Tuum Talks Episode 2: Scaling Fintech Growth

Welcome to Tuum Talks Episode #2: Scaling Fintech Growth – A Masterclass in Strategy

Recorded Live: Monday, November 20, 2023
Host: Myles Bertrand, CEO of Tuum
Guest: Elliott Limb, Founder & CEO of Cubed

Join us for a masterclass in fintech growth strategies as we delve into the second episode of Tuum Talks, titled “Scaling Fintech Growth.”

Myles Bertrand and Elliott Limb engage in a deep and insightful discussion that unravels the layers of scaling in the fintech industry.

In this session, Elliott Limb shares his rich experience and knowledge, covering pivotal topics such as the evolving sales landscape in fintech, the strategic importance of choosing the right customers, and the profound impact of partnerships on growth.

This episode is an essential masterclass for anyone involved in fintech, providing a roadmap of strategies, practical insights, and forward-looking predictions for the industry. Tune in for an enlightening experience that promises to shape your understanding of fintech growth.

Startup Fintech Growth

[Full Transcript]

[00:00:11] Myles: Hi. Good morning, good evening, good afternoon to anyone that’s joined us. I’m Myles Bertrand, the CEO of Tuum, and welcome to Tuum Talks. This is the second episode that we have. With great pleasure, we’re joined today by Elliot Lim. The good news is, Elliot, you and I know each other quite well, and we’ve worked together, which is a fantastic thing. But maybe just for our audience today, just a quick background for yourself would be great.

[00:00:42] Elliott: Sure, Myles. Thank you. I’d argue we know each other too well, I’m sure that will come out over the conversation. Elliot Limb, founder and CEO of Cubed. My background is software engineer by education, masters in computer science. I worked in banks for 20 years and then made the move over to the dark side of fintech, worked for what was at the time MySys, now Finastra, started a couple of consultancies, founded five companies, myself and Myles worked together at Mambu where I was the CRO. I then went on to be the CCO at Feedside before starting Cubed 12 months ago, and Cubed is very much around helping FinTechs to scale, grow and increase the valuation of the company.

[00:01:25] Myles: Excellent. You got that down to less than a minute, which I think is a miracle. Thanks for that. I’m going to ask you a hard question to get started. Everyone’s had successes and some people have failures, I think we’ve all had those. Was it hard to walk away from a failing start-up?

[00:01:46] Elliott: No, it was not that hard at all.  As anybody who goes through failure will know, you probably should always have walked away earlier. That’s the hard bit. But I think once you realize something’s failing, you pivot so many times, you do something different. You have to just take the bull by the horns and do it.

If you go to where 90% of start-ups fail in the first two years, I actually don’t think that’s a bad thing. Most start-ups should fail sooner, pivot, go and do something else. You learn a lot from failure. It hurts, it’s like a kick in the teeth. But honestly, it’s always the right thing to do if you get to that point in your head, this just isn’t working anymore.

[00:02:24] Myles: I agree. Scaling fintechs and learning from those lessons and recognizing when things aren’t going well is one of the hardest things. What would you say was your biggest learning through that period?

[00:02:38] Elliott: Pick the right customers. There’s all the things people think about with having the right people, having the right investors, but actually you can kill a company very quickly by having the wrong customers. It’s something we’ve seen in so many companies. When you start a company, you’ll go chase the money. We’ve got an opportunity to get in there, have a customer, they’re going to pay, we can employ people, look at this, let’s have a drink.

Honestly, you have to be very cautious with those first few customers. You will inevitably as the company grows walk away from them or find that a lot of them are a little bit toxic to where you want to go as a company. That honestly killed that side of the main, and I’ve seen it kill several others.

[00:03:16] Myles: I agree with you 100%. You and I had this conversation. When you’re small and you’re trying to grow, you make those decisions. But I think actual cultural alignment between you and the customer is one of the most important things you need to recognize. Quite often, I think organizations don’t think about that. They think about building their pipeline. They’ll take whatever’s in there and they’ll just grab it. As you say, chase the dollar. But sometimes they need to have a good look at themselves and say, are we culturally aligned? Can we do this?

Because you pick the wrong customer, you can blow up your business. Really, that’s the way it can go.

[00:03:52] Elliott: Yeah. look, you’ll see a lot of companies, especially tech companies, they’ll go and sell cool tech to companies who want to buy cool tech. That’s fun, but it’s a bit of a problem because the second you’ve got people who are buying because of cool tech, they want to make it cooler. They’ll completely destroy your roadmap. You’ll have to go and just deliver cool tech; you’ll never get proper value out of them. Everybody tries wrong at the start of a start-up anyway, and as they move to different scales those customers will kill you.

[00:04:21] Myles: Why did you start Cubed?

[00:04:24] Elliott: We’ve already spoke about 90% of companies fail in the first two years. The other stat that we all know about is that only 2% of scale ups get to Series D onwards, which I think is quite stunning. But the one that really gets me, is the 75% of venture backed companies fail.

