeah, this is really not goingto be for me, but I didn't want
(04:37):
to quit.
I'm quite a stubborn person.
So I was like, I'm going tostick this out and I did.
And it took me four years tofinish it and get my doctorate.
And I'm still glad that I didthat because I think there,
there is something about whenyou start something, you want to
see it through, you want to havethat commitment to something.
I'm so, I still believe in that,but I ground out.
I mean, it was a grind towardsthe end.
Dan Balcauski (05:00):
Well, I don't think a stubbornness is maybe
the worst quality to possess inan entrepreneur.
Let's pivot to FreeAgent.
Can you take us back to theearly days of a FreeAgent?
What inspired you to start thecompany?
What were your initial goals?
Roan Lavery (05:14):
Yeah, so I mean, after I'd I'd left on my PhD, I
retrained in web technologiesand I started working for a
small agency.
Um, but I was also freelancingand I was really interested in
the design aspect of the web.
And obviously it was still quiteearly on in terms of design.
Things like user experience andstuff, but that idea of,
designing amazing applicationsand having people really enjoy
(05:36):
using those was something that Igot a lot of energy and
enthusiasm from.
So I worked for this agency andI've been doing some freelance
work up until about like 2006.
And at that point, that's when Iwas introduced to the founder of
FreeAgent, Ed Molyneux.
And he'd originally had thisidea, he was working as a
contractor, Ed had a reallyinteresting background.
(05:58):
He was actually a fighter pilotin the RAF, and he had left the
RAF he'd originally You know, atuniversity, he did a background
in computer science.
He was contracting essentiallyas a programmer back into the
ministry of defense in the UK.
And he was managing his ownbooks.
He was managing his ownaccounts, um, and, By his own
(06:19):
admission, not doing a very goodjob of it because, he was a
pilot, he was a fighter pilotthat tend not to be sort of very
accounting savvy.
And so he'd had this originalidea.
He'd recently moved up toScotland, where I'm from London,
and we were introduced, and westarted talking about this idea.
I was doing freelance work, hewas doing contracting work, and
he was saying, I've been playingabout with this idea for,
(06:40):
building a web product thatcould help people manage their
business.
Finances.
This was in 2006, 2007.
The only real other company, I'msure there was ones, but the
ones that were really aninspiration to us at that point
was Basecamp.
Ed had started playing aboutwith Ruby on Rails.
(07:00):
Obviously, that was sort ofcreated by the Basecamp guys.
And so we're really looking atthat model and the technology
that used to build it as reallyas an inspiration for what we
could do, albeit, obviously, ina sort of a different industry
and a different So we startedworking on that earlier
prototype in 2006.
Like a few months later, we metthe other co founder, Al Heedy
(07:23):
he also had a programmingbackground, met him back in
London.
He was looking for a sort ofsimilar idea to get into a
project.
And we all came together and wedidn't know each other as co
founders before we started thecompany, which, it's an
interesting thing.
I think there's pros and cons ofthat.
And really that's when it sortof started off.
Dan Balcauski (07:41):
Very interesting.
And so, yeah, I mean, there'sprobably, we could probably do
a, a couple hours on just justidentifying good co founders.
It sounds like you were lucky inthat situation.
And it ended up working outquite well.
I want to shift a little bit toso those are the early days of
this going into how you scaledFreeAgent sort of over time.
Like every CEO, and team, cofounding team faces challenges,
(08:02):
along the way.
As you sort of look back overyour journey, is there a
specific challenge FreeAgentfaced during your growth that
was particularly difficult toovercome?
Maybe it was like something, youthink it was a crucible moment
that kind of has made you a partof who you are today?
Roan Lavery (08:17):
Yeah.
I mean, I think sort of, allthree of the co founders were
technical and we all essentiallycame from a product background.
None of us have launched like aweb application, but we were
still so well versed in webtechnologies and product
background.
And so we always, I think,because we were working as
contractors and freelancers, wesort of understood our target
(08:37):
market because it was us.
We had a real, we were, we weredog feeding our
Dan Balcauski (08:42):
Scratching your own
Roan Lavery (08:43):
We were absolutely.
And so from that side of things,I think we, we had a pretty good
understanding where we wereabsolutely weaker in was on the
go to market, the sales andmarketing side of things.
And that was definitely an areain which we didn't really know
what we were doing originally.
I think things were quitedifferent back then in 2007 with
(09:05):
regards to just how muchknowledge and material was out
there about how to run SaaSbusinesses.
And also what your options werewith regards to funding,
especially in Scotland.
So for the first We bootstrappedthe company.
We were still working.
Our contracts or jobs, freelancethings, and FreeAgent was really
just a site project for us.
(09:26):
We were doing it evenings, we'redoing it weekends, and we did
that for two years up until2009.
And that's when we wereintroduced to Christophe Janss,
who now is so, One of the leadsof Point Nine Capital, VC based
out in Berlin he was not withPoint Nine at that point.
He was just doing his own sortof investments and he'd invested
(09:47):
in Zendesk about a few monthsprior to meeting us and
obviously went on to become,incredibly successful and we
were like a second investment.
So.
We were introduced to him, heput a bit of money into the
business, and really that's whenwe were able to quit the day
jobs and work in the companyfull time.
And that's when we startedlooking at plugging in those
(10:07):
gaps or areas that we wereweaker in.
So by the time something like2010 rolled around, that's when
we started hiring some seniorpeople into our sales and
marketing function.
We've still got our CMO, he'sstill with us today.
Dan Balcauski (10:21):
So, so it sounds like, none of the, all the co
founders you said were technicaland none of them had really a
lot of experience running acompany
Roan Lavery (10:30):
none at all.
This was, our first company we'dever ran.
Dan Balcauski (10:33):
So I'm curious, like, how did you sort of
approach learning to lead agrowing organization?
Roan Lavery (10:38):
I mean, you do your best.
I mean, I think one of thethings Is really interesting,
um, is the rate of growth ofFreeAgent.
I talked about that for twoyears.
We were essentially building aproduct and launching a company
with just the three of us.
And we still had some like fulltime jobs.
And even when we raised a littlebit of money, our first seed
(10:58):
round was a hundred thousandpounds, 110, 000.
It's like, it was.
It was tiny, it was absolutelynothing.
And I think we raised another, afew hundred thousand, and in the
middle of like 2009, like theamount of money we raised, all
even through the entire lifetimeof phrasing, is probably not
even what a Series A would betoday.
(11:21):
So,
Dan Balcauski (11:22):
Yeah.
There's a lot of entrepreneursbeing like, what your series,
your seed round wasn't 20
Roan Lavery (11:25):
yeah,
Dan Balcauski (11:26):
revenue and a billion dollar pre like, are you
kidding me?
Roan Lavery (11:29):
Pre acquisition, we didn't raise 20 million.
So it was very gradual growth.
I mean, you know, we didn'tbootstrap the company, but the
growth in the organization wasvery measured.
It was very gradual.
And we always took this approachto fundraising where we would
say, right.
We're not just like going toraise, 5 million to give us this
(11:50):
like chunk of runway.
We want to use this money to getback to breakeven.
So we're going to invest in thebusiness.
We're going to hire, grow theteams, but we also want to map
out revenue until we can seethat coming back to a breakeven
point and be profitable afterthat.
And we would typically try andreach that breakeven point or at
least model that breakeven pointwithin 18 to 24 months.
(12:13):
After the investment andnormally what we would do is we
would then raise another round,but we were doing it from a
position of not needing to raisethe money, but wanting to raise
the money to fuel growth andacceleration in business, as
opposed to having to raise moneybecause we were, going to run
out of cash.
So that was quite an interestingthing, but it did mean that we
scaled the business in quite ameasured and gradual way.
Dan Balcauski (12:36):
Interesting.
So, well, and that's obviouslyvery different than maybe the.
Traditional view in like placeslike Silicon Valley where it's,
you raise funding and it's, goall out, win win.
Yeah, rocket fuel.
And unfortunately a lot ofrockets explode on launch.
Right.
Seeing as you've taken the slowpath, like, can you talk a
little bit maybe about like,what do you think were the
(12:57):
advantages of, Growing moregradually, like how did that
maybe it was in terms of yourmaturity or like other ways that
you were able to that maybeotherwise you wouldn't have
Roan Lavery (13:06):
Yeah.
I mean, I think that's exactlyit.
So, your question about how didwe learn to scale a company?
We were able to do it on the jobbecause the company grew a rate
that allowed us to level up.
I always think that any point intime as a founder of a business,
you need to be able to look atyourself and say, am I able to.
(13:26):
Give this company what it needsright now.
And for us, that was always thecase because we were hiring five
people or 10 people.
We were never sort of, like10Xing the business like
overnight.
And it would have taken thisfundamentally different skill
set, maybe fundamentallydifferent people than we were at
that moment in time.
And you hear that aboutcompanies where they just, the
founders just can't keep up thedemands of the business,
(13:48):
investors and so on.
But because we took thatslightly more measured approach,
we were able to raise our gameat the level the company needed
to.
We were also lucky like we hadadvisors, our board, some of the
investors were, had some reallygood networks and we were lucky
to be plugged into like anetwork of other high growth
like SaaS companies, which wasamazing.
(14:11):
So there was extra externalsupport that we had there, but
you know, fundamentally, we weregrowing at this sort of rate
that allowed us as individual cofounders to level up at the same
sort of rate as the business.
Now, don't get me wrong.
There were downsides to that aswell, and that we were also
operating in this competitivemarket where some of our
competitors were really growingat this astronomical rate and
(14:35):
scaling scaling.
Uh, and I think that, withhindsight, would we have taken a
slightly different path likebeing who we are today?
I think we probably would havedone.
I think the reality is knowingwhat I know now, I may have
taken a different path then, butI'm not, I wasn't the same
person as I am today.
You see what I mean?
So I can look back and say, Idon't really regret it because
(14:56):
at the time it was the rightthing to do.
But with the experience I havejust now, I think we may have
taken a different path.
Dan Balcauski (15:04):
Well, that's interesting.
And that your logic totallymakes sense, right?
I mean, you only can, we onlycan do what we did, right?
And say again, the other waysis, But with that benefit of
hindsight, could you just unpackthat a little bit?
Maybe there are someentrepreneurs who are maybe
thinking about taking mayberounds that are larger than
they're comfortable with, ormaybe they've been bootstrapped
(15:24):
and are thinking about seeking,institutional capital for the
first time.
Like talk a little, could youunpack a little bit of what you
just that insight of like, maybelooking back, you would have
changed a different path?
