Andrew Davies is the CMO of Paddle, a payments infrastructure platform for high-growth SaaS companies serving over 3000 customers. He has more than 20 years of experience in start-ups ranging from leading global demand, advisory and consultancy, and even teaching.
How I Work, Episode 23 with Andrew Davies (Paddle)
Andrew joins Josh Becerra in episode 23 of How I Work to discuss his entrepreneurial journey and the failures, acquisitions, and unicorns that came with it. He shares the resources that helped him succeed including Patrick Lencioni’s book; “The Five Dysfunctions of a Team.” Plus:
Learn more about Andrew Davies and Paddle: https://www.paddle.com/
Josh Becerra: Hi, everybody. This is Josh Becerra from Augurian. This is episode 23 of How I Work. Today, I have the pleasure of welcoming Andrew Davies. Andrew has over 20 plus years of experience working in startups, both as a founder and an executive. He's done everything from bootstrap bringing startups to raising 200 million at a 1.4 billion valuation in series D. That's amazing.
Currently, Andrew is the CMO of Paddle, a payments infrastructure platform for high-growth SaaS companies serving over 3000 customers. Andrew also advises SaaS scale-ups and sits on a board of Ninety, an agile digital transformation consultancy serving the insurance industry and giving 90% of its distributable profits to alleviate global poverty. Andrew, that's pretty awesome. Thank you so much for being with us today.
Andrew Davies: Oh, total pleasure, Josh. Thanks for having me.
Josh: Yes. This idea of being in startups that were both bootstrap all the way to where you're got a unicorn over a billion dollar valuation, that's quite a wide variety of experiences. Can you just tell us a little bit about how you got into software as a service and a little bit of that story?
Andrew: Sure thing and as we were just talking about before we started recording, these journeys make much more sense in hindsight than they do on the journey, and as you are passing that route and there'll certainly not much of a plan behind it. This is one of those cases I think Winston Churchill is quoted as saying that success is lurching from one failure to the next with no loss of enthusiasm. It looks good from retrospective and I'm very happy where I am now. There's been lots of failures in lurching from one to the other along the way.
Josh: That sounds very familiar.
Andrew: My entrepreneurial journey started-- [laughs] It does for all of us, except those who are on tech or the front of wide magazines, for them, it's all perfect. [laughs] We started the first business at University. I actually had the privilege of being a scholar with Deloitte Consulting before University. They have this scholarship program, they take you and fund your University degree and you work for them during holidays.
You do a year's worth of work before then and I loved it. I've got friends back from that day 20 years ago. I enjoyed my time with them, I was in Strat consulting and audit for technology media and telecoms companies. My dad's an accountant, it just felt like a very obvious career path and one that would be a bit restrictive and I went to University after that year of experience with one goal, which was to start a business so that I could say no to my Deloitte offer when I finished my graduation.
Josh: Oh, become an accountant?
Andrew: University was-- [laughs] Yes, misplaced confidence of youth. University was trying to start things whilst doing my degree. We started the top-end, women's wear fashion label that ended up in court in our second year, we started a translation business, a web business, and we ended up finishing and graduating with a social media analytics firm. This was in the early days of the Twitter API, and we were building Twitter apps and Facebook apps for large corporations in the UK. As we left university, that was sustainable enough to be a very small starter job for me and my co-founder.
At the same time, I'd met the co-founder of my first SaaS business in my final year and he was doing something that felt it had a lot more lift in it, a lot more growth potential in it in the personalization space. I started that with him. We bombed along for a bunch of years, it ended up being a leading B2B personalization engine called Idio. We were powering the content personalization for Salesforce, IBM, SAP, a whole bunch of other companies on exit. We sold that in December, 2019 and became part of a roll-up backed by a private equity firm called Insight Venture Partners.
We were the first of five acquisitions. We were sell-side once and then buy-side four or five times. I ran global marketing there, so I was co-founder and CMO of our business. Then ran global marketing for this larger software company. That was 1200, 1300 people. During that journey, I also was advising 15 or 16 SaaS businesses through that couple of years on their growth, their ABM, Demand Gen, messaging positioning fundraising.
I love that and actually, Paddle was one of those. They're actually funded by the same VC that backed my business Idio. I knew a few of the people there, jumped in to have a look and helped them out with a few things, fell in love with the business and so joined Paddle at the beginning of 2022, where I am CMO. As you said, we've raised a bunch of money in our series D, we've made a big acquisition a few months ago and I'm pumped to be here as we try and put a dent into the payments infrastructure business.
