00:00:39 (Alastair)
Welcome to another edition of Seed to Success. In the studio today, we've got Laura Beales, COO and co-founder at Tally Workspace. Welcome to the pod.
00:00:50 (Laura)
Thanks for having me.
00:00:51 (Alastair)
Yeah, great to have you on, Laura. And first of all, give us the elevator pitch on Tally Workspace.
00:00:58 (Laura)
So, Tally Workspace is a marketplace for offices and on demand workspace. We help companies, whatever their budget, find the best office space for them. So we have a technology platform and we have an amazing team of office space experts. And yeah, we find the best office, and that's showing companies all of the options available, negotiating on their behalf, and helping them to find the best space for them.
00:01:26 (Alastair)
Marketplaces are notoriously difficult to get started because you don't just have one customer, you've got two sides of the equation that you have to satisfy supply and demand at the same time, or more or less at the same time. So want to try and get into a little bit more of that and what that looks like. But Laura, if we can tell us a little bit about your history, how you got to being the co-founder of a two-sided marketplace in the property business.
00:01:52 (Laura)
Okay, so you'll be pleased to know I'm an accountant like you. So I qualified as an accountant at KPMG and did audit and consultancy there. This was a pretty boring accountant as they go, but I was always kind of interested in start-ups, so I think I took a bit of a risk averse approach. So I started by doing outsourced accountancy for start-ups. I then went and did finance for a start-up, and then I set up my own start-up. So it was a bit of a step program there. Yeah.
00:02:29 (Alastair)
And what was it when you worked in the first start-up that kind of gave you the, oh, I want to do this for myself because your background, as you say, is risk. Well, your approach to it was risk averse, but typically not coming from a profession that is the most forthright with risk. What was it that nudged you over to say, hey, I want to start my own business?
00:02:54 (Laura)
I think the things I loved about my job were the bits where I was working really closely with the founders and making decisions. And I think during COVID I really began to realise how boring I found finance. So that was kind of like the push. So, yeah, I think it was a bit of realising that I didn't love finance, but also kind of looking at the things I did like about my job and thinking that the risks kind of worth taking to do something that I really loved.
00:03:25 (Alastair)
So the business you were at just before Tally, can you tell us a little bit about that and maybe some of the skills experiences that you took from that that you may not have had professionally before that?
00:03:37 (Laura)
Yeah, I would 100% recommend, if you're thinking about starting a start-up, go and work in a start-up, because it will become a lot clearer to you whether you want to do that. So the previous company I worked at was called Florence, and they were essentially a marketplace for nurses and carers to book shifts in care homes. So two sided, and that you had to find the care homes to place the workers, and then you had to also find the workers to fill the shifts. And it was a real, it was a real journey there, full of kind of ups and downs, because during my time, COVID happened, and there was a point where it was illegal for temporary workers to go into care homes. So I think being on that roller coaster and being really close to the founders at the time and kind of seeing how you, how you deal with that was difficult, but it was a really good learning curve for me.
00:04:30 (Alastair)
Yeah. What was the biggest takeaway or the biggest… What did you learn most from the founders when you were there at Florence?
00:04:39 (Laura)
I think having come from an audit background where things are treated like the biggest deal in the world, you send out an email with a typo and you'll get crucified for it. One of them was a doctor and one of them was ex-army. And if there was a mistake, they used to always be like, well, you haven't killed anyone. So I think that kind of, like, putting it into perspective was really important for me because I think I'm definitely guilty of sometimes taking things way, way too seriously. And I think as a founder, you have to kind of focus on what matters.
00:06:12 (Alastair)
Kind of like the 80-20 Pareto's law. Just be pragmatic about it and hey, yeah, just move on to the next thing. Because there's so many things as a founder you actually need to do, and it's impossible to get everything right first time.
00:06:24 (Laura)
Yeah. So, yeah, I think learning to move on from mistakes was, yeah, quickly and realising…
00:06:30 (Alastair)
So you've got a bunch of experience working already in a marketplace, right, where some of the terminology, the importance of data, I guess, and the very nuanced metrics in a marketplace, you've had experience of all of that, and then you decide to go and set up your own marketplace. Some may call that crazy, some may call it inspired. I think it's great. I think marketplaces are incredible, but very difficult to kind of ignite that spark on both sides of the market. So how did that journey actually begin to develop Tally and at what point, kind of during your career at Florence did that start?
00:07:15 (Laura)
Me and my co-founder, Jules, I think we both struggled during COVID with workspace for slightly different reasons. I really missed being able to be close to people. I think I'm an introvert, but I do still get a buzz off being around people. And I found that really difficult. But I also really like having kind of like focused space and, you know, my spot in the office and all of that type of thing. And Jules was kind of working out of coffee shops and stuff just to be near people. So I think we were both… we both thought that workspace was fundamentally going to change. We didn't exactly know how, but we thought that there was an opportunity there and the business started in a completely different place than where it is now. So we started with kind of on demand workspace in coffee shops. And actually we found that didn't work, so we were kind of testing that idea, but we found that your customer expects a really good, high quality workspace, and your coffee shop kind of just wants to get on with their day, regardless of how much that person is paying. And it never just quite matched up. So the business definitely evolved into kind of higher quality workspace, and now we do full time offices as well.
00:08:34 (Alastair)
So I think we're... I think everyone's got an element, you know, if you look at two-sided spectrum, extrovert and introvert, I think everybody's on a sliding scale there. I think it's slap bang in the middle. Is it ambivert where you're a bit of both, depending on maybe the time of day or the kind of what the scenario is to get your energy from one place, to get your energy from, like, being in a gaggle of people or being on your own. I certainly have. I have both of those myself. But you got to the story of Tally itself. At what point did you go, right, we're all in on this. And also tell me a bit about how you met your co-founder and how you said, actually, let's make a thing of this, rather than just, hey, there might. I have a million ideas a week with people, and obviously not all of them translate into actually doing anything. But how did you actually get to the point where you said, we're gonna do something, we're gonna put tangible action steps in place and ultimately create a company and a business with a team.
