MAIN HEADING
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SECTION HEADING
FEATURING
WHAT TECH TRACK DID FOR US
BLOCKERS
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TECH
2030
BUSINESS
CONTENTS
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02
EDITOR'S NOTE
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10 YEARS OF TECH TRACK 100
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5 KEY BUSINESS BLOCKERS
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06
SIX STEPS TO DRIVE A CULTURE OF RESILIENCE
07
FDS IN FOCUS
08
TECH 2030
09
HOW TO FIND THE RIGHT CTO
10
SALES VS ENGINEERS
11
WANT MORE?
Tony Spillett | National Head of Technology and Media, BDO
We’ve sponsored Tech Track 100 for ten years, and I’ve been very fortunate to be involved in the relationship throughout that time. Over the last decade, we’ve had the opportunity to meet with more than 500 high-growth tech businesses, and to spend time with many more in the course of lively and inspiring Tech Track award and alumni dinners. All of our team love meeting with Tech Track 100 businesses and developing long-term relationships – it’s a highlight of our business year. It’s a particular pleasure to have worked with so many of the unique businesses featured in Tech Track 100, providing audit and accounting services, tax planning and compliance, transaction advisory, M&A, valuation and more. In all these client interactions, what always stands out is the determination of the founders and their management teams to generate successful and rewarding outcomes for their investors, employees and clients, and to receive an appropriate return for their own hard work. With our deep specialism in the sector, we can advise even the fastest-moving and most international businesses in real time, in a style they appreciate, and add real value and insight from our experience of how similarly placed companies have handled similar situations. Our Tech team is the largest sector group in BDO, accounting for almost 15% of our firm’s revenues, and we can draw on more than 300 dedicated specialists in the UK alone, with the back up of our international sector team and a total of 80,000 people globally to assist tech businesses in flourishing. To celebrate our ten-year support for the Tech Track 100, we’ve created this special edition of plugd:in, our content hub for the tech and digital media community. We’ve pulled together a series of expert-led articles focused on the fast-growth tech space, from insightful stories from leading FDs, to a look at the role of the CTO in bridging the cultural divide between sales and tech. We showcase some of the inspired thinking that has led so many fast-growth tech businesses to success. We are proud to be associated with the leading businesses on this prestigious list, and we salute every team that has earned its place in the rankings over the years. We hope that you find this edition both enjoyable and informative.
Tony Spillett National Head of Technology & Media, BDO LLP +44 (0)20 7486 5888 tony.spillett@bdo.co.uk
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ten years of tech track 100
5 key business blockers
what tech track did for us
fds in focus
how to find the right cto's
As we celebrate 10 years of sponsoring The Sunday Times Tech Track 100, our experts look back at defining moments, trends and key challenges for fast growth tech and media businesses over the past decade.
Monetising innovation: Ten years of the Tech Track 100
2008
In 2008, when BDO began its involvement, tech companies were once again showing they had the cutting-edge ideas and staying power to succeed even in a downturn. Life-changing biotech figured prominently, with over 1000 hospitals worldwide using the synthetic bone graft material developed by Apatech (#5 in 2008) and Vitaflo (#86 in 2008) developing supplements to help patients manage metabolic disorders. The transformation of leisure time was another key theme, with the travel comparison site Cheapflights (#38 in the 2008 list) serving up information on 1.5m flight deals a day, and Lovefilm International (#2 in 2008) already capitalising on the ‘staying in is the new going out’ trend as it eyed up the 1million subscriber mark. Lovefilm, of course, would go on to be acquired by Amazon in 2011 for a reported £200m after four appearances on the list. It’s just one of a raft of distinguished flotations and acquisitions for Tech Track alumni.
When BDO began its sponsorship of The Sunday Times Tech Track 100 back in 2008, we were in the midst of the Global Financial Crisis, the UK was officially in recession for the first time since 1991, and – hard though it is to believe now – no one had ever even heard of the word ‘Brexit’. But, as research into the country’s fastest-growing private technology, media and telecoms (TMT) companies has repeatedly shown, the sector has a remarkable ability to fashion opportunity out of adversity. It was the same story back in 2001, when the first ever Tech Track 100 was published, just a year after the dotcom boom. Total sales for the first-ever cohort were just £414m, with the companies on the list employing 5,270 staff.
In 2018 — despite the chill winds of uncertainty threatening to cool the economy once more – total sales had reached a staggering £3.3bn, with headcount reaching an impressive 19,300, a figure boosted in several cases by strategic acquisition. Average sales growth reached a record 101%, based on the last three years of available data. Taken together, an overview of these annual reports on Britain’s emerging tech stars provides a fascinating insight into a rapidly shifting landscape, and the trends in business and consumer behaviour that inform it. And it offers inspiring testament to the resilience and ingenuity of this uniquely audacious sector of the UK economy.
start the journey
2009
Since 2001, some 43 featured companies have gone on to float, including: (Valued at £1bn on flotation in 2015, and now worth £1.9bn) (Valued at £937m on floating in 2010, now worth £8.2bn) (Floated at £1.5bn in 2014, and now worth £5bn).
Defiance of the downturn continued into 2009, with over three-quarters of featured companies bucking the macro-economic trend and reporting a profit in their latest accounts. Growing awareness of environmental issues saw several businesses profiting from services designed to save energy and reduce carbon footprint. CP Electronic (#80 in 2009) offered energy-saving light switches activated by body heat for schools and hospitals, while e-invoicing platform OB10 (#87 in 2009) claimed to have saved 8.4m sheets of a paper – and thereby a great many trees – in a single year. With increasing concerns over cyber-security, a number of security software companies began to feature on the list, such as Stonewood (#77 in 2009), which designed and manufactured hard drives that refused to yield their data even when lost or stolen, and disaster recovery specialists Neverfail Group (#28 in 2009). In all, there were 18 firms providing internet and network services by 2009.
The biggest profit-maker was Bet365 (#35 in 2009), a high-profile player in the ever-popular gambling and gaming space, which was pulling in £77m.
2010
The rise of the cloud was a big story in 2010, as broadband and 3G continued their transformation of business operations and consumer spending habits. Some 16 businesses cited outsourced IT services, such as cloud computing and managed hosting, as their main activity. Outsourcing server capacity and sharing IT infrastructure were attractive options to businesses which had slashed their IT budgets during the downturn. The flexibility and low cost per user offered by cloud-based infrastructure has been an abiding theme of the Tech Track 100 ever since, as innovative businesses find new ways to offer more and more things ‘as a service’.
Young tech continued to buck the trends. While corporates were shedding jobs in the wider economy, the Tech Track 100 class of 2010 created over 10,000 jobs in three years, with over 80% of them reporting pre-tax profits too.
2011
A resurgence of funding from venture capital and private equity was evident by 2011, with 22 of the 100 benefiting from private investment. Wireless Logic, for example, (#54 in 2011), whose specialist SIM cards enabled devices such as vending machines to be monitored remotely, was acquired in a £35m management buyout by Peter Jones of Dragons’ Den fame, one of a number of Dragon-led deals to feature down the years. Online consumer services were featuring more and more prominently on the list by this time too. Businesses on the 2011 list could help you do everything from ordering a takeaway to trading in your car to recommending a plumber – and leave feedback in an instant. This was the era of the first big-brand campaigns for such services too, from the likes of GoCompare (#17 in 2011), Rated People (#30), and We Buy Any Car (#25). Research and development take on a new impetus in periods of economic uncertainty, but to scan any edition of the Tech Track’s annual research is to be blown away by the extraordinary wealth of innovative thinking and sheer creative brainpower on display.
That funding trend has continued upward ever since, with a record 78 companies in 2018 having secured equity investment from venture capital or PE firms, corporations or business angels.
