Entrepreneurs are often characterised as the people who ‘jump off a cliff and assemble the plane on the way down’, as LinkedIn’s founder Reid Hoffman once suggested.
There are traits that make startup founders successful – an eye for a problem and determination to offer the world a solution, a willingness to take some risk (often personal in financial terms), and unrelenting optimism, to name a few. Startups are often chaotic entities, formed and built iteratively through experimentation and failure.
Stepping into a founder’s shoes
This we know. But there comes a time when many founders reach the limit of their ability. They struggle to deal with the many challenges that scaling a business presents. Venture capitalists will often recognise this and gradually – or rapidly sometimes – phase the founder out into presidential, ambassadorial, figurehead-type roles. And into the void a chief executive officer will step.
I’m not a founder. Instead, I was appointed as CEO of business finance marketplace Funding Options in September 2019. Having served as Commercial Director for the six months prior, my remit has been to shift the company through the gears as our business pursues growth. Alongside me, the founder of Worldpay and Clearbank Nick Ogden came on board as Non-Executive Chairman, adding a wealth of fintech nous.
It’s now been more than 18 months since this transition, sufficient time to gain some insight into what taking over as a growth CEO from a startup founder is really like. Here are three things I’ve learnt:
1. You have to bring people with you
By hook or by crook it’s imperative to take the team with you. There’s an arc to change management that typically sees people respond negatively in the first instance when faced with ‘The Vision’, as set out by the new CEO. Startups achieve so much going from 0-60mph, with early employees often working late into the night without complaint to make something out of next to nothing.
At some point, with new joiners, that ethos dissipates a little as a greater distribution of labour and more standard working conditions begin to be applied. The early momentum tends to settle into something more steady. So when a growth CEO tells the team that sales will need to triple in 12 months, fear sets in and the arc falls deep into a trough. Some people are right for different phases of a business and at this point you need to hold on tight to the ones who are ready to ‘go again’ and hire the right personalities and skill sets to supplement what you have.
To overcome residual doubts, the job of the CEO is to demonstrate and elicit lateral thinking from others to find new ways to achieve formidable targets – without imposing longer hours. This is a question of establishing economies of scale, and in our case having a vision for how technology and partnerships could be deployed to multiply the throughput of applications for funding. It’s likely to be very similar within other scaleups chasing sales volume.
2. Stay calm and focused, no matter what
In terms of impact on UK businesses, nobody could have predicted the Covid-19 pandemic, so it’s not something I’d prepared for mentally when I became CEO. Nevertheless, in any business’ existence there will be times when your mettle is tested and you need to show that everything is absolutely under control.
You need to convey where your business has underlying strengths and how those foundations provide the platform on which to build. In addition, it quickly highlights the weaknesses and where time must be spent addressing those. We have made a highly significant investment in our tech stack, brought in a very experienced and unusually entrepreneurial CTO, and added to our engineering capacity.
Despite being a fintech, the ‘human’ element is still prevalent in the efficient processing of new business. We operate a hybrid model where our Business Finance Specialists are on-hand to discuss funding products with business owners. It remains a crucial differentiator, but for more ‘commoditisable’ loans there has been an opportunity to be more digital in order to process faster and Covid-19 brought that into sharp focus.
As a marketplace, the supply of product choice (in our case lenders) is key alongside generating sufficient demand from end customers (for us, SMEs). Covid presented enormous challenges for both the SME and fintech communities, but also made the work we do essential as business finance became front page news. If anything, experiencing the early surge demand last March of more than £1bn loan applications from over 10,000 SMEs, only emboldened us to push harder to innovate further.
3. Shoot for the stars
We hear a lot of moonshots when it comes to the likes of Elon Musk and Jeff Bezos who are exploring lunar missions. But when you take over from the startup founder who created the business and sold a team of people a dream while getting investors on board, you have a group of people who saw and played their part in the frenetic ambition of a fledgling company.
To go further, you need to underpin the business and respond to the challenger businesses that emerged later. Having steadied the business, bringing more process into the day-to-day, we laid out a step-change plan to create a new funding platform that could deliver finance into a small business’ account in minutes. We launched Funding Cloud, the first real-time fully integrated lending platform capable of instantly scouring our marketplace’s lending panel. Built to deliver lending decisions at speed, the use of data analytics, open banking APIs, and artificial intelligence saw the time taken from application to approval of a loan down from just under three minutes, to our best to-date: 21 seconds. This was for a £25,000 loan – so not an insignificant sum of money.
Since then we’ve seen that process repeated at great speed, with one recipient company also drawing down the approved loan within just 18 minutes – meaning a business could apply for and have cash in the bank within a tea break. That level of innovation was months in the planning and delivery.
Simon Cureton is Chief Executive Officer at Funding Options, where he’s using his extensive experience in the alternative finance sector to ensure the company is at the forefront of Open Banking and other innovations within the industry, and delivering those benefits to its customers. Before joining Funding Options, Simon was one of the founding members at Esme Loans. Prior to that, he worked for RBS International as part of its transformation programme, as well as other world-leading financial companies including Morgan Stanley, Barclays Capital, Commonwealth Bank of Australia and Deutsche Bank.