#91 Sam Smith: From Northern Rock Crisis to London IPO and Super Scalers

Speaker A: Not one person, uh, not one thought it was a good idea. I don't think I've got the same approach to risk as you because I think the biggest risk for me is going to do something right. I can't stand that gut is all you need to know. You just need the right environment to be able to trust that gut and know what it's saying. Two weeks after that, northern rock collapsed and we actually had a northern rock opposite our office and you could see the queue forming for people trying to get their money out, going, oh, God, this isn't very good for markets. And I've just become the CEO. We did take no pay for three months as a board and I had to bring a coach in and I was fine and it was awful.

Speaker B: Both times I'd say tested me to the absolute limit, but not one moment did I think we were going to fail. Literally 24 hours later, I had two and a half million quid. It was the worst 10 days of my life. I couldn't breathe. I was having chest pains. It was awful. That was chapter one. I'm, um, going to go and do my chapter two. And I could not be loving it more.

Speaker C: Hello, Sam, welcome to the podcast.

Speaker A: Hi, nice to be here.

Speaker C: Um, Sam, I've been, um, doing a little bit of background research and I've kind of, I've seen you've spent most of your career, as far as I can see, around working with founders and entrepreneurs and I'm always quite curious as to where that started from. I mean, did you grow up in an entrepreneurial family? Where did that first come about?

Speaker A: So the answer is no, not at all. My parents have very normal jobs. My dad was a computer engineer, my mum was a nurse. And they still don't really understand what I do. But I think that there was a moment, now I look back, that was the start of this entrepreneurial, um, journey. And I probably only worked it out maybe 20 years later. And my grandparents were bakers, they had a couple of bakeries in Wales, so very small business, but it was their business. And When I was 17, I went to go and do a summer job there. Just work for two weeks and as usual when you're 17, you just do the job, get paid, you know, you think that's great, go home. And, um, my job was taking on a round for someone who was away for two weeks. And the round was this, you know, sandwich round, to go to a big office block, an out of town office block and do all the sandwiches and the cakes and make the Two office and just do that sort of lunchtime rush and then leave. And every day of this two weeks I'd get so into it. Yeah, you know, I'm going to set up my stand and I'm going to work out what people like and I'm going to do more of that sandwich. I'm going to make everything look great and I'd start dressing really nicely and putting like fun things around the thing and I, every day I'd make it just that tiny bit better. And I did that because I just loved it. I loved the people, talking to them, working out what they wanted, iterating it. And by the end of the two weeks I was done, went home and it was only probably a month later that my aunt said to me she was running the finances and the business said, do you know you doubled takings in that two weeks. And uh, again I didn't really clock it until much later. When you realize you are an entrepreneur, you're building this business gig. Actually I think that was the first sign of do you know what, it's just making something that um, little bit better every day and just being so in tune with your customer and wanting to make a difference and wanting people to feel good that the same thing, double turnover. So I think that was a little bit of planting the seed for me

Speaker C: that must have been it. Those, those early day experiences you have of having some success and getting that feedback from your auntie and recognizing that a bit of effort sometimes does get rewarded. And uh, so something was going on there. But then I understand you took a fairly traditional route you into uh, accounting.

Speaker A: Yes.

Speaker C: What went on from there?

Speaker A: So I was an accountant. I was between a primary school teacher and an accountant. I thought oh, I'll do the accounting thing, um, and really loved it. But on the day I qualified I was like I don't want to do this anymore, to do something else. And during that process what happens? As a newly qualified accountant you get offered lots of jobs around corporate finance, being an analyst for generally for a big bank. And that's where everyone goes. So I was in that interview process thinking that's great, I'll get that nice job. And during that process something happened and I started to get the feeling that do I really want to do this? Do I really want to work somewhere big? The non compliance was slightly kicking in and M I, uh, just at the end of it said I don't think I do, changed my mind and um, went to a job offer that was a private client stockbroker, uh, that basically was a guy that I really liked that said, we want to set up corporate finance division. He didn't really know how to do it. We just had a great chat, said all these clients, high net worth. We've got lots of non execs. They think they want to invest in smaller companies. We think we could create division out of this. Do you want to run the division? Uh, there was nothing there. So I thought, oh, that sounds quite good. And for me it was like, great. No one had heard of this company, by the way. They're quite a small stockbreaker. And I just thought, this sounds like the best thing ever. Sounds right up my street. Didn't do any of the other jobs. And, um, what was amazing, I mean, I knew it was the right decision for me, but not one person, not one, no one thought it was a good idea. Everyone could not work out, why are you not going to a Schroeder's? This job, why are you not going to Morgan Stanley? Where, yeah, it's secure, it's great, it's a big company. And all I would think is, I don't think I've got the same approach to risk as you because I think the biggest risk for me is going to do something which I can't stand. I'm tied to this job, doing what someone else wants to do, not having any freedom at all, where I could go and do this thing and set up on my own and learn all this stuff. And, um, that's the decision I took. And now I look back, I think, my gosh, that decision was what then created, think out that, uh, decision to just start, uh, a division by myself at, uh, age 24, with nothing and a desk, a phone, that's it. And learn how to float a business and learn how to do corporate finance. Suddenly, you know, five years later, I'm doing every single role where my contemporaries at Goldman SAS are still preparing pitch decks. Yeah. So it was the best decision ever, but it was a gut decision. And if I hadn't been so sure and listened to everybody else, there's no way I would have built Finger.