2012
By 2012, the average sales growth for the 100 companies in the list was a mighty 81% a year, to a total of £2.7bn. Almost 11,200 staff were employed, with an extra 7,500 jobs having been added, some as a result of acquisitions. Some 73% of Tech Track 100 companies were in profit, with 12 reported OP margins of more than 20%, and 31 businesses with profits of greater than £1m. Companies on the table included well-known names such as online entertainment trader musicMagpie (#6) and content recognition services developer Shazam (#67). The #1 spot went to Essence, provider of digital marketing services to the likes of Google, eBay, Betfair, Expedia and YouTube. Essence had grown sales 284% in a single year, from £3m in 2009 to £170m in 2012.
Digital media and entertainment is the dominant industry with 18 companies on the league table.
At least 20 companies have made more than 30 acquisitions in the past 6 years.
2013
Digital marketing services featured strongly again in 2013, a year which also saw a resurgence in high-value manufacturers and supporting businesses. Some 18 companies matched this profile in 2013, up from 10 the previous year. The companies, many of which offered a niche product within a global market, included Nanosight (#70), a scientific instrument manufacturer, which was set-up in 2003 to sell the founder’s particle counting technique to drug companies and universities around the world, and SMD (#87), a specialist engineer that designs and builds high-tech, remotely operated vehicles in the UK and sells to multinational oil and gas firms globally.
Average profit margin among the 78 profitable companies is 11%.
2014
Take the 2014 list. Some businesses were exploiting scientific breakthroughs, such as Apical (#41 in 2014), whose technology allowed phone and tablet screens to adjust to light conditions in a way that mimics the human eye. Some were applying new tech to new areas, such as EV (#18 in 2014), which developed video cameras systems that could be used 10,000m underground to help explore for oil and gas.
15 businesses were developing software for the burgeoning mobile world, such as the keyboard apps developed by SwiftKey (#3 in 2014).
The software sector dominates the league table with 20 companies.
2015
The 2015 list was a good showcase of the typically young and dynamic profile of Tech Track 100 companies. Some 90 of the companies were founded after the turn of the century, and 12 were less than five years old. Software companies were the largest sector on the league table that year, with 23 listees generating £490.5m of sales and employing 3,645 staff. They ranged from companies producing workplace management software to app developers. IT consulting and services companies accounted for another sixth of the table (15 companies). These included cloud computing specialists, datacentre providers, and companies that combine service provision and expertise with the re-sale of IT equipment. Together, they generated sales of £330.6m and employed 1,201 staff. The rise of fintech was also evident, with 11 companies featuring on the league table, including Funding Circle (#4) and Ratesetter (#5).
66 companies are majority-owned by an entrepreneur and/or founders.
2016
Tech businesses tend to expand overseas more rapidly than their non-tech counterparts. Backed by $70m of funding, BBOXX (#40 in 2018) develops solar home systems that have been deployed in 35 countries, for example. Fashion search aggregator Lyst (#67 in 2018), reported 80% of sales from overseas, notably the US market.
By 2016, over 75% of the 100 businesses listed were generating at least some of their revenue internationally.
18 companies received growth capital from new or existing investors in the past 12 months.
2017
The wealth and depth of innovation in the UK manufacturing sector is strongly reflected in the Tech Track 100. The 2017 list, for example, included 11 high-tech manufacturers such as Geo (#60 in 2017), which provides smart energy devices for homes; M Squared Lasers (#79), developer of lasers for some of the world’s leading research institutions; and Symetrica (#43), whose equipment is used by customs and border agencies to identify materials for potential use in dirty bombs.
16 companies operate in the financial technology space, making it the second largest industry (after software). This is up from 7 in 2014.
2018
By 2018, the average sales growth for the 100 companies was a record 101% a year, to a total of £3.3bn. The companies employed 19,300 staff, having added more than 14,000 jobs, some as a result of acquisitions. Since 2001, some 39 companies that featured in the Tech Track 100 have gone on to float on stock markets. Companies on the table in 2018 included unicorns Darktrace, Farfetch, Funding Circle and TransferWise – all valued at more than $1billion. The top company was Plan.com, the communications provider, which had grown revenues by 364% a year, from an annualised £354,000 in 2014 to £35.4m in 2017. There were 32 serial entrepreneurs on the 2018 league table. These included Azimo (#34), which was founded by Michael Kent, Ricky Knox and Marta Krupinska, who had previously founded Small World Financial Services. Hyperoptic (#26) was founded by Dana Tobah and Boris Ivanovic, who previously started Be Broadband, which they sold to O2 for £50m in 2006.
For the first time, the northwest was the biggest region after London, with 11 companies.
Two more welcome trends captured by the Tech Track 100 over the last decade have been the rise of women in tech and the growth of regional powerhouses. It’s no secret that women in senior positions in tech were notoriously thin on the ground in the early years of the list. But the needle is steadily moving now, with a record 11 companies founded or run by women on the 2018 list and women featuring prominently in the management teams of many others. And where London and the South East once dominated tech business activity in the UK market, recent years have seen greater representation of other areas. The North West surpassed the South East (excluding London) for the first time in 2018, contributing 11 companies to the list, six of them based in Manchester. A concentration of tech businesses in the South West M25 area, heading down the M3, A3 and M4 is also quite distinct. That magical beast, the unicorn – a small, fast-growth tech firm valued at upwards of $1billion – first emerged from myth into reality on the 2015 list. There were five of them, in fact, including peer-to-peer lending platform Funding Circle (#4 in 2015), fashion e-tailer Farfetch.com (#17) and travel search engine Skyscanner (#51). Together they had increased their sales by an average 191% per year for the previous three years. But the year’s top performer in 2015, ecommerce technology developer Ve Interactive, offers a cautionary tale of the potential risks that are the flipside of the reward equation. The company fell into administration in April 2017, after which it was quickly rescued in a management buyout. Nevertheless, the rate of failure among Tech Track 100 companies is just 10%, as compared with the rate among start-ups generally, over half of which on average fail within four years, according to the Office of National Statistics. It’s just another example of the way in which these extraordinary enterprises continue to demonstrate, in their different ways, the strength and depth of Britain’s knowledge economy. With their tenacity, commercial nous and experimental spirit, these idea-led firms will continue to prosper and to benefit the wider economy, in times good and bad.
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Tony Spillett | National Head of Technology & Media, BDO LLP
Failing to look outwards, lack of innovation, overlooking international opportunities… our experts offer strategies to address classic barriers to scaling a tech business.
5 key blockers to business growth (and how to deal with them)
Growth blocker 1: Failing to keep evolving your offering
Nurturing a culture of forward-thinking innovation without losing focus on current client delivery is a classic scaling challenge.
Driving revenue isn’t always conducive to uncovering new avenues of opportunity, says Jon Cornwall of Newsflare, which helps people to monetise their videos. In new or rapidly changing markets, you need to be innovating constantly, testing out if clients’ needs and opinions are shifting, and looking at how we’re pivoting and innovating to meet those shifts. We put product KPIs into the board agenda, so that discussions are not just fixated on sales, revenue, profit and income. We’re also looking at underlying indicators of market response before they translate into revenue.
Too often, entrepreneurs think that the role of the FD is just to count the cash and manage the payroll, says Paul Morris, Head of Growth Advisory at BDO. But the right FD will create value, not just protect it.
Growth blocker 2: Lack of a strategic financial director
A strategic FD will be looking hard at how the business can scale, he says. They can calculate the real profitability of individual customer relationships, support invest-seeking efforts, and take on wider responsibilities such as HR and legal.
To that end, the CEO needs to be regularly gathering this type of information. Too often businesses think that a survey like this is just about customer satisfaction. But it needs to reference competitors, pricing, the marketplace.