Josh: It's an amazing story. Like you said, looking back now, it all seems to fit and be perfect and I'm sure your dad is very happy that you didn't become an accountant and just take that Deloitte offer in the end.
Andrew: Just about, I think, he's taken him until very recently to feel that way.
Josh: [chuckles] That's great. One of the things that I read in your bio and we talked a little bit about, is that you really, because of this experience, have had a lot of time leading marketing teams. I'd like to just dive into the topic of marketing teams, it's something that really interests me. When you think about marketing teams, what attributes do you see as the signals for great teams and how they function, or conversely, what are some of the signs of dysfunction that you found in your work?
Andrew: Firstly, I guess let's strip away the word marketing because these things I think are true of any team. I'm a fan of Patrick Lencioni and the Table Group and some of their methodology might well have come across it and have used that in multiple businesses. For those who haven't, if you just Google five dysfunctions of a team, you'll see some good graphics and explainers there.
His research and his practices research talks about how you need trust and on trust, you can build the ability to have conflict rather than artificial harmony and a fear of conflict. On that, you can build commitment which is not ambiguous. On top of that, you hold people to account and you have high standards and on top of that, you have results without care for status or ego.
I think that's how I see the world in that it all starts with trust and it all starts with, do we trust each other to have hard conversations, to have difficult conversations? Do we trust each other to give feedback to ourselves? Do we invite that because we've got those relationships. In terms of signs of teams that feel great or don't feel great or are acting in a high-performance way versus being dysfunctional, I think that the ability to ask questions openly and challenge with empathy are great signs of a high-performing team. I love it when I find ideas that sprout and get nurtured and [unintelligible 00:07:21] without me knowing anything about them, without any top-down input.
Finding stuff that's going on, I didn't initiate it, that's still driving towards the goals of the organization and then the flip side, people leaving suddenly without a conversation as to why, silence in big team meetings, the lack of any fun, the absence of being able to hold people to account. Fundamentally, I guess, the phrase I use for this is I love to be in a place where we can teach the wider team, the rules of the game, so they can go and play it themselves rather than be in a situation where everything has to come top down.
Part of my university, Josh, I was a university for first and third year in the UK and in the US at University of Richmond to Virginia for my second year. I'm going to make a very bad comparison here. You'll hate me for it if you're a US sports fan. Soccer, the proper football that we play over this side of the ball.
Josh: Football, yes
Andrew: Very creative. You have positions, but there's no set plays or very few set plays, it's made up in the moment. When I came to the US and I found American football [unintelligible 00:08:26], the rule book is this thick and the playbook is this thick. If I know as a running back, I can run 150 yards this way and turn 90 degrees and run 30 yards this way, put my hands up and the ball will fall into my hands and I know I've done a good job. I guess not to diss on American football, but I love the ability to teach people the wider rules of the game and allow them to be creative within it rather than everything being run as a play from the top.
Josh: We won't hold your diss on American football against you. It's fine. I will say I do love the comparison. I am also a soccer fan and I played football in my early days. We won't get into that today. I do agree with you that there is a different level of Liberty and I love what you're saying about helping people just understand the rules and then go out and play and be creative.
I also love Patrick Lencioni. If I was in my home office, you'd see that five dysfunctions of a team book sitting on the shelf right behind me. Today, I'm at the office recording. I think that's really true. I think that some of the struggles that I've seen with CMOs or just within organizations, in general, is that you as the CMO might be able to develop that team and give them that level of creativity and and be able to foster what all of it you're talking about.
It's going the opposite direction. Your role within the C-suite, I see a lot of CMOs who are-- There are CFOs sitting in the room and everybody, of course, has an opinion about marketing, even though they aren't trained. Do you have any words of advice for CMOs on how do you get that other team, that first team, that team in that C-suite to really respect your area of expertise, how do you own that? How do you get people to understand that you're not going to be commenting on the chart of accounts and how it should be managed or not? Any advice about the other team, that first team, which would be in the C-suite?
Andrew: I think, firstly, if you have the privilege and the opportunity choosing a team where you know that is valued, to start with, I think is the first step. I think there are a lot of people who take on positions and that is an element of the validation or an element of the job search. They haven't fully gone through, have been allowed to go through.
