Alex Elliot - Exiting, scaling & growing a successful recruitment business from the ground-up

Welcome back to another episode of the Recruitment Mentor podcast. I'm your host, Hishem Azzouz, and today I'm really excited to be joined by Alex Elliott. Alex, thanks for joining me.

It is my absolute pleasure. I understand you have— no, I've listened to you interview a couple of my colleagues, so I feel honored that it's now my turn.

Amazing. So I think where there's a few things that we're going to discuss today, but I think I always find it just to be useful for people just to give everyone just some context right at the beginning so people can understand where you are on your journey and I guess some of the key parts of your journey so far. So feel free to, yeah, add in anything that I've missed. But since October 2019, you've joined Strive, which is, yeah, I've interviewed Adam. I've had other people from Strive on the podcast as well. And since October 2019, you've joined them as an investor, but also a strategic director. So ultimately you help those guys scale is how you put it to me. And I know that you are really excited about the platform and the business that, yeah, you are helping out and part of. So we're definitely gonna go into that today. And then before that, maybe what a number of people know you for, you started Liquid Personnel in 2006 with your business partner John, and you successfully sold that business in a private equity deal in 2016. And the high-level stuff there is you, you both organically grew that business to 140 heads, £101 million in revenue, £11 million net fee income, and £4 million in EBITDA. So I think how we're going to approach this is I'm going to dive straight in with Alex on some of the, the things that he's learned in hindsight, uh, looking back on his, uh, journey, uh, on building Liquid Personnel. And then I'm really keen and excited to then go into, yeah, why you think you've been able to build a really great and exciting infrastructure at Strive Sales and how you've gone about that and those types of things. So have to, have to go straight in. Alex, anything I missed there?

That sounds amazing. It feels like you've done the podcast now, so I don't think you actually need me, but no, go ahead. Yeah, dive straight in.

Okay. So I guess let, I, I will start with this, this, this qu— with this question. So I'll be keen to get your thoughts on this. I know a big part of the business model with Liquid Personnel was you organically, uh, grew that. So I'd love to just hear your take on what you believe are the sort of characteristics and traits of a highly successful recruitment consultant in today's market. Uh, they may have changed or evolved. I dunno what, what comes up for you on that?

I think, as is always the case, it depends, right? So it's context-specific. So I think there's probably 3 things you have to consider from a context perspective before you can talk about the consistent. So who you're selling to is going to be really, really important, right? There's a big difference between selling to a director of social services versus selling to a VP of sales within a tech firm. So I think the context of who you're selling to is really important to this question. You've also got where you're selling as well. If you're selling in the German market, that's very different selling in the US market. So again, I think you have to, you have to look at that piece of context with regards to defining the right profile. And then lastly, the stage of growth the company's at, I think is really important as well. So I think if you're selling in a startup environment, that business and that model and the infrastructure around you is going to be really, really different to if you're selling in a large corporate environment where basically you're handed everything. And everything's really close, clear, and process mapped. So if you look beyond those, those three sort of key areas of context, which will probably give you your differentiation between what you're looking for, the consistency, and certainly what we look at at Strive, we look at seven different things. So the five things that we look for from a behavioral perspective, we look for drive, we look for grit, we look for conscientiousness, we look for competitiveness, And we look for coachability. So there are 5 things that we believe, based upon looking at what's worked and what hasn't worked within our particular environment, within our particular business, we've identified those as big ticks against people's names, that if they can demonstrate those 5 things, typically they're going to be really successful. I think it's really important how you define those things as well. So again, just on that point, It's all well and good saying we want people who are driven, but if you were to get 10 different people in a room and ask them what their definition of drive is, you'd probably get 10 different answers. So again, I think you have to be really clear on how you're defining those attributes. And again, that's business dependent. We also, you know, slightly differently, I've heard some of your other guests speak about things. And one thing that I never get, I haven't heard it yet, and this might be just because I've missed it, but I haven't heard it yet. We look at GIA, so we look at general intelligence. And we also look at different aspects of emotional intelligence. So as well as those 5 behavioral traits, we look at 2 intelligence traits: 1, general intelligence, and 2, there's a few key aspects of emotional intelligence that we look for. Because again, if you do regression analysis on the people who are successful in your business, you will probably identify that there is a benchmark within your organization where people have to be smart enough to a certain level You don't have to be a rocket scientist to be a good recruiter, but you do have to be able to learn and crystallize information pretty quickly and process information reasonably quickly. So we also have a benchmark within our business that we're looking for people to achieve from a GIA perspective. And on the other side of that, there's a few particular traits within emotional intelligence that we're looking for from a benchmark perspective. And again, all of this is, is evidence-based. It's not just us plucking some pulling some indicators out of the air and saying, this is what our opinion is. This is something that we regularly review and assess to ensure that we're being as accurate and evidence-based as possible with regards to our hiring profile.

