In this episode we unpack the topic of: What is it like being COO of a private equity backed business? We are joined by Pete Harris, COO of Pipedrive. 

Bethany and I discuss:

• When are we at our best? Our worst? 
• What are we passionate about in a business context?
• What is our why? 

We then discuss the following with Pete: 

• Why the title COO versus CRO or CCO? 
• How are you being evaluated by your PE investors? 
• How do you motivate employees given you are not founder led? 
• What does a board meeting look like in PE backed companies?
• What is the approach to compensation in a PE backed company? 
• What is your why? 

References

• Pipedrive 
• Simon Sinek - TED Talk on ’Start with Why’ 

Biography: 

As Chief Operating Officer for Pipedrive I am responsible for a broad range of value creation activities, including business strategy, execution, and Pipedrive’s approach to global markets - determining which markets we are in, why and associated investments. I work closely with our Board from Vista Equity Partners and Bessemer Partners. 

Previously I led Global Business Development and Global Partnership team at Intuit - supporting our customers across the US, UK, Australia, France, Brazil, Mexico and our expansion markets. I also spent 12 years at Deloitte with roles including risk consulting in Financial Services, UK Innovation Lead and UK Ventures Lead. The latter involved managing a £25m fund to invest in external start-ups but also internally in those ideas that might change Deloitte from within.

Summary: 

• Lung health and private equity CEO experience. 0:06
• Bethany Ayers discusses her experience with chest X rays and doctors' appointments after being diagnosed with COVID-19.
• Brandon Mensa shares a story from his time at SwiftKey about ignoring chest discomfort and eventually getting an X ray after realizing it wasn't going away.
• Brandon M experienced a spontaneous pneumothorax, where one of his lungs collapsed into his chest cavity, and was pumped back up with a tube inserted through his clavicle.
• The medical team used a rudimentary method to insert the tube into Brandon's lung, and he was able to recover quickly.
• Brandon and Bethany discuss the concept of "Y" or starting with why, as discussed by Simon Sinek, and how it relates to their discussion on the purpose of the company and its impact on the organization.
• Leadership, passions, and personal growth. 5:53
• Bethany: feeling inauthentic or unwilling to express views can be at worst, hating having to do that.
• Brandon M: tiredness can make him less present and less effective in leadership roles.
• Bethany passionately advocates for gender equality and personal growth, reflecting on death and regret.
• Unlocking potential and creating a fulfilling life. 10:27
• Brandon M recognizes immense potential in individuals, both personally and professionally, and finds it exciting to work with companies to unlock this potential.
• He believes that exercising these muscles through activities like acting helps him understand the human experience and apply it to his work in companies.
• Brandon M: Why? To help teams fulfill their potential.
• Bethany: Why? To create a fun life and inspire others.
• Leadership roles and AI initiatives at Pipedrive. 15:32
• Pete Harris oversees sales, partner, customer success, and customer support teams at Pipedrive, while also leading AI initiatives.
• Pete Harris discusses his role as CEO of Pipedrive, focusing on AI initiatives and commercial growth.
• CEO role, value creation, and long-term growth. 18:45
• Pete Harris, CEO of Pipedrive, focuses on value creation plan to deliver success, with key metrics including net revenue retention and churn numbers.
• PE investors evaluate Pete's success through delivery of value creation plan outcomes, with specific focus on revenue and retention numbers.
• Entrepreneurs often prioritize short-term growth over long-term sustainability in their business strategies.
• Growth vs margin in private equity investing. 22:32
• Panelists debate whether growth or margin is more valuable in today's private equity market.
• Pete Harris emphasizes the importance of balancing growth rate and margin in business, citing the "rule of 40" as a benchmark for success.
• Bethany asks Pete if he still follows the "rule of 40" in private equity, and Pete confirms that it is still relevant and important for their business strategy.
• Leadership, culture, and motivation in a 1000-person business. 26:47
• Pete Harris: Founder lead plays a role in a company's culture and values, even after they leave. Holding on to that legacy can attract top talent and be a unique selling point.
• Bethany: Charismatic leaders, whether founders or not, can play a significant role in shaping a company's culture and values.
• Pete Harris emphasizes the importance of understanding one's "why" and purpose in work, citing it as a key factor in motivation and job satisfaction.
• Harris believes that founders can play a significant role in shaping a company's culture and values, but acknowledges that not all founders are equipped to lead a business through its entire lifecycle.
• Leadership, purpose, and private equity involvement in a business. 32:36
• Brandon M emphasizes the importance of purpose and charismatic leadership in a company, citing it as a motivating factor for himself and others.
• Pete Harris agrees, highlighting the need for alignment between personal purpose, mission, and what the business is doing. He believes that being a charismatic leader without being the founder is crucial for scaling up a company.
• Harris also stresses the importance of authenticity in conveying the company's purpose and mission to employees and stakeholders.
• Pete Harris describes the experience of working with a private equity (PE) firm, emphasizing the importance of confidence and alignment on the company's goals.
• The PE firm has a formal agenda for board meetings, which can go in unexpected directions, focusing on metrics and growth.
• Bethany asks about the frequency and rehearsal process of these meetings, with Pete Harris highlighting the importance of preparation and alignment as a team.
• Board meetings and investor dynamics in a startup. 38:45
• Bethany highlights the value of board meetings for VC-backed startups, where investors provide strategic support and challenge.
• Board dynamics, compensation, and talent attraction in a PE-backed company. 40:31
• Brandon M. emphasizes the importance of confidence in the founder and leadership team for the board to effectively contribute to the business.
• Pete Harris highlights the value of having operating partners and investment partners on the board, bringing different perspectives and expertise to the table.
• Pete Harris emphasizes the importance of attracting the right talent in a PE firm, with compensation being a key factor in doing so.
• Brandon M asks about the approach to compensation in a PE company, with options being a common incentive for top management.
• Career development and personal purpose. 45:11
• Pete Harris emphasizes the importance of understanding one's "why" and mapping it out to achieve success in their career.
• Harris recommends using a blank sheet of paper to draw a "circle of why" to identify one's purpose and goals.
• Pete Harris believes that understanding one's "why" can serve as a navigation system for both career and life decisions.
• Harris encourages others to identify their "why" and use it as a guide for making decisions and setting goals, even in unrelated areas like volunteering or hobbies.
• Pete Harris suggests asking "What's your why?" to uncover personal motivations and values, and using those insights to make decisions without regret.
• Bethany struggles with understanding her "why" and seeks help from Pete, who encourages her to imagine her deathbed regrets and apply her values to decision-making.