Growth blocker 3: Being too internally focused
The tech and media space is so dynamic that you have to maintain an awareness at all times of the broader market, says Paul Morris.
A classic error is to get in people who are used to a more commoditised sell. In this space, it’s much more of a consultative sell, that requires a lot of knowledge and experience,’ says Paul Morris. You need to educate prospects, understand their pain points. Retention becomes increasingly important too. ‘In the first phase it’s all about hunting. But if you don’t want to miss a growth opportunity, you’ll need a separate team who are account-focused – there to land and expand customers, and make sure that they don’t look elsewhere.
Growth blocker 4: Lack of an effective sales engine
Young tech businesses looking to scale face significant challenges when it comes to building a sales function.
In tech there is a risk you might saturate your UK market very successfully, and if you haven’t considered expanding overseas because it seemed too risky or laborious, you could end up hitting a ceiling, says Paul Morris.
Growth blocker 5: Not considering international expansion sooner
A key way to address this gap is to consider getting an investor on board, who can help you minimise risks, assess opportunities, and manage and underwrite the process.
HOW TO FIND THE RIGHT CTO FOR YOUR BUSINESS AT THE RIGHT TIME
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What Tech Track 100 did for us
Three business leaders whose companies have featured in the Tech Track 100 think back to the moment they found out, and reflect on what it meant to them…
MARTINA KING
After a long career in business, media and technology, including roles as Managing Director at Capital Radio and later running Yahoo! in the UK and Europe, as well as launching augmented reality business Aurasma, Martina King joined Featurespace as CEO in 2012. Founded in 2008 and grown out of research from Cambridge University, Featurespace creates software that identifies unusual online behaviour in order to prevent fraud. Clients of its analytics platform include some of the world’s largest banks, payment processors, merchant acquirers, insurance companies and gaming organisations. The company collaborates with payment providers such as TSYS and Worldpay, and helps the financial services industry to detect and prevent fraud in real time. In 2017, Featurespace opened a US office in Atlanta and earlier this year raised £25m led by Insight Partners. Featurespace was featured as ‘One to Watch’ in Tech Track in 2015, and made the main table in 2018. If you’d like to know more about Featurespace, visit www.featurespace.com.
CEO, Featurespace
I’d been a Sunday Times reader for more years than I care to mention, and Tech Track is an annual business section that I would read. I’m always very interested to learn about the companies emerging in the UK technology scene. To be featured in Tech Track was an ambition. Then, when it happens, it’s also a real recognition of the hard work put into building a strong commercial organisation. When we first featured, we were at £1.3 million in sales, and 30 staff. Things have changed dramatically since then. We are now at about 250 people and our commercial growth is driven by strong customer demand and long term agreements. A lot of people in our community are familiar with the Tech Track. The external recognition of our progress is reassuring for our customers and hugely positive for the whole of the Featurespace team to receive the external recognition. We were able to celebrate with our team at our quarterly company update and social. We also issued a press release.
Being featured in Tech Track definitely had an impact on the way the business is perceived, especially among customers and in the business community. Otherwise it can be very difficult for people to understand the transition from startup to an established medium sized company. Which can happen quite quickly. Our customer base is primarily financial services, it’s important for that community to see our progress and solid financial progress, which builds confidence. Often the judging panels are important people who've achieved a great deal and are influencers in their communities. That’s why it’s incredible to have those judges view businesses across a broad spectrum, and to receive their recognition. The Tech Track provides an annual sector performance score card, without it it’s hard to judge how well you're doing comparatively. It is a valuable benchmark, but of course there’s always a long way to go. We're continuing to develop our business internationally; our fraud prevention technology is receiving considerable demand. We’ve also been developing our US business, which is also experiencing strong growth. Our customers have encouraged us to work towards helping them resolve a new financial crime challenge; anti-money laundering. Which has led to new product development at Featurespace. We’ve been selected by a number of new customers including a Global International Bank, following a thorough scientific and technical competition. If I were to give some advice to an early-stage tech business looking to accelerate growth, I would say, in a nutshell: Listen! Listen to your market, listen to your customers, listen to your team, listen to your investors. And then whatever you do, respond.
STEVE GANDY
Co-Founder, MeetingZone (now part of the LoopUp Group)
Steve Gandy founded MeetingZone with partner Tim Duffy in 2002. The pair grew the company both organically and through acquisitions to operate in the UK, North America, Germany and Sweden. As CEO, Steve led a management buyout in 2011, in partnership with private equity firm GMT. MeetingZone was sold to LoopUp PLC in June 2018, and Steve left the business after a handover period at the end of August 2018. MeetingZone made the Tech Track 100 league table in 2007, 2008, 2009 and 2010. If you’d like to know more about LoopUp, visit www.loopup.com.
MeetingZone started off in 2002, with £2 million of venture capital, as an audio conferencing service provider, and went on to expand into web conferencing, video conferencing, unified-collaboration solutions, Cisco and Microsoft solutions. We started on a premise of automating the provision of the business, which was different at the time. Back then, most businesses were still running on paper systems or computer systems that weren't joined up. Processes were lengthy, inaccurate and disorganised, so there was a big mistrust of the early service providers. Our differentiation was about the automated creation of accounts, the automation of the billing process, and an ability to trust our bills – the by product of which was that our bills were paid on time. We converted something like 90% of our revenue into cash within 30 days, which was unheard of at the time. That point of differentiation enabled us to scale the company quite quickly. We had direct sales, and we had channel partners – our systems were clever enough to enable a company to white-label our conferencing service, so you had the MeetingZone backbone behind a fully branded service. To underpin our growth we expanded internationally and also acquired some of our smaller competitors, who were hitting a glass ceiling because they couldn't automate their billing. It was BDO, our accountants, who first suggested we might have a chance of inclusion in Tech Track. We hadn’t really looked at it or assumed we’d qualify, if I’m honest. So we looked into it and worked out that actually, yes, our published accounts did support us having a go. Our first entry was in 2007. We achieved 67% growth by their calculations and we were positioned 67 in the list – a coincidence, I think! We definitely saw lots of benefit in terms of marketing and PR. We were looking for things to assist our brand building, and our challenge, which I think many SMEs have, is that you may have the best service around but you’ve still got to find a way to tell people about it. You've got to get that message out there.
At the time it was harder to understand where your customers came from too, so it was great to see if someone was influenced by seeing us in the list. It enabled us to go to market with the message that we were the UK's fastest growing conference call company. Effectively, Tech Track was a third-party endorsement for us. The unique thing about MeetingZone was that we made it onto the list four years on the trot, which I think is a stand-out achievement. To consistently have growth rates that kept us in the Tech Track is something I’m very proud of. ‘In 2008 we achieved 60% growth and we reached 51st place in the Tech Track 100. My co-founder Tim Duffy and myself thought we should make a bit more of this. We arranged a quirky photo of the pair of us, each standing on a phone, which went in. A picture paints a thousand words and that actually really helped us build the profile of what was going on. Once we’d been seen in Tech Track a few times, we started being noticed by potential future investors too. Because we were venture capital backed and we were doing very well, there was an ongoing question about when was a good time for the original investors to exit. Our profile supported private equity, because we were high growth, had high cash conversion, so we could afford to take on debt, and we had high profitability, running at c. 40% EBITDA margins. In 2010 we partnered with a private equity firm called GMT Partners. They supported me in leading the management buyout of the business in July 2011. And I do credit Tech Track with helping us to get a very successful first turn on the business. We sold for £38.5 million, which was 3.8 times our revenue at the time – this was recognised as a good result all round. Seven years later, MeetingZone was sold to LoopUp PLC, one of our direct competitors, who share our passion for driving high growth from an excellent platform. We’d more than doubled the returns for our investors, and again the deal was very well received. It was a really good growth success story. My advice for somebody at the start of this journey? Focus on sales, and sales growth. You can have the sexiest platform, the best app, the most wonderful website. You can have a piece of differentiation that is genuinely very good – but unless you can get out there and convince people to buy it, and find a way of converting that sale process into quick cash, you'll be spinning your wheels. You need to have a very clear understanding of what your proposition is, and be able to articulate that proposition to your buyer audience.
