SaaS Scaling Secrets
The SaaS Scaling Secrets podcast reveals the strategies and insights behind scaling B2B SaaS companies to new heights. Dan Balcauski, founder of Product Tranquility, leads conversations with successful SaaS CEOs, exploring their challenges, triumphs, and the secrets that propelled their businesses to the next level.
SaaS Scaling Secrets
Why Slower Growth Could be Your Fast-Track to Success with Roan Lavery, CEO of FreeAgent
Dan Balcauski interviews Roan Lavery, founder and CEO of FreeAgent. Roan shares his journey from a solitary PhD in physics to leading a collaborative team at FreeAgent, an accounting platform serving nearly 200,000 businesses. The discussion covers the challenges and strategies of early growth, including the co-founders' lack of sales and marketing experience, and the bootstrapping approach taken before securing initial funding. Roan reflects on the measured growth strategy as opposed to rapid scaling, lessons on managing a growing organization, deploying capital smartly, and maintaining alignment with effective frameworks like 'The Advantage' by Patrick Lencioni. Key insights include the importance of embedding core values and strategies into daily processes, avoiding the 'set and forget' mentality with OKRs, and differentiating KPIs from OKRs for focus and success measurement. The episode also touches on FreeAgent's financial journey, from crowdfunding to IPO, handling market challenges, and the critical role of self-awareness and mentor influence in shaping the company's direction.
01:45 From Physics to Product Development
05:06 The Birth of FreeAgent
07:52 Early Challenges and Bootstrapping
11:40 Gradual Growth and Fundraising
17:24 Leadership and Organizational Health
21:41 The Power of Business Fables
22:36 Implementing OKRs: Challenges and Solutions
24:27 Embedding Principles into Company Culture
27:39 Scorecards and Measuring Success
35:07 Navigating IPOs and Public Markets
41:05 Reflections on Leadership and Growth
Guest Links
FreeAgent.com
Roan Lavery on X
Welcome to SaaS Scaling Secrets, the podcast that brings you the inside stories from the trailblazers of B2B SaaS growth. I'm your host, Dan Balcauski, founder of Product Tranquility. Today, I'm excited to speak with Roan Lavery. Roan is the founder and CEO of FreeAgent, an accounting platform founded in 2007, used by nearly 200, 000 businesses. Over the past 17 years, Roan has led FreeAgent from inception IPO to an acquisition by NatWest, demonstrating deep expertise in bringing products to market, accelerating growth, and building high performing teams. Let's dive in. Welcome Roan to SaaS Scaling
Roan Lavery:Thank you, Dan. Thank you for having me.
Dan Balcauski:Really excited for our conversation today. Look, Roan everybody goes through different transformational moments in their life. I like to think of it as the superhero transformation. For example, you're Peter Parker, normal high school student, just living your life, you get bit by a radioactive spider you wake up the next day, you're Spider Man. In your journey of your life, what's been your superhero transformation moment?
Roan Lavery:Maybe nothing as dramatic as being bitten by a radioactive spider. Um, I think it was, for me, it was more of a, There's a gradual evolution of figuring out what made me happy, what sort of gave me a sense of motivation and a sense of purpose. Uh, and I think that's something that sometimes it takes a little while to figure that out. Especially if it's like a young person, it wasn't like, when I was like 18 years old, I didn't know what I wanted to really do with my life. I left school, I went to university, I did physics at university, it was originally I was a scientist. I ended up doing a PhD. Uh, and condensed matter physics and then quite quickly figured out that wasn't really something that I enjoyed. It was quite a lonely experience. It was quite an isolating experience. I essentially spent four years on an underground laboratory with no windows. In the dark. And so it was quite a solve. Yeah, it wasn't the most sociable. It wasn't the best for the mental health. And so I learned then that I wanted to do something where I'd be working with a team of people, we're working on something that we could really try and make a difference with, that we could, build, ideally something together. I ended up being a product. Put it out into the market and really see if we could benefit people with that. And so I learned that as part of like, doing my PhD and then had opportunity to train in web technologies, which was in about 99, 2000, which was a weird time to get into tech. It was essentially just when the first dot com bubble burst, but it was still, an interesting inflection point. And really that's when I started my journey into technology, into tech and the web.
Dan Balcauski:I love that wallet. Also, I happened to graduate high school, entering into a computer engineering degree in 1999
Roan Lavery:yeah,
Dan Balcauski:be a.
Roan Lavery:Yeah, yeah, it was,
Dan Balcauski:right. As soon as I graduated and graduated to the oh three down cycle, so, feelings go out for anybody in the current down cycle. It'd be to be SaaS. This too shall pass. Well, I love that. So along the way it sounds like, you were You're sort of doing this PhD and in this dungeon
Roan Lavery:it was,
Dan Balcauski:it was very isolating. I can imagine. Was there a certain point that you were sort of in that where you're just like, yeah, this is just I realized you wanted to kind of go in the your current direction of working with a team?