Like what would have been thedifference in your
Roan Lavery (15:35):
So, I mean, I think quite simply, I think we would
have been more aggressive.
I think we would have been moreaggressive with our ambition
with the business.
I remember me, Ed and Ollie,when, maybe there was like 10 of
us.
We had this joke, it was like,yeah, we don't want to run a
company with 50 people.
And we're all like yeah, wedefinitely don't want to run a
company with 50 people.
And then we'd get to like 40people and we'd be like, you
know what?
(15:55):
This isn't too bad.
We definitely don't want to runa company with a hundred people.
You're like yeah.
I mean, that'd be crazy, right?
Who would want to do that?
And then we get to like 90people and be like, do you know
what?
I mean, a hundred people is notso bad.
So there's this constant likeresetting of expectation levels.
Whereas I think if we were tolook back, I think we would have
that competency.
Yeah, sure.
We can run a company of hundredsof people.
We know how to do that because Ithink like back then it was
(16:17):
like, I remember us saying, Idon't even know what we do with
a million pounds.
How do we spend that?
We just, we couldn't even likefigure out today you give me a
million pounds and I'll spend itbefore we finish this call.
Like I, I have no problem doingthat now,
Dan Balcauski (16:31):
Yeah, you pay, you just pay that to Snowflake,
I think, directly.
Roan Lavery (16:35):
I mean, it's like, but it was this idea was like,
you don't know what you don'tknow.
And even just like, how do youput money to work in a smart
way?
Not in a wasteful way, which isvery easy to do.
And it can definitely be thecause of a lot of issues with
high growth businesses.
But, being able to.
Smartly deploy your capital.
I have a much, much better ideaof how to do that now.
(16:55):
Whereas I didn't at the time.
And so I'd be more confident ofbeing more aggressive, raising
money, setting expectationsappropriately with investors but
I'd be able to sort of reallyput us on that high growth
trajectory.
Dan Balcauski (17:07):
Interesting.
Well, it's funny how, you sortof, you're, Oh, this is it.
This actually isn't so bad.
It's a little bit like the thefrog is you're turning up the
Roan Lavery (17:13):
It is a boiling frog,
Dan Balcauski (17:14):
Like, Oh, this is kind of warm.
Roan Lavery (17:16):
it's okay,
Dan Balcauski (17:16):
It's all right.
Well, so, you did have a gradualpath, but eventually you had a
sizable company.
Like how, what.
Have you found to be effectiveto, keep a leadership team
aligned as the company got toscale?
I mean, you'd said, you guysweren't you hadn't run
businesses before.
Are there tools, techniques,strategies you found that like
(17:39):
helped you manage those largerorganization?
Roan Lavery (17:41):
Yeah, I think so.
I think one of the biggest oneswas we adopted a framework
called the Advantage.
It comes from a book by PatrickGalencioni.
He sort of famously wrote thefive dysfunctions of a team.
A lot of people know the
Dan Balcauski (17:55):
I got it on my bookshelf over there.
Roan Lavery (17:57):
a brilliant book and the advantage very much I
think builds on that andeffectively builds a system to
run companies.
It talks a lot aboutorganizational health and the
different layers oforganizational health that you
need in a company.
And there's things like, levelsof trust, accountability, being
results focused, masteringconflict, all of these sorts of
things.
(18:17):
But then there's also otheraspects around what are the
fundamental questions that aleadership team needs to be able
to answer, and then needs to beable to provide clarity for the
rest of the organization.
So that not just the leadershipteam, but everybody in the
organization is empowered and isaligned with what the company is
(18:38):
trying to do.
Because I think that's probablythe central challenge as your
organization grows.
When it's really small andthere's like 10 of you in a room
or even 30 of you in the samelike office or building or
wherever it is, or even,distributed remote.
Everybody knows each otherreally well.
There's very sort of stronginterpersonal relationships and
network within the organization.
(19:01):
By and large, people tend toknow most of the things that are
going on in that company justbecause, you're all on the same
Slack channels or whatever, butthat definitely starts to break
down 50, 100, 100 and so like 50sort of person organization.
And then the risk is that peoplejust are working in little
isolated things and, silos startappearing and people aren't
(19:23):
joined up.
And so being able to createclarity around what it has and
the advantage of these six bigquestions, these really
important questions that isactually like a key part of how
to drive that alignment whilestill making sure that people
have a sense of autonomy in anorganization and that they're
empowered to be able to solvelike,
Dan Balcauski (19:44):
Can you give me a sense of what maybe some of the
questions are?
Like
Roan Lavery (19:46):
I'll go through them.
Yeah.
So, essentially the sixquestions are see if I can
remember them.
Why do we exist?
Which is obviously probably oneof the most fundamental of all,
and that's your vision or that'syour, your mission as an
organization.
How will we succeed?
And effectively that's yourstrategy.
In your organization, like, weknow we wanna get to, but how
we're going to do that, um, howdo we behave?
(20:07):
And that's your values andthat's your ways of working
within an organization.
What do we do?
That one seems super simple.
It's your product.
But I think the interestingthing about that is it's.
Quite often it's not aboutunderstanding how you would
define your product, it's aboutunderstanding how your customers
interpret your product.
So, To be done framework toarticulate that.
(20:27):
Um, then there's a who doeswhat, so it's your organization
structure, roles andresponsibilities, and what's
important now.
And that's all about things likeyour goals, your metrics, your
KPIs, OKRs, all of that sort ofthing.
So those questions, they cover alot of different ground from
these really big existentialthings, like why do we exist,
all the way down to much moresort of like tactical things,
(20:50):
like what's important now.
Dan Balcauski (20:52):
got it.
So, there's a whole bunch ofquestions around this.
My first one is I'm curious howyou introduced it to the
organization because I've beenin situations and maybe this is
just me before where it's like,I read a book, right.
I read Google's book on how todo design sprints or read,
something like fivedysfunctions.
And I'm like, this person hasnailed it.
This is a brilliant.
(21:13):
And then I'm like, all right, Iwant everyone to do this.
And then I'm like, I don't knowhow to like actually start.
Like, it's like, Hey, you makeeveryone just, Hey, like, let's
go read the book and let's talkabout it.
Or is it, was it a thing?
Type of thing.
I don't know if Patrick has aconsulting firm that you hired
to bring in the advantageprinciples.
Like how did you sort of thinkabout, all right, this is the
thing that we're going to do andthen, kind of lead lead the
(21:34):
organization to sort of adoptit.
Roan Lavery (21:35):
Yeah, I mean, so he does have a consulting firm, but
we never actually used itsimplemented bandage.
I think the first one was justthe, the exec team.
Reading the book, discussing it.
The great thing about that bookis that it's written into the
soul of a business fable sincethere's a lot of practical
examples there, but it does havea lot of exercises to go through
(21:56):
either as a, like as aleadership team, or you, some of
them you could either do morebroadly as an organization to
help you answer some of thosequestions as well.
So it doesn't just leave youfumbling.
So here's how you want Find agood vision or a good mission
statement.
Here's how you want to maybethink about articulating
strategy or even your values.
And it gives you some sort oflike practical examples to use.
And You can use those with thewhole organization.
(22:19):
So I think, all of these sort ofactivities, right?
Defining your values, definingyour strategy.
Mission and stuff like that,there, there tend to be things
that organizations do anyway.
Um, this just sort of puts alittle bit more of that
framework around why all this isimportant, how it all comes
together.
I think Talk about things likeOKRs, right?
(22:39):
So OKRs are one of these aspectswhere companies really often
struggle to introduce them orimplement them into an
organization.
I mean, I work withorganizations, I've been in
organizations where they've had.
I think there's only like two orthree failed attempts at
introducing OKRs.
They kind of use them for a fewquarters, everybody hates them
(23:00):
and then everybody's like, wedon't want to do this and then
they get forgotten about andthen a year later somebody says,
Oh, we should really do thisstuff.
And I think some of them arejust, they're just like, The
longer you leave it, the harderit gets, again, there may be one
of the things that would havegone back and done is some, I
think we were okay when westarted introducing some of this
stuff, but if you leave it to ahundred person business before
(23:21):
you start covering off some ofthese things that I'm talking
about, you're going to find itreally hard because there's a
lot of like tracks laid in theorganization to begin with.
So it's going to be harder tosolve and rework that.
So I think for some of them, theearlier you can do them, the
better, when the team's still.
Quite small.
And then the more inclusive youcan be in terms of bringing
(23:42):
people from the organizationinto those conversations and
into those activities, I thinkthe better it's going to be as
well.
Dan Balcauski (23:48):
Yeah, it's funny.
You mentioned the OKRs because Ihad heard a joke once that
Google introduced OKRs into theecosystem to prevent any startup
from actually meaningfullycompeting with them.
Because everyone has done thatpoorly.
Well, so going back to theadvantages.
So, so, okay.
You've got these six questionsand those all make sense.
And I can understand everythingyou just said, it would like
(24:10):
people wait too long.
But like, ah, B to C, B to B, Bto C.
So you introduce it, you start,you have the exec team, read the
book and go through some ofthese exercises.
How then do you sort ofinstantiate that so that it's
(24:31):
embedded in the framework of thecompany, right?
Cause it's not just like, Oh, wedid
Roan Lavery (24:35):
Yeah.
Yeah.
Dan Balcauski (24:36):
at an offsite one time and then everyone kind of
moved on with their life.
Are there practices that you'vedone to make sure that those
principles kind
Roan Lavery (24:42):
that's actually a really big, important part of
the book.
It's broken down into thesedifferent sections.
The number one is about creatingclarity.
Um, and that's where youanswering those questions and
how incredible answers that is aleadership team, but, and then
the second bit is aboutcommunicating clarity and the
third bit is about overcommunicating clarity.
So there's a good, like twothirds of the book, which is
(25:02):
essentially just repeatyourself.
Now, I think it's worthwhilejust even just unpacking that
because I think there's a realinteresting thing about how do
you do that as a leader in anorganization?
Because I think that's sort ofthe default that you go to is
you say, Oh, well, I did thattown hall and I stood up and I
told everybody what the strategyis going to be.
Or I told everybody these areour values or these are our
(25:24):
mission or you have them on thewall or whatever it is.
I'm not being down on thatstuff.
I think that stuff is important.
But what you've got tounderstand is that is only one
layer of how you communicate inan organization.
And fundamentally, I believeNOE, it's when those answers,
whether it's your values, yourstrategy, your mission,
(25:45):
whatever, when those are bakedinto the day to day processes of
your organization, that's whenit truly starts to stick.
So processes like hiring,Processes like onboarding,
processes like reward and careerprogression in an organization.
