Building the "Spotify of Textbooks" with Gauthier Van Malderen, Founder @ Perlego

0:00Welcome, Gautier, to Riding Unicorns. Thank you so much for joining us. pleasure yeah gotier can we kick off with a bit of an introduction in your own words sure um so my name is gotier i'm from belgium i've been building a company called pelego for the last kind of seven eight years pelego which means i scan or i read in latin um basically it came out of a personal pain point of mine which was really expensive price of textbooks in a very sort of short story i was going to college spending 300 pounds on a book read two chapters a book and never use it again and i noticed that all my friends they were downloading books illegally or they were buying photocopied versions of the books or buying secondhand.

0:36And I was doing my master's in the UK and I thought, okay, this might be a nice idea to try and build. Totally failed it in the first go and then came back after a few months of working in another job to say, I'll give it another go. And then we raised a bit of funding and been doing it ever since. Amazing. Tell us a bit about that first attempt that failed. Yeah, so it was actually my dissertation for my master's was around the impact of textbooks on education or something like that. I spoke to some of the publishers and I thought, what a subscription model in publishing work. All