Ride to the Mountaintop: How Peloton Re-Invented the Fitness Industry with a Revolutionary Business Model, Precise Execution, and Focus on Culture & Community

Recognized as a true disruptor of an established industry, at-home fitness pioneer Peloton initially struggled to get funded. Investors questioned whether Peloton could unseat entrenched workout chains and exercise machine makers, especially with a business model that requires blended expertise in hardware, software, content, retail, and logistics. But CEO John Foley and his co-founders persisted in their vision of a fitness company that actually gets people fit, delivering revenue growth, expanding internationally, going public, and continually adding value to memberships.

TCV led Peloton’s Series F financing round in 2018 and supported the company on its journey to its IPO. John Foley joins Peloton board member and TCV general partner Jay Hoag for a wide-ranging discussion with multiple lessons for entrepreneurs:

  • Why the fitness industry was ripe for disruption
  • Why many investors had a tough time seeing the potential in Peloton’s approach
  • How Peloton makes memberships more affordable than you thought
  • Why culture and social responsibility are increasingly important to business success
  • How to navigate the road to the IPO and life as a public company

For all this and much more, settle back and press play.

***

The views and opinions expressed are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the authors and disclaims any responsibility therefor. This interview and blog post are not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this interview and blog post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.


TCV 2020 Summer Newsletter

Keeping our team members safe and helping our companies navigate COVID-19 and prepare for the rebound has been our main focus at TCV. Our Portfolio Operations group, along with our Investment, Legal, Marketing and Capital Markets teams, are providing a surge of support for our companies. The takeaways of these efforts are the main themes of this newsletter. We hope that you will find nuggets you can apply in your business, in areas such talent, sales and marketing, systems and technology, and more.


Revolut raises $500 million in Series D funding as it sets sight on profitability and daily adoption in 2020

  • Revolut raises $500 million in Series D funding, valuing the business at $5.5 billion, making Revolut one of the highest valued fintech companies in the world
  • The round was led by US-based investor TCV, with a number of existing investors also participating in the round
  • Revolut will use the capital to further strengthen product development in existing markets, roll-out banking operations in Europe and increase daily engagement

LONDON, 25 February 2020 — Revolut, the global financial platform with over 10 million customers worldwide, has today raised an additional $500 million in Series D funding, taking the total amount raised by the company to $836 million.

The new funding round was led by US-based growth capital firm TCV, with a number of existing investors also participating. The latest funding round values the business at $5.5 billion, making Revolut one of the highest valued fintech companies in the world.

The new capital was secured on the back of high customer demand and engagement and a strong financial performance last year. In 2019, Revolut increased customer growth by 169%, the number of daily active customers by 380%, and saw financial revenues in 2018 grow by 354%.

The new capital will be focused on the customer experience and used to strengthen Revolut’s core retail and business offering in existing markets, with a particular focus on product development that will help accelerate daily usage of accounts. Future plans include lending services for retail and business customers, extending high interest savings accounts beyond the UK, further improving customer service and rolling out banking operations across Europe. 

Revolut will also focus on further developing its Premium and Metal subscription accounts, which have proven to be a successful revenue stream for the business, growing by 154% last year. Revolut’s Premium and Metal accounts include a variety of benefits for customers, such as unlimited foreign exchange, airport lounge access, commission-free stock trading and travel insurance. 

Revolut will continue to invest in expanding its workforce across multiple locations. The company now employs over 2,000 people, and last year made a number of senior appointments across the business in order to scale up its governance. Last year, Revolut appointed Martin Gilbert, the former Co-Chief Executive of Standard Life Aberdeen, as Chairman of the Board. Caroline Britton, a former Audit Partner at Deloitte, and Bruce Wallace, the former Chief Operations Officer at Silicon Valley Bank, were both appointed as Non-Executive Directors. 

Commenting on the new investment, Nik Storonsky, Founder & CEO at Revolut said: “We’re on a mission to build a global financial platform – a single app where our customers can manage all of their daily finances, and this investment demonstrates investor confidence in our business model. Going forward, our focus is on rolling-out banking operations in Europe, increasing the number of people who use Revolut as their daily account, and striving towards profitability. TCV has a long history of backing founders who are changing their industries on a global scale, so we are excited to partner with them as we prepare for the next stage of our journey.”

Commenting on the investment, John Doran, General Partner at TCV said: “We are delighted to partner with Nik, Vlad and the entire Revolut team. Using a modern technology stack and with a relentless focus on delighting customers, Revolut has built a truly exceptional customer experience that is exceeding anything that existing banks can offer. We look forward to supporting the team on their journey to build Revolut into one of the biggest financial services companies in the world.”

Commenting on the investment, John Glen MP, the UK Economic Secretary and City Minister said: “It is clear that the UK fintech sector continues to thrive, and Revolut’s announcement, which comes on the back of record-breaking fintech venture capital investment in 2019, is a clear indicator of our strength as a place for fintech business as we leave the EU.”

— END —

About Revolut 

Revolut is here to transform the way money works.  As an innovative, new kind of financial platform, it gives people the power to spend, invest and transfer money without the sky-high fees charged by the big banks. 

Since launching in 2015 in the UK, Revolut has expanded significantly beyond its origins as an FX product, adding new features all the time, including Commission-Free Stock Trading, Cryptocurrencies, Business Accounts and more.  

Headquartered in London, with 2,000 people in 23 offices, Revolut is now one of the biggest Fintech communities in the world, with over 10 million customers globally. Since launch, Revolut has processed over 1bn transactions worth over $130bn.

Revolut Press Contact 
Chad West, Director, Global Communications 
chad@revolut.com l +447860651737

Kiran Wylie, Senior Communications Manager 
kiran@revolut.com l +447875057754

About TCV

Founded in 1995, TCV provides capital to growth-stage private and public companies in the technology industry. Since its inception, TCV has invested over $13 billion in leading technology companies, including more than $1.5 billion in fintech, and has helped guide CEOs through more than 120 IPOs and strategic acquisitions.

TCV’s investments include Airbnb, AxiomSL, Dollar Shave Club, ExactTarget, Expedia, Facebook, LinkedIn, Netflix, Nubank, Payoneer, Splunk, Spotify, Toast, WorldRemit, Xero, and Zillow. In Europe, TCV has invested $2 billion in companies including Believe Digital, Brillen.de, Perfecto, FlixMobility, RELEX Solutions, RMS, Sportradar, The Pracuj Group, and WorldRemit. TCV is headquartered in Menlo Park, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, visit https://www.tcv.com/.

TCV Press Contact
Katja Gagen, TCV Communications 
kgagen@tcv.com l +1 415 690 6689


FULL POTENTIAL SAAS

We believe that SaaS vendors, particularly vertical and SMB, that provide a “system of record” are seeing massive increases in TAM, competitive moats, and economic opportunity. By extending and leveraging their workflow, data, and account ownership, SaaS vendors are delighting end customers while creating platform and networks.

With opportunity comes competition, both from within one’s category (e.g. application area) or from adjacent categories within one’s vertical (e.g. industry). As boards and management teams wake up to the opportunity, they realize that the race is on to capture the full potential of their vertical.

This post is a framework to help leaders of SaaS companies think through the strategic choices and hopefully increase the odds of reaching their full potential.Strategy is implemented by focused alignment of execution, talent, M&A, organizational structure, functional excellence, and financial and governance/board frameworks. I hope to write about these supporting pieces over time, but I wanted to start with strategy first.

Finally, I think it’s important to acknowledge that very few companies have reached “full potential,” and this framework is inherently aspirational. However, “most entrepreneurs aren’t building a house, they are putting bricks in the foundation of a skyscraper” (Naval Ravikant). Aspiration is important, so hopefully this is an articulation of what is possible.