Processes like how you set yourProcesses, like how you do
(26:06):
sprint reviews or retrospectivesor anything like that.
All of these sort of multitudeof things that we use in agile
organizations.
Think about how you can usethose as an opportunity to
reinforce whatever message itis.
So it's just constantly bakedinto the day to day because this
is, it's the number one reasonwhy OKRs fail, is teams like set
(26:28):
and forget, they do the OKRs andthen they just go off and they
get involved in their day today.
Then somebody kind of goes, ohman, oh yeah, like.
It's getting towards the end ofthe quarter, we better check our
OKRs and oh my God, like we weresupposed to be doing this, and
well, we just got excited.
But if it's actually woven intothe fabric of, the standup or
the sprints or reviews or retrosor whatever it is, then it
(26:49):
becomes much more sort of theomnipresent.
And I think it's the same forthose questions.
So yes, there is a role forpodcast, whether that's.
Company all hands meetings orcompany announcements or slack
or emails or anything like that.
But then think about how it getsactually baked into the day to
day.
Dan Balcauski (27:06):
Interesting.
Yeah.
So making sure that, yeah you'vegot the processes sort of using
that as a foundation sort oftouchstone there.
And I mean, just kind oftactically, like, you as the CEO
leader, like, you don't have totouch on everything, but maybe
there's like one sort ofprocess, like, is there a way
that you sort of keep your eyeon those things to be like,
(27:27):
okay, is this, has this.
Is there a drift check like thatyou do to be like, Hey, is this
we seem to be spending a lot oftime on this thing.
Let's make sure that it'saligned.
Like, how do you sort of keep apulse on that within the
organization?
Roan Lavery (27:39):
Yeah, so we, another important aspect, which
comes under the, how will wesucceed and how will we know if
we're a successful banner?
It's really where the scorecardsfor the organization come in.
So, you'll be aware of theconcept of a balanced scorecard.
What we do at FreeAgent is everyteam is effectively managed with
their own balanced scorecard.
(27:59):
Um, so product teams, we usesomething called the Google
Heart Framework.
I'm not sure if you're aware ofthat.
Yeah.
So it, stands for happiness,engagement, adoption, retention,
and task success.
And effectively, these are likefive measures of what you would
consider a successful product.
Is it?
Making customers happy.
Are they engaged?
Are they adopting the product orbits of the product?
(28:20):
Are you retaining customers?
Are they doing things certaintasks successfully?
And each of the product teamswill own different aspects of a
product scorecard.
And All of those scorecardseffectively cascade up via a
goal tree into a companyscorecard, which is the headline
metrics, which we think we needto be doing.
(28:41):
So, for example this year,FreeAgent, one of our big
strategic pushes is that wewanted to launch new revenue
streams.
On top of our core subscriptionrevenue, we want to launch some
additional add on products andstart generating revenue from
those.
Sounds really simple.
That's our core headline metric,so I track their routes, our
(29:03):
additional revenue streams do.
But then that cascades down todifferent product teams who are
like, oh, we want adoption ofthis product, we want conversion
of this product, we're going tolaunch this new thing over here.
And so we can, we can look atthat lower down level, but then
also see how it optimally sortof impacts the headline
scorecard.
So that's a really big partabout giving teams ownership,
(29:23):
but also accountability.
So they're on a hook fordelivering success in that
particular area of the product.
And, that will be seen even atthe highest company level.
But how they do that, thedetails of what products are
going to bring to market, or howthey're going to sort of drive
up adoption.
It's really left to death.
Dan Balcauski (29:41):
So, that's fascinating.
So, okay.
So you've got these specificmeasurements that are scorecards
that are departmentallyspecific.
So then does that take the placeof what most people might think
of as OKRs in an organization?
Or do
Roan Lavery (29:55):
no, so it doesn't.
And again, this is like, wecould spend like literally hours
on this and it could bore you todeath.
But one of the real, I think,areas of confusion is what's the
difference between a KPI and anOKR?
People really struggle with thatbecause they're two numbers,
right?
So I need to solve the samething, but fundamentally KPIs
are things which on an ongoingbasis, we want to track and make
(30:18):
sure we're doing a good job of,so conversion rates.
Okay, that's clearly like, like,like a KPI and Is like, we're
going to, within this period oftime, we're going to do this
work and this is the impact thatwe want to see.
So they're More tighter bound.
They have a very specificdeliverable and they generally
have a an anticipated expectedoutcome and impact that you want
(30:40):
to have as So, typically, itmight be something like, we've
got our targets around our KPIsfor the year, and we, conversion
might be one of those.
But then you might have adiscrete project, which might be
about maybe one aspect of theonboarding, you know, which
might be the setup process, forexample.
And we want to improve thatsetup.
(31:02):
Process, get more people throughit and we want to take the
success rate of that setupprocess from, I don't know,
wherever it is, 20 percent to30%, and we know if we do not
just what conversion is about,but we know that will contribute
to that overall KPI ofconversion, which is something
Year on year, all the time,because that's something that's
so important to us, and The OKRstend to be more discreet.
(31:25):
Initiatives where you'rethinking about what impact
you're going to have and youmeasure that and then the longer
term impact that you want tohave is measured through your
KPIs.
Dan Balcauski (31:35):
Oh, wow.
So, I mean, I just want to noteon the arc of this conversation,
right?
We started out, say how, 17years ago, you and your co
founders hadn't managed anorganization and now you're
like, now you're like, I couldteach at a business school,
telling you how to
Roan Lavery (31:47):
yeah, yeah,
Dan Balcauski (31:48):
processes so, and I think that growth journey is
fantastic, but, so again wedon't need to spend all day on
this, but one final thing,because you did mention, right,
I mean, a lot of CompaniesStruggle With OKRs and I've been
on the other side of that aswell.
It's not pleasant for anyoneinvolved.
Obviously you've sort of createdthis system that, that works for
(32:09):
you.
Give advice for other leaders atSaaS companies who are trying,
like maybe struggling to make anOKR process effective.
Like, what any ways that, likethey could improve that?
Like, do you see any sort ofContinuous mistakes being made
out there in the world.
Roan Lavery (32:24):
Yeah, I mean, I think there is a lot of mistakes
are made with OKRs.
I mean, I'm definitely notdogmatic about OKR.
There are a lot of OKR puristsout there.
I wouldn't say I'm morepragmatic.
I think, ultimately, There aretwo.
They should be working for you,and they should be helping you.
(32:45):
If you feel like you're battlingagainst them, and they're just
creating more problems thanyou're solving, then you're
doing it wrong.
Okay, that's that Google quoteyou make.
If you genuinely feel like thisis hindering you as a business,
you're doing them wrong, like,and so sometimes if something
feels like it's too difficult,Just make it, just ease off on
(33:07):
the dogma around it and just bea bit more pragmatic.
That's not to say that theprinciples behind OKRs were, the
fundamental one is it's aboutmeasuring impact of the work you
have.
They're not a task list, it'snot a list of things that you're
going to do in the next cycle.
It's about the impact of thework you're going to have.
I feel that's like a reallyimportant principle, but
(33:31):
sometimes it doesn't always workthat way.
And sometimes I see someorganizations come and say,
well, we're on, like the realityis we're going to do this big
project.
We're not going to see theimpact of this project for nine
months, or maybe there's like a,the sales cycle for an
enterprise deal is nine months.
So we don't know what the impactis going to be.
And then you just have to say,well, that's okay.
(33:51):
That's okay.
Like don't force it.
But you know, it's, Sounderstand the theory and then
be a bit more flexible about theapplication of that.
Um, I do think the other thingas well is about you don't want
to get into the set and forgetthing where there's a disconnect
between there's this reallyintensive process of defining
OKRs once a quarter, once everysix weeks, whatever it is, and
(34:14):
then they just sort of likedrift off.
So again, Once you've got them,bake them into your actual day
to day process.
There's a really good bookcalled Radical Focus you may
have heard by Christina Wotnick,and she talks very much around
the process of doing it.
It's very much aimed at earlystage startups, but it talks
about how OKRs are baked intothe sprint process.
(34:36):
So if you're running that everytwo weeks, then at the beginning
of the sprint, You actually usethe OKRs to define the
priorities for that sprint.
And it's just about, making surethere's that kind of constant
focus on that.
So I think they will be the twothings.
Don't get into that certainforget mindset, bake them into
the process, but then just bepragmatic around what's actually
(34:57):
going to be realistic for you,given the type of organization
that you've got.
I love
Dan Balcauski (35:02):
I love
Roan Lavery (35:03):
that and Yeah,uh you know We could
Dan Balcauski (35:04):
spend, uh, you know, Hours on, on this topic.
I'm sure.
I do want to pivot with a littlebit of our remaining time to
you've gone through a crazy setof fundraising and financial
transaction journeys over thecourse of a FreeAgent's life.
And I'm sure we could talk formany episodes just about those
of you at one point you guysactually went.
Public.
(35:24):
It went through that process.
And we happened to be in aninteresting moment in time.
We're recording this in 2024,and I was mentioning before we
hit record that we're actuallyin a period of.
Worse number of IPOs in the techworld than we've, it was worse
than the 08, 09 financialcrisis, which is mind boggling.
(35:45):
So, obviously this is a problem.
It's a problem for,entrepreneurs their employees
trying to get liquid.
This is a problem for venturecapital.
It's a problem for the market ingeneral.
So I'm curious kind of Yourexperience there, like, can you
walk us through kind of yourdecision making, at least at a
high level that led to you'regoing public?
Roan Lavery (36:02):
yeah, I kind of, yeah.
I think.
One of the things I think is, Ithink important to say is that
our experience of doing an IPOand the type of IPO we did,
probably very different from thestereotypical IPO that people
talk about with your techcompany.
We were a really smallorganization.
In comparison, like, we weredoing probably about 10 million
(36:25):
ARR at that point.
So really, really novel.
We were only probably anorganization of 100 people.
And we didn't fall on the largeUK stock market.
It was a smaller AIM market,which is designed for an earlier
stage, smaller companies.
So it was a, Differentexperience of going through the
process of an IPO and certainlyafterwards as well, which is
(36:47):
maybe that we can talk aboutthat because it certainly has
some challenges.
I think in terms of like therationale behind it, and as you
mentioned before, we'd been onthis, we can, we quite often
joke that we've ticked every boxon the bingo card of startups.
We did bootstrapping, we didangel investment, we did VC, we
did debt funding, we did acrowdfunding route.
(37:08):
So we did it, we raised amillion pounds in a crowdfunding
round in 2015 or something likethat.
