Sherry Coutu is a former CEO and angel investor who serves on the boards of companies, charities and universities. She chairs Founders4Schools and is a non-executive member of Cambridge University (Finance Board), Cambridge Assessment, Cambridge University Press and an NxD of Zoopla and the London Stock Exchange Group. She also serves on the Advisory Board of LinkedIn.
Philanthropically, she supports the Prince’s Trust, the Crick Institute and serves on the Harvard Business School European Advisory Council. Sherry has an MBA from Harvard, an MSc (with distinction) from the London School of Economics, and a BA (Hons with distinction) from the University of British Columbia, Canada. She was appointed Commander of the Order of the British Empire (CBE) for services to entrepreneurship in the New Year’s Honours List 2013, is author of The Scale-up Report on UK economic growth and serves as an Ambassador for London.
[00:00:01] Thank you. I did not threaten him — but I do want you all to sign up to Founders4Schools. We've even put up a special thing, Founders4Schools slash Turing, so that we can track how many of you have signed up as a result of this, and then next year we'll report back on how many children's lives you have changed. And that's one of the things that I love about technology. The accountability and the transparency is pretty fantastic.
[00:09:30] Brian was very clear about what I should talk about, so I know that I'm going to somehow get struck by lightning if I don't speak about these things. We're going to talk about mentoring, advisers and boards, and really think about what you need as you grow from startup, to scale-up, to a large corporate business that's making acquisitions of other scale-ups and startups.
[00:09:50] From what I understand, this group is at an early stage. Please put your hands up if you're in a startup. OK. And now put your hands up if you're in a scale-up, meaning that you've been growing 20 percent for two or three years. And finally hands up if you're in a large corporate or professional services firm. Oh, I'm going to have fun.
[00:10:00] So, a little bit about my background — it's a Canadian accent that you hear! I originally came over here a long time ago as a student. I wanted to go to the London School of Economics, but then I became a computer programmer, because that's what you do after getting an economics and econometrics degree. Not. What happened is that I met some entrepreneurs who were doing really, really cool stuff, and it made me excited about that rather than what I had studied. And that's not that unusual for an entrepreneur.
[00:10:25] I joined my first startup in 1994, and that was really quite fun. I founded a second startup in 1995, because I started doing something simultaneously, but being a parallel entrepreneur is not as good as being a serial entrepreneur, so try to resist the temptation of starting several things at once — because really it is quite painful and doesn't work for anybody. After that I sort of sold and floated to some others' projects. I also sort of went very portfolio for a while, which was quite confusing if you look at it, but that's quite a lot of years. But I've got these sort of blobs to share — they show the different things and the different directions that you can go after your first startup, or maybe after your first and your second and third startup. And some of what I've done is to play around in investing, which is why I've got about 55 companies and counting at the moment.
[00:11:03] I'm an LP or an investor in a bunch of venture capital companies, not only in this country but in some other countries. I sit on the Board of Raspberry Pi which is in education and technology, and I hope you or your young children use them. All I do is about entrepreneurship and technology, one way or another. And then over on this side, there's a lot about education as well. What I love about Cambridge Assessment and CUP is that they have operations in 145 countries. They've got quite complex businesses at scale in a number of countries and I've learned a lot from being an adviser and a board member on those companies, but they're very very different than than some of the startups and scale-ups that I've been on.
[00:11:39] What I'm going to to try to talk about is how you get the best, or how you don't get the best, out of advisers and mentors and board directors in all of these different circumstances, so that when you go through this same cycle maybe a nugget might come back to you at some point. I boarded the London Stock Exchange which is quite interesting and also chair their technology advisory group. And that in particular is trying to make sure that we do enough business and procurement from startups in our space so that we're a good corporate citizen to the startup space and to scale-up space. So if you've got anything in financial services you can come and talk to me later with that hat on. And C are.com and Zoopla...
[00:12:12] Anybody move house or review Zoopla here in the audience ever? Okay, good. I was the first angel into Zoopla and I knew Alex Chesterman from his LoveFilm days, so for me he's like "oh I'm thinking about my next startup" and I'm just totally in. And that's been very good. And I was an adviser to them for the first six years. When they decided to float, they asked if I would join their board of directors as opposed to board of advisers. And I did, almost to make a point that many people think of exits as when you enter the stock exchange. It's like, "oh, that's an exit." And many angels think of that and certainly VCs think of that. But you know when you're on the board of the stock exchange you think of that as an enter. And I liked the idea of joining something that I'd been the first angel into, but hadn't been on the board of, to take it to on its next journey. And Zoopla is now at £1.6 billion in market cap, though I like to measure turnover way more than market cap, as you'll hear later.