90% fail is okay, because that can be friends and family, they’ve taken a punt, you’ve done something cool with your friends. It hasn’t worked out, no customers, blah, blah, blah. The 75% that are venture backed to fail mean a professional investor has seen the right team, the right product, the right market, and all the opportunities to move forward. You would think, how could it possibly be that 75% fail?

It’s not just the fact that 75% of entrepreneur dreams, start-up dreams are thrown out the window, 75% of LP money is basically wasted. They don’t care because the 25% gets such a high return that it’s always shuffled. But the thing that kills me is it means the industry is only running at 25% of the innovation momentum. You’re only running at one quarter pace, and that seems insane in an industry where there is so much still to be done and so much growth to be had.

[00:05:38] Myles: It’s almost like gambling to a certain degree, that only one in four is actually going to make it. That’s what they’re looking for, the one out of four. Why can’t it be two out of four? Why can’t it be 50%? I think those are really good points.

What do you think people get wrong about funding? What are the pitfalls that you’ve seen?

[00:06:03] Elliott: I think there are so many. We could talk an hour about this, to be honest.

There’s a founder CEO mentality, where you’re running the business operationally. A founder becoming a CEO is always really difficult. I love what you’ve done at Tuum, bringing in a professional CEO rather than founder CEO. It changes the game significantly because as a founder, you’re always in the weeds, you always know everything, you get pulled into it, you can’t step away because the emotion pulls you back and you’re not pragmatic.

I think doing that and becoming a CEO is a big step, but also as you go through funding rounds, Founder or CEO, you have to become the founder of the business. You need to trust that your team can run the business at whatever level you’re at. Imagine you’re a Series A company; you need to have the right people around you to be able to run that business. You can pull yourself out to strategically do the mindset shift, which is the real key to go, “Right, we’re moving into Series B.”

The second you start preparing for that, you need to think of an 18-month, 24-month timescale to say, what does this look like? And do you know what, you will have different people you need, you’ll have different strategies you need, you’ll have different customers, different pricing. You as the CEO have to sit there and go, hang on to this before we get into the funding round, and then when you get in past that funding round educate the rest of the organization. Realign strategy, realign the team, have those horrible conversations where what you got you to where you are today will not get you to where you need to be. That’s one side of it.

The other big thing that get wrong in funding, and probably the easiest and biggest mistake I see is selecting the wrong investors. I’ve done quite a bit of due diligence with investors and some of them just don’t do good DD at all. You’ll find a lot of them will do a very good products DD, they will do a gut feel on the team. But from a revenue, financial point of view, they’ll follow a few rule books. The best thing they always do, and it’s crazy, is this company was really successful and these guys look very similar to them, we missed that, let’s jump on this bandwagon.

As a founder or CEO, you then get the opportunity to work with all of these investors. People tend to go for biggest valuation, biggest logo, whatever it may be, because there’s a bit of an ego driver there, but they never think about, what are they going to do for us? What is the value having these investors is going to have? I think all investors have to help you to think, to build or to operate. If they’re not doing that, then they’re the wrong investors, no matter what valuation they’re giving, no matter what money. They have to be there to help you build a business. They can’t be passive. It’s amazing how many times that happens to me.

If you fix those two things, it’s a big step forward. But there are hundreds of things that go wrong.

[00:08:57] Myles: I agree 100%. I’ve been in this role six months now. I was fortunate that coming in as an operator CEO and taking over the business from the founders, all the bits of the jigsaw puzzle were there, but the ability actually to get out of the weeds, I call it dance floor and balcony time, but get out of the weeds and say, have we got the bits of the jigsaw put together the right way in seeing ourselves up for success? I inherited a great business, and now it’s just about, we’re just changing our dynamic and putting the bits together slightly differently.

I agree with what you say about choosing the right investors. Over the past six months, I’ve met over 30 to 40 different VCs and investors through the process. It’s really interesting the dynamic of how they think about how they want to help you, what the value is, and I’ll bring it back again the cultural fit. Yeah, they can put petrol in the tank, hey can give you a big fat check, and they can say we can help you do this. But are you culturally aligned? Do you have that same thing? For me it brings it back to that. Really resonates with what you’re saying with me there.

Let’s shift gears a little bit. I want to talk a little bit about scaling FinTechs, which is really what this is about. Before we talk about sales, because we’ll get to talking about the sales engine, what’s your view on getting high calibre people into the business early, particularly CFO, CPO? More importantly, when’s the right time to bring that chief revenue officer into the business?

[00:10:32] Elliott: There’s a couple of angles we could take here. the sooner you can bring in high calibre people at every level of the organization, the better. They change the game. Especially as the CEO, as I just said, you’ve got to have people that can operate the business without you in it day to day. You need to be doing that next level of growth to drive something forward. You almost want them to turn around in your aspects and all sit down and go, what the hell does Myles do? We’re growing 100% every year, but what the hell does he do? We’re all doing all the work. Then you have the right team. That’s perfect.

