How to Go From Start Up to SCALE UP ft. @SKellyCEO

And we are live. Welcome everybody to another YouTube Hangout. Super excited to be back here with my friend, the CEO of Sage, Mr. Stephen Kelly. Welcome back, Mr. Kelly. How we doing?

Great to be here, Evan. Actually, I was just gonna ask you how the Blue Jays are doing, and obviously a lot of stuff going on, how the kids are, but we're good. We're back on air. I've missed you. We haven't been on for a couple of weeks, so it's good to be back with Evan Almighty.

The Blue Jays lost in the playoffs, so it's a sore point. We're kind of moving past and we're thinking next season now. We're thinking next season. But where are you in your London office? Where are you joining us from?

Yeah, just back. I did a— since we talked last, I did a crazy world tour. I went out to see all our colleagues around the world. So we did 3.5 kind of rotations of the earth in about 3 weeks. Good news, we finished up in Vancouver, in Canada. So your great country, and what a great way to finish. It was fantastic up in Vancouver, and the Canadians absolutely set the bar high, and they rocked as they always do.

I love that. Well, today we're talking about how to, how to go from startup to scale up. How do you take that either part-time idea you have and make it something bigger, or how do you take that you know, small company you have and turn it into an empire. But before getting into it, Stephen, people always love your quotes to kick us off. So what is the curated Stephen Kelly quote that you want to lead us with today?

Yeah, probably. I got a couple of two or three today just to kick it off and they may frame some of the questions as well. First thing is 50%. We survey all our customers and 50% of our customers business builders, business owners said that actually growing a business is actually harder than starting a business. So that's something to reflect on. And then also a good quote we've used a lot is kind of work on your business, not totally in it. Obviously, day-to-day running is relentless, but sometimes you need to step back and think about how you build it for the future and go to the next level. And then final thing is, you know, if core values, I think we all We all know business builders have a dream, a mission, a sense of purpose. And if those core values are the soul of the organization, then really bring them to the heart of everything you do as you grow your organization.

Very cool. So I wanna, we're gonna get into some questions. We got people watching, they're already asking some questions for us. But before getting into it, I'm curious, your number one piece of advice for somebody who wants to go from startup to scale up What would the man Stephen Kelly recommend as his top piece of advice?

I think top advice is be, be absolutely true to the vision and the idea you started with. And that's kind of back to the culture. And then as you grow, obviously, almost certainly you're going to have to hire folks in your business to support your growth and hire rock stars. It's really clear to me the great companies have fantastic— two things that stand out is great culture. And then that's really all about you, that you're the founder, you inspire that culture, and people really galvanize around your movement and your dream. But then also, when you bring them in, you need to make sure that you hire rock stars. And then with all rock stars, they want to fly like eagles. So you need to be a bit careful that you're going to— don't suffocate them, because it's quite likely you'll be better than the people you bring in. At certainly some parts of the business. And to scale and grow that business, you've got to give them a bit of space to do what we talked before, like fail fast, learn quickly, get it right, and really kind of power on.

It reminds me of the quote, if you want to go fast, go alone, but if you want to go far, you got to go with the team. I wonder for you, because velocity is so important. Every time I'm around you, you're talking velocity and speed. We got to go fast. How do you, how do you go fast for the entrepreneurs who feel like I can do everything myself, I can do it way better than these people that I'm bringing on? You know, I hired somebody and it's not working out and like, I'm just going to go back and do it myself because that first hire didn't work out because I want to go fast. How do you go fast and have a team at the same time?

Yeah, I think, I think you can do it. I do think this is near Evan, you know, and I talk to so many businesses that have kind of scaled up and quite a common theme is a lot of the guys who joined in the early days, in the pioneer days, say when the company's a million or 2 million revs, we've lost that essence of meeting on the Friday afternoon, ringing the bell when we had a great week in terms of sales or we had won an award and we lost that informality. I still think you can go fast and have great clarity. So, and that's down to again, the founder and the chief executive, really, probably the same person. And make sure there's that clarity of purpose, what we're here to achieve, the moon mission. And then take some moonshots out of that, but just carve a bit of space out for your people to celebrate the successes and feel part of the family. You are galvanizing a team of people around your vision. That you hold very dear to yourself, very special, something unique and magical. And the more you kind of engage them in your movement, and also back to what Evan said, if you can get partners involved to join your volunteer army, then wow, you can amplify the message and really go much, much faster. And then through modern kind of digital technology and social media, you can amplify it and you can get a volunteer army of millions of people out there. So So that's when you go really fast, great velocity in businesses, but also you're bringing people with you, which I think is really important to be inclusive. And then just carve out a bit of time with your trusted guys around the table just to say, you know, what's working well, how do we go faster? So as that quote I gave you at the beginning, when business builders just don't get lost in the sea of noise of the day, just take a bit of time to step back and reflect on what's going well, Is the product launch going well? Is the website looking good? Is e-commerce, whatever part of the business it is, is the services utilization tracking? Are the clients going well? Are they happy? Are they in good space? All those sort of things that you have to do, you need to carve out some time. And then strategically, you gotta say, are we being true to ourselves? Because if you've got a great idea and you've been through that kind of really steep white-knuckle ride of growth, you want to go to the next stage. And if you've got a great business, there's no reason to stop. Stop you rather than your own capability. So just go for it and make sure you go fast, but bring people with you.

I love it. The words of motivation from Stephen Kelly.

I love it.

Cool. Well, let's hit up some questions and hopefully answer some— give some knowledge to some entrepreneurs. First up, we got Christoph, who's saying, hello, thank you so much for your inspiring educational video. You're so helpful to my life. My question is, how do you find good people to work with to scale your business? So it ties into what you were just talking about. So now how do we find these people, these rock stars to help us achieve velocity for our company?