So we did it all with thosethings and we were sort of like
looking ahead as to like, well,where is this going to go?
Do we just want to raise a crazybig VC round?
Are we going to get acquired?
And at that time we thought,well, actually the IPO would be
(37:29):
quite an attractive thing to usbecause it would allow us a
mechanism for bringing peoplein.
More investment into thebusiness while still allowing us
to fundamentally have controlover the business.
So we wouldn't necessarily be onsome, um, very sort of
prescriptive or fixed VCtimeline for when there would
have to be a return or maybe PEmoney or sort of something like
(37:51):
that.
Idea.
I wouldn't necessarily say itworked out that way, but that
was the original concept behindit.
We'd actually tried to do it in,it must've been like 2015, I
think that we we must've triedto do initially and it didn't
work out.
We couldn't really get enoughmomentum behind it.
But at that point we had somefeedback from potential
(38:13):
institutional investors like,well, come back to us if you've
managed to do X, Y, and Z.
And we did.
So when we went back and wetried it again a year later, we
were able to say, this isawesome.
This is what we talked about.
We've actually delivered againstthese targets and milestones
that we said we're going to do,and that gave those investors a
lot of confidence that gave us,to push through into the IPO.
So yeah, it was the idea that wewould still be able to retain
(38:37):
control and power over thebusiness, but ultimately, have a
path through to additionalinvestment into the company and
also potentially an exit for thefounders as well at some point.
Dan Balcauski (38:48):
I imagine that that created some interesting
pressures kind of across thebusiness being public.
And you had mentioned that youhad this view of what it would
be like, and then what it waslike.
Could you just unpack kind ofmaybe what was different on the
other side of being a publiccompany?
Roan Lavery (39:03):
Yeah.
I mean, so, so I think, we hadthis idea that we would be sort
of like masters of our owndestiny, be able to raise money
when we want to from the publicmarkets, there's a pathway
through to an exit for thefounders as well.
I think the reality was, andagain, I do want to stress that
some of this was definitelyrelated to being on.
(39:23):
that smaller market where therewas a very limited liquidity.
In the shares, there wasn't alot of like shares being bought
and sold in the business.
But what I meant was that anytransactions that did happen had
quite an outsized impact on theshare price.
And it made the share pricequite volatile as a result.
(39:46):
Just definitely something thatyou can see.
What we definitely find is thatIt quite quickly shifted the
focus of the business to be muchmore short term about delivery
on essentially sales targets,acquisition and growth targets.
You know you've got your nextlike quarterly analysis and you
(40:06):
know that was good, it's goingto, share prices is going to be
positive, it's going to be bad,it could be really bad.
Again, that point about thevolatility and liquidity there.
And so All of a sudden it wentfrom sort of, there's always a
sort of like a focus on growth,but you were thinking longer
term, you were thinking ahead aswell.
Suddenly it became much moreshort term, much more of a short
(40:29):
term focus.
And that was quite it's quite astressful experience.
I'm not going to lie.
And it meant that, for me, Fromthat time I was the CPO, Ed was
the CEO at that point.
It was less about investing inthe long term of the product,
less about investing in theproduct for customers, and more
just about hitting the numbers.
It was just ruthless,relentless.
You've got to hit these numbers.
(40:50):
There's a lot of pressure fromthe board.
You've got to do it.
You know you're going to be,have those sort of like analyst
expectations as well.
And it was definitely the,probably the most stressful
period, probably the leastenjoyable period that
Dan Balcauski (41:04):
We had If you had to sort of do it again would you
have made the same decision?
Roan Lavery (41:09):
I think that essentially whenever you talk
about decisions that maybeweren't the best, maybe, it's
not, it's never usually like ablack and white or it was the
absolute worst decision afterthe best decision.
It isn't just about how did thatdecision work out.
It's about what was thealternative.
And so for us, it was just like,well, if we hadn't done.
(41:31):
The IPO, what would we have doneinstead?
And that, it probably would havebeen like a larger VC would have
done, which would have had itsown pros and cons.
So I don't think you cansometimes say, yeah, I didn't
particularly enjoy that.
I'm not sure what thealternatives would have been and
if they'd been any better orworse.
And so, ultimately it's the samething with the acquisition as
(41:53):
well.
We made a decision to sell thebusiness ultimately and then,
you can look back and see, is itthe right decision or wrong
decision?
But you have to also say, whatwere the alternatives?
Dan Balcauski (42:02):
Yeah, exactly.
Well, yeah, I'm a big pokerplayer and you can get drawn out
on in a in a poker hand and youstill made the right call.
And didn't, didn't change thedecision, even though the
outcome might not fall in yourfavor.
So I love that.
I love that framing on the thedecision process is like, yeah,
well, what was the alternatives?
I made the right decision at thetime.
Nevertheless, the outcome.
Yeah.
Roan, I could talk to you allday.
(42:22):
And I would love to, but I wantto be respectful of your time.
I'd like to wrap things up witha couple of rapid fire closing
questions if you're up for it.
Awesome.
Look when you think about allthe spectacular people you've
had a chance to work with, isthere anyone who's popped a mind
who's had a disproportionateeffect on the way you think
about building companies now?
Roan Lavery (42:41):
Think in the early days it would have been
Christophe Jantz.
So, as I mentioned, the firstinvestor we had our second major
investor was Robert Klein, who'svery well known an investment
that we've seen.
Both of those people were reallypivotal in putting FreeAgent on
the early path.
But also introducing us to otherpeople.
So Christoph would run, he stillis, I just still get his run to
(43:02):
this day.
He would run a sort of annualmeetup of all his portfolio
businesses which today is sortof includes sort of like really
so well establishedorganizations like Zendesk, all
the way through to sort of likemany sort of like early stage
startup, but he was bringingthose people together in those
early days, having a chance to,bounce ideas of people, learn
(43:22):
from other people, and bearingin mind in those early days,
that it wasn't a playbook forhow to run SaaS companies like
there was, so we were also likelearning, so like as we go, so
that was a really sort ofinfluential and really
inspirational, important part ofour journey was meeting him and
getting his input, but also thenetwork that I think he
introduced us to.
Dan Balcauski (43:41):
that's fantastic.
And look, if I had to give you abillboard and you could put any
advice on there for other B to BSaaS CEOs who are trying to
scale their business, what wouldyour billboard say?
Roan Lavery (43:50):
I think we say know yourself, or know thyself, can
rephrase it, and I think that's,it's really important that.
You understand, on a continualbasis, so you're constantly
doing that self reflection ofwhat am I good at, what am I bad
at.
And, the good things are great.
You just keep on doing more ofthe good stuff.
Like, I'm, I've always beenquite good at strategy, so I
(44:11):
just keep on doing that andthat's fantastic.
And if you're honest about yourweaknesses, you've then got a
couple of choices.
You can then either say, well,I'm going to like spend more
time in those areas and get goodat that stuff, or I can bring
other people in to help me withit or a bit of both.
But fundamentally having thatvery honest sort of perspective
of like, where are my strengthsand weaknesses.
(44:33):
If you don't do that you'rereally not going to be able to
lead the organization in asuccessful way.
So, be humble and be honest withyourself and others about your
weaknesses and your failings.
Dan Balcauski (44:44):
Know thyself.
Classic wisdom from Roan Laver.
We'll just scratch out of thebillboard of Socrates and put
Roan there.
Could speak to you all day.
I'm sure other folks would beinterested in learning more
about FreeAgent or following youaround the internet, anywhere
you'd like to point them towebsites, social media.
Roan Lavery (44:59):
I don't actually use social media.
I used to use it a lot.
I used to really use Twitterlike a lot back in the day.
I think I joined in like 2009 orsomething, but I've really, I
don't enjoy it nearly as much asI used to.
I find it quite a toxic placenow.
So I've sort of stepped backfrom doing a lot of the social
media stuff.
I'm much more.
Prefer doing events.
I much prefer doing things likethis, to be honest, doing
(45:20):
podcasts, doing interviews,doing chats, conferences, that
sort of thing.
So, I do pop up at events andstuff like things like that.
So I guess just keep your eyesout.
Dan Balcauski (45:30):
Well, Roan, it's been an absolute pleasure.
Everyone that wraps up thisepisode of SaaS Scaling Secrets.
Thank you to Roan for sharinghis journey insights and
invaluable tips for ourlisteners.
If you found this conversationas enlightening as I did,
remember to subscribe so youdon't miss out on future
episodes.
Welcome to SaaS Scaling Secrets, the podcast
that brings you the insidestories from the trailblazers of
B2B SaaS growth.
I'm your host, Dan Balcauski,founder of Product Tranquility.
Today, I'm excited to speak withRoan Lavery.
Roan is the founder and CEO ofFreeAgent, an accounting
platform founded in 2007, usedby nearly 200, 000 businesses.
Over the past 17 years, Roan hasled FreeAgent from inception IPO
(00:41):
to an acquisition by NatWest,demonstrating deep expertise in
bringing products to market,accelerating growth, and
building high performing teams.
Let's dive in.
Welcome Roan to SaaS Scaling
Roan Lavery (00:50):
Thank you, Dan.
Thank you for having me.
Dan Balcauski (00:52):
Really excited for our conversation today.
Look, Roan everybody goesthrough different
transformational moments intheir life.
I like to think of it as thesuperhero transformation.
For example, you're PeterParker, normal high school
student, just living your life,you get bit by a radioactive
spider you wake up the next day,you're Spider Man.
(01:13):
In your journey of your life,what's been your superhero
transformation moment?
Roan Lavery (01:17):
Maybe nothing as dramatic as being bitten by a
radioactive spider.
Um, I think it was, for me, itwas more of a, There's a gradual
evolution of figuring out whatmade me happy, what sort of gave
me a sense of motivation and asense of purpose.
Uh, and I think that's somethingthat sometimes it takes a little
while to figure that out.
(01:38):
Especially if it's like a youngperson, it wasn't like, when I
was like 18 years old, I didn'tknow what I wanted to really do
with my life.
I left school, I went touniversity, I did physics at
university, it was originally Iwas a scientist.
I ended up doing a PhD.
Uh, and condensed matter physicsand then quite quickly figured
out that wasn't really somethingthat I enjoyed.
(01:58):
It was quite a lonelyexperience.
It was quite an isolatingexperience.
I essentially spent four yearson an underground laboratory
with no windows.
In the dark.
And so it was quite a solve.
Yeah, it wasn't the mostsociable.
It wasn't the best for themental health.
And so I learned then that Iwanted to do something where I'd
(02:18):
be working with a team ofpeople, we're working on
something that we could reallytry and make a difference with,
that we could, build, ideallysomething together.
