Truth, Lies & Work

Episode 27 · 22 February 2023 · 1:04:30

How to Secure An Investor: What You Must Know for a Successful Exit (Part 1 of 2)

How to Secure An Investor: What You Must Know for a Successful Exit (Part 1 of 2)

0:000:00

Tip: click any timestamp below to jump there and keep playing.

Enjoying the show? Subscribe for free

SpotifyFollow on SpotifyApple PodcastsSubscribe on AppleAmazon MusicListen on AmazonYouTubeWatch on YouTubeAnother appSee all platforms →

Chapters & timestamps

Click any timestamp to jump the player to that moment.

  1. News roundup: hush trips, Amazon's return-to-office, Blinkist

    news roundup#news#hush-trips#return-to-office#blinkist

  2. What investors look for in a business

    other#investing#investor-perspective#business-growth

  3. Al's story: proving yourself without credentials

    other#career#credentials#self-taught#personal-story

  4. Sarah on investing in women-founded companies

    other#investing#women-founders#gender-diversity

  5. Simon on backing people, not just plans

    other#investing#founders#people-first

  6. Melissa on M&A integration and scaling culture

    other#mergers-acquisitions#culture#scaling#consulting

  7. What investors look for in entrepreneurs and leaders

    other#leadership#entrepreneurship#investor-criteria

  8. The role of People & Culture in securing investment

    other#people-culture#investment#hr

  9. Red flags that will lose you the deal and the 'family' trap

    other#red-flags#deal-breakers#company-culture#family-trap

Show notes

How to Secure an Investor: What You Must Know for a Successful Exit (Part 1 of 2)

Truth, Lies & Work — What do a billion-dollar VC investor, a serial entrepreneur, and an M&A integration specialist have in common? They all invest in people, not businesses. Al and Leanne sit down with Sarah Chen Spellings, Simon Berger, and Melissa Carson to uncover exactly what investors are looking for in 2023 — and how you can secure funding and grow your business to exit.

In part one of this two-part series, they dig into what investors look for in a business and its leaders, the red flags that will lose you the deal, the role of People & Culture in securing investment, and how bias still shapes the world of business and investment.

🎙️ About the Guests

Sarah Chen Spellings — Co-Founder & Managing Partner of Beyond the Billion, the world's first and largest global consortium supporting women-founded companies. In under two years, the fund has deployed more than $638M to 800 female-founded companies, with 11 recognised as unicorns.

Simon Berger — Founding Partner of IM2 Group (2002), Rendezvous Exhibitions (1994), and Intermedia Exhibitions & Conferences (1997). Having built and sold 26 exhibitions and conferences around the world, Simon continues to invest in creative business opportunities and offers consultancy and M&A services to industry players.

Melissa Carson — After 25 years with high-performing organisations including Accenture, where she supported M&A integration from a people perspective, Melissa founded Canopy Solutions. As Founder, People Strategist and Leadership Advisor, she works with clients from small non-profits to scaling technology companies — all with a common goal: aligning business and people strategies to drive growth.

🧠 Key Themes From This Episode

Investors invest in people, not businesses. All three guests — from vastly different corners of the investment world — land on the same truth. The plan matters, the numbers matter, but the team is what gets deals over the line.

The "unicorn" metric isn't the only one. Sarah reminds us that unicorn status is one measure of success, but not the only one. Runway matters. Revenue matters. And so does the ability to balance long-term vision with short-term needs.

Culture is a deal-breaker, not a nice-to-have. Melissa's experience at Accenture — scaling from 10,000 to 100,000+ people — shows what happens when culture and leadership feed each other. Investors are paying attention.

Red flags are everywhere. From narcissistic founders to "we're a family" rhetoric that masks poor performance management, our guests share the warning signs that will send investors running.

💡 What Investors Look For

  • Entrepreneurial leadership — not just vision, but the ability to execute
  • Self-awareness — knowing what you don't know, and building a team that fills the gaps
  • People & culture alignment — business strategy and people strategy must move together
  • Resilience in a VUCA world — volatility, uncertainty, complexity, and ambiguity are the new normal
  • Proof, not promises — track record, execution, and the ability to adapt

🚩 Red Flags That Lose the Deal

  • Formulaic blueprints — "we'll follow the playbook from day one to exit" doesn't convince anyone
  • Narcissism — founders obsessed with themselves rather than the business and the team
  • "We're a family" — when that phrase masks an inability to manage performance or have hard conversations
  • Ignoring the people side — treating culture as an afterthought rather than a strategic driver

📚 Resources From This Episode

Connect with Sarah Chen Spellings

Connect with Simon Berger

Connect with Melissa Carson

From the News Roundup

More From Truth, Lies & Work

Connect With Us

Get in touch, book a call, or find Al and Leanne on LinkedIn — all in one place: truthliesandwork.com/connect

Mental health support: findahelpline.com — UK: Samaritans 116 123 · Mind 0300 123 3393 — US: 988 — Australia: Lifeline 13 11 14

Truth, Lies & Work is part of the HubSpot Podcast Network.