00:09:39 (Laura)
So me and Jules been friends since Uni, so over the past ten or so years, we have had so many ideas and we've got, I would say, relatively far. You know, we built websites for things previously, but this was the first time where, when we started talking to people, people were actually trying to buy it. It was kind of like people wanted to go a step further than almost what we had done. So we built a super basic website on Squarespace or yeah, or one of those types of websites, and then we kind of faked it till we could prove that people actually would use it. So people used to make bookings on the website and, you know, to them, they would get an email saying the booking had been accepted. But the reality was we were calling up the venue to actually make the booking and checking.
00:10:32 (Alastair)
So was the email delayed then, or would the email go back and you just had a kind of retrofit?
00:10:36 (Laura)
We had an hour, right?
00:10:37 (Alastair)
An hour. Okay.
00:10:38 (Laura)
Yeah, an hour to try and make it work.
00:10:42 (Alastair)
Our machine will be working for the next hour to send it…
00:10:44 (Laura)
… to send this confirmation. So we kind of did a bit of that type of stuff. We started to build it out properly. So we were quite lucky because I had some developers that I'd worked with in previous companies that I really gone on with and I trusted. And they were also quite good at building MVP's, I think. I mean, we spoke to some other developers and what they were suggesting to build for us to test this thing would have cost us thousands of pounds and we didn't need that. We built a really basic thing that had real core functionality and yeah, I think we were very lucky that we kind of knew people that were actually probably harsher than ours in, you don't need to build that, you don't need to build that, these are the core things that you need to build.
00:11:31 (Alastair)
Yeah. So that's really interesting actually. So tried and trusted developers that won't… terrible consulting phrase, but boil the ocean won't overcook the… won't overcook what needs to be done and just really strip it back down. I guess that was because of the relationship you had and they could be open, honest and trustful and kind of want to continue that relationship.
00:11:52 (Laura)
Yeah. And I don't think they were trying to rip us off in any way. You know, they were doing it as a friend, you know. Yeah. I can build this for you. And Michelle, who's now our tech lead, was kind of one of the developers that we worked with super, super early. And she actually started working full time for Tally before me or Jules did so…
00:12:12 (Alastair)
Okay, cool. There's a few things there to dig into. One of the things you mentioned was we've built websites in the past?
00:12:18 (Laura)
Yeah. So you can't find them anymore.
00:12:23 (Alastair)
Let's dig into one or two. What sort of ideas did you have in the past?
00:12:26 (Laura)
So one of the ones we had was around like second hand clothes.
00:12:33 (Alastair)
Something like a Depop or Vinted. Before or after Depop and Vinted?
00:12:37 (Laura)
So I guess similar time. But I think we thought the value, I mean, you had to be so big for it to work was basically our conclusion on that one. What's the one where you take a postcard? That...
00:12:57 (Alastair)
You mean like you get postcard printed.
00:12:58 (Laura)
You take a photo and it prints as a postcard? That was... We had that idea at university. We didn't build a website because we didn't. There was another company that did it before us. So that was what killed that one. We were too slow.
00:13:12 (Alastair)
So interesting. So great ideas. But timing also plays a part.
00:13:19 (Laura)
Right.
00:13:19 (Alastair)
And so those first two you just mentioned, maybe the timing was off a little bit.
00:13:24 (Laura)
I don't think we were quick enough to act on those. And I think that was one of the things that with this, when people were being really positive about it, we were, you know, we're gonna have to do this now or kick ourselves again.
00:13:37 (Alastair)
But also, if you... If you talk about timing not being right on those first two ideas, actually, timing on this one was perfect because it was in the start of COVID when basically the blueprint on office space was thrown up in the air.
00:13:53 (Laura)
Yeah.
00:13:53 (Alastair)
And there was a, you know, some companies may always have had a hybrid solution or some element of that, but the whole country needed to move to something different. The timing worked perfectly then.
00:14:08 (Laura)
Yeah. And it's been really interesting because we interviewed loads of customers before we even built the website, and we've kind of revisited a lot of those since. And it's so interesting because I've got the notes from that initial conversation, and then you look at the notes about what they're actually doing now and how people think about workspaces really evolved over that three year period. It's kind of, yeah, and it's still changing, I think. I don't think it's fixed yet.
00:14:35 (Alastair)
So it sounds like you went about it the right way and did some research, actual user research, before you built anything, and way before you built any proper code, you built a website. And I almost liken it to a duck, where everything on the surface looks perfect, but the duck’s little legs are going ten to the dozen underneath the water, which is effectively what you're ‘tech’ inverted commas, your back office was doing to try and find these deals. But it sounds like you actually went through this process properly and did a bunch of research. Can you talk us a little bit more around kind of some of the other steps you did along that in order to validate the idea.
00:15:17 (Laura)
But despite doing all of that, I still feel like we've pivoted a lot from the original model. So I think it is one of those things.
00:15:24 (Alastair)
But it's still got you here because it's got you some initial capital, initial traction, initial conversations.
00:15:30 (Laura)
Yeah. And it's got us working with all of these different office providers. A lot of the customers that used us for kind of on demand workspace when all of the offices are closed, then ended up getting offices with us. So it was 100% all things that were worth doing. But I think it is also worth saying, you know, don't be too welded to your idea because you need to adapt and change. Like, I don't think that making bookings in coffee shops was ever the right answer, but it was the solution that got us to where we are now, if that makes sense.
00:16:02 (Alastair)
Yeah. Yeah, I do. I do. So you built this MVP on Squarespace or a similar kind of front end website, and then did the manual work in the background? How long did that go, and what was the thinking behind that? Was it, we need to close 50 deals on this, and then we've proved our thesis? Or kind of, what was the validation there? Or was it just a means to get some traction? Or what was the thinking behind that?