I was very privileged in this role at Paddle to have met everybody through that advisory work before I was offered a job, and it was a bit of an odd interview process where there wasn't really an interview process because I'd already been doing some work and helping them a little bit. I think, firstly, it picks a team where that counts the chief storyteller is usually the CEO, not the CMO.
Do you have a CEO who wants that, who has that as a clear understanding of what that is, as a clear understanding of marketing? Do you have a CFO who has been in high-growth environments where you do need to spend to get to where you want to go and has an understanding of what those norms and benchmarks are within the industry? I think choosing the right team is first there.
I think a couple of other things that I've found important is there's a challenge of different functions using completely different languages. We find it in the sales and marketing divide with sales talking about opportunities and individuals and marketing, talking about, click-through rates and audiences but we also see it across function in the leadership team, whether it's financing or whether it's the people team, or other elements of that leadership.
I think learning other people's language, so you're able to help translate is really important. If I can talk about customer acquisition cost and what that's going to do and our lifetime value, and think about profitability and not just about revenue, then certainly, I'm going to have a better and a more interesting conversation with my CFO. Then the second piece of that, other than language is that bit about benchmarking.
I think as the SaaS industry grows up and matures, there is a much better set of benchmarks over what is normal to spend in different environments, and I've got my own rules of the farm over what you might need to spend in different environments, but introducing people to any external data sets over what is normal is usually very helpful in our environment too.
Josh: I love that. I really do. One of the things that I think ties into this philosophy and team is around, and you mentioned it in the pyramid-like this, the level which is around accountability. One of the things that I've been talking about more and more is how I believe marketing organizations need to really characterize themselves more as learning organizations than strictly KPI chasing environments.
I feel like when I see organizations that are just solely focused on like, did we hit our KPIs or did we not? You find yourself in an environment of constant judgment, and anytime teams or people, individuals, humans are feeling like they're constantly being judged, it doesn't work to the benefit of the company. It's like you're the decision-making process, executive functions are shutting down because you're just like, "Oh, my gosh, I'm being judged all the time." I'd be curious to hear your take on this idea of experimentation and learning being really where marketing teams need to be, the relationship that they need to be having with their data is really around learning versus just hitting all the KPIs.
I'm not saying that KPIs aren't important and that we don't want to try to hit them, but there is data in failure and there when you fail, you can learn a lot from why did that tactic not work. What are our competitors doing differently? Can you talk a little bit about your personal philosophy around building a learning organization versus strictly chasing KPIs?
Andrew: Of course. I think you're making a great point there and, most of us are operating in an environment where the only constant is change, and therefore, if we're not building a learning organization, everything we're working on, those KPIs are likely to be missed in the future. In fact, I'd reframe the entire question and conversation in that.
It can all be KPI driven but if we're entirely focused on short-term KPIs, we're never going to hit those long-term KPIs, and building a learning organization and learning culture experimenting is all about opening up the potential of hitting future KPIs. Often we find organizations engaged in very short-term behavior and very short-termist KPIs. We're having this conversation internally at Paddle right now, there's a huge amount of focus on pipeline generation, opportunity creation, opportunity to close conversion rates and close-to-life conversion rates all exceptionally important.
Andrew: If we're also not talking [inaudible 00:15:42] then actually, next quarter, the future quarters are going to have much more challenge of reaching those ever-increasing goals. I see it as a job of a CMO, as a job of a leader in marketing is to hold two timeframes in mind at all points of time. Everything I'm doing I need to be focused on next quarter's Demand Gen to make sure the sales team are able to hit their targets and two years out, position and description and category and what the audience can look like such that there's a market size and addressable service and market we can go win to hit the future goals there.
I think the experimentation of the learning plays into both of those as well. We have to be learning in our tactics right now as well as in learning and experimenting about where we go. We all wholeheartedly agree that maybe, controversially, I think some of the short-term duration of many senior leaders in marketing does come down to the necessity of focusing on that short-term metric either within themselves or imposed on themselves which mean that further longer-term thinking or longer-term experimentation aren't able to happen.
I'm very grateful to be in a place where I need to judge both of those and balance both of those but there's space and I'm affording space and I'm affording space to my team to be thinking beyond where they are right now in terms of their experiments.