I would bring them in as soon as possible because I think it’s very difficult to reinvent the wheel every 18 months, which is what you go through. Let’s take CRO as an example. CRO is a classic example. You hire a CRO, you get it wrong, and you’ve got to go 18 months until you actually prove they’re wrong. Then you’ve lost an entire deal cycle, flow cycle, funding cycle. You will burn through a lot of cash during that week.

Now, go back earlier, you have founder led sales. You then get founder led sales, usually goes into, we’re going to bring in some professional salespeople. Then they may have a VP of sales, they they may go to a CRO. I personally think an individual contributor is not the same as a VP of sales, and a VP of sales is not the same as a CRO. You’re constantly going to go on that flywheel and reinvent it. Save yourself a couple of cycles and get a CRO in sooner rather than later.

Now, the ones that are underestimated in my view, CRO, CPO, CTO, BMO. CMO is another one that people ask when is the right time to bring it in, does it sit under a Chief Growth Officer? How do you work that? That’s depending on your business.

The ones that get a little bit cheapened in the cycle, so CFO, let’s talk about CFO and then the CHRO or most senior HR person. The CFO can be the person who kills innovation in the business. They’re watching the purse strings, we need to make sure we’ve got money in the bank, we need to drive that and they say, brilliant. They keep you in money. They keep you out of prison. They do an amazing job. But you need somebody who understands the innovation, understands the market, understands where you’re going as a business. Because if you have a classic CFO that you’ve bought in from company A, that has nothing to do with what you’re doing, they’re not going to help you grow as a business. Any CFO who only talks about ratios. “Hey, we need to be in the rule of 40.” “Hey, my EBITDA zero needs to be here.” “Hey, we’re going to move this.”

[00:13:03] Myles: My favourite at the moment, burn ratio.

[00:13:08] Elliott: Yeah, exactly. When you enter a funding round, you’ll be doing all of these quite a lot. It’s important, but what you’re missing is that there can be a real gap there. Then you’re linking to your board a lot of the time, because they’re investors and they come from the same background. They went to the same schools, work at the same companies, and they just decided to go different ways. But if they don’t understand your business, there’s a huge gap there that can actually drive a lot of growth and innovation.

My second one, which I think is my favourite, I believe, and I get a lot of arguments about this, the most important C level you can hire is the right CHRO. Many people get this wrong.

[00:13:49] Myles: You and I are 100% aligned here. I think it’s the most critical. Again, you’ve heard me talk about culture with both of the questions we’ve had before. They’re the pinnacle of the culture. You get it wrong, you can blow up a culture overnight. I think that it is fundamentally super important.

[00:14:07] Elliott: It’s culture and it’s people. They are responsible for hiring the best people. They are responsible for retaining the best people, removing the ones who aren’t good, and they’re responsible for enabling all these guys and keep them moving up the line.

The other two points that are missed a lot with CHRO, one, it amazes me how few senior HR people are in the board meetings with the rest of the C level. They get left behind and they’re not included. Why? Makes no sense. People are the huge bit of how we drive this business forward; they’re seen almost as second-class citizens in a lot of leadership teams, and that’s completely wrong as far as I’m concerned.

I also think they become the CEO whisperer. A really good one is almost like a good chief of staff. Because your CRO is measured by revenue. Your CFO is measured by cash. Your CTO is measured by innovation. CPO is in competitive analysis. The HRO is a fully internalized measure. They don’t really have metrics that are really driven and reported in the right way. You can have an employee survey and you can have all these attrition metrics and everything; they don’t really tell you the full story. I think they’re the one that can turn around to the CEO and be that extra pair of ears and goes, “Do you know what? This isn’t working. What I’m hearing is this.” I think that is a massively underutilized role.

[00:15:29] Myles: Yeah, I couldn’t agree with you more. It’s one of the challenges that we’re stepping through as a business right now.

Let’s bring it back to the start of the question, which is around sales. Being a sales guy myself, I’m a commercial guy and I’ve got to where I am, but I’ve been in the trenches. I feel the role of sales has changed, and it continues to evolve.

What’s your perspective on that? How is the role of sales changing for you in what you’re seeing, particularly in FinTech?

[00:16:05] Elliott: I’d love to hear your thoughts on this as well. But I think for me, it’s changing. I think it’s becoming a more skilled, more credible role. Sales previously has been about the guy who goes and gets drunk with everybody, has lots of dinners, and will have a fun time, and he’s the fun guy, and he will also annoy the rest of the organization because they all know they’re paid well and they all know they’re going to get ridiculous amounts of compensation and paid directly for all the success.

I think sales in general now has to be a lot more strategic. It’s not just a quick relationship game of driving that through. You actually have to have an intelligent operating model behind it. You have to put the metrics in place. You have to get the leading indicators. No longer is sales just, “I know this guy, it’ll be okay. Don’t worry about it, I’ll get it to close in six months.” That’s gone. The market’s gone for that. We are not in 1990s anymore. It needs a more intelligent, more focused, more process orientated group.