Special thanks to my co-authors John Burke, Katja Gagen, and Payam Vadi from TCV as well as Tim Barash, Kevin Burke, Henrique Dubugras, Mike Ford, Marc Fredman, Noah Glass, Andrew Low Ah Kee, Ara Mahdessian, David McJannet, Aman Narang, Sankar Narayan, Githesh Ramamurthy, Jason Randall, Bob Solomon, Connor Theilmann, Dan Wernikoff, and Dai Williams for great insight and support in creating this framework to date. We’ve also learned a ton from working with great management teams in the TCV portfolio[1] as well as across a broad network of friends.

Lead the Category

This phase of the SaaS strategy is well understood so I won’t spend much time on it. A SaaS company aspires to:

  1. build a great product (and service)
  2. over time, build an efficient and repeatable go-to-market model (marketing -> sales -> onboarding)
  3. and then “add capital” and execution to press its advantage against sluggish incumbents or poorly capitalized competitors

This is the playbook that Omniture and our portfolio company ExactTarget pioneered a decade ago. Despite massive capital inflows into SaaS and deteriorating economics, this model generally still works today.

On the product side, scale in data + AI can create increasing differentiation. For example, when you start to have more data than anyone else, you can flip your product from being reactive to proactive — having the product tell users where to look and how to optimize the system. Both Xero and Shopify have done this well.

Five other things to think about in this early phase that don’t get enough attention:

  • Scalable onboarding: Onboarding friction can be unaccounted drivers of CAC and churn. A great onboarding process builds the trust and confidence that are the foundations of virality/word of mouth, future cross- as well as third party channel strategies. Carefully measure funnel metrics and be attentive to new customer NPS. Automate early as “throwing bodies at it” can create process debt that will be difficult to unwind later.
  • Expansion: Expansion drives net revenue retention and most of the strategies we are about to discuss. With all sales processes, it’s a lot easier to learn, iterate, and optimize with fewer bodies and less complexity.
  • UI and Architecture: Like onboarding, these can be long-lead time fixes that compound as your business scales and gets more complex. A specific call out is to plan for an API strategy. It can facilitate future partner strategies and increase the value and stickiness of your offering.
  • Pricing structure/strategy: You will constantly revisit tactics, but it’s important to have some sense of how your pricing structure might change over time.
  • Foundations for global, including a work culture that can support distributed executives and operations, and good product feedback loops that incorporate non-home market needs.

Hyperscale Locations, Feed the Beast

A lot of ink has been spilled on forward investing in sales and marketing, and arguably it’s part of a/the “lead the category” strategy. But, it’s worth a call out as it’s important you don’t take your eye off the ball too early. So much of winning and future monetization is getting location market share. When the wind is at your back, go get it done! Market structures have a nasty habit of shifting, future secular tailwinds may abate, or competitors may leapfrog your product or your go-to-market model. If your churn and sales economics are sound, keep “feeding the beast!”

One particularly powerful unlock is Channel. There are verticals and categories, where influencers in a channel are kingmakers and can help you engage with segments that are otherwise difficult or uneconomical to reach.  Furthermore, Channel partners’ engagement and contributions can enrich your products and increase overall customer value. A great example is in tax software, where Xero’s wooing of accountants proved to be an effective source of customers and a formidable competitive moat (thereby disrupting the incumbent provider). Xero went as far as offering free practice management tools to help accountants run and grow their business on Xero.

Win the Control Points: Own Your Vertical

This is where management teams are faced with a paradox of choice: “Where should we go next? How should we spend the next incremental dollar? On increasing ARPU, acquiring incremental locations, or expanding into new verticals, geos or segments?” At this juncture, it is my belief that you should focus on winning the control points. In vertical SaaS, there are typically one or two control points, “systems of record.” Usually one control point in the front office (e.g. Point of Sale, CRM, e-commerce) – “that drives sales, that grows the business, that serves as the cash register.” And one control point in the back office (e.g. general ledger) – “where everything else reconciles to.” Hopefully, you provide one of the systems of record, so go build or acquire the other system(s) of record and secure the high ground! 

Pragmatically, a system of record is the last software package a customer will “turn off” in a tough economic time.

I also like to think about the concept of “gravity”:

  • Workflow gravity – the system that all other systems integrate to – it’swhere the most users spend the most time. Not all workflows deliver the same value; in my experience the system of record workflow tends to deliver the most value.
  • Data gravity – the system that creates and holds the most critical information and is the hardest to migrate. That data can be critical to a client for a wide range of applications, from understanding their customers (e.g. CRM) to managing risk (e.g. compliance). Data also can be critical in two-level situations, such as loan underwriting (e.g. a bank underwriting a merchant’s risk via POS data) or supplier information management (e.g. a client managing risk by validating supplier capabilities and quality). Data depth and scope also create gravity where AI technologies can be highly productive.
  • Account gravity – the user/sponsor of the system is the highest-ranking individual in the customer organization; it’s the system that requires the biggest financial outlay, etc.

Winning the other system of record is not easy. By definition, a system of record is hard to displace and unless the market is greenfield pen and paper, competition can be challenging. You may be able to do it organically with product innovation, but M&A can be the more desirable path if “integration debt” is manageable. If M&A is not possible, a slow winnowing of your competitor may be the only approach available to you.

If you own multiple systems of record in a vertical, the benefits are enormous:

  • Customer delight: automation from integrated workflows and potentially unified data and data models allow efficiencies and offerings unavailable before
  • “SaaS as a Platform and SaaS as Network” opportunities
  • Stronger account ownership to capture incremental spend and drive more efficient growth
  • A new level of durability and stickiness

A good example is Veeva. The company started in 2007 with the launch of a CRM and a sales automation platform for pharma sales reps (e.g. record their activity, keep track of the doctors they meet with or drop off samples for, etc.). After becoming the dominant player in that category, Veeva saw an opportunity to move backward into research and development for their life science customers (developing new drugs, conducting clinical trials and bringing those drugs to market). In 2011 Veeva launched Vault, a suite of applications that first centered on the core content management needs for clinical trials, regulatory submissions, and quality documentation. The company then expanded to include a series of core data applications that help manage clinical trials, quality processes, safety processes, etc. Veeva is expected to finish 2019 with $1.1B in revenue (26% YoY Growth) and 37% EBIT margins. Vault represented 51% of total revenue and grew 38% YoY. Analysts also estimate Vault meaningfully expanded Veeva’s addressable market. 

Another recent example might be front office player Shopify’s $450M acquisition of 6 River Systems to move into back office fulfillment and warehouse management. Some financial analysts estimate that merchants spend up to ~10-15% of their GMV on logistics which could potentially provide multiples of Shopify’s current take rate.

Expand Headroom

With category leadership comes high market share and potentially high saturation. Long-term growth is driven by location growth, as there’s generally a finite share of wallet you can access. It’s important to invest in the S-curves of geos, segments, and adjacent verticals that can unlock new location TAM. This can take a couple of tries before you’re successful, so start this during your growth phase when there’s less pressure on maximizing profitability.

Extend Through the Value Chain

This stage of growth can be transformative. By leveraging the strengths of your core customers, you can expand into a new market with a new set of customers. Typical patterns include moving from front office software to extend to your customer’s customers, or from back office software and extending to suppliers. These can be riskier bets, but success can pay out big here:

  • Increased TAM
  • Workflow that spans multiple parties and creates increased customer value and vendor stickiness
  • Two-level network effects

Supplier

Extension seems to work best by “following the money” and leveraging purchasing power. TCV portfolio company Ariba articulated the “golden rule”— He with the gold rules! By using their leadership in procurement software at large corporate buyers, Ariba extended to build a robust suppliers software business for merchants that serviced those corporate buyers. More recently, Avetta has followed a similar path in the supplier information space by building a strong two-level network effect. We believe corporate clients want to be on Avetta because it has the largest network of suppliers, and suppliers want to be on Avetta because it has the most corporate clients. Avetta’s advantage gets stronger as it scales. Moreover, Avetta has an opportunity to help suppliers do more than just manage compliance information. As a result, Avetta sees growth in helping suppliers grow and operate their business.  

