Alex Norman sat down with Lloyed Lobo, Co-founder and President of Boast A.I, and Laurie Schultz, Board Director at Boast.AI & Former CEO at Galvanize to talk about how to build a billion dollar company. Check out the discussion below.
Norman: Let's get Laurie on stage so she can Introduce yourself.
Laurie: Well, thanks very much, Alex. It's great to be here. And I'm looking forward to the next hour. I'm Laurie Schultz, I was the CEO of galvanize for 10 years, up until April 30. As you'd mentioned, we sold the business for $1 billion, which was about a 40x increase in valuation from when I joined. And today, I'd be delighted to share with you that that journey, I waited by the founder actually 10 years ago, to basically come in and break all the rules that he created in the first place. In building our business and creating a category we we live in the governance risk and compliance space. And what our application does is it interrogates data, to help customers mitigate fraud, corruption and waste, and we are the leader in this $41 billion market. I have a feeling that Mark has expanded over the period since the company is founded. Well, you know, when I joined 10 years ago, while we were owners of a segment of that market, we've kind of pigeon holed ourselves, in that we were exclusively committed to just auditors and a big part of our transformation. As I said, a 40x increase in valuation, a 4x increase in revenue, was our ability to from a product and go to market perspective, brought it broaden the types of customers that we sold to beyond audit, and they're in the types of solutions that we delivered as well.
Alex: So I'm gonna let Lloyd take over his conversation. But before I go down, I have one, I have one question for both of you. How do you know each other so people have some context of why you are having this conversation.
Lloyed: I've been a big long standing fan of Lori, you know, running traction, one of the largest communities for innovators. And after a fundraise, we created a list of board members. And and so Laurie was high on that list. But I did not know her. And our investors, Chris, who, you know, Chris Livingston and radium capital, he reached out, and then we collectively evangelize Laurie to join the board. But I think the question is, what excited Laurie to join our board?
Laurie: I was not aware of Boast A.I and it's in my backyard. And when I was first exposed to the opportunity, you know, is curious, of course, about its total addressable market and the people and, of course, what's not to love about Lloyd. But in particular, I think that this is a very unique application. It's got a very compelling Tam, total addressable market, and I will do a major commercial on Tam for any founder on this, this call, it's, it's fundamental to your success. And I love the business model. And so those you know, those three things combined for why I'm so excited to join the poster board.
Lloyed: I'm the co founder of Boast A.I. I hope everyone can hear me. Okay, sorry for the technical difficulties. So yeah, the journey with Laurie has been phenomenal. For us, it was really important that a board member had run a company and scaled it to a billion dollars, and understood our space. And Laurie has a phenomenal background. So Lori's background, over 25 years experience in software and technology. But more importantly, she's held, she was the SVP at Sage she was VP or into which is held leadership positions at KPMG. And, and tell us and galvanize is in the space as well, right here a GRC. So governance and compliance software. And I think when Laurie joined the company nine and a half years ago, it was a services company, you turned it into a software SaaS company, and sold it for a billion dollars in cash. And then like a boss, you've pieced out on a boat for two months. And Laurie has been extremely helpful to us. And we have like a bi weekly call schedules every other Tuesday. We chat with each other. And I look forward to those conversations. When I think about who can I work for. If I ever wanted a job, Laurie would be at the top of that list. And so it's great to have people. It's good to have people on your side that you respect and that you would want to listen to it who's been an operator. So I think my fundamental feedback for anyone here is if you want to bring a board member make sure that they have been through the journey a couple of times. where you want to go to and you want to, and you respect them. And it's funny, we've known each other for only a few months, but it feels like I've known Laurie for a number of years. Awesome, Laurie, walk us through your journey, you started in accounting, right? You were an accountant or I had that wrong.
Laurie: I had a marketing finance have a marketing and finance background. And I just so happened to get a job at TELUS. And I launched calling line ID back in 1989, before most people in this phone were born. And that was my exposure to technology. At the time, it was a very sensitive media privacy related business, and kind of put me on the ground working with technical engineers. And I never looked back, I moved to Intuit, to sage and to galvanize, and over the course of a 30 year career, I've run 12 software businesses. So really, really awesome to try to find places that I can add value to a great business like like yours, Lloyd.
Lloyed: I often keep confusing that you have an accounting background, because you know, finance better than most CFOs I've met, how is that?
Laurie: I, you know, I'm just predisposed to it. One thing I find very, very rare. And, you know, I always kind of look for this in my employee base, for example, it's like the rare person that can put a price tag on an idea, you know, if they're a product manager, or if they're a marketer? Yeah, I'd say in my experience, you know, maybe less than 5% of employees have the ability and maybe more importantly, the confidence to put themselves out there and put some math and I've always been predisposed to that. I've always used that my entire career. And I guess I've just had a lot of practice in the finance world as a result.