Josh: I just think that what is working today might be tactics and strategies that we didn't even use a year ago. What is working today is not what necessarily will be working tomorrow. I do think that organizations that can understand that this is moving very quickly and the only way to really ensure that future is by staying ahead and having a willingness to put some budget behind things that might inevitably fail but that we learn from those things.
Andrew: Totally. Let's use a recent example from Paddle here. We've produced team books, we've produced reports on the normal type of stuff, when it came to the acquisition we cut her behind-the-scenes documentary about the acquisition story. We've got a full 25-minute documentary all of our scars, blood toil tears, sweat on show about how we did that acquisition.
Now, that was a massive risk. It could have been rubbish. We could have not published it. We could have published it and it came really badly in terms of how it reflected on us or the process. Practically, it didn't cost much more than a good eBook or a couple of eBooks but it was a very different experiment. For me, there is that tourism that if we keep doing what we've always done we're going to get what we've always got. Except that in marketing, where everyone else is raising a game, usually, those returns are going to slip time after time.
One of the things that I'm really trying to instill and hold true in the market or in the company I'm in is that we really do have to give value to stand out. We have to build rest reciprocity. I'm really interested in doing stuff that almost gets a WTF response, what on earth is going on [unintelligible 00:18:45] response from our audience because we are doing things that are different to what they've seen before but are still resonating.
Josh: I think it's great. The way that I feel that ties into what we were talking about previously which is that number one team, your first team, the CEO needs to get that and needs to understand that, hey, we are going to be learning, we are going to be experimenting, or we're going to be out there doing things that maybe our prospects will find intriguing and interesting but we don't know if it will fall flat on its face.
There has to be alignment at that level. Otherwise, CMOs have a really short lifetime. The average amount of time CMOs spend in their jobs is much shorter than other members of the C-suites. I think that's why, it's because that lack of alignment there.
Andrew: Yes. If we go all the way back up to five dysfunctions of a team we said that foundation was trust. That's where it all starts. I think trust gives you the ability to have experiments and to do things that are a bit off [unintelligible 00:19:52].
A wise colleague once said to me and I've held this and used this phrase multiple times in multiple companies over the years, that whenever there's a gap in expectations, you've got the choice to fill it with trust or with suspicion and building an organization and a culture at that C-Suite but also in your wider marketing team where misunderstandings of expectation are filled with trust rather than with suspicion is a key way of making sure you continually to pay it forwards to win the right, to have more experiments in the future.
Josh: Yes, that is great. I'm going to have to use that idea of, yes, filling with either trust or suspicion. It happens all the time in our work, it's dead on. Wow. This has been a great conversation. One thing that I always ask my guests is a last question is, who are you reading? What thought leadership is out there that's impacting you or influencing you today? You mentioned, of course, Patrick Lencioni. Are there any others that this audience would be interested in?
Andrew: Yes. Hey, I did my research beforehand and knew you'd be asking this so I pulled a few books off my shelf. When it comes to, before we get onto some books from other people, we do loads of our own shows ourselves. We've got a new season out [unintelligible 00:21:14] which is a fantastic interview-based show for SaaS leaders which, I'm not involved in producing, the team do it. I love it when those episodes drop. It's one of the first things that I listen to. I listened to it before we acquired it and I love listening to it now.
In terms of books, I pulled four that are different that I've read recently, a couple of them I reread recently, an easy one Bad Blood. The inside story of a very interesting tale throughout [unintelligible 00:21:39]. You might well have know it or listened to the podcast or read the book. Those inside stories of things that went wrong or the startup journeys, massive scandals ended up in the courts but fascinating book.
I really enjoyed Trillion Dollar Coach. This is a book by-- It's co-authored by Eric Schmidt who was the CEO of Google and Alphabet. It's talking about the coach that coached all of them, Bill. Bill Campbell is a mentor for many Silicon valley leaders. I love the generosity that's in this book of how he helped many people and they're helping other people too. I've just dipped back into Play Bigger which is a classic over the last couple of years in terms of building category, strategy, and how to dominate a market. We're using a few frameworks from that in work right now. There's three quick examples of things that I've read recently that would fully recommend for those that are listening.
Josh: I love that. Thank you so much. Thank you for your time, Andrew. This has been a fabulous conversation. We're going to wrap it up here for this episode of How I Work. Thanks so much.
Andrew: Total pleasure. Thanks for having me, Josh.
Josh: Thank you.
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