CCC is on the third generation of this approach. They started by serving large auto insurance carriers and then extended into autobody repair shops that serve the carriers. CCC is now in the process of expanding to parts suppliers. By getting all the key constituents on its software platform, CCC is able to leverage AI and automation to massively reduce friction and provide a great customer experience across all steps of the auto insurance process.

Employee

The employee opportunity is similar to the supplier opportunity in terms of “following the money.” Companies can use integrated payroll or time & attendance offerings to establish a relationship with the employee. Employees are also consumers who represent significant B2C opportunities such as consumer lending, insurance, etc. There are big dollars here, but perhaps less opportunity to build significant network effects.

Consumer

The consumer/demand opportunity is the white whale. We believe that SaaS companies tend to capture ~ 50-100bps of GMV for software subscription, whereas online demand channels can take 15-20% of GMV in categories such as hotels and restaurants. In addition to the massive revenue opportunity, Consumer also represents a strategic flank worth monitoring carefully. Online marketplaces have large competing salesforces that engage with your merchant customers and have strategic interests encroach on the software layer to try to control supply.  Booking.com bought Buuteeq and Hotel Ninjas to vertically integrate into hotel supply. Uber is rapidly expanding its driver offering to over-draft protection, a debit card, and likely lending over time to manage driver churn. This is another example of increasing marketplace + SaaS convergence.

That said, success stories of extending SaaS to Consumer are rare. Few SaaS companies have consumer product DNA, the funds, or the skills to build a consumer brand. While a SaaS provider can have a high market share of merchants in a vertical, it’s rare that it has the supply ubiquity that an online marketplace would require. Eventbrite is one of the few companies that has landed as a software tool for creators, built liquidity, and created a marketplace.

Some derivative Consumer monetization models include:

  • Consumer pay: FareHarbor approaches tour and activity operators with a free to merchant, consumer pay model: “We’ll build your website and booking engine for free, with no work on your part; you just pay us for payment processing and the customer will pay us a booking fee.”  
  • Channel management: SiteMinder offers channel management to help hotels manage existing channels in real time. SiteMinder has extended that value proposition to “Demand Plus,” an offering that helps hotels easily expand into new channels to scale demand.
  • Existing customers: While 15-20% marketplace take rates may be sensible for new customer acquisition/discovery, companies such as Olo are looking to move existing customers to lower cost channels through their dispatch offering while taking a much lower percentage of GMV.
  • Customer Co-opt: By seeing consumer data pass through their systems, some SaaS vendors are building consumer profile databases that they might monetize over time. In the recruiting market, we’ve seen players leverage job distribution tools to build a candidate database. Shopify similarly has built a large shopper profile database across all their merchants. While Shopify hasn’t monetized directly, the uplift in conversion rate is likely significant. This model is the most capital efficient but can create conflicts with the vendor’s core merchant customers.

The biggest benefit of extending through the value chain is that it gives you a beachhead and a right to win in a new vertical to start the “full potential” growth cycle again. As you do this, it’s important to reconsider your end market and focus. When Ariba transitioned from procurement software to supply network, they started to represent a front office “system of record” for their suppliers. In doing so, Ariba was both a large enterprise “procurement company” and an SMB “supplier enablement company.” The question was: “Which priority should dominate?” When extension leads to conflicts, there are no easy answers. As such, it is important to acknowledge that this growth strategy is ever-evolving.

Deepen Functionality/ Monetization

Deepen Functionality/Monetization doesn’t literally mean waiting to pursue this step until all other strategies have been completed. It’s more a reflection of priorities. Acquire as many customers as you can, win the control points, and you will likely have many of these profit pools locked up to pursue in the future.

In winning the key control points, for the same reason a single system of record has a lot of “gravity,” you now have an even stronger opportunity to turn your product into a channel. This enables entry into adjacencies with data, workflow, and account ownership advantages for you as well as for the end customer. The most extreme example is the “platform/ecosystem” play, where you monetize third party vendors that want access to the channel your product has become (e.g. Salesforce, Intuit, Shopify). However, most commonly a SaaS vendor will pursue additional monetization with in-house or white-labeled products.

Another key consideration in prioritizing adjacent function/monetization is consistency with your core go-to-market channel and proximity to key decision makers. Go-to-market will determine the financial leverage of the cross-sell and often the overall success. The core advantage of SMB software here is that often the decision-making is relatively consistent and concentrated across software purchases.

Every vertical is different, but there are some common functionality/monetization patterns emerging. Each of these patterns deserves its own write-up, but for the sake of brevity here are some highlights:

  • “Integrated payments -> integrated banking”: The attachment of payments to SaaS has been well covered. That trend is expanding to the attachment of integrated banking. I had an opportunity to interview two of the smartest people in the business, Tim Barash and Jackie Reses. Square is out front here with broad based merchant and consumer plays. To understand the magnitude of the opportunity, Square’s Subscription & Services (most of which are financial services) are expected to reach $1.3B in 2020. This represents 23% of 2020 total GAAP revenue and 47% of 2020 Total Gross Profit (incremental gross profit is ~90%). Brex is earlier in its progression, but we’re excited to see how the company leverages its initial corporate card and expense management offerings to extend into broader financial services.

  •  “Follow the workflow”: At times SaaS companies have actually observed customers at work or mapped out the physical sites to understand all the areas their workflow touches as areas of expansion.
  • “TAM shark”: HashiCorp CEO David McJannet describes expansion as “TAM Shark,” constantly circling the biggest, fastest growing (most change/opportunity) markets. He requires product managers to report on market size and growth of all adjacent categories to make sure they are focused on the biggest opportunities. Generally, over a 2-3 year period companies have one, maybe two opportunities to build distinct add-on businesses. Make sure you’re picking the biggest markets and therefore the biggest payoffs.

Summary

If the typical SaaS playbook is “Lead the Category” and “Hyperscale Locations,” clearly the full potential for vertical SaaS players is dramatically larger than conventional SaaS wisdom would suggest. We’re excited to work with — and hopefully invest in —the frontier players as they explore the “Full Potential of SaaS.”  

If you found this useful, let me know, and we’ll continue to publish and explore the topic. I look forward to hearing your adds, edits, and challenges.

Caveats

  • There’s a tension between aggregating as big a profit pool as quickly as possible vs. “winning the market.”
  • This framework is characterized as a sequential strategy. In reality, most companies are pursuing multiple steps concurrently, and the sequence is more a reflection of prioritization.
  • Time horizon: this approach is a long-term strategy to winning, which may often be at odds with short-term maximization of valuation multiple and financial performance.
  • This approach is informed by a U.S./western/mature approach. In emerging/more greenfield markets, less focus and value chain expansion earlier in company development may make sense.

The views and opinions expressed are those of the authors and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the authors and disclaims any responsibility therefor. This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.

[1] See TCV’s SMB and Vertical SaaS investments at the end of the document.


The Most Important Relationship in Business: Best Practices for Board Directors and CEOs They Advise

Board members can bring a wealth of experience and advice to their CEOs – and not just when the board convenes each quarter. The chemistry of this critical relationship requires careful attention, particularly when selecting and onboarding new directors, coaching the team and providing diverse insights. Tayloe Stansbury, Venture Partner at TCV, shares lessons and insights from his board memberships and two decades reporting to corporate boards as CTO at Intuit, CIO at VMware, and EVP at Ariba. Beth Knuppel, Principal in TCV’s Portfolio Operations, guides the conversation to the key moments and processes that board members and CEOs need to master so that their relationships – and the business – can thrive.