Really interesting. I have to ask then, because I think maybe people will be thinking about it. What, like you said that you added there, yeah, it's evidence-based. Yes. Like, talk to me a bit about that, because I think, like you said, you just said a lot of people are just sort of maybe going off their gut instinct, plucking out of the air. When you say evidence-based, how are you capturing that? Are you using different tools or I don't know, what's been the science behind that?

[Speaker] I don't think early stage, look, you want data points, right? If you want to make evidence-based decisions, you have to have data points. And early on when you're growing a business, you don't necessarily have lots of data points. Now, look, fortunately myself and the other leadership team, we're pretty experienced. We've kind of done this before. This isn't our first rodeo, but for anyone who's starting out in business, even if you've had 3 or 4 people come through your business as trainees, you're getting to a point where you can start to identify by literally sitting down and looking at those individuals. Some will have been very successful, some maybe haven't been successful and haven't worked out. What were the traits of those individuals that were successful, and what were the traits of those people that weren't successful? Or what were those people who weren't successful, what were they missing compared to the people that weren't successful? That's your starting point hypothesis, right? Well, you know, Sarah was driven, whereas John didn't demonstrate that same level of drive and aptitude with regards to hitting targets and a need for achievement, whatever it might be. You know, Bob was particularly gritty and he could bounce back from disappointment really, really quick— quickly, whereas Peter didn't have that same bounce-back ability. So I think you can start to make some really good assumptions with regards to what those key traits are early on. And then as you grow and as the business gets bigger, I think you can start to be more scientific with it and you can really start to effectively grade and assess a larger amount of people, which will give you much more consistency with regards to those, those things that I've just been describing. So we know in our business that people who hit a GIA above a certain level are more, more likely to be successful than people who come in below that level. Now, that doesn't mean that people who come in below a certain level aren't necessarily going to be successful in recruitment. Far from it. But the key is to be able to make decisions which are loaded in your favor from a hiring perspective, from my, in my opinion. So again, it's about taking that initial information, even if it's just 3 or 4 people that you can start to make some assumptions based on. You can look at that success and failure. Make sure that you're defining what those characteristics or those traits are that you've identified lead to either success or failure. Be really, really clear on that. Build yourself a scorecard which is those things. Then I think the key is to be able to define those characteristics and also build an interview structure which is aligned to those characteristics. So I always find it quite interesting when you look at people who are going through the interview process or interviewing for their company. Company, they've got, they've got an understanding of what it is they're looking for, but then they don't actually align the structure of the interview and the questions that they ask to identifying those exact characteristics. And that's weird, right? So you have a defined criteria, but you don't then actually align the assessment process to that criteria. So literally every question you ask in the interview process should probably, in one way or another, be geared towards defining at least one of those attributes that you're looking to identify. Um, and then at the end of that process, I think it's about regular review. So going back to what I said earlier, I think the context is really important— who you're selling to, where you're selling, and the stage of growth you're at as a business. The same type of recruiter who is successful working for one of the big corporate goliaths is possibly, they could be the best biller out of 1,000 recruiters, but put them in a startup environment where they don't have that same infrastructure, they don't have that same ability to follow a clearly mapped out and optimal process, they don't have training on every single aspect of the process, whatever it might be, best practice, that person might not be successful. So again, as your business grows, I think it's really important, not, this isn't just a one and done job, You have to regularly review this stuff and make sure that you're reviewing it on a quarterly, maybe a biannual basis to ensure, you know, the people that are coming through the business that are being successful, is it because of the criteria that we've identified previously? Is there anything we should be looking to remove or add and vice versa? You know, it's a big responsibility when someone doesn't work out. Why didn't, why didn't these people work out? Did they fit the criteria? Was it a selection mistake? Was it our fault or was it— it's always your fault, but was it also maybe that we didn't identify something that they didn't have or something that they did have that we need to take into account? So I feel like I've been talking for a long time there, but hopefully that adds some color to the answer.

No, no, I think that's really interesting. I think we've all heard that sentence where people have gone, if only I had 5 more Alex Elliotts, do you know what I mean? So actually the insight there is the evidence is your people. And really doing the work of understanding, yeah, why is it that they're successful? So I think that's a really great insight. I guess where I wanted to start, Alex, you've been doing a really good job on the LinkedIn front, I think it's fair to say, consistently sharing, I think putting out some really good content. And the first question I had, I guess in hindsight, and I don't know, I'm sure you continue to think about this in the relevant context, but you did, You did 2 posts around like the 25 of the most important lessons I learned building a £100 million revenue business. And I guess where I wanted to start, I'm not going to get you to talk through each 25 lesson, but I wanted to just start with like looking back, what would you say if we were to make it, to distill it down to some principles? I don't know how many principles they're going to be, but like what were the principles do you believe looking back that really enabled you and John to successfully scale that recruitment business? Because a lot of people don't want to sell their recruitment business, and a lot of people don't scale their recruitment business and get to that stage. So I guess looking back, what would you say were some of the principles, do you think, of doing that?

