Episode 130 of the Fintech Scaling Show
The Mindset of Scaling with our CEO, Nicola Breyer
Fintech Scaling Show Host, Richard Doherty, and our CEO, Nicola Breyer, sat down together for the Fintech Scaling Show’s 130th episode, The Mindset of Scaling, which we are summarising here for you now on our Insights Blog. The podcast was originally published on August 5th, 2022, and is available to listen on Apple, Spotify and the show’s website.
Richard Doherty (R): How is the mindset of a leader in a scaling business? How must it shift as you start growing/scaling up?
Nicola Breyer (N): At an early stage you should be very product focused with the aim of bringing some revenue and progressively increasing it. This then shifts to building an organisation that becomes a scalable entity and focused on revenue generation. This transition is not easy, sometimes there is a phenomenon where the founders only want to sell, and this isn’t the best path either, I would say the transition to really build a strong commercial unit and be fully responsible for the revenue generation is the key.
R: Healthy obsession for the job, be obsessed but don’t take the eye off the ball when it comes to goals. Have the right goals at the top of the pyramid and then lead a team, inspire a team, so that it can get you to the next journey. Continue learning, but don’t unlearn the relevant stuff, don’t forget about the simpler things. Be strategic but also opportunistic. With these elements scaling becomes easier and you can start building a framework to allow you to build up what you want. What are your thoughts on this?
N: That is essential, but I’d like to add that it needs to come with a certain degree of professionalism. Inspiring yes, but if you’re already living a product that doesn’t exist, your sales people won’t be able to sell it. You don’t want to build a huge construct that isn’t flexible anymore, you need to start to measure what you do so that you’re able to learn and evolve, not to mention processes, contracts, all those nice foundations that specially in a B2B or B2B2C world we really really need. So yes, that doesn’t come from one day to the next, it’s gradual, but there are a lot of things you need to think of that a lot of people don’t have experience in.
R: Also what you’re saying: the fact that you onboard 100-300 customers doesn’t mean that next day you have this amazing infrastructure, but it does mean that you as a strategist and as a leader need to figure out what the best way is to continue to build the infrastructure step-by-step, allowing you to see how the engine is working and treat the engine to get a better cadence across various departments, right?
N: Yes, there is also the fact that you move from a belief-driven organisation, which is at an early stage because you have no data, to data points. And all of a sudden those data points don’t tell you what you want to see, and that can get quite frustrating, so how do you reevaluate how to move into one direction or when you want to take a stronger shift? The learning I’ve had from my last position at OptioPay is that one of the things that pays off is to stay incredibly close to your customers and to keep talking to them, and really involve them, because these are the people that pay your bills. But one of the key transition moments in a scaling business is when you bring in professional sales people who tell your story. How do you make yourself somewhat dependent on sales without letting go of the responsibility for revenue? That’s one of the key moments in any scale up story because it needs to happen, otherwise the company will not be able to grow, and I have seen that several times and there is no magic formula for it, it’s just something to be acutely aware of and to plan for it.
R: As you went through the process a few times, what are the steps you’ve taken as a leader in organisations? What are the practical steps that one needs to think about and start planning for?
N: The product needs to work in line with marketing, with sales and with key account management or customer success. So thinking about that earlier on in the process and making sure that your product has things built in that allow for that, and that you create the relevant content that you can then take out to the digital world in terms of marketing and lead generation is something that is really important, rather than solely relying on the previous relationships selling, which is also important, but you need to create more volume in your sales funnel in order to then have a relevant output at the other end. And that is a key learning that I underestimated when I moved into this world, that this is a technological machine just as the actual product.
R: It’s also obviously important to understand that it is not just about sales, but also about PR and marketing, saying our products solve specific problems for our market and every market in some way. Because it’s a whole funnel that you need to consider right?
N: Yes, an interesting thing in addition is what you do in-house and what you outsource, right? I think something you need to look at is to test early and then figure out what kind of people you need as a core team and what other tasks you can outsource to experts that you don’t need in the long run. You need to be able to know a lot of stuff to brief someone and maximise the value of these people. Which also means you need some sort of marketing design content team or you just have to accept for this to be a part of your own role as a leader and a founder. I would argue you should be because you’re the best person in the beginning to write that narrative and ask for support. But you need to control the narrative at the beginning yourself and then you have to find a way to professionalise it.