Roan Lavery:um, I mean, I think we, the thing about PhDs is, is very much a sort of solitary existence, you're working on this incredibly So, specialized piece of research that pretty much nobody else in the world cares about, or there's maybe like four people in the entire world, on different parts of the planet, that actually care about the same thing that you do, because it's so specialized. And so there's no way to, Bounce ideas of people, or there's limited ability to sort of bounce ideas. And I really, that's when, and also be creative as well, because I was, quite, quite a creative person. And so that idea of like, you have an idea you want to bounce off other people and you want to get some feedback on that. You want to come together and build something, but ultimately you want to manifest this thing. You want to build it. You want to put it out there and you want to see what other people think of that. Um, that was very challenging. I think I probably learned that in my second year. It took me four years to do my PhD and by year two, I was like, yeah, this is really not going to be for me, but I didn't want to quit. I'm quite a stubborn person. So I was like, I'm going to stick this out and I did. And it took me four years to finish it and get my doctorate. And I'm still glad that I did that because I think there, there is something about when you start something, you want to see it through, you want to have that commitment to something. I'm so, I still believe in that, but I ground out. I mean, it was a grind towards the end.
Dan Balcauski:Well, I don't think a stubbornness is maybe the worst quality to possess in an entrepreneur. Let's pivot to FreeAgent. Can you take us back to the early days of a FreeAgent? What inspired you to start the company? What were your initial goals?
Roan Lavery:Yeah, so I mean, after I'd I'd left on my PhD, I retrained in web technologies and I started working for a small agency. Um, but I was also freelancing and I was really interested in the design aspect of the web. And obviously it was still quite early on in terms of design. Things like user experience and stuff, but that idea of, designing amazing applications and having people really enjoy using those was something that I got a lot of energy and enthusiasm from. So I worked for this agency and I've been doing some freelance work up until about like 2006. And at that point, that's when I was introduced to the founder of FreeAgent, Ed Molyneux. And he'd originally had this idea, he was working as a contractor, Ed had a really interesting background. He was actually a fighter pilot in the RAF, and he had left the RAF he'd originally You know, at university, he did a background in computer science. He was contracting essentially as a programmer back into the ministry of defense in the UK. And he was managing his own books. He was managing his own accounts, um, and, By his own admission, not doing a very good job of it because, he was a pilot, he was a fighter pilot that tend not to be sort of very accounting savvy. And so he'd had this original idea. He'd recently moved up to Scotland, where I'm from London, and we were introduced, and we started talking about this idea. I was doing freelance work, he was doing contracting work, and he was saying, I've been playing about with this idea for, building a web product that could help people manage their business. Finances. This was in 2006, 2007. The only real other company, I'm sure there was ones, but the ones that were really an inspiration to us at that point was Basecamp. Ed had started playing about with Ruby on Rails. Obviously, that was sort of created by the Basecamp guys. And so we're really looking at that model and the technology that used to build it as really as an inspiration for what we could do, albeit, obviously, in a sort of a different industry and a different So we started working on that earlier prototype in 2006. Like a few months later, we met the other co founder, Al Heedy he also had a programming background, met him back in London. He was looking for a sort of similar idea to get into a project. And we all came together and we didn't know each other as co founders before we started the company, which, it's an interesting thing. I think there's pros and cons of that. And really that's when it sort of started off.
Dan Balcauski:Very interesting. And so, yeah, I mean, there's probably, we could probably do a, a couple hours on just just identifying good co founders. It sounds like you were lucky in that situation. And it ended up working out quite well. I want to shift a little bit to so those are the early days of this going into how you scaled FreeAgent sort of over time. Like every CEO, and team, co founding team faces challenges, along the way. As you sort of look back over your journey, is there a specific challenge FreeAgent faced during your growth that was particularly difficult to overcome? Maybe it was like something, you think it was a crucible moment that kind of has made you a part of who you are today?
Roan Lavery:Yeah. I mean, I think sort of, all three of the co founders were technical and we all essentially came from a product background. None of us have launched like a web application, but we were still so well versed in web technologies and product background. And so we always, I think, because we were working as contractors and freelancers, we sort of understood our target market because it was us. We had a real, we were, we were dog feeding our
Dan Balcauski:Scratching your own
Roan Lavery:We were absolutely. And so from that side of things, I think we, we had a pretty good understanding where we were absolutely weaker in was on the go to market, the sales and marketing side of things. And that was definitely an area in which we didn't really know what we were doing originally. I think things were quite different back then in 2007 with regards to just how much knowledge and material was out there about how to run SaaS businesses. And also what your options were with regards to funding, especially in Scotland. So for the first We bootstrapped the company. We were still working. Our contracts or jobs, freelance things, and FreeAgent was really just a site project for us. We were doing it evenings, we're doing it weekends, and we did that for two years up until 2009. And that's when we were introduced to Christophe Janss, who now is so, One of the leads of Point Nine Capital, VC based out in Berlin he was not with Point Nine at that point. He was just doing his own sort of investments and he'd invested in Zendesk about a few months prior to meeting us and obviously went on to become, incredibly successful and we were like a second investment. So. We were introduced to him, he put a bit of money into the business, and really that's when we were able to quit the day jobs and work in the company full time. And that's when we started looking at plugging in those gaps or areas that we were weaker in. So by the time something like 2010 rolled around, that's when we started hiring some senior people into our sales and marketing function. We've still got our CMO, he's still with us today.