Lloyed: Definitely. So you've got this great journey. It's like you planned this 10 step of building a billion dollar companies like when you join you had planned this. Can you before we dive into that, I'm curious, what experience you felt you could draw on coming from sage and Intuit that helped you map that out? Like, how, what do you How did you feel so confident?
Laurie: I think I'll say it in the moment here, I think one of the most important skills a leader needs to have is change management, to convince people to do something against their better instinct to get them to change what they've done, in some cases, that formula successfully in the past. That's what I learned. That's age, actually, I joined sage, I was running one year product called ag pack. And when I left, I had seven of them. And all seven, when I got them, I thought they were the best. And I had to kind of mash them together, put them under one brand. And they you know might sound very Navy like Lloyd. But we really had to greet some economies of scale by you know, kind of leveraging the best in the in the practice. And that was really hard. Not everybody won. Not everybody was the top of the food chain and not exercising. A great you know, learning for me was just to try and you know, learn how to drive change in an organization.
Lloyed: How do you get good at Change Management? But first I wanted to share Laurie and I often joke about this concept of pirates and navy startups are often like pirates, we do whatever it can to hit the end goal. But there comes a time in your life where you have to graduate from being a pirate and like just trying to win at any cost and, and sort of try everything to becoming more like a Navy Because ultimately, pirates get loot and navies conquer worlds. And so my pitch to Laurie was we need you to help us become the Navy. And more like when Lori joined galvanize It was a 40 year old services company she had to change them into a pirate and then turn them into a Navy before getting into the billion dollar exit. But yeah, let's answer that question actually, how did you get how does one get good at change management and then let's dive into the 10 fundamentals.
Laurie: There's a couple of fundamentals to Change Management not to make it over simplified but you have to get in the hallways you have to talk to people and you have to be relatable You know, I'm sure no one on this on this call is uh, you know, kind of an in the office with the door shot type leader. People want to follow people that they like people want to follow people that are human that have made mistakes and you know, the single biggest thing that I've used to drive changes just kind of, you know, monthly Town Hall accessible CEO, I don't sit in an office I will call. You know, I wear my Lulu lemons to Safeway on Saturday. I'm very relatable as a leader and as a result People feel comfortable talking to me. And, you know, we, we focus very, very much on culture and, you know, kind of that type of accessible leadership number one, number two, you know, if you're starting to get stuck, you know, when I joined galvanize, we were already 25 years old, if you can imagine that in dog years that made us like over 200 years or something like that. We were stuck, like we've fallen victim to continuing to do everything that had made us successful in the beginning, and those things weren't working any longer. And so one thing I've done is create a case for change. And, you know, bordering on the finance modeling, you can model out status quo. And you can draw a picture of what five years looks like from now. And that can often be a very, very sobering catalyst to get people off of kind of the treadmill and to convince them to do something differently.
Lloyed: Definitely. And so let's let's dive in, right? So here, when you when you join galvanize that you're effectively taking over as CEO. So the first step was this founder transition. Tell us all about that. Because that's, that's a very hard thing. Once you're at scale, sometimes the founder CEO is maybe not the right CEO for the company for the next level, or maybe they might be burned out. And these guys probably were a combination of the two of them this company for 40 years. What made you join that company? And what did you have in mind that I'm going to take this company in the next few years and turn it into SAS? And did you? Did you have that all in your head? Like, how did you come in and manage that sort of founder to CEO, new CEO transition?
Laurie: Well, there's a lot to unpack there, you know, if I reflect just from my own point of view, I'd say that, you know, when a company gets around the 15, to $20 million range, and led by a founder, that's the time for the founder, to consider, you know, organizationally, what they can do to drive further change. I mean, it could be getting a board, I've been on boards, where founders, you know, aren't necessarily leveraging things like a board chair, necessarily leveraging the board to help them achieve their goals. And certainly, there's many software companies that don't even have a board. So that's number one. Number two, to state the obvious. founders need to stop trying to do everything on their own, and bring in a leadership team that's been there, done that. And that is, you know, Lloyd, I know you're doing that right now, that can be tough, right is passing the baton to somebody that maybe actually can even do it as good as you because you have to give them the opportunity to learn in order to scale. In my situation at galvanize, the founder, actually, an incredible leader, stepped into the board role, he actually got out of the business. And that takes a lot of courage and humility to do. He authentically gave me the baton, to break all the rules he created in the first place. And, you know, that was a big ask for me, I'll tell you this. Most employees at galvanize at the time and many in the tech scene in Vancouver had bets on how long before either quit or got fired. And, you know, it speaks to how rare a founder CEO transition typically have, you know, happens, especially when the founder is the one initiating it. So in our case, it worked. It worked because Hill, Harold was very authentic. And we worked like crazy to make sure that we were aligned in our values. And that we were, you know, kind of focused on the same destination.