In this podcast, Beth and Tayloe address practical questions for anyone coming onto a board or running a company with board support, such as:

  • The most important criteria for joining a board
  • How to maintain diversity of opinion on the board while still providing the CEO with convergent advice
  • Why board members should meet with their CEO informally between board meetings
  • How to set efficient board meeting agendas that allow for in-depth discussion of pressing issues
  • Why board members should evaluate their own performance and not just the CEO’s

For this and more, settle back and click play.

TRANSCRIPT

Beth Knuppel: Welcome to Growth Journeys. This is a podcast series from TCV focused on lessons from the field from both operators and entrepreneurs in the TCV ecosystem. I’m Beth Knuppel. I’m an Operating Principal at TCV, where I lead our talent center of excellence within portfolio operations. Our podcast today is all about the CEO board partnership and lessons learned for effective governance. I’m joined today by Tayloe Stansbury. Tayloe is a Venture Partner at TCV, where he works with existing portfolio companies, and he’s also involved in diligence for potential investments. In addition, Tayloe serves on the board of directors at Coupa Software and BlueJeans. Welcome to Growth Journeys, Tayloe.

Tayloe Stansbury: Thank you very much. It’s great to be here.

Beth Knuppel: So, Tayloe, you had a long, successful corporate career before joining TCV as a venture partner. Most recently you were CTO at Intuit. Tell me a little bit about your background and how you got to this point.

Tayloe Stansbury: For the last decade, I was CTO at Intuit. I looked after all their technology operations — so engineering, data AI, IT, and information security. And before that, I worked at a number of other companies, including Ariba. I was EVP of product and operations there, which included customer support, product management, engineering, and operations. I worked also at VMware, Calico, Xerox, Sun, and Borland in a variety of different engineering and general management positions.

Beth Knuppel: So you are a technology veteran, for sure?

Tayloe Stansbury: I guess.

Beth Knuppel: In addition to those roles, I mentioned you also serve in some board of director roles. You were on the board of Shutterfly for three years. You continue to serve on the board at Coupa and at BlueJeans. What was it that attracted you to board service in the first place?

Tayloe Stansbury: I was a direct report to CEOs of public companies for some 20 years, which meant that most every quarter I was doing presentations to boards. And it started to intrigue me that maybe I could contribute at a different level. And that’s what led me to getting onto my first board.

Beth Knuppel: When you say at a different level, tell me more about what that means to you. What is it that a good board really adds to a company?

Tayloe Stansbury: Boards advise, right? Boards don’t manage. Management manages. And I think that distinction is really important. Boards bring a wealth of experience that is orthogonal to what some of the managers have and can advise them on new situations that arise and how to think about new problems.

Beth Knuppel: I think that a lot of people have in their mind this outdated stereotype of the board member who sort of jets in, goes to dinner, maybe makes a few pithy comments at the meeting the next day, and then you don’t hear from them again for another quarter. I should say, that is definitely not the model at TCV. Our boards are really engaged. But I’m curious, what would a management team expect, or what should they expect, in terms of engagement in between those quarterly board meetings? How do you work with the board in between those formal opportunities?

Tayloe Stansbury: For myself, I’d say, I generally meet with the CEO of each of the boards that I’m on once in between each board meeting — go out to dinner, to breakfast, or something like that — and just talk about whatever’s on their mind. And I usually adopt one or two, sometimes three members of the senior management team that I coach. And I usually meet with them once off-cycle between board meetings. And those meetings can be a lot of fun, high engagement.

Beth Knuppel: Got it. You know, a lot of our audience are founders who may not have ever worked with a board before. So you’re talking about this engagement in between. Who’s initiating that? Is that you, on the board? How should the CEO be reaching out?

Tayloe Stansbury: I think it’s best always if the CEO is making the introductions so you’re not invading their space and having meetings unbeknownst to the CEO. I’d give an example from a board I was on that was for a college. And the president asked me if I would lead the advancement committee, which means fundraising. And I said, “Hey, I’ll do anything for you, but I know nothing about fundraising.” And she said, “You’ll figure it out,” and turned around and then walked away. So she did actually introduce me to the head of fundraising and, we had a very fruitful relationship, where I would come down before each of the board meetings and go over his management challenges, his prioritization challenges, and how it is that he was going to present to the board, because while he was very experienced in fundraising and I was not, I knew something about presenting to boards and he didn’t. And so it would end up being a very fruitful relationship and we blew through all our targets and it was great.

Beth Knuppel: That’s great. One of the sayings that we have here at TCV is that the journey to the top is never a straight line, right? Every organization experiences setbacks and challenges. But I’m wondering, the CEO is typically looking to put their best foot forward with the board. How should a CEO balance that? How should they bring bad news or maybe challenging situations to the attention of their board?

Tayloe Stansbury: If all you’re doing is the Pollyanna version, nobody learns anything. I think what’s really best is approaching it with complete transparency and an attitude of seeking counsel, because that’s when you get the true value out of a board member who may have been through some of these things, or have cognated things before. So that’s hard to do. It means you’ve got to show your dirty laundry. But over time, you can build a relationship with a board where that’s okay, because they’ve had dirty laundry in managing the things that they did earlier in their lives as well. And they’re not going to be freaked out about it, and they’ll be able to give you much better advice which will enable you to perform better over time, with the transparency.

Beth Knuppel: It sounds like a key piece of that is just developing trust.

Tayloe Stansbury: Absolutely.

Beth Knuppel: How do you think about doing that when you’ve joined a new board and you’re establishing your own relationships with the other board members, with the CEO? How do you think about your entry into that board?

Tayloe Stansbury: Well, I think you’re hitting on a really important issue which is that the relationships are really important. And I think boards work best when there’s diversity of thought, everybody is respectful of each other’s opinions, but they’re also able to converge towards something which is a plan of action or a consistent set of advice for the management team. And I think the same thing is true with management. There has to be that trust of each other, the sense that different people are bringing something different to the party that is worth listening to and every now and then might be the key thing you need to know to manage through a tough situation. Mechanically, how that would work is going out to dinner with these people off-cycle from regular board meetings, getting to know them, and getting to build up that level of trust and respect for what it is that they’ve done.

Beth Knuppel: Right. I’m curious. As you work with a CEO, you want to build that trusted relationship, but at the end of the day, as a member of the board, part of your job is to evaluate the performance of the CEO.

Tayloe Stansbury: That’s right.

Beth Knuppel: How do you work through CEO evaluation?

Tayloe Stansbury: I think it’s best practice to have an annual evaluation of the CEO and actually even an annual evaluation of the other board members, where you think about: “What are the objectives that were set for the company, what are the objectives that the CEO may have set?” And everybody actually scores the CEO on that. You have a discussion as a board, and that gets presented to the CEO on an annual basis. And that discussion precedes setting the compensation for the CEO for the following year. I think that detachment where you can help and also provide some evaluation — hopefully which has got constructive ideas as to how the CEO can improve in areas where perhaps they need to grow.

Beth Knuppel: And you mentioned that you think it’s good hygiene for the board to engage in some self-reflection as well.

Tayloe Stansbury: Yes.

Beth Knuppel: How does that process work?

Tayloe Stansbury: Same way. Score each other, get together to have a couple-hour discussion about what came out in the survey. And if it’s a board that has mutual respect, those kinds of comments can end up helping bring the board closer together and help smooth out some rough spots.