When I originally joined Camwood, we were what I would call a boutique consultancy, focused on what was known then as application management. We would help people get their applications ready for Windows XP. There were lots of challenges with app management at that time. People didn't really understand what applications were, and then with the advent iPhones and iPads and the like, everyone up to C-suite level suddenly started to realise the extent to which apps were proliferating in an uncontrolled way. The problem really came into focus with the move from Windows XP to Windows SP2, which businesses were all recommended to do in order to avoid data and security breaches. Organisations looked at their thousands of apps, and just didn’t know how to go about migrating them. Can we just press a button or do we need to look at each one individually? At Camwood, we offered a corporate hygiene service, helping businesses to prepare for their migrations. It was a big challenge, and no one else was really doing it. We were refining the way that you could do app management, to improve accuracy, reduce costs, and speed up the process. That’s all we did, so we were very, very niche. Then, in 2008, the work we’d done on automating the process spawned its own technology, and we decided to set up a separate company that was just focused on selling this product. We called the company App-DNA, and the product became known as AppTitude. We could go into an enterprise, and find and test all your apps against your specific DNA – the way you’re going to use them – so you can migrate to your new operating system with confidence. We knew it was a powerful tool, but we had no inkling of how big it would become. We discovered that we could reach a much bigger market by offering a product rather than consultancy. As Camwood, the large systems integrators saw us as competition, but they had no problem buying a piece of software from a company that they could licence and use themselves. Camwood, the service business, appeared 58th place on the Tech Track 100 in 2011, and our stand-alone software business, App-DNA, was highlighted as a ‘Ones to Watch’. Little did people know at the time, but the one to watch was already rapidly outgrowing its parent, because a few months later Citrix bought App-DNA for $100 million – just three years after it was founded.
For us, to be listed in Tech Track was definitely a barometer of validation in the tech space. It gets you PR and it gets people recognising you and contacting you. We were able to put the logo onto the webpage, and on our documentation and marketing materials. That’s a real badge of achievement. ‘One of the important things about Tech Track is that it focuses on hard metrics. There’s too many events now where people effectively pay for their own recognition through sponsorship. Tech Track championed us as a business, and it’s also interesting for us to see some competitors on there and grow our awareness of other businesses. In 2016, I joined the board of HeadBox as an investor. It’s the UK’s only software-as-a-service event tech. It’s like an Airbnb for event spaces, which connects people and spaces together to enable great events to happen. When I got involved, that was doing around a £1 million revenue, and this year it will do about £12 million. It’s also just secured £4 million series-B funding in a deal led by Guinness Asset Management, so it’s a really exciting time. I’m also one of the founders of Rimo3, which has a product called Activ. It's a revolutionary technology that can automatically identify, discover, install, and test all of your applications without any user intervention. In a way, it's like the next generation of AppTitude and it’s way more powerful. It can cut application testing time by about 95%, according to our analysis, and it’s adapted for the new subscription-based Windows 10 software. It can be running all the time, ensuring that you're always compliant. My advice for a tech founder at the start of their journey would be to build a successful business, not something for exit. Choose failure over regret. I’d also say you’re better to start with tier-one people and a tier-two product, because your tier-one people will make it a tier-one product, whereas if you try to start with a tier-one product, you'll spend so much time on it that you'll only be able to afford tier-two people. The other thing I always say to people: Pitch passion. I’ve had people pitch business ideas to me, and I’ve thought, “I'm not sure you believe what you’re pitching to me, so why should I?” But if you can present with passion and conviction, then you’re going to make people like me sit up and listen, and want to find out more, and maybe even get involved.
Frank Foxall
Entrepreneurial Investor and Director, Camwood
After heading up sales in the UK for GE Capital’s IT solutions business, Frank Foxall was CEO of IT consultancy Camwood Group when it appeared on the Tech Track 100 list in 2011. Months later, Camwood’s spin-off software company, App-DNA, was sold to Citrix for almost $100 million. Frank remains at Camwood as Chairman, and is also Non-Executive Director and founder at Rimo3 and Investor Director at HeadBox. If you’d like to know more about Camwood, visit www.camwood.com.
SIX STEPS TO DRIVE A CULTURE OF GREATER RESILIENCE IN YOUR TEAMS
Anne de Kerckhove | CEO, Freespee Justin McCarron | Director, Justin McCarron Ltd
More and more tech businesses are looking at ways of proactively looking after staff, especially amid the pressures of rapid growth. Enter the increasingly popular idea of resilience... Here are some practical steps that leaders and teams can consider in order to nurture a more resilient working culture.
LEAD BY EXAMPLE ON WORK-LIFE BALANCE
As a leader, the way you manage work-life balance sets a template for everyone else,’ says Justin McCarron, a communications and resilience specialist. ‘If you don’t set boundaries and balance your priorities effectively, people will take their lead from you. And of course, work can always expand to fill any available holes. There will always be more work.’ Anne de Kerckhove would agree. ‘A common error in high-growth businesses is that you obsess only about your business and lose track of everyone else,’ says Anne, CEO of Freespee, which is currently moving through a period of rapid international expansion. So it’s vital, she says, ‘to make sure you don’t lose perspective and to be super aware of one another. My job is to make sure that my people watch out for one another. For example, if a presentation doesn’t go well, let’s just chill and realise that that’s totally normal in this kind of environment.’
But the danger is, if you are doing that to your family you will very likely be doing that to your teams too, and they will burn out.
GIVE PEOPLE AUTONOMY
‘Autonomy is about creating the space where people feel they have some level of control over what they do,’ says McCarron. The leader sets the tone, as Anne de Kerckhove exemplifies. ‘A while back, my new performance manager came to me and said, “We’re looking at marketing plans for Q4 – we’ve got a conservative plan and an ambitious plan…” My immediate response to her was: “When making plans here, there are only ambitious ones, so go for it!” In doing so I’m empowering her to take that risk, but also letting her know that I embrace and accept the risk with her, and will support and accompany her on that journey.’
Research into key motivational factors inevitably surfaces the concept of autonomy.
TAKE TIME TO CHECK IN WITH PEOPLE AND LAUGH
Anne de Kerckhove believes it’s essential that leaders and managers take time to check in and connect with people. ‘I travel a lot between our offices, and it’s tempting when you get off the plane to go straight to your Mac, open up your messages and start typing away,’ she says. ‘But that would be to overlook the main reason I’m here – which is to engage with people I haven’t seen in a few days. The emails can always wait.’ So too, she says, it’s vital to connect ‘in those first few seconds with your teams when you see each other in the morning. We laugh constantly in the office – we’re always making fun of each other, we have lots of running gags.
There’s nothing better than laughter for restoring a sense of perspective and re-engaging with people.
ENCOURAGE PEOPLE TO WORK IN LINE WITH WHAT THEY CARE ABOUT
Often what you find is there’s a fundamental disconnect between the things people say are their priorities in life – and how they actually live.
'When I work with groups, I ask people to think about what they really care about', says McCarron. 'For example, people often say: For me, it’s all about my family – but then it turns out that they are regularly pulling 12 hours days, then going home and spending the evening on emails and calls. So part of the work is helping people to become more aware of that, and encouraging them to take more responsibility for managing their lives in a way that’s more matched to what they really care about.’