00:16:32 (Laura)
So Jules is a terrifying person that she had built the website, I would say, within the day of us having the conversation, and probably already spoken to about 100 people within the week. So she's kind of a bit of a machine with stuff like that. And that was very helpful in that you started to realise that the concept had legs quite quickly. So I think it's not being scared to put things out there really quickly. Like, if it had been left to me, if I'm honest, it would have been way slower. I would have faffed around trying to come up with perfect interview questions or, like, build the perfect website. Whereas actually, what we did was something really basic in front of people quickly and conversations where you quickly kind of worked out which companies might use this and then which companies actually did use it.
00:17:23 (Alastair)
And actually, it brings me on to an interesting question. So, obviously, your background is finance and accounting, big four. And you say you kind of take a long time to get the questions right, whereas Jules would just run at it. And so when you look at cofounders, they bring complimentary skills most of the time. Jules is your co-founders background, and how did you complement each other in the skill sets that you have?
00:17:51 (Laura)
Jules kind of leads up our sales and marketing side. So she used to kind of do SME acquisition at Soldo, which is like another B2B. And I think that's always been really helpful in that it's very clear that our roles are separate. You know, she does that sales, outreach, growth side of it, and I do kind of all the operations, finance, HR, and she hurries me up and I slow her down, if that makes sense. So I'll be the one checking things, and she'll be the one being like, this needs to go today, and that really works well for us. So I think we're really lucky in that we've got quite a balance of different skills, but also that we've been friends for so long that we can be quite horrible to each other without, like, taking it personally, you know, whereas I think that would have been harder if we had gone into kind of, you know, one of those programs where they match you with the founder. I think me and Jules can be very honest with each other and just move on quickly, and that's worked well for us. So I think the relationship as well is important if you are kind of opposite ends of the spectrum, because, yeah.
00:18:59 (Alastair)
Yeah, that is quite interesting, isn't it. So the co-founder of a relationship is, in itself is quite an interesting one. But I think you're talking. You're basically describing an element of a very, very trusted and deep relationship there where you can be honest without things festering and just call a spade a spade, I'm assuming, and then move on. And that in itself means that actually the business benefits and the team benefits and the customers benefit from that awareness of each other and each other's styles and…
00:19:35 (Laura)
And I'm a big believer in kind of constant, honest feedback. And I think the fact that, like, people will see me criticise Jules, and Jules criticise me, and it us take it kind of on the chin and move on. I think that's quite helpful in that people realise that it's not just, like, a personal thing that you're getting feedback on this. It's everyone feedbacks on everything. And that's how the culture should be, it's constantly learning and iterating.
00:20:00 (Alastair)
Do you guys have a shareholders agreement in place?
00:20:02 (Laura)
No, I don't think we do.
00:20:05 (Alastair)
It's one of my favourite questions.
00:20:07 (Laura)
We literally got the standard one. I remember getting some advice about it at the time, and we both were. Yeah, I think maybe a bit naively, this is a problem for another day.
00:20:19 (Alastair)
Keeps going to the bottom of the very long to do list. So you've kind of got this website. You've proved that Jules is kind of getting 100 conversations a day. Proved this model. Where'd you go then? After kind of this website and doing it manually? How do you then get into building the technology with Michelle or building new technology with Michelle and kind of moving forward into, hey, this is a product now, and we're building a brand and a business, and we need to fund it, and we need to leave our jobs and focus on this 100%.
00:20:53 (Laura)
So we were both quite lucky and that our jobs were both quite supportive. So Jules's job let her go part time.
00:21:00 (Alastair)
So working on both businesses at the same time?
00:21:02 (Laura)
Yeah, okay. And we kind of just decided how much money we were willing to both put in. So kind of, like a couple of grand, see if we can get this to work, otherwise, move on with our lives.
00:21:15 (Alastair)
Onto the next idea…
00:21:17 (Laura)
Yeah. So we kind of agreed, you know, what are the things that we need to achieve? How much money are you willing to put in? At what point are we willing to quit our jobs? So I quit my job first. Jules went part time for longer. So it was all kind of getting it to work for both of us. We were quite lucky in that we won an Innovate UK grant, which helped us build out the product.
00:21:38 (Alastair)
And at this time, were you taking any money? You mentioned you put a bit of money into the business, but you win a grant. Were you taking money? So you're full time, Jules is part time. Are you taking money out the business, or is it all kind of working for… working for the valuation in the future?
00:21:55 (Laura)
It was working for the valuation, I think. But there was also like, we're going to do this for a set amount of time, and if it doesn't work, it doesn't work. So, yeah, I think there's always going to be an element of risk, and you've just got to be very clear with yourself at what point the cut off is, because it's quite easy to look back and be like, oh gosh, I've done…
00:22:15 (Alastair)
Five years have gone by. Yeah, exactly. And did you put milestones in at that point as well and say, okay, in three months or six months, or nine months, twelve months, we want to have achieved this, and if not, then actually that's it, we can it?
00:22:29 (Laura)
Yeah, so we had kind of revenue milestones. We knew that we needed investment, so it was kind of a bit of a milestone time scale on that as well. And I think part of it was, yeah, we wanted to hire Michelle full time and we needed money to do that as well, so, yeah.
00:22:47 (Alastair)
And so you mentioned this Innovate grant. So that was before or after you quit your job?
00:22:54 (Laura)
I can't remember the timelines. I think after, yeah.
00:22:59 (Alastair)
But I guess at the time of quitting, you were kind of like, okay, we've got a bit of validation in the market, we're gonna seek funding or we're gonna get a grant, or, hey, it will be okay, we'll figure out this parachute on the way down, kind of thing.
00:23:12 (Laura)
I think we had enough customers lined up that we knew it wasn't a complete… we knew we had something. Whether we had a business that was going to be profitable and scalable forever was kind of a different question. But we did know that we had enough money coming in that it wasn't a zero business at that point.