Speaker C: I find that fascinating.

Speaker D: That's.

Speaker C: That's what we call one of those sliding doors moments. You could have done the traditional route and most other people were doing that. And everyone around you is telling you must do that. And something inside you just told you, no, I don't, I don't want to. I'm going to do this. Yeah. On the face of it, much higher risk. Effectively a startup within a, within a company, right? Uh, you just sort of knew.

Speaker A: I had no idea at the time that that's what I was doing. If someone had said it was just this, I. It feels right for me. It's a great opportunity. I can do something for myself. I think I've always believed, and that's why I always champion change, is that I know what I want to do. I've had a very clear, uh, sort of attachment to what I think is right for me. And I've never, ever been worried about going against a grade so that, you know, that trusting your gut thing has served me well. And it's something I want to teach kids and we teach entrepreneurs. With the super scalers now underrepresented founders, it's like that gut is all you need to know. You just need the right environment to be able to trust that gut and know what it's saying.

Speaker C: I think that's really important. We all have big choices and big decisions. Hopefully not every single day, but from time to time, pretty big decisions. And in my experience, you could easily choose either one or one of several options. I think it is really important to trust your gut, trust your intuition, weigh everything up. I think human beings, we've all got to one degree or another, a sixth sense. And you just feel. And what might be right for you might not be right for the next person, but you just had a gut feel, an intuition. You thought, I'm going to do this. And that's what I. The role as you're describing there, it sounds to me what people call an intrapreneur. So this was an existing. This was, um. Who's it? JM Finn.

Speaker A: JM Finn. So they were a private client stockbroker, uh, wealth manager, managing about 4 billion when I joined it. So it's relatively small in the scheme of stockbrokers. Didn't really have a brand name. And, um, we had to build a corporate finance function for them. And so it was like starting up your own division, mini business within a much bigger business. And I think that's why for eight years, until we did the buyout, I didn't realize I was doing anything entrepreneurial. I was just building something, enjoying it, doing a great job for clients, winning more clients, um, generating revenue, hiring more people. And it was only eight years later when we got in a position where we wanted to buy out that whole division and we had something called quite good that the light bulb went on and said, m, I think I might be an entrepreneur.

Speaker B: Yeah.

Speaker C: For those who don't fully understand who, uh, might be tuning into this, what's the kind of, what's the summary description of what is corporate finance?

Speaker A: So corporate finance is, you're a business and you are running that business. But everything to do with the financing, the structuring, the strategy, where you want to look at, ah, how you raise money. So do you want to IPO on the stock market? Do you want to raise debt, do you want to raise equity from people? All of that is corporate finance. You're doing the sort of financial work, uh, around the corporate structure. So it encompasses quite a lot of things.

Speaker C: So obviously you hadn't done this before, um, you were a qualified accountant. But was it a case of just learning on the job, just as you were going along?

Speaker B: Basically, yes.

Speaker A: We used to call it carry on, um, corporate finance. So it was, I got there the first week, it was an office, a desk, you know, a phone. That was it. And I ordered, I started ordering the three books that were important, which was Butterworth Companies Law, it was a yellow book at the time, which was the listing rules of the stock exchange. And it was then some guidance on how to list on the smaller market, which was offex at the time, the one below the aid market. And I just read them and read the books. Okay, how, how do you float a company? How do you advise a company? And I think very quickly what I realized is the technicals around corporate finance, which is a lot of rules, regulation, a lot of lawyers telling you exactly how you could do things. That actually wasn't the secret. That that was actually something that most people could probably get their head around. What was brilliant and what I loved and what made the difference was how do you, when you talk to a board or a company about a major decision, so a major financing, an uh, ipo, raising debt, you know, some really serious transactions in their corporate life, when they've got all this other stuff going on about running the business to worry about, how do you help them through that process? So over those eight years before we did the management buyout, what I was learning was not just how to do the process. I was learning how do you take, uh, someone through this process and make it successful. And that became our point of difference. That became like almost secret sourcing. That was coming out of doing what was a very competitive market role. That became our point of difference, that we were just caring about our client way more than anyone else. We would come right.

Speaker C: Do you mean you're almost to the level of coaching them, these executives, uh, C level board members, CEOs. Are you sort of talking to them at a personal level that your competitors weren't doing a. Ah, quick pause.

Speaker D: You might not be aware that this podcast is a passion project. It's born from my commitment to supporting entrepreneurs who through the business stages of scaling up selling and then life on the other side. It's the same work we do at Capital Partners, our uh, boutique wealth planning firm, which is dedicated to helping entrepreneurs to gain clarity around their money, their aspirations, and ultimately achieving financial peace of mind. With over 20 years experience of working with business owners, our team brings deep insight, strategic thinking and clarity to what can often be complex decisions. So what you're really looking for is a trusted advisor. Someone who understands people like you and can offer thoughtful guidance at the intersection of business, family, money and life. In other words, someone to act as your strategic thinking partner and your financial coach. So if that resonates, feel free to explore more. There's a link in the show notes to our website with tools and resources to support you on your journey. Now let's get back to the conversation.