FACILITATE THE DEVELOPMENT OF SUPPORTIVE NETWORKS
'One of the interesting findings from the research into people who have survived extreme hardship is their ability to develop and make use of networks of support,’ says McCarron. ‘Resilient people are not only good at giving help – but also at asking for and receiving help. Now that is a big part of what most of us get wrong – we don’t like to ask for things'. One approach McCarron advocates is to train a group of super-users in coping skills, and then gradually encourage them to cascade out their approach to other staff and teams, in a sort of hub-and-spoke structure. ‘So you work with people to give them the language and the skills to become a sort of self-facilitating support group, a little team of senior and junior people, that can seed new groups as the company grows. So you end up with these little pockets of multi-level support all around the business.’ This is just one approach of course, and, as he says, ‘there are already lots of different structures out there which tie into this notion of helping people to help themselves’. The idea of huddles, for instance, typically associated with Toyota’s highly successful lean manufacturing model, makes possible regular informal meetings between staff at different levels, where issues can be aired and problems solved.
So how, as a leader, can you create structures where the default is that people help each other?
SET TIME ASIDE TO BREAK THINGS
‘Another thing we do here are regular hackathons,’ says Anne de Kerckhove. ‘We’ll get the tech team together for a day, set them an interesting challenge, and encourage them to just go wild on creativity, with prizes at the end for the best ideas'. ‘By doing that, we’re saying to them: We are dedicating an entire day where you will not be productive in the traditional sense, but this matters because you will be massively productive in terms of creating new ideas.' ‘And there’s no blame culture here. If something fails, we learn from it and we move on to the next challenge. Why? Because we took the risk together.’
I want the message from the CEO to be – you have the freedom to innovate.
Didn’t want it to end? Read the full-length version of this article
@bdoaccountant
FDs in focus
What does it take to be the finance leader of a successful fast-growth tech enterprise? We talk to four finance stars whose businesses have featured in Tech Track 100 about what they’re doing now, their secrets to success and advice for others in the fast-growth tech space…
Zoe Bayliss Wong
Zoe is the Finance Director at Depop, an app-based peer-to-peer marketplace for buying, selling and curating second-hand and vintage clothing. With more than 15 million users, Depop made the Tech Track 100 in 2018 (#11) and in the same year opened its first bricks-and-mortar shop in Los Angeles. Zoe has been at Depop since 2016 and has also been an established style writer for publications like Yahoo! Style and Elle UK, reaching an audience of millions every week. She was recently featured on the Forbes Under 30 list.
Depop is like a social media marketplace that takes the transactional element of eBay and mixes that with the addictive community nature of Instagram. Some people are interested in vintage fashion, some like streetwear. Depop has found a way to connect people with their kind of shared passion around fashion, including young fashion designers, taste-makers and upcyclers.
What does the future hold?
As tech and tools remove more and more of the number-crunching elements of the finance role, there’ll be more emphasis on people’s ability to draw insights from the data. I think we’ll see a greater value placed on the softer skills, on people’s ability to communicate the numbers to people who aren’t numbers focused. That really draws on your presenting skillset, how you deal with stakeholders, being able to read different emotions and agendas in the room. We’ll see more and more of a focus on emotional intelligence, on EQ over IQ.
How has your role developed over time?
I started as the financial controller with a tiny team – one of my first memories was being put in charge of the petty cash box! At the time we were just 40 people, operating in a converted warehouse. I’ve seen tremendous change in my four years here. I got promoted to head of finance, then took over the operational side as well. Now we have a new COO, I can go back to being a pure finance director, but before that I was looking after not just finance and legal, but also customer support, fraud prevention, content moderation, payments… The speed of growth within tech means that you sometimes end up finding new or unexpected paths that can suddenly make your current budget or forecast completely redundant. For example, we just closed a funding round within the space of three months, which means we now need to expedite our annual plan and probably next year’s plan into the next six months. Having to be agile like that is something that’s very unique to a fast-growth space. As a company grows, you obviously end up with more complexity, more headcount, more things to measure. A good FD will support visibility, not just of costs across the whole of the organisation against the plan, but also around alignment. Through regular one-to-ones with different department leads, the finance leader can flag up where departments are moving off in slightly different directions and make sure that everyone is agreed on the direction to take. There’s a strong commercial element to the role too. That’s something I’ve definitely done in my time at Depop, identifying new sources of revenue, taking the business through new deals, looking at potential partnerships or even mergers, and even just looking at core contracts and helping business stakeholders to get the best deal. Another core area for me is around future-proofing. When you’re in a fast-growth business, it’s very tempting to only focus on what’s happening right now. But actually, it’s vital to think about what we need tomorrow and in years to come – setting up the infrastructure the business is going to need, systems that will help you move quicker and have better visibility, and also be ready if you’re looking at exit options further on. Your business is constantly developing, but so too are the capabilities of your suppliers. You might be just signing off on a big tech contract that’s going to last you for the next three years when a new offering comes in that knocks the competition out of the water. As a finance leader, you need to be prepared to either pause on projects, re-evaluate, and even start from scratch with a new deal regardless of the fact you’ve been working on this other three-year deal for weeks. It’s about being agile to put the business in the best shape for the next couple of years rather than signing off on a deal so you can basically tick a box.
What advice would you give to someone starting out?
A big piece of advice I would offer is to remember that often the only thing that’s holding you back… is yourself. If you can do it, go ahead and do it - and tell people that you can do it. Don't necessarily wait to be asked. A lot of people can make assumptions about the limitations of your skillset, so it’s about proving that you can do it and even giving yourself the opportunity rather than waiting for it to turn up.
CHRIS FOUNTAIN
Chris is the Chief Financial Officer and Board Director of Qualasept Pharmaxo Holdings, a fast-growing independent pharmaceutical company. As an aseptic compounder and high-tech homecare provider, Qualasept supports the NHS nationwide, and recently won a Queens Award for Enterprise in Innovation. After his arrival in 2016, Qualasept made the Tech Track 100 league table three years running: #60 in 2016, #55 in 2017 and #63 in 2018.
Qualasept Pharmaxo is pretty big now, we’re looking at £240million group sales this year, so qualifying for the Tech Track 100 is even more of a challenge. Last year we had 35% growth, this year is going to be about 25% growth, but of course we’re talking bigger numbers now, and we do make a healthy profit! We’re growing very, very fast, so we’re always looking to improve on our financial management capabilities.
What is the role of a finance leader?
I think the role of a finance leader in a company like ours is to act as a sounding board for whether a strategic initiative is practical and makes commercial, financial sense. It's also about challenging the CEO and MDs, who are very entrepreneurial and very focused. I certainly can’t take the credit for the growth in sales and in profits, but what you can directly influence in my role is working capital management. Like a lot of growing companies, we're pretty thirsty when it comes to working capital, so it’s about managing that very efficiently. We use the usual working capital and cash conversion metrics and our absolute borrowing amount is also very tightly controlled; that's something I'm really held to account for. Another important KPI for my role is forecast accuracy, which is crucial for any fast-growing tech company potentially looking for external investment.
How do you attract the right talent?
Attracting the right talent, especially when growing from a very small company, is a key challenge. We are a very dynamic company, we’ve grown very, very fast, and many of my staff have joined the company early on in their careers. They’re incredibly loyal and dedicated, so part of my job is to train them up and help them qualify. I always take a great interest in our people’s personal and professional development. As well as investing in their qualifications, we do a lot of things for their well-being like providing free breakfasts, free fruit all day, and we even have a personal trainer who comes on site once a week for small group training. We’re a very green company as well, and everything is aligned to that sort of thinking: carbon offsetting, hybrid electric cars and so on. We want to make people feel that they’re part of a forward-thinking company. Technology is very important for staff retention too. The more of the heavy lifting of data that can be done with systems, the better for my staff. There's nothing more demoralizing than spending your whole day crunching numbers on a spreadsheet and cleansing data. So we are investing pretty heavily in improving our systems so my staff can spend more time on adding value through reporting and analysis – it’s much more fulfilling that way as well as benefitting the company.