Lloyed: Definitely. And so what was one of the first things you you did you talk a lot about town halls, change agents, like, you know, one of our biggest challenges is we were bootstrapped, sub 30. People got paid figures with that. And then we raised this money, we did the series A, we brought on a whole bunch of key execs, I went from running products and marketing, which was no marketing, just running a big community. And for salespeople to now we have a CTO, we have a CMO, we have big team. And I sometimes wonder what do I do? Like what now that we've scaled with 95 people right now? And and I wonder, like, what do I do, but one of the most important things is, when you're growing, there's a lot of people who are stuck in their old way of doing things. Like how do you manage that scale? You come in as a CEO, and I'm asking it from a perspective of a founder also, right? Whether you bring on a new CEO or not, as a founder going from a bootstrap company to a venture backed company and adding 6070 people in like, five, six months, you got to become a new founder. So how did you manage that going into Galvanize?
Laurie: Let me think about this from a justice from three perspectives. We I focused on three Internal audiences and I, you know, I probably spend 50% of my time communicating. You think about that, that's two and a half days a week. It's an enormous commitment. And I focused on employees, monthly town halls, weekly CEO slack messages, very, very transparent leadership. From maybe a founder to who just got investment to your situation. Lloyd I also spent a ton of time building a strong leadership team. We had, we had this one pager that talked about leadership expectations. And one of our anchor statements was SLT his first team, senior leadership team, his first team meeting, when you were at a meeting that was SLT, your commitment was to your peers, not actually to the department that you lead, that was a pretty big culture breaker for us. And I'll just say this, thirdly, we brought on investment in 2017. That was like 30 years after we were born. So we bootstrapped it all up until then. And as you know, what, you know, managing a board with investors on it that that takes a lot of work, we work really hard to make sure we add values, and evaluation and a vision aligned investor. And I spent a considerable amount of time making sure we continue to be aligned, where we aligned on our exit strategy where we clear on our exit strategy. Did we prefer sale to strategic or going public? On a financial dimension? was everybody aligned on a growth agenda? Or was it more of a hybrid growth and profit? Those are obvious things to say. But when you're managing a dynamic with the board, it's really, really critical that you've got transparency and clarity and alignment on those on those topics.
Lloyed: Definitely. And then when you joined, right, because in Yeah, you say you It's a 30 year old company, but when you joined effectively, you change the direction of the company in ways you took it. You turned it into a SaaS company. And so in many ways, you're re-founding the company, and people who are used to doing things a certain way. You talk a lot about like town halls and and change agents with us. How did you identify who are the people to take you on this trajectory to a billion dollars like it starts all starts with people?
Laurie: When I joined, we were we were just shy of 200 people. And I kind of made this up. But it was like there was a ping pong game going on at the company, there was the people that were willing to change. And then there were the people that were not willing to change, let's call it a third each, and they were battling each other, they were not aligned. And then you had a third of the employee population sitting in the middle, watching the ping pong match, trying to figure out what side they were on, it was a very, very disruptive situation. And it started with leadership. And not to be too gentle about it. But I took the leadership team out in the first year, we just did not have the right chemistry there. And that was breathing its way down into our organization. And so I talked a lot about that a third, a third, a third, and trying to swing as much of the leadership team and employees over to that that group that was willing to drive change. Now, how do you? How do you come up with the playbook of change? Again, not to oversimplify this, but town halls was a significant part of creating the culture where people would put their ideas forward. Some of them stupid, some of them great, and if you listen hard enough, not only are you going to get great ideas, because people are smart, you are more importantly, going to be able to spot in the crowd, the back of the room, the person that has got integrity of intent, who's got a great idea, and who everybody else watches. And that actually is a huge part of how we drove change. At galvanize, we called those change agents, kind of like a top talent program, to be honest with you. And we put those people in charge, but whether it was in an organized, you know, maybe role or whether it was a certain projects, and that change agent program became very public and visible. And, you know, people wanted to be change agents, and it bred this bravery that helped us drive our uniform outcome.
Lloyed: And those change agents are not necessarily always your oldest employee. I made a very controversial statement on LinkedIn recently, and I got some flack for it. I said, if you keep promoting people on tenure versus trajectory, you become the very thing you set out to disrupt maybe the government.
Laurie: You know that that concept born in the very first town hall I did on my second day, that transitioned into kind of over and above town halls and organized programs. So every year we launched that years change agents, these were the 10 to 15% of our employees, who were both great performers, but also had potential to the most potential to drive our vision. And we published this list. And I spent, you know, quarterly strategic workshops with these folks, I spent one on one time in terms of trying to understand their their career aspirations. And you know, I remember asking other CEOs and even my board, have you ever heard of a public top talent program? And nobody's ever done it? And I thought, well, let's do it. Why wouldn't you communicate to everybody? What amazing looks like why wouldn't this just be a badge of honour. And so this public top talent program, public change agent program, again, was something that kind of bred our transformation. It was, without tenure, it was untitled. In fact, I'll admit, I went out of my way to look for somebody that was kind of new in green. And so we did, you know, try to have kind of a diversity envelope when we when we built those, those groups.