Speaker A: I think so. So it became sort of a 247 job that, you know, now I think about it and having gone through my own IPO and tongue raising, it's the same, you know, you don't care when you're an entrepreneur building a business, what your document looks like, what the process is, what the lawyers think. You just sort of, that's a thing you have to do. It's part of the process. So to get the end result, which is raising money or building your business or ipoing, you know, you're trying to get somewhere. And I think what I've realized is the things that the CEO worries about, and that's the main person you're dealing with, are, um, not any of those documents. It's what will, what will happen to me when I'm suddenly public? How will I get my brand out there? How will I sell this to my staff? I'm acquiring a business. How will I gel this together?

Speaker B: Oh, my God.

Speaker A: I'm worried about that key person leaving. Or have I got the right non executive support and you just became that confidant and the trusted advisor, uh, around what they were doing with their business. And becoming that trusted advisor, uh, means you start to be able to offer them other services. And that's where our growth came from. It's like, right, we're doing one thing. We IPO your business, we raise you money. Well, actually, if we build this trusted advisor relationship, which we were doing because we wanted to, you can actually offer a lot More services. And that's what ended up scaling and building what was the leading investment bank in the UK for growth companies. Because we had all these offerings with the same principle that we were just dealing with clients very differently.

Speaker C: Yeah, that's really insightful. In particularly in what is obviously a very competitive marketplace.

Speaker B: Very.

Speaker C: There's lots of other companies of, I guess, bigger companies, um, you know, offering similar, on the face of it, similar services. So to look for your kind of unique position, that's a, that's a very valuable insight, I think, as you're, as you were going along. So clearly you were successful and you grew this business and you grew it and you grew it through applying those skills and tactics. But then you mentioned it a moment ago, you did, you did an mbo. So you. So you bought the business out of the ownership or the majority ownership?

Speaker A: Yeah, so we got to around 3 million turnover, uh, within our division. We made a lot of money within this division, which had paid off various parts loans around the place. So we, you know, we, we've been very successful, but really why we did the buyout was because we wanted to continue growing. So we got around 25 plants. We had about 25 people by this point. And it was like, right, where do we go next? And this is where you realize, I'm a growth entrepreneur, I just want to grow this. And the only next stage that we could go to grow our business was to become an advisor to the stock market. So what happens in that corporate finance world is you raise the money, you've got permissions for that, to become the next stage, to become a full service advisor and the fundraiser, you have to hire four people that are qualified. You have to apply to the stock Exchange. It takes 18 months, no guarantee they're going to give you a license. And it cost about 500k. And that was the only next stage of development. We've got to do this if we want to grow. And that's what started the conversation to say, look, we need half a million. We're going to have to recruit four people. No one wants you to make that investment. We didn't want to make that investment as the division because it would have meant us earning their money for a year. And we're saying, okay, well, we will grow this, we will do this, but we need some equity. So to make it worth us taking a salary sacrifice, not having any bonuses to do this, we need to own some of it. They said no. And we said, okay, if you don't want to give us any equity in the whole business, we will buy out ours and we will own 50. 50. That's a very short way of saying it, but that actually took three years. It was quite complicated, I'm sure. But we roll on to 2007. We achieved our MBO. We did buy it out. We were 50% owned by our staff and 50% owned by our parent company and we were then on our own. We were then moving from sort of division and me running a division to being CEO of a separate business that was completely separate with 50% ownership by our parent company. So that's, that's when we went alone and called ourselves fincap. Um, and most people don't know us from before then. They think we started then in 07 as Finca. Actually we were 10 years before. So building, iterating and so you're finding out what we were doing.

Speaker C: Right, so you were within JM Fin, you did the buyout and your FINCAP now and you just.

Speaker A: We're now fincap.

Speaker C: You just mentioned uh, the. I'm thinking back to the timeline because um, you know I was certainly around in those days. 2007. Yeah, was. Was not a best time to start a business, particularly sort of a stock market based business. What was that?