R: There are specialists out there and the reason there are is because they focus on a specific topic but I track that with caution, as you go into this journey of scaling a business. So it is up to us as leaders and founders to figure it out and bring the specialists in certain positions to get the most out of it, right?
N: I completely agree and I want to build on that. Let’s talk for a moment about standardisation vs. personalisation and opportunity. I really believe that you can make your life a lot easier if you standardise certain things, for example, if you have a consulted-on selling approach, you might want to have some standardised workshops that are always part of your sales process, where someone from product is coming, the client is paying for that workshop and then you know whether this is something you want to take on. What we want to see in SaaS models is a solid volume that goes through those clients, that generates revenue and a cost base that pretty much needs to be high in terms of individual salaries because you need good people. You want to create a technology which has an 80%+ revenue margin, and then you want to have people who maximise the output of your individual accounts and ensure your contract duration is long and that you don’t lose anyone. Additionally, you need to start saying no to certain things and start figuring out if you are a technology company or a consultancy, ask yourself what is your business model and what do you need to bring it to life and make it work.
R: I’d say it’s also vital that everyone has a view on profits and that everyone is accountable to delivering certain things around the transformation of the business and also the selling of the product to various customers, right?
N: I think we’re talking unit economics instead of macroeconomics, or company economics, so that you can decide on a leadership level. But, coming back to OKRs, everyone in the company should understand what numbers they are contributing to, it’s important that everything is measurable in terms of people, culture and team. We should also know which are the KPIs that are going to make us successful and success often means what the investors want to see at the beginning, but also what our customers need so we can focus on this. But inherently you need to understand what margin your product will give you and then you’ll have to decide how quickly you want to achieve the profitability target. Unit economics is what we need to talk about. The path towards profitability is the way to go.
R: We’ve spoken about a lot here: mindset, shift, sales, marketing, PR, standardising your product and understanding the numbers to move forward with your business. But what are the one or two things that you consider important as you move into the gears and start scaling up your company?
N: One of the key aspects as an operational leader is to find focus time to work through important issues and proper problem solving not for cutting, also with the pressure in scaling up a company can put on you, if you stop being able to elevate and to look at your business from, with a slightly suggestive, outside perspective then you are in big trouble. From my point of view, sometimes it is better to do less and to decide not to do something in order to be able to have some sort of phase in your head, than to do too much yourself if there is no one else to do it.
R: Yeah totally agree, and as to wrap this part, do you know what is the last message you want to give to founders out there, in the fintech space that are going through a scaling journey or now are growing their business?
N: I think there is a universal message, but right now in the short term there are tougher times as you know the market is nervous and is slowing, I think is to continue to believe in your value proposition. And you know unless you are giving everything away for free, no one is happy to pay for your solution. There is value in what you are creating, to figure out who the key people are your work with and retain them and to obviously do something to stretch through air time but also not to stop believing in yourself, if you are heading towards the next funding round. If you get that right, if you get people to pay for what you do then, things should be pretty much ok.
R: That is good advice and some really good direction following. Now I’d like to ask you 3 simple questions, all you say is yes or no. And by the way, there are no wrong answers. As a scale-up what is more important as you build up your solution or you build up your business, considering what parts you should outsource or considering how you should build that know-how and that team internally?
N: Number 2. Number 2 first before you have no idea what your internal capabilities need to be to run the core of your business, you don’t know what you can outsource.
R: What is more vital to a leader when they are going through the scaling journey, is it more part execution or is it always more about strategy first?
N: That depends on which part of your journey you are. I think strategy has to be done at an early stage so that is why I am inclined to go with execution in this particular scaling phase.
R: Nice, ok. Last, but not least, what is more important in the fintech business, the people or the tech?
N: I would like to say option one, people, but unless your technology is regulation-proofed, secure, and trust-inducing, you have nothing and in fact you have reputational damage. You can have the nicest people, but if they are not good at what they do, and they create accidents around the product, then, sorry, I have to go with technology in this case, but purely because we are talking about what affects people on the other side.