Lloyed: How do you get the same benefit from a town hall in a remote distributed environment? Did you have to you probably had to battle some of that, because the last leg and probably the most difficult leg when you're deciding, should we IPO? Should we take more investment? Should we exit? Probably all of that was happening in a distributed world, right?
Laurie: it's harder to do this remote, that kind of thing. And certainly, if I reflect, because we had such a baseline, and we were so face to face, and we built this culture, in a lot of face to face town halls, when you meet somebody, then subsequent in a town hall, and it's through zoom, you you already have that muscle built, so the communication was strong. Having said that, we we did do our town halls remotely, and be able to state the obvious. So we had to supplement that with tools like slack. I mean, we were maniacal users of slack, it's like a great surrogate for a hallway conversation. And so, you know, we as leaders were very, very accessible for that, through that, and through through crises, things like COVID, and maybe other other examples of crises, you know, there's many actually end up writing a daily SEO post, and that to some of my earlier comments, you know, you can talk about the business stuff, surely, I think it's really important to talk about personal stuff as well. You know, with COVID, we went through together, regardless of position, personal stuff, as well. And so trying to be very relatable, even if it's done through a tool like Slack, or, you know, zoom townhall, you could still connect with people, if you could somehow find a way to be human and real about it.
Lloyed: the thing is, both has been a remote first company. And I feel like yes, we're, you know, the medium of, of zoom, or venue gives you two senses, right, sound and sight. But anytime you try to incorporate more than two senses, taste, touch and smell, you end up building more genuine bonds. So we do things like offsites in different cities, we do conferences, so we meet around that. And, and also, sometimes, you know, ship people food and drink during the calls. But, you know, one thing that was touched on which is really important, the job of the leaders is to communicate, right, like clearly articulating and communicating your vision to excite, inspire and motivate people is probably one of the most important skills to have. And it's not a one and done activity, like you've said, right? If you've been doing it day in, day out, because when people are excited, inspired and motivated, they can move mountains. And so I think communication is a very, very huge part. And most leaders I talked to say the same, same thing. The concept of change agents you advised us on is something we've tried to recently to implement, we created a group called the both the Avengers and we found people in the company that may or may not be new, but they just had a lot of context. More importantly, trajectory. You know, you know, what I've realized through our conversations, Laurie, is that a company that's on a hyper growth trajectory, they it becomes a different company every six to 12 months. Last December, we were a different company than we are right now. We're growing to 125 I don't know half the people in the company. And so you know, when you're a bootstrap company, you're always looking at how to react to situations Okay, we signed clients now we got to feel like product or CES or whatever. But when you're growing hype or when you're moving hypergrowth you're thinking about what is a company I should build for end of next year today? And and the people you need that I feel are people who are high trajectory They may not have the experience, but they have trajectory thinking, they look at problems. And they're like, you know what this is how the company says, These are the things we need to do today, to get to where we are next year, versus, you know, it's a concept of people saying, build me a faster horse versus people saying, No, we need to actually build a Ferrari. That's your advice that we took, and we instituted very recently.
Laurie: Folks here are doing things like regular employee surveys and stuff like that, you know, if you're like us, you know, the one area we would get negative feedback on was pace of change, pace of change, everything is, you know, it's always moving, like you said, Every six to 12 months. And, I mean, the reality is, that was the reality. And for the transformation agenda we had, there was no nine to five. It wasn't particularly balanced, just to be completely honest. But we were clear about that. Four people that joined us and, you know, it speaks to making sure people know what they're getting into, and then not apologizing for it. Because, you know, if you want a billion dollar unicorn outcome, it, it's, it's hard work. And you need people that have got that appetite, and that curiosity and kind of the relentless, you know, desire to, you know, drive change, and to lead their peers to change.
Lloyed: Definitely. And that's why so much of this is people you, you've advised as a ton on like people is the top focus at the equation, if it build, inspire and motivate a team, if you treat your people with love, they'll treat your business with love, and the outcome will follow. And that's that's a lot of what we've learned from you. Now you talk a lot about TAM right. So let's dive into the TAM. How do you craft a compelling picture of your tab? I mean, probably when galvanize started, it was a smaller TAM. And then you guys painted a picture of a $41 billion. TAM, walk us through that, and why that is important, you know, through m&a and everything else. But even like building your company and your roadmap.