Dan Balcauski:So, so it sounds like, none of the, all the co founders you said were technical and none of them had really a lot of experience running a company
Roan Lavery:none at all. This was, our first company we'd ever ran.
Dan Balcauski:So I'm curious, like, how did you sort of approach learning to lead a growing organization?
Roan Lavery:I mean, you do your best. I mean, I think one of the things Is really interesting, um, is the rate of growth of FreeAgent. I talked about that for two years. We were essentially building a product and launching a company with just the three of us. And we still had some like full time jobs. And even when we raised a little bit of money, our first seed round was a hundred thousand pounds, 110, 000. It's like, it was. It was tiny, it was absolutely nothing. And I think we raised another, a few hundred thousand, and in the middle of like 2009, like the amount of money we raised, all even through the entire lifetime of phrasing, is probably not even what a Series A would be today. So,
Dan Balcauski:Yeah. There's a lot of entrepreneurs being like, what your series, your seed round wasn't 20
Roan Lavery:yeah,
Dan Balcauski:revenue and a billion dollar pre like, are you kidding me?
Roan Lavery:Pre acquisition, we didn't raise 20 million. So it was very gradual growth. I mean, you know, we didn't bootstrap the company, but the growth in the organization was very measured. It was very gradual. And we always took this approach to fundraising where we would say, right. We're not just like going to raise, 5 million to give us this like chunk of runway. We want to use this money to get back to breakeven. So we're going to invest in the business. We're going to hire, grow the teams, but we also want to map out revenue until we can see that coming back to a breakeven point and be profitable after that. And we would typically try and reach that breakeven point or at least model that breakeven point within 18 to 24 months. After the investment and normally what we would do is we would then raise another round, but we were doing it from a position of not needing to raise the money, but wanting to raise the money to fuel growth and acceleration in business, as opposed to having to raise money because we were, going to run out of cash. So that was quite an interesting thing, but it did mean that we scaled the business in quite a measured and gradual way.
Dan Balcauski:Interesting. So, well, and that's obviously very different than maybe the. Traditional view in like places like Silicon Valley where it's, you raise funding and it's, go all out, win win. Yeah, rocket fuel. And unfortunately a lot of rockets explode on launch. Right. Seeing as you've taken the slow path, like, can you talk a little bit maybe about like, what do you think were the advantages of, Growing more gradually, like how did that maybe it was in terms of your maturity or like other ways that you were able to that maybe otherwise you wouldn't have
Roan Lavery:Yeah. I mean, I think that's exactly it. So, your question about how did we learn to scale a company? We were able to do it on the job because the company grew a rate that allowed us to level up. I always think that any point in time as a founder of a business, you need to be able to look at yourself and say, am I able to. Give this company what it needs right now. And for us, that was always the case because we were hiring five people or 10 people. We were never sort of, like 10Xing the business like overnight. And it would have taken this fundamentally different skill set, maybe fundamentally different people than we were at that moment in time. And you hear that about companies where they just, the founders just can't keep up the demands of the business, investors and so on. But because we took that slightly more measured approach, we were able to raise our game at the level the company needed to. We were also lucky like we had advisors, our board, some of the investors were, had some really good networks and we were lucky to be plugged into like a network of other high growth like SaaS companies, which was amazing. So there was extra external support that we had there, but you know, fundamentally, we were growing at this sort of rate that allowed us as individual co founders to level up at the same sort of rate as the business. Now, don't get me wrong. There were downsides to that as well, and that we were also operating in this competitive market where some of our competitors were really growing at this astronomical rate and scaling scaling. Uh, and I think that, with hindsight, would we have taken a slightly different path like being who we are today? I think we probably would have done. I think the reality is knowing what I know now, I may have taken a different path then, but I'm not, I wasn't the same person as I am today. You see what I mean? So I can look back and say, I don't really regret it because at the time it was the right thing to do. But with the experience I have just now, I think we may have taken a different path.