Another underestimated part of the organization is revenue ops. Having good, strong revenue ops that can drive the right behaviours in your sales force. Again, we’ve had these conversations years ago. If you want to judge your best salespeople, it used to be what number did they hit? And that’s still hugely important. You want the leading indicators, look in the CRM system and look at the quality of the notes they keep. Look how quickly they do that after the meeting. Look at not just the amount of pipeline that’s being built in their territory, but actually the pipeline that’s being executed. Again, you fall into this trap of generate pipeline, close pipeline, loss, and people measure on that and it just doesn’t work. Professionalism of sales is a huge thing. Completely agree on that.

[00:17:57] Myles: In my perspective, I agree with you 100%, is that particularly for a FinTech near scaling, the ability to create that repeatable model, and I call it the engine. You basically want to create that sales engine, which you how it gets from A to B, you know how it runs, you know how it works.

Yes, at the end of the day a salesperson is measured on the ultimate number that they achieve. But there’s a lot of those other indicators that are so important about how they build their pipe, the quality of the information, the data, the process they go through. Putting that in place as well as I think is critical. Gone are the days where deals get done over liquid lunches on a Friday afternoon. We know that this doesn’t happen anymore. I really believe that.

It continues to evolve. The complexity, particularly when you talk about software and enterprise software, and the type of solutions that our business offers and lots of others out there, you do need that intelligent person. You’re not selling photocopies anymore. Back then, walking into a cold call into a store and sell a milkshake machine; we’re talking about the complexities of what we do here. I agree 100%.

Employing a top-level person, I understand that. But when do you start that bottom up growth on that? Because at the end of the day, as you scale and grow, the engine room needs to be repeatable, which means you need that broader capability. You can’t just have one super strong CRO sitting at the top. How do you build that out and how do you look at that? What’s the right structure from your perspective?

[00:19:34] Elliott: You need account executives. That’s the first thing you’re always going to do. You’re going to put some money in and go and sell, somebody who’s got the Rolodex.

I’ve already mentioned it, I think revenue ops is massively important. The sooner you get those metrics in place and you start measuring people. We use resource metrics at Cubed, and the two most important ones for me, because honestly I can almost predict successful failure on these, which is what percentage of your account executives are making their quota? It should be like 80% are making 80% plus. Also, what is your forecast accuracy? If anybody is achieving forecast accuracy on a deal by deal basis of 80% plus, they will be a unicorn. It’s literally as simple as that.

I think the sooner you put that in place, the sooner you can feel it and start to drive it. I have a lot of conversations about, we’re not ready for it yet, we’ll do that when we get to series B, series C. It doesn’t cost you a lot. Put it in. Get the right things in place. That’s massively important to me.

The other one that we probably need to hit on is accounts management. How do you the land adopt, expand,  side of things, and CSMs as well. As soon as you’ve got your first customer, go and put it in the account manager around it. It’s vitally important. People look at, well, you’ve sold it therefore you can manage it. I’m a massive believer in the fact you should have successions. We said fail is evolving as something different. Account management is a different job title.

[00:21:06] Myles: They’re different skill sets and they’re different personalities and different people.

I hate using this analogy, but it’s the truth. You’re a hunter or you’re a farmer. There are unicorn people out there who can do both very well, but they’re few and far between. I’m a big believer as well, that you put that strong account management structure in place to do that.

That’s the thing, that perspective is where operators come in, they start to build out those capabilities and they put those frameworks in place. I think that’s part of the evolution that we’re going through as a business right here at Tuum right now, which is really good.

You talked a lot about forecast accuracy, et cetera. Are there any other? What are the key metrics for measuring sales teams from your perspective? What are the things that anyone in my position, even coaching a CRO that may be a series A, series B type FinTech organization, what would be those key metrics that you want to start putting in place for the sales teams?

[00:22:13] Elliott: I can give you the key problem that we use from a revenue point of view, and it’s mostly down to sales. But the 80% forecast accuracy is massively important for me, I think that’s a leading indicator. I think you need to set aggressive targets for ARR growth, which you then can take down into the individual salespeople and regions. I would go at least 50% plus, I would always go for 100%, that’s where I would push for. Pipeline coverage, depending if you’ve got direct pipe generation or if you’re moving. The classical pipeline generation should be 30% marketing, 30% SDR inside sales, 30% partnerships, 10% direct. But that does move with evolvement. You need 4 to 5X coverage, and it needs to be reflected in your win rates. Win rates on qualified deals over 50%, and if they’re not giving you that, then there’s something very wrong with the way they’re executing the sales.

I’d do it from increasing deal size all the way through as you evolve. I’ll go at least 10% increase in average deal size. That’s smaller pricing, bigger customers, better coverage and everything else. We talked about account managers; I would be looking for 30% of your annual revenue growth coming from account expansion. That is literally an account growth, be it through volume, be it through proper MVEC.

I would look from a partner’s revenue stream. You always want to have at least 10% coming through partners. We can go more into partners because I think it’s a hugely misunderstood part of the organization.

Your NRO, your net retention rate, needs to be 125% at least, as far as I’m concerned. That really starts to grow your business and that becomes a real exponential growth effect.