Hey, hey, Christophe, shall I go back to a little quote I did with Evan Carmichael? He'll know this one of our— he's a legend in terms of a business person, Steve Jobs. So Christophe, his quote is a famous quote. You know, the big D motor, hashtag number one. Demotivated for talented people is to have to put up with bozos. So Steve Jobs said nothing's more frustrating than A players having to work with B players who absolutely, number one, slow them down and two, suck their energy from them. So the best thing you can do as a leader, obviously, is hire great people. And Steve Jobs said it's better than giving them football or sushi, free sushi. You want to hire A players. So how do you do that? That's the crux of your question. I think number one, you have obviously a brand out there, a big idea, and I think actually if you do that well, it attracts great people. Secondly, I'd always, always go out to your network. And we sort of talked about on previous broadcasts about how you go out and attract really good people, but first of all, identify them. You'll know if you're working in a company today or you're starting off on your own, people who really impress you. And people who consistently kind of knock the ball out of the park, they'd be great targets to join your personal crusade in your business. So I think a lot of it is around kind of networks. Obviously things like LinkedIn and stuff like that make it even easier. But I think most of all, you really want to build a business and a company that attracts the very best, attracts rock stars. And probably the most important thing you can do as a growing business, actually, probably the most important thing is to actually invest your time making really smart hires. And candidly, I've made bad hires in my life. I've made lots of mistakes. And if you do make lots of mistakes, then, you know, on hiring, it's somewhere where it can hurt you. But if you have made a mistake, let's be honest, everybody's done it. And what you've got to do is really be honest with yourself and have the honest conversation with the person you've hired and, you know, cut them loose if they're not happy and they're not going to make it in your company. You're much better off having someone really motivated and really capable to do that job. But the best way to do it is build a great company, great brand, and that will actually draw, you know, the bees to the honeypot.

Yeah, I think just always keeping an eye out for talented people, whether you're at a networking event, whether you're going to Sage Summit, whether you're, you know, at a conference, whatever it is, if you see somebody who really impresses you, and there might be a way to work together on it on a project that you have coming up. You always want to— you're always looking for— you always want to keep that in mind. You're looking for talented people to help join and build this thing you're creating. If you're posting out on social media, you know, Stephen talked about having a really galvanizing message and something powerful that people want to come and be attracted to. Are people responding to that? Is there somebody who's going above and beyond? And, you know, if you're looking for a programmers or somebody on there who's like sharing their programming skills that you can ask to join your team, you know, people who love your mission already. I think it's great to be able to involve them, um, in what you're doing. So Steve, I'm thinking now, you know, when you came to Sage, it's still, you know, relatively new. I guess it hasn't been something you've been at for 20 years.

Yeah.

When you came over, how did you go about building your team? Obviously there's a team in place, you're bringing new people on as well. How do you think about the people that you surround yourself with there?

Yeah, you know, one of the most critical things we had to do was hire huge talent, and we've made a lot of changes in the team. So just a few data points: we've got about 14,000 people, but I think it's a lot about capability, some experience, and attitude. But if you've got attitude and you've got desire, it's amazing what you can overcome. So we've actually kind of really focused on hiring millennials. We've really focused on a much better gender balance. So in the senior management team, I'm really pleased to say, I think we've now gone up from about 22% female, it's now 32%, and that's just in less than a couple of years. So there's loads of elements, not just capability, but it comes back to that culture you want to build. You want to be an inclusive company, a company which is obviously high-performing, but also a company that really encourages young people to come in and learn. And rotate through their careers so they can go, you know, into one function and go off. And we, you know, it's great actually. I'm in Vancouver, met a guy called Tom Gough who used to work in the London office, now he's working in Vancouver. You know, 27, 28-year-old guy, fantastic. What an opportunity if we can create a company where people, individuals, colleagues have huge aspirations, and their aspirations and their dreams touch and connect with Sage so that they can make a career. But I'll also say, Evan, you know, I met a 23-year-old entrepreneur this morning who blew me away, a guy called Jack. And Jack has just started a company. He's got— I think he's closing around to get about $8 million of funding. But what impressed me with Jack, firstly, he contacted me on Twitter. He said, can I have a coffee with you? The answer was yes. He's done that with Ronan Dunne, who's a rock star at Verizon. He's done it with superb female entrepreneurs. And he's just assembled an unbelievable little company of about a dozen people. But he's also done that through just perspiration, hard work, hard graft, and being bold and asking people. And actually, you know, a quote is, "If you don't ask, you don't get." So I think when you're looking for talent, it's exactly what you say. Save some of all these great conferences you go to, look and network and find out who the stars are. Share with them your big idea and your vision. And you always find people gravitate to leaders and fantastic business ideas as well, and a mission and a good cause with a great culture. I love it.

Just, just tagging on that, I got asked a question in a previous livestream of how do you, how do you make friends with a guy like Stephen Kelly? How do you get on a guy like Stephen Kelly's radar? So maybe, maybe you could answer like, how do you get on your radar? So this guy reached out to you. For Twitter, what do you look for when someone is reaching out to you?