Laurie: We had two pieces of paper galvanize that were that drove everything. One was our one page strategic plan, maybe chat a little bit about that. And the other was TAM. Now, when I joined, we had flatline our culture wasn't good, our technology was old. We weren't growing, and we had pigeon holed ourselves. We were an audit analytics company, we own the space, we created the category, we help people stop fraud, corruption and waste, but we were only selling the auditors. And so the success of building and, you know, creating dominant market share, and that was our biggest liability, because we were afraid of kind of breaking out of the sandbox. And so I remember early boasting about our town then and it was, you know, about a billion dollars. And I thought that was pretty vague. And person I was talking to just kind of laughed at me and said, That's not very interesting. And it took courage to and creativity to build a credible view of a $41 billion total addressable market. And what that what that envelop for us was looking at how we move from selling just a point solution to a platform, how do you deal with the entire governance risk and compliance suite? And also, even more tricky was how do we move beyond auditor? How do we talk to a CFO? How do we talk to a chief information officer? How do we talk to General Counsel? How do we talk to CEO? How do we talk to boards The reality is we didn't know how to talk to different buyers. And so consider those two dimensions, we sized the share of wallet that different buyers have. And we sized the different solutions that we sold that we looked at the intercept. And you know what it what that allowed us to do was figure out what we were going to build versus buy. It informed our m&a strategy and our r&d investment. And then also significantly informed kind of our go to market roadmap. How do we evolve our brand across buyers? How do we sales enable people to speak the multiple dialects of the different buyers that we were looking at? Just for bonus points, we also cut our town by geography, when is the right move, time to move into different markets and what kind of go to market model Do you need to be effective there so that TAM for us, we we built it in 2014. And we use it we use it today religiously. It fundamentally put us on the map. We presented it to investors Of course to our board and to our employees alike, and it was compelling. It was original and it It was significantly informative in terms of how we're spending our time and our money.
Lloyed: Awesome. And, you know, a lot of founders and Alex will attest to this for them, TAM is the three bubbles on the champ slide in the pitch deck.
Laurie: Drew on as many analyst reports, and we had 6000 customers, so we could impart us kind of the profile of our own face, to build this kind of original view of the market, there was no template, there's no book, we created this space. And, you know, perhaps coming up with a picture of it at the beginning, was easy. What was hard was to create believability about it. And so our follow through on that town, you know, here's the buyer, here's the product suite, here's where we're going to invest this year, here's where we're going to acquire for us to rinse and repeat that, you know, every second conversation at the board every second conversation with investor for us to continue to use that over time, people could see our execution against it. We said what we're going to do, and then we did what we said. And we had investors that would, you know, seek out that view of the town, we often got comments, you know, they'd never seen anything like it. And, again, I'm probably over commercializing this, it was a huge part of our billion dollar outcome, because it showed both the enormity of the opportunity number one back to the moat comment. It described why we were in a unique position to deliver it. And three, because we had follow through on it, we had credibility that we could execute against it.
Lloyed: Definitely. And then moving on here, you said this, the second most important piece of paper was your one page strategic plan. Walk us through it, why should every business have it? And what are the key elements of a one page strategic plan.
Laurie: So remember the job you had before the current one that you're in right now used to walk past the poster by the elevator and had your values vision and mission. And the mission statement was about 500 words long, and they were boring as hell. That was my experience. I hate to say before galvanize values vision mission, they weren't meaningful for me, they were too many words, I wasn't given any authorship and creating them, they weren't a motive. For me. At galvanize, that was different. we cared a ton about our values, vision and mission we got in the hallways, I remember the we, we built our one page strap plan in 2014. So three years after I joined, and to be honest, to retire the incumbent values and put three new values out, I kind of needed to earn the right to do that. So we anchored on core values as authored by employees. And with the help of our town, we created this beautiful, meaningful, self actualized picture of our destination. And we were able to get people's heads and hearts lined up against this one page strat plan. So it captured our values vision and mission. It captured a statement on what was our distinctive competitive asset in the space. And it actually had at the bottom three strategic priorities, which were more annual in nature, and focused in order on employee than customer then shareholder. The the act of how we built that was how we created ownership of it. And the fact that I use that one page strat plan in every single kind of formal presentation I did with employees, even if it you know, they couldn't stand seeing, again, emphasized how much I was using it to drive the business.
Lloyed: And in those buckets, employee, customer shareholder, I love that order. Because without people you have no customers, and without customers, I have no shareholders. And so what was in those buckets, I mean, maybe you can watch Walk us through the most recent one, or maybe the initial one in under employee, customer and shareholder.