00:23:33 (Alastair)
So tell me a bit about this Innovate grant, because I think a lot of start-ups we talked to, they raise equity funding, obviously that's been a bit dry more recently, but very few, unless they're in the… unless they're in quantum computing or some sort of very theoretical pharma world, very few of them actually go for grants. So I think I'm wondering whether they're not that well known, that well understood. What made it… you're obviously a chartered accountant, you've got an awareness of other forms of funding available, but what made you aware of… Was it an Innovate grant you said?
00:24:15 (Laura)
Yeah, they had a COVID related one, so for us it was… we were… when you read through the competition criteria, we were a good match for it. We were trying to get people into hospitality spaces, we were trying to get businesses to put money into hospitality spaces, which was a massive issue at the time, so we were a good match for it. But I would always say, like, check those websites. There are more grants available than I think people realise, and a lot of them are really aimed at that quite early stage, and I think maybe earlier than people realise.
00:24:49 (Alastair)
And just talk us, very high level through the process, or share your experience of the process. I'm assuming you did it yourself, or did you work with a third-party kind of grant applicant? You do yourself, yeah. So talk through the process there of how you went about doing that grant.
00:25:06 (Laura)
So, I mean, it's quite a detailed application form, I would always say it's a bit like writing a GCSE paper in that they really mark you on, like, every question. You really have to make sure that you've answered every question. And I think some people get so hung up on trying to really sell something that they actually forget that they're not answering the question. Whereas actually the most important thing that you do is make sure that, yeah, everything that they've actually asked you for, you answer, because there's a lot of stuff in there that's around, like diversity and inclusion and all of that type of thing, which I think when you're a small scale start-up, it's quite easy to say, oh, we're so small that it doesn't matter. Whereas actually you should be thinking about those things and answering the question properly.
00:25:55 (Alastair)
How long did the process take you to from start to finish? Well, I'd probably say, like, from start to submission to confirmation to pay out, or roughly, just to give people a feel of how long it takes and the expectation.
00:26:11 (Laura)
It really depends on… I mean, they're all listed on the website, but it really depends. Cause you can, the cut-off date, you can submit way before the cut-off date. Normally you could submit six months before and then I think they spend three months maybe judging and then the money comes as you achieve the project goals.
00:26:28 (Alastair)
It's quite a… I mean, I wonder if a lot of people I know someone that's just applied recently and actually been successful as well. Bizarrely, also an ex chartered account or tax advisor.
00:26:40 (Laura)
But there is financial information. So I think it could be quite hard if you were, you didn't have an accountancy background to fulfil what you need to do for the grant without it becoming quite expensive.
00:26:52 (Alastair)
I think a lot of people look at it and think it's onerous and what's my chance of success. Therefore I'll put, I'll put my effort somewhere else to do it.
00:26:58 (Laura)
I would say at the moment it's probably easier than angel.
00:27:02 (Alastair)
There we go. You heard it first. Yeah. Easier to get those grants. So you got a grant, which was how much? About 60 or so, 60k. Which lasted you I guess, you know, gave you runway for six months or…
00:27:15 (Laura)
Yeah, we fundraised as well. So then that was just purely for like tech development. So we fundraised as well, which then helped us to build kind of a team of CS, marketing and everything else.
00:27:28 (Alastair)
Yeah. So how many people are you today with?
00:27:31 (Laura)
Ten people.
00:27:31 (Alastair)
Ten people, cool. And so the fundraising, I want to dig into your fundraising journey a little bit because you've done a couple of, you did a round and then you did a top up to that as well, I think, didn't you? So tell us about your experiences on that. I mean, you've obviously got working in start-up and exposure to start-ups and what good decks look like and how to critique them and that kind of thing, right. But how easy or how hard did you find it? Bearing in mind this is going back before the dryness that we have right now.
00:28:01 (Laura)
So the advice we got, which I think is good advice, is speak to other start-ups and find out who their original investors are because the ones that you find online tend to be really well publicised and they're probably receiving a million emails a day. And actually there's a lot more angel investors out there. One thing I think I've definitely noticed this is start-ups come to me saying, can you introduce me to your angels? And actually it's quite a big ask because your angel investors, if they give money to these people, have less money to give to your start-up. If that start-up behaves badly, that reflects really badly on you. So you have to build up the trust of that start-up, I would argue, and this is definitely what we felt to even get that introduction. And I think sometimes people kind of want to skip that step. But actually if you can get a really nice warm introduction from a start-up that, that they already invest in, that is probably the best route and that's where we got our funding from.
00:29:10 (Alastair)
So how did you go about building. So I guess there's two questions, but maybe a similar answer. How did you go about building up the credibility in the eyes of fellow founders? And if someone came to you today, what sort of “ due diligence” would you do on them before you're comfortable enough to introduce them to an investor?
00:29:30 (Laura)
I think, I know it's cringe because a lot of people say this, but going to advice, not for money, and I think genuinely go to people for advice, go to other start-ups, ask them for advice on like whether on your pitch deck, on your pitch, all of that type of stuff. Most people will be willing to give up the time to have those conversations with you and, you know, take them as that, take them as advice conversations. But often out of that conversation you might get an introduction or you might actually get an investment. One of those conversations turned into an investment for us and it wasn't what we were expecting or planning from that conversation.
00:30:05 (Alastair)
When you're asking for advice, yeah, it's really interesting. We had Audrey Miller from Tapestry VC on a couple of episodes ago, and her one piece of advice was, you ask for money, you'll get advice. Ask for advice, you'll get money exactly the same. That's super interesting.
00:30:22 (Laura)
Just because people get so bored of being asked for money all the time, and you see that if you go to some of these investor events, they're kind of swarmed. So actually asking sensible questions and coming across as an interesting person, I think is more important.
00:30:39 (Alastair)
What was the most eye-opening question that you weren't prepared for as part of the investment process? Or not necessarily you weren't prepared for exactly, leading to a bit of exposure. But yeah, the most kind of the question you weren't expecting the most that came through.