[00:12:58] One of the things that I didn't think about that much when I was first starting out was how much it was an ecosystem play when you're in technology. So I thought I'd put this up to make sure that we all scale, and because the diversity of what you're going to want — your advisers, your mentors and your board directors — is important. It all represents different aspects of a bunch of different parts of the ecosystem. So if you don't have anybody from the government, but you need to sell to the government you might want a mentor who has been there, or an adviser or board director to be there. I will talk about diversity, not only in gender and culture, but also refer to different bits of the ecosystem, and what you can learn from them and what you need to learn from them in order to scale really quickly and really really really far.
[00:13:37] I'm going to talk a little bit about some of the mentors that I've had. You can see them over here on the screen. My mother, believe it or not, I consider her a mentor. My father. Jean Leponce. This is the lady who convinced me that I should be an entrepreneur, and that it was the right thing for me to consider. It was that man who actually convinced me to be an entrepreneur, but it was her that made me think that I could be one as opposed to just being told that I was one. And then on the far right hand side you've got Lucinda, who I adore. She's one of your entrepreneurs, one of the Scottish entrepreneurs, and I met her quite a few years ago when she was just starting to scale up Genius Foods, which is an interesting company. I think it is one of your success stories even though it is not pure tech, although I tried to convince her that she was a tech company because she was using it quite a lot of it. But she still didn't see herself as a tech company.
[00:14:13] Something that I think we should all bear in mind is the difference between a startup and a large company or a scale-up, especially because there's a huge amount of enthusiasm for starting things up. Say you look at all of the companies that get started up — so you have your cohort of all the companies in a single year that start up — and then you want to know where they are in ten years and where have they gone to? And so this academic study shows that the survival rates of the cohort is about 30-37 percent. Then of all those companies started up 10 years ago, how many actually even get to 10 employees? You're down at 4 percent of any given startup population in any given year. And then if you go down to those that not only got to 10 employees, but got 10 employees and got at least one year of growth exceeding 20 percent, you're down to 2.7 percent in the UK. And if you go further and you talk about scale-up companies, which is two years of consecutive growth and more than 10 percent and more than 10 employees, You're at .5 percent of the business population. So think about whether or not you're going to learn more from a startup or a scaleup.
[00:15:18] There's also some fascinating research that talks about learning. There's a difference of productivity and learning if you're an employee of a startup, versus an employee of a scale-up or company that's growing. And the percentage difference in the productivity of a person who's been in a scaleup is something like 22 times that of somebody who's only ever worked for startups.
[00:15:39] So if you can join a scale-up for some period of your life you will learn a great deal of good things and bad things. And bad things are even better than good things to learn because they're far more poignant. And they help you. You know, pain is a good thing to learn from. And sometimes we forget that. So I think you should think about that.
[00:15:58] These are some of the scale-ups that I've been involved with, and it's been quite fun. So LinkedIn is probably the one that you know about the most. I joined them when I think they had 120 employees and their market cap at the time was about $250 million. And you'll know that they sold recently for $26 billion to Microsoft. Zoopla, I mentioned already. Bonobos, I've put them on there. They are a tech company but also they produce clothing for men, and they just sold recently. Founders4Schools, I mentioned. DueDil is a small company that allows investors to do due diligence on small and medium sized companies that are growing quickly. Raspberry Pi, Ieso.
[00:16:33] I like that one Ieso because it's in healthcare and they've cracked how to sell to the government in the NHS — and selling to the government and the NHS in mental health in mental health technologies is not at all simple. They use technology in a super, super, super smart way that I think is really really exciting.
[00:16:47] What I'm going to try to do is talk about how each of these have used advisers, mentors and also directors. And, hopefully, in the next 20 minutes I want to highlight the differences and nuances between mentors, advisers and directors. Once you've grasped that, you've got really effective amazing levers in your hands that you can use as great growth hacks, and great growth hacks will make growth and scaling really simple. My objective really in some ways is to make sure that the number of companies in Scotland and certainly the UK as well grow far faster that are scaling up.
[00:17:20] I feel pain when companies get 10 employees and they've got a great product and they don't grow further. I would like to make it really easy for all of you who are running your own companies or working on them to keep on growing them. And I think that one of your secrets to that will be how you use mentors and advisers and border directors. So, I can't really not have a picture of a unicorn. I don't really want you all to be unicorns, because I think measuring by valuation is wrong. But it's useful, and people like unicorns so I thought I'd put something about them on the page.