Brandon M 0:06

Hello, everyone, and welcome to another episode of the operations room a podcast for CEOs. I am Brandon Mensa. And as always joined by my lovely co hosts, Bethany Ayers, how are things going, Bethany,

Bethany 0:17

you're always riddled with COVID cohost hairs

Brandon M 0:23

are we know passed on what's going on?

Bethany 0:25

Now, this is week five today. The fifth week from when I was first diagnosed, I finally broke down and talk to a doctor this week, my husband's been trying to convince me to do it for about two and a half weeks. So I'm like, What are they gonna tell me, they're gonna say anything, can't be bothered. And then after coughing up a lung, I decided to actually talk to a doctor who sent me for a chest X ray. So waiting for the results. I don't think it'll be anything. But he's said he basically can't tell until he sees an x ray. So we'll see. So other than the chest X ray, slightly eventful part of my life. It was also my birthday this week, I have turned 47, which I had thought I was for the last six months. So it's particularly anti climatic. Like, oh, I'm still 47. So it's like a bonus here. And then I have a son in boarding school, who is not particularly communicative, and may or may not have read my husband's messages, my other son's messages all reminding him that it's my birthday this week. But we are now four days post birthday, and have yet to have a single, not even like a happy B day.

Brandon M 1:38

Text Message forum. Not even that.

Bethany 1:41

And to make matters worse, when I had to go to the doctor to collect my referral form for the X Ray was a very friendly receptionist who said what's your birth date? I said it because Oh, happy birthday for yesterday. I'm not taking much offence, it's more humour. But also, his Christmas presents might not be great this year.

Brandon M 2:01

Bethany 4:17

That is so scary. So many ways. So the big question I have is the tube to pump it back up. Does it go from the outside down your throat where it How does it get the tube into your lungs to pump it up?

Brandon M 4:31

They take the clavicle at the top and they basically pop a hole and through that clavicle, they take a cord and basically like whatever inserted into your lung effectively so it's quite rudimentary it's not like a scientific process. They basically puncture it stick in the tube jam it down. I think they based on their I guess their doctor knowledge to know how to do it correctly to not make it incredibly painful for me.

Bethany 4:54

Thanks for that story, I think horrified the rest of the day obviously I'm thinking about bumping up lungs like bicycle tires.

Brandon M 5:02

Bethany 5:53

when I'm having fun. And of course, there's lots of definitions of fun, but it's when I'm feeling energised. And that's a combination of curious about something and wanting to dig into it more. And also doing that with other people. I've been natural introvert, but I'm an introvert who really likes people. I just don't like a lot of people altogether. I like individual relationships. So it's like a combination of curiosity and relationship.

Brandon M 6:24

Okay, curiosity and relationship. Yeah, I think I don't perform well, when I feel like I'm fulfilling somebody else's expectations of who they think I should be, if that makes sense, right. And I think when I perform best, it's when I'm being present within Brandon, in a very authentic, real way. And I'm centred within myself, and I'm delivering a message that I truly believe in and expressing it. And when that happens, I'm so much better. Whether it's a team meeting, board meeting, or being in front of customers, that's always when I perform my best. And as I've gotten older, I've been better at getting into that place of being present within myself to express myself more effectively. I think, love

Bethany 7:03

your answer, Brandon, and particularly love that it's the embodied leadership answer without using the word embodied in any way, but being in your body. Coming from a place. Yeah.

Brandon M 7:16

Perfect. So the opposite question, When are you at your worst,

Bethany 7:20

very similar to you. So when I have to be or feel as though I have to be inauthentic or unwilling to take the consequences of expressing myself and my views, because it would be unacceptable at that moment, I think in terms of leadership that comes up, when you have to disagree and commit. And so you might not actually believe in what you now have to go out and sell to the organisation. I really hate that. It might not be be at my worst, but it's me at my worst inside. I hate having to do that. I

Brandon M 7:57

think when I get tired, I'm not a good Brandon basically. So sometimes when I've had a really difficult week, and it's just been a tonne of stuff happening. And it gets to like 3pm 4pm, at the end of the day, and I'm dealing with yet another problem and another person, I can be short pick and not listen very well, for sure. You know, and I can be much more abrupt, I think in terms of my commentary and feedback. If I'm gonna go into a meeting with somebody, I need to be ready to have that meeting with that person. And if I'm not ready to do it, I'm much better now at catching myself and cancelling the meeting or rescheduling. Again,

Bethany 8:30

I think that's when that comes with age and getting to know yourself and noticing those markers. Again, within your body of the short temper the exhaustion, the lack of resource to deal with other people know

Brandon M 8:46

exactly. Last question. What are you passionate about? And I think you actually kind of referenced this maybe earlier in your other answers. But what is best to be passionate about?