I’d look for signalization. I always say to the sales leaders, but also sales guys, do you want to get 90% of your deals closed before the last week of the quarter? I want to say you want to get at least 70% of your deals done before Q4. They’re laughing as I say, because nobody ever does it.

[00:24:21] Myles: I can remember signing contracts at quarter to midnight on December 31st. It wouldn’t be the first time.

[00:24:29] Elliott: And I can remember you calling me to tell me you’d done it.

[00:24:31] Myles: I can’t remember how many campaigns I’d had at the time, but I’m sure it was a few.

[00:24:37] Elliott: It was a few. One that I think is really important is deal alignment to your strategy. This is not going and just throwing things around. You can’t just put this on the individuals because you have to get strong enablement. It’s actually a measure of enablement. But I would say 100% of your deals need to be aligned to your GTM strategy, or else you’re going to spend all your time reworking your roadmap, apologizing to customers for late deliveries, not doing things. It comes back to what we said earlier, wrong customers. If you’re not going against your strategy, they’re wrong customers.

[00:25:11] Myles: I’m a big advocate, people have heard me say this, but I think one of the hardest things for sales people to learn is to say no. getting a sales person to walk away from a deal is like asking him to cut off a limb. But I think it’s the sign of a mature person, particularly when you’re in that scaling fintech stage. You don’t want to follow the shiny toy or the bright light. You go after a deal and it derails your business or derails to that. I’m a big advocate of actually just saying no sometimes, because that can be a stronger indicator of where someone is at, by the ability for them to walk away from opportunities.

[00:25:50] Elliott: In an ideal world, you kick off your quarter and your salesperson says to you, “Here’s my target, I’m going to hit it, I need to close three out of five deals. Here are the five, I’m confident I’m going to close all five of them. I have more backup as well if I need it, but these are all qualified, these all fit to strategy. Here’s my account management plan. Here’s my close plan for each of them. Any questions?” That again doesn’t happen. It’s very rarely you get a unicorn, but that’s what you’re looking for. Actually it’s not that difficult.

[00:26:21] Myles: It is. But if they do, if they get all five, then potentially they’re at 120% of targets and they’re a rockstar.

Now I’m going to ask you another thing, and a couple of questions here. Oracle famously fires the bottom 20% of sales performers each year. They’re just known for. They’re a big, well evolved corporate machine. Do you think you need to be at that ruthless as a fintech as well? As you’re a scaling business, do you think you need to be that ruthless that you just have this hard line of X bodies that need to go on an annual basis?

[00:27:01] Elliott: I think you know my answer. Look, I worked for investment banks for 20 years; they bell curve everything. You’re in the bottom 20%, you find a new job. You’re in the top 20%, you get a ridiculous bonus. That’s the way it works. It’s effective. I actually completely support it.

Now, in current times, is that real? Is it practical to do that every year? Actually, very, very difficult unless you’re a very large company like Oracle because you’ve got the numbers to throw at it and you’re not going to dislodge.

I think the 20% doesn’t necessarily have to leave the organization, but it may be that that 20% gets moved into other things or has the right coaching. Why are they failing? Not just cutting it when you don’t have a mature organization, but looking at, and I mentioned a couple of times, “We’ve noticed that we’re failing in a region. Why is that? Is the leadership wrong? Is the enablement wrong in that region? Are we not getting the messages through? Is the pricing wrong for the region? Whatever it may be.”

Yes, in theory I’m a believer in enforcing the bell curve, but I don’t necessarily think you have to just cut everybody. I think you have to learn lessons from it, take a step back and understand why those things are happening before you do that, because people aren’t always put in a position they can execute. You have to look historically where they’ve been and everything else. Again, it’s hard to do, obviously.

[00:28:28] Myles: Yeas, it’s not a black and white type thing, particularly when you’re in that series A, B scaling and you’re growing. It’s a very hard thing to do. I agree. But I think you do need to put some guidelines in place and you do need to start thinking about it.

But on the flip side to that, the challenge for an organization, a small, is how do you incentivize people? What do you do with the top people? How do you hold onto them? Because in this space, if you’re a really high performer, the market knows you’re a high performer so people are going to chase you and incentivize you and look to do that.

What strategies do you need in place to attract, one, attract top talent, but two, keep them as well? Because that top end of the bell curve, that’s the opposite. I think it’s a struggle for a lot of organizations that are in that life cycle, is that you’re not a big, powerful brand, you’re growing, but there’s still some risk associated with you. But if you lost that high performer, the downstream impact to have in your business is quite significant. How do you address that?

[00:29:31] Elliott: Yeah, it’s not with fluffy bean bags and nice signs made of moss and everything else. It’s about, honestly, salespeople. It’s super simple, which is even better than anybody else. Salespeople are greedy, and you want them to be. You want them to be because if they’re not, then they’re in the wrong job. They’re not a salesperson. You need to incentivize them aligned to the business success.