You know, I think everything is really amazing, Evan. And, you know, I'd encourage everybody on this, but just generally to believe in yourself. You espouse it, you've written your book, it's all about hashtag belief. I see so many people lacking self-confidence when they're great people. And inherently, you know, maybe, I don't know, the education system beats confidence out of people. But if it does, it's a real shame because I think there's so much talent that's latent and untapped. So people contact me. This Jack, he pinged me on Twitter, DM'd me, and 3 times later he was still DMing me. I said, okay, come in for a cup of coffee. And he came in for a cup of coffee, did his pitch. Brilliant idea. I've got some photos of him. I'll put them on Twitter later. I'm really happy to promote him. He's really just the inspiration of his idea, his attitude, his business, his get up and go, his hard work. So I think I would argue nearly all chief executives like me probably don't get asked enough. And Evan, in this summer in the London office and around the world, actually Sage, we've done loads of interns, kind of kids come in at the age of 16 do work experience. And I just would encourage everybody out there, especially if they've come from tough backgrounds, to just ask people like me, people like you. I, I couldn't imagine anybody coming to Evan Carmichael and saying, will you give me 10 minutes of your time? I've got an idea to run by you. It might not be this week because you're a busy guy, but you'll find time for them. Um, and I just would always, you know, beseech you guys out there to, to ask the question Back yourself, believe in yourself, have the conviction that you believe in your idea and you think it's going to change the world for the better. I love it.

Another thought that came to mind as you were talking about trying to bring on more women and that being a really key part of you coming in and now increasing the women on the executive team. I forget her name.

We talked about her, I think, back in July of the tech Oh, Kriti Sharma. Oh man, she's a rock star. She's, um, I think she's unbelievable. Yeah, no, oh wow. So she's, um, built, uh, and credit to her, she's just come in, bootstrapped it. This is, this is real, the essence of everything we love. So she's bootstrapped her team, she came up with an idea, met customers came up with a revolutionary, basically a chatbot that allows you from your, literally on your smartphone or whatever device you use to use Facebook Messenger or Slack or one of the messaging platforms to actually talk to your accounting engine. So you can just take a photo in a restaurant of the receipt and you can post it straight through your messaging platform like Facebook. And it makes it like, it's incredible because I think we're going to see that sort of, they call it artificial intelligence type technology, more and more over the next decade. But credit to Kriti, what, she's probably 27, 28 years old. And again, I just, I'm so excited when young talent comes in and lands something really exciting, connects it with customers. And she launched this product, PEG, and you guys can download it and have a look at it. But it's literally from launching at a Sage Summit, a soft launch on the stage with me, Evan, within I think it was about 6 weeks, we had users in 85 countries. So 10 years ago even, to have 85 countries use your product, that would probably take 3 years. And it happened for her in 6 weeks. And she's very enthusiastic, visionary, passionate. High energy, gets stuff done. She's everything you look for if you're hiring people. Rockstar.

I remember reading too about, I think it was Jacqueline, Jacqueline de Rojas, who won all these awards, a pioneer female in the tech industry who you guys brought on to be an EVP at Sage. So I mean, you're making all these hires. Now these are smart women. There's a lot of people going after them. They could have opportunities at any company. And so this is the question. You got entrepreneurs who are trying to build their team. You know, we're saying that team is important to go from startup to scale up. What do you do to recruit those women and have them pick Sage over the 100 other companies that they could go work at as well with their skill set?

Yeah, I think there's a question we should ask before that as well. Evan, why do we need, you know, obviously for us, Reality is, I think I'll be the first one to hold my hand up and say, you know, we're on a transformation at Sage, but wow, we've got so much more to do. We've got to, we've got to have, you know, every day I beat myself up about better products, better customer service. You know, there's always more to do. That's just life. But one of the things that I looked at when I looked originally at the management team when I walked in, they're all old guys like me, you know, Evan. Look at me. You don't want Stephen Kelly clones walking around this place. So the first question is, where's your audience? And then you've got to hire people to represent your audience. We want millions of millennial customers. We want, you know, what now, probably about over a third, I think it's 40% of new businesses started by females. And the whole world has changed dramatically in the last 20 years. And so our audience is, you know, these female entrepreneurs. Our audience is millennials. They're the people. So for everybody on this broadcast, think about where is it your audience is that are going to be attracted to your service, your product. And then you want people in your team who really represent their views that around the table, you can get the customer in the room and have an empty chair for the customer or the marketplace so that they are representative. Then I think key thing, Evan, is you've got to really make it a priority and a focus. So simple things we did to change it was every time you get down to a sort of shortlist of 3 candidates, it's got to have a female candidate on the slate. And we changed some of those things. And then also, you know, a lot of people here are founders, they're leaders in their businesses. What you say, I use this phrase called the tone at the top. What you say has huge impact and the shadow following you every day in the business. Literally with all these things, it's all about trust and culture and credibility and integrity and authenticity. And literally with these sort of things, you know, it takes weeks and months to build trust with colleagues and customers. And if you kind of screw up or do something stupid, you destroy that trust in a second. Second. So I think when you go out and target rock stars, you need to make it a priority. Honestly, probably the thing I still spend a lot of my time on is on recruiting the rock stars we want to take the company forward. And I think you should never kind of abdicate that or outsource it to anyone else. You've got to be responsible, especially if you're going from like 10 people to 50 people. The next 40 people you hire ideally should be better than you, should have real essence of what your customers need and where the audience is, and should add a spark and a different lens to your company as you grow and scale up. And whether that's engineers, development guys, more consultants, salespeople, marketing people, whatever it is, they should kind of really come in and be, be part of the cohesive team. And I think it's a really exciting thing in terms of the recruitment process that you're part of that because you're going to inspire them. Let's not kid ourselves, they're going to come and work for you because you are the person. And another little quote, people join companies typically because of the founder or the leader, and they leave because of managers. So it's important for you to be involved in that process.

I like it. Um, G-Rise is asking a question following up on your galvanizing message, uh, quote at the start. He's wondering, what is the galvanizing message of SAGE to attract your volunteer army?