Bethany 8:54

It's a hard question because it's like equality and self vested interest, equality for women. And I am very motivated by making the world a better place for women and a fairer place and pointing out the inequalities that we often don't see or just accept blindly. Women are still doing 65% of the housework, even in houses where women out earn men, and we ended up just culturally accepting this. That's like a passion of an external sort. And then internally, I think about death a lot. I am not religious, I don't believe that there's an afterlife. This one life is all that we have. And so how do I want to shape and live my one life? And that kind of goes back to my original answer, which is, I want to have fun. I want to learn and follow my curiosity and I want to You have meaningful relationships with people. But there's like a, I have a litmus test of almost everything of when I'm on my deathbed, will I regret this or not?

I was thinking about this question of like, I guess to me, there's two angles to it. Like, I've really been into fitness over the course of my life, you know, I religiously, train three or four days a week in terms of, you know, weights and working with a trainer, I used to be really into climbing, indoor and outdoor climbing. And I think what I've realised is that the reservoir of potential that you have is immense. And when you think about, or when I think about, you know, going into my fifth set of deadlifts, Rep Number eight, and you're killing yourself, basically, you don't realise how far you can go, the trend is very good, because the train is gonna push me, he's very passionate, he kind of lends That, to me the excitement, and he's the one asking for the next set, he's the one asking for two more reps in this case. And it's just remarkable. If you're in the groove, and if you're in the moment, and it's feeling good, you can go pretty far in terms of pushing your body pretty hard, physically, in the sense much farther than what people think I think oftentimes, I think this also kind of equates to more of like the human experience, which is, there's all sorts of potential within people to be and do different things. You know, you don't have to be captain your past you, there's definitely a future in front of you that can be differentiated, you want to exercise those muscles a little bit. And that fascination with the human experience, I think, for me, personally, you know, has shown up in my interest and fascination around acting, because with acting kind of, like, express yourself, physically and emotionally through different characters and do so safely because it's not you per se, as it is the character that you're demonstrating in front of, you know, an audience or with your fellow actors, or in this case, kind of like the improvisation stuff where it's a bit similar. It's like, you're exploring the permutations around how you interact with others in a way that is real and authentic, but also builds off of each other. Somebody poses something ridiculous to you, you say yes. And something else to build on it. It just keeps reminding me that there's so much potential in individuals. And when you apply to a business and somebody that you're coaching, or mentoring or line managing, in this case, you know, what you see in front of you, there is immense potential not person to be so much more. And I think that, to me, is what gets me excited and passionate about working in companies. When you think about a more an organisational level, that's fulfilling the potential of that organisation, because at the end of the day, when I worked at SwiftKey, we had a phenomenal outcome for that business, Microsoft bought that company for a ridiculous amount of money. And we think about the people that were there, were we special, you know, like, were we somehow uniquely amazing at delivering this phenomenal outcome. And it really wasn't that at all, it was really just, I think, each of us individually and as a team, and as an organisation had a capacity and ability to fulfil our potential in terms of an organisation in this case, and that's what I chase, I chase that for myself, I chased that for others, I chase that for teams, and I chase that for companies. That's what I get excited about. It's interesting,

because yours is, like, I would think of you often is maybe I don't know, the more analytical or like the less wanting to go there with people versus me. And yet, my answer is a bit more. Little bit of the relationship, but a lot of like the intellectual curiosity, and yours is the other way of like, the untapped potential of humans and having all people reach it. I think winds ended up being more of a ideas based passion, and yours is more of a people based passion. It's interesting, just versus kind of what are our brands are normally.

It's, it's true, isn't it? I don't know. I think in some respects, I feel more awkward talking about it, because it doesn't feel so tangible sometimes, like being more analytical and functional and pragmatic, always seems more real to people sent out. And maybe that's an illusion, I don't know. But to quickly summarise, I was then trying to put together my why, like, how does that translate to a why in this case, and the only thing I could actually come up with, and I'll just read this verbatim here, but that was to basically to have the back of people or teams to help them on their journey to fulfil their potential. So I know, Bethany, I'm kind of putting you on the spot here. But if you have to kind of wrap up your thesis in a in a sentence of it's possible. It's interesting,

I guess, for me, because I feel as though nothing exists until we create it. Life can be a game and something fun to play with. And so my why is to create that fun life for me and inspire others to do it as well.

Love it. I feel like we're doing like OKRs. Here. We're trying to create like a simple statement.

It's not measurable. How are we going to measure it? measure time down. Exactly.

That is definitely not going to happen. All right. So with that model, we transition over to our Conversation with Pete Harris. And let's talk to Pete about that.

I am delighted to welcome Pete Harris to the podcast today. Pete is the CEO of Pipedrive, which I'm sure many of you are actually customers of, or have considered purchasing along the way. So Pete, we are just going to start with a really easy question for you today, which is every CEO was different. What does SEO mean at Pipedrive? What are you responsible for?

Brilliant? Well, first off, thank you for having me. Brandon, I'm delighted that you've seen the two Bad's there a hit amongst Pipedrive employees.