Full transcript

Expand full transcript
Al ElliottThe dirty little secret is that most businesses think they know their customers. They have the data, the records, the history, but it's scattered across 3 teams and 4 systems. And in our case, it's about 216,000 spreadsheets, which means nobody can actually use it.
Leanne ElliottWhat you should be doing is using HubSpot, because why? HubSpot connects it all— every interaction, every support ticket, every conversation— into one platform every team can work from. So when sales talks to a customer, marketing already knows the full story. And when you know more, you grow more.
Al ElliottNice. Check out hopspot.com, the agentic customer platform for growing businesses.
Leanne ElliottSimon's actually going, and I respect his opinion because he's built 26 successful businesses and sold them. Um, is that— he's kind of going, no, I don't buy into the hustle culture. Hello and welcome back to the Truth, Lies and Workplace Culture podcast, where we help you simplify the science of people. My name is Leanne. I'm a business psychologist.
Al ElliottMy name is Al. I'm a business owner.
Leanne ElliottAnd you are very welcome. And welcome back. Welcome anytime. Welcome back. Welcome, welcome. So have we covered the welcome?
Al ElliottI think everyone feels welcome, which is quite kind of on brand for this, for this episode. You'll find out in a second. Just, we, I'm really excited about this episode. I really, really am. I know I started my first business when I was 21. 21, 22 or something. Um, and my— I, I'd been reading all these books about Richard Branson and all this kind of thing, and I was like, okay, right, so what we're gonna do is build it and, and sell it, and we're gonna make loads of money, and I'll sit on the beach and all that kind of stuff. And what we've got today is really interesting look at that, because we have 3 particular guests we'll get onto in just a second, um, who basically have got every part of that thing covered, haven't they?
Leanne ElliottYeah, yeah. Today we are covering everything you, you need to know, or questions you might have about what investors look for, the types of businesses they want to invest in, what it means for your business in, in terms of what your priorities are as a leader. Um, and then the practicalities of it, of it as well. You know, if you are acquired, if you do sell, what, what happens then?
Al ElliottOur first guest is Sarah Chen Spellings. Sarah is a very special lady. She's a venture capitalist and a strategist. She's a co-founder of a company called Beyond the Billion. She's also the host of Billion Dollar Moves podcast, which is, uh, another podcast on the HubSpot Podcast Network. Um, this isn't nepotism. Uh, we wanted to, to have her on the show because she's just such an amazing person. She was named the Young global leader in the World Economic Forum in 2020. So let's go meet Sarah.
Leanne ElliottMy name is Sarah Chen Spellings. I'm the co-founder and managing partner of Beyond the Billion that was launched as the Billion Dollar Fund for Women, the world's first and largest global consortium of venture funds that have pledged to invest over $1 billion and are actively deploying that into women-founded companies globally. Our second guest is Simon Berger. Simon has been working in the events and exhibitions industry for over 30 years, and he's launched a whole portfolio of events across the world in Europe, Africa, Asia, and the Middle East. He is also a serial investor, and for the past 10 years has invested in creative people and technologies. That means he is the founding partner of many different businesses including Mad World, Make a Difference Media, The Water Cooler, um, Hypo Surface, Design Junction— the list goes on. And he also continues both as a mentor and investor in innovative disruptive entrepreneurs. And if that wasn't enough, Simon also supports a number of charitable organisations. Let's meet Simon.
Al ElliottHey, I'm a bit of a one-trick pony and have been for over 30 years. Um, I organise events, um, and they range in, in size and sector and territory, but they could be anything from a sort of one-day summit all the way through to a branded event, you know, for a brand. Or a corporation all the way up to big trade shows and exhibitions. So I've been doing that for a long, long time. And I suppose my, my place really in the food chain from the very early days was we launch shows, uh, in different sectors and different territories. We run them for about, I don't know, 3, 4, 5 years. We try and show an incremental growth in Number of exhibitors, number of sponsors, obviously great content in theaters, the footfall. And, um, very, a very key focus is retention of all those parts. But if we show a 15-20% incremental increase in each of those sectors, we then very quickly become quite a valuable asset. And after 3/4 or 5 years, we, we tend to try and divest of those, um, titles, either individual titles or portfolios, to the big organizers in the world. And our final guest is Melissa Carson. She's a founder, a people strategist, and Her clients range from small nonprofits to scaling technology companies, and they all have this common goal of ensuring that they have aligned the business and people strategies to drive their growth. So she's got 25 years experience with several high-performing organizations, including Accenture, where she supported the M&A, which I think means mergers and acquisitions integration from a people perspective. So she's a really, really good resource for the people who actually acquire you.
Leanne ElliottYeah, absolutely.
Al ElliottLet's meet Melissa.
Leanne ElliottI am a long-term HR executive in corporate world that decided at a point in time that I wanted to do the parts of the job that I loved, um, and not the rest of it. So decided to take a leap of faith, um, in 2019 and start my own business, um, focusing on those parts of the, the role that I loved, which is, you know, coaching leaders and working around the, the people strategy side of businesses. And so have been doing it for just A little over 3 years now.
Al ElliottOkay, so we've met our guests. We're gonna hear from them again in a few minutes, but it's my favorite time of the week. It is the news roundup with Leanne Elliott, the business psychologist.
Leanne ElliottYay!
Al ElliottI'm loving your applause there.
Leanne ElliottIt is the news roundup. Gonna keep this one brief this week because we've got exciting stuff to talk about. Uh, but we've got a new word.
Al ElliottGo on.
Leanne ElliottHush trip.
Al ElliottSounds rude.
Leanne ElliottIt does sound a bit naughty, doesn't it? And I guess it is a hush trip. Any guesses?
Al ElliottWhen you take LSD but don't tell anyone?
Leanne ElliottIt is.
Al ElliottI'm guessing that's not what it is. What's a hush trip?
Leanne ElliottWell, in the world of people and culture, a hush trip is when you're working remotely somewhere else for a couple of weeks, so away from either your home or your home country, without telling your boss. Um, yeah, you might be on a desert island somewhere and they don't know.
Al ElliottIf you've— if you're listening that you've ever read, um, 4-Hour Workweek by— oh, I can't remember his name. You're shouting it at the phone, aren't you? I can't remember what his name is. Um, but he basically said that same thing. He said what you do is to work remotely, and this is going like 15 or probably 20 years ago. What you do is you go and you go and work somewhere remotely for a week and then you You put in a little bit extra work so they think, oh, this is great. And then you just basically just back out of the company and the country and like you end up on a desert island and doing your work and no one knows.
Leanne ElliottNo one ever noticed. That's, that is a hootstrip. And yeah, it is exactly that. It's for, for workers that, you know, don't want to commit to living abroad but are looking for a bit of a break and a test of digital nomadism. We might know a thing or two about that, but that's a different podcast for a very different audience.
Al ElliottYes. If you are interested, go to A Sideways Life and You'll find a podcast that unfortunately is, is missing a few episodes because we can concentrate on this one, but we will come back to that, I promise. Anyway, so what else we got, Leanne?
Leanne ElliottWe have some, uh, people news from Amazon this week, um, which, yeah, keep you on the remote trend, I guess. Um, Amazon are calling people back into the office for at least 3 days a week, um, and that's come from the CEO himself, Andy Jassy. Um, so yeah, he posted on the company's blog, um, that yeah, the leadership team has decided, they've, they've got together and they've gone We're going to change our policy. And instead of being able to work wherever you want, you have to be in the office for 3 days a week.
Al ElliottBoo. Boo.
Leanne ElliottWhat was interesting is that, I mean, also cringe, you know, that the senior leadership team at Amazon call themselves the S-team or STEAM.
Al ElliottOh no.
Leanne ElliottI know, I feel sick for them. But basically what they said is that apparently, allegedly, these senior leaders have listened to their employees, they've watched how their teams perform, they've talked to leaders at other companies, um, and got together on several occasions, not just one, Al, several occasions.
Al ElliottThat's the key.