Ah, it's great. So, oh, Evan, you know this. It's like Evan and I almost were cut from the same cloth. So what do we love so much? You know, we're kind of just street fighters, working-class heroes. We started, I started in my life when I was like 7 years old, getting home from school, going to my dad's small business, sweeping the floor, packing bags, helping out. I used to love it. I just loved it. But I also was a witness and at the table where I knew the hard work that he put in to being his own boss, to following his dreams, to pursuing his passion. And, you know, he got sick, and I saw the human sacrifice that it takes if you really want to build a great business yourself and you want to be your own boss. And then, you know, I've come full circle to Sage now, and I'm just so blessed and lucky to be here because now I have the opportunity to serve the business builders. And when I think, like, Canada, where Evan says 70% of the jobs across Canada are created by small and medium businesses. The, you know, the guys who are out in Calgary, the guys who are up in Jasper, the guys who are in Nova Scotia who probably have used their life savings to fund their businesses. They've been working at it 5, 10, 20 years, and they're the engine room of the economy in Canada and every economy around the world. And we know they work 60, 70, 80 hours a week, and we know they're pursuing their dreams. So I use this phrase, you I am serving the noble cause. I'm serving the noble cause of Business Builders. I'd say unless you kind of want to work, and I respect people who do and I love them, in the charity sector, then how lucky am I to serve Business Builders at Sage? All these, you know, we've got 3 million customers around the world. They're the best people. I've met so many of them. They've given their lives to follow their dreams, pursue their passions. And what an honor it is for me to serve them. And ultimately, you know, I believe because they're such awesome people and they're absolutely the engine room of their economies, then they deserve awesome technology. So Sage is the sort of digital heartbeat to help them, you know, power their business, collect their cash from customers, manage their suppliers, pay their employees, all these sort of things. That are fundamental and we've got to make that as simple as possible for them to make sure they're in compliance with the tax authorities and they can sleep well at night. So trust is really important, 100% compliance 100% of the time, but also that they can run their business from the palm of their hands. And we're on a mission to make technology for business builders as simple as we kind of use apps like WhatsApp or Snapchat or any of these apps in our personal life. So what an honor. So literally, Evan, for me, I've been here almost a couple of years, um, to be given the opportunity to lead Sage, which is on a mission to serve business builders around the world and give them awesome technology and make their lives easier and allow them to do what they love, which is grow their businesses, hire more people, create more prosperity for rural Canada, rural America, rural Britain, um, and urban. So cities around the world is a huge privilege. And honestly, I just get so excited about it. I could, I could, I could talk for hours on this and just infuse with love of Business Builders. I love it.

Kathleen is asking, how can I upscale my fashion brand? I'm just starting out. So advice for someone who wants to start out a fashion brand and scale it up.

Right, so I think, again, Kathleen, you know, you probably know the market in terms of fashion brands. Think about who is it your audience is going to be, who's going to be your market. You know, are you going to go for— is it going to be a generational play or is it going to be a segment of the marketplace? And then I kind of think, what is your big idea about how you get to both the product and why you're different? And then also, what's the best distribution channel? Who can you either partner with Or do you want to do it on a website and kind of through basically digital presence? Once you determine that, then I'd always actually honestly kind of test drive stuff. So, you know, I believe you, Kathleen, should have huge dreams. You should be the next kind of massive fashion icon walking down, you know, all the, all the platforms picking up the awards. But in the meantime, you've got to take the first baby step. So if you've kind of got a product, an idea, and you're going to say market to, I don't know, 16 to 25-year-old females, then wouldn't it be good to go and test drive it with 6 or 7 of your friends? Or again, if you're going to market it into guys, high fashion brands, then that would be great. So get people around, test their ideas, and then actually prototype it, then test drive it. And I actually, I know quite a lot of our customers who have built businesses like this. And one of them in maternity wear, actually different business, but in maternity wear. And she did it through her friends first of all, and then she did it through building a very small website, and then she scaled up. And I think she now employs about 40 people and has been hugely successful and a really kind of high-end brand. So I think with all these things, again, kind of have a big idea, which it sounds like you have, and then understand the marketplace you're trying to sell it. Why you're different, what's your kind of unique differentiator, and then get loads and loads of feedback. So when you kind of go to market, you're constantly iterating and learning as you scale up your business.

Yeah, I think you've got to find the product that's going to work, got to find the unique thing, whether it's a special dress or a new hoodie or whatever it is. You know, you're creating amazing new colorful ties for Stephen Kelly to rock. With matching cufflinks. You got to show the cufflinks.

Here you go. Look, huh? You see it? Can you see that, Evan? Yeah.

Yeah. We love it.

We love colors. You see, see, I love it. Evan, you're looking cool in that hoodie, man. I love that.

So you've got to find the thing that is different about your, your brand. Why is your fashion brand different than everybody else's? And test drive it. I think a lot of people make a mediocre product. They make a t-shirt like everybody else is making a t-shirt and then they buy 5,000 t-shirts and it's sitting in your mom's garage. You need to find the thing that's unique about you. This is like the startup. Before you scale up, you got to start up to find what is the angle that's going to work for you. When you have a product that you know works and people love it, then you focus on the scaling up. You work on the partnerships and the distributorships and the marketing. If you focus on that too soon, you're just burning dollars, you're burning marketing dollars without something that's going to work. So you got to figure out what that key product is first.

Hey, Evan, just on that, I got the sort of top 5 reasons why companies fail to go through, you know, from startup to scale up. The number 1 reason, the number 1 reason is 42% of businesses fail because they fail to understand the market need. All about your point about the wrong product and making sure that it's a great fit with the market.

I love it. Now I want to know what the other 4 are.

Do you want to know?

I want to know.