If you have to boil it down, look, I'd suggest there's probably, there's probably 4 key barriers to— let's look at that question and actually say, all right, well, instead of answering what are the principles to scaling a recruitment business, for me, maybe the starting point is to identify identify what are the barriers to scaling a business. And then if you identify what those barriers are, you can then look at the other side of that and say, all right, well, how do we not do those things, or how do we remove those barriers? So I think there's, there's 4 key things that you have to focus in on, which are your, your, your critical barriers to growth. And, and these aren't in any particular order, but leadership— number one thing that you need to be able to do is develop leaders in your business. So I say the number one thing, I say none of these four things are in any particular order, but if you can't develop leaders in a recruitment business, one of the things that I sometimes see recruitment leaders get a bit wrong is they think scaling a recruitment business is about hiring lots of great recruiters. And I don't actually think that's quite right. For me, the number one fundamental thing is that you have to be able to hire lots and lots of great recruiters. Recruiters and train and develop and retain those guys. The critical piece in that, though, is that you have to be able to turn or convert a high enough proportion of those recruiters into your future leaders. If you can't do that, your business won't scale. So first and foremost, you have to be able to identify, attract, and bring into the business either experienced leaders, which is tough unless you know them already, because that, you know, from my experience, that's a really challenging thing to or you have to be able to bring in people at the very beginning of their career, give them the skills and ability to be able to become really successful recruiters, and then the ones that are suited to and aligned with leadership, you need to be able to convert a high enough proportion into leaders. I think we did that pretty well at Liquid. So, first and foremost, I think we were quite good bringing people in and putting them through that conveyor belt where they went through a constant learning and development program, upped their skills, and became, you know, we had We have people in their mid-20s running 40, 50-person, you know, divisions of the business, multimillion-pound, huge profitability-wise units of the business. So I think we were quite good at developing leaders. The second thing that I'd say is really, really critical is scalable infrastructure. And if you can't put in place, if you can't identify in your business what the core business processes are and then put in place continually reviewed but optimal working process for all aspects of your business, I think it's going to be really, really tough to scale because you, you— I think one of my favorite— I think it's from a book called The E-Myth, and in that, they— what's the chap say? He says, um, the processes run the business and the people run the processes. And that always stuck with me because I think that's really, really true. If you look at what business is, business is about having really good process. So if you can't put scalable infrastructure and good processes into your business, I think you're going to reach a point where you don't grow anymore. And again, I think we were good at that at Liquid. So we built really, really good infrastructure. The third thing would be new business. If you— new profitable business. If you can't continually win profitable business, whether from existing accounts by landing and expanding accounts or by winning new business and then turning that into, you know, whales and profitable accounts, you're not going to be able to scale your business because the business is going to starve. And lastly, cash flow. The fourth thing I'd say that you've got to be really, really good at is cash flow. If you can't, if you can't win enough profitable business where you've got strong enough cash flow to be able to continually invest in the first three things that I described, you're not going to be able to reinvest back into the business to grow aggressively enough to keep scaling. So I think if you look at those four things, we were pretty good at those four things at Liquid. And then if you look at those and then you put them onto the other side of the coin, they're probably a good starting point to say, well, how do I ensure these barriers don't happen? And if you're doing that, you're probably setting yourself up pretty well to be able to scale.

I love that. Yeah, you did that. I had that. Yeah, you did that as a post as well, didn't you? So yeah, I love that. I think, I guess what I was asking—

that my rambling—

No, it's exactly how you broke it down. It's exactly how you broke it down. I guess what would be really interesting to hear your thoughts on then, you've mentioned the word infrastructure a number of times, scalable infrastructure. What would you say, and we'll definitely go on to Strive on this, 'cause you might have some perspective from being part of that business as well, but really curious at Liquid, what would you, let's say we've, yeah, like you said, we've got that conveyor belt of taking people on that leadership journey for the people that want it and, and yeah, able to upskill them and create those leaders. But what would you say was the, the most important— there may not be, but what would you say is the most important hire of all when it comes to really helping the business scale? For example, an ops director, people manager, sales director. I don't know, that maybe looking back you're like, you know what, that was so critical to helping us get to the next stage. I don't know if anything comes up for you on that.