I ended up being a product.
Put it out into the market andreally see if we could benefit
people with that.
And so I learned that as part oflike, doing my PhD and then had
opportunity to train in webtechnologies, which was in about
(02:41):
99, 2000, which was a weird timeto get into tech.
It was essentially just when thefirst dot com bubble burst, but
it was still, an interestinginflection point.
And really that's when I startedmy journey into technology, into
tech and the web.
Dan Balcauski (02:55):
I love that wallet.
Also, I happened to graduatehigh school, entering into a
computer engineering degree in1999
Roan Lavery (03:02):
yeah,
Dan Balcauski (03:02):
be a.
Roan Lavery (03:03):
Yeah, yeah, it was,
Dan Balcauski (03:04):
right.
As soon as I graduated andgraduated to the oh three down
cycle, so, feelings go out foranybody in the current down
cycle.
It'd be to be SaaS.
This too shall pass.
Well, I love that.
So along the way it sounds like,you were You're sort of doing
this PhD and in this dungeon
Roan Lavery (03:22):
it was,
Dan Balcauski (03:22):
it was very isolating.
I can imagine.
Was there a certain point thatyou were sort of in that where
you're just like, yeah, this isjust I realized you wanted to
kind of go in the your currentdirection of working with a
team?
Roan Lavery (03:34):
um, I mean, I think we, the thing about PhDs is, is
very much a sort of solitaryexistence, you're working on
this incredibly So, specializedpiece of research that pretty
much nobody else in the worldcares about, or there's maybe
like four people in the entireworld, on different parts of the
planet, that actually care aboutthe same thing that you do,
(03:57):
because it's so specialized.
And so there's no way to, Bounceideas of people, or there's
limited ability to sort ofbounce ideas.
And I really, that's when, andalso be creative as well,
because I was, quite, quite acreative person.
And so that idea of like, youhave an idea you want to bounce
off other people and you want toget some feedback on that.
(04:17):
You want to come together andbuild something, but ultimately
you want to manifest this thing.
You want to build it.
You want to put it out there andyou want to see what other
people think of that.
Um, that was very challenging.
I think I probably learned thatin my second year.
It took me four years to do myPhD and by year two, I was like,
yeah, this is really not goingto be for me, but I didn't want
(04:37):
to quit.
I'm quite a stubborn person.
So I was like, I'm going tostick this out and I did.
And it took me four years tofinish it and get my doctorate.
And I'm still glad that I didthat because I think there,
there is something about whenyou start something, you want to
see it through, you want to havethat commitment to something.
I'm so, I still believe in that,but I ground out.
I mean, it was a grind towardsthe end.
Dan Balcauski (05:00):
Well, I don't think a stubbornness is maybe
the worst quality to possess inan entrepreneur.
Let's pivot to FreeAgent.
Can you take us back to theearly days of a FreeAgent?
What inspired you to start thecompany?
What were your initial goals?
Roan Lavery (05:14):
Yeah, so I mean, after I'd I'd left on my PhD, I
retrained in web technologiesand I started working for a
small agency.
Um, but I was also freelancingand I was really interested in
the design aspect of the web.
And obviously it was still quiteearly on in terms of design.
Things like user experience andstuff, but that idea of,
designing amazing applicationsand having people really enjoy
(05:36):
using those was something that Igot a lot of energy and
enthusiasm from.
So I worked for this agency andI've been doing some freelance
work up until about like 2006.
And at that point, that's when Iwas introduced to the founder of
FreeAgent, Ed Molyneux.
And he'd originally had thisidea, he was working as a
contractor, Ed had a reallyinteresting background.
(05:58):
He was actually a fighter pilotin the RAF, and he had left the
RAF he'd originally You know, atuniversity, he did a background
in computer science.
He was contracting essentiallyas a programmer back into the
ministry of defense in the UK.
And he was managing his ownbooks.
He was managing his ownaccounts, um, and, By his own
(06:19):
admission, not doing a very goodjob of it because, he was a
pilot, he was a fighter pilotthat tend not to be sort of very
accounting savvy.
And so he'd had this originalidea.
He'd recently moved up toScotland, where I'm from London,
and we were introduced, and westarted talking about this idea.
I was doing freelance work, hewas doing contracting work, and
he was saying, I've been playingabout with this idea for,
(06:40):
building a web product thatcould help people manage their
business.
Finances.
This was in 2006, 2007.
The only real other company, I'msure there was ones, but the
ones that were really aninspiration to us at that point
was Basecamp.
Ed had started playing aboutwith Ruby on Rails.
(07:00):
Obviously, that was sort ofcreated by the Basecamp guys.
And so we're really looking atthat model and the technology
that used to build it as reallyas an inspiration for what we
could do, albeit, obviously, ina sort of a different industry
and a different So we startedworking on that earlier
prototype in 2006.
Like a few months later, we metthe other co founder, Al Heedy
(07:23):
he also had a programmingbackground, met him back in
London.
He was looking for a sort ofsimilar idea to get into a
project.
And we all came together and wedidn't know each other as co
founders before we started thecompany, which, it's an
interesting thing.
I think there's pros and cons ofthat.
And really that's when it sortof started off.
Dan Balcauski (07:41):
Very interesting.
And so, yeah, I mean, there'sprobably, we could probably do
a, a couple hours on just justidentifying good co founders.
It sounds like you were lucky inthat situation.
And it ended up working outquite well.
I want to shift a little bit toso those are the early days of
this going into how you scaledFreeAgent sort of over time.
Like every CEO, and team, cofounding team faces challenges,
(08:02):
along the way.
As you sort of look back overyour journey, is there a
specific challenge FreeAgentfaced during your growth that
was particularly difficult toovercome?
Maybe it was like something, youthink it was a crucible moment
that kind of has made you a partof who you are today?
Roan Lavery (08:17):
Yeah.
I mean, I think sort of, allthree of the co founders were
technical and we all essentiallycame from a product background.
None of us have launched like aweb application, but we were
still so well versed in webtechnologies and product
background.
And so we always, I think,because we were working as
contractors and freelancers, wesort of understood our target
(08:37):
market because it was us.
We had a real, we were, we weredog feeding our
Dan Balcauski (08:42):
Scratching your own
Roan Lavery (08:43):
We were absolutely.
And so from that side of things,I think we, we had a pretty good
understanding where we wereabsolutely weaker in was on the
go to market, the sales andmarketing side of things.
And that was definitely an areain which we didn't really know
what we were doing originally.
I think things were quitedifferent back then in 2007 with
(09:05):
regards to just how muchknowledge and material was out
there about how to run SaaSbusinesses.
And also what your options werewith regards to funding,
especially in Scotland.
So for the first We bootstrappedthe company.
We were still working.
Our contracts or jobs, freelancethings, and FreeAgent was really
just a site project for us.
(09:26):
We were doing it evenings, we'redoing it weekends, and we did
that for two years up until2009.
And that's when we wereintroduced to Christophe Janss,
who now is so, One of the leadsof Point Nine Capital, VC based
out in Berlin he was not withPoint Nine at that point.
He was just doing his own sortof investments and he'd invested
(09:47):
in Zendesk about a few monthsprior to meeting us and
obviously went on to become,incredibly successful and we
were like a second investment.
So.
We were introduced to him, heput a bit of money into the
business, and really that's whenwe were able to quit the day
jobs and work in the companyfull time.
And that's when we startedlooking at plugging in those
(10:07):
gaps or areas that we wereweaker in.
So by the time something like2010 rolled around, that's when
we started hiring some seniorpeople into our sales and
marketing function.
We've still got our CMO, he'sstill with us today.
Dan Balcauski (10:21):
So, so it sounds like, none of the, all the co
founders you said were technicaland none of them had really a
lot of experience running acompany
Roan Lavery (10:30):
none at all.
This was, our first company we'dever ran.
Dan Balcauski (10:33):
So I'm curious, like, how did you sort of
approach learning to lead agrowing organization?
Roan Lavery (10:38):
I mean, you do your best.
I mean, I think one of thethings Is really interesting,
um, is the rate of growth ofFreeAgent.
I talked about that for twoyears.
We were essentially building aproduct and launching a company
with just the three of us.
And we still had some like fulltime jobs.
And even when we raised a littlebit of money, our first seed
(10:58):
round was a hundred thousandpounds, 110, 000.
It's like, it was.
It was tiny, it was absolutelynothing.
And I think we raised another, afew hundred thousand, and in the
middle of like 2009, like theamount of money we raised, all
even through the entire lifetimeof phrasing, is probably not
even what a Series A would betoday.
(11:21):
So,
Dan Balcauski (11:22):
Yeah.
There's a lot of entrepreneursbeing like, what your series,
your seed round wasn't 20
Roan Lavery (11:25):
yeah,
Dan Balcauski (11:26):
revenue and a billion dollar pre like, are you
kidding me?
Roan Lavery (11:29):
Pre acquisition, we didn't raise 20 million.
So it was very gradual growth.
I mean, you know, we didn'tbootstrap the company, but the
growth in the organization wasvery measured.
It was very gradual.
And we always took this approachto fundraising where we would
say, right.
We're not just like going toraise, 5 million to give us this
(11:50):
like chunk of runway.
We want to use this money to getback to breakeven.
So we're going to invest in thebusiness.
We're going to hire, grow theteams, but we also want to map
out revenue until we can seethat coming back to a breakeven
point and be profitable afterthat.
And we would typically try andreach that breakeven point or at
least model that breakeven pointwithin 18 to 24 months.
(12:13):
After the investment andnormally what we would do is we
would then raise another round,but we were doing it from a
position of not needing to raisethe money, but wanting to raise
the money to fuel growth andacceleration in business, as
opposed to having to raise moneybecause we were, going to run
out of cash.
So that was quite an interestingthing, but it did mean that we
scaled the business in quite ameasured and gradual way.
Dan Balcauski (12:36):
Interesting.
So, well, and that's obviouslyvery different than maybe the.
Traditional view in like placeslike Silicon Valley where it's,
you raise funding and it's, goall out, win win.
Yeah, rocket fuel.
And unfortunately a lot ofrockets explode on launch.
Right.
Seeing as you've taken the slowpath, like, can you talk a
little bit maybe about like,what do you think were the
(12:57):
advantages of, Growing moregradually, like how did that
maybe it was in terms of yourmaturity or like other ways that
you were able to that maybeotherwise you wouldn't have
Roan Lavery (13:06):
Yeah.
I mean, I think that's exactlyit.
So, your question about how didwe learn to scale a company?