The obvious one, about a third of them, third of them, obviously, I guess this is sad because I think people over-engineer. You obviously got to understand your cash requirements, but a third of them run out of cash through a lack of funding or poor investment or getting ahead of themselves. So tracking your finance is really critical. Obviously, that's where people like Sage can come in and help. Next one is a quarter of them go back and say they actually hired the wrong people, which is interesting. We talked about that. Less than 20% of them fail because of competition. And then actually the last one is about one-sixth of them say they had cost or pricing issues with their products. So they're the top 5 reasons. But number 1 standing out is kind of the product related to the market need.

Huh, I like it. Interesting. Stephen Kelly always comes prepared with stats and quotes and stories and energy, ready to go.

Yeah, but it's the highlight of my week talking to your, your, all the guys out there. Cool.

Uh, Kendra is next. Kendra is asking, how much test driving do you need to do before you ask for an investment?

Oh, I think, um, I, I think with all these things, actually let's look at it the other way. What do investors look for? They look for a really good kind of management team and an idea. So back to the product idea. And I know that you can raise money on the back of a management team and idea. I think for your confidence, because I hate kind of seeing you guys give away too much of your companies, I think you want to test drive again, run it on fumes. Don't spend loads of money to Evan's point. 'cause you can do things really cheaply, especially through social media and digital. And you can test drive loads of stuff really coolly but really cheaply as well. And that's what you should do. So iterate it and test drive it. And I'd say, I'll be honest, businesses should never stop test driving. You know, when they get super scale, they should always be test driving stuff, new ideas, new products, prototype them, incubate them, kill them if they're not gonna work. If they are gonna work course correct to make sure they learn from it. And then when you go to investors, I think, we've talked about this a lot, I would always kind of try and run your business almost on fumes. You wanna plan your cash so you've got plenty of cash runway. But the best way to do that is either through friends and family, certainly wouldn't be going to get loads of money 'cause I've seen the parallel, the extreme. And when I was a CEO of a NASDAQ company and we were a startup back in, well, it's a long time ago, 1997. We had this phrase where we, you know, basically treat the company's money as if it's your own, number one. Revenue always should follow expenses in a business, kind of number two rule. And number three rule, we saw loads of companies at that time go and raise $100 million or $200 million, and they would just waste money. Just, you know, you couldn't believe the waste. They'd be booking private jets and stupid stuff like that. Rather than worrying about what really mattered, what's about the customers and the product. So I think it's a really good ethos, even when you kind of scale up your company, to keep that kind of hungry sort of street fighter kind of mentality that we're really going to preserve cash, we're going to preserve every dollar, and we're going to ask ourselves on that dollar we invest, what return do we get? But within that context, I think there's tremendous scope to test drive. And when you feel confident in terms of your business and your test driving to get investment, then I think that's a whole different conversation around where you get that. But probably the last place I'd go for businesses like ours that we talk about is to the sort of traditional places. I think there's much better sources of investment and people who will be great partners to you and your business who can give you advice. Who potentially can join your board or your management team and all those sort of things. And the final thing, back to recruitment, actually, back in the day, Evan, when I started a business, I got people to join our company, take a massive haircut on their salary and trade that for equity. So they had a share of the business. But wow, did that change their attitude. They had so much skin in the game and they worked harder and we built a great business and they got rewarded over the long term much more than they would if they're just taking a salary.

So that's a question I get asked a lot from my audience, and I'm curious to hear your perspective. Giving up ownership in a startup business— who to give it to, how much to give up, because then you still need to raise capital as you grow, and you can't give the same percentage to everybody. If you're starting a business and you've identified some key employees that you want to keep long term, do you have advice on how to go about determining how much to give them and how much you want to lose in the business?

Yeah, I would say, Evan, on this, I think this is an extreme philosophy, but I would counsel you that everybody you hire should have equity in the business. I think there's no more powerful way to get commitment and to get alignment around the purpose and the dream that you have than people having real skin in the game. So even if you have to sort of pay them, hopefully you could pay them, what, 70-80% of the market salary or even 50% and then give them the trade on equity, then that's a great thing to do. And I'd say that pays for itself 100 times. The other thing, back to your message about partners, if you've got a great product and you are dependent potentially on a distribution partner, I don't think there's anything bad if you structure something with a partner so they actually make an investment. That's a pretty cool thing to do in return for a bit of equity, but then have some really big milestones in terms of distribution, new product. The more with partners, the real thing is how are you going to get them committed? If they're carrying 50,000 products, why do they care about your product? So anything that you can do, back to Evan's point, what can you do to differentiate yourself when they're looking at catalog? On a screen of 1,000 products. If yours popped out and they've got an investment in it, that's not a crazy thing to do. And so it comes back to sort of the design of your business. What's your big idea? How are you gonna be successful? And who are the people that you need and where the audience is to really deliver that dream that you have? And then I would use equity as a good way. I'd suggest as you grow and scale your business, typically, you're going to dilute your company and you just have to accept that. But again, to have— it's always the old adage of 0% of $1 billion is not as good as 10% of $100 million. So I think you just have to be in some ways generous as you share the opportunity for wealth creation in your business and you connect people with your dream. But I'd certainly look at key stakeholder groups. And then obviously, if you're raising money, Evan, I'd always go to things like friends and family, get network. I would definitely, if you've identified a rockstar potential sort of board member who really knows the industry, that would be a great person to be investing in your business as well. So it's those sort of people, people who are really going to have skin in the game, who can bring something to move the dial for your business. And normally that's great experience. Or contacts or networks or access to markets and distribution.

Very cool. Well, Kendra's writing back to say, thank you, sir, that is awesome advice, and then a big happy face.

So hey, thanks, Kendra.

She's liking the answer. Um, Jason's asking, are all of Sage's products digital, or do they sell tangible physical products as well?