Speaker A: So I'll tell you, we did the buyout on 1st August 07. So seven months before we got the final agreement. Yes, you can do this. Yes, it's 50 50. So then I had to run around like doing everything, getting the company set up, getting the agreement signed, getting a new website, even getting umbrellas with bcap. You know, all our trading systems moved across. So it was a bit of a move. Massive job to do this. We're going to spin out, we're going to be on our own, we're going to find a brand name, we're going to do all those things which m. We might as well have done a startup from scratch. So on the 1st of August 7 we had just the night before signed the checks. So J Fin had put their money up half a million. Our team including me had put up half a million. So we needed a million quid of capital to do it. So all my team had put in half a million quid. Two weeks after that. So I pitched this big vision, they've all put their own money in. So I borrowed money to do it. Two weeks after that Northern Rock collapsed and we actually had a Northern Rock opposite our office and you could see the queue forming for people trying to get their money out, going, oh God, this isn't very Good for markets. And I've just become the CEO and I'm. And I was 33 by this point. Still didn't really know what to do. Thinking that running into vision was the same as being CEO. Uh, it wasn't. Uh, it's like, oh, my God, the bike starts with me now. So we've got this Northern Rock situation. We've got Lehman's then collapsing and then going into the general financial crisis. And it was pretty hairy. I totally say we've just taken money, we had this big mission and now the market's imploding. But this was our moment. And, um, this is what I say to a lot of entrepreneurs. I've had about four of these moments in my 24 year journey, building, take care of. And they've all been massive shifts in our business plan. So instead of sitting there saying, the whole market's imploding, this is going to be a nightmare. We just don't buy out. We put all our money in. What we're going to do. I was absolutely intent on, we're going to go for it. So what happened is as very big banks were sacking people and, uh, exiting small cap. What we said is we are utterly committed to the small cap space. We love SMEs. We think they're the most important things in the market. They're the next big companies, the next big Tutsi one hundreds. We give them the best service. We are going to absolutely recruit whoever we can into our business and we're going to absolutely give all those small clients the love that they need to get them through this situation. And that's what we did. We hired amazing people that we wouldn't have hired, you know, the day before the crisis, wouldn't have been able to hire. Hired amazing people. They want clients. We pitched literally all day, every day. It was pitching for our life. It was like, right, we're building. And we did that. We basically accelerated our business plan by five years and we won so many clients because we were utterly committed to our vision and we were utterly committed to a vision that people had bought into. On 1 August 07, they had written a check to back me and themselves as a team with what we were doing to treat SMEs like the most important part of the ecosystem, to give them love no matter what's going on in the market. And if there was one place to show that we missed what we said, it was that market. So we accelerated the business plan. We wanted to hit 10 million turnover and we hit it within three and a half years.

Speaker C: Wow, that's. I, uh, mean, it's really interesting with the benefit of hindsight, looking back on it, um, and I know that people like Richard Branson say it's the best time to start a business in a recession or really, really challenging times, but, God, it must have felt tough. I know you're the CEO and you've got to put on a brave face, but I mean, looking back on that period, were there some sort of moments of self doubt, of really wondering, what the hell have we done? Take an investment? Or were you always supremely confident?

Speaker A: So it's a weird one because I. I honestly say that I never felt for one single second that we would fail.

Speaker C: Really?

Speaker A: Never. But that was only me. So what did happen? As I was hiring and hiring and hiring better people, my team would get more and more nervous, saying, what are you doing? You're. We're spending a lot of money. The market's awful. What. How are we going to, you know, deal with this if we can't cover our, uh, costs and we're going to dig into cash? We m. Haven't got a lot of cash. But at the back of my mind, which I couldn't really tell them, but I always knew if we're going to grow, this is our opportunity. And if it goes wrong, I will have to make some redundancies and I will have to take some cost out. But I know that the cost I take out will probably not be the new people I'm hiring, because the new people are getting me to the next stage. It will probably be some of the people that were there at the beginning who maybe might not make the journey. And, um, that's a very tough call because you don't want anyone to go. But I knew the risk I was taking. Everyone thought I was taking too much risk. You start to lose, you know, the, the people around you. But what I've come to realize, because I probably have three or four of those times when people just lose that, they get nervy. You as a founder, you know, in your gut, you just know. Um, and back to what I said at the beginning, I knew that this was the right thing. And I've always had that ability to commit to what I know is right in my gut. And that's what happened. We kept hiring. And in 2009, the inevitable happened. The market went really, really wrong for small cats. No one raised money at all for four months. We did. We had no fees, and we would every week go, oh, my God, when are we going to have to take no pay? When are we going to have to ask people for a pay cut? When are we going to have to raise money? When are we in the shit? And, um, it was. It was like that for four months and it got very close. And we did take no pay for three months. As a board, we got just before asking all staff to take a pay cut, but then we did say, right, we've got to take some cost out here. And we did make our first redundancies, and I had to do it, and it was horrendous. I had to bring a coach in and I was crying and it was awful. But it's not that I didn't know that might be a risk, but it was a risk I thought was worth taking to grow and. And we got through it and we built again and we carried on, um, our growth journey.

Speaker C: Wow, that's, uh. Yeah, that's a hell of a story. And as I say, I remember those days well. I'm trying to navigate it, but what. What comes across really interesting, particularly interesting there is. This wasn't something that you were just putting a brave face on. You. You just knew it. You just knew it in your guts. We will be successful. We will navigate through this. Yes, there's some challenging times, but you just. You knew it, but you had. That's got to be one of the biggest challenges, because there's people around you that don't have the same conviction as you do and try to encourage them and support them and just, you know, help. Help them try to, um, understand what's going on in your mind.