[00:17:49] If you survey the companies that have scaled up — or not the companies that have scaled up, but the leaders who have been responsible for scaling them up from startup to scale-up — it breaks down into six different categories. These categories represent What - given that they're very ambitious and they've already been growing for years - what gaps are preventing them from growing further. And it's kind of simple.
[00:18:08] The first is that people think that they're a startup, and they think, "well you're going to feel like 98 percent of everything else. I'm not going to pay attention to you" or "oh, you're already started up, you don't need help because it's really simple once you've started up." So, the identification and even empathy with somebody goes a great deal.
[00:18:21] The second is that 82 percent of companies complain that they could grow faster and they could accept additional customer orders if they had the skills that they could hire to fill those orders. So the skills gap is very real and excruciating pain in the UK, and that's why you should go sign up to Founders4Schools at the end of this. But it is serious. It's a real issue.
[00:18:39] The third one: there is leadership capacity and if you again go back to 98 percent having not had more than a year of fast growth, your ability to tap people who have had that experience, and your ability to quickly learn how to deal with it yourself is constricted here and it's harder than you might seem. So what can we do? And what can you do to get over the fact that you don't know how to do all the stuff that you need to do as a leader of a small company that's growing quickly? Part of that is advisers and boards.
[00:19:02] The fourth, the sales gaps: selling to corporates and selling to government is usually really very difficult. So understanding how to do that.
[00:19:07] The fifth, the finance gap. Really, finance is not at all the most important thing for growth. It is an important thing, but if you can't crack the first three then you're kind of stuck for the finance. And as an angel you're really stuck if they can't crack the first the first three.
[00:19:18] And finally the infrastructure gap. Infrastructure isn't something that you do that you suffer with, particularly here.
[00:19:21] So if I'm going to think about what the stories are, I'd say "choose a big enough problem." And sometimes you might focus on that. But if you're thinking about a mentor, I would advise you to think really hard about a mentor who's gone really very far and who's going to push you to solve the bigger problem. Often the problem that you've started out trying to solve isn't big enough. And I think that, if your problem isn't big enough, you should get rid of it and just try something that's a bigger problem. We've got enough really big bad problems. And the thing that I love about choosing big problems to solve, is that ability to get advisers and mentors and directors to come join with you in a team to defeat this nasty thing that you're trying to solve. It's so easy.
[00:19:58] But if it's a little problem that nobody recognizes then it's really hard to get a team of talent around you, and what you need is a team of talent around you. So, the first thing that they're seeing a stopper is choose a big problem, and surround yourself with other people who have conquered difficult problems. Because if the problem is hard you don't want to surround yourself with people who have not tackled really difficult gnarly problems, because they might give up, or they might tell you it's all too hard. You want people to push you because you might feel alone some days, and you might feel like giving up, and you don't want people around you to feel like giving up. And that's of course the problems too small which case you should give up and you should choose a bigger problem.
[00:20:34] I think embedding yourself in the right network is really important. I know that we are here in Scotland, but in Edinburgh particularly, your network for your big problem is probably greater than, and outside of, this city. So you shouldn't restrict your mentors or your advisers or your board directors to your immediate geographic vicinity, because you might suffer from what they suffer from in Silicon Valley. They're in an echo chamber there and often they don't really know what's going on in the rest of the world. If you're on a tiny small island like this one you really want to make sure that your advisers and mentors are going to connect you to the rest of the world so that they can help you sell your products in China or in India or in Canada or any of the other markets you might want to sell in. But if you surround yourself by people who haven't thought in other markets and operated in other markets, for whom it's not second nature, then you might find yourself constricted if you really do get that product market fit, which we were talking about earlier today a nd is super important.
[00:21:29] So think really hard about your definition of right network. What does that mean? What does it mean for your customers if you're focused on your customers? Where's your customers network? Who understands them? And then build that ecosystem graph that I sort of put up there earlier. Do they work for the government? Do they work for a large corporate? Do they work for an advertising agency? Do they work for the media? Who do they work for? And probably in most cases companies will need to interact with each those, and you might want to put together a matrix. They used to call me Matrix Coutu, which is a bit sad. That was before the movie The Matrix.
[00:21:59] I think being thoughtful about who you surround yourself with rather than accidental and opportunistic is probably good advice.
[00:22:07] Now this is probably one of my biggest advice: sometimes you just want to solve pain.