Yeah, um, nearly all— well, all our products, uh, are technologies that work on things like smartphones. So they are, and we, we have this concept, I want I won't do a big plug for Sage, but we have this concept in a business. It's about all ways managing your income, your assets, and expenditure. So we've created a golden triangle, which is kind of underpinned by an awesome accounting engine, real-time accounting. And then obviously if you've got employees, you need to pay them and there's payroll. And then the other thing, obviously you've got customers, you've got to have payments. So collecting the cash, sort of the movement of money. What we provide is the digital heartbeat most of our customers are moving to mobile, mobile first. Some of them are still kind of using kind of laptop and desktop technology, but more and more kind of we're seeing a lot of our customers sort of running their business and being in control of the business from the palm of their hand. And their digital heartbeat is both their sort of personal life management, which is their smartphone, and also their Sage system. So that's kind of what we do. And then obviously, you know, actually in Canada with probably the market leader, over in Europe, France, Spain, Africa, UK with the market leader. And we partner with a lot of people though, Evan, actually as well. So we partner with some of the companies you've probably heard about— Google, Apple, Salesforce, all these sort of companies. And we do loads of great stuff with those companies where we build our technology on their platforms. Or on their devices. And, you know, actually what we want to do is embrace the business builders and just give them awesome technology. And if we can partner and go faster and quicker and deliver a better solution for our customers, the business builders, then that's absolutely what we'll do rather than building it ourselves.

I love it. I want to expand on that point just a little bit. The idea of partnering with other companies to scale up, to go from startup to scale up, And I know, I know you're going to be really humble about it, but I know you had a big role to play in bringing some of those big companies on board. And it's been a key part of the goal, your goals at Sage. What's your approach if you now want to give advice to entrepreneurs who are looking to form partnerships to scale up? So we've talked about building a team. We've talked about raising capital. Now it's okay. Who else can we partner with to help this business grow, what kind of advice would you have on the approach of reaching out to potential partners, making it attractive, making a deal that makes sense for everybody? What advice would you have?

Yeah, I think, I think particularly product businesses, but also services business. Again, it's kind of know where your audience is. So who are the partners that are really going to allow you to accelerate your business and scale up quicker? That's the first question. Secondly is how do you construct something where it's a real win-win? So you both win out of it. And thirdly, I think from both parties' point of view, my experience of partnerships where they've been really successful is that they're partnerships where you personally invest time with their senior executives as well, and you form a common understanding, a bond around the mission that you're on together. So, you know, and particularly around us, if you go and talk to the guys, Salesforce or Google, they've got a massive ambition to support business builders as well. So the alignment of vision is very compelling. And when I talk to their senior executives, you know, they're almost just listening to myself back in the mirror. So, and then it's about what do we do really well, what do they do well? And if there is any overlap, you've got to think about being pragmatic about associated with that. And then back to the final point of the question, How do you construct a relationship where you've got a real win-win and skin in the game? So I think if you've got a product business, you probably don't want to give up a ton of margin on that product business. And therefore, if you can trade a little bit of equity where they have a big incentive to be successful in your business and see you grow and create value through the expansion of your business. The other thing, Evan, is Just ask the really obvious questions. Like if they've got a sales force and their sales force is gonna carry a product, you know, the obvious question is, well, how did the sales force get incentivized and compensated around our product? 'Cause I promise you, if they're not compensated around your product, you got no chance of being successful. So it's just the kind of real common sense things. And I think all of us would say, you know, it's very alluring and very exciting. I've been there myself and I'm sure every entrepreneur on this broadcast has been there, where you kind of sign a partnership and you think, wow, you know, you open the champagne and the party starts, and you've only just started. You've sold zippo. There's zippo sales from that partnership, and yet you think the partnership is the mountain you've climbed. You put the flag on top of it. No, no, that's just the start. You're in the foothills. So that's when the hard work starts. It's really easy to sign partnerships and sign contracts I reckon probably 90% of partnerships don't work out because people declare victory way too early. And you got to hunker down, you got to go the extra mile. And with that partner, the other thing I'd obviously do is make sure the partner builds a business plan, has real skin in the game, has real volumes committed, pays their salespeople based on your product success, incents their salespeople, gets you in to pitch it to their salespeople. Take the salespeople out for their monthly parties or whatever, or their holiday parties at Thanksgiving, all those sort of things. The more you connect and get alignment around your business and vision on the partnership, the more successful the partnership will be.

I don't know if you can answer this question, but I'm curious what kinds of partnerships you see yourself getting into in the future. Maybe not specific companies, but the kinds of industries you see yourself partnering with? Like, if we're going to see Sage, you know, in a Tesla, do my, do my Sage in a car or something else, like, where do you see the industry going that you need to partner with these kinds of companies? Maybe not specific companies, but like the industry that you want to get into. Is there something that comes to mind?