Speaker A: Well, there's two. There's, you know, two times where I thought I was tested more than ever. One was that where you had to, you know, you're losing the room, but you're so convinced. And I never. Failure was not an option. It just wasn't an option. The second time was when we did our ipo, when the timing of our IPO was very. It was great. When we started. It started to get into that period of time when Therese May was Prime Minister and was losing all her cabinet. And then there was a general election called and all IPOs were pulled, every single one. And we IPO businesses for a living. We're trying to do our own. And at, uh, that point, everyone. I was losing everyone again, going, we're not going to be able to do this. We're going to have a fair deal. We've just bought this company. We spent loads of money on costs. What we're going to do if we don't get the IPO away. And I just had to channel like, you're the last one standing, almost as the ca. The entrepreneur, uh, you've got the weight on your shoulders and you are channeling. This is not failing. And to get that IPO job, I still don't know how I did it, to be honest, but it was, it

Speaker B: was the last bit of raising that money. And I just remember the last piece of, you know, this is impossible. This cannot go wrong, this cannot fail. I will, under whatever circumstance, get this deal done. And I still don't know how we did raise the money. We went to every single. We were, you know, raiding the bottom of every draw. Every single person we knew because my attitude and everyone's going to. Given up, given up here, given up here. It's like it's almost last man standing. And when you are so passionate about the vision and you, uh, have so much commitment to what you're doing, I think as the founder in your DNA, you, you just don't have failure as an option. And that's what I think it takes as an entrepreneur, that you've got to have the vision and the passion. You've got to have something that's driving you beyond money, which makes you just utterly, um, unaccepting of failure. There was in those two moments when we were making people redundant and growing through that downTurn and the IPO. Both times I'd say tested me to the absolute limit, but not one moment did I think we were gonna fail. None. Which is weird, isn't it? It is weird.

Speaker C: It's kind of weird. But you wouldn't have succeeded if you had doubts. If you had a lot of self doubts and wondered, you just wouldn't have committed. I think it's that sort of burn the bridges.

Speaker D: I've just.

Speaker C: I've just got to make it happen one way or another and. And just relentless self belief that it's going to work. Um, I read somewhere and I can't remember, was this the MBO? I think it was MBO. You. You had like, I don't know, 48 hours to raise two and a half million pounds. Was that the MBO?

Speaker B: So we did the MBO with 50, 50. And as we, as we grew, what happened is that 50% was all allocated to the team. So JM Finom. 50%. The team had 50%. What happened in the next three years was we were hiring. We were growing because of the downturn. We were hiring more people. We basically ran out of equity and said, our story for hiring people is they get a market rate, probably low market rate, salary. We couldn't compete on, um, salaries and bonuses, but we could give them equity. So if they believed our story and if they were backing themselves, they could make a lot of money through this equity. And we had run out, and we basically said, look, we need JM Finn to sell us a bit of equity because we need it to incentivize more people. What the growth is getting blocked. JFIN did not want to sell it because we obviously doing quite well. Right? So that started the next buyout, which we call a secondary buyout, where we wanted to say, look, it's been amazing to have you as our shareholder, but now is the time we'd like to buy it back. Thanks very much. And they were not really up for doing that. So, again, these things sound simple, but it took a whole year of going in almost every day going, I need to buy this back. I need to. Should we agree a price? No, no, no, no, no. A few things happen, which suddenly meant, I think they probably got bored of me, to be honest, going in every day. And there was one point where I remember walking into the senior partner and with my usual, you know, this, I really need this 50% really, to buy it back. And he just went, all right, you can have it, you can buy it back. And he was being amazing in the background, coaching me. But it's like, this is hard. And he'd got agreement. And I'm thinking, yes, you know, he's finally agreed, said, you can have it, 2.5 million. If you can get 2.5 million within 48 hours, you got it. And he was not, not really happy. I think he was just fed up. But going, if you give us this price, valuation of five million for m. The whole thing, give me two and a half million, we'll walk away, you can have it. So I left the room thinking, yes, yes, yes, and called my chairman and went, right, the good news is I've got them to agree. The bad news is I've got 48 hours to find two and a half million to do it. And do you know what was the most unbelievable thing? And I never forget it, which is why he was the most outstanding chairman. He said, I'll underwrite you. So, wow. Uh, yeah, he said, I'll underwrite you for the two and a half million, but you've got 48 hours to find it. So I obviously didn't want him to have the two and a half million, so I didn't say, but it was an amazing backstop. So for 48 hours I didn't sleep for about seven days until the deal got done. But for that 48 hours I got. I had one room for all the staff coming in to talk to them about, look, we've got this one opportunity to buy it out. Do you want to be part of it? This is the valuation and I split it equally. That was the one big thing said everyone can have 50 grands worth, everyone can buy 50 grand and only if people don't take up their full allocation do you get more. So it's quite high risk because I would have had the same as my receptionist. It was, ah, a sort of risk on. This is about fairness, it's about culture change. Try and do it fairly differently so everyone can have the same. So I had these chats with everyone individually and then I had the bank in the next room saying, go and talk to the bank. And I didn't know what those conversations were, but said, I've got the bank in the next room that said they will loan you money secured on these shares. So I don't know what their personal circumstances, I don't know how much you can borrow what you want to borrow, but if you want to do it, go and talk to the bank. And so I had these two meetings, ran around the city, like presenting to the people that I thought would be interesting, so raising a bit of backup money and then everyone came back within 48 hours. The next day, literally 24 hours later, I had two and a half million quid.

Speaker C: Wow, what a story.