Laurie: So our first under employee was called mobilized talent. And when I was hired, as I'd mentioned, I was hired to fix culture. We actually had one metric for that. But we had many, but the one most important that we use my entire 10 years was employee Net Promoter Score. So most many folks are accustomed to use it in net promoter score for customers on a scale of zero to 10. how likely are you you'd recommend, we use that for employees. And, you know, depending on the year, we did the survey, either twice, or we did it even quarterly. And we published that. And we interacted with that survey. And we were very, very religious around growing our score, when when we first did it, we were zero NPS. And I think our peak was around 72. And so that, that said a lot. And it said a lot because as a leader, as a leadership team, it was clear, we cared so much about it. And because of the culture of transparency, I mean, people gave us a shit. And of course, because we acted on that we gained credibility in this tool. On the customer front, yeah, the the the label, there was disrupted category. And for us, you know, one thing that's hard, I think, for someone like me coming in and taking the reins from from a founder and an incumbent business, so I had to unstick it. And so a lot of what I had to focus on initially with the customer bucket was kind of growth in the strategic parts of our business and the customer experience there. And not let that get whitewashed with parts of the business that I was exiting. So for example, let's say customer NPS is is a metric there, I had to separate the kernel from the chaff. I had to focus on, you know, what's the level of engagement of the customers that are part of our strategic future. And you know, it'll sound bad. I was less focused on customers at work, want to be part of moving forward in that journey with us that was really, really hard for us because it sent a mixed message. Well, you love customers so much, but I guess you only love certain kinds of customers. And the reality is just that was true. For us, the third pillar unraveled shareholder, we labeled it transformed the business model. And one thing about us, when I joined, we were on premise, we were perpetual Boyd, as he mentioned, we were consulting 47% Consulting, well, we transitioned our business model to subscription and to to multi tenant cloud. We're at 9% recurring revenue today. So by default, when we 11% Consulting, and you know, a big focus for us was to move 100% of 6000 customers to subscription that was a that was a crazy thing to do financially, but it colored the business model transformation agenda. And you know what, to be honest, that's a hard thing to do. Especially when you have investors in your mix, we chose to do it before we bought on investment, because we had to tank our p&l for basically two and a half years before we saw the the payoff of compound growth on a subscription model.
Lloyed: Only a visionary kid could do that. 'm personally very passionate about people all my life is driven by people. And Laurie said in at the end, you guys worse over 70% NPS I just want to share, Salesforce and Adobe are two of the top employee experience, like in terms of top companies in terms of employee happiness, and Adobe z NPS is 57 last time and published NPS from Salesforce is 58. So you've done a fantastic job there. One question before we move on to moats because I really want you to talk about your view on moats and why it's important. Do these NPS surveys need to be anonymous? Like what's your view there?
Laurie: We used a tool called Work Tango. And it was excellent because it did all math. But it also actually had an interactive capability where employees, you know, gave you qualitative feedback as leaders, you could go in and you could read them and you know, it only publish stuff. You know, you wouldn't get results if it was below a certain sample size, but you could interact even anonymously, and often on a very sensitive issue doing that the person would would come out and you would you know, you would build trust through that tool. So, you know, I'd say for us 90% of the time, people were just fine, telling us who they were, because we created that culture, but you know, 10% of the time they weren't and so and anonymity I believe is still very critical.
Lloyed: Definitely. The other thing we talked about a lot is every time we talk to you, it's your favourite - tell us about moats? What do you see as being valuable moats for companies growing into this next sort of decade here.
Laurie: You know, sometimes when describing a moat in one sentence can be any climatic because you want it to sound bigger than it is. And when we updated our one page strategy plan, it was only one other time we this was the biggest subject for debate. So what is it that you uniquely provide that personifies you as a scarce asset that both customers will buy into, and certainly investors will buy into. For us, our formula was around things like to multi tenant cloud, in our space, there's a lot of bullshit cloud, not true multi tenant cloud, our emphasis was on platform over point, you think about trying to present risks to your board, and you're trying to do that by you know, cobbling together a whole bunch of independent risks, you're not gonna really have objectivity in that conversation. For us, our moat was around global scale, we were the only one in our space with sales, and 130 countries, whatever it is for you, you know, it's important that the organization has a common opinion on what it is that's distinct about you. And once you figure that out, you know that the trick is to maintain your lead. And, you know, I'll give you another example, our chief revenue officer was from avalara. And they have a great example of a moat in that their sales tax or their tax compliance tool is embedded in most of the major e RPS around the world, talk about a moat, somebody that wants to kind of take a run at that business. They're not trying to upstage them just on a direct sales model, they're gonna have to try and get all of these, you know, global vendors to change who they're married to. It's an excellent example of a moment.
Lloyed: How do you build a moat that strengthens your market share, without planting yourself into a corner? painting yourself into a corner?
Laurie: When we first talked about our moats, it was around, I didn't mentioned beautiful design, easy to use to multi tenant cloud. And platform over point II, I realized that's just galvanized, gobbly gook language. But in doing so, we actually had to say no to a lot of business, imagine 10 years ago, telling auditors and risk professionals that they can only buy a true multi tenant cloud solution. And all of the way we don't do that. And we just said, well, we're not doing business with you. It's a bit of a risk. But, you know, once you've kind of got religion around your moat, make sure you have religion, about your execution against it. Because if you get tempted by large revenue opportunities that are off strategy, you're most likely to be credible, credible.