I actually think to attract good talent, the base salary doesn’t have to be crazy, though. If you can give them an upside that is absolutely game changing for them, and they’re hungry to do it, and they believe in themselves, then you attract top talent. That changes everything. Then to retain them, you put them in a position where they can go and continue to earn a ridiculous amount of money and can go and drive exceptional targets. Is that an expansion of where they’re heading? Is it expansion of products? Is it GO? You just have to make sure at that point you are having as a business, enabling it. Again, coming back to the point of not going selling long things. You can’t set people up for failure.

As an example, and again we’ve both seen this, you can’t open up a region and say we’re going to attract the top talent from there, we’re going to pay really well from a commission basis, we’re promise them everything; then they find out in the next two years the product isn’t going to be ready to sell in that region. That’s not going to work. But enable them with having the capability to go and sell those things, enable them the right way, give them the right product. They will go and sell. Yes, they will always look, and everybody will always question about how the hell much do these people earn? But actually, without them, you don’t have an injury. It makes a massive, massive difference.

[00:31:08] Myles: Yeah, fundamental. I agree. Switching topics, one of the big challenges that fintechs have is the ability for them to scale as we talked about. One of the biggest challenges is growing too quickly. It may sound really good on one hand, but actually it sets you up for potential failure.

How critical are partnerships do you believe in the fintech stream? What’s the best way to work with potentially partners, and how have you seen that play out for the organizations that you work with?

[00:31:45] Elliott: 100% important. You can’t scale a business properly without partners, not on a sustainable cost base. It’s interesting, everybody just went for hyper growth a few years ago, throw all the money at it. Let’s get in a hundred new AEs this year, let’s see how many of them can hit the fan and let’s just see where they go. It doesn’t work. Then everyone went, we’ve got a problem, let’s go for scalable, predictable growth. Okay, good, take a step back, but it slows things down a little bit. The only way you could get through what people want, which is scalable, predictable, hyper growth, is through partners.

You look at some of the biggest, most successful companies, up to 70% of their revenue is coming through partners. That to me is, is massively important. Now, it’s not easy. Again, a big mistake people make is choosing the wrong partners. Same problem as choosing the wrong customers. Because people put metrics in on, if you can sign 50 partners in the next three months, you’ll get a bonus. Well, don’t incentivize that. Incentivizing them to sign three really good partners that have a complete alignment on values, a complete alignment on strategy, and a complete alignment on revenue share, so it’s a win-win basis. Having the right strategy around partners is huge.

That also includes not standing on the toes of the territories. Do it by territory, by segmentation or something. Don’t just go to one guy, “We want you to run partnerships in this country,” and another guy is a sales guy there and they’re competing against each other. That doesn’t work at all.

Then you need to have the right partner managers. To be honest, again, different people, not the same skill set as a salesperson, not the same skill set as an account manager. These guys are expensive when you get them right. They cost you a lot, but the multiplier effect they bring in is huge. Sometimes the partners are stuck to the side a little bit, so it’s like they’re not really revenue people, they don’t understand it. You’ve got to get them to be adopted into the fold a little bit, because moving to a partner model seems to have massive repercussions in organizations, especially failed organizations, because people think, these guys, what are they doing? They’re just going to come in and they’re going to give away all the money, they don’t make the same amount of margin, blah, blah, blah.

You need to have the right governance, the right metrics around it. But honestly at the end of the day, it’s the right partners. They have to be partners; they can’t just be people you’ve got a contract with and are going to go and try and sell some stuff. They have to invest. You have to co-market, they have to enable their people. They have to understand, look, how do we go to market together? If they’re not putting in joint pipeline calls, if they’re not putting in joint enablement pieces, there’s not joint marketing, you’re not making it work.

[00:34:27] Myles: They’re not committed. Quite often I’ve heard a lot of people say, “I’ve got 200 partners.” Well, that’s amazing, but what do you get out of it? You get nothing. There’s no go to market plan, there’s no joint discussions, there’s no marketing. It’s like, we signed some partnership, but what really came out of it, who actually knows? I do agree with that 100%.

I’m going to ask you another question, then we’re going to take some Q and A from the audience and then one more question to close. This year has been really tough for FinTech. I think we all agree and we’re seeing that. Are there lots of great sales people in the market though? You’d expect that there would be, but there’s been a lot of layoffs, there’s been a lot of companies closed down. What’s your perspective of what you’re seeing in the market from a talent perspective?

[00:35:18] Elliott: That’s a great question. Look, there is some talent out there. People have kept their heads down. People are being cautious and going, I’m not going to jump after the big money because I need stability. They feel grateful that they’ve been kept on after many cuts and they feel that they have a little bit more loyalty, which is unusual for salespeople to go down that route. But I think we have to look at what defines a strong salesperson.

There’s one thing I keep smiling about through this whole conversation, which is we’ve agreed with each other on every single point of view, on every single question so far. That’s not how we’ve worked together over the years. You need good IQ, you need good EQ, you need good communication, but you need a no-fear, combative approach with salespeople to drive this, especially in this.