00:30:58 (Laura)
I wouldn't say it was a question, but I would say the interest in us as people was much higher on the agenda than necessarily the forecast or the metrics, especially at that like first stage. And interestingly, like our biggest investor, now that the business is completely pivoted, he's like, yeah, I didn't really believe in the original business thesis. I just thought you girls were really good. Obviously when you're out pitching, that isn't what you're thinking. People are judging, whereas actually they are. So, yeah, I think that was the thing that surprised me the most, is how much people are kind of investing in people rather than investing in a business idea.
00:31:47 (Alastair)
It is interesting to reflect on that a little bit more, because if you have a couple of co-founders pitching, the belief in their business model and the plan they put in place is immense, and if an investor sat opposite going, yeah, okay, maybe this business is there, but actually you two have something. You three or however many years, you actually have something. And whether it's this or another business, if I give you money, I have the confidence that you will create something from nothing, stroke money, stroke ideas, stroke the team. That's actually quite interesting to reflect on, I think, isn't it? Because people do. I think co-founders, founders labor a lot on the original business model. And some of the best businesses have pivoted, I guess, haven't they?
00:32:41 (Laura)
Yeah. Well, I think if you start looking into it, most businesses have pivoted a lot. And it is interesting as well, because some investors that we spoke to, they would look at your forecast or your business model, and for some reason within that, either you're not ambitious enough or you're too ambitious, they rule you out completely. It is quite difficult to also, there are those types of people as well that you're dealing with. It's a bit of a minefield.
00:33:12 (Alastair)
Yeah. I think the slack one's the one that sticks to my mind for a major pivot where they were actually building a game.
00:33:19 (Laura)
Yeah.
00:33:19 (Alastair)
And they decided the game or the technology would never be fast enough to process the game and ultimately canned it. And at the side, they built this messaging.
00:33:28 (Laura)
Yeah.
00:33:28 (Alastair)
It was just technology internally and thought, hey, this has legs, you know, the rest is history and we all use it. But I think it's a great example of how you can pivot from one extreme to another. So you're out there, you're pitching for investment. You get an angel syndicate or a bunch of angels that invest into you. You get some follow on funding from the same angels. And at that time, you hire a team, you're building two sides of this market. At that point, are you building a board, a management team? What does governance look like at that early stage with Tally?
00:34:13 (Laura)
So the advice we got around governance was so mixed, there's a lot of people that are, and this is kind of the camp that we've fallen into, which like, you don't want a board, you don't want to have the admin of doing all of this extra reporting. So just keep it simple. Report quarterly unless there's a real desire from your investors otherwise. So that's kind of where we've ended up in external reporting. We report quarterly. Those reports are pretty detailed, but we don't have a kind of board or anything in place. I think if we were going to put a board in place, like we really have to trust those people and, you know, believe that they are adding skills that we don't have in terms of internally. We kind of have our leadership team meetings and that's just three of us at the moment. So that's just me, Jules and our Tech Lead, Michelle. But then weekly we have a meeting with the team where we go through kind of key metrics, key KPI's for every single team. And then we also do issues and blockers and then try to resolve them as a team. And it was actually interesting because we added the issues blockers bit probably about two months ago, and we just did our employee feedback. And that was one of the things that came out. By far the most positive was I really like being able to share my problems with the rest of the team and that it feels like everyone's collaborating and that type of thing. So I think that's worked really well for us as well.
00:35:47 (Alastair)
Yeah, there's a few things in there. I definitely want to dig in, definitely want to dig in on metrics, but just back on the board conversation, I think, you know, if you have to have monthly sit downs and there's a time and a place and a stage of a life cycle of a business, and right now, I guess you just want to be fluid and you just want to go, like go at it rather than be stifled by too much governance. And I think one thing you said was adding value and skills that you don't have. And I think that's where some investors might want to have the governance and the control. Maybe not at that stage, but I think from a founder's perspective, there's always who can help me, either open doors, who've seen this before, who can help solve a problem. And if that's not needed at that point, then it's a case of arm's length and as and when they're needed.
00:36:42 (Laura)
Some of the investors that we spoke to originally, some of the reporting and things that they wanted to do and sitting on the board, we like genuinely didn't take the money because we didn't think that we felt like it was going to become a nightmare. And I've definitely seen that with previous start-ups where they've ended up having to kind of buy people out all of that type of thing, because just the cost of having to deal with all of that person's requests when they've invested a relatively small amount in your business just doesn't have payback. So I think, do be a bit careful with that because it's easy to say, oh, they want to invest, but actually someone's investing £10,000 and they require a lot of you, and in three year’s time you're going to regret taking that money.
00:37:24 (Alastair)
Be careful who you get married to. I guess it's the principle there. You mentioned metrics before. Can you talk to us? What are your two-sided marketplace? What are the metrics you monitor in your two-sided marketplace?
00:37:41 (Laura)
So I think, I mean, it's to be really accountancy about it, but I think the obvious one is kind of like CAC versus lifetime value. And so that is the cost of acquiring a customer versus the lifetime value of a customer. And it's super important to kind of look at those together. And it's really hard to get lifetime value right at the beginning.
00:38:04 (Alastair)
Yeah, yeah. Cause you're extrapolating or you're…
00:38:05 (Laura)
Yeah, you're extrapolating or you're guessing. And especially for us, where the business changed, so people that were regularly booking on demand workspace and hot desks got offices. So our lifetime values…
00:38:19 (Alastair)
And did that change from an individual customer to now a business? Sorry, initially, was it an individual customer that said, hey, I just need out my home, I'm going to find a spa, I'm going to find a coffee shop, and I'm going to sit down in it. Or has it always been business to business?