Leanne ElliottUm, and they've come up with some, um, some findings, which I would put in inverted commas because I think the data points seem somewhat biased in terms of their collection. But let's see. They have claimed it's easier to learn, model, practice, and strengthen culture when in the office. They have argued that collaborating and inventing is easier, that we can learn more from one another, um, in person. That's much easier than it is remotely. And also, teams tend to be better connected. Um, so yeah, good, good, good luck to you, Amazon. I'm, I'm sure it'll go fine.
Al ElliottIt has in the past. There's been no scandal around Amazon, has there?
Leanne ElliottNo, no, they have a marvelous culture.
Al ElliottAnything else catch your eye this week?
Leanne ElliottYes, there is something else that caught my eye this week, and I thought it was very topical for our conversation today. I was looking And I think this might have been in, in Fortune, I can't remember. A German startup doing it for the, the Europeans out there, um, have got some interest of the US investors, £35 million worth of investment actually, um, for an app called Blinkist.
Al ElliottOh yeah, yeah.
Leanne ElliottHave you heard of it?
Al ElliottI have, it's been going for a while. It does these summaries of books, is that right?
Leanne ElliottYeah, I'd not heard of it. Tell, tell, what is Blinkist?
Al ElliottI downloaded it, but I think I had to pay for it, so I got a little bit. I didn't bother doing it. But from what I understand, it's like you'll go and find like a book on management, and it will give you the summary. I think the Americans call it the Cliff Notes of a particular book. And you can listen to it, can you?
Leanne ElliottYeah, yeah, yeah.
Al ElliottSo I think it's, I think it's definitely worthwhile. Although I don't know about you, I personally like to sit and read a book, even on a Kindle. I'm not bothered about paperback, but I take much more in if I see it. But you are much more auditory. So this could be really good for you. You can take things in when you listen to them.
Leanne ElliottYeah. And I think as well, it's really good for anyone else out there who is a generalist where you need to know a little bit about a lot of things. Yeah, they say in both text and audio formats, they're going to give you, you know, 15 minutes or less, everything you need to know about very specific topics. So yeah, it looks cool. I've downloaded it. I've not used it yet, but I'm looking forward to it. And yeah, congrats on the investment you've just secured. I'm sure it sounds like a great idea, completely revolutionizing how we, how we consume content in terms of reading and, and what they kind of, they basically said they're kind of latching onto the microlearning segment. Um, and apparently already have 25 million users. So business must be good.
Al ElliottBusiness must be booming. So, and I think that's, that's kind of like the key, I think, to, to a lot of leadership and everything, um, and building businesses that you go and listen to someone who's built something completely different or even like a not-for-profit. And you can learn stuff that you can take back to your business, um, and, and implement. Talking of implementing, let's get cracking. So the structure of the show. So if you've got a business, then you probably want to grow it. If you don't wanna grow it, then go and buy the book Company of One by Paul Jarvis. Brilliant book. And basically it's all about how to stay small. Fantastic book. And that might be for some people. If it's not for you and you wanna grow, then it's likely that you've kind of got 3 routes that you wanna go. One, you wanna get funded. So VC, venture capital funding, uh, potentially for an IPO or something, or maybe just an exit. Um, secondly, you want to be acquired. There's, I've seen lots and lots of stories of small sort of, um, tech startups, and they specifically start up with the idea of being acquired by someone like Google. Um, and then the third one is that you acquire, that you go and buy other businesses and grow that way. Um, so you are gonna have a lot of questions on this. For example, what are venture capitalists or people who acquire looking for in a business that they actually invest in? And what are the red flags? What do they actually look at the people like? You know, we're all about people and culture, but is that important? Are they just looking at the bottom line? And what do they look for in leaders? What do they want to see in the people and culture if they want to see anything? And finally, we want to talk a little bit about this, and this probably isn't a question that you've got, but there's something which will come in, is the rise of this purpose-led investment. So just to summarize, Melissa has got experience of mergers and acquisitions. She worked for Accenture, and she was in charge of Folding in the companies that they bought. Sarah is a multimillion-dollar VC investor, and Steven has grown businesses and sold them. So I think we're getting all-round advice here. This is gonna be another chunky episode, Leah.
Leanne ElliottWhen you have guests of this caliber, we can't possibly leave anything out. So yes, let's dive in and hear a bit more on our investors. We will be hearing from Melissa a little bit later on in this episode as we talk about the latest stages of mergers and acquisitions, and in particular integration. But first, let's hear from our investors, both where they started and where they are now. We asked Sarah to share her origin story and how that influenced her work today as a billion-dollar investor. I was a TV host when I was 9 years old, and I was doing it for some time. I wouldn't say I was very good at it, but it really put me in the spotlight to handle pressure. to rise to the occasion every time, to juggle it all, right? And beyond that, I was actually, you know, when I was young, 9 years old, I was already interviewing people and having big discussions, right? So I had to learn on my feet, and that has given me an insatiable curiosity for people, for the world beyond myself. I would say, you know, because of that TV program, we also did a lot of things with people like the United Nations. I mean, at 16, I was speaking of about the rights of children's voice in media in shaping what we consume at 16. So that gives you a little bit of a perspective. But at the same time, you know, I think what's important is, of course, I come from a very supportive family in which I never felt I couldn't do anything because of my gender. You know, I have an elder brother. We support each other with such, I would say, gusto that we want each other to succeed. And The disconnect I think that happened for me, which maybe inspires my journey, is that in my bubble of my home, I was encouraged. I was like confident, you know, go do this, be in front of the screen, do everything. But then when I started to grow a little bit older and go get into reality, you know, applying for scholarships, experiencing what the quota system means and all that, and how Being an ambitious woman actually comes at a cost with certain people in certain environments, and I had to learn that the hard way. But I vowed to myself that, you know, there was one day where somebody actually, a person of authority, told me, you know, Sarah, you might not be happy with this level of ambition, and maybe you should reconsider the way you are. That maybe left a mark on me as a young woman where I thought to myself, I never want my daughter to feel this way. I would like you to remember that question from that authority figure in Sarah's life when you hear a bit more about Sarah today and her incredible success as an investor. We've pledged over $1 billion to be invested into women-founded companies. So it was a pledge campaign. As of the end of 2020, when we did our first round of reporting, $638 million of that has been deployed into close to 800 female-founded companies globally by our partner funds. And of course, we have 11 unicorns and counting in the group. So very happy to see the progress. But as I always say, you know, the work is not done. We're not nearly done with the work here. And there's a lot more to be desired.
Al ElliottJust so we know, everyone's on the same page, unicorn company is a company that's valued at $1 billion or more.
Leanne ElliottNow we do say valued at, And we'll also be talking about the bias in the world of investment a little later on as well, both in terms of women, ethnicity, and education. But first, let's get to know our second investor a little bit better. Here is Simon Berger.
Al ElliottYeah, I never went to university. I didn't, um, actually I never got any A-levels, to be brutally honest. Um, and, um, but look, it was that sort of like you can do anything attitude, uh, I think more than anything else. And, um, I just kept going. I could tell you 1,000 stories. You'd be here all night about the lessons that I've learned from my very first job washing up in a restaurant. You know, how I was made to feel. You know, really, it was an all-Spanish restaurant and I was not welcome there. They didn't want me there. They tried to get me out because I was given a permanent position rather than a contract position.
Leanne ElliottYeah.
Al ElliottAnd if I succeeded in that job after 6 weeks, I would get the permanent position and then get a percentage of the tips. So I've learned very young that, you know, you could, you know, if you, you know, if you knuckle down and you did something really, really well, which I did, and I took a lot of flak for that, let me tell you. But once I got through it, they respected me, changed their attitude, were apologetic.