Speaker B: Mostly, mostly from the team and everyone. What happened was actually someone who was a bit more junior didn't take up 50 grand, they took up five, which meant that I could maintain my stake at 10%, John could maintain his stake at 10%. The senior people all got what they wanted. So it all ended up exactly as it would have done if I'd said, okay, um, I'm having 10%. The rest of the team can share 10% between you all. But the way it was done with the fairness of everyone's in this together, I think just grounded us in this. We have a different culture to anybody else. Which is when we realized our real point of difference was not the caring about the clients piece, which it was, it was the culture that we'd created, which meant people then did care about the clients. So our fundamental secret sauce was our culture that was creating a very different experience working with an investment bank, which meant people were so committed to their clients, which Meant we were different to everyone else. And that's the only reason I think we really scaled in a market that, uh, effectively was shrinking.

Speaker C: M. What a fabulous story and how that worked out. Uh, when you were sharing that story, I was getting the impression this senior partner at JM Finn, he wanted you just, okay. Eventually you sort of ground him down. But I'm going to guess he. And he didn't think you'd be able to get the money in that short space of time.

Speaker B: I don't know. I've never spoke to him since about it.

Speaker C: He said, all right, yes, fine, but I want it in 48 hours. Thinking, well, she's got no chance. And yet you did fantastic.

Speaker B: The whole deal together. We got the money in 24, 48 hours. And then you. Once you've got the money, as people know in corporate France, you've got to do all the deal, have a shareholder's agreement. We did that. And I had an amazing lawyer, Ian Raisinblatt, that worked with me. And we just literally worked through the night with his team and, uh, said we got to get this paperwork done because if they don't sign, they might renege on it. So within seven days, we had done the fundraising and signed all the deal, and then we owned 100% and then it was ours.

Speaker C: Incredible. That's the sort of thing that would take months and months and months, just fundraising and then the paperwork and the whole thing. Normally, normal circumstance would take months and you turned around and 48 hours in a week to do the legal work. But again, there's a theme coming through here, Sam, um, that I'm just picking up on, which is you thrive in adversity and really challenging times. You start the business. You start the business when Northern Rock goes bust, and then you have this really challenging situation, um, and you pull the rabbit out of the hat. So congratulations. That's brilliant. And, um, and I think in terms of just building that culture, which. Yeah, well, we should talk about in a second. But the fact that you chose to say every. We're all in it together, we. Everyone's get the equal opportunity to. To buy the number of shares, and some just choose not to, or they can't afford to, or they don't want to take on the debt, that's perfectly fine. They were given the opportunity to do so. And I think that's.

Speaker D: That.

Speaker C: That says it all. And the way it worked out, uh, you know, everyone, the senior people managed to secure the. The largest stake, but. But not. But you give everyone an opportunity. I Think is the key thing. What do you think? Clearly you're somebody that believes in employee ownership to grow a business. Tell me more about you. I mean, you've done it. There's tons of things pretty much from the early days. Tell me why you think that's important in a business.

Speaker D: Hi. Just a quick pause. If you are getting value from this episode, I'd really appreciate it if you could hit subscribe and leave a rating or review. It's honestly the best way to support the show, to help more people find it, and to make sure that future episodes get even better based on your feedback. Thanks for being here and, uh, now back to the show.

Speaker B: So I think when I talk about it in my book, it's a whole chapter on engagement. And once you have the vision, you know you're there, you've sold it to people, they understand the why. The next piece is how do you get people to emotionally and financially connect to your vision? And the best way I found, you know, there's the emotional connection, which is about being part of it, understanding the why and being committed to it, but the financial connection and when you have both emotional, financial, this when you get the best results, the financial connection is have, have you got an incentive that ties you to the success of this vision. And ah, so it could be bonus, it could be different incentive plans. But what I found with equity is it was very different to the bonus. It was much more about I'm building something. So when we paid our first dividend and we always paid a dividend that, that may need to pay the interest on the loan that they borrowed, that's why we did it at the first thing. But people would get a dividend and it might be 200 quid check or something, but to earn £200 from a dividend, from a share that you've bought from a company that you've helped grow is a very different feeling to getting a bonus for work done. So you suddenly feel not an employee, you feel a stakeholder. So this moving from employee to stakeholder changes the way you think about the business, how you work in the business, how productive you are, how committed you are. We just had people that felt like owners. And I have never found something that incentivizes people more than being an owner, even if it's small. Our receptionists were put in 20 quid a month to a save as you earn scheme. So very small. But they all made money out of the shares when they got a small dividend of 10 quid, you know, that would mean something to them. And I'd always say, go and buy something you would never buy otherwise with that money because that's what you've earned helping build an actual business. So they all became like mini entrepreneurs and then they'd come up with ideas and they'd, they would just, you know, do the work for me. Basically growing the business because they were so ingrained in the success of it and they were passionate about it and they loved it, which is what the culture was all about. It was, to me it makes a lot of sense, but back then it was a bit of what's this culture thing all about?