I think early on you need someone to manage your finances. That's really, really important. Do not try and manage your own finances, would be my advice. We tried to do that, John and I tried to do that early on, and we just made a complete and utter mess of it. We outsourced it, obviously, but we made an absolute mess of it. And by the time Helen, our eventual FD, came into the business, she had quite a mess to clear up, basically, because we were just rubbish. So I think making sure that you've got an expert managing your finance is really important. But again, I think look at Strive as the example. We hire— we have a lady called Mackenzie who is our ops manager. And the challenge you've got in recruitment businesses is that it's the salespeople, it's the recruiters who get all the glory. And it's often the people in the background who are just as, if not even more important to the growth of that business than the people on the front line in the trenches every day. Who get all of the glory when, you know, the deals come in. Mackenzie is absolutely exceptional. She is the glue that binds the business together operationally. She's the doer who, when you've got entrepreneurial types, they aren't always necessarily, myself included, they're not natural finishers. They're not the people that they met. They're maybe good ideas people. They may be good at creating. They're quite visionary. But maybe they're not the people who can actually follow through and actually execute on things. And I think someone like Mackenzie, who brings an operational mindset instead of a sales mindset, she brings structure and process, she brings organization, and she brings execution to the table. She has been an absolute game changer for us as a business, and we wouldn't be where we are now. We're, we're still reasonably small, right? So we're 25 heads, something like that. But What we've spent this last couple of years doing is really putting in those things that I've described to you. So effectively, we're, we're, we're in a position where we can start to really, really aggressively scale. And we've put in place, or we're currently in the process of putting in place, all of that infrastructure and platform, which most businesses at 20 to 25 heads, they're not even close to doing. So what we've done is we've kind of looked at it and said, all right, well, Let's look at a 140-person recruitment business, which was liquid by the time I exited. What were the business processes and the infrastructure that we had in place at the point of exit? Let's, within reason, put as much of that in place as early as possible in Strive so that instead of figuring it out and doing it as we go along, we just have it all there ready to go. We wouldn't have been able to do that without Mackenzie. So again, a bit of a long-winded answer, but, you know, just big up to Mackenzie here. If she doesn't say thank you after this to me for, shouting her out, so proactively I will be horrified. But no, she's amazing and she would be a perfect example. Get an ops manager in early and if they're good, they'll be a game changer for you.

So I think what might be helpful then for me, because I did want to ask you this later on, but I think that this would be a good time to ask it. So you said that you wanted to, yeah, ultimately build the processes and the infrastructure and the scalability of a 140-person company before you even arrive at that destination. So could you, if you are happy to, I think this would be really helpful for small growing recruitment entrepreneurs who have that business. Like what does the org chart look like then? You just mentioned McKinsey, 'cause I think if I was to speak to most recruitment entrepreneurs and I say, right, what does your business look like? They might have, they'll go, I'm the founder of the business. I'm still involved in winning some clients. Dealing with some existing relationships, I might have drive performance, and then I might have 1 to 3 leaders that also do some billing, and then they have— I'll have people under them. I wouldn't be surprised if typically it looks like that. Some of these companies might have an office manager or someone like that in, in the, in that role. But you said you've really worked hard on this and you've taken your lessons from Liquid. What does that org chart look like then?

So again, I'm just going to play devil's advocate and push back a little bit. By org chart, do you mean the responsibilities of like the senior leadership team, what they themselves to do it. Is that kind of where you're going with that?

[Speaker] No, I guess what I'm trying to, just to make it really easy for people, you said how important that is, and I guess I'm trying to think about if I'm listening to this, what would be really helpful? So I guess what I was just hoping you would share is if I was to look at the Strive business today of all this work that you put in, like, more about the people in different seats. So if I was to look at the business today, I might have Adam and Harrison at the top who are the founders of the business, then I've got an ops person, then we've got 4 leaders and then we've got— do you get what I mean? I think people would just be interested on, I'm on 2025 business, what does that actually look like? Where it can give me some ideas on how I can actually start thinking about how I want my business to be structured. I think the responsibilities is a whole different question.

I think the structure is going to be a little bit dependent again on context. So I think the answer like always is it depends a little bit. I guess the key thing you've got to decide early on from an organizational perspective is You said it yourself, you'll often have at the beginning or an early stage business, you'll have maybe the MD at the top and the MD is basically still a rainmaker. They are still heavily involved in the sales side of the business. So I think from an organizational perspective, one of the first decisions you've got to make is at what point do certain people step away from the day-to-day sales aspect of the business and they stop working in the business and they have to start working on the business. So using Strive as the example, Adam is the managing director. He works very, very closely with Mackenzie, who's our operations manager. And Adam does not have— that's not quite fair. He still is involved in some of our senior level relationships with VCs, etc., etc. But typically Adam is not involved in the day-to-day running of the business beyond strategic and tactical implementation and management. On the other side of that, you've got Harrison, who's our global sales director. Harrison is that guy who, who Harrison kicks down doors that you shouldn't be able to kick down. He's that guy who he just finds a way somehow to win clients and win business that he shouldn't be able to win, to be quite frank. So he's your natural. He's just your hyper-driven, competitive winner. Who finds business. So he's super, super involved in the business on a day-to-day perspective, from a NewLogo perspective. Below those guys— and look, we've got a hyper-flat management structure as well, just to put that out there. We're a small business, so I don't think you should have a particularly, um, you shouldn't have a particularly detailed org chart at this point, right? We've then got, um, leaders who are either director level or mid-manager level. Depending upon their experience and their seniority. But again, it's a pretty flat management org chart. So those guys will then have management responsibility and leadership responsibility. So does that answer your question? I'm not entirely sure. And then, you know, I support—

No, no, it does.