Yeah, I think, and this is pretty cool, you know, we are at a time where the industry is so disruptive, technology is changing faster than I ever remember it. And I've been in the industry 35 years and it's so exciting. So we do see in the future, actually, Evan, different sorts of partnerships, things we're getting really excited. And tell me if I'm talking kind of gobbledygook. You know, I hate to use the three-letter acronyms and stuff like that, but there's this whole movement around one area of artificial intelligence where a lot of things that have been done in the past manually will be automated, and we're already seeing it, you know, around robotics, around kind of machine learning. And we're building stuff and partnering with other companies to build stuff that's kind of learning software and actually can replace a lot of the stuff that are done manually at the moment, especially in the area of accounting. You just imagine it, many entrepreneurs still give their accountant at the tax year a shoebox of receipts and invoices and stuff. And it's just crazy, it's inefficient, you know, and then there's loads of manual handoffs, rekeying data. It's just mad. And I'm sure every entrepreneur here who's probably on this call, if they're over 35, will remember loads of mistakes they've made on accounts and stuff like that. It's just wasted time. All that, we believe, will be frictionless. It will all be automated, it will all be real-time. And it will get smarter and smarter in terms of sort of clever stuff that give you predictive analytics about sales, future product requirements. And the other area that we think is pretty cool is things like, we call it data science, but obviously we're very lucky we've got over 3 million customers. But wouldn't it be nice to tell, I don't know, think about an electrician's business in Toronto, you know, do you know every other electrician's business in Toronto gets paid in 15 days and you get paid in 45 days, you know, what could you do to get more rapid payment, improve your cash flow, all those sort of things around sort of the health of your business. I think companies like us and companies in partnership with us can really help provide a much better insight and service to business builders. And also we're working lots with accountants because I think you're seeing accountants going through a massive transition where they used to be kind of old-fashioned bookkeepers keying data in, and now they're becoming sort of virtual finance directors to hundreds of entrepreneurs. You know, typically an accountant has 300 clients, and they can give really good insight into some of the questions we're answering here, like where would I go for cash? What's my cash flow requirements based on this projection of sales over the next year? Where would I best go for even things like export markets? Where should I scale up my business? All these questions, you know, you're dealing probably with someone who's an accountant who's got tremendous, obviously, financial acumen, but they've also got probably a lot of business experience that they can share with you and help you grow your business faster.

Interesting. I'm curious if, and this I think is a great lesson for entrepreneurs, if you see an opportunity, so like, you know, you love AI, there's big, big opportunities in AI. Sage is a technology company. How do you make the decision to partner or develop? And so for all the entrepreneurs who are like, see this future path for them, how do they know like they should go down that path or just partner with somebody else to help them?

I think this is quite a really key issue and a really great one to answer. I think, Evan, there's probably a lens of a number of criteria you want to apply. Number 1, could you get there quicker by partnering than developing yourself? Number 2, you know, what are the other resources in your business plan and priorities that you've got to deliver? And if you do the partnering option, does it allow you to get there quicker without distracting you or changing all your priorities around and sort of robbing Peter to pay Paul? And then the other thing is, you know, what are you giving up? What's the downside? Relative to what the upside is. And if the partnership paid off, how much quicker could you scale and grow? And then the final thing is quite a subtle thing, but I think my experience of many businesses probably listening today would be ultimately you've always got to put your shoes in your customer. So you always want to maintain a relationship with your customers. So I would really be careful about a partnership where you have to abdicate complete responsibility for your customer in the marketplace and be dependent on another company for that. And what I found, I'll be honest, in relationships, particularly in retail area where companies, great little small businesses are selling through a big retail chain, there's a very uncomfortable power shift where the retailer has really kind of all the keys to the castle and can apply really uncomfortable leverage. And basically kind of screw the small business. And I think personally, I think that's not ethical. But also, I think you should always keep— if you do do that sort of partnership, well and good on you. Be careful and make sure it pays off, but also keep some sort of web presence. So you're keeping directly— you're keeping a retail channel to the consumers. So if the partnership failed to materialize or work out, you've also always got a contingency. And you haven't kind of abdicated sort of responsibility for your customers in the marketplace.

I love that. I love that.

Cool.

Thank you. Next, Susan, Susan with two N's, interesting spelling of Susan, is asking what books or videos inspire you?

The ones I, you know, I've done all the sort of Good to Great, Jim Collins. They're a bit old now. I've read— look at that behind. Yeah. Believe. Hashtag believe. Evan Carmichael. Inspiration. Read this guy's book. Other guys I love to have books, and we had him on the stage at Sage Summit. Richard Branson. I like people who just tell a human story. I love storytellers. So, and I think business is about storytelling. I love to hear when people tell me about their dreams. I love when they talk about their lives. And their personalities. And so things like Branson's book, I think, is a good read. And I think, you know, actually with all that sort of stuff, any book you read, there's probably 2 or 3 great nuggets that apply to your business. But again, I think you've got to plow your own furrow. So you don't want to be a slave to any book. Again, you've got your own dream and no one's got your dream, so you should be proud of that. But if you can use the source of all the great business books that are out there, then that's absolutely the, the, uh, a perfect accelerator to get your idea to market and grow your business and follow your dreams.

I love it. Uh, Gurav is asking, this is an interesting one, uh, how do you market products to customers who hate the products? What's your strategy?

I think you probably need, in that, Gurab, I think if they really hate the product, you've got to find out why. You've got to put, number one, obviously I'd say go where the audience is, put yourselves in their shoes, and then there's some great ways again through social media to find out exactly why they don't like the product. And then back to iteration, test drive, and the product development, re-engineer the product to make sure they do like it. You know, I think these days the product is so much more than just the product. It's the brand, it's the customer service, it's the partnership network. It's so many different things that are part of a product these days that I think it's really important that you kind of get an understanding of all the elements of the sort of product mix to make sure that you land it better. And again, I would— don't beat yourselves up, you know, Gurpreet. I beat myself up probably too much. And with any company, you never should be satisfied. You always want to do more, but you should savor the moment of what you got. And even if you've got a product out there with customers, the reality is you've probably done pretty well to get it to that stage. But then the next stage is getting your customers to become raving fans. So I think they are— and I know, reality, your customers, they're just human beings. They want to love your product and love your company. And if you start believing that, then you're on a mission to let them be incredibly happy and big kind of net promoters and big advocates and big ambassadors. And they're part of the volunteer army that you create.

Yeah, I mean, I think if you have products that customers hate, you need to stop marketing and start listening and retool the product.