Leanne ElliottYeah.
Al ElliottUm, for treating me like that. And I was welcomed into the, into the family, if you like. And the good news about that was, well, the person who took my place as the washer-upper in that same restaurant was never treated that way. Um, and so, you know, 'cause I wouldn't have allowed it, you know, having been through it myself. So through that you learn. I'm a big believer, a big advocate in entrepreneurship, the basic skills. Um, and, uh, I think everyone should know them. I mean, how do we solve the world's problems if we don't have innovators and disruptors? Do you know what? When I was at school, every single school report I had said that I was a disruptive influence in my class. My parents used to look at this and go, really? Now the word disruptor means you're doing something well. I take great privilege in saying to my 93 and 92-year-old parents now, look, I was a disruptor then and I'm a disruptor now. In my own business, I have to tell you, I'm the antithesis of a traditional exhibition organizer. Disruption, what a word. It's so funny because I think back to, uh, to when I was at school, and yes, there was people— I was never a disruptive influence. I was a good boy. I was, um, I wasn't at school. I just shut up and got on with it. Um, but yes, disruption now has just totally gone to its head. Um, there is something which I'm— and I'm not one for quoting George Bernard Shaw on our podcast, but I'm going to. Um, and basically he said, the reasonable man adapts himself to the The world. The unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man. And I love that. And Simon isn't— I'm obviously— George Bernard Shaw, this was written maybe 100 years ago. So you say man, we mean people. Um, so, so both Simon and Sarah are unreasonable people, and that is fantastic. So let's hear some more about Simon and his story as an investor. We've exited either individual shows or portfolio shows 26 times now. Um, and some of them have been our own shows that we've launched. So there's 3 ways we work in exhibitions. When we started, we launched them ourselves. Then after about 5 years, we started, uh, people would come to us with ideas for events, and if we liked those ideas, we'd put them through the same formulaic approach and over 5 years and sell their shows. So they would have an equity stake in that. We'd finance them so there could be no loss. We wouldn't have taken them on if there was going to be a loss, but they got a percentage of anywhere between 10% and 33% of the And the sales proceeds when we sold. And then thirdly, as we got, you know, 10, 15, 20 years later, we were selling shows. So we know in what sectors the big organizers are buying, and we know what the multiples they're paying for events. So people who had an exhibition, nothing to do with me, but they were thinking of potentially exiting, they would then use me in an M&A business, and we'd take a broker's fee and go and sell them.
Leanne ElliottYeah.
Al ElliottYeah, that's what we do. We all love it, to be honest with you. Each of those partners that have come with me, and I would suggest there's probably at least 10, most of them women, I have to say to you, who've partnered up with me. When we come to sell that event, they walk away with very, very nice checks. Often, they stay and we do something else together. But quite often, in fact, more often, they go off and do their own thing. They've got a lovely little nest egg in their pocket for them to invest and do what they want to do next. 26 times he's, he's taken something, sold it, um, and made everyone a little bit of money. So he clearly knows what he's talking about. It's interesting what he says about women. He said that most of his— I think he said most of them, uh, people who he partners with are women. Um, and now I'm all for equality, as you know, um, but I do think there are some fundamental differences between the behaviors that of the typical woman leader than to behave as a typical male leader. Now, I'm prepared fully for Leanne to shout at me for this, and I am saying behaviors, but I think Sarah kind of agrees that naturally women might have a tendency to do one thing over another.
Leanne ElliottWhen you invest in women, you're in good company. You know, that's really a tagline that my co-founder Shelley coined. But the reality is that, of course, you know, as I said, women are outperformers. They're smart and resilient. And when you invest in women, you see the returns. It's no longer A lot of times people ask me, you know, is this concessionary returns, right? Is this charity? Why are you thinking about it in this way? Is this going to make any money? And well, if you care for nothing else, the returns speak for itself, right? Women, when you look at returns, there's a lot of data, and we see it in our own consortium itself with the 11 unicorns, right? Women-founded companies outperform by 23% to 63% when you're looking at returns, you're looking at revenue rates. And when we looked at the data, specifically zooming in and giving a specific example of one of our multibillion firms that's invested into women-founded companies, they looked at their portfolio of— they made a comparison between, of course, because their portfolio still has male-founded only startups and diverse teams. And when they looked at the comparison between the two, the diverse teams outperformed by a couple of metrics. One, and you would love this, retention rates, right? Staff retention rates. And what that means is women somehow tend to be building teams that are working together well, that are collaborating and creating results. And of course, you know, when retention rates are higher, that impacts profitability, revenue, and all of the above that we VCs, investors, care about, right? So, you know, at a micro level, looking at our sample set, we're seeing the results speak for themselves. And of course, at a macro level, you know, based on the report, as I said earlier, you know, the valuation drop hasn't been as drastic. Women are exiting quicker at higher valuations, uh, and, you know, exit is a very important metric for, for many investors as well. That's where they get their, you know, liquidity after putting their money in for some time. And, uh, women are building great businesses. So, you know, when you invest your time, your efforts with women, it's— you're in good company in, in many ways, right? You're investing into a good company. This is the reason We're gonna delve into issues related to, to women and education when it comes to, to investment. Because just, just let's just go back out to some of those statistics that, that Sarah mentioned there. Female-led businesses outperform male counterparts by 23 to 63%. They have higher employee retention, which translates to higher revenue and profitability, which means that they get higher valuations and quicker exits. Even as Sarah says, you're just looking at the money, there is a serious case for investors to invest in female-led businesses.
Al ElliottIt's interesting to hear that from an actual investor who's been looking into this. Um, some of those stats are quite, are quite incredible.
Leanne ElliottIt is. And, you know, Sarah also mentioned there that, you know, somehow women tend to be building teams that are working well together, that are collaborating and are creating results. But is that the case? We asked Melissa. She is a female leader. She has led teams of thousands of people and worked with some of the world's highest-performing organizations through her role at Accenture. I don't know that women are better than men. I think they're different, and I think that's still a generalization of— there are some very, um, tough, not showing their vulnerability women leaders, and there's some men that Definitely have tapped into that side of their vulnerability to lead well. So, I think it's more around behaviors that we tend to associate with women more than men. But I think it's the leaders that are most successful and I think are most well followed or that people want to follow are really tapping into their human skills, their empathy, their—
Al ElliottYeah.
Leanne Elliottability to negotiate, to communicate effectively, to show that they care. And so, I don't think that's a gender-specific set of capabilities.
Al ElliottI think we've just tended to see more of it, of just—
Leanne Elliottit's been more natural for women to show that. But though in many workplaces they've hidden that because it's not been valued or it's looked at as a weakness.
Al ElliottYeah. Exactly. It's what I think I was suggesting, saying before, and possibly a little clumsily, was that it's about behaviours, not necessarily intrinsic qualities. One of the things that I heard someone once say, and I think it might have been a woman saying, don't mistake kindness with weakness. And I think that is such an important thing to remember. Okay. So let's have a look at what investors are looking for. So we have a few things that investors are looking for. Regardless of the gender, the number one thing investors are looking for is leadership. Simon says there are 2 things he looks for in a leader that he could invest in. It's people. I mean, I don't believe you buy— I don't believe that businesses or people buy businesses, they buy people. And I'm a massive believer in that, which is why I do what I do. So I look for very creative people, people who are doing something differently. I like— so it has to be both interesting, not necessarily new, but it has to be useful and interesting. Those are my 2 things, whatever investment I do. And if you do that, then I think, you know, you've got a chance of success. And then second to that, I look for the right people to deliver that. So it's all very well having great ideas, thousands and millions of ideas, but it's about implementation. And that takes a special sort of person.