And if you can't avoid it, it's on every two carriage. I think that's

awesome. So I was actually listening to one of your other guests previously, Ahmed from gocardless. And I thought his answer was brilliant, around what there's a kudu and the fact that really, it's just different in every organisation, and it depends on the match. And the match between the person looking for the role and the business and the business needs. That Pipedrive I was very specific, both were Dominic, our CEO, and VISTA who were the private equity, owners of Pipedrive, and what the role would be and why it would be that way. And so, for me, it's largely commercial. So I look after our sales teams, partner teams, which are reseller partners. So like a one to many relationship, I look after customer success, who help our largest customers getting the value from our product. And finally, customer support. So they are our or my people responsibilities. But I'm also responsible for our value creation plan more generally. So that's the business strategy of how we realising value over the next four to five years. And finally, and an area I find really exciting, actually is I'm currently leading our AI initiatives. So this is all about how do we use AI internally in Pipedrive, to become more efficient, and to do more, and basically have more fun because we get to automate many of the boring tasks, repetitive tasks, and then free people up to do more of the intelligent based tasks. Just

a quick follow up on the titling nomenclature for the role itself. Is there a particular reason why it was called CEO versus let's say, Chief Commercial Officer? Or what was the distinguishing marks? Do you think as to why the CEO title made more sense in this case,

I think it was a mixture of what was required by the business. And this may be a slight tweak, I'd love your opinions on this later over the PE versus VC versus other types of ownership. Because my role originally was very sales focused, it was sales team, and it was partner team. And it was transforming those into really operationally efficient arms of our business. And then it extended into the customer success, customer support. So initially, it probably was a bit more CRO, like chief revenue officer, and then Chief Customer Officer. And then we've actually combined those two into my role, and then my responsibilities and now very much focused on the commercial side, and also supporting our customers. So it could be both. It's

interesting, because it's very similar to my career paths at peak, except that I started a CRO then Chief Customer Officer and then COO, but moving into coo became more back office and operations focused rather than building out the commercial side. I had a question around the AI initiatives, does that mean that you're responsible for all internal operations? Yeah,

in a way it does. So I often joke with the CEO, because I have permission if you like to sort of poke around in any area of the business. And that's what I love about being a chief operating officer, you really get to understand and uncover all of the different parts of our business to see where it is opportunity. And when it comes to AI, of course, that can be anywhere it can be doing anything. It's all about where do we see the opportunity to optimise and use AI as an enabler for that to happen? So to certain extent, yes, it can be very broad. And then also, of course, I'm starting with my own areas of responsibility and my own functions to make sure that we optimise for the commercial arms as well.

And then this may be fairly straightforward now that you've explained your remit as a CEO. But when it comes to the P investor, what is it that they want out of you in terms of your role? And how do you think you're being evaluated? Like what are the markers for good success for Pete in the CEO role for Pipedrive?

I feel like we can apply different lenses to this. So if I look at what our PE after, for me, it's very much to think about our value creation plan. And would you say that's a term just for PE or did you have similar terms like that within the VC world? As well,

we don't have a similar term. So I was just assuming the value creation is basically like your model, your budget your model in your three to five year plan. Exactly.

It's like the PE term, I guess for how do you create value within the business that they've acquired. And so what we've done and we went on a journey with VISTA, right at the start of this was to say, what are the elements of our value creation plan that we want to realise over the next four to five years? And then you split those and there are there are six of them for us. And then what we get to be able to say is, which of those elements are we going to do in what order? What are the outcomes of those going to be, and so on, and so on. When we think about what success for me, I look after certain elements of those value creation plans that I'm responsible for. So to give you an example, I own the net revenue retention number for Pipedrive, the churn numbers 90%, of the revenue number. So for me, success very much looks like delivering against that value creation plan. And that's ultimately how at the end of the day, they're going to realise and we are going to realise the value upon the events wherever that may be. So that's like point number one, I guess, point number two is very much around building a business for the future. So it can be tempting to think of life as a kind of four year cycle or a five year cycle. But of course, what you're building is something that will go on somewhere else and be something else. So you've got to make sure that you're investing in the long term as well to build that sustainable platform. So this is not about optimising asset stripping anything like that. This is about building a really solid business that can just go from strength to strength, over the longer term, does that resonate with where you've been? Or is that maybe slightly different from the experiences that you've had? I think

there's lip service, that that's what we're doing. And in reality, it's trying to grow as absolutely quickly as possible, spend as much money as possible to then raise again, and keep on the hyper growth, it's going to change in the new market. But

yeah, because I feel like the typical cycles are venture capitals, for the most part, on average, you get your funding, you have 18 to 24 months to prove out the next Metro set, it's almost like more short term focus than what you just described, in a sense, because it's less about a five year outcome of flipping the business at that point, as opposed to, you've got cash for two years, you're gonna burn it for two years, and you better deliver that next metric set to get to the next round, essentially. So the very much is like a short term thinking in terms of how do we make that happen? How's it going to occur in this business?

That's interesting, because we talked a little bit about the difference between VC and PE. And I think that from the PE side, there's an investment difference, potentially, where if VCs are earliest stage, maybe lower ticket, whereas peers bit later stage, and certainly, you know, working with VISTA, they tend to be businesses that are generally profitable, making money, they've got product market fit, they understand their customers, and they're on that growth trajectory. And then the money, therefore, is all about how do you scale that as quickly as possible versus potentially, in VC world earlier investments, finding your feet a little bit burning more cash, maybe margin is less important at that point in time?

You know, what's funny about the margin part of it, I always felt that if you're at 80%, it was like that was it. I didn't care about that number at all. It just like gross margin 80% or fluctuating between 78 and 82. You're like, whatever, I don't care. Then it was all about how do we grow the company as opposed to the margin part of it?