Yeah. The FD sort of supports Helen, who is our FD at Liquid, is our, you know, manages all of our finances at Strive. So again, it's great that we've got that finance financial expertise. I don't know if that answers your question.

No, it does. I think that would definitely get people thinking on like what they can aim for because I think, yeah, you've spoken a lot about the infrastructure and the importance of that. So I think that, yeah, that would just be helpful for people on those things that you mentioned.

You have to make a decision about when you're going to take a hit on your short-term profitability. That's bottom line the decision you've got to make. So Typically, if you start up a recruitment business, it's because you've been really successful as a recruiter historically. Therefore, when you start up that business, for a considerable time, you're going to be one of the principal earners that bring money into that business. If there's two of you, it gets to a point where probably one of you says, right, now's the time for me to step away from day-to-day billing and for me to stop working in the business and start working on the business. So I guess, you know, that's the key fundamental decision. And that is going to have an impact upon short-term profitability. Of course it is. But that's, I guess, also about understanding what your long-term goals and aspirations are. If it's just to have a small recruitment business and maximize profitability in the short, medium, and long, you know, in the short term, don't do that. If your long-term objective is to really scale and build something of size, you're going to have to make that decision at some point. And probably a lot of recruitment companies, they, they they don't make that decision or they make it too late. They make it later than they should do.

So I guess something that I always hear as well that I— yeah, again, isn't very evidence or scientific is when to hire. Like, obviously you scaling Liquid and then now actually actively involved in Strive. Have you— I don't know, have you, have you got any thoughts on more of an evidence science-based approach on hiring triggers and when is going to be— yeah, when you're going to be more— when you're going to feel more confident hiring. I don't know. Yeah. Is it— do you have anything on that out of interest that you've— I don't know, maybe create a bit of a science behind?

Uh, look, the typical, like, the accountants out there will tell you once you get to a certain level, of profit per head across your business, that's the trigger to hire some more people. Okay. We never looked at it that way, to be honest. We didn't. So I think there's value in looking at it like that. And I think that's one good metric to look at, because the reality is if you're not, if you're not already kind of maximizing the profitability and the potential of your existing team, I don't think you should be adding more heads. What you actually need to do is focus on getting your existing team up to really high standards before you start adding heads. But we kind of looked at the opportunity. We were really, really good at training and developing people and getting them up to a required standard reasonably quickly. So we basically looked at our cash flow, we looked at our jobs, because at the end of the day, there's no point continuing to hire if you're not going to be able to feed the people that are coming into the business. That's if you've got a 180 model. If it's a 360 model, it's slightly different. But we looked at our cash flow, we forecast our requirements and the opportunity that there was in the marketplace, and we just went at it really, really aggressively. So my FD would probably be horrified to hear me describing it like that because she'd be a lot more analytical and she'd want to have specific, specific numbers around PPH, which she'd like us to hit on a quarterly basis or for 2 running quarters, something like that. Genuinely, that was something we weren't quite as scientific on. We looked at it holistically and we said, you know, there's the opportunity here to grow by X, and we're just going to maximize our growth potential. And we were quite good at balancing the opportunity versus bringing people in below by looking across a number of different factors.

Interesting. So, so help me out here then. So with you exiting Liquid, what What did that deal look like in terms of like when it was done? Was it straight away you and John could leave the business? Was there an earn-out period? Because I just want to ask some questions around the latter end of that.

We were really, we were really fortunate with the buyer that we, we quickly came to the agreement. In terms of the deal, we could leave very quickly. So there wasn't an earn-out for us. We— the reality was we built a business which wasn't— it wasn't reliant upon us anymore. And I think if you're going to build something which you can exit from, you have to build a business which runs without you. And we had an amazing board. We had an amazing senior and mid-level management team. We— the organization that bought us were very experienced within the sectors, not necessarily the vertical and the sector that we worked in, but complementary verticals and complementary sectors. Within the healthcare space. So they already had a lot of knowledge of our, of our market in general, in principle. And they also had someone that could come in, um, and oversee things who had a good understanding of that marketplace. But look, we had a managing director, we had a finance director, we had an ops director, and we had a senior leadership team on the sales side who basically ran that business. So it enabled us to be able to leave really quickly. Um, we didn't have an earn-out. I think from selling the business to actually leaving the business was about 3 months. And then, you know, we got the rest of our money about a year later. But that wasn't based around an earnout, I don't think, at the time.