Leanne ElliottYeah.
Al ElliottNot just in terms of what they know, but how they then put that into action. So, a few examples. I invested in a young Scottish designer called Beau McClellan. I met him in a hairdresser's. He looked a bit like the guy in Freedom, Mel Gibson in that film. What was that called? I can't remember.
Leanne ElliottBraveheart.
Al ElliottBraveheart. Yeah, Braveheart. He looked a bit like him. Anyway, I met him. In a hairdresser's salon where he was having his long Scottish locks done. Um, and the guy said, I want you to meet the hairdressing salon owner, said to me, I'd love you to meet this chap. His name was Beau McClellan. Um, and he was a blacksmith, a trainee blacksmith, had done it for years. And he had some great ideas about lighting. And, um, 5 years later on, um, I'd invest— I picked him up, invested in him, took him to various shows, used my shows, not my shows that I own, but using the platform of exhibitions to launch him and his brand. And he became one of the world's most famous lighting designers. We built the world's largest chandelier for the Prime Minister of Qatar. It's still in the Guinness Book of Records, 20 tons and 165,000 LEDs. Yeah. And he's commissioned now all over the world. Um, so he's done a fantastic job, and I really did nothing other than, you know, use the marketing skill sets of the platform, uh, obviously with some money involved, but also to guide him. You know, a lot of creatives don't have that business acumen, and when we, we gel very, very well.
Leanne ElliottI think Simon might be being a little bit modest there, but I think he makes a great point. You know, the ideas are only as good as, as the problems they solve in the market they're in. Um, and as we've said, there's a huge amount of disruption in the world, uh, in this VUCA world, which is a phrase I've used before and realized I never explained. Would you indulge me, Al?
Al ElliottYeah, V-U-C-A.
Leanne ElliottV-U-C-A, VUCA. Um, so yeah, 2014, George Casey, who was a U.S. soldier, actually described the VUCA world, uh, which stands for volatility, uncertainty, complexity, and ambiguity. And while George was talking about it in terms of military operations, there are psychologists that are quick to point out that this is a really useful way of looking at the challenges most employees are facing today, including Kara Cooper, who is one of my favourite psychologists of all time.
Al ElliottYou've got his book, I think.
Leanne ElliottI've got all of his books. But yeah, you know, it basically describes that in a situation where there's constant change, it's unpredictable, that's just kind of the norm now. It's what we're all used to, particularly. You know, since the, the pandemic as well. Um, so yeah, it's really important that, you know, we avoid these traditional outdated approaches to, to management and to leadership and more broadly day-to-day working. And I think that links back to, to what you were saying before, Al, when you quoted George Bernard Shaw. So of course, you know, I had to ask our, our experts, you know, is this something that you, you also look for, um, in great leaders and leaders that you want to invest in. Here's Melissa. I feel like I was really privileged in that I had the opportunity to work with great— in a great organization, great people. I saw some things I didn't really like, you know, as far as, you know, examples of leaders in, uh, early on in my career, behaviors. I'm like, I'm not sure, but I believe that we can love our work, you know. Does it have to be our be-all and end-all? No. But I see so many people are listening that they just hate their jobs. They, you know, they're miserable. And I don't believe that's the right answer. Like, I believe that, you know, people may need a paycheck and they may have to take a job that they don't like, but maybe that's not a forever. So, I think I want to make sure people don't settle. for, you know, something miserable because you're scared of the next thing. But because I know there's goodness out there, I know that people can, you know, love what they do and feel like they add value. And so, I don't know where that came from, but it's just been the way that I've always believed and feel like I found it. So, I want to help others, you know, believe that it's possible.
Al ElliottAnd this is Melissa's experience at Accenture.
Leanne ElliottYou know, a partnership to— I was there for almost 19 years. I saw a lot of evolution from a private company to a public company to a, you know, a partnership to, with, you know, tens of thousands of people to, you know, when I left, hundreds of thousands, and now it's probably double that. And so, it was really interesting to see those changes. It was a couple of things we would always say is like, if you don't like sort of the direction that the organization's going today, Yeah. Hold tight for a year, year and a half, because the pendulum will swing and we'll go in a slightly different direction. Because Accenture was really good about looking at what was going on around the marketplace and evolving to try and meet the needs of the industries and the population. So, I learned, I was always on the internal side at Accenture, not an external consultant. And so, I had the opportunity because they changed so often that I got to change my role very often. And I chose to change it and do different things and work in different groups. And so, for me, it was a huge learning opportunity to be able to work with so many different leaders across several industries and see where growth went. So, you know, I think it was probably the best foundation I could have had for my career.
Al ElliottSo, she's seen Accenture go from 10,000 to 100,000. It's now potentially at 200,000. She's saying that there's a pendulum, and it makes sense, you know, because as you grow, you're just exchanging one set of problems for another. Now, most people think the goal is to aim for a unicorn, as we said before, $1 billion valuation. But as WeWork demonstrated, if you've ever— if you've seen that Apple documentary, the— I forget his name, but the guy who basically built a unicorn that wasn't making any money. Um, it's got nothing to do with profitability. So let's hear from VC investor Sarah about profitability.
Leanne ElliottBut we talk a lot about unicorns as a metric of success. It is not the only metric of success, right? Because, you know, uh, being a unicorn means your valuation is, uh, at this level, but that may not be necessarily justified by strong profitability, which is actually important for businesses, right? And, and that's part of the results that we're seeing in that it's growth for growth's sake with the layoffs and all that, because, you know, a lot of startups have been pushed to grow, to have great revenue, which justifies the valuation, but it's not sustainable with profitability. But what I will say is, if you're talking about businesses that are successful and, you know, using the unicorns as one of the metrics to think about that, I would say it is having the long— a balance between the big picture.
Al ElliottMm-hmm.
Leanne ElliottAnd the short-term needs, right? You know, times are changing so rapidly in which you can no longer do a 10-year plan, um, because, hey, guess what? We didn't— none of us, you know, expected the pandemic to unravel the way it did and happen the way it did. But, um, you know, these businesses were able to, um, react with the long-term game plan in the back of their mind.
Al ElliottYeah.
Leanne ElliottWhile addressing short-term needs. So of course runway is important, and I think one of the key things— and I, I mentioned runway a lot because I think that is so core. There is a culture of, especially in VC, because for us it's about pushing to an exit, right? Remember, VCs, we're in the business of business, unfortunately, which means that we are looking to make a return on an exit, whether that's a sale, whether that's—
Al ElliottMm-hmm.
Leanne Elliotta listing. And what helps drive that is numbers, right? And it may be revenue, not necessarily profitability, in certain places where you need to grow your market share, things like that. And that creates a misaligned culture sometimes. And I think a CEO, a founder that is really focused on what it is— what is it that my business really needs without the noise, right, of these are the VCs', um, you know, demands, these are the banks' demands, these are my customer demands, but really moving forward in a way that makes sense to serve, of course, all your stakeholders, customer first. Again, Sarah is highlighting there the importance of having this entrepreneurial mind and this agility to respond to the uncertainty of, of what's around us in, in the markets, in the world. Sarah also mentioned there that unicorn businesses tend to forward in a way that makes sense for all stakeholders. Now, I would argue that in this VUCA world, in this changing workplace, one of our biggest stakeholders as a leader are our teams. And that might not have been the way it was viewed traditionally, but I think, as I said, you know, these shifts in power that we've seen, you know, we're starting, starting to view our people as key stakeholders. Might not be a bad way of thinking about it.