Beth Knuppel: In the case of, maybe, a board that’s underperforming, what are some of the things that in the past you’ve encountered that help address an underperforming board?

Tayloe Stansbury: I see it as a spectrum – where at one end of the spectrum, you have a rubber-stamp board that’s not really providing any meaningful thought diversity to the problem, and the other end, where you have an acrimonious board which can’t agree on anything and they’re just fighting over stuff. And I think the sweet spot is somewhere in the middle, where everybody is thoughtful, they’re presenting diverse points of view, and they’re figuring out how to converge that into something that is constructive for the management team. And how do you get there? Again, I think it’s by spending time with each other and learning to appreciate what each other’s gifts are, what each other’s experiences are, what their scars are that they’ve managed to live through and learn things from. On a rare occasion, it may be best if some people move off the board if they just can’t get aligned with the rest of the team.

Beth Knuppel: Are there any common pitfalls that you see?

Tayloe Stansbury: In one case in particular, we did have a board that was pretty acrimonious and couldn’t get on the same page and it was very hard to get anything done. It was very hard to give consistent advice to the president of that organization. What happened in the end is some of the people who were really on a different page rolled off. And we got down to a set of people not who were rubber-stamped, who had diverse points of view but were able to come together in the end.

Beth Knuppel: I know at Coupa, you’re a member of the nominating and governance committee. What is it that you think about when you’re evaluating somebody who might potentially join the board? For CEOs out there, what should they be looking for when they’re thinking about board composition?

Tayloe Stansbury: We look at: “What is the skill set?” We have a whole matrix for skill sets that would be desirable for the board, and we score each other on how strong we think we are on those things. And that leaves it clear where there are some areas where we may have some gaps, some skills gaps — some experience gaps — that it would be really nice to flesh the board out with. And so then you go and say, “Well, who would be the people who could best fill those skill or experience gaps?” And then you look for, “Who are the people who are going to work well with the rest of the board, whose voices will be heard, who will hear other people’s voices, and will actually be convergent in their thinking, over time.”

Beth Knuppel: And, of course, the other side of the coin, as you’ve joined boards, you’re also making an evaluation. What is it that you look for to figure out whether a board is a good fit or not?

Tayloe Stansbury: The first thing is, you’ve got to have a passion for the business. If it isn’t a business that you love, then you probably shouldn’t be taking up space on the board. Another thing I really want is to have a visceral sense of what is the strategic path to success for this organization. So how is it that they’re going to weather whatever competitive threats and come out on top? Your sense of that may change over time, but I think you have to go in with a pretty good hypothesis of how this organization can become durable and win against the invariable competition. And the last thing is, it’s got to be people I like, because you’re going to be working with these people over several years. And you’re going to have to come to converged advice for management. It helps if you like everybody who’s involved.

Beth Knuppel: Sure. I’m curious to get your perspective on bringing on a new board member. Is there anything that you’ve experienced personally, or you’ve seen done really well, in terms of onboarding somebody onto the board?

Tayloe Stansbury: I think that bringing on a new board member is a big deal, and if you just hand them a board book and say, “Show up for the next meeting,” they’re going to come in without a lot of context, and they’re going to feel a little bit not on the inside, and their questions are just going to be off-kilter. And what I’ve seen as a best practice is you invest several hours, like a day, in training a new board member by having them meet with some of the senior management people, one-to-one, and then also go through a full rundown on the products, including demos of the products, so they have a real feel for the business and the competitive space.

Beth Knuppel: I’d love to get your perspective on how you think about the board agenda, and what topics are actually covered. Board time is so precious, you want to make sure that you’ve got a thoughtfully constructed agenda. What, in your view, rises to the level of importance for a board meeting?

Tayloe Stansbury: One thing I’ve seen that doesn’t really work really well for board agendas is to try to have every key member of the senior leadership team talk about the progress in their area every single board meeting. What I have found works a lot, lot better is if you look at the board calendar over the course of a year and say, “How do we make sure that every function gets their day in court, if you will, with the board, over the course of a year rather than the course of a single meeting?” And everybody can have a deeper discussion, and you get into the meatier stuff. Now, to complement that, I think having board materials that are first-rate, that come out early enough so that all the board members have a chance to read and digest them, is really important.

And what you can do in the board materials is make sure that the board materials include some news about what’s happening in every function that has something to report — even if they’re not going to present — so the board gets a view of that as it’s happening but then gets the deeper-dive discussions.

Beth Knuppel: Great. When I was presenting to boards on a regular basis, one of the things my CEO always said was, “Be bright, be brief, be gone.” In other words, do whatever you need to, to avoid the dreaded page flip where it’s kind of a march through slides that hopefully the board has already read. Is there anything you would share with folks who are in that spot of presenting to the board?

Tayloe Stansbury: I think it’s important for presenters to realize that the board has read the materials in advance and say the things only that punch up the most important parts of what’s on the pages. I think another good practice is you may think that you’re going to have an hour to present or half an hour to present, and it may be that the schedule goes sideways and you end up with only 5 or 10 minutes to present. It’s always good to have the 5-minute version of your presentation in the back of your mind so if you’re asked to do that, you can say something intelligent and helpful during whatever time remains. An important thing to remember about board members is they come and engage only periodically in the business. You, as an operating leader, are in there every single day. The board member isn’t going to remember all the context that you’ve got in your brain, and they’re not going to remember the thing that you told them three months ago. So making sure that you show not current state, but trajectory over what’s happened before, can help make sense for the board member.

Beth Knuppel: Great. Good advice. I want to close out with two questions. And first, I’m curious, if you look back over your board service, what do you think is the biggest learning that you’ve taken away? What is it that you would do differently the next time you join a board?

Tayloe Stansbury: You know, I think that getting to a sense of flow with a board, where you’ve got good ideas that are coming in, people bringing diverse thoughts, and where people are thoughtful about that and get to a good place quickly in terms of advising management, those are the boards that feel really good. The ones where you have people who are on a different place of, “Hey, I’m excited about this company,” and others who are thinking, “We ought to sell this company,” and you just can’t get them together, those end up being pretty rough situations. And you want to avoid the latter, if you can.

Beth Knuppel: Finally, for founders, for management teams who might be listening, what would you say would be the key takeaway that you would offer them for, really, how do you build and leverage an effective board?

Tayloe Stansbury: Look for openness and trust. Build a board where that exists. And working together, you can actually be a lot smarter than you can individually.

Beth Knuppel: Absolutely. Great insights, Tayloe. Thank you so much for joining us today.

Tayloe Stansbury: Thank you so much.

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The views and opinions expressed are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the speakers and disclaims any responsibility therefor. This blog post is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified above, if any, are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies/. For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.


TCV Welcomes Gopi Vaddi as General Partner

TCV is delighted to announce that Gopi Vaddi, a seasoned investor with broad international experience, has joined the firm as a General Partner. Founded in 1995, TCV has invested over $13 billion in more than 350 consumer and enterprise technology companies, including $2 billion in Europe, where Gopi will be focused. TCV investments in Europe include Believe, FlixMobility, Brillen.de, RELEX Solutions, RMS, Sitecore, Sportradar, Spotify, The Pracuj Group, and WorldRemit.          

Gopi is an excellent fit with TCV’s long-term strategy and focus of investing across geographies and domains, often far from major technology and financial hubs. He was born and raised in India, took degrees in business administration and electrical engineering in the U.S. and India, and has experience investing in the U.S., Europe, and Asia. Most recently, he was a partner at Providence Equity’s growth fund, where he worked on growth buyouts and minority investments in software and payments. At TCV, Gopi will focus on software and software-enabled businesses covering business applications, vertical software, digital marketplaces, and infrastructure software.