We were able to do it on the jobbecause the company grew a rate
that allowed us to level up.
I always think that any point intime as a founder of a business,
you need to be able to look atyourself and say, am I able to.
(13:26):
Give this company what it needsright now.
And for us, that was always thecase because we were hiring five
people or 10 people.
We were never sort of, like10Xing the business like
overnight.
And it would have taken thisfundamentally different skill
set, maybe fundamentallydifferent people than we were at
that moment in time.
And you hear that aboutcompanies where they just, the
founders just can't keep up thedemands of the business,
(13:48):
investors and so on.
But because we took thatslightly more measured approach,
we were able to raise our gameat the level the company needed
to.
We were also lucky like we hadadvisors, our board, some of the
investors were, had some reallygood networks and we were lucky
to be plugged into like anetwork of other high growth
like SaaS companies, which wasamazing.
(14:11):
So there was extra externalsupport that we had there, but
you know, fundamentally, we weregrowing at this sort of rate
that allowed us as individual cofounders to level up at the same
sort of rate as the business.
Now, don't get me wrong.
There were downsides to that aswell, and that we were also
operating in this competitivemarket where some of our
competitors were really growingat this astronomical rate and
(14:35):
scaling scaling.
Uh, and I think that, withhindsight, would we have taken a
slightly different path likebeing who we are today?
I think we probably would havedone.
I think the reality is knowingwhat I know now, I may have
taken a different path then, butI'm not, I wasn't the same
person as I am today.
You see what I mean?
So I can look back and say, Idon't really regret it because
(14:56):
at the time it was the rightthing to do.
But with the experience I havejust now, I think we may have
taken a different path.
Dan Balcauski (15:04):
Well, that's interesting.
And that your logic totallymakes sense, right?
I mean, you only can, we onlycan do what we did, right?
And say again, the other waysis, But with that benefit of
hindsight, could you just unpackthat a little bit?
Maybe there are someentrepreneurs who are maybe
thinking about taking mayberounds that are larger than
they're comfortable with, ormaybe they've been bootstrapped
(15:24):
and are thinking about seeking,institutional capital for the
first time.
Like talk a little, could youunpack a little bit of what you
just that insight of like, maybelooking back, you would have
changed a different path?
Like what would have been thedifference in your
Roan Lavery (15:35):
So, I mean, I think quite simply, I think we would
have been more aggressive.
I think we would have been moreaggressive with our ambition
with the business.
I remember me, Ed and Ollie,when, maybe there was like 10 of
us.
We had this joke, it was like,yeah, we don't want to run a
company with 50 people.
And we're all like yeah, wedefinitely don't want to run a
company with 50 people.
And then we'd get to like 40people and we'd be like, you
know what?
(15:55):
This isn't too bad.
We definitely don't want to runa company with a hundred people.
You're like yeah.
I mean, that'd be crazy, right?
Who would want to do that?
And then we get to like 90people and be like, do you know
what?
I mean, a hundred people is notso bad.
So there's this constant likeresetting of expectation levels.
Whereas I think if we were tolook back, I think we would have
that competency.
Yeah, sure.
We can run a company of hundredsof people.
We know how to do that because Ithink like back then it was
(16:17):
like, I remember us saying, Idon't even know what we do with
a million pounds.
How do we spend that?
We just, we couldn't even likefigure out today you give me a
million pounds and I'll spend itbefore we finish this call.
Like I, I have no problem doingthat now,
Dan Balcauski (16:31):
Yeah, you pay, you just pay that to Snowflake,
I think, directly.
Roan Lavery (16:35):
I mean, it's like, but it was this idea was like,
you don't know what you don'tknow.
And even just like, how do youput money to work in a smart
way?
Not in a wasteful way, which isvery easy to do.
And it can definitely be thecause of a lot of issues with
high growth businesses.
But, being able to.
Smartly deploy your capital.
I have a much, much better ideaof how to do that now.
(16:55):
Whereas I didn't at the time.
And so I'd be more confident ofbeing more aggressive, raising
money, setting expectationsappropriately with investors but
I'd be able to sort of reallyput us on that high growth
trajectory.
Dan Balcauski (17:07):
Interesting.
Well, it's funny how, you sortof, you're, Oh, this is it.
This actually isn't so bad.
It's a little bit like the thefrog is you're turning up the
Roan Lavery (17:13):
It is a boiling frog,
Dan Balcauski (17:14):
Like, Oh, this is kind of warm.
Roan Lavery (17:16):
it's okay,
Dan Balcauski (17:16):
It's all right.
Well, so, you did have a gradualpath, but eventually you had a
sizable company.
Like how, what.
Have you found to be effectiveto, keep a leadership team
aligned as the company got toscale?
I mean, you'd said, you guysweren't you hadn't run
businesses before.
Are there tools, techniques,strategies you found that like
(17:39):
helped you manage those largerorganization?
Roan Lavery (17:41):
Yeah, I think so.
I think one of the biggest oneswas we adopted a framework
called the Advantage.
It comes from a book by PatrickGalencioni.
He sort of famously wrote thefive dysfunctions of a team.
A lot of people know the
Dan Balcauski (17:55):
I got it on my bookshelf over there.
Roan Lavery (17:57):
a brilliant book and the advantage very much I
think builds on that andeffectively builds a system to
run companies.
It talks a lot aboutorganizational health and the
different layers oforganizational health that you
need in a company.
And there's things like, levelsof trust, accountability, being
results focused, masteringconflict, all of these sorts of
things.
(18:17):
But then there's also otheraspects around what are the
fundamental questions that aleadership team needs to be able
to answer, and then needs to beable to provide clarity for the
rest of the organization.
So that not just the leadershipteam, but everybody in the
organization is empowered and isaligned with what the company is
(18:38):
trying to do.
Because I think that's probablythe central challenge as your
organization grows.
When it's really small andthere's like 10 of you in a room
or even 30 of you in the samelike office or building or
wherever it is, or even,distributed remote.
Everybody knows each otherreally well.
There's very sort of stronginterpersonal relationships and
network within the organization.
(19:01):
By and large, people tend toknow most of the things that are
going on in that company justbecause, you're all on the same
Slack channels or whatever, butthat definitely starts to break
down 50, 100, 100 and so like 50sort of person organization.
And then the risk is that peoplejust are working in little
isolated things and, silos startappearing and people aren't
(19:23):
joined up.
And so being able to createclarity around what it has and
the advantage of these six bigquestions, these really
important questions that isactually like a key part of how
to drive that alignment whilestill making sure that people
have a sense of autonomy in anorganization and that they're
empowered to be able to solvelike,
Dan Balcauski (19:44):
Can you give me a sense of what maybe some of the
questions are?
Like
Roan Lavery (19:46):
I'll go through them.
Yeah.
So, essentially the sixquestions are see if I can
remember them.
Why do we exist?
Which is obviously probably oneof the most fundamental of all,
and that's your vision or that'syour, your mission as an
organization.
How will we succeed?
And effectively that's yourstrategy.
In your organization, like, weknow we wanna get to, but how
we're going to do that, um, howdo we behave?
(20:07):
And that's your values andthat's your ways of working
within an organization.
What do we do?
That one seems super simple.
It's your product.
But I think the interestingthing about that is it's.
Quite often it's not aboutunderstanding how you would
define your product, it's aboutunderstanding how your customers
interpret your product.
So, To be done framework toarticulate that.
(20:27):
Um, then there's a who doeswhat, so it's your organization
structure, roles andresponsibilities, and what's
important now.
And that's all about things likeyour goals, your metrics, your
KPIs, OKRs, all of that sort ofthing.
So those questions, they cover alot of different ground from
these really big existentialthings, like why do we exist,
all the way down to much moresort of like tactical things,
(20:50):
like what's important now.
Dan Balcauski (20:52):
got it.
So, there's a whole bunch ofquestions around this.
My first one is I'm curious howyou introduced it to the
organization because I've beenin situations and maybe this is
just me before where it's like,I read a book, right.
I read Google's book on how todo design sprints or read,
something like fivedysfunctions.
And I'm like, this person hasnailed it.
This is a brilliant.
(21:13):
And then I'm like, all right, Iwant everyone to do this.
And then I'm like, I don't knowhow to like actually start.
Like, it's like, Hey, you makeeveryone just, Hey, like, let's
go read the book and let's talkabout it.
Or is it, was it a thing?
Type of thing.
I don't know if Patrick has aconsulting firm that you hired
to bring in the advantageprinciples.
Like how did you sort of thinkabout, all right, this is the
thing that we're going to do andthen, kind of lead lead the
(21:34):
organization to sort of adoptit.
Roan Lavery (21:35):
Yeah, I mean, so he does have a consulting firm, but
we never actually used itsimplemented bandage.
I think the first one was justthe, the exec team.
Reading the book, discussing it.
The great thing about that bookis that it's written into the
soul of a business fable sincethere's a lot of practical
examples there, but it does havea lot of exercises to go through
(21:56):
either as a, like as aleadership team, or you, some of
them you could either do morebroadly as an organization to
help you answer some of thosequestions as well.
So it doesn't just leave youfumbling.
So here's how you want Find agood vision or a good mission
statement.
Here's how you want to maybethink about articulating
strategy or even your values.
And it gives you some sort oflike practical examples to use.
And You can use those with thewhole organization.
(22:19):
So I think, all of these sort ofactivities, right?
Defining your values, definingyour strategy.
Mission and stuff like that,there, there tend to be things
that organizations do anyway.
Um, this just sort of puts alittle bit more of that
framework around why all this isimportant, how it all comes
together.
I think Talk about things likeOKRs, right?
(22:39):
So OKRs are one of these aspectswhere companies really often
struggle to introduce them orimplement them into an
organization.
I mean, I work withorganizations, I've been in
organizations where they've had.
I think there's only like two orthree failed attempts at
introducing OKRs.
They kind of use them for a fewquarters, everybody hates them
(23:00):
and then everybody's like, wedon't want to do this and then
they get forgotten about andthen a year later somebody says,
Oh, we should really do thisstuff.
And I think some of them arejust, they're just like, The
longer you leave it, the harderit gets, again, there may be one
of the things that would havegone back and done is some, I
think we were okay when westarted introducing some of this
stuff, but if you leave it to ahundred person business before
(23:21):
you start covering off some ofthese things that I'm talking
about, you're going to find itreally hard because there's a
lot of like tracks laid in theorganization to begin with.
So it's going to be harder tosolve and rework that.
So I think for some of them, theearlier you can do them, the
better, when the team's still.
Quite small.