Al ElliottYeah.
Leanne ElliottHere's Simon to explain a bit more.
Al ElliottIf you don't like or see what— like the team, or you don't feel that the team's right for you, and certainly the culture, then don't take the job. I mean, for goodness sake, don't do that. And I advise that to people all the time, um, particularly when it comes now to, you know, workplace well-being and stuff like that. I think, you know, you've got a massive choice, probably more than any other time in my life. The power is with you, with the talent that people are trying to acquire and, and to join. You know, make no mistake about it, you know, if they haven't got the right, you know, attitude about flexi-working that doesn't suit you, or they haven't got good workplace wellbeing strategies in there, or they're not interested, you know, it's all about money or hours, um, you know, I think, yeah, you were, because a lot of companies are really good talent, and, uh, um, and you're in a really good position.
Leanne ElliottDid you know that the UK's number one Management podcast, that's us, by the way.
Al ElliottYeah. Yeah.
Leanne ElliottAnd the UK's number 1 marketing podcast are both on the same podcast network.
Al ElliottWe actually have a lot in common. We both use behavioural science to help people do better at work.
Leanne ElliottAnd we both had to wrangle Rory Sutherland on an episode.
Al ElliottAnd 2 out of 3 of us are devilishly good looking. And you're not gonna say which. Fel, host of Nudge, UK's number 1 marketing podcast. It's brought To you, we need to do this in threes.
Leanne ElliottThe HubSpot Podcast Network, the audio destination for business professionals.
Al ElliottSeamless, seamless. Tell us about your latest episode, Phil. Uh, we've just done an episode on fake fandom and how New York indie bands are paying agencies to create fake TikTok videos about how much they like their work. And we talk about the behavioral science behind fandom and how that encourages people to enjoy the music and all of that good stuff and do some big things about how this affects the world of politics, business, and brands as well.
Leanne ElliottIt is. It's such, it's such a good show. Of course, you'll hear all the stuff you want to hear about how to grow your business by using behavioural science in your marketing. But there's also just some really interesting episodes that'll be right up your street. Personally, I enjoyed Can Balsamic Vinegar Make Beer Taste Better?
Al ElliottIt can.
Leanne ElliottAnd Are We All Just Status-Seeking Monkeys?
Al ElliottI am. Go and listen to Nudge wherever you get your podcasts.
Leanne ElliottBut come back.
Al ElliottYeah, come back. Definitely come back because Nudge isn't as good as this, so come back. I'll cut that out.
Leanne ElliottKeep that in. Simon mentioned, you know, as employees we have— we are experiencing more power and control over where we work, how we work, and who we work for. And as entrepreneurs building a business, this is a really important consideration. And I think really just joins those dots thoughts as to why our teams are now one of our most important stakeholders.
Al ElliottSo the first thing they're looking for is leader and entrepreneurial leadership. The second thing they're looking for is people leadership. So what are the commonalities here? What are the traits of a business around people that VCs want to invest in? Here's Sarah.
Leanne ElliottYou know, their own individual, they have their own style, right? But a couple of things really stand out. One is, you know, the, um, value collaboration, right? So they have a way of actually bringing out the best in a lot of the people that they work with, right? And they make that a priority. I will say, you know, I had on my podcast recently a woman who is building the next big ghost kitchen concept, right? So virtual kitchens, cloud eats. And one thing that really stood out about her for me was her service-based leadership. And, you know, in being in America, I will say I see a lot of narcissistic leadership where it's about me, me, me, you know, of course I did that. And it was— it's very easy to, you know, fall behind this. I don't know how to put it, but I think selling yourself is important. But I'm also very, you know, I spent most of my life in Asia and I believe I have that Asian construct in me, in which I value service-based leadership a lot, right? Where you show first that you are leading forward by example, number one. And number two, you know, when I think about the phrase she said, right? She said this to me, Sarah, you know, we've got 650 people in the company, and every day what keeps me going is these are their rice bowls.
Al ElliottRight.
Leanne Elliottdo this for them. You know, I need to show up, I need to motivate, right? We're no longer in the small stage, right? We're scaling right now. We're scaling our operations. It is my job to motivate them to get the funding to do all these things for them. And I do bring, right, where it is less self-first. I wouldn't say selfish, less self-first, but people-first has been really, really what's been important. But of course, you know, I will say, Leanne, I— and I think you would value this, but I'm very I think we have to be careful to paint it with a broad brush, right? Because one of the criticisms, as someone who brought Lean In to a different country, of the Lean In concept is that it blames the woman, right? In that she has to be confident, she has to be a certain way, and it's in the model of a Sheryl Sandberg-type leader, which of course is privileged. She's a privileged white woman, which many don't have the opportunity, right? You can't say that all women have to be this way. We need to be able to celebrate leaders that are introverts, that can lead, uh, from behind and from, from the front. And I think that's important. But, um, yeah. Simon also has some observations of the types of leaders he's had success investing in.
Al ElliottI'm a massive believer in, in, as I've said earlier, about people. So I think all business is about people. I think all business is about the human capital that you have there, um, how engaged they are, how passionate they are, themselves, how resilient they are in terms of, you know, you've got to be able to go through bad times, you know, to get to your good times. Rome wasn't built in a day. So yeah, I feel that, you know, if you have the right culture, if you like, DNA culture, cultural DNA in your personality and your character, and you are willing to adapt, to take lessons and build on resilience, I really think you can do most things, if not everything. I think that experience— I like to look at what I call the soft skills of management. And you don't have to be a manager, by the way, to work with us at all if we don't believe you have those soft skills. And not everyone does. Not everyone's a manager, let me tell you. You know, you've got to be— you have to have a culture of integrity. You've got to be authentic with us. You've got to be honest, which is those 2 things. I'm a massive believer in compassion, you know, to be compassionate with whoever you're dealing with, whether they be suppliers, venues, All the way through to customers, sponsors, and the staff that you're running. I think most importantly, for me, when I look at someone, it's their ability to treat this as their own business, which it very much is. So there has to be a bit of entrepreneurialism within them. They've also got to— for me, it's humanizing that as well. Not just normalizing it, but humanizing it as well. To be an entrepreneur is one thing, but to lead or work with, share with a team the roles and responsibilities, you've got to really fit into that. There's no one characteristic, but I suppose if we're going to be really arrogant, that person has to fit in with us.
Leanne ElliottYeah.
Al ElliottRather than the other way round. Um, and, you know, that's sometimes not easy when you come and join an existing team. Um, and, but, you know, it's very satisfying when you do it.
Leanne ElliottLet's recap some of the, the words that were used there by both Sarah and Simon to describe a people leader and entrepreneur that they would want to invest in. They are resilient, adaptable, collaborative, coachable, people-first, curious, honest, lead with integrity, authenticity, accountability, compassion. Call me crazy, they are not words that I have been, I guess, socialized to think they're the qualities that an investor wants to invest in. No, I mean, Dragon's Den, Shark Tank, Shark Tank, even just the names in itself. Right.
Al ElliottYeah, exactly. They're all about where there's blood in the water, we're gonna go and do these things. And of course it makes great telly, but unfortunately also I think teaches a whole generation— well, possibly not the current generation because I think Dragon's Den's a little bit older— but it teaches us that this is the way you do do business, and it's not. It's absolutely not. This is a guy who's, who's built 26 times, has built a company up and sold it, or an exhibition company up and sold it. He knows what he's talking about. Talking to Sarah, who's got $1 billion, I think. Is it $1 billion?
Leanne ElliottMore than $1 billion pledged in, in female-led businesses.