So a lot of people will think this and probably want to ask, like, did that sell meet your expectations? Yeah.

So I don't think it was the sale, which is the really interesting bit. The interesting bit came afterwards. Well, I'm sure for other people, the interesting bit is the actual sale. So look, We, we were fortunate enough to create a situation and we had lots of luck along the way where we, you know, we, we made a— we did very well out of selling the business, obviously, because we wouldn't have done that otherwise. But we did it for the right reasons as well, because the reality is, while you've got owner-founders in place, that's always going to— there's always going to be a bit of a glass ceiling when you've got the owner-founders sitting there. Taking up the most senior positions within the business. So yeah, we obviously did very well out of it, but at the same time, so did the people that came through because, you know, some of the people and some of the senior people, they earned life-changing amounts of money from us selling that business. But as well as that, the managing director of that company, who's a great guy, really, really, you know, really good guy and very smart individual. He's the managing director of that company now. He started off as a trainee. Every single one of our sales directors in that business started off as trainees. Every single one of our associate directors in that business started off as trainees. Every single one of our sales managers and team leaders, you know, the entire business was based around hiring super talented individuals who came in early on in their career and over the course of that 10 years really, really established themselves in their market and did really special things. Things for themselves. So I think that the exit was really valuable for lots of people, not just myself and John. The interesting bit came afterwards, I think, when you try and figure out what you're going to do after that. But maybe that's, that's, that's a conversation topic for another day.

Yeah, because I think a lot— yeah, I think that is— I've spoken to a couple of people. I mean, yeah, I was listening to one of the interviews and it sounded like one of the first things you did was buy your parents a villa in Spain.

I did. Yeah, that's very true actually. That was quite a proud moment.

Because yeah, I think a lot of people are, yeah, just, I spoke to a couple of people that have experienced moments like that. And obviously I think, I don't know, from the people that I've spoken to, Alex, the way that it worked for you guys sounded a bit unique because that's why a number of questions when I reached out to people about interviewing people like you and the journey that you've been on, they're asking questions around the earnout and what it was like to report to people that, yeah, ultimately maybe now own the business and those types of things. Like, that can be really difficult where you get millions and millions of pounds into your bank account and then you go back to your office the following day and you're like, right, we like— I have to carry on, crack on. And that, that can be obviously a difficult—

it's really difficult. Like, there's no— is a Haitian proverb, behind the mountains there are mountains. And I think that you can, I really like that. And I think it's true for lots of different things in life. But I think John, I'm speaking on behalf of John here, but I'm pretty sure John would say the exact same. I know John would say the same thing. I don't think we thought enough about what mountain was behind that particular mountain. So I think we were so focused on exiting that business. We worked incredibly hard for 10 years. We put our heart, our heart and our soul, you know, into making a dent in the universe with that company, which we did do, which was amazing. I don't think we enjoyed the journey as much as we should have done because I think we were too focused on the end result. So I think that's a really important thing for people to think about. Try and enjoy the journey despite the fact that it's an incredibly hard journey at times. I think it's really important to try and take a step back and enjoy it a little bit as well because I don't think we did that enough. And then when we did get to the end of it, I think there was a bit of a feeling of like, oh wow, I hadn't really thought about this in a lot of detail. What do I do now? So I think they call it, is it Olympic gold syndrome? Where people go on, I don't know, there's so many different examples in athletics or sport, isn't it? There are people who reach the absolute pinnacle and then actually the period after that is the really tough bit. And I think, you know, again, I'm speaking on behalf of John here, but I think both of us found that for a year or so afterwards. I don't think we probably enjoyed that year after exiting the business as much as we expected to, to be quite frank, because we probably hadn't thought enough about what comes next.

Now, I appreciate you sharing that. So I guess I know this is one of the most common questions you always get asked, so I want to make sure I ask it at this stage. And then I have a number of different things that I want to ask you a bit more about Strive. So I think you said to me, right, that probably the number one question you always have people ask you is like, how, how does a recruitment business get valued? Um, so what, why don't you, why don't you give us some education on that, Alex? And like, yeah, the typical things that you speak to people about. And I know there's, you also shared around sometimes what people lose sight of. But yeah, what if I'm listening to this and I do have ambitions to, uh, to sell or at least achieve some sort of exit? If that's for an MBO, maybe a different way. But yeah, thinking about my business in the future is something that I do want to exit and achieve that business event. Like, how is it that you found in your— on your journey how, how recruitment businesses are typically valued and what, what these types of companies may look at?