[00:22:10] Think "oh, I really need somebody to do THIS," and you know what THIS is, you're very clear on what THIS is. And you can just take the first person who's presented to you, hopefully through your network, or maybe through a great partner or adviser or something else. But you really need to think forward 1, 3, 5 years, because if you pick someone who has done this before — but you're growing at 20, 50, 80, 100, 200 percent — and that's their peak and they haven't gone further than that, then they will constrain you or you will find yourself constrained. It's much better, if you're looking between two candidates, to push yourself a little bit harder even if it's more expensive, even if they challenge you more.
[00:22:46] And they will challenge you more than you actually want them to challenge you more. And I think that's what it means to be a mentor or an adviser. I think it's really critical. When I was recruited to LinkedIn by Reid, that was before they had any operations outside of America and lots of users adopting LinkedIn all over the world. They didn't have any outside operations, and prior to that my companies had started up and floated in and had operations in a bunch of different countries. He was interested in the lessons that I could share, particularly to help him expand globally outside of a single country. And they hadn't yet made that transition. That was why he wanted me as an advisor.
[00:23:20] When I was at my first company that floated, I wanted people who had really big asset management companies, because we wanted to sell to asset management companies. So, we got someone from the network who had worked in asset management and who was interested in how disruptive asset management was going to be. So they were curious about what the future would look like for 10 years because they were a little bit fearful, because they were an incumbent. And they were very interested in joining a disruptor. That's very much in your favor if you are a disruptor and you are growing quickly. It's going to be pretty easy to get some ambitious person who's thoughtful about you where incumbents might be in 10 years time. You just need to ask because they will, if they're curious people, they will want to be around you. They might not, or they're almost certainly not going to want to be on your board of directors because that presents them with a conflict. But it would be very easy for them to join your board of advisers. And that is the right place for them. And you can interact with them once a quarter. You don't tell them your company's secrets even though they'd like to know them so that they can take them inside.
[00:24:17] But think about who you want as advisers and who you want as board directors on the IT part of it before. If you are a fast growth company and you think there are a hundred million customers for your product, or potentially that many, that might mean that you might have to raise finance a number of times. And if I put my investor hat on, there have been many occasions where my heart was breaking when I had a fabulous entrepreneur in front of me and they brought with them a really ill -advised, well-meaning person as their chairperson. A person who had never done financing for a company, and had never been at a company during its growth stage. They were sort of professional services background or whatever, and there's nothing wrong with professional service background, but if you need someone to help you raise finance repeatedly over and over and over because your company is very hungry and is growing, it's much better to have somebody join you with that on your journey so that they can help you do that. And if you surround yourself by people who are interested and curious but who haven't done it before, then you find yourself with chains around your ankles. That's very painful because you're getting to know you as the entrepreneur. You know you are getting poor advice because they just don't know and often their networks don't extend into other people who know.
[00:25:28] So be really really careful who you choose as a board director because it gives all sorts of signaling to others. Once they are a director, it's very very hard to un-directorize them. So you want to be very thoughtful, particularly with directors. you want to be more careful with directors than you are with advisers or mentors.
[00:25:43] Again, think always about tomorrow, not today. It's too easy to think about today. But tomorrow comes very very quickly. And again, think about, not the problem you're trying to solve today when you're thinking about mentors. I think you should have let's say 30, just to be provocative. A mentor isn't somebody who you sign up to have be at your side. That's kind of a coach and you you pay coaches. But mentors are curious people that are interested in the industry reconfiguring around you and around them, and they are somebody that usually you get along with. I probably have seven or eight mentors right now and I've certainly had north of 30 in the last 30 years. And I have no idea where I'm going to be in the next 10 or 15 years, but I can tell you I definitely need mentors still today.
[00:26:24] So think really hard about it. You probably know pretty well where you are now, but if you've got glimpses of where you might be going in the next five to ten years - either as a person or at the helm of your company - or maybe you're thinking, you've been there eight or nine years, "should I be going portfolio? Should I be selling? Should I be floating? What should I be doing?" In any of those cases, talk to other people who have done that before because it will help you, and they'll be very happy for that interaction because they felt lonely when they were at that stage too, and they had questions that they didn't know how to answer or who to ask. And I wouldn't be fearful at all about about that.