Al ElliottThese are people who know and understand this. So let's forget all this bullshit that you see on, on YouTube of people saying, oh, well, you know, I will give you this amount of money, but I want 15% more than you'll get in your offering. Just don't do that. Just be like you said, compassion, humanistic, And people are entrepreneurial, and that's pretty much the basis of it. Sorry, rant over.
Leanne ElliottI love it. I love it when Al gets outraged. We also know from last week's episode that CEOs and MDs are responsible for about 20 to 35% of the company's value. We also know that about 95% of entrepreneurs say that healthy culture at work is vital for success. We know that having high-calibre employees are attractive to these healthy cultures increases revenue by about 33%. And yet 63% of US companies find it harder to retain talent than they do to acquire it, to recruit new talent into their business. So we're clearly missing a trick. I had to ask our experts, how important is culture when you are considering investing in or buying an organization? Here's Melissa. I think in the, um, in the early, in the due diligence And really asking some of those questions. A lot of times, the upfront is very much more around the financials and the offering and how the companies are positioned. But I would definitely make it part of the conversation around what is the culture of that company, how would they treat the employees coming in, and do a little bit of research if that company has already done acquisitions around how those founders—
Al ElliottRight.
Leanne ElliottYou know, went through that transition. So, I wouldn't try and map, but I would be very conscious if you have a couple of different suitors for your business, you know, really, um, how you think your people would want to work, how you want to work, assuming you want to stay in the business, um, and how you want your brand to be represented as it moves into that organization.
Al ElliottThat's all well and good, Melissa, because you're talking about Accenture, which has got between— got 100,000 1,000 people, a huge company, um, it's, you know, huge resources to build this culture. What about the scrappy upstarts? We asked the same question to Simon. The top of the list would be culture. Fair enough, Simon. Okay, get the right culture, but not just a culture— a culture is a big word, okay? So like, you know, you know, the business has— what culture is it? And that could be, you know, compassionate, emotional, rational, whatever you want to call it, okay? But for me, culture is built out of Everyone in the organization. So for me, if you put culture at the top, and then let's just say, depending on what team you're in, or if it's the entire group, you'd have team underneath. And then as importantly for me is the word me. So you've got to feel that you are part of that team, and then in turn, part of that culture. Most people will talk to you about culture, team, and then you.
Leanne ElliottYeah.
Al ElliottBut actually, if you reverse it, and that's how our model works, I want you to think about you. So we're not— even from the interview, it's very much— I declare it very much so. I'm not particularly good interviewing, so I'm not very PC, but I say to people, look, this is much about you wanting to— whether you want to work with me as it is I want you to work with me. The fact of the matter is that you're actually going to be paying me in 4 years' time, not the other way around. Let's look at this with a certain reciprocity of respect, but knowing that we work hard, we have fun, but you have to fit in with the team and therefore the culture of this organization. It's up to you whether you want to do that. Again, it's not something you could— you have to work at that. My advice would be consider yourself in in anyone's team, anyone's company, and how you fit in with their culture. We're all employees, if you like. We're all humans. Whether I'm looking to invest in someone, it has to suit me. Whether you're looking or someone's looking to work with me, it has to suit them. Then both of us, if we're going to work successfully together, have to agree that we work well as a team. Most importantly, Then all of us working together have to agree that this is a safe, proactive, fun, productive, successful culture which accepts everything and anything that happens in life. That can be failure, negativity, diversity, and everything, basically everything. That's what I'm trying to say to you. So for me, When I'm looking to invest, it's that person, that's that creativity, it's his, it's his or her idea, um, and how we feel we can do it differently and how interesting and how useful it is. But most important, all of that stuff is that person that I'm dealing with, um, and how that person will fit in with me and my team and ultimately the culture I want to run my business with.
Leanne ElliottExplaining really clearly there, you know, how leadership informs culture, culture informs leadership, and that cycle continues. Let's dig deeper. I asked Simon about some of the values and behaviours that he looks for in a positive workplace culture.
Al ElliottSo yeah, I think, you know, lead by example. I think performance— I'm not a big, not a big believer in what hours you put in per day or per week, you know, provided you deliver what you promise you deliver and you're authentic about that, you can come into the office one day a week. I'm also a massive believer in Not over-flogging the horse that works the most for you. My top saleswoman or salesman, as soon as they get a big deal, I'm not on to the next. It's like, well done, go and have a break, recoup a bit, and come back when you're ready. Salespeople are normally— they tend to— they're not authentic with you when you put too much pressure on them with a target. And they try to just— if you're not honest, Then you're not giving me the advice I need to hear. I don't want to be given any flannel. I want to be told exactly what's coming in, and I need you to be more accurate on your forecasting as I have to be with my investors or whoever it might be. So you work as a team, very much a team. You know, if I'm away from my office at any given time, I'm not missed. And the same for every single one of my staff. We, we cover each other's backs.
Leanne ElliottAgain, I think, I think we're seeing opinions and thoughts that go against what the stereotypical investor is. Or maybe I've just spent too much time watching, watching Hollywood films and the like about what investment is. But I guess, you know, you'd think that investors are gonna buy— are you gonna promote the hustle culture? You know, I only sleep 4 hours a night, and, and what else do hustle people do? Oh, it's all hours and everyone on deck and blah blah blah. And what Simon's actually going in on, and I respect his opinion because he he's built 26 successful businesses and sold them, um, is that he's kind of going, no, I don't buy into the hustle culture. You know, we work hard, we work on our resilience, we do what we need to do, but I measure performance by outcomes, not hours worked. And I prioritise wellbeing in terms of making sure when you need a break, you take a break. I think also, you know, in terms of that, that big one for me How many business owners, entrepreneurs do you see? Maybe that's why they are in the, in the kind of the public eye, but make it all about them. The world and business is revolving around them. And what Simon's saying is that if I can't leave the office and no one notices, I'm probably doing something wrong.
Al ElliottIsn't it?
Leanne ElliottHow many, how many business owners in my business, not enough time on my business. And it is that thing, isn't it? Well, you know, how, how important are you making yourself? And are you fostering the environment, the relationships, the teamwork that is needed to scale your business and then easily remove you from it? Because that's what's gonna happen if you are building your business to sell.
Al ElliottTotally agree. I think there's so many people out there who are so obsessed with themselves and so narcissistic, as I think Sarah said, so narcissistic, they think that the business has to exist, that they are the business, and if they're not there, it's gonna fall apart. And maybe it's because they've not got much else going on. Going on in their lives. I don't know, maybe that's a little bit judgmental. And I want to pick up on your thing about there, about sales having an outcome. There's a second person who said that great salespeople have got each other's backs. It's not an outcome of what has Derek and Jane done and are they in competition with each other. It's what has the entire team done. And in a role like sales, well-being and teamwork is probably the most important— well, probably the most important cornerstones, because you spend the day probably getting blanked or getting told to go away. So, you know, unless— I'm saying that because I did door-to-door sales for about a year and a half, and I did phone sales for selling advertising for a dodgy company for about a year. So, so I know that. But this is the cornerstone, is that people are teams, and it's the team is working, not the individual. We asked Sarah, our VC, how much the culture influences a decision to invest.