What’s next for the business?
We’re now the number one private compounder in the UK, and there is further growth in the UK, but in order to maintain the sort of levels of growth that we have had up until now, we are considering looking at overseas markets too – perhaps via acquisitions and/or partnerships. So that will be a very exciting development.
What would your advice be for someone starting out?
My advice for finance professionals starting out: Never stop wanting to learn – every day ask yourself if things could be done better. Variety is also the spice of life. I’ve worked in several countries and sectors, and done an MBA. It’s given me lots of broad experience, which, as well as having been very stimulating, I can now apply to any opportunities and challenges facing Qualasept Pharmaxo.
It’s vital to think about what we need tomorrow and in years to come.
Another important KPI for my role is forecast accuracy, which is crucial for any fast-growing tech company potentially looking for external investment.
KEITH LOVELL
Keith is the Chief Financial Officer at Antidote, launched as TrialReach in 2010. Antidote is a digital health company, using data and smart systems to match patients to relevant medical research and boasting a network of 270 partners. Before rebranding in 2016, TrialReach appeared on the Tech Track Ones to Watch in 2014. Prior to his appointment at Antidote, Keith was CFO of household name Shazam, the music recognition and discovery application, between 2006 and 2015. With over a billion downloads, Shazam is a famous Tech Track success story, making the league table in 2010 (#36), 2011 (#44), 2012 (#67) and 2013 (#88).
Before Antidote, I was with Shazam for nearly ten years. I joined when it was about 30 people, just four or five years old, and turning over next to nothing. It was an amazing concept, but hard to make work with button phones, voice calls and premium texts for delivering results. With the advent of digital music, data tariffs and smartphones, the planets came into alignment and suddenly the business was able to surge into this beast that had 120 million monthly active users with around 600 million transactions a month. When I left, we had just raised $50million at a $1billion dollar valuation.
What is the role of the finance leader in a tech business?
What’s fascinating about the tech space is the pace and level of complexity involved: you are working with genuine innovators and creators. New technology companies are by definition often trying things that haven't been tried before. So, you get lots of innovation, lots of very bright people, and inevitably both successes and failures. It’s fluid and it’s fast, there’s a real buzz to it. As a tech finance leader, you’re moving very fast with the team to make the most of that innovation or maximise the opportunity of value from a particular disruption. You’ve got to make significant decisions in what are often small companies, in the early days. Contrary to what some might think, the finance department isn’t just there to say, “No.” You are the commercial partner to the rest of the team, and the CEO’s sounding board. What you can ask is, “What are the pitfalls and the advantages of doing that and how do we want to do it? How much do we want to do it?” So, you haven’t just got your foot on the brake – you’re more controlling the fuel flow. You’ve got to decide with the CEO and the board how hard you are going to accelerate and what the controls are around that.
What are the key challenges?
All businesses are there to either provide something or solve a problem. At Shazam it was, “What tune is playing?”, whereas the mission for Antidote is more serious, to accelerate new medical solutions for patients. In every business, the trick is to get every department, every person in the business aligned to the mission and then with each other. That’s not a pure finance thing - it is a challenge for the whole leadership team.
In future I think we’ll increasingly see a blurring between the roles of CFO and COO. You’re getting very involved and helping with decisions on when to execute things. You may not be an engineering guy, but you will be working with your CTO to help define what can happen in terms of their delivery of the roadmap, or working with sales people on how they’re pushing the structure of their big agreements, and so on. So, it's not just pure numbers, it’s actually understanding the full commercial impact of things. Today there is deeper and better information available, quicker and faster. In fact, there’s so much detail available right now that the role is partly about actually distilling down and simplifying to what matters, so that the right decisions can be taken in a timely fashion.
The opportunity with Antidote is to take a business through that same growth curve, albeit in a very different industry. Antidote is on a mission to accelerate breakthroughs in potentially life-saving treatments by bridging the gap between medical innovation and the people who need it.
How do you retain talent?
One thing you have to accept in a small business is that if you've got really good people working for you, if the business is not growing or is not expanding and doing different things, a good finance person will ultimately move on to a new challenge. But the way I think you retain people for as long as you can is you put your efforts into developing them and giving them as much freedom and responsibility as you can. And of course, you can only do that if you've got people who are good enough to run with that opportunity.
What advice would you give to others in the industry?
My advice would be to work with great people in a business that you believe in, and also have great people work for you. If you feel threatened by recruiting people who are good enough to take your job one day, then you’re not being a good leader – you need to be developing the people that will ultimately be leaders themselves.
All businesses are there to either provide something or solve a problem.
malcolm locke
Malcolm is Chief Financial Officer at Egress, a B2B SaaS solution that enables both private and public sector businesses to share data securely. Malcolm has led start-ups and scale-ups through rapid growth and international expansion in North America, EMEA and APAC. He’s been with Egress since 2014, since then the company has featured in two consecutive Tech Track listings, at #66 in 2017 and #77 in 2018.
What’s perhaps unique about the tech sector is the pace of change. If you’re scaling up a business, the strategy is constantly evolving to take advantage of new opportunities or to combat competitors or keep pace with growth. So as a CFO, you've got to be a little bit more flexible in your thinking. You've got to be refreshing or at least reviewing your plan every quarter to take into account what's changed in the business. Coupled with that, you’ve got to be able to support quick decision making in the business because the market moves so quickly, competitor activity changes quickly, opportunities are emerging rapidly and you want to be in a position to take advantage of those opportunities. So, for example, where I am now in Egress, we’re constantly changing our headcount planning, particularly in sales, because we’ve got a growing opportunity in front of us and we now need to pull forward hiring that we originally thought might not happen till 2021.
How do you measure your efficacy as a financial leader?
I think, for me, the mark of whether I’m being effective as a CFO is that I’m accepted by the rest of the executive team and decision-making group as a trusted advisor. I work in an environment where we have private equity and venture capital investors and I’m sometimes asked to provide advice and guidance to CFOs and CEOs in their other companies. So that’s a good benchmark for a finance leader: to be valued by your peers and by the ultimate decision-makers in the business.
How is the role of the FD evolving?
As CFO, you’re the righthand person to the CEO, and the trusted advisor on a lot of decisions, such as around how we take products to market, how we structure the marketing and sales organisation, which markets we enter, key hiring decisions etc. And this is where I think the role of CFO is evolving into a kind of secondary CEO. The CFO can play a key role by devising and managing a framework of measurement that provides a kind of backbone to your execution of the strategy. I do this by breaking the strategy down into a series of critical success factors – typically, the 20 or 25 things that the organisation has to do in a year. Then I define the metrics and track our progress against delivery. The metrics go beyond finance factors such as profit and loss and revenue growth, to potentially include things like hiring against plan, cost of customer acquisition, lifetime value of customers. And there can be qualitative factors too, such as delivery of a particular project. By defining business-wide checks and success factors, and taking responsibility for tracking those metrics and reporting on progress to the senior team in this way, you have a platform as the CFO to work with leaders across the business and look for ways to mitigate risks and amplify positives – to think about where we could invest more to get an even better outcome.
How do you deal with disruption?
Disruption is a perennial challenge in the tech space. We’re only at the beginning of a massive AI innovation cycle, for example. A huge challenge for the finance leader is to understand how that’s going to impact planning and budgeting. It might mean that you need to raise money and invest heavily in development in a way that you weren’t expecting. You’re going to have to assume disruption is going to happen even before it’s happened – to say, “Let’s be the company that does the disrupting. Let's dream up that disruption and raise the money and execute on that strategy, because it's going to happen.