I can think of many times when myself, you and your CRO as he sits at the head, Gardo, have sat on calls, sat in different bars around the world, sat in meeting rooms, and screamed at each other because we disagreed on how we want to do things. Honestly, that’s high performance. That theme was super high performing because of that, because we all bought different thoughts, different ideas and different ways of working. Everyone would go away in sulk, lock the door in the hotel rooms, 24 hours, come back, and everybody would have a bit of a laugh about it, and we’d get back to work. But for me, it’s something that’s massively underrated. If you’ve got people who are now sitting back and being very cautious in a role, and don’t want to take that jump to the next place, I worry that a lot of what were A players don’t have that aggression, that fight, and that drive at the moment.

I think that’s something you have to be really careful when you’re looking to people at the moment. If you try to hire a sales guy and they don’t negotiate with you on the package at least three times to the point where you’re just saying; and someone’s HR, if HR don’t turn around going this guy’s too difficult, we don’t want him anymore. That’s exactly the guy you want.

[00:37:18] Myles: That’s the type of guy you want, 100%.

[00:37:21] Elliott: I just worry that that’s not there anymore. I don’t know. I’m seeing little bits, but that’s not quite as strong as it was.

[00:37:27] Myles: Yeah, cool. We’ve got a couple of questions from the audience. First one, which goes back to one of our very first questions was, Elliot says, you need to be careful about your first customers. What’s the profile of the wrong customer? That’s a good question.

[00:37:45] Elliott: That is a good question. It’s a difficult one to answer. It’s the customer who will not be a good customer in 24 months. It’s the customer who is paying you what value you’re getting today. If it’s a customer that’s changing your roadmap in ways that don’t align to the value they’re adding to your company, honestly in your first customers, unless you are a company who’s selling tier one banks, none of them are going to be adding value to your company over a long period of time so don’t let them dictate the roadmap. Don’t bend over backwards on payment terms or anything like that, which you generally do. Here’s my favourite bit, which is don’t believe a word they tell you.

A bad customer is a customer who will come to you and say, “We’ve just got funding, we’re launching a neobank, and our projections are we’re going to have 10 million customers in the next three years. We would like you to give us a ramp so that we can pay you until we get to a million customers at a low rate, and we don’t want any downside on contracts.” You’ll find that at that point that they never get above 100, 000 customers, you’re making no money. It’s costing you to keep them as a customer. You need to exit as soon as possible because it the longer they stay, the more money it costs you, and pass a referenceable logo.

There’s always exceptions. If you need a logo, you need a logo. If you need your first customer, you need your first customer. But be very, very careful that you look at what, from an economic point of view, the long-term health of this relationship can be.

[00:39:16] Myles: I agree. It’s interesting sometimes, people come into the room and they think they’re a top 50 company in the world because they’re founders and they’re passionate about what they do and they have a different perspective. Sometimes it’s a balancing act on how you have those negotiations with you. You do have to think about that, I agree.

Next question. What are Elliot’s recommendations for assembling the right board of directors?

[00:39:47] Elliott: This is a fun one. I can tell you all the mistakes people make. I always said you need to have value add.

Fundamentally for me, if your directors are not helping you think, helping you build and help you operate during your execution cycle, let’s step back and go through a race cycle, execution cycle, race cycle, execution cycle, growth cycle. If they’re not helping you on this side of the equation, they’re only helping you by giving you a check, they’re the wrong investors.

Also, to me, I find it funny, people will go and do a raise, they will sign, get the check in, they’ll build that; and they don’t interview the person who will be on their boards. That is crazy. Back to your aligned values, aligned culture piece. If that’s not in place, you’re lost. You’ve got a massive problem.

The third piece of it is, and you see this happen quite a lot, a lot of the VCs, a lot of the investors, are ex bankers. They’ve all had a similar education, similar degrees, similar way of working. They want to drive to become a VC, it’s the natural progression in investment banking sometimes.

What you can do is you can get your first couple of funding rounds out of the way, and you’ll find you’ve just got a bunch of robots in the room. You all have one opinion, to do exactly the same thing. They’ve never worked in a business and don’t understand the operation side of it, and you don’t have a relationship with them because you didn’t interview them, and they don’t understand your business, and therefore they just think you’re a failure because they don’t understand the complexities or where you are on the cycle or where things are driving. You just spend half your time managing those board members and just thinking, why the hell am I doing this? This is ridiculous, I need to do my job.

Eventually you get to a point where you go for the big logo, the big investor. This is always the, for me, the straw that breaks the camel’s back. Because you get another one of those guys, and he’s now got the most power because he’s put the most money into the organization. Unfortunately, because it’s from a big company and you are not big to that investor, you get the most junior person from that company sit on your board, who’s never done this before. Not only doesn’t he understand how you operate and what your business does, but also doesn’t actually understand how to be a board member, never mind about helping you think, build and operate. That is a real horrible place to be. They all think the same. They are all jumping in the same way, that’s when you get the wrong board.

Get some interesting characters who are not just purely there from an investment banking background. I don’t think that’s done enough in the industry.