00:38:34 (Laura)
So right at the very start, we did try and do some B2C. We just found that it didn't work. And I think part of that is employees expect their companies to pay for their workspace. So there aren't that many people that are willing to pay a huge amount. And most freelancers, they're happy to go and sit in a cafe, and then they don't really want to pay to sit in a cafe. So it was a different market. So I would say that was one of the things that we found out from interviews and stuff. Very, very quickly we became B2B. So yeah, we used to have and we still do have a lot of these remote companies. They've got employees all over the UK and they let their employees book hot desks and things. But quite a lot of those companies came to us and were like, you know, we've got twelve people in London, we also need an office. So they kind of turned into different types of customers, which made lifetime values all very complicated.
00:39:33 (Alastair)
So back on the LTV to CAC ratio. So you got customer acquisition cost, which is probably quite easy. What, do you use a CRM to track that, or is it a system?
00:39:39 (Laura)
You say it's easy to track. But one of the things, when…
00:39:47 (Alastair)
I’m comparing it to the complexity of lifetime value, so relatively it's the easier of the two.
00:39:52 (Laura)
But I think it's also important to do kind of fully loaded CACs.
00:39:56 (Alastair)
So just explain what you mean by fully loaded.
00:39:56 (Laura)
Fully loaded CAC. I mean it would have everything in it, so it would have your salesperson cost. I mean really trying to events all of that stuff that maybe might not be a directly attributable cost, but actually does feed into the overall cost of acquiring a customer. And once you start to bake that in, we quickly realised that for our on-demand product, we couldn't really get payback if we had salespeople selling that.
00:40:25 (Alastair)
So you introduced another, you've introduced another metric here, which is actually super. No, no, it's cool. It's good, it's good. I could talk about these two metrics till the cows come home, right? So I think that there's a couple of things you introduce payback, which I think when you look at LTV and CAC ratio is great, but you've actually also got to take it into account with payback or the amount of money you have in the bank. Because if your LTV to CAC ratio could be brilliant, but you could run out of money because your payback's too long and you don't have enough money in the bank. But before we get to that one, if we just take it back to the CAC again, I was the one that said it was easy. It's obviously not. But CAC in a B2B business can actually span multiple months. So how did you calculate your customer acquisition cost when you might be having a salesperson or a BDM having a conversation in month one, a little bit of a conversation in month two, and then coming to an event, and then month three is when they convert. Because obviously you've got longer lead times because people are, their offices are maybe expired, their leases are expiring, so you've got prolonged period of having that customer interaction. How do you cope with that?
00:41:28 (Laura)
I think also the best is the enemy of the good with some of this stuff so…
00:41:32 (Alastair)
Is that Jules?
00:41:36 (Laura)
No, for me, for some of this stuff, I do think when you're modelling this out, how many deals can you expect a salesperson to close each month? What's realistic? How many have they've done? What's the average value of each of those deals? So kind of looking at it that way, you can try and map back like a perfect one. But I think when you're the size we are, and things change so quickly, having a kind of proxy is actually, you know, as long as it's sensible and actually takes all the costs into account. That's…
00:42:09 (Alastair)
So your costs are coming from your finance system then, by the sense of it, right, Xero or a different one, and then you're like, so your lifetime value, what do you look at? A lifetime of a customer?
00:42:21 (Laura)
Ours is very difficult because the on demand side, our churn, is incredibly low, but our frequency can be quite low as well. So some of these customers that we did our MVP testing with and used our rubbish Squarespace are still using us today, I think most of them, but they're probably using us once a quarter or something. So actually, the frequency has gone down a lot, but our churn on the customers is quite low. So that has been really difficult to look at on the on-demand side, whereas for the full time office side, it's relatively straightforward because you kind of know what the amount is upfront.
00:43:01 (Alastair)
So a lot of companies cap their LTV. What they say is, oh, our LTV to CAC ratio, our 36 month LTV to CAC ratio is this or our 24 month… What do you look at as the. This is our cause, you know, LTV, there'll be a tale that goes on forever more. It should be a very, very long and small tale. Do you go, oh, we cap it at 36 months, and then this is a comparable metric across other start-ups?
00:43:30 (Laura)
It's hard because our usage has changed so much and we haven't been around for, you know, we're not talking about a company that's been here for ten years. You know, our experience is relatively small, so we tend to look more at our current numbers and how our clients are using us now, because it's different from how they used to use us and then kind of take about 18 months
00:43:51 (Alastair)
And you extrapolate going forward as well. Take “liberties” and go, yeah, from, you know, what month are we in now? From September, October, our 36 month LTV to CAC ratio will be this?
00:44:05 (Laura)
Not really. I mean, the majority of our revenue now comes from full time officers. So that on demand element, we don't spend like, hours trying to calculate that and extrapolate it. And to be honest, it's often a very good lead generation for our full-time officers as well.
00:44:21 (Alastair)
And what do you track these types of interactions and LTV in? Do you use a CRM system that tracks it, or how are you getting the raw data behind it?
00:44:33 (Laura)
So we use…
00:44:36 (Alastair)
Or is it your own port, your own platform?
00:44:38 (Laura)
Yes, we've got our own platform. We use a mix panel to kind of do the transactional type stuff, and that also holds the financial information as well. So we run a lot of reporting from that, and then we have a system called Trevor, and we use that as well. So there's quite a lot of things going on. And then we obviously have Xero for finance.
00:44:59 (Alastair)
And then… So you mentioned payback. Payback being the other very important metric is that one that you're like, is it up there with LTV to CAC for you? Or which other metrics are up there as kind of the second or on par with?
00:45:15 (Laura)
I think GMV is super important because it's actually like how much value we provide. So GMV is the amount, the full amount that is transacted through our platform. And that's obviously super important to how important we are to our suppliers. Like, we take a tiny margin versus what we give them. So it's super important for us to know what we're giving them.
00:45:38 (Alastair)
GMV standing for gross merchandise value or volume, I think it's value. I've seen it interchangeable. But essentially, the gross that you're selling on behalf of that side of your market, the landlord or the property side of the market, and you take a take rate from that, which is essentially your revenue.