Speaker C: Yeah, for sure. Um, honestly, I think that's really insightful. I think not enough SME businesses do that and create equity and ownership within the companies. Because I'm just thinking that through imagining that if you got whatever is a £10£100 dividend, you just treat it mentally different to if it was a bonus. You just got a pay rise or a normal bonus. That's an employee mentality and you're creating an ownership mentality and having everyone, regardless

Speaker B: of their role as well. So if we have senior people and you could give them a very big percentage of the company as an option, but they behave very differently when they had to put two grand of their own money into the business to buy it. Very, very different. So I'm not a great fan of option schemes. I'm a great fan of investing. Eventually we would, because we had lots of excess cash by this point when we'd done well, we would loan people money to buy the shares so then they would afford, you know, and we do it, uh, as uh, low as interest rates as we could. But that we found created better behavior change than just giving them options for free. So it was an ownership thing. It had to be a share and an ownership and generally it helped if they paid for it.

Speaker C: Yeah, um, I think that, I think they call that skin in the game. You've actually parted. You know, money is a real differentiator. Let's face it. If you're going to part with your own hard earned capital or borrow it against which you've got a personal debt, that's a different type of money than as you say, than an option or just a salary and a bonus. I think that's very insightful. Um, and clearly, you know, it uh, was part of your success and your growth story. Just changing gears a little bit if I can. You have um, I guess over the years advised hundreds of entrepreneurs and um, SME and fast growth businesses um, looking back on that, are there any specific mistakes that you've seen or things you've seen happen regularly or things that you would now advise people to avoid or be careful of? What were the kind of bigger mistakes you saw business owners do?

Speaker B: So I think it, uh, and actually with superscalars now we're trying to put all those mistakes in one place and help underrepresented founders and teach them. So I'm very on this at the moment, but I would say one of the consistent themes is the inability of the CEO to listen. And it sounds basic, but it was time and time again you see it, they don't, they're too in their own mindset, fixed mindset. So you have to have the vision and the absolute, you know, not fail approach, but you have to be in a growth mindset. You have to constantly be listening, willing to adapt your strategy as things change, willing to move. And that not listening and not to being too rigid, I think is a real downfall. Why companies get going to a certain extent and don't scale the next big thing, and we see this in underrepresented founders, is they just don't have the playbook. So they don't understand how growth works. They don't understand what most other people understand, who were in the city and who were in the, you know, the clients that I was advising that just got it. They don't understand that. They don't have the networks to understand it. They don't understand how the system works, the finances work, the funding landscape works, how to get a good pitch done. Um, they don't have those networks. So a, uh, lot of it is just about skilling yourself up and understanding what that playbook is. And that's why we built the playbook and we're teaching as many underrepresented founders as we can to level the playing field for them. So those two things I think are fundamental. And then you go into more specific things, you know, once they have scaled, are, ah, they taking too much risk? Have they just got the wrong strategy? Are they not moving fast enough? Pace is so important. The ones that I think don't do as well can't work with pace. They just can't work fast enough. And I think at the moment we think of AI, transition, the world as it is, geopolitics, all of that. The pace is ridiculous. I've never, ever known it work at this pace. So if you can't adapt and you don't have a system and you don't have a team that run at Pace. That's the real problem. And then the last thing is probably the team. If you have the wrong people, the wrong investors, the wrong co founder, if you have the wrong things attached to your business, that becomes a blocker, uh, much later where you have disagreements and you just can't get through. So those are the main ones, I would say.

Speaker C: Yeah, you've covered quite a lot there and you've obviously, you've seen it and you've observed it. Um, just as we're kind of wrapping up, this has been super helpful. A real sort of whistle stop tour through your 24 years or whatever it is of experience of working in that community. Um, yeah, really, really insightful.

Speaker A: You.

Speaker C: So you stepped away from fincap a few years ago.

Speaker B: Four years now coming up to four years.

Speaker C: Uh, so. Well, two parts to that one. How did it feel in those first few days and weeks after you, you know, you stepped away from your baby, I think you called it your second child, this business.

Speaker A: Yeah.

Speaker C: You spend so much time.

Speaker B: And it was my first job, but no, it was my. It was definitely that feeling. Definitely. Like a teenager leaving home.

Speaker C: Yeah. So that's how it felt. Did you feel a bit kind of lost?

Speaker A: It was horrendous.

Speaker B: Uh, it was horrendous, if I'm totally honest. It was the worst 10 days of my life. Um, I couldn't breathe. I was having chest pains. It was awful. Um, but I think I knew in my heart it was 110% the right decision. I knew it was the right time. I needed to be around for my daughter. There was issues going on with the business. The market was awful. I'd had 24 years of really busting a gut. And I think you've heard through this story. You know, I don't think it was building a normal business. I think we were in warrior mode all the time, trying to change culture. I. I am. I'm a warrior mode person. And doing that for 24 years, I did not have the energy for a downturn or to deal with all the issues. And it was like, I, uh. And we just reported our best year ever. And it's like, I think this is the right time to handover. This is probably me done. Um, I won't have a CEO role again. But that. You've got to process it quickly because we were listed. So we had to announce it pretty quick. And it was all done in about 10 days. It was horrible. But I think I had moments of just going through my story and just thinking, do you know what I feel Good about this. That was chapter one. I'm going to go and do my chapter two and that will be more portfolio, different around impact, and I could not be loving it more brilliant.

Speaker C: And again, the other theme that I'm picking up here is trust your gut. You just knew it was time to move on.

Speaker A: Yeah.