Sure. I should have thought about this in advance, so I'm not particularly like— this isn't particularly going to be a structured answer, answer, but some of the key aspects to think about. I think what one of the things that I find people maybe don't have as much One thing that would be good for people to know, you have to reach— but when people are looking to buy your recruitment business, they're not buying what your business has done historically. What they're doing is they're buying your future profits. So first and foremost, they're buying your future profits, not what you've done historically. You have to reach a certain level of scale from a profitability perspective where you're going to be able to interest enough people to look at and be interested in buying your business to justify a large enough multiple, which would make it probably worthwhile for you to sell that business. So just to be a little bit more definitive with that, I would suggest to you that unless you can reach €3 million EBITDA, your, your business probably isn't going to be worth what you think it is or what you would like it to be from a multiple perspective. And again, without going into lots and lots of detail around that, I think that's important for people to understand because there's a lot of people out there who have got great recruitment businesses, but the reality is they're just not at the sort of scale that would, um, attract a large enough number of buyers to be interested, who would then create the competition amongst themselves to be able to drive up the multiple to sell that business at a valuation which you probably think business is worth. And I would suggest your starting point is about $3 million.

And just quickly on that. Yeah, just quick on that, Alex. So can you just like, just so, yeah, EBITDA, what, just like, what does that mean?

If you think about your operating profit, EBITDA is effectively, it's an accounting principle where accountants can look at all businesses regardless of the industry or the sector they work in. And operating profit might be quite different based upon the different industries you're in because you have depreciation, for instance, of machinery and stuff like that. So that can make a massive difference in some industries. Compared to recruitment, that's not an issue because the reality is you don't have lots of equipment which is depreciating in value. But effectively, it's a slightly different way of looking at operating profit.

Okay, nice. Love that. So the insight there.

Electricals and industries from, from an accounting perspective.

Yes, the insight there is that that's probably the, the one thing that you really want to look at. But yeah, that's really one thing you want to focus on.

I think you shared with me, if you want to exit your recruitment business, I think from a financial target perspective, that has to be your minimum benchmark that you're aiming to achieve.

Um, yeah, that's really interesting.

That, that's kind of like a fundamental starting point. I think sometimes people might not be aware of. I heard someone told me something recently that I thought was really cool. And what was it? So what they said was, and I'm not going to say who said this because it's secondhand information, but someone who's very experienced within the M&A space said at $3 million, you can take your business to market and there will be people interested in looking at it and potentially buying your business. At $5 million, you'll have people knocking on your door to talk to you about your business. And at $10 million, you'll have people queuing around the street to come and basically buy your company. So from a recruitment perspective, so those are big, big numbers. But again, I just think it's really important to be clear with people that if your business is generating half a million, a million, that in EBITDA, the truth is it's probably not going to be able to attract enough people unless there's a real strategic value in the vertical that you work in for the potential purchaser, or maybe the territory that you, you have, unless there's a really, really compelling strategic value for a purchaser, then you're probably just not going to be big enough to be able to sell that company, as I say, at a multiple that makes it worthwhile, makes it worthwhile for you.

Is it worthwhile? Yeah. Um, thank you. That's really interesting.

Going back to that previous point, so once you've got that understanding of what you need to achieve from a financial perspective The reality is that they're buying future profits. So forget what the company's done historically. What they're doing is they're looking at those existing profits and they're saying, what's the potential to grow these profits further? So if we're doing 3 million now, can we be doing 5 million in 3 years' time in profitability? And what are the risks to that? So if you think about that, what are the things which are going to mean that this company continues growing at the sort of growth rate that it has been growing at? Because what they don't want to want to do is buy a business at €3 million EBITDA that's still doing €3 million EBITDA in 3, 5 years' time. They want to buy a growth opportunity where they can make additional income moving forward. So what are the things that you need to put in place to justify that and demonstrate that you're in a growth market and that the business plan justifies the fact that the company is going to continue growing rather than the fact that you've tapped out and you're selling at the top of the market? The other side of that coin is the risk involved with that. So client concentration. If 50% of your business comes from 3 clients, that is a huge risk. If you don't have scale from a consultant perspective and your top 3 billers contribute, I don't know, 30, 40% of your total income, that's a huge risk to a potential purchaser. If you are too heavily involved in making strategic decisions as the leadership team, if you as the owner and you're going to be leaving, If you are too involved in the business, ensuring its ongoing success, that's going to be a huge risk to the potential purchaser. Um, if the market is changing, if the dynamics of the marketplace are changing and the market potentially isn't going to continue growing, or there isn't going to be the same supply and demand dynamics, or maybe the financials are changing within the space and margins are coming down, that's a huge risk, the ongoing profitability and growth of that business. So I think it's a case of weighing up how can we reassure ourselves as a potential purchaser that that existing level of profitability is going to continue growing, and what are the things that we also need to look at from a risk perspective on the other side of that coin, which are the potential dangers. So that's something else that maybe the purchasers are looking at. And again, to be frank, I've done this once, right? I sold one recruitment business, so it's not like I'm an expert, but this is what I've taken from the process that I went through. Luck's massive, so you have to get lucky. And people again don't necessarily want to hear that, but the truth is that I think anyone who successfully exited a recruitment business at scale, they know there was a large element of luck involved in that. Market timing is so important. If you get unlucky, if Bob has got the exact same business as Jane, but Bob is at the right— is in the right time in the market from an economic growth perspective compared to Jane, Bob sells his business, Jane doesn't. It doesn't mean Jane's business wasn't just as good as Bob's. He just got lucky. I don't know why I'm going with Bob and Jane. I can't even remember now who these people are that I'm— I've just randomly picked out Bob and Jane. Those two businesses are just as good as each other. The reality is one got lucky with market timing and the other one didn't. So I think that's really important. Um, and I, and, and that luck piece again, I think it's how much value are you to a purchaser from a strategic perspective based upon their existing business and what you can offer them purely beyond just like potential profitability into the future. I think that's really, really important as well. Um, and there's an element of luck with that. You know, you sometimes you get lucky because you're the right type of company in the right place at the right time for that particular organization that's looking for a company like you. So yeah, there's luck involved, which, which is super important.