Leanne ElliottOh, absolutely. I mean, you know, I am a— I think you know now that I'm a massive geek for sort of startup stories and, you know, how it— the rises and the falls. And if you think about WeCrashed, you think about Travis Kalanick and the rise and fall of Uber, right? That is really a great case study. If, you know, if you— your audience has not watched it, I highly recommend because it really showcases how the leader was driving the results, which created all these unintended consequences that that you as a leader need to be aware of with culture, right? Where, you know, great talent were leaving because they felt they were not valued, right? That's a red flag, and you want to investigate when you, when you see a high performer that is able to deliver results suddenly feel like this is not the place for me. You need to investigate that. And of course, it would be remiss for me not to mention, of course, you know, the Things like the MeToo movement, which partly inspired a lot of the work that we do because we saw the toxic culture that the Silicon Valley environment— and I hate to say it, the bros of Silicon Valley— have perpetrated in many different ways in which it was deemed to be, okay, you know, we're sky high now, you know, it's— we're on a growth trajectory, everything goes.
Al ElliottRight.
Leanne ElliottSo we need to be very, very mindful. I think, like, for us, when we look at a company, a lot of the unsaid items, the intangibles, the culture comes from meeting with the founder, the wider team. And, you know, this is why actually I will say it's been— VC has grown and we've been able to do a lot of things virtually. You know, checks have been written, but there is still value in what I would call kicking the tires, because that's where you see the culture and the red flags that come from that. Sarah mentioned some red flags here when it comes to culture and investability in a business. I think again, what she's linking back to is that, you know, if, as she says, if you have a high performer within the business that suddenly decides that environment is not one they want to be in, that reflects on the leader of the business, the owner of the business. And as we know, that is a person that our investors are investing in. So what other red flags might investors be looking for? We asked Simon.
Al ElliottThe formulaic blueprints, you know, that sort of, you know, that plan to go from literally the day we launch until the day we sell is tried and tested. Um, and so, you know, that doesn't change. I, I know that backwards. I can do that blindfolded. And, and we have teams in place, financial teams, um, marketing teams, operations teams, who know, who've worked with me for years, who do that.
Leanne ElliottYeah.
Al ElliottBut the person who makes this happen is that there's that partner, that content partner, or that in-territory partner, whoever, whatever the sector, wherever we're doing it, the person who has that knowledge, the little black book full of buyers and sellers, and the person who has the relationships and can deliver it. And it's the content partner. So yes, they're massively important. The culture within the company, all of the companies we've ever worked on, is that they are the lead, they are the event director. We're here to help them. And that's why it's really important to get the right characters. More often than not, when I turned down or when the board, if you like, now we have a board that decides on the investments we do. So when the board sits together, it's assessing whether that person can deliver that. Because none of us have the time really to Um, you know, to lead. It needs a leader. Um, and so even if the content is good, if it's not the right person, then really, you know, then it's not going to work. Um, and it very quickly becomes— we now, um, have quite a, um, a strict policy now, which is we don't do anything we don't like in terms of the subject matters. But even if we really like them, we don't do anything unless we like the person who's going to be running it. Because if either of those not work, it doesn't work. I think this is massively interesting that, that Simon has got this formula clearly where he can turn a business around in a matter of months, really. But his key things are we don't do things that we don't like and don't believe in, and we don't do things with people who we don't like. So in terms of red flags, I think the— what Sarah called the bros, the Silicon Valley bros, in terms of the hostile culture, That's just not what necessarily what people are looking for.
Leanne ElliottHugely. And I think as well, it's really brought it to the forefront for me, for any business owner that is looking to scale their business, to potentially exit, to secure funding. You need to be prioritising your ability as a leader, your effectiveness as a leader from day one, because everything is coming back to that. Even when we talk about culture, it's coming back to the leader behind that You even talk about metrics. It's coming back to the leader's accountability and delivering those metrics. If you are not investing in yourself from day one, I think it's gonna be a, a really tough challenge.
Al ElliottYeah, totally agree. Now, one of the other red flags I think that, uh, that we've talked about is this idea of being a family. Now, I know a lot of smaller businesses go, oh, we're all a family here and this is what we do as a family. But there's a very big difference between, between being a team and a business that's succeeding and being a family. So, if you describe yourself as a family, is this a red flag for investors? Melissa thinks so.
Leanne ElliottI think when people talk about they want to feel like a family, that it's just that everybody cares about each other and we're in it for the long haul together. But it is a business that people are a part of. And so, people will come and go. So, I think it's more around you want the— And the respect that comes with colleagues versus with family, sometimes we're not as nice as we need to be because they're family. Like, they can't really disown us, not as easily. But so, I think it's finding the level of respect, but making the— creating a feeling, that belonging feeling of, hey, we are a team, we are a tribe.
Al ElliottYeah.
Leanne ElliottYou know, people use a variety of different terminologies, but that It's part of something and we stick together. We have each other's back. We care about each other. And so, I think that's more important. But the family thing, because you might— you can't fire your family, but you might have to fire, you know, an employee and you don't want— I mean, if you're doing the right thing for your team and your organization, carrying somebody who is not pulling their weight isn't fair to anybody.
Al ElliottRight.
Leanne ElliottIt's going to alienate your team that's working really hard, and it's not fair to the person who's not performing because they might be exceptional somewhere else, or they might be exceptional if you actually gave them feedback. And sometimes in families, we just, we let the conflict sort of simmer and we just kind of leave it be, and it's not really healthy in the workplace.
Al ElliottHear, hear. If you heard last week's episode all about family businesses, you basically— it's exactly what Melissa just said.
Leanne ElliottYeah, I, I, oh, honestly, it makes me like, oh, cringe whenever I hear somebody explain that culture is, oh, we're like a family. Because one, it's a really crappy analogy, as Melissa has explained. Like, it doesn't quite work in terms of the relationships and dynamics that you have within an organization. But particularly for like an owner-led business, what does that make you? Mum? Dad?
Al ElliottHmm.
Leanne ElliottAnd what are you gonna do, sell your kids at the end of it with your 5-year exit plan? It's just a flawed analogy from the start. Can we just leave— unless you are a family business, let's just leave family out of it, shall we?
Al ElliottSo we've gone through an awful lot so far. We've got more. We've got probably about the same again. So we've made the decision to cut this into 2. So we're going to do another episode next week.
Leanne ElliottYeah, I think it's a good part to leave it. I think we've talked a lot about what investors are looking for. I think we're at the point now that with, with part 2 next week, we'll talk a bit more about why that is and also how you can fulfill, you know, those, those things that investors are looking for. So I feel like we're at a nice place to stop the what and focus next week on the how.
Al ElliottNicely done. All of the comments, all of the links are going to be in the show notes. If you, if you want the transcription, that's going to be in the show notes as well. Just follow the link, and we will see you next week. Make sure if you're not subscribed yet, then just make sure you subscribe so that you don't miss next week's, because the next week is going to be vitally important for anyone who is looking to grow their business, either via acquiring, being acquired, or VC funding.
Leanne ElliottIt really will. And we'll also leave the links to all of our guests today in the show notes. That's Simon, Melissa, and Sarah. Um, and we'll be including loads more resources next week as well. Oh, I had a bit of feedback actually from listeners on Spotify. So they don't always get the same experience with the show notes. When we say, oh, the links in the show notes, they don't always see it. If you head to our website, Truth, Lies and Work, and go to episodes, then you'll see there's a, there's a post for every episode, and that includes the full show notes.
Al ElliottDefinitely. So we'll see you next week. Bye for now.
Subscribe

Subscribe for free

SpotifyFollow on SpotifyApple PodcastsSubscribe on AppleAmazon MusicListen on AmazonYouTubeWatch on YouTubeAnother appAll platforms →