Yeah.

Right? That's like, you just— Stop spending money trying to get new customers in if your current customers are really unhappy. Just listen to your customers and make them happy. Make the product better.

Hey, actually, Evan, I'll tell you a little story. So, um, 1998 in my startup company, and we built it. We thought it was an awesome product. Uh, the engineers were great down in California, and then we actually shipped the product to a few customers out on the East Coast. And one of the customers in Wilmington, actually, they're a pretty big brand name. I'm probably not appropriate to tell you who they are, but they picked up the phone to me one day and said, you know, your product sucks. And it was in the call center. And I said, look, I'll fly out there and I'll, you know, fix whatever, whatever it takes, because it's really important we get you whole and make you really happy that we've done the right thing for your business. And I met with him and in his office, it was a big glass office. There's all these people in the contact center. And when, when the contact center went down in those days, this is kind of pre-internet. So this is when there was really old technology and we were pioneering. But when all these agents put their hand up, it meant some part of the system had gone down. And I was sitting in his office, glass doors, and all these people were putting their hands up. And actually it wasn't related to our product that their systems had gone down. But he said, that's what I'm dealing with every day. And he said, and oh God, the data he gave me, he said, every 1 second we lose on call costs us $300,000. So what did I do? I went back to California, I got all the engineers together and I said, guys, we got a big problem. We built something that we thought with high integrity was an awesome product, but it's kind of not, it's not, it's road tested. We tested the quality, all that stuff, but it's not doing the job we expected. To do. So what I said was, who's up for going out to the East Coast, giving up their lives, and making that product work? And we had 20 engineers, 20 engineers put their hand up and they said they'd do it. And literally, I'm not kidding you, we put them on a plane, they went out there, and they just camped with the customer and their IT department, and they got that product working. Now, the reason why I'm telling you that is, number one, kind of a core belief I've always had from a baby really, when I was watching my dad in the business, you never let a customer down. Number 2, that customer became a raving advocate and fan. And he said, you know, in the world of technology, technology never works the way suppliers say it will, but the great companies make it work according to what we as the customer wants. And then the third thing, wow, what a light bulb moment for those engineers. When they came back to California, number one, they were rock stars, but they said, that was the best thing we ever did. We could never have imagined how a customer would have used our product. We back here in California doing all these clever sort of business analysis, data flow diagram, building products. But when you actually see how customers use your product, you've got no appreciation of how they use your product until you actually go out there and you're sitting in the trenches next to customers seeing it. That comes back to, you know, that was an extreme example. But off the back of that, Evan, we built what, $100 million company in 4 years, sold that product to all the great institutions, Canadian Tire, you know, CIBC, MetLife, Barclays Bank, all these great companies. And the product won awards. And those engineers, they were the proudest people in the company and they They, they put a fire out for a customer and they build a company.

Very cool. I love it. I love this story. Story time with Stephen Kelly. I love it. It's great. We're quickly winding down. Maybe time for one more question that we have Roman writing in. I said, I'm 20 years old. I'm studying communications. I have a huge passion for the arts. It's hard finding people that have big dreams, big ambitions, and because I believe I have them, but what I don't have is the people and an environment that dare me to have such big ambitions. Everyone wants to settle down for the normal path of life. How do I create a great environment for myself?

Wow, that's a great question. You sound like a great guy. You sound like you should be on here every week. Now, what I would say, wherever you're living, there's great people out there like you. It sounds like you've got a massive vision, great ambition, and you connect that with an awesome idea and a product. You've got a business. And I guarantee, you know, I don't think I've ever lived in the world and there's been so much excitement and energy around people like you. And it sounds like just from Evan reading your question, you're contagious in terms of your energy. It's infectious. And I guarantee you'll be able to hire. If you believe and you talk like that, you'll be able to hire great people and you'll be able to surround yourself with rock stars who can build a business. So I'd say never give up, never let those guys ground you down, and believe in yourself. It comes back to always believe in yourself. And I think the most biggest thing we can always say is This is another quote: "There are no straight lines in nature or in business." Reality of my business career is every day is actually even now sometimes a white-knuckle ride. But when I was in a startup, every day was a white-knuckle ride. There was exuberance and highs, and there was crashing-down lows. And the great thing about entrepreneurs that are on the broadcast today, and it sounds like you, you know, absolutely exemplified us all, is your spirit and your energy and your passion will be absolutely infectious. And when you hit the brick wall, you can bounce off and you can pick yourself up, pick your colleagues up, and you can go up and shoot for the stars. So, so never ever stop backing yourself. I love it.

Well, we're at time, and I think that's a great one to end on. Stephen, thank you so much for joining us again. For people who want to follow you and all the things you're up to, What's the best place?

Just on, on Twitter or any of the other social channels, Facebook, Instagram. But I think the hashtag #SKellyCEO. And Evan, it's always great to be with you. Hopefully we've been helpful to all the guys out there. You know, guys, keep the faith. Love the questions. Really excited. Sounds like you guys are almost at a stage you don't need Evan and I. You're rocking and rolling. And you've got big ideas, lots of passion, loads of energy. So it's back to Evan's kind of tagline of #Belief, #Conviction, back yourself, and you've got so much confidence, you're going to be successful. We'll back you.

I love it. Well, maybe ending on one last quote in the chat, Kendra saying, "Best advice of the year." So that's a winner. So thank you guys for watching. We'll see you again next month. We'll figure out what our topic is going to be and we'll be in touch. Have an amazing rest of the day. Continue to believe or whatever your one word is. Much love. Thank you, Stephen, again. And we'll see you soon.

Great job. Thanks, Evan. Great to see you. Take care, buddy.