Do you have any advice for other looking to follow in your footsteps?
My advice for finance professionals is to get as broad a business experience as you possibly can. Take every opportunity that comes your way to work in another part of the business or run a project that goes beyond your pure function, spend as much time as you can talking to people in other roles. It will all help you understand how the business fits together.
You’re going to have to assume disruption is going to happen even before it’s happened.
keith lovell
chris fountain
What are the big issues and challenges that will affect fast-growth tech in the next 10 years? Our expert advisers look into their crystal balls.
Tech 2030
STEVE RUMBLE (SR) Technology Risk Partner, BDO
SR
DAN FRANCIS (DF) Head of Innovation and Digital Technology, BDO
DF
What areas of fast growth tech do you think will be the most interesting for investment in 10 years’ time?
"My picks would include quantum and optical computing, where we’ve recently seen a double exponential increase in power (something rarely seen in technology), space tourism and particularly space research and manufacturing. In the medical area, I’d call out lifespan management – optimising people’s ability to extend, enhance and improve their later years. I think that will be a particular era of technology that's going to get a lot of investment, and a lot of traction with an aging population that are ready to spend money on this. I also want to mention water. One of the big global trends over the next few years will be the lack of usable water. There’s a lot of investment going into this, and I think we’ll start to see the fruits over the next five to 10 years around water purification and the protection of water supplies, and the ability to be able to use and reuse water around the world as it becomes more and more scarce and we take it less for granted – remember only 1% of the world’s water is actually useable, and this is reducing year on year."
"The combination of advanced data analytics, deployment of Robotic Process Automation and use of AI solutions will remain significant investment areas for the next 2-5 years. We are already seeing an increase in use cases as businesses are starting to realise the value that these current solutions provide in terms of enhanced customer interactions, realising back office efficiencies and enhancing business intelligence across all components of the business. Another trend is regulation technology – that is, deploying AI into the regulatory frameworks that organisations operate in, such as data privacy and money laundering. You’ve got all these financial regulations that organisations need to comply with, and I can see more and more advanced technologies emerging to support that need. Don’t overlook the continuation of blockchain either. I think we’re going to see sector-specific solutions and niche requirements coming through too."
Just over three decades ago, Sir Tim Berners-Lee created the World Wide Web. In such a short space of time, this pioneering technology has dramatically changed the world as we know it, bringing humankind closer together. Given that this phenomenal pace of change took place in less than 30 years, what might the next 10 years hold for the fast-growth tech of today? We asked our BDO experts Steve Rumble, Technology Risk Partner, and Dan Francis, Head of Innovation and Digital Technology, for their predictions for the future…
What are the social changes that lie behind these areas of future innovation?
And what do you think will be the main funding challenge for tech businesses that are going to be pushing these kind of changes?
"One issue is the change agenda and impact this can have on return on investment. With the speed of change that technology brings, there is a risk that a knowledge gap emerges across the end user community and the ability to leverage the value from the new technologies is lost. If you want to drive change, you need to get people embracing it. But to embrace change, the digital economy will need to work hard to narrow the knowledge gap. The other key issue is finance. Clearly the length of return on investment is becoming quite key, and the geopolitical landscape is going to impact on both local and global investment too. Then you've got the disruption factor. For example, with Facebook creating their own new currency platform and the global reach they currently have, this presents big challenges for small startups and the fintech market in terms of finding ways to leverage or just stay afloat around such a signficiant strategic disruption - understanding where disruption may come from is a difficult strategic challenge facing the technology market. So funding can't just be a financial decision anymore. Investors have to ask: Do we really understand what will be disrupted, or the opportunity it's going to bring? And equally do we understand the market we’re going into well enough to know what other disruptions may be out there, or what other competitors’ solutions might do to disrupt any emerging innovation? This is a real challenge."
"Absolutely. We should also think about the cities of tomorrow. One of the consequences of this digital adoption as the default and also the change in the way that people live and work, is that in lots of sectors and industries you may no longer need to commute to a city to work together, especially in Western economies. The growth of the modern city over the last 200 years has been around collaboration and commerce, but now digitalisation and technology allow us to distribute ourselves. I think you'll see working 'from the countryside' grow in the next 10 years or so as people seek to rebalance their lives. And if this happens, what are the consequences for cities? If the workers leave, then what will cities look like in the future? Will there be more entertainment areas and places to shop? Will it just be lots of driverless cars dodging shoppers and tourists? This will all have big implications on how we would plan and build cities, they might become more temporary than fixed as they are at the moment. You might have pop-up shopping malls and 3D printed buildings that can change shape as tourists, workers and events come and go. So I think there could be some fundamental shifts around that that we'll start to see in 2030."
"I think we’re seeing a new ‘mecosystem’ emerging, where you have a younger generation that is wanting to absorb new technology. At the same time, there’s an older generation that is aging and is looking more to benefit from technology enhancements in their older life. Those systems are being driven by a digital economy, and already we’re seeing dynamic businesses that are trying to leverage those solutions, whether that’s through a consumer model or a health model. Definitely that is how I see macro level things emerging."
What do you think are the key challenges for tech companies in the next ten years?
"I think it's the speed of change. Speed of change is both a positive if you embrace it, but it becomes a barrier if your business model isn't quick to change. Then there’s a whole ethical and reputation agenda that I think comes with where technology currently is, and where it’s heading, and boards are going to have to deal with that in ways they've never previously had to consider. An example would be AI. What is an acceptable AI solution? Where are the ethical boundaries? What implications does AI have on issues such as data confidentiality or privacy?"
"Also, if you look ahead 10 years in terms of political and social change, and some of the very large economies that are making huge impacts on technology like China and India, the successful companies will have to be true citizens of the world. I think that we'll see a rebalance of the types of skills that technology companies need in different areas as they grapple with changes internationally, and politically as well. We'll see a different mix of skills and education, and how people aquire them."
"I think Dan hits on a really fundamental challenge – the growing skills gap. So a business may have a vision and a view of what the target operating model of the future looks like, but have they got the capabilities and skills in house or in the market to enable that change? Businesses are currently struggling to access the right skills and this it likely to remain a critical challenge over the comings years until the skills gaps narrows."
"To that point, I think the current way of having permanent versus contract employment, or insourcing versus outsourcing, will just go within the next 10 years. You'll have skilled individuals who will be paid to do a particular job, whether it’s for a week or a couple of years, and that will give rise to some quite fundamental questions around how particularly large companies are organised, and how larger companies train people and how smaller companies retain and attract talent. If you're going to invest in people then on what basis are you going to get that return as a company? And how does that work for the individual, if you are not necessarily committed to staying with a company for life or even for the next couple of years? Or maybe you're doing multiple jobs at the same time in multiple times zones for multiple companies – then what does the payback look like for training and qualifications and all of the things that you normally get through a career? So I think there’s some big challenges for large companies as well as the smaller technology startups in this area over the next 10 years."
What can tech firms and founders do to best prepare themselves for the challenges of the next 10 years?
"I think that transparency angle is going to be key. We’re already seeing some companies embrace that, being completely open book about their business strategy or product strategy or customer feedback, letting the customers co-create and design product roadmaps, and contribute to funding the company. Monzo is a very good example, and Barclaycard have a socially powered credit card (Ring, US), but you can see more companies embracing this in in five to 10 years time. That's a very different style to how some companies are run at the moment where lots of things are closed and locked down."