[00:26:52] Embrace diversity — but diverse diversity. I think that gender is very important. I also think thought is really, really, very, very important, and it depends on which part of the ecosystem they have come from before. They will all have a very different view, and surrounding yourself by people who look like, smell like, think like you won't get you anywhere. Or it may get you somewhere in a sprint. But in the marathon that you will want to be on you're going to need that diversity. So I would just encourage you to think about it broadly. And it's really important. I'm a hopeless entrepreneur but also an optimist and I actively look for people who see glass as bone dry because I see it as more than half full because they're always half full, there's always a way to get around that barrier or whatever it is. But it's really important, and I've always tried to make sure that I have somebody who's that Doubting Thomas. Somebody who just shoots down everything, and I can tell you they're generally very annoying people, but they're really really helpful to have around. And it's really important to have them around you. This is a really super important one.
[00:27:48] Systems that scale. Bearing in mind how rare it is to scale. I've got a sort of an engineering and science to tilt to me, so I like perfection. I like things being just right but things that are just right and perfect pretty hard to scale to 100 million. As an angel investor I've probably got better looking at this and helping people think about it because I probably suffered from it enormously when I was sort of first starting out. But making sure things scale, so let's not have 17 different contracts for every possible conceptual type of market segment that we could have — let's have one, and let's just make it right for everyone so that it works and you don't have to rewrite it. And then when you're acquired you don't have to rewrite it and it doesn't require 17 different sets of lawyers to look at 17 different sets of terms and conditions or any of those other things. So what may seem to be perfection can be overengineering. It can really slow you down when you're pivoting it around and trying to expand your product into other countries or other markets. So try to keep it really really simple and that leads to product market fit.
[00:28:43] I think being obsessive about getting that fit right, and then, once you've got it, scaling like crazy is really really important. So if you're at that I would really obsess about "have we got the product market fit?" For me it's "are we at about 20 percent market share yet in our segment for that?" And that's when it's right to go international. And that's when it's right to start expanding into other products. Until that you pivot around until you've got that because the "is it working better than anything else, and will it scale really really quickly, and am I obsessed enough about fitting that market and getting it better for the customer rather than just moving on continually to the next thing" can be never ending. It's really easy if you're quite a curious individual to keep on moving on to the next thing that that doesn't work if you want to scale. It's quite interesting but it doesn't work if you want to scale and you want to end up having something really substantial that millions and millions of people are using, which is a good segue into the next thing.
[00:29:35] Golden globe: so, the point here is that we're actually quite a small island here. There's only 60 million people. I think to really grow, especially if it's tech, you need to know that if it works here in one country it will work elsewhere, and there's nothing more fun than getting your product used in hundreds of countries solving lots and lots and lots of different people's problems. And if you've got it right and it's a flexible good enough product, it will be. And that is very joyous to create that. So think about going global from the first day because that is a good thing to do. If you set out to solve a big problem in the first place it's really nice to solve it not only in one country but in lots of countries.
[00:30:08] Board: the right kind of money at the right time. You know if they've never raised seed and you know you're going to have to raise a seed, you should think hard about surrounding yourself with people who can help that. And so I think about the different levels. If you think about, now we're sort of raising secondaries for a couple of companies that I'm on so that they can make other acquisitions, having board experience and people around you at that time to help you smooth the next two three years is really really important. So think about where you're going and what skills you need, and either as a director or as an adviser make sure that you've got the right people around you that can help you understand this new uncharted territory that you're going into. But that isn't rocket science for some people. So just keep on finding your rocket scientists who have done it before and you'll be fine. And I think curiosity. I mean that's what I love about our industry and the tech industry is you surround yourself by curious people who want to solve that problem. What's that thing that we're trying to make happen. And if you surround yourself by that you'll find yourself solving those problems, and there's nothing nothing better really.
[00:31:04] So on that, I think I've got 24 seconds left. And what I want to say is that a lot of the problems you may not know that you have yet relate to your skills. So one of the things you can do is make sure you go back to your school or a school near you and talk to them about what you're doing in your company, and why it's cool, and why it makes you feel good about the contribution you're making to society. Because one of the things that the kids aren't hearing enough at the moment is how they can control their fate and the contributions that they can and will and should and must make to our world. Making them feel brave by introducing them to real life people like you, who have started up your company, makes a world of difference. It actually triples the percentage of them that choose a STEM subject, but it massively multiplies how likely it is that they will make decisions that will make them employable by you. In order to fill your own customers you know your own customer's needs.
[00:31:52] So I think that's it. I'm looking forward to not hearing your questions now because I'm going to get kicked off stage, but I'm looking forward to the panel and I hope that this might help some of you. And I look forward to watching every single one of you scale massively and every time you get a win please drop me a line. Anyway, thanks a lot.