00:45:55 (Laura)
Yeah, so obviously interested in that. Liquidity on both sides of the marketplace. So we track active customers and then we track active venues, because obviously, if all of your customers are just going to one venue, then your value as a marketplace is pretty small. So we're kind of interested in keeping that balance and making sure that there's liquidity on both sides. What else do we look at? I think one of the key things is funnel conversion as well. So drop offs at different stages of the funnel and then focusing on making sure that we improve the conversion at the point which is causing the biggest drop off, I guess yeah.
00:46:38 (Alastair)
How do you go about… so if you look at that liquidity on either side of the market and not monopolising one or the other, how do you go about what's like, do you look at a ratio between the two of them? Do you look at volumes between the two? Like, how do you go about going, oh, we're in perfect harmony, or perfect equilibrium between the two?
00:46:58 (Laura)
I don't think we think there's a perfect harmony, but we kind of know that it works as it is. So we kind of try to keep that ratio similar. I guess for us, it's so location specific. So if you've got someone in Salisbury and you don't have a workspace for them in Salisbury, they're never going to use the platform. So what we try to do is really make sure that when we onboard our customers, we find out where their employees are and where they want to work, and that's when we go on the onboarding because we look for gaps. So it's quite targeted in kind of location specific. Now, we cover pretty much the whole of the UK, so it's a lot easier. But at the beginning, that was the little legs running up underneath. It would be, oh, we've got three people in Birmingham. Okay, that's cool. Every workspace in Birmingham. So, yeah, that was the bit that was always quite hard, was trying to matching actually on a location basis. That was similar in my old company as well. It wasn't necessarily...
00:48:01 (Alastair)
So you came in with that experience of, you need to have the harmony on both sides. I love marketplaces. I think they're brilliant. And if you get that equilibrium, or however it is, whether it's across the country or different types, whatever it might be, in that market, in that marketplace, I think when you get that flywheel, I think it's a self-propelling business model. Once you've got enough customers and enough, the whole thing improves, but very, very difficult to ignite it and get it started. From day one, you talked about investment. Tell me a little bit about how you go about building… Well, first of all, what is a two-sided marketplace model and what's it cover and how do you go about building one? Sorry, a few questions in there, but maybe we'll take it one step at a time. What is a two-sided marketplace model?
00:49:04 (Laura)
In terms of financial model?
00:49:06 (Alastair)
Yeah, in terms of financial model.
00:49:07 (Laura)
So, I mean, it's a normal financial model. I think one of the key things to work out when you're doing a two-sided marketplace is normally one side of the marketplace is much harder than the other in my experience anyway. And that's normally kind of your limiting factor. So getting a clear view on which side that is super important and how you're going to gain that supply. So for us, it's salespeople and the majority of, you know, what leads our growth is a factor of salespeople and getting them to success. But then you also have to look at the other side and make sure that you are acquiring venues in line with that. So it makes it more complicated. But I think the same root start in that, find out the key kind of drivers of what's driving your model and then make sure that you are building those things in and building the right costs in.
00:50:06 (Alastair)
Yeah. And in your experience of building one for, I guess for Florence and for yourself, I'm assuming you were in…
00:50:12 (Laura)
Problem with both of mine is we also have multiple products, so you end up with a reel.
00:50:18 (Alastair)
Yeah. Can you give a feel for how long and how in depth it is to build a model and the scrutiny that needs that you need to do? And also what's the… Lots of multiple questions here. I shouldn't be throwing multiple questions at you, but. And what tool did you build these in?
00:50:35 (Laura)
So I think it depends on the stage that you are at. I have definitely seen start-ups that have like no revenue with incredibly complicated models and I mean, investors care that you have built something that has legs, but the reality is they're going to sense check this in a very, very simplistic way, which is like.
00:50:57 (Alastair)
And that's its seed stage?
00:50:58 (Laura)
Yeah. Whereas once you've got revenue and traction, you've actually got things that they can look back on and say, okay, well you've said a salesperson can onboard three companies, but historically they've onboarded zero. Once you start to get those numbers, then it becomes much harder to have a model that is purely theoretical. So I think there are two different stages. Once you've got revenue and traction, then you really need to look at your previous figures and make sure that the model is based on those. Whereas when you're doing your theoretical, it's almost taking that step back and saying, if I plotted this out on a scrap of napkin or whatever, would the key figures add up? And if it doesn't, then that's the kind of check that the investor's going to do on it.
00:51:46 (Alastair)
You mentioned strategic drivers, or I think that's the word you mentioned, or it might be my interpretation of the word you used, but when you said it, that's why I heard strategic drivers, can you talk about those? Because quite often in models, I don't always see, maybe use the word drivers, actually. I don't always see drivers put in appropriately, and compounding drivers. Can you give a bit of experience around how you've built compounding drivers in your two-sided marketplace? Do you know what I mean by that? Or explain? So you talk about BDM, right? And so if a BDM can have this many conversations and he or she has this conversion rate and except on, on, on to get to, oh, we've onboarded five new properties. That's, that's what, that's what I mean.
00:52:38 (Laura)
Fine. So, yeah, I guess for us, compounding drivers, yeah, salespeople. But it's also looking at kind of other things. It's kind of, if you take a step back and look at where your leads come from and where you've got these customers, you can normally plot out, like, how many were inbound, how many were referrals, how many are repeat customers, how many were, like, pure sales outbound outreach. And once you start to plot those numbers out and get some kind of high-level metrics, then you can start saying, okay, if I invest this much in marketing, I can expect this many leads from that, if I invest this much in salespeople… And then I think there's also doing the kind of sense check on the top of that, because, for example, there are certain things that are always going to be capped at a certain level. Like, I think there's a lot of talk around kind of like paid marketing. You know, when you do Google Ads, it becomes more expensive as you scale it up. And I think you need to recognise saturating the market. Yeah, you start to saturate. So it probably isn't going to be a problem in your super early stage fundraising, but it is worth thinking about, like, do I have enough different drivers in here and that one of them won't become saturated and kind of like, ruin this model? Or if one goes wrong, have I got enough other levers that I can pull? So we used to do really well out of Google Ads, and it kind of died of death for us. So we had to have other, you know, if that had our pure acquisition channel, that would have been really, really difficult. But, you know, it was one of four or five, so it was fine.