Lloyed: Awesome. And you guys have this heat map. There's another concept you talk about the billion dollar heat map, what goes into that heat map? What were the key elements drivers along the way?
Laurie: Yeah, billion dollar heat map that that's a great thing to try and do. It was a keep ourselves honest about what we still need to focus on, on route to a billion dollar outcome. And I remember building it, built it with our leadership team, build it with the change agents, and then build it, we ran it with the board. So I'm trying to, you know, play dispatch and get alignment, we probably had some 40 different metrics at the beginning, and we consolidated it down to 12. key thing is that it's diverse. I mean, there's gonna be the obvious financial metrics, don't let it be 80%, financial, you know, pick your two or three financial metrics, maybe it's rule of 50, for example, or maybe it's net return. You know, whatever your favorite metrics are, those should be easy, hard thing, there will be the pick. We pointed at a couple of other things, the caliber of the C suite, and the diversity of our board, not just where they diverge from a gender, you know, that type of profile, but did they have publicly traded company experience for example, we we had metrics around a product that would capture win loss with certain segments that were strategic, for example. We also measured accessible town. So this $41 billion town our platform, you know, by the time we sold, didn't deliver All, you know, against the full $41 billion capability every year, though, you know, we would grab another 3 million or 5 million based on either what we built or we bought, we had an accessible Tam metric in there. And so the key thing, you know, is I have one, we, we had these metrics projected out three years, we had valuation ranges around it, we had red, green, yellow, and I presented kind of the status of this billion dollar heat map in the monthly financial memo, and the quarterly board reports. And that was tough, because we were great at everything. But at least I had kind of alignment on what we needed to get great at, up down and across the organization. And it was really, really helpful. I built that, by the way, with an independent on my board, back to some of your opening comments, Lloyd, you know, if you've got a board member that's been there, done it, that, you know, that you can work with on something like that it can be a really impactful tool to use.
Lloyed: Definitely. And, you know, as you were building this company to a billion dollars, who are the three key people that you probably wouldn't have gotten without? And how should the audience here look for those people kind of thing? Who were some of the key drivers to help you because as a founder or a CEO, you're alone, right? Who do you talk to? Who do you bounce ideas off of your board is not with you day in, day out?
Laurie: I'd say the chemistry I had with a founder was really, really critical. He and I, over the years that we did an initial raise in 2017. And then we we sold in 2021, he and I were out on the streets, actually, in it, you know, 50% of my communication, my time internally communicating was supplemented with a bunch of time, call it 25% of my time, with with a founder building relationships with investors. And, you know, a great piece of advice I'd the I think about the timing of arrays is to do it when you don't need it. And if you have relationships with investors you respect in the queue, and you know, values and vision alignment was always key for us, then you can draw on those relationships when you are ready for investment. So the chemistry and that Harold and I had the founder and I had in building relationships with founders that really appreciated how hard what we were doing was, and who were able to see kind of the before and after, was high, high impact for outcome. Instead, you asked for a third, I had an amazing strategic product officer, who was the author of the TAM, who had domain actually, and was able to, in a way I couldn't bring kind of the customer piece along for the ride. So that combination created a ton of credibility for us as we we had our kind of investment discussions really mobilizing in this past year.
Lloyed: And in your in your 10 step plan that we talked about through this conversation. Investors courting investors at the end, a lot of what you what you talked about was invest in people have the right people in the right seats, talk about high trajectory, finding high trajectory people. You talked about processes, and and having a big tab and really putting the framework in place. And the investors are courting investors is at the end there. So tell us a little bit more about your process of courting investors. Also, you said that you guys didn't raise money until What was it? 2017. Right. Yeah. And it was from Norway. It wasn't a big amount of money. Like we're seeing hundreds of million millions of dollars this way. I think you guys raise what 50 or 70 million?