Dan Balcauski:Well, that's interesting. And that your logic totally makes sense, right? I mean, you only can, we only can do what we did, right? And say again, the other ways is, But with that benefit of hindsight, could you just unpack that a little bit? Maybe there are some entrepreneurs who are maybe thinking about taking maybe rounds that are larger than they're comfortable with, or maybe they've been bootstrapped and are thinking about seeking, institutional capital for the first time. Like talk a little, could you unpack a little bit of what you just that insight of like, maybe looking back, you would have changed a different path? Like what would have been the difference in your
Roan Lavery:So, I mean, I think quite simply, I think we would have been more aggressive. I think we would have been more aggressive with our ambition with the business. I remember me, Ed and Ollie, when, maybe there was like 10 of us. We had this joke, it was like, yeah, we don't want to run a company with 50 people. And we're all like yeah, we definitely don't want to run a company with 50 people. And then we'd get to like 40 people and we'd be like, you know what? This isn't too bad. We definitely don't want to run a company with a hundred people. You're like yeah. I mean, that'd be crazy, right? Who would want to do that? And then we get to like 90 people and be like, do you know what? I mean, a hundred people is not so bad. So there's this constant like resetting of expectation levels. Whereas I think if we were to look back, I think we would have that competency. Yeah, sure. We can run a company of hundreds of people. We know how to do that because I think like back then it was like, I remember us saying, I don't even know what we do with a million pounds. How do we spend that? We just, we couldn't even like figure out today you give me a million pounds and I'll spend it before we finish this call. Like I, I have no problem doing that now,
Dan Balcauski:Yeah, you pay, you just pay that to Snowflake, I think, directly.
Roan Lavery:I mean, it's like, but it was this idea was like, you don't know what you don't know. And even just like, how do you put money to work in a smart way? Not in a wasteful way, which is very easy to do. And it can definitely be the cause of a lot of issues with high growth businesses. But, being able to. Smartly deploy your capital. I have a much, much better idea of how to do that now. Whereas I didn't at the time. And so I'd be more confident of being more aggressive, raising money, setting expectations appropriately with investors but I'd be able to sort of really put us on that high growth trajectory.
Dan Balcauski:Interesting. Well, it's funny how, you sort of, you're, Oh, this is it. This actually isn't so bad. It's a little bit like the the frog is you're turning up the
Roan Lavery:It is a boiling frog,
Dan Balcauski:Like, Oh, this is kind of warm.
Roan Lavery:it's okay,
Dan Balcauski:It's all right. Well, so, you did have a gradual path, but eventually you had a sizable company. Like how, what. Have you found to be effective to, keep a leadership team aligned as the company got to scale? I mean, you'd said, you guys weren't you hadn't run businesses before. Are there tools, techniques, strategies you found that like helped you manage those larger organization?
Roan Lavery:Yeah, I think so. I think one of the biggest ones was we adopted a framework called the Advantage. It comes from a book by Patrick Galencioni. He sort of famously wrote the five dysfunctions of a team. A lot of people know the
Dan Balcauski:I got it on my bookshelf over there.
Roan Lavery:a brilliant book and the advantage very much I think builds on that and effectively builds a system to run companies. It talks a lot about organizational health and the different layers of organizational health that you need in a company. And there's things like, levels of trust, accountability, being results focused, mastering conflict, all of these sorts of things. But then there's also other aspects around what are the fundamental questions that a leadership team needs to be able to answer, and then needs to be able to provide clarity for the rest of the organization. So that not just the leadership team, but everybody in the organization is empowered and is aligned with what the company is trying to do. Because I think that's probably the central challenge as your organization grows. When it's really small and there's like 10 of you in a room or even 30 of you in the same like office or building or wherever it is, or even, distributed remote. Everybody knows each other really well. There's very sort of strong interpersonal relationships and network within the organization. By and large, people tend to know most of the things that are going on in that company just because, you're all on the same Slack channels or whatever, but that definitely starts to break down 50, 100, 100 and so like 50 sort of person organization. And then the risk is that people just are working in little isolated things and, silos start appearing and people aren't joined up. And so being able to create clarity around what it has and the advantage of these six big questions, these really important questions that is actually like a key part of how to drive that alignment while still making sure that people have a sense of autonomy in an organization and that they're empowered to be able to solve like,
Dan Balcauski:Can you give me a sense of what maybe some of the questions are? Like
Roan Lavery:I'll go through them. Yeah. So, essentially the six questions are see if I can remember them. Why do we exist? Which is obviously probably one of the most fundamental of all, and that's your vision or that's your, your mission as an organization. How will we succeed? And effectively that's your strategy. In your organization, like, we know we wanna get to, but how we're going to do that, um, how do we behave? And that's your values and that's your ways of working within an organization. What do we do? That one seems super simple. It's your product. But I think the interesting thing about that is it's. Quite often it's not about understanding how you would define your product, it's about understanding how your customers interpret your product. So, To be done framework to articulate that. Um, then there's a who does what, so it's your organization structure, roles and responsibilities, and what's important now. And that's all about things like your goals, your metrics, your KPIs, OKRs, all of that sort of thing. So those questions, they cover a lot of different ground from these really big existential things, like why do we exist, all the way down to much more sort of like tactical things, like what's important now.
Dan Balcauski:got it. So, there's a whole bunch of questions around this. My first one is I'm curious how you introduced it to the organization because I've been in situations and maybe this is just me before where it's like, I read a book, right. I read Google's book on how to do design sprints or read, something like five dysfunctions. And I'm like, this person has nailed it. This is a brilliant. And then I'm like, all right, I want everyone to do this. And then I'm like, I don't know how to like actually start. Like, it's like, Hey, you make everyone just, Hey, like, let's go read the book and let's talk about it. Or is it, was it a thing? Type of thing. I don't know if Patrick has a consulting firm that you hired to bring in the advantage principles. Like how did you sort of think about, all right, this is the thing that we're going to do and then, kind of lead lead the organization to sort of adopt it.