“We take as much care in adding a new partner as we do in making a new investment,” said Jake Reynolds, General Partner at TCV. “Gopi’s success springs from the same qualities that have driven TCV for nearly a quarter-century: deep domain knowledge, keen market insight, and a passionate commitment to helping entrepreneurs achieve category leadership. He also complements the firm’s broad growth-biased investment approach with expertise in software buyouts and buy-and-build investing.”

Gopi understands TCV’s approach, just as we recognize the value he has brought to his investments, including a willingness to roll up his sleeves and work side by side with management. As a citizen of the world who started his career as an engineer and data modeler, he has an innate ability to identify and partner with the next generation of category leaders and the entrepreneurs steering them.

We are thrilled to welcome Gopi to the team.

The General Partners of TCV

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The companies identified above are not necessarily representative of all TCV investments and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/portfolio-list/. For additional important disclaimers regarding this post, please see “Informational Purposes Only” in the Terms of Use for TCV’s website.                                                                                                 


At the Cutting Edge of the Governance Risk and Compliance (GRC) Sector – Leveraging Compliance Data to Drive Business Value

By Nari Ansari and Gal Peleg

Compliance seems to divide enterprises into three categories: those that primarily publicize it as proof of “good governance,” those that actually push the boundaries far enough to bring consequences, and everyone else with their heads down, trying to address whatever regulatory standards govern their industry and the seemingly ever-changing nature of those standards.

Now a fourth group is emerging, charting their own course. These enterprises are turning compliance to their advantage by mining compliance data for digital gold: insights that increase efficiency and competitive advantage. Like the governance crowd, they have automated many compliance functions with emerging software solutions. They are looking at the resulting data with fresh eyes and using it to improve their businesses.

More Regulation…

Most people think of compliance in terms of rules and regulations imposed by lawmakers and other governing bodies, for good reason: there is a proliferation not just of new regulations but of whole new regulatory frameworks such as Dodd-Frank and GDPR. Even long-time frameworks such as SOX, HIPAA, and FCPA continue to evolve. Yet at the same time, many enterprises are setting rules of their own to address an increasingly complex environment that includes global supply chains, cybercrime, trade wars, Brexit, and other evolving risks.

In the end, it doesn’t matter where the rules come from: compliance, and the documentation that comes along with it, is essential for managing risks and maintaining brand reputation. The roster of damaged brands from just the past few years illustrates what can happen when risk and compliance management break down.

Until recently, enterprises managed compliance risks with home-grown, often siloed and disparate initiatives that focused on people and processes. The components included manual record-keeping, time-consuming audits, constant training, ever-lengthier supplier questionnaires, C-level compliance positions, and board-level reporting. The reams of information gathered and presented were considered useful mainly for answering a simple question: Are we compliant or not?

Then a new question arose: Can we at least automate and digitize risk and compliance data, like we have done with so many other processes? The answer to that question is clear: We can, thanks to a growing community of companies providing governance, risk, and compliance (GRC) technology solutions that automate the process of collecting, aggregating, analyzing, and presenting relevant data while reducing their costs to the organization.

…Meets Smarter Compliance

We believe that just as homegrown compliance structures created the opportunity for digitization, a critical mass of companies are now positioned for a new opportunity that may eclipse the earlier one. Data that was once viewed merely as fuel for the compliance machine can now be considered a strategic output in its own right, with value to the business beyond compliance.

Whether it’s a bank mining Know Your Customer data to pitch targeted travel insurance to its customers or a CPG manufacturer analyzing complaint data from the Consumer Financial Protection Bureau to improve its manufacturing methods, we see an opportunity for companies to extract incremental, “offensive” business insight from large risk, compliance, and regulatory data sets.

Why Now?

This opportunity represents a convergence of what may seem unrelated factors. But let’s remember that in a globalized, highly competitive economy there are few trends that arise in isolation.

The first trend we note is a dramatic change in the people sitting in the chief compliance officer (CCO) chair. Russell Reynolds Associates analyzed the career backgrounds of 72 CCOs in banking, insurance and asset management and reported that “gone are the days of principally legal and compliance executives nabbing the top job in the compliance function.” So who’s getting the job instead? According to the report, it’s “broader-focused appointees from consulting, risk and audit. This new breed of appointees would be well-positioned to contextualize compliance (and the associated cultural change) in the wider picture of the organization.” In other words, compliance executive leadership is not just for lawyers and specialists – it’s for multidisciplinary executives who are as fluent with brand value and enterprise risk as they are with the P&L and operations.

The second trend we note is increased use of AI/ML. The transportation sector is a leading example, in part because it is heavily regulated. Shipping companies, notably UPS, now place dozens of monitors on their vehicles for compliance with internal and regulatory rules – and then apply AI to the monitor data to optimize delivery routes and driver behaviors in ways that squeeze out fuel costs and improve customer satisfaction. Fleet operators are further served by solutions from the likes of Keep Truckin, Samsara, and Geotab, which help improve driver safety and increase the precision of preventive maintenance.

The third trend is the evolving consumer privacy landscape. Ironically, more robust data protection and security regulations such as GDPR can actually serve to enhance business value by increasing the trust between companies and their customers. In its January 2018 report, “How GDPR is an Opportunity to Create Business Value”, Gartner notes that “handled effectively, there is great potential to obtain consent to increase data access, use, and sharing rights — aligned with goals of a wider organizational data and analytics strategy. This can help drive competitive advantage, while also helping to achieve compliance in other countries and regions.”

Examples of Leveraging Risk & Compliance Data to Drive Business Value

These are examples of companies that are helping advance the use of risk and compliance data for improving everything from customer experiences to supply chain performance to more effective emergency response:

  • Avetta’s customers use Avetta to certify compliance quality of its suppliers (green flag, yellow flag, red flag) and then mine the data to identify which suppliers are best trained and best equipped for certain on-site jobs.
  • Higher education institutions have long collected data to achieve and maintain external accreditation. Watermark Insights helps universities and colleges not only collect, digitize, and report on that data to demonstrate effectiveness, but also to use it to inform curricular changes and improve student outcomes. 
  • AxiomSL’s financial services clients utilize its data integrity and control platform and its risk calculation and reporting solutions to satisfy regulatory requirements across the globe systematically.  With trusted data, banks are now also able to identify opportunities to fine-tune capital/credit risk and deliver compelling business insights across the enterprise.
  • Global Trade Management solutions from the likes of Descartes and Amber Road (now a part of E2OPEN) have long been used to satisfy mandatory export compliance obligations (e.g. restricted party screenings) and to remain abreast of regional duty programs and tariffs. But by marrying these regulatory datasets with companies’ more “traditional” supply chain data (such as bill of materials and transportation fees), clients are now able to more accurately forecast true landed costs (the total price of the shipment including customs, duties, taxes, tariffs, etc.), all the while minimizing risks and delays.
  • Rave Mobile Safety enables schools to automate collection of and access to critical facility information (e.g., floor plans, alarm information), which they need to remain compliant with fire department ordinances – and it also provide 911 dispatchers and first responders better real-time capabilities when emergencies arise.
  • Information governance and eDiscovery vendor Nuix is well known for its deep technical capabilities in high speed processing and analytics around vast data sets, typically in the context of litigation and investigations.  But enterprise clients are also able to leverage the platform to create “data lakes”, making data more accessible for re-use in future investigations, litigations and data management programs, helping reduce costs.
  • Biopharma companies rely on software from ETQ for much more than compliance with FDA requirements; they also leverage the data to mitigate and prevent high-risk events, scale operations more effectively, and streamline their go-to-market activities.