Speaker C: You just, you had, you had that feeling. Time to move on. So, Sam, what are you spending your time doing now?

Speaker B: Mostly, so I have a portfolio career, so people think I'm semi retired, but I think I work probably harder than ever, so. So I do. I sit on four boards. A private equity backboard, a listed board, a bootstrap company and a fund, a tech fund. So it gives me a nice range of entrepreneurial, how you grow things in different ways. And I generally champion entrepreneurship. So I've judged EY World Entrepreneur of the Year and UK Entrepreneur of the Year. So I've been chair of the judges there. Uh, and I work with Rosaleen Blair, who is an outstanding entrepreneur built ams, Alexander Mann Solutions. She's one of the, um, women in the UK that's built the, one of the biggest businesses in the uk and we are working on projects that are very exciting. And our first project was the Super Scalers, which takes all of my other time outside of my four boards, which is about changing who gets to grow a big business. So our mission is to have more underrepresented founders scale to super scale, which is 50 million revenue. We track the women who have built them to super scale. It's now 144 in the UK that have ever done it. Me and Rosaline are too. Um, we get that community together, we learn from them. And we have a peer group of 1 million to 50 million aspiring superscalers that we are helping to grow as big as possible, as quick as possible by giving them the playbook. So basically, the community is a not for profit, but we're building the community that we would have wanted when we were scaling to make our lives easier and to do it faster and to think bigger. Uh, and ideally that changes who gets to sit at the table and make decisions in the world. That it's a real impact project and I love it. And the more women we can get building big businesses, the better.

Speaker C: Sounds like you're thriving. You're really.

Speaker B: I love it, I love it. It's so inspiring. It's very exciting. And we're growing exponentially the number of female founders around the world. So it's a global mission, it's a big mission, but we got to Go big. Go big or go home.

Speaker C: If anyone can do it. Um, I'm betting, I'm betting on you, Sam. Um, just as we wrap up, I often ask people if you've been. You've written your own book, right? And, um, but other. Other than that. And we'll put a link to your book, uh, in the show notes. People want to check it out. Are you somebody who's, who read. Other than the first three books that you got when you first set up and you had to learn the ropes, are there any kind of resources you found helpful, whether they're books or podcasts or anything at all you found helpful in your journey?

Speaker B: We didn't really have podcasts or TED Talks and all of that back then, but I am a business book like fanatic. I'd go through one a day. And my rule was if I find one thing out of a business book that's useful, then that's been a really good effort. So hundreds and hundreds of business books. Um, some great ones. I think one of the most, um, important books for me that I've read, in fact, two. One was Grit, by Angela Duckworth, which was the Secret of Success across multiple different areas. Don't know if you've read it. It's amazing. Um, and then the second one was Rocket Fuel, about how leaders, you know, whether they're visionaries, integrators and how they move, and that those two are probably fundamental. But I read a lot about business psychology. I read a lot about business, um, people psychology. My book really went from how to run a business to how to motivate people. So I'm very, very interested in psychology and workplace culture and, and how you get the best out of a workforce by understanding people. So all those things were very useful. YPO, I found amazing. A network of CEOs, EO was amazing. Um, there are now more communities available. There weren't when I was there, but, you know, our superscalers, female founders, Rise board, Wave, 51% club, all these things now are amazing resources for people to. You've got to be around a tribe, you've got to be around people who got it, you can talk to and who are at the next level as well to give you that ambition. So that's what I would say. Books. If I was back then, I'd be on LinkedIn and TED talks probably 24 hours a day. It'd be addictive for me.

Speaker C: There's no shortage of information out there. The thing is to find things which speak to you, that interest you and Spend time. I do say, I've said leaders are readers. Some of the most successful people I've ever met are like that. They're just consummate readers and take information, distill it through their own brains and minds and then pick up one or two things that they can execute and act upon. So I think, I think that's great, great advice. Great, um, books that you've mentioned and we'll put links to them as well. Last question. You have been through so many things and ups and downs and you've been in the sort of the business and the money game for pretty much all your life. What's your personal definition of the saying true wealth?

Speaker B: So for me, and I do think about this question a lot is I'm happy 90% of the time. It's stupid. I rank myself every day out of 10 on happiness and if I'm M not 9 out of 10, I do something about it. So it's all for me about how happy I am and then the other things are all add ons. So that's it.

Speaker C: That's it. Is happiness and self ranking every day. I think that that's a useful tool that we can all do as well.

Speaker B: I love a good rank and a list.

Speaker C: Scores out of ten. Yeah, fantastic. Anything less than nine is absolutely unacceptable. Sam Smith, thank you so much for joining us and sparing your time, your precious time to uh, share your ideas and your wisdom. If people, and particularly underrepresented founders and females want to get in touch, what's the best way? Is it the website? Is it superscalers? What's the best way for them to connect with you?

Speaker B: Website superscalers world where you can apply. You have to be a million pounds revenue and above for that. And a female founder. Um, I am on LinkedIn. Sam Smith, entrepreneur. And I'm on Instagram. Samxsmith.

Speaker C: Wonderful. Once again, Sam Smith, thank you so much for joining me on the Bulletproof Entrepreneur podcast.

Speaker B: Thank you.