And then the more inclusive youcan be in terms of bringing
(23:42):
people from the organizationinto those conversations and
into those activities, I thinkthe better it's going to be as
well.
Dan Balcauski (23:48):
Yeah, it's funny.
You mentioned the OKRs because Ihad heard a joke once that
Google introduced OKRs into theecosystem to prevent any startup
from actually meaningfullycompeting with them.
Because everyone has done thatpoorly.
Well, so going back to theadvantages.
So, so, okay.
You've got these six questionsand those all make sense.
And I can understand everythingyou just said, it would like
(24:10):
people wait too long.
But like, ah, B to C, B to B, Bto C.
So you introduce it, you start,you have the exec team, read the
book and go through some ofthese exercises.
How then do you sort ofinstantiate that so that it's
(24:31):
embedded in the framework of thecompany, right?
Cause it's not just like, Oh, wedid
Roan Lavery (24:35):
Yeah.
Yeah.
Dan Balcauski (24:36):
at an offsite one time and then everyone kind of
moved on with their life.
Are there practices that you'vedone to make sure that those
principles kind
Roan Lavery (24:42):
that's actually a really big, important part of
the book.
It's broken down into thesedifferent sections.
The number one is about creatingclarity.
Um, and that's where youanswering those questions and
how incredible answers that is aleadership team, but, and then
the second bit is aboutcommunicating clarity and the
third bit is about overcommunicating clarity.
So there's a good, like twothirds of the book, which is
(25:02):
essentially just repeatyourself.
Now, I think it's worthwhilejust even just unpacking that
because I think there's a realinteresting thing about how do
you do that as a leader in anorganization?
Because I think that's sort ofthe default that you go to is
you say, Oh, well, I did thattown hall and I stood up and I
told everybody what the strategyis going to be.
Or I told everybody these areour values or these are our
(25:24):
mission or you have them on thewall or whatever it is.
I'm not being down on thatstuff.
I think that stuff is important.
But what you've got tounderstand is that is only one
layer of how you communicate inan organization.
And fundamentally, I believeNOE, it's when those answers,
whether it's your values, yourstrategy, your mission,
(25:45):
whatever, when those are bakedinto the day to day processes of
your organization, that's whenit truly starts to stick.
So processes like hiring,Processes like onboarding,
processes like reward and careerprogression in an organization.
Processes like how you set yourProcesses, like how you do
(26:06):
sprint reviews or retrospectivesor anything like that.
All of these sort of multitudeof things that we use in agile
organizations.
Think about how you can usethose as an opportunity to
reinforce whatever message itis.
So it's just constantly bakedinto the day to day because this
is, it's the number one reasonwhy OKRs fail, is teams like set
(26:28):
and forget, they do the OKRs andthen they just go off and they
get involved in their day today.
Then somebody kind of goes, ohman, oh yeah, like.
It's getting towards the end ofthe quarter, we better check our
OKRs and oh my God, like we weresupposed to be doing this, and
well, we just got excited.
But if it's actually woven intothe fabric of, the standup or
the sprints or reviews or retrosor whatever it is, then it
(26:49):
becomes much more sort of theomnipresent.
And I think it's the same forthose questions.
So yes, there is a role forpodcast, whether that's.
Company all hands meetings orcompany announcements or slack
or emails or anything like that.
But then think about how it getsactually baked into the day to
day.
Dan Balcauski (27:06):
Interesting.
Yeah.
So making sure that, yeah you'vegot the processes sort of using
that as a foundation sort oftouchstone there.
And I mean, just kind oftactically, like, you as the CEO
leader, like, you don't have totouch on everything, but maybe
there's like one sort ofprocess, like, is there a way
that you sort of keep your eyeon those things to be like,
(27:27):
okay, is this, has this.
Is there a drift check like thatyou do to be like, Hey, is this
we seem to be spending a lot oftime on this thing.
Let's make sure that it'saligned.
Like, how do you sort of keep apulse on that within the
organization?
Roan Lavery (27:39):
Yeah, so we, another important aspect, which
comes under the, how will wesucceed and how will we know if
we're a successful banner?
It's really where the scorecardsfor the organization come in.
So, you'll be aware of theconcept of a balanced scorecard.
What we do at FreeAgent is everyteam is effectively managed with
their own balanced scorecard.
(27:59):
Um, so product teams, we usesomething called the Google
Heart Framework.
I'm not sure if you're aware ofthat.
Yeah.
So it, stands for happiness,engagement, adoption, retention,
and task success.
And effectively, these are likefive measures of what you would
consider a successful product.
Is it?
Making customers happy.
Are they engaged?
Are they adopting the product orbits of the product?
(28:20):
Are you retaining customers?
Are they doing things certaintasks successfully?
And each of the product teamswill own different aspects of a
product scorecard.
And All of those scorecardseffectively cascade up via a
goal tree into a companyscorecard, which is the headline
metrics, which we think we needto be doing.
(28:41):
So, for example this year,FreeAgent, one of our big
strategic pushes is that wewanted to launch new revenue
streams.
On top of our core subscriptionrevenue, we want to launch some
additional add on products andstart generating revenue from
those.
Sounds really simple.
That's our core headline metric,so I track their routes, our
(29:03):
additional revenue streams do.
But then that cascades down todifferent product teams who are
like, oh, we want adoption ofthis product, we want conversion
of this product, we're going tolaunch this new thing over here.
And so we can, we can look atthat lower down level, but then
also see how it optimally sortof impacts the headline
scorecard.
So that's a really big partabout giving teams ownership,
(29:23):
but also accountability.
So they're on a hook fordelivering success in that
particular area of the product.
And, that will be seen even atthe highest company level.
But how they do that, thedetails of what products are
going to bring to market, or howthey're going to sort of drive
up adoption.
It's really left to death.
Dan Balcauski (29:41):
So, that's fascinating.
So, okay.
So you've got these specificmeasurements that are scorecards
that are departmentallyspecific.
So then does that take the placeof what most people might think
of as OKRs in an organization?
Or do
Roan Lavery (29:55):
no, so it doesn't.
And again, this is like, wecould spend like literally hours
on this and it could bore you todeath.
But one of the real, I think,areas of confusion is what's the
difference between a KPI and anOKR?
People really struggle with thatbecause they're two numbers,
right?
So I need to solve the samething, but fundamentally KPIs
are things which on an ongoingbasis, we want to track and make
(30:18):
sure we're doing a good job of,so conversion rates.
Okay, that's clearly like, like,like a KPI and Is like, we're
going to, within this period oftime, we're going to do this
work and this is the impact thatwe want to see.
So they're More tighter bound.
They have a very specificdeliverable and they generally
have a an anticipated expectedoutcome and impact that you want
(30:40):
to have as So, typically, itmight be something like, we've
got our targets around our KPIsfor the year, and we, conversion
might be one of those.
But then you might have adiscrete project, which might be
about maybe one aspect of theonboarding, you know, which
might be the setup process, forexample.
And we want to improve thatsetup.
(31:02):
Process, get more people throughit and we want to take the
success rate of that setupprocess from, I don't know,
wherever it is, 20 percent to30%, and we know if we do not
just what conversion is about,but we know that will contribute
to that overall KPI ofconversion, which is something
Year on year, all the time,because that's something that's
so important to us, and The OKRstend to be more discreet.
(31:25):
Initiatives where you'rethinking about what impact
you're going to have and youmeasure that and then the longer
term impact that you want tohave is measured through your
KPIs.
Dan Balcauski (31:35):
Oh, wow.
So, I mean, I just want to noteon the arc of this conversation,
right?
We started out, say how, 17years ago, you and your co
founders hadn't managed anorganization and now you're
like, now you're like, I couldteach at a business school,
telling you how to
Roan Lavery (31:47):
yeah, yeah,
Dan Balcauski (31:48):
processes so, and I think that growth journey is
fantastic, but, so again wedon't need to spend all day on
this, but one final thing,because you did mention, right,
I mean, a lot of CompaniesStruggle With OKRs and I've been
on the other side of that aswell.
It's not pleasant for anyoneinvolved.
Obviously you've sort of createdthis system that, that works for
(32:09):
you.
Give advice for other leaders atSaaS companies who are trying,
like maybe struggling to make anOKR process effective.
Like, what any ways that, likethey could improve that?
Like, do you see any sort ofContinuous mistakes being made
out there in the world.
Roan Lavery (32:24):
Yeah, I mean, I think there is a lot of mistakes
are made with OKRs.
I mean, I'm definitely notdogmatic about OKR.
There are a lot of OKR puristsout there.
I wouldn't say I'm morepragmatic.
I think, ultimately, There aretwo.
They should be working for you,and they should be helping you.
(32:45):
If you feel like you're battlingagainst them, and they're just
creating more problems thanyou're solving, then you're
doing it wrong.
Okay, that's that Google quoteyou make.
If you genuinely feel like thisis hindering you as a business,
you're doing them wrong, like,and so sometimes if something
feels like it's too difficult,Just make it, just ease off on
(33:07):
the dogma around it and just bea bit more pragmatic.
That's not to say that theprinciples behind OKRs were, the
fundamental one is it's aboutmeasuring impact of the work you
have.
They're not a task list, it'snot a list of things that you're
going to do in the next cycle.
It's about the impact of thework you're going to have.
I feel that's like a reallyimportant principle, but
(33:31):
sometimes it doesn't always workthat way.
And sometimes I see someorganizations come and say,
well, we're on, like the realityis we're going to do this big
project.
We're not going to see theimpact of this project for nine
months, or maybe there's like a,the sales cycle for an
enterprise deal is nine months.
So we don't know what the impactis going to be.
And then you just have to say,well, that's okay.
(33:51):
That's okay.
Like don't force it.
But you know, it's, Sounderstand the theory and then
be a bit more flexible about theapplication of that.
Um, I do think the other thingas well is about you don't want
to get into the set and forgetthing where there's a disconnect
between there's this reallyintensive process of defining
OKRs once a quarter, once everysix weeks, whatever it is, and
(34:14):
then they just sort of likedrift off.
So again, Once you've got them,bake them into your actual day
to day process.
There's a really good bookcalled Radical Focus you may
have heard by Christina Wotnick,and she talks very much around
the process of doing it.
It's very much aimed at earlystage startups, but it talks
about how OKRs are baked intothe sprint process.
(34:36):
So if you're running that everytwo weeks, then at the beginning
of the sprint, You actually usethe OKRs to define the
priorities for that sprint.
And it's just about, making surethere's that kind of constant
focus on that.
So I think they will be the twothings.
Don't get into that certainforget mindset, bake them into
the process, but then just bepragmatic around what's actually
(34:57):
going to be realistic for you,given the type of organization
that you've got.