00:54:16 (Alastair)
I quite, quite often see in start-ups, I see one of two extremes. I see finance shut away to build a model, and I see operations trying their best to build a model and actually they have some sort of weird hybrid between a cash flow and a P&L, it just doesn't work. You're obviously one in the same, given the fact you're COO and you've got finance background and hat. But how do you, in your business, how do you sit down and brainstorm the start of kind of the modelling journey between finance and operations? Bearing in mind you've got two hats on, how do you bring different parts of the business into it so you get the drivers right?
00:54:59 (Laura)
I think in Tally Workspace it's easy, because I know the business so well that there isn't a huge amount of conflict in what I want to put in. Or I think one of the useful things is to use a forecasting tool because it makes it much easier. Or if you're good at Excel, where you can just switch things on and off so, you know, for different scenarios. Yeah. So you can be like six salespeople, you know, and then if someone's like, well, let's add ten, then you kind of ask the question like, do you really think you can hire ten people this quarter and get them up to success and like, what's going to be? I guess one of the other key things that investors do look at a lot is factoring in things like ramp up of salespeople.
00:55:43 (Alastair)
Yeah. There's a lead time until…
00:55:44 (Laura)
There's a lead time until they become. And how many salespeople you actually accept expect to succeed. You should be factoring in the fact that a lot of salespeople won't succeed, as bleak as that is.
00:55:56 (Alastair)
So there's a churn there as well.
00:55:57 (Laura)
Yeah.
00:55:58 (Alastair)
And what do you build your model in?
00:56:00 (Laura)
I used to build them, Excel. I built the most recent one in Fathom. And I think there's advantages and disadvantages to both, because the good thing about Excel is you're so in control of it that an investor asks you to change this or to send how this was calculated, and it's super easy, whereas when you send it from a forecasting tool, the slight problem is that then they want to see kind of the underlying details. You almost end up rebuilding some of it in Excel to just show, I mean, that might be our investors, but they didn't want to go into the forecasting tool, which did mean that I had to kind of pull off micro forecasts and stuff.
00:56:41 (Alastair)
I see that all the time where, one, they're not comfortable in that technology, and two, they want to kick the tires and apply their own sensitivities to the model. I've even seen it where a model's been built in Google… in sheets and investors gone. No, no, we want this in Excel. It needs to be downloaded and the conversion isn't always there. So some of it's had to be rebuilt in Excel, but...
00:57:06 (Laura)
You'll never know until you through the process.
00:57:07 (Alastair)
That's it unfortunately, there's still a place for Excel in model building at the moment I think, unfortunately. What's been the biggest challenge since you've kind of left finance world, left the comfort of a big four, left the finance world, left a start-up, and now on your own, what's been the biggest challenge that you've experienced?
00:57:30 (Laura)
I think there's an element of resilience. You really care about your team. Like, you hire these people that you think are the best at their job. Like, you nurture them, you train them, and then things are tough and you miss targets, and it's trying, you know, and they want to pay rise, and, you know, it's really difficult to fundraise at the moment. And so I think that's been the hardest thing for me, is kind of like not being able to necessarily give people always what they want, even though sometimes that's fine if they don't deserve it, but when you genuinely believe that they deserve it as well, and you have to do it later than you wanted or whatever. So I think it's kind of like having that you care about your team, and so sometimes it's letting them down, I think is kind of the hardest thing.
00:58:21 (Alastair)
Yeah, it's difficult. And what does success look like for Tally Workspace?
00:58:26 (Laura)
I would love for the business to be a respected brand. I would love for people to be like, oh, my gosh, you started Tally Workspace. I think sometimes when you meet founders at these events and they tell you the business, they found it, and you are like, wow, I would love to be in a position that Tally Workspace was one of those businesses. I think, in a similar way to what I said about employees, I would love for the business to be exited at such a high valuation that, you know, it didn't just have a material impact on me and Jules's life, but everyone who'd worked for us could walk away with a deposit for a house or whatever, that would be great.
00:59:06 (Alastair)
Yeah. You mentioned about having a well-known brand and people kind of knowing… What the building blocks, if you break that down and say, okay, that's success, what are the kind of tangible things behind that, as well as kind of a well-known brand, what would you say are the kind of the success criteria to having a well-known brand.
00:59:27 (Laura)
I think for me, although I say brand, I think it is financial success and actually having a company that makes lots of money annexed for a decent valuation. I'm a finance person, I am quite... But I think there's also a reputation thing. You want a brand that people associate with like having done a good job and like respect rather than, you know, you see all of these things in the news about things companies have done, you know, employing slaves in other countries, you know, I don't want any of that. I think it's something a brand that's kind of like respected in the space and has done so in a… in a good way.
01:00:09 (Alastair)
Yeah, I find it, I find it, I find it pretty interesting. You know, as a founder myself, when you build something from nothing, like the power of building a brand from nothing, that people understand, know and respect is really powerful. And then lastly, Laura, what would be the one piece of advice you give to other founders?
01:00:33 (Laura)
I think don't be scared to try things. I think it's very easy to, you know, let your own anxiety stop you doing something when actually, normally if you go and speak to people, you ask people questions, people are much more willing to help you. And when you put something out in the market, it might fail. And that's absolutely fine.
01:00:53 (Alastair)
Yeah, cool. Great advice. And where can people find you if they want to? Well, where can they find Tally and where they can find you?
01:01:00 (Laura)
So we are tallyworkspace.com. Yeah, find us there or find me on LinkedIn.
01:01:06 (Alastair)
Perfect. Laura, thanks so much for doing this.
01:01:08 (Laura)
Thanks, it's been lovely.