And what we never think about is EBIT? Da, yeah,

I mean, EBIT DA is incredibly important for private equity is essentially and especially at the moment, the way the market is, I'd be curious if your view and I'll ask you the question is one point of growth more valuable than one point of margin in today's world? When

we say margin, we just think about gross margin. And as Brandon says, As long as it's fine enough, in venture, again, the caveat is this at the new world is very different. And we'll see how it unfolds. But in the past 10 years, you basically can use EBIT da as your proxy for how much cash you're burning. And it's always negative, and it doesn't matter. All that matters is your ARR growth. And all valuations are based on it. It's

been really interesting, because we've looked at events and how they happen, whether that's an IPO, whether it's just a strategic sale, whatever that looks like. We talk a lot now about the points of growth versus the point of margin and how valuable is each and therefore what might you do in your plans in order to optimise and the reality is, there's not an awful lot between them, you need to be growing at a decent rate. And at the same time in private equity, you want your margin to be strong, so that it gives you that option then for a business that wants a high growth business or a profitable business. It just opens the doors you're not closing any doors by only having one and not the other.

So do you actually live by the rule? We'll have 40 Does a rule of 40 still exist? And again, just for any listeners to explain what it is, is it's the growth rate and the margin. So percentage of EBIT. Also, if you have a 20% margin and 20% growth rate, that's 40. And it can be five and 35. Should be longer than it should. And anything in between. So Pete, I'm just like, it's quite a contentious number in the VC world. I'm wondering if it still exists for PE? Absolutely,

it does. Yeah. And it can be rule of 40 is the kind of the most well known one, but it can be really 50 rule of 60, whatever it is, and absolute, like 40 is considered the baseline. But it absolutely is, how do you do it in? And what combination? Do you do it? So we know some of our competitors, for example, are growing very heavily and could be growing at sort of 80. But then also not making the money on the margin and be at minus 10, for example, or worse. And it evens out then to be around, you know, the 60 or 50. Whereas other companies and Pipedrive, in particular, we tend to be more balanced and have a balanced approach towards our growth rate and our margin so that we can play with both. And you can fluctuate both, according to what's important in the market right now, like what's attractive. And you could easily argue that a point of margin is more assured than a point of growth, because growth is hard. You've got to get customers, you've got to convert them, you've got to expand and you've got to keep them that's hard. But with margin, if you decide actually, I'm not going to recruit that person that's straight to margin. And you can keep doing that. And that's the balancing act of how do you grow the business. And then attractive growth rates whilst managing your margin and then attractive rate but without stagnating the machine without stalling the machine? And that's the real delicate balance that we're constantly battling with with our plans in in the PA world. Yeah,

that makes sense. And then maybe a different question. Also clarification VC versus p in this case, but all venture capital companies, for the most part are founder led, and they're built off the vision of that founder, the mission of that founder, and really the purpose, why do we get up in the morning, and that galvanises the business that galvanises the internal employees? How does that differ whenever 1000 person P back company,

I don't know if it does. So Pipedrive is obviously found the lead, we had our five founders based out of Estonia, the initial investment went through VC. So they went through those cycles. And then upon private equity, when VISTA bought Pipedrive, out in 2020, the last founder then left, and that culture, the roots, especially within somewhere like Pipedrive, which is a very proud Estonian company, and Estonia is very well known for creating quite a few unicorns that do very well. And by nature, because the country is quite small, they have to be global from day one. And so with all of that cultural significance, I feel like with a business like Pipedrive, we are still very founder, led, even though the founders aren't here. So their legacy lives on in the values in the mission, etc, etc. So that in a way can be its own value within a company. And you've got to hold on to that, that's what makes a company unique and special is when you walk into it, and you haven't feel. And it's difficult to monetize that it's difficult to put a number on that. But it's what attracts the best talent, it's what means people want to work here wants to stay here and want to build their careers here. So from a private equity perspective, I'm not sure whether there is a difference between if it's VC, private equity, I think found a lead plays a role. And as they leave, if you can hang on to some of that as you grow, then that becomes very important. The challenge, of course, is that your 1000 person business, you will no longer a startup, you will start to have Enterprise contracts come in place, you will start to have processes which feel very unlike a smaller business, a scale up business. And that's important because you've got compliance, obligations, regulatory obligations, people obligations to the business naturally has to change. And that can be an interesting dynamic for people that have been around for a while. So

I think it's not just the founder lead element, but like cult of personality. And so I feel like most of the businesses that I've been in, there's been a very charismatic leader. And that has been a large part of it. And then I was in the Salesforce ecosystem for a long time, which again, I know probably shouldn't bring up Salesforce today with Pipedrive. But another very charismatic founder, leader who has stayed. Do you have a charismatic leader? Doesn't matter if that person is a founder or not? I'd

say no, being perfectly blunt, your original founder is probably they said, Baby, it's their creation. It's very difficult to replicate that when an external person then comes in and tries to take over. And I think it would be fake. I don't think it would be authentic. And that's really important. I'd say no, but I don't think that's the problem. And I think, at various stages of businesses, you need a certain type of leader. And now that we're into the 1000 person business were owned by private equity, we are on this journey. Potentially you want someone that's been there before that understands what needs to happen that gets EBIT, da understand margin, and so on and so on. That's really important. And I'm not saying that founders can't do that, but not all of them are the right fit to take on that next stage of the journey. And that's okay. So I think that the founder led legacy can let live on and I think that's really important down to the kind of soul of the company. But who leads it? And what that looks like, can be quite different sorts of

questions like how do you motivate people I've so used to seeing the founder lead story, that I'm almost struggling to imagine what it's like, how do you motivate everyone? What's the story? Why do people come to Pipedrive?