I love
Dan Balcauski (35:02):
I love
Roan Lavery (35:03):
that and Yeah,uh you know We could
Dan Balcauski (35:04):
spend, uh, you know, Hours on, on this topic.
I'm sure.
I do want to pivot with a littlebit of our remaining time to
you've gone through a crazy setof fundraising and financial
transaction journeys over thecourse of a FreeAgent's life.
And I'm sure we could talk formany episodes just about those
of you at one point you guysactually went.
Public.
(35:24):
It went through that process.
And we happened to be in aninteresting moment in time.
We're recording this in 2024,and I was mentioning before we
hit record that we're actuallyin a period of.
Worse number of IPOs in the techworld than we've, it was worse
than the 08, 09 financialcrisis, which is mind boggling.
(35:45):
So, obviously this is a problem.
It's a problem for,entrepreneurs their employees
trying to get liquid.
This is a problem for venturecapital.
It's a problem for the market ingeneral.
So I'm curious kind of Yourexperience there, like, can you
walk us through kind of yourdecision making, at least at a
high level that led to you'regoing public?
Roan Lavery (36:02):
yeah, I kind of, yeah.
I think.
One of the things I think is, Ithink important to say is that
our experience of doing an IPOand the type of IPO we did,
probably very different from thestereotypical IPO that people
talk about with your techcompany.
We were a really smallorganization.
In comparison, like, we weredoing probably about 10 million
(36:25):
ARR at that point.
So really, really novel.
We were only probably anorganization of 100 people.
And we didn't fall on the largeUK stock market.
It was a smaller AIM market,which is designed for an earlier
stage, smaller companies.
So it was a, Differentexperience of going through the
process of an IPO and certainlyafterwards as well, which is
(36:47):
maybe that we can talk aboutthat because it certainly has
some challenges.
I think in terms of like therationale behind it, and as you
mentioned before, we'd been onthis, we can, we quite often
joke that we've ticked every boxon the bingo card of startups.
We did bootstrapping, we didangel investment, we did VC, we
did debt funding, we did acrowdfunding route.
(37:08):
So we did it, we raised amillion pounds in a crowdfunding
round in 2015 or something likethat.
So we did it all with thosethings and we were sort of like
looking ahead as to like, well,where is this going to go?
Do we just want to raise a crazybig VC round?
Are we going to get acquired?
And at that time we thought,well, actually the IPO would be
(37:29):
quite an attractive thing to usbecause it would allow us a
mechanism for bringing peoplein.
More investment into thebusiness while still allowing us
to fundamentally have controlover the business.
So we wouldn't necessarily be onsome, um, very sort of
prescriptive or fixed VCtimeline for when there would
have to be a return or maybe PEmoney or sort of something like
(37:51):
that.
Idea.
I wouldn't necessarily say itworked out that way, but that
was the original concept behindit.
We'd actually tried to do it in,it must've been like 2015, I
think that we we must've triedto do initially and it didn't
work out.
We couldn't really get enoughmomentum behind it.
But at that point we had somefeedback from potential
(38:13):
institutional investors like,well, come back to us if you've
managed to do X, Y, and Z.
And we did.
So when we went back and wetried it again a year later, we
were able to say, this isawesome.
This is what we talked about.
We've actually delivered againstthese targets and milestones
that we said we're going to do,and that gave those investors a
lot of confidence that gave us,to push through into the IPO.
So yeah, it was the idea that wewould still be able to retain
(38:37):
control and power over thebusiness, but ultimately, have a
path through to additionalinvestment into the company and
also potentially an exit for thefounders as well at some point.
Dan Balcauski (38:48):
I imagine that that created some interesting
pressures kind of across thebusiness being public.
And you had mentioned that youhad this view of what it would
be like, and then what it waslike.
Could you just unpack kind ofmaybe what was different on the
other side of being a publiccompany?
Roan Lavery (39:03):
Yeah.
I mean, so, so I think, we hadthis idea that we would be sort
of like masters of our owndestiny, be able to raise money
when we want to from the publicmarkets, there's a pathway
through to an exit for thefounders as well.
I think the reality was, andagain, I do want to stress that
some of this was definitelyrelated to being on.
(39:23):
that smaller market where therewas a very limited liquidity.
In the shares, there wasn't alot of like shares being bought
and sold in the business.
But what I meant was that anytransactions that did happen had
quite an outsized impact on theshare price.
And it made the share pricequite volatile as a result.
(39:46):
Just definitely something thatyou can see.
What we definitely find is thatIt quite quickly shifted the
focus of the business to be muchmore short term about delivery
on essentially sales targets,acquisition and growth targets.
You know you've got your nextlike quarterly analysis and you
(40:06):
know that was good, it's goingto, share prices is going to be
positive, it's going to be bad,it could be really bad.
Again, that point about thevolatility and liquidity there.
And so All of a sudden it wentfrom sort of, there's always a
sort of like a focus on growth,but you were thinking longer
term, you were thinking ahead aswell.
Suddenly it became much moreshort term, much more of a short
(40:29):
term focus.
And that was quite it's quite astressful experience.
I'm not going to lie.
And it meant that, for me, Fromthat time I was the CPO, Ed was
the CEO at that point.
It was less about investing inthe long term of the product,
less about investing in theproduct for customers, and more
just about hitting the numbers.
It was just ruthless,relentless.
You've got to hit these numbers.
(40:50):
There's a lot of pressure fromthe board.
You've got to do it.
You know you're going to be,have those sort of like analyst
expectations as well.
And it was definitely the,probably the most stressful
period, probably the leastenjoyable period that
Dan Balcauski (41:04):
We had If you had to sort of do it again would you
have made the same decision?
Roan Lavery (41:09):
I think that essentially whenever you talk
about decisions that maybeweren't the best, maybe, it's
not, it's never usually like ablack and white or it was the
absolute worst decision afterthe best decision.
It isn't just about how did thatdecision work out.
It's about what was thealternative.
And so for us, it was just like,well, if we hadn't done.
(41:31):
The IPO, what would we have doneinstead?
And that, it probably would havebeen like a larger VC would have
done, which would have had itsown pros and cons.
So I don't think you cansometimes say, yeah, I didn't
particularly enjoy that.
I'm not sure what thealternatives would have been and
if they'd been any better orworse.
And so, ultimately it's the samething with the acquisition as
(41:53):
well.
We made a decision to sell thebusiness ultimately and then,
you can look back and see, is itthe right decision or wrong
decision?
But you have to also say, whatwere the alternatives?
Dan Balcauski (42:02):
Yeah, exactly.
Well, yeah, I'm a big pokerplayer and you can get drawn out
on in a in a poker hand and youstill made the right call.
And didn't, didn't change thedecision, even though the
outcome might not fall in yourfavor.
So I love that.
I love that framing on the thedecision process is like, yeah,
well, what was the alternatives?
I made the right decision at thetime.
Nevertheless, the outcome.
Yeah.
Roan, I could talk to you allday.
(42:22):
And I would love to, but I wantto be respectful of your time.
I'd like to wrap things up witha couple of rapid fire closing
questions if you're up for it.
Awesome.
Look when you think about allthe spectacular people you've
had a chance to work with, isthere anyone who's popped a mind
who's had a disproportionateeffect on the way you think
about building companies now?
Roan Lavery (42:41):
Think in the early days it would have been
Christophe Jantz.
So, as I mentioned, the firstinvestor we had our second major
investor was Robert Klein, who'svery well known an investment
that we've seen.
Both of those people were reallypivotal in putting FreeAgent on
the early path.
But also introducing us to otherpeople.
So Christoph would run, he stillis, I just still get his run to
(43:02):
this day.
He would run a sort of annualmeetup of all his portfolio
businesses which today is sortof includes sort of like really
so well establishedorganizations like Zendesk, all
the way through to sort of likemany sort of like early stage
startup, but he was bringingthose people together in those
early days, having a chance to,bounce ideas of people, learn
(43:22):
from other people, and bearingin mind in those early days,
that it wasn't a playbook forhow to run SaaS companies like
there was, so we were also likelearning, so like as we go, so
that was a really sort ofinfluential and really
inspirational, important part ofour journey was meeting him and
getting his input, but also thenetwork that I think he
introduced us to.
Dan Balcauski (43:41):
that's fantastic.
And look, if I had to give you abillboard and you could put any
advice on there for other B to BSaaS CEOs who are trying to
scale their business, what wouldyour billboard say?
Roan Lavery (43:50):
I think we say know yourself, or know thyself, can
rephrase it, and I think that's,it's really important that.
You understand, on a continualbasis, so you're constantly
doing that self reflection ofwhat am I good at, what am I bad
at.
And, the good things are great.
You just keep on doing more ofthe good stuff.
Like, I'm, I've always beenquite good at strategy, so I
(44:11):
just keep on doing that andthat's fantastic.
And if you're honest about yourweaknesses, you've then got a
couple of choices.
You can then either say, well,I'm going to like spend more
time in those areas and get goodat that stuff, or I can bring
other people in to help me withit or a bit of both.
But fundamentally having thatvery honest sort of perspective
of like, where are my strengthsand weaknesses.
(44:33):
If you don't do that you'rereally not going to be able to
lead the organization in asuccessful way.
So, be humble and be honest withyourself and others about your
weaknesses and your failings.
Dan Balcauski (44:44):
Know thyself.
Classic wisdom from Roan Laver.
We'll just scratch out of thebillboard of Socrates and put
Roan there.
Could speak to you all day.
I'm sure other folks would beinterested in learning more
about FreeAgent or following youaround the internet, anywhere
you'd like to point them towebsites, social media.
Roan Lavery (44:59):
I don't actually use social media.
I used to use it a lot.
I used to really use Twitterlike a lot back in the day.
I think I joined in like 2009 orsomething, but I've really, I
don't enjoy it nearly as much asI used to.
I find it quite a toxic placenow.
So I've sort of stepped backfrom doing a lot of the social
media stuff.
I'm much more.
Prefer doing events.
I much prefer doing things likethis, to be honest, doing
(45:20):
podcasts, doing interviews,doing chats, conferences, that
sort of thing.
So, I do pop up at events andstuff like things like that.
So I guess just keep your eyesout.
Dan Balcauski (45:30):
Well, Roan, it's been an absolute pleasure.
Everyone that wraps up thisepisode of SaaS Scaling Secrets.
Thank you to Roan for sharinghis journey insights and
invaluable tips for ourlisteners.
If you found this conversationas enlightening as I did,
remember to subscribe so youdon't miss out on future
episodes.
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