There are many other examples of organizations across industries utilizing technology from GRC vendors to not only achieve their risk and compliance objectives, but also advance their strategic objectives.  The trend is still very much in its early days, but it provides an exciting avenue for continued growth in the sector.  As an experienced technology focused growth equity firm, TCV is committed to investing in the category innovators in the GRC space and has invested in such companies as Avalara, AxiomSL, Avetta, LegalZoom, Rave Mobile Safety, RiskMetrics Group, and Watermark Insights. 

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The statements, views, and opinions expressed are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the speakers and disclaims any responsibility therefor. This interview is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified, if any, are not necessarily representative of all TCV investments and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies. For additional important disclaimers, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.


TripAdvisor: Driving Decisions from Data, to Benefit Both Employees and the Company

Part 2: Aligning HR with Technology and Data / Planning for Acquisitions

Beth Grous, Chief People Officer for TripAdvisor, is applying the same strategy to HR and strategic talent management that TripAdvisor  utilized to become the world’s top travel site: leverage new technology and approaches to gain insights that drive decisions and positive business outcomes. In Beth’s case, that includes everything from recruiting and retaining employees to increasing equity, diversity and inclusion. In this second part of a two-part conversation, Beth talks with TCV General Partner Nari Ansari about the many ways this approach is benefiting both TripAdvisor and its people. Examples include informing business strategy with direct feedback from employees, using smarter benefits and training to retain employees, building a more diverse talent pipeline, and how her team plans for acquisitions so that people management operates effectively during and after integration.

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Nari Ansari:  Beth, thanks for joining us again to discuss TripAdvisor and your talent and people operations journey. We previously talked about aligning HR with business strategy, and jumping back in, I’d love to hear a little bit more about how TripAdvisor is using technology and data in HR operations.

Beth Grous:  Great question, and I can give you some relevant examples across different areas.

Let’s start with employee development. We want to use technology to think about learning differently and less traditionally, and we want to meet the workforce where they are. As one example, we recently began piloting Audible for Business. Employees like to get training delivered to them during their commute or during their downtime; it’s a different approach to content delivery than classroom learning, and one which our employees have embraced.   

Additionally, we seek employee feedback as a key input to how we build and evolve our people programs. We do everything from surveys to monitoring Glassdoor to, and it sounds overly simple, but just talking to people. As much as I love tools and technology, you’d be surprised at how much you learn if you just ask people what’s going on … they’ll generally tell you. And we are increasingly looking to data to help us think about our people in more detailed ways. Let’s use the turnover example. You’re never going to get it to zero attrition, so it’s really about slowing that path to exit and increasing engagement.

One of the recent data-driven insights we had is around the leave of absence journey. When an employee goes out and then returns from leave of absence—particularly one taken to welcome a child into the family—they enter a meaningful period from a retention standpoint. It doesn’t matter whether the employee is the birth parent or not. Our data indicated that one of the most important factors in determining retention during this period was the employee’s relationship with their manager; do they feel supported as they leave and return?  So with this understanding, this past year, we did two things. We increased our benefit level around leaves in general, expanding our leave policies to include a paid caregiver leave: 8 weeks fully paid for caring for a newborn, caring for an ailing family member or elderly parent. For birth moms, who also get an additional 8 weeks of short-term disability pay, this brought our full maternity benefit to 16 weeks; non-birth parents get 8 weeks. We also coupled our leave enhancements with improved manager training. The data gave us insights that if our managers aren’t paying close attention to that transition, your likelihood of losing someone just after a leave of absence increases significantly.

Nari Ansari: Clearly some impactful examples with regards to the use of data to inform your people strategy. Are there any other areas where you have experimented with the use of data to make people-based decisions?

Beth Grous: We’re in stage one—the early phase—of our overall people analytics journey, but I believe we are starting in a very good place. We have robust systems, including Workday and Greenhouse, to capture data. With 3500+ employees, we have scale, which provides a lot of data points. So we’ve got a good basis to work from.

We’re actively thinking about data and analytics and how we apply it to the workplace. Within talent acquisition, we monitor a number of key metrics: How many days does it take us to fill jobs? Where are the pinch points in the various recruiting stages and how can we speed throughput for candidates? I expect that in the future we’re going to be even more intensive about how we aggregate all the signals, both active and passive, around some interesting analytics. I think we’ve barely scratched the surface here. And that’s really exciting.

Nari Ansari:  I think certainly the world is recognizing that business is going to be intensely data-driven, and on the people management and HR side it’s very much heading in that direction as well. As we continue to shift from a manufacturing economy to a knowledge economy, many would argue that people are a corporation’s most important asset. 

Beth Grous: I couldn’t agree more.

Nari Ansari:  Along the lines of employees as a critical asset, one of the things we are also seeing many tech companies grapple with is how to make workforces more diverse. I know at TripAdvisor you have an equity diversity and inclusion department with a responsibility in this arena. Perhaps you can shed light on that department’s role and your organization’s journey.

Beth Grous: It’s an important topic and something many companies are grappling with. My personal macro view is that individual companies need to do much more, but that said, this is not a one-company solve for one-company problem or opportunity. This is an ecosystem opportunity. I think about not just building diverse and inclusive teams here at TripAdvisor but building diverse and inclusive skill sets that help the greater employment ecosystem. I had a new dad tell me recently how grateful he was for our eight fully paid weeks of caregiver leave, because it allowed his working wife to go back to work at her company, and not have to worry about finding a nanny,  childcare center, or a relative to help for those first several weeks she was back to work, because her spouse was able to be home with the baby — because of our benefits. I was excited to hear that our benefit had eased the transition to motherhood for a woman working in another organization.  It is important that all companies — sort of like all boats — rise together.

When we built and crystallized our organizational values back in 2016, one of the values we were explicit on is “We’re Better Together.” We then built a small team in the end of 2016 to focus on equity diversity and inclusion or what we call “ED+I.” In 2018, we looked at the demographics of our workforce, to be clear on our starting point. We asked our workforce what their experience here has been around the topics of equity, inclusion, diversity and belonging to really understand how people are experiencing our workplace. And that information helped inform our initial approach.

Over the last year, one of our insights was that we needed to focus even more purposefully on talent acquisition, which meant providing our recruiting team and our hiring managers with better tools and training around sourcing and recruitment delivery, and around building a diverse pipeline.  You can’t have a more diverse organization if you don’t bring more diverse people into the pipeline. And once they get here, they have to experience an authentic sense of belonging. It’s so obvious, right? And you can’t build a diverse pipeline unless you’re really paying deliberate attention to the talent acquisition process.

Nari Ansari:  That makes sense. And it ties back to our point earlier, that people are the most important asset in companies. When you do an acquisition, it’s a talent acquisition, not just the IP or the customer base. The people are a huge part of it. Most of our portfolio companies do augment their organic growth with inorganic growth as part of their strategy, and these acquisitions can introduce a lot of complexity and challenges from a people management standpoint. What role have you and your HR organization played as you think about strategizing around and integrating these various acquisitions, particularly the ones that are global in nature and may have additional unique complexities as a result?

Beth Grous: We recently acquired Restorando in South America and Bokun in Iceland. Both are companies with teams that are not located near any other TripAdvisor office. I mention this because it’s often easier to integrate acquisitions if you have a local presence in that market already, or a leader from the new parent company who joins the newly acquired team. When organizations do that, people on the acquisition side can see and understand what the parent company is about, through that leader. You have to think about it a bit differently when you’re totally remote from the center or other offices. Our business leaders, for sure, recognize that having a successful integration and change management strategy materially increases the likelihood of that acquisition being successful. So, therefore, the HR teams or people operations teams are very involved in the pre-acquisition planning. We invest a fair amount of time in that upfront planning, and I’m diligent about making sure that people have well-thought out, detailed project plans so that at the appropriate time, you can just enter execution mode and go from there. How do we think about organizational structure? How do we think about Day One change management and culture integration? How much of the TripAdvisor fabric do we superimpose on this acquisition, and how much of the local culture should continue to exist? I think it’s always a really healthy balance of those two things. An acquisition can be both a thrilling and terrifying time for people. There are many unknowns and a lot of uncertainty. Part of what we try to do is bring that human element to the forefront and recognize change management and communication are vital parts of that journey. 