Yeah, and I can get quite deep here and tell them if I go too deep. I truly believe in your purpose and understanding your why and why are you passionate about this? You know, why are you doing the podcast? What is it that you're trying to get out of this and uncover and educate or whatever it may be? So why do you get up in the morning and go to your job, I think that's really important to understand your why. And by the way, this isn't a chief operating officer thing, it's, I believe it should be for everyone to understand why you're going to work and doing what you do. That's really important, because I think compensation and incentive obviously plays a role. Of course it does. But if you're going to work, because you're constantly learning, and because you're constantly with people that are role models for you, and you're with a manager that teaches you things you didn't know before, and there's helping you understand what you may go to next. That's invaluable. And some people pay to have mentors, they pay to have coaches. But if you get that within a work environment, you're getting it for free, if you like, you're seeing this in action, in reality, to solve real world problems. And so I think it's really important to understand why you're going to work now if you're going to work for the money, and that's okay. But if it's purely for the money, then you'll probably go down a route that's slightly different, you may not need to enjoy work, because you're doing it for different reasons. You're purely doing it for the paycheck. So I think it's a balance. And for me, it's very hard to answer that question with a short answer, because everyone's different. And I'd almost flip it back to you and say, like, when you were in this position, or even with this podcast? What's your why? What incentivizes you to do what you do?

The purpose matters more than the vision to me, the vision is, you know, what do we want this company to look like, in five years? The mission is how do we get there? But the purpose as to like, what cause Do we believe in, in why do I get up in the morning to do this, that's incredibly motivating, to me an incredibly powerful, and I feel like, as Bethany talked about, having a charismatic founder, that can really galvanise the business in a way around that and get people excited by that including myself becomes extremely important. That is a self delusion that the founders usually have in a good way, where they're so incredibly focused, so incredibly excited by their particular product, and they're of that particular opportunity in front of them, they can almost irrationally, get people excited, in a very real way. And I think that, to me, is what I look for, that's what I want to feel. And when I head into a work week, on the Monday, that's what I want to be a part of. And I've always made an assumption. And the assumption has been that in scale of companies, that's where you find that you don't find that elsewhere. And I guess maybe this is the question, we're asking you a little bit, which is can that feeling that sustained feeling be found in a private equity based company?

I love what you said there, by the way, and I'm nodding my head, because the answer is 100%. Yes, but it has to be aligned, you have to want your purpose to be aligned with the mission and the purpose of what that business is doing. So the reason I get out of bed every morning, my personal why. And this will sound a little egotistical. It's not meant to, but it's to make an impact on the world. And for me, that means various things. It can mean helping small businesses, which is what I do every day at Pipedrive. It can mean teaching my kids the right ethics and values. It can mean lots of different things in the way that I go about it. And then my house, like how do I do that? I do that by being a role model. And for me, that means being the charismatic leader. So with my teams, I want to pump them up every day on their mission, whether it's in sales partner, customer success, support, AI, doesn't matter. If I can be charismatic, if I can be that leader, without being the founder, then I'm kind of filling that gap as we scale up. I think that's critically important. And then you get down to your what and ultimately your what is delivering what you need to do. It's your day to day, you know, the what that Pipedrive is it's a SaaS product that customers use to grow their business. That's the what, and that's the outcome bit of it. So going back to the whitening is critically important for all of us to get pumped up by that. Now a few Under lead is undoubtedly the familiar anyway, it's the highest level. As I say, it's their baby, it's their passion, it's everything for them. Maybe it gets a bit diluted as you go down. And I'm sure I can't speak as passionately about some of the elements of Pipedrive, that one of the founders would be able to tell stories about where it came from, and why this feature turned out the way that it did, etc. That's very difficult to replicate. But as I say, you don't want to fake it either. You need the authenticity there in order to do it properly.

Perfect. So different question, I have this imagination of boards for P back companies, just being much more micromanaging, controlling around the numbers, what needs to happen to the business, whereas VCs, for the most part, on average, there's way more latitude and kind of space for the founder to make mistakes. So maybe you can kind of clarify the experience of a P backed board and what that looks like for you. My

experience working with Pierre, your first question, is it controlling, I don't see it as controlling in the slightest. It's not as if we're being told it needs to be fixed, it needs to be that to go away and work out this go away work out that we are given absolute freedom now that could be the PE firm that we're working with, versus others. And the reputation that private equity can have is very different, I've found to the reality of working with the likes of Vista, for example, but I wouldn't say they're controlling, what they want is confidence. So confidence in me confidence in us as a team confidence that we are just on the business and understand it. So in a board session, although we have our agenda, you need to be ready for it to go absolutely anywhere. It can go absolutely anywhere, with any type of question. And the type of question is probably quite different in some ways. So it is quite metrics driven. So what's the LTV to CAC of the sales motion? How are you thinking about the EBIT, da growth in this scenario? How are you thinking of a point of margin versus a point of growth? And what would that mean overall for the rule of 40, growth rates, etc, etc. So it can go in lots of different directions. And it generally speaking, the way that we run it is quite formal. So it's, it's an agenda, we rehearse it, we practice it, we make sure that we show up as a team. And it's world class answers so that we give that confidence. And I think that means that we get the freedom to kind of just run the business go away and do what you want to do, because we're aligned on where we want to go. And that's absolutely fine. Would you say that's a little different from VC and some of the experiences you've had? Definitely

like the rehearsing it ahead of time part, I want to go into that one, like, how often are your meetings? And how much rehearsing are you talking about?