Laurie: 50 million, with Norwest was a minority investment in 2017. And so as you know, we are incorporated in 87. So pretty good run bootstrapped. And, yeah, we spend time thinking about control of our business. And then of course, when we brought in investment, we we weren't, we didn't want another table. We wanted people that we could learn from who are truly provided guests and great partners. And that's what we got in in the past year. And I didn't expect to do this but so it's something that I learned how to do and then I hope to be able to do it again, because we had so much inbound. We got organized, and my board was really really helpful for me and you It was my responsibility to create choice. And we actually thought we're going to go public. And in the end of the day, we sold to a strategics. And so we in kind of the last nine months that I was at galvanize, we had three tracks of organized conversation. And I reviewed these every second week or so with my board. We had about five investment bankers, we were talking to Evercore ultimately helped us with our transaction, they were fantastic. And we use them to keep us honest about our IPO agenda, we gave them a look under the hood. And we took their advice. And as a result, we created some evangelists in the investment crowd investment banker crowd, door number two, we on a very selective basis, cued up conversations with 10 to 15, private equity organizations, we got to know them, we looked for, you know, kind of compatibility of agendas. And on the third track, on a very selective basis, we talked to a few named strategics. And as you can imagine these plates on sticks, I mean, at the end of the day, I probably had like 20 conversations going and it's not just a one time thing is you know, Lloyd, then it won't meet with you every three months. And so it was crazy. But in those conversations, we created scarcity value, people got to know us. And, you know, we knew where our works were at the same time. So we had time to kind of double down and, you know, address those issues. And that put us in a great position to queue a competitive process in December, which culminated in our transaction. But, you know, we pro acted, we proactive who we wanted to have the conversations with, we didn't just respond to inbound.
Lloyed: Definitely. And you know, Laurie, you have such great brand value that many of the growth equity and private equity and VCs that that know you very well reached out to us, because there's a function of you being on our board. And everyone seems to know you. Well. It took to sort of bring this all together. I know, you don't like the word playbook. But you did have a playbook. Right? What were some of the six or five, six things that you would say were key to this ultimate playbook that led to a big exit.
Laurie: I had a playbook and I didn't even know I had one. But if I look back, I wish somebody would have just given this to me. And so five or six things, culture, technology, obviously, I talked a lot about culture, we transitioned our business to to multi tenant cloud business model. With the backdrop of those two things. We asked 6000 customers in 130 countries to change how they paid us. And then we rebranded our company, we used to be ACL, you may notice that as that end, we rebranded to galvanize, and we did that actually coincident with an acquisition. By the way, if you ever do a rebrand, try to do it with an acquisition, because the coincidence that those two things, almost gave us instant credibility beyond audit, we were immediately credible in kind of the cyber risk management space with Chief Information Officers. So you know, of anything, those five things stand out the most, and, you know, simple to say five words, those were major transformations, each one of them in and of themselves. But those are the five things that we focused on to to get our outcome.
Lloyed: How did you know it was time to sell the business you could have IPO? How did you know it's time to sell the business?
Laurie: It was, it's hard, I didn't want to sell a business. It was a long shot, we talked to just a few select strategics. And here's the thing in the governance risk compliance space, and if you think about auditors who remain one of our anchor tenants, unfortunately, these these professionals don't have the audience that they really need, at the board. Bring in diligence, the company that acquired galvanize, you know, they, they're on the iPads of 700,000 of the world's most influential leaders, be it you know, board directors and such. And the customer value proposition was just too good for us to walk away. It was a fast forward on our ability to get our customers into a position where they get up high impact. And me that was the main reason that we acted before we thought we would and in a way we thought we wouldn't. So what's incredible now is to say See how that transaction has transformed the lives of employees. And, you know, what we've done by virtue of this is we've incubated this next generation of leaders into the tech scene who've gone through this crazy transformation and now have, you know, built some muscle around what it takes to be able to drive a change agenda on candidate formula of culture, technology, business model, m&a, and brand.
Lloyed: Awesome. And Ross here asks, How did you personally or as a leadership team, keep going on the change of billing model to 6000? clients? That's crazy. And you sank two and a half years of PnL to make that happen? Did you ever worry, like at some point like this is not going to work? That's a massive that.
Laurie: Well, we were crazy. And maybe we did it. So with such certainty because we didn't know what we were doing. It I like to describe it as being pregnant. The first year was like being in the first trimester, we were amazed, it was actually easier than we thought to get customers to sign up. Of course, we deferred a bunch of revenues. And so your two was like being the second trimester. I mean, there's no getting out of it. And the problem is, we didn't know how to count our success, we actually didn't even know if we were successful. It's like you had to create belief in something nobody could see. So we looked for, you know, different ways to predict whether customers would continue to retain their, their, their solution, we looked at their actual consumption of our technology. And from a financial perspective, I trained my board and leadership team out, she had a hang up on the balance sheet, not the p&l. This is crazy. And it's where you have to have a lot of credibility as a leader, like I said, because you're you're trying to create belief around something people can't yet see. And your pot committed. I mean, there's no going back. by year three, we had all of the right signals. And this was the greatest move that we ever made. Because the concrete lift from a recurring business model was, was obviously high impact for us.
Lloyed: We're at the top of the hour. I think this is a great note to end on. First, they ignore you, then they call you crazy, then they fight you. And then you win a billion dollars. Laurie, what a great pleasure. I wish actually, I was working for you at galvanize at the time. It's just so phenomenal to just learn every time we talk. We talk more frequently. I learned I learned more. Thank you so much. Thanks for having me.
-5.png)
.png)