We’ve started to develop a bit of a muscle around acquisition integration. And again, when we’re buying a company, we’re often as excited about the employees and what they bring to the whole of TripAdvisor as we are about the customer base or the part of the industry that they’re in. We’re thrilled to be welcoming these folks to the family, so we try to make it as seamless as possible.

Nari Ansari: Right. I’m glad you used that term, “muscle,” because it’s certainly a term that we think about a lot as we work with our portfolio companies. We also compare conducting acquisitions to building a muscle, and like any muscle, it’s developed and honed over time, through practice and exercise. And I think you get better with each one. TripAdvsior has certainly done enough where you’re seeing pattern recognition and have enhanced your approach on the people side, to ensure things go as smoothly as possible and you get all the good positive impacts you want on the other end.

Beth, my last question is a little more open, because of where you sit at the intersection of technology, people management, consumer internet, and international growth. You see a lot. What else in the world of tech outside of TripAdvisor gets you excited? What are you watching and thinking about in the tech world more broadly?

Beth Grous: Good question. First, I think technology is improving and becoming more integrated into people’s lives. Five years ago, if you had told me that people would be comfortable booking an expensive trip on their little, slow mobile phone, I would have probably raised a bit of a skeptical eyebrow. That was a big transaction to do in that way. And now, we see this happening all the time with our customers. Consumer habits and technology have shifted.

Personally, I’m very excited about the level of innovation in HR technology across the spectrum, whether that means delivering benefits in a different way, new data and analytics approaches, thinking about various talent acquisition strategies, or how we use technology to help us end up with more diverse workforces. The new technology solutions that I see today are very exciting to me as an HR practitioner.   I do think that technology will continue to transform the work of HR and it’s going to have a net positive impact on organizations, which is energizing.

Nari Ansari: As someone who invests in HR technology, I definitely see more interesting things and innovative approaches than in years and decades past. So, lots to be excited about.

Beth Grous: The last thing I’ll add, and I say it to people all the time, I am so lucky to have the opportunity to do this work in this company. It’s really fun. I’ve got a great team and work with a great team of executives. And for that, I’m very grateful.

Nari Ansari: That’s great to hear. We are very proud to have TripAdvisor in the TCV portfolio. Thanks so much for sharing your thoughts with us.

Beth Grous: My pleasure!

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The statements, views, and opinions expressed are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the speakers and disclaims any responsibility therefor. This interview is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified, if any, are not necessarily representative of all TCV investments and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies. For additional important disclaimers, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.


Cloud Technology Leader Clio Announces $250 USD Million Investment from TCV and JMI to Transform the Legal Industry

Dublin, ROI, Sept. 04, 2019 (GLOBE NEWSWIRE) — Clio, the leader in cloud-based legal technology, announced today it has raised $250 million USD in Series D funding from TCV and JMI Equity. The investment marks one of the largest private transactions in legal technology and a definitive shift for the future of the legal industry.  

As reported by the World Justice Project, 59% of individuals in the United Kingdom experienced a legal problem in the past two years, but only 28% were able to access help with many (48%) seeking advice from a friend or family member. Yet, there were over 138,000 practising solicitors as reported by the Law Society of England and Wales, with 63% of those residing in Dublin. 

“It’s clear something needs to change when the majority of legal problems don’t receive legal assistance,” said Jack Newton, CEO and Co-founder of Clio. “Clio is committed to building the essential operating system for solicitors, one that focuses relentlessly on unlocking new efficiencies and entry points to legal services. This will allow legal professionals to easily deliver exceptional client experiences, increase their productivity, grow their firms, and make legal services more accessible. This investment will accelerate our ability to realize this vision.”

Founded in 2008, with their European headquarters based in Dublin, Clio will use these funds to amplify efforts to support access to legal services across Europe. Clio is the only legal case management software endorsed and approved by both the Law Society of England and Wales and the Law Society of Scotland due to their robust product, exceptional customer care, and commitment to helping law firms meet GDPR & SRA compliance responsibilities as data controllers.  

“At TCV, we partner with innovative companies that are leaders in their industry and offer superior value propositions for their customers,” said Amol Helekar, Principal at TCV, and a member of Clio’s board of directors. “Clio has had long-standing success in transforming a vast industry that has been lagging in technology adoption and we are confident the company will continue to lead on a global scale. We are committed to supporting Clio with TCV’s resources and network in order to help them capitalize on their significant growth opportunities,” added Jake Reynolds, General Partner at TCV.

TCV and JMI have been investment partners to innovative technology companies such as Adaptive Insights, Airbnb, Eloqua, Expedia, Facebook, Netflix, PointClickCare, ServiceNow, and Spotify, and have helped these businesses achieve their growth objectives.

“We believe the legal software space presents significant opportunities for continued disruption, and Clio is the clear leader,” said Matt Emery, General Partner at JMI Equity who has joined Clio’s board of directors. “Clio is not only solving some of the biggest pain points for the legal profession, it is creating a platform for the future of legal services, and we look forward to partnering with the team in the company’s continued growth and success,” added Sureel Sheth, Principal at JMI.

Customers can expect to see ongoing investment in the depth and breadth of Clio’s offerings, with even more powerful and flexible tools for legal professionals to manage and grow their practices, making them more efficient and sustainable as businesses. Mark Britton, former Expedia executive and founder of legal marketplace Avvo.com, will also be joining Clio’s board of directors to provide his own industry experience as the company brings their vision for the future of legal to market. 

Raymond James served as legal buyside advisor to TCV for this investment.

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About Clio

Clio (Themis Solutions Inc.), the leader in cloud-based legal technology, empowers legal professionals to be both client-centered and firm focused through cloud-based legal practice management software. Clio has been transforming the industry for over a decade with 150,000 customers spanning 100 countries, and the approval of over 66 bar associations and law societies globally. Clio continues to lead the industry with initiatives like the Legal Trends Report, the Clio Cloud Conference, and the Clio Academic Access Program. Learn more at clio.com/uk.

About TCV

Founded in 1995, TCV provides capital to growth-stage private and public companies in the technology industry. TCV has invested over $12 billion in leading technology companies and has helped guide CEOs through more than 120 IPOs and strategic acquisitions. 

TCV’s software and legal technology investments include Alarm.com, Altiris, Ariba, Avalara, Avetta, Avvo, AxiomSL, CCC Information Services, ExactTarget, ETQ, FinancialForce, Genesys, IQMS, LegalZoom, OpenText, OSIsoft, Rapid7, Rave Mobile Safety, RELEX Solutions, Sitecore, SiteMinder, SMT, Splunk, Toast, Xero, and more. TCV is headquartered in Menlo Park, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, please visit tcv.com.  

About JMI Equity

JMI Equity is a growth equity firm focused on investing in leading software companies. Founded in 1992, JMI has invested in over 145 businesses in its target markets, successfully completed over 95 exits and raised more than $4 billion of committed capital. JMI partners with exceptional management teams to help build their companies into industry leaders. For more information visit jmi.com.

Attachments

Sasha Perrin
Senior Manager, Brand and Communications, Clio
1-800-347-8314
sasha.perrin@clio.com

Katja Gagen
Principal + Head of Marketing, TCV
650-614-8264
kgagen@tcv.com