We have quarterly meetings. And we would get together probably two weeks before, to run through the agenda, and to align on the narrative to make sure that we're all very consistent in what we're saying and how we want it to be. So that would be like the skeleton of the board deck, if you like. And then we may meet then, a week or a few days beforehand to say, right, let's just run through it and challenge each other and say, do we think we've got this right? Are there any holes within this story? Do we think that we're being bold enough in this area, to be honest, I'd run any meeting like that, I think it's critical. If you've got an important meeting, you should rehearse, you should prepare, you should make sure that everything's buttoned up in the right way. And so it's not overly like, let's make sure that we stand up tall, and we deliver everything perfectly the way we're going to deliver it. It's not that at all. It's more about let's make sure that as a team, we've got that connection, that alignment, and we challenge each other where we disagree, on the bottom out, and then we agree how we're going to deliver it and how we're going to come across, it's

actually really helpful, because I find that in the middle of a fundraise. Everybody always complains about how distracting fundraisers are. But I think that they're actually massively valuable. Because it's a time where you have to think through your strategy, you really need to check your metrics realise what you don't have. And it sounds like you're doing that almost on a quarterly basis, it's a way of checking in on what matters most, because sometimes almost in a, in a weekly cadence, the day to day happens, and you forget about the rest of this. So it actually it makes a lot of sense. Our board meetings, or at least my board meetings that I've attended are very different. The board deck seems is pretty much the same every time you get or at least like the top part with all the metrics. And so that's just done wrote. And then you choose your agenda topics that are separate to that. I think there's also a different dynamic because for the most part, VCs are not majority stake holders, and the founders still own most of the business and are the main voters.

That's the key difference, right? And what's the challenge like So would you say that it's more of a delivery? Or do you get the conversational back and forth and the the kind of engagement and challenge different

level of engagement and challenge because for the most part they're investors They're not ex operators. And so their challenges what they've seen on another board or what they've heard of, rather than their own personal experiences, which is where an NAD is super helpful, like a former operator who can help support and challenge where investors get to be very helpful is preparing for another fundraise, or another event where it's all about investment banking, and then they shine. And you can see them all laid up on the strategies on what should we be doing for more money, there

is a commonality, which is what you said at the outset, confidence is extremely important, the board needs to feel confident in the founder, they need to feel confident in the leadership team to pull off that quarter's results for that year's results, or whatever the case might be. So I think that's the same. I think I've had two different setups, I'll talk about the one that's better, I think, for the most part, which is what Bethany talked about, usually all the numbers are packaged up and pre shipped for them to look at the meeting is really hear the numbers, ask them questions, let's put that to the side. And now let's have a real conversation around the two or three challenges of the business. And really think that through in some depth, and at that point, you'll have your period that you've already sent out that they've already read, presumably, that at that point, you're gonna go and do some deep dive conversations around this two or three subjects to really get the board to contribute to the thinking around how do we solve these things, what's the best way forward for whatever those two or three things are, and from their perspective, what their view is on how to move the ball forward. In that case,

you actually raise a good point, they're brand new on the link between on our board, for example, we have the operating partners that are working with lots of different companies like this in lots of different things. They're able to make those connections and challenge constructively in a certain way. That's incredibly valuable to know that they've run businesses in the past, and they're seeing a portfolio of companies operating in a certain way that they can advise us on. And then you've got the investment side. And the investment partners and the investment team are there to say we bought this business under certain hypothesis and priestesses were trialling we're checking, is it becoming true? Is it aligned to where we want to go? Is it when I come to think of the event? Are we on the right path that will make this really easy for me? Or am I going to have some struggles over certain areas of this business that we need to dive into a bit more, I really find those two roles help us from a different angles and different perspectives that maybe we don't see in as clearly as easily as we would do? Yeah,

and I think the final difference is there's just so much more regular meeting cadence. So it's either monthly or two times in a quarter, rather than once a corner, which is where I was asking about the rehearsing, because if it was monthly, like that's quite a bit time to take out of it. And also just a very different cadence.

Yeah, absolutely. And many of the team from this, that we talked to them individually, every week, or every two weeks, just around topics that are on top of mind for us. And like I said, it's really acting like advisors to help us then understand what they're seeing elsewhere that may be useful and make those connections like if your PE firm, this got to injured businesses and under your control, then brilliant, like you should make those connections and make the introductions and someone in that portfolio is going through the same problem that you've got, that is solved in a really innovative way that you can learn from. And that's what I love about, here's what I'm working on, can you connect to three people going through something similar? And ordinarily, that works really well? Yeah.