[00:42:11] Myles: Yeah, going through the process we are at the moment, spending time with the individuals is a critical part of it. Again, cultural fit, it all circles back to that cultural fit, whether it be internally, externally, customers, it’s really super important.

I think Oracle used to give the top salesperson a Porsche each year. Would you advocate for that?

[00:42:38] Elliott: If that’s coming from a salesman, you need to hire them straight away, because that’s exactly the right question. I’ve seen this, lots of companies, they’ll do it as a top salesman, get in a car. I massively believe in things like President’s Club, Diamond Club, where you can then go and take people who are successful away. There’s two sides to that. One, which is massively positive, which is they get a reward and they take their partner with them, so you bring the partner into loyalty in the company and they become part of the family. You have to be really careful that you don’t just do it to salespeople. Bring the people in the rest of the organization.

[00:43:12] Myles: Bring in the product people and other people, I agree. But I’m a massive advocate as well, something that we’re going to look to implement here in the next 12 to 24 months as well. I think it’s super important. I think maybe a Porsche is a bit extreme, but I guess it is Oracle, it is what it is. Company in my life cycle, I can’t quite afford a Porsche yet; we’ll see what we can do.

This question is really good and it actually feeds into my last question for you. The question is, ADM just had some great results. Is Fintech back? My question to you was, what are your predictions for 2024? Is the market coming back? Let’s just wrap that up with one thing, what do you think the state of Fintech is right now?

[00:44:02] Elliott: Yes, it’s coming back.

I think 100% it’s coming back and I think you can see a lot around the world where it’s coming back. There’s some that’s got good results at the moment. There is also a lot of investment money out there. I know that you’ve been sticking to a lot of investors, and there’s a lot of money still, people burning holes in pockets because they haven’t invested for a while.

Some big market share shifts are ahead. I think you’ll see a real leapfrog effect. We’ve had a bit of a hiatus, and I think we’re now driving towards that next level of innovation, the next company that jumps ahead. I’m sure in your worldview, you’ll be looking at it from, we are that next logical leader in the core banking space.

Because of where you’re at, because of the way things innovate, because of driving that, you got a great opportunity to leapfrog above the competition and drive to a new market position. I see that everywhere in a lot of different parts of the organization.

You also see the super neos are now becoming credible. You’re actually seeing people adopt them as an actual proper bank, which has taken 20 years to get to. But there’s a few of them out there offering exceptional products, from a retail and from a business point of view. I’m, I’m using the neobanks for my business family. It’s credible, it’s fast, it’s easy. They seem to understand me as a human being, as opposed to just throwing something at me.

All the hotspots in the world that you will see a usual hotspot, with possible not exception, but the slowdown in US, I think there’s other things driving that, you see in Europe, you see the Netherlands, you see London, you see Berlin in Dubai, which you also know. The energy is back in the room. Things are starting to move forward.

I spoke at an event last week in London. You could see all the questions were right. The body language was right. 100% I think FinTech is back and it’s going to be a bumpy year for the next 12 months.

[00:45:59] Myles: We sense that as well. I feel like there’s a bit of a cultural shift in the market, particularly in relation to financial services and banking as well. Particularly in our space, the concept of putting your core in the cloud or even thinking about going to more modern technology, first of all banks would laugh at you, then regulators would laugh at you five or six years ago. I think there’s been that fundamental shift even within organizations now, that a lot of financial institutions say, “We’re going to put all our workloads in the cloud by 2030.”

You’re seeing this real shift now, and I think that’s flowing down right through FinTech as well. We’re seeing really good activity for ourselves, but also our partners, our network, and the people we talk to, the different types of conversations. But the conversation is not almost about validating what we do right now, it’s more about, how can you help me solve a problem? How can you help me as a bank to maintain that relationship with my customer better? How do I become more innovative? How do I do things faster?

I think that the underlying shift and applies for us directly here at Tuum, I think I’m seeing it right through the whole fintech ecosystem as well. It’s quite exciting times ahead. I think there’s been a hiatus, as you say, I think there’s been a bit of a clean out. A lot of organizations have not survived. Others have survived. Some have grown and been quite successful through this period as well. But I think the next 24 months are really exciting.

[00:47:47] Elliott: Agreed. Like I said at the start, we started Cubed to make sure we get away from that 75% failure rate. I actually think it can be a 75% success rate. I think things like this help us on the journey as well. It’s not just our operating models and data models. The investment’s there, but they’re getting a lot better with the due diligence. They’re starting to ask the right questions.

I think the right companies will be backed and we’ll start to see that real growth effect, as you say, over the next 24 months, which is huge for all of us and great news.

[00:48:18] Myles: Elliot, it’s always a pleasure. Thank you very much for joining me today on Tuum Talks. This was probably a lot more sedate than some of our normal conversations where we literally do scream at each other and yell at each other, but normally it’s always with good intent and good fun. I look forward to catching up soon. Thanks for your time.

[00:48:35] Elliott: Thank you, mate. See you soon. It’s been a pleasure.

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