"In addition, I would say make sure you really understand what it is you're taking into the consumer market, and know that the end user experience is absolutely key from end to end now. It is fundamental for the success of the business more than ever. If you have a bad experience, the resulting social media feedback loops can become very damaging to a brand very quickly. Fast experimentation is key. You need to be agile to create new ideas quickly and test them immediately and thoroughly in the market. Identify early the innovations to back and those to cease and use experimentation to identify the elements to tweak to turn an interesting concept into a market leader. Having the right skills and creative culture are fundamental ingredients for success."
What are you most excited about for the next ten years?
"If you take the widest possible view, it’s great to think that some of the biggest and brightest minds are already thinking about the big problems to solve. Not just over the next 10 years either, but over the next 100 years, in terms of clean energy, transport, planet-wide issues. And beyond the planet too – there’s a lot of private investment going into space flight, into the moon and Mars, and commercialising space. So I’m personally exicted, people are genuinely thinking big and bold about the future for us all."
Paul Morris | Head of Growth Advisory, BDO
A CTO is one of the key hires for any fast-growth tech business. Here we look at the role, key attributes, KPIs and the all-important issue of timing.
The job of your CTO (chief technology officer) is: • to make sure the company’s technology strategy supports its business strategy • to ensure the business has the best and most appropriate technology for its requirements • to build and lead the delivery capability within the technical team • to develop and manage a technology roadmap
The CTO occupies a C-suite, board-level position, so they must be able to deliver according to a technology roadmap that aligns with the organisation’s commercial strategy. The roadmap should describe the technology strategy of the business for the next two to four years. It should offer a clear (ideally annual or six-monthly) picture of how technology in your sector is expected to evolve, how it will impact the business and how the company can adapt. It acts as a vision statement, able to adapt to unexpected events while still adhering to the business’s philosophy. And it should set realistic timeframes and deadlines, showing stakeholders when to expect deliveries, how these will align with changes in the industry, and then help the CTO – or their successor – stay on track.
Hiring a CTO is an expensive process. You have to factor in the resource to hire the right person, salary, plus any costs they will need to build their team, and prepare the resources they’ll need to implement their roadmap. These costs may seem high to the board, but this appointment is a long-term investment that should return significant value.
Let’s say you’re a founder or CEO of a company with some interesting IP. Ask yourself: • Do you need to build an in-house technical team? • Do you have a medium-term technology roadmap? • Is your technology future-proofed? • With all your other responsibilities, do you have the time to focus on the technology strategy? If you are unsure that you and/or an ordinary technical manager will be able to answer these questions, then you should certainly consider a CTO appointment.
Don’t allow costs to dictate
When is the right time to get a CTO?
KPIs: How do you know that your CTO is delivering?
As well as delivery against the roadmap, here are some other key ways to measure the success of your new CTO.
LEADERSHIP
A CTO should be a natural leader who can assemble and lead a delivery team, delegate tasks efficiently, build resilience in the business and mitigate risk.
Strategic budget delivery
The CTO should be able to stick to the costings set out in their roadmap and demonstrate ROI at every stage. And they should be able to report on scalability – whether they will need to increase or even decrease their budget over a given period.
Timely delivery
Your CTO should be able to demonstrate an understanding of how they can help the company adapt to a constantly-changing landscape, ideally in quarterly or six-month intervals.
Commercial strategic sense
Your CTO must be able to understand how both the tech itself and also customer expectations will change. They should have an understanding of how product marketing works and be able to work effectively with your marketing function.
Hiring a CTO: 3 key takeaways
Be absolutely clear about the job description
Don’t hire until you are clear about the skills, experience and attributes you are looking for. Be clear what the day-to-day role will entail and what they should be expected to deliver in their first six months, year, two years. Consider how you will measure their success and what resources they will need to fulfil these objectives.
Understand the CTO’s wider impact
Make sure you understand exactly how your CTO will fit in to the business. It all goes back to the tech roadmap – that crucial document that demonstrates how the CTO will be expected to deliver value back to the company.
What are the key attributes of an effective CTO?
Your CTO needs to have: • a deep understanding of how your business and the market works • strong leadership qualities • experience of building their own team • a problem-solving mindset • flexibility and adaptability • a passion for technology You might also want to look for people who were coders or engineers earlier in their career. This will give them an intricate understanding of how the delivery process will work from their team’s perspective.
commercial strategic sense
timely delivery
It's a challenge for any fast-growing tech business – making sure your sales team and your techies work together for optimal business success. We asked an expert from each side of the room...
How to get your engineers and salespeople talking the same language
PHIL GUEST (PG) Sales expert and founder of Revcelerate, which helps tech start-ups to build their sales engine and scale revenue
PG
TIM PALMER (TP) Career technologist, former CTO and co-founder of partner-led tech consultancy Blue Hat
TP
Delegating the sales function
"In the beginning of building a new business, sales is often led by the founders. No one will sell a product as well as the person who conceived the idea or who developed the code. As the business gains momentum, the founders have to focus on other areas and at some point, they will start bringing in sales specialists. This is why I encourage all the founders I coach to document the sales process from the start. It will help with onboarding sales people, and reveal strengths and weaknesses in your product positioning and sales process, saving you a lot of time and angst in the future."
"As the company develops and separate technology and sales functions are put in place, you also have the risk of competing agendas. Sales is focused on what people are buying; whilst products are all about the art of the possible with the technology. The challenge is to ensure a healthy dialogue between the two."
Aligning the learning curves of sales and tech
"The product side has a well-established learning development cycle, which takes the team and the tech through a series of iterations until eventually you have a product solution. However, this approach doesn’t tend to happen so much on the sales side of the business, the reality is there's just as big a learning curve on the sales process side as there is in the product development process, and the two should be very well aligned. In the very early days, there's an awful lot you don't know about selling your product, in the same way that you don't know all the features of that product as you develop it. But then your understanding starts to accelerate, until you get to the point where you know what it takes to attract new customers and how long it takes to convert and onboard them. That learning curve is very closely aligned with the way that products are developed. This understanding that both functions follow a similar learning curve is a great way to align sales and technology towards a common goal."
Sales and product development
"Having a good feedback loop is really important in any successful early-stage tech business, and having technical people join you in customer conversations is very valuable on a number of levels. They get to hear things first hand, and you get to bring a different perspective to your customer. But a word of caution: salespeople will often look for the quickest route to closing that deal, and sometimes they may look to blame the lack of a specific feature for a lack of closed deals."
"Sales can input significantly into product development. It’s vital to get access to all those touch points that the organisation has with clients, because all the clues are in these conversations. But too often in businesses the sales team is completely focused on targets and not being asked what they’re hearing about the product. That’s a criminal waste, there need to be channels in place for feedback to reach the technology team."
"That’s where project governance comes in. Governance is what stops everyone from just reacting to the new flavour of the month, rather than reacting to truly critical issues. The sales team might say, “We just need to have this feature and then we’ll close this colossal deal.” But a strong leadership team can say, “That’s not a block to selling the product, it’s a nice feature to have but it’s not going to make a difference to that client. You need leaders who can separate out the noise in those feedback channels and are prepared to have the awkward conversations where necessary."
Vive la différence (and hug a techie!)
"And that comes from the leadership as well. If people see there’s a strong rapport between the Head of Commercial and the CTO that sets the tone for everyone else."
"Salespeople and tech people are often built quite differently. Salespeople love to be optimistic and positive, so it’s easy for them to get deflated by technologists – who love looking for problems because they are natural problem-solvers. At one company where I worked, we actually started a 'Hug a techie' initiative. The idea was, if you see a techie in the kitchen, go and have a chat with them – they might not always be the most vocal, but that’s because they have a lot going on in their heads, trying to solve your problems. It was a bit of a joke, but it did help to break down those barriers and to get people to talk to each other."
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