And we get that as well, from the investors. And also you'll normally have 234 funds. And so it's all of their portfolios to draw upon. So very similar,

different question when it comes to compensation. What's your approach to compensation in a P back company in this case, because obviously, in a venture capital company, EMI short grants, which are very favourable in the UK is a key part of the compensation for employees. And if it communicated well, it can be quite a powerful incentive, in particular, for leadership and for middle management. And when you don't have that, or it's a different way of approaching compensation, I guess, what is that? And how is that attractive? This

plays tightly into my comments before around what's important for you, and hence the type of talent that you attract. But when you do attract the talent, you know, compensation, generally speaking, is around auctions. And of course, they're not realised until an event of some kind happens, whether that's an IPO or whether that's a strategic sale or change of ownership. And those options will then be vested in realise that your multiple for whatever the business is sold for. So it's quite as simple. You get the options, they invest over a certain period of time and event takes place. And then you get the multiples of them. They will be issued, generally speaking, reserved for top management. So probably your directors VPs and executives. It's not unusual to have a middle management also involved in that and Some of the more juniors, especially if they've been in the business for a while. So if they've been for 10 years, for example, under the founders and then gone through the various stages, that's not unusual. But in order to attract talent lower down and early stage career, for example, I think, for me, it comes back to the purpose question again, of like, why do you want to work in private equity? And what are you expecting to see? And what's the journey you expect them to be on here? Not every business is VC or private equity. It's not unusual for someone, you know, I started my career at Deloitte, I joined Deloitte on what was an okay salary, starting salary, it wasn't amazing that I joined because I knew that the experience that I would get would be very valuable then throughout my career, and indeed it was, and so you join a business based on what you're hoping to get out of it. I

think we've just so soaked in VC for so long that you forget about, I have to like, remember the start of my career? And what was I looking forward? How does the world work outside of this little ecosystem? So we're unfortunately running out of time. But I have a final question for you. Unless it's a really interesting answer, which case we might have a couple follow up questions afterwards. For our listeners, what is the one thing they should take away from our conversation with you?

I've said it a few times. But I highly recommend sitting down with a blank sheet of paper, drawing Simon Sinek circle of why, you know, the one, you've got the middle of which is the why you've got the house and then you've got the what. And I think it's critically important that everyone can sit down and map out what what are they doing, why are they doing what they're doing? And then what are how are they doing it? And then what are they actually doing and mapping it out? And then for the future? Because what I found, and I don't know, generally speaking, if your listeners, I assume are of various levels in their career. And if I look back, you know, sort of 510 years ago, going through that exercise to say, I know that this is what I want to do, eventually, I know that I believe chief operating officers like my calling, because I love complex problems. I love blank sheets of paper. I love sticking my hand up when no one else will to do a problem and try and get involved in it. Yeah, I think it stems from early days of playing golf and trying to play a board out of a bunker. I was like, Yeah, I'll do it. I'll do it, never expecting to get it out. But you go in there, and you give it a go, because no one else will. And I think then you can put yourself in situations that will help you progress your career and get to where you want to get to. And it doesn't matter for me, if you're a seasoned chief executive Chief Operating Officer, it doesn't matter. We've all got what we want to do next in our head. And we all want to get to that satisfaction, we want to make sure that appetite is full. And so just planning that out, I think is absolutely critical.

You're mostly talking about career, but I assume you're talking Why do you think career for also the why of your life?

Absolutely. Yeah, absolutely. I mean, it can be your navigation system for everything. And so when I've got a hard decision, I shared my why earlier, which is to make an impact on the world. And my How is to be a role model. And so, if I don't do that, then I'm going against my wife, my purpose, my very being. And so if I've got hard decisions to make, I can always use those as my guidance system as to making the decision. And I find it really comforting. And I find it really useful to be able to do that. So whenever I take on a new team, I always sit down with them to say, What's your why and it doesn't have to be career, it can be anything. And then I even had one person that back in the days at Intuit that said, I just I love dogs pee. And my dream job is to set up a sanctuary for dogs for stray dogs. I feel like that's my being. And I was like, why are you here? And she said, Well, I'm working here to raise, you know, earn the money to then be able to one day do that, as like as brilliant. So let's work out how we put you in situations and how we can progress your career, how we can help you get passionate and engaged and energised to get to your why by doing that, and in the end, she sets up a community like a weekend give back style. So that then we arranged offsites there to go and help the dogs every so often. And it was phenomenal. And it's just understanding that person's why that kept them energised then throughout their life in their career that suddenly became this whole mission for them. So I think you'll uncover so much when you start to ask the right questions if your team and if you're your friends and family as to what their Why is.

It sounds easy. The question is just What's your why? But I'm trying to answer my why. And I have no idea. I think my driving force is an imagining what my deathbed and what regrets I'm going to have or not have and that's how I decide things. I don't know if that means that my why is to have no regrets on my deathbed. Except that it's like an unreasonable expectation? Have you heard people who have a bit of resistance? How do you help us get over that? I

actually think it's really personal. And so like I said to my wife to make an impact on the world, and you could go off, whatever, what does that mean even. But an impact on the world could be not dropping litter, it could be opening the door for someone that's struggling there, the little minut moments that matter. And so for you, if your guidance system is no regrets on your deathbed, then just imagine the next decision that you make. And you think about Will I regret this? Is this the, you know, the Amazon one way door to wait? Or, like, can I just do this and not regret it? Or is this a big decision that there's no going back when I've done this, and then you get to apply your values, which are really important your your ethics? And what would you do if no one's looking to then understand and sort of inform that decision. So I think, take some time, sit down with it and play around with it. It's not easy, and it may change. But as actually listening back only to the previous intro on the podcast with the COO of gocardless. And you were telling a little bit about your your health decisions. And I absolutely loved that because it gives an insight into how you think. And therefore if you apply your why, to some of what you just said, they're about grey hair, for example. Then you go, why did I do this? Is this a regrettable decision? Hell, no. I'm good with this. It's fine. It's just go do it. If other people have a problem with it doesn't matter. And that's the beauty of this. It's your way and you own it. You don't have to tell people about and it doesn't matter what they think.

Perfect. Excellent. So thank you very much, Pete for joining us on the operations room. If you like what you hear, please subscribe or leave us a comment and we will see you next week.