So many great insights in there. I guess as we come to the end here, then, like you've said, thinking about Strive, you've done obviously back to those 4 critical barriers. I know you've done some loads of really good work around the sort of leadership and exec program that you've built or continue to build. You've got this scalable infrastructure or platform at Strive. So I guess let's just sort of end on like, so now, now you've got that, what is it now that you really keep a close eye on? Is it just then the profitable new business or is it more about, right, how can we continue to review the types of people that are successful in our organization and make sure we continue to keep those standards and hire more of those people? How can we continue to get the most out of our teams and continue to win that new business? And is that— are they the simple things that we just need to focus on now if we've got that infrastructure, if we've got that leadership program and the leadership team in place as well? What's like, yeah, the things that are now top of mind going into this next chapter, an exciting chapter? With Strive?

You have to keep turning the flywheel. So have you heard that analogy by Jim Collins? Really good analogy, right? So once you've got everything working, the key at that point is about execution and optimization. So I think it's really, really important to understand the, the infrastructure or the, the foundations you have to put in place to be able to grow, get a business to the point where you can start to scale really, really aggressively. Once you've got those foundations in place, which we've been doing at Strive for a couple of years now, it starts to get really, really exciting. I think, you know, I do want to like, I do want to talk about Strive here because I've kind of seen this movie before because I saw it. Yeah, please do. I didn't necessarily know it at the time, but I've seen this movie before and I know how it ends and You know, that might sound a bit boring, but the ending's really, really good. I mean, the journey that you go through to get to that ending is absolutely amazing. I think one of the things that we did at Liquid was we wanted to make a dent in the universe. And at the beginning, we were just 20 people in a room that said, let's become the best in the world at what we do. And that was quite compelling for us because we said, right, there's some established players in place. We're going to take on— we're just this small recruitment company in Manchester, and back then all of our competitors were based in London. They were big, they'd been around for a long time, they were really, really established. And what we did was, we were just 20 people and we sat in a room and said, right, we are going to make a dent in this universe and we're going to become the market leader within 10 years. We're going to take on and beat every single one of those established players in this space, and we're going to make a dent in the universe. And at the end of this journey, we're going to be able to say that We took this business from nothing effectively to being the very, very best in the world at what we do. We're in exactly that same place at this moment in time at Strive, and that's why I'm so keen to, you know, build my profile online and maybe get a bit of recognition for what the guys at Strive are doing, because it's a really congested, crowded market at the moment, and there's so many recruitment companies out there that look and sound the same, but they're not the same. Some company, and I'm not— that's not in any way being critical of other recruitment companies, far from it. But I've seen this movie before. I know where we go from here. And it's such an exciting time to get in on the ground level in a business like this because we're about to go through that hypergrowth stage. So I'm really, really keen to sort of shout from the rafters, whatever that saying is, and really sort of describe to people what that opportunity is and hopefully get them as excited as we are about where we're going as an organization. You notice how I didn't actually answer your question? Well, Alex, I think that's fine.

Well, look, I think, I think that's a, a great place to end. I think, look, so many insights in there. Absolutely love your energy and passion for the recruitment industry. And yeah, like super excited to continue to see outside looking in what you guys achieve at Strive. But yeah, thank you so much for joining me.

I've really enjoyed it. It feels like it's been 5 minutes. I've just been talking solid for an hour, so you can rest now. You don't have to put up with me anymore. But no, thank you. I've really enjoyed it and I love what you're doing, Hishem. So thank you.