Roan Lavery:Yeah, I mean, so he does have a consulting firm, but we never actually used its implemented bandage. I think the first one was just the, the exec team. Reading the book, discussing it. The great thing about that book is that it's written into the soul of a business fable since there's a lot of practical examples there, but it does have a lot of exercises to go through either as a, like as a leadership team, or you, some of them you could either do more broadly as an organization to help you answer some of those questions as well. So it doesn't just leave you fumbling. So here's how you want Find a good vision or a good mission statement. Here's how you want to maybe think about articulating strategy or even your values. And it gives you some sort of like practical examples to use. And You can use those with the whole organization. So I think, all of these sort of activities, right? Defining your values, defining your strategy. Mission and stuff like that, there, there tend to be things that organizations do anyway. Um, this just sort of puts a little bit more of that framework around why all this is important, how it all comes together. I think Talk about things like OKRs, right? So OKRs are one of these aspects where companies really often struggle to introduce them or implement them into an organization. I mean, I work with organizations, I've been in organizations where they've had. I think there's only like two or three failed attempts at introducing OKRs. They kind of use them for a few quarters, everybody hates them and then everybody's like, we don't want to do this and then they get forgotten about and then a year later somebody says, Oh, we should really do this stuff. And I think some of them are just, they're just like, The longer you leave it, the harder it gets, again, there may be one of the things that would have gone back and done is some, I think we were okay when we started introducing some of this stuff, but if you leave it to a hundred person business before you start covering off some of these things that I'm talking about, you're going to find it really hard because there's a lot of like tracks laid in the organization to begin with. So it's going to be harder to solve and rework that. So I think for some of them, the earlier you can do them, the better, when the team's still. Quite small. And then the more inclusive you can be in terms of bringing people from the organization into those conversations and into those activities, I think the better it's going to be as well.
Dan Balcauski:Yeah, it's funny. You mentioned the OKRs because I had heard a joke once that Google introduced OKRs into the ecosystem to prevent any startup from actually meaningfully competing with them. Because everyone has done that poorly. Well, so going back to the advantages. So, so, okay. You've got these six questions and those all make sense. And I can understand everything you just said, it would like people wait too long. But like, ah, B to C, B to B, B to C. So you introduce it, you start, you have the exec team, read the book and go through some of these exercises. How then do you sort of instantiate that so that it's embedded in the framework of the company, right? Cause it's not just like, Oh, we did
Roan Lavery:Yeah. Yeah.
Dan Balcauski:at an offsite one time and then everyone kind of moved on with their life. Are there practices that you've done to make sure that those principles kind
Roan Lavery:that's actually a really big, important part of the book. It's broken down into these different sections. The number one is about creating clarity. Um, and that's where you answering those questions and how incredible answers that is a leadership team, but, and then the second bit is about communicating clarity and the third bit is about over communicating clarity. So there's a good, like two thirds of the book, which is essentially just repeat yourself. Now, I think it's worthwhile just even just unpacking that because I think there's a real interesting thing about how do you do that as a leader in an organization? Because I think that's sort of the default that you go to is you say, Oh, well, I did that town hall and I stood up and I told everybody what the strategy is going to be. Or I told everybody these are our values or these are our mission or you have them on the wall or whatever it is. I'm not being down on that stuff. I think that stuff is important. But what you've got to understand is that is only one layer of how you communicate in an organization. And fundamentally, I believe NOE, it's when those answers, whether it's your values, your strategy, your mission, whatever, when those are baked into the day to day processes of your organization, that's when it truly starts to stick. So processes like hiring, Processes like onboarding, processes like reward and career progression in an organization. Processes like how you set your Processes, like how you do sprint reviews or retrospectives or anything like that. All of these sort of multitude of things that we use in agile organizations. Think about how you can use those as an opportunity to reinforce whatever message it is. So it's just constantly baked into the day to day because this is, it's the number one reason why OKRs fail, is teams like set and forget, they do the OKRs and then they just go off and they get involved in their day to day. Then somebody kind of goes, oh man, oh yeah, like. It's getting towards the end of the quarter, we better check our OKRs and oh my God, like we were supposed to be doing this, and well, we just got excited. But if it's actually woven into the fabric of, the standup or the sprints or reviews or retros or whatever it is, then it becomes much more sort of the omnipresent. And I think it's the same for those questions. So yes, there is a role for podcast, whether that's. Company all hands meetings or company announcements or slack or emails or anything like that. But then think about how it gets actually baked into the day to day.
Dan Balcauski:Interesting. Yeah. So making sure that, yeah you've got the processes sort of using that as a foundation sort of touchstone there. And I mean, just kind of tactically, like, you as the CEO leader, like, you don't have to touch on everything, but maybe there's like one sort of process, like, is there a way that you sort of keep your eye on those things to be like, okay, is this, has this. Is there a drift check like that you do to be like, Hey, is this we seem to be spending a lot of time on this thing. Let's make sure that it's aligned. Like, how do you sort of keep a pulse on that within the organization?
Roan Lavery:Yeah, so we, another important aspect, which comes under the, how will we succeed and how will we know if we're a successful banner? It's really where the scorecards for the organization come in. So, you'll be aware of the concept of a balanced scorecard. What we do at FreeAgent is every team is effectively managed with their own balanced scorecard. Um, so product teams, we use something called the Google Heart Framework. I'm not sure if you're aware of that. Yeah. So it, stands for happiness, engagement, adoption, retention, and task success. And effectively, these are like five measures of what you would consider a successful product. Is it? Making customers happy. Are they engaged? Are they adopting the product or bits of the product? Are you retaining customers? Are they doing things certain tasks successfully? And each of the product teams will own different aspects of a product scorecard. And All of those scorecards effectively cascade up via a goal tree into a company scorecard, which is the headline metrics, which we think we need to be doing. So, for example this year, FreeAgent, one of our big strategic pushes is that we wanted to launch new revenue streams. On top of our core subscription revenue, we want to launch some additional add on products and start generating revenue from those. Sounds really simple. That's our core headline metric, so I track their routes, our additional revenue streams do. But then that cascades down to different product teams who are like, oh, we want adoption of this product, we want conversion of this product, we're going to launch this new thing over here. And so we can, we can look at that lower down level, but then also see how it optimally sort of impacts the headline scorecard. So that's a really big part about giving teams ownership, but also accountability. So they're on a hook for delivering success in that particular area of the product. And, that will be seen even at the highest company level. But how they do that, the details of what products are going to bring to market, or how they're going to sort of drive up adoption. It's really left to death.
Dan Balcauski:So, that's fascinating. So, okay. So you've got these specific measurements that are scorecards that are departmentally specific. So then does that take the place of what most people might think of as OKRs in an organization? Or do
Roan Lavery:no, so it doesn't. And again, this is like, we could spend like literally hours on this and it could bore you to death. But one of the real, I think, areas of confusion is what's the difference between a KPI and an OKR? People really struggle with that because they're two numbers, right? So I need to solve the same thing, but fundamentally KPIs are things which on an ongoing basis, we want to track and make sure we're doing a good job of, so conversion rates. Okay, that's clearly like, like, like a KPI and Is like, we're going to, within this period of time, we're going to do this work and this is the impact that we want to see. So they're More tighter bound. They have a very specific deliverable and they generally have a an anticipated expected outcome and impact that you want to have as So, typically, it might be something like, we've got our targets around our KPIs for the year, and we, conversion might be one of those. But then you might have a discrete project, which might be about maybe one aspect of the onboarding, you know, which might be the setup process, for example. And we want to improve that setup. Process, get more people through it and we want to take the success rate of that setup process from, I don't know, wherever it is, 20 percent to 30%, and we know if we do not just what conversion is about, but we know that will contribute to that overall KPI of conversion, which is something Year on year, all the time, because that's something that's so important to us, and The OKRs tend to be more discreet. Initiatives where you're thinking about what impact you're going to have and you measure that and then the longer term impact that you want to have is measured through your KPIs.
Dan Balcauski:Oh, wow. So, I mean, I just want to note on the arc of this conversation, right? We started out, say how, 17 years ago, you and your co founders hadn't managed an organization and now you're like, now you're like, I could teach at a business school, telling you how to
Roan Lavery:yeah, yeah,
Dan Balcauski:processes so, and I think that growth journey is fantastic, but, so again we don't need to spend all day on this, but one final thing, because you did mention, right, I mean, a lot of Companies Struggle With OKRs and I've been on the other side of that as well. It's not pleasant for anyone involved. Obviously you've sort of created this system that, that works for you. Give advice for other leaders at SaaS companies who are trying, like maybe struggling to make an OKR process effective. Like, what any ways that, like they could improve that? Like, do you see any sort of Continuous mistakes being made out there in the world.
Roan Lavery:Yeah, I mean, I think there is a lot of mistakes are made with OKRs. I mean, I'm definitely not dogmatic about OKR. There are a lot of OKR purists out there. I wouldn't say I'm more pragmatic. I think, ultimately, There are two. They should be working for you, and they should be helping you. If you feel like you're battling against them, and they're just creating more problems than you're solving, then you're doing it wrong. Okay, that's that Google quote you make. If you genuinely feel like this is hindering you as a business, you're doing them wrong, like, and so sometimes if something feels like it's too difficult, Just make it, just ease off on the dogma around it and just be a bit more pragmatic. That's not to say that the principles behind OKRs were, the fundamental one is it's about measuring impact of the work you have. They're not a task list, it's not a list of things that you're going to do in the next cycle. It's about the impact of the work you're going to have. I feel that's like a really important principle, but sometimes it doesn't always work that way. And sometimes I see some organizations come and say, well, we're on, like the reality is we're going to do this big project. We're not going to see the impact of this project for nine months, or maybe there's like a, the sales cycle for an enterprise deal is nine months. So we don't know what the impact is going to be. And then you just have to say, well, that's okay. That's okay. Like don't force it. But you know, it's, So understand the theory and then be a bit more flexible about the application of that. Um, I do think the other thing as well is about you don't want to get into the set and forget thing where there's a disconnect between there's this really intensive process of defining OKRs once a quarter, once every six weeks, whatever it is, and then they just sort of like drift off. So again, Once you've got them, bake them into your actual day to day process. There's a really good book called Radical Focus you may have heard by Christina Wotnick, and she talks very much around the process of doing it. It's very much aimed at early stage startups, but it talks about how OKRs are baked into the sprint process. So if you're running that every two weeks, then at the beginning of the sprint, You actually use the OKRs to define the priorities for that sprint. And it's just about, making sure there's that kind of constant focus on that. So I think they will be the two things. Don't get into that certain forget mindset, bake them into the process, but then just be pragmatic around what's actually going to be realistic for you, given the type of organization that you've got. I love
Dan Balcauski:I love
Roan Lavery:that and Yeah,uh you know We could
Dan Balcauski:spend, uh, you know, Hours on, on this topic. I'm sure. I do want to pivot with a little bit of our remaining time to you've gone through a crazy set of fundraising and financial transaction journeys over the course of a FreeAgent's life. And I'm sure we could talk for many episodes just about those of you at one point you guys actually went. Public. It went through that process. And we happened to be in an interesting moment in time. We're recording this in 2024, and I was mentioning before we hit record that we're actually in a period of. Worse number of IPOs in the tech world than we've, it was worse than the 08, 09 financial crisis, which is mind boggling. So, obviously this is a problem. It's a problem for, entrepreneurs their employees trying to get liquid. This is a problem for venture capital. It's a problem for the market in general. So I'm curious kind of Your experience there, like, can you walk us through kind of your decision making, at least at a high level that led to you're going public?
Roan Lavery:yeah, I kind of, yeah. I think. One of the things I think is, I think important to say is that our experience of doing an IPO and the type of IPO we did, probably very different from the stereotypical IPO that people talk about with your tech company. We were a really small organization. In comparison, like, we were doing probably about 10 million ARR at that point. So really, really novel. We were only probably an organization of 100 people. And we didn't fall on the large UK stock market. It was a smaller AIM market, which is designed for an earlier stage, smaller companies. So it was a, Different experience of going through the process of an IPO and certainly afterwards as well, which is maybe that we can talk about that because it certainly has some challenges. I think in terms of like the rationale behind it, and as you mentioned before, we'd been on this, we can, we quite often joke that we've ticked every box on the bingo card of startups. We did bootstrapping, we did angel investment, we did VC, we did debt funding, we did a crowdfunding route. So we did it, we raised a million pounds in a crowdfunding round in 2015 or something like that. So we did it all with those things and we were sort of like looking ahead as to like, well, where is this going to go? Do we just want to raise a crazy big VC round? Are we going to get acquired? And at that time we thought, well, actually the IPO would be quite an attractive thing to us because it would allow us a mechanism for bringing people in. More investment into the business while still allowing us to fundamentally have control over the business. So we wouldn't necessarily be on some, um, very sort of prescriptive or fixed VC timeline for when there would have to be a return or maybe PE money or sort of something like that. Idea. I wouldn't necessarily say it worked out that way, but that was the original concept behind it. We'd actually tried to do it in, it must've been like 2015, I think that we we must've tried to do initially and it didn't work out. We couldn't really get enough momentum behind it. But at that point we had some feedback from potential institutional investors like, well, come back to us if you've managed to do X, Y, and Z. And we did. So when we went back and we tried it again a year later, we were able to say, this is awesome. This is what we talked about. We've actually delivered against these targets and milestones that we said we're going to do, and that gave those investors a lot of confidence that gave us, to push through into the IPO. So yeah, it was the idea that we would still be able to retain control and power over the business, but ultimately, have a path through to additional investment into the company and also potentially an exit for the founders as well at some point.
Dan Balcauski:I imagine that that created some interesting pressures kind of across the business being public. And you had mentioned that you had this view of what it would be like, and then what it was like. Could you just unpack kind of maybe what was different on the other side of being a public company?
Roan Lavery:Yeah. I mean, so, so I think, we had this idea that we would be sort of like masters of our own destiny, be able to raise money when we want to from the public markets, there's a pathway through to an exit for the founders as well. I think the reality was, and again, I do want to stress that some of this was definitely related to being on. that smaller market where there was a very limited liquidity. In the shares, there wasn't a lot of like shares being bought and sold in the business. But what I meant was that any transactions that did happen had quite an outsized impact on the share price. And it made the share price quite volatile as a result. Just definitely something that you can see. What we definitely find is that It quite quickly shifted the focus of the business to be much more short term about delivery on essentially sales targets, acquisition and growth targets. You know you've got your next like quarterly analysis and you know that was good, it's going to, share prices is going to be positive, it's going to be bad, it could be really bad. Again, that point about the volatility and liquidity there. And so All of a sudden it went from sort of, there's always a sort of like a focus on growth, but you were thinking longer term, you were thinking ahead as well. Suddenly it became much more short term, much more of a short term focus. And that was quite it's quite a stressful experience. I'm not going to lie. And it meant that, for me, From that time I was the CPO, Ed was the CEO at that point. It was less about investing in the long term of the product, less about investing in the product for customers, and more just about hitting the numbers. It was just ruthless, relentless. You've got to hit these numbers. There's a lot of pressure from the board. You've got to do it. You know you're going to be, have those sort of like analyst expectations as well. And it was definitely the, probably the most stressful period, probably the least enjoyable period that
Dan Balcauski:We had If you had to sort of do it again would you have made the same decision?
Roan Lavery:I think that essentially whenever you talk about decisions that maybe weren't the best, maybe, it's not, it's never usually like a black and white or it was the absolute worst decision after the best decision. It isn't just about how did that decision work out. It's about what was the alternative. And so for us, it was just like, well, if we hadn't done. The IPO, what would we have done instead? And that, it probably would have been like a larger VC would have done, which would have had its own pros and cons. So I don't think you can sometimes say, yeah, I didn't particularly enjoy that. I'm not sure what the alternatives would have been and if they'd been any better or worse. And so, ultimately it's the same thing with the acquisition as well. We made a decision to sell the business ultimately and then, you can look back and see, is it the right decision or wrong decision? But you have to also say, what were the alternatives?
Dan Balcauski:Yeah, exactly. Well, yeah, I'm a big poker player and you can get drawn out on in a in a poker hand and you still made the right call. And didn't, didn't change the decision, even though the outcome might not fall in your favor. So I love that. I love that framing on the the decision process is like, yeah, well, what was the alternatives? I made the right decision at the time. Nevertheless, the outcome. Yeah. Roan, I could talk to you all day. And I would love to, but I want to be respectful of your time. I'd like to wrap things up with a couple of rapid fire closing questions if you're up for it. Awesome. Look when you think about all the spectacular people you've had a chance to work with, is there anyone who's popped a mind who's had a disproportionate effect on the way you think about building companies now?
Roan Lavery:Think in the early days it would have been Christophe Jantz. So, as I mentioned, the first investor we had our second major investor was Robert Klein, who's very well known an investment that we've seen. Both of those people were really pivotal in putting FreeAgent on the early path. But also introducing us to other people. So Christoph would run, he still is, I just still get his run to this day. He would run a sort of annual meetup of all his portfolio businesses which today is sort of includes sort of like really so well established organizations like Zendesk, all the way through to sort of like many sort of like early stage startup, but he was bringing those people together in those early days, having a chance to, bounce ideas of people, learn from other people, and bearing in mind in those early days, that it wasn't a playbook for how to run SaaS companies like there was, so we were also like learning, so like as we go, so that was a really sort of influential and really inspirational, important part of our journey was meeting him and getting his input, but also the network that I think he introduced us to.
Dan Balcauski:that's fantastic. And look, if I had to give you a billboard and you could put any advice on there for other B to B SaaS CEOs who are trying to scale their business, what would your billboard say?
Roan Lavery:I think we say know yourself, or know thyself, can rephrase it, and I think that's, it's really important that. You understand, on a continual basis, so you're constantly doing that self reflection of what am I good at, what am I bad at. And, the good things are great. You just keep on doing more of the good stuff. Like, I'm, I've always been quite good at strategy, so I just keep on doing that and that's fantastic. And if you're honest about your weaknesses, you've then got a couple of choices. You can then either say, well, I'm going to like spend more time in those areas and get good at that stuff, or I can bring other people in to help me with it or a bit of both. But fundamentally having that very honest sort of perspective of like, where are my strengths and weaknesses. If you don't do that you're really not going to be able to lead the organization in a successful way. So, be humble and be honest with yourself and others about your weaknesses and your failings.
Dan Balcauski:Know thyself. Classic wisdom from Roan Laver. We'll just scratch out of the billboard of Socrates and put Roan there. Could speak to you all day. I'm sure other folks would be interested in learning more about FreeAgent or following you around the internet, anywhere you'd like to point them to websites, social media.
Roan Lavery:I don't actually use social media. I used to use it a lot. I used to really use Twitter like a lot back in the day. I think I joined in like 2009 or something, but I've really, I don't enjoy it nearly as much as I used to. I find it quite a toxic place now. So I've sort of stepped back from doing a lot of the social media stuff. I'm much more. Prefer doing events. I much prefer doing things like this, to be honest, doing podcasts, doing interviews, doing chats, conferences, that sort of thing. So, I do pop up at events and stuff like things like that. So I guess just keep your eyes out.
Dan Balcauski:Well, Roan, it's been an absolute pleasure. Everyone that wraps up this episode of SaaS Scaling Secrets. Thank you to Roan for sharing his journey insights and invaluable tips for our listeners. If you found this conversation as enlightening as I did, remember to subscribe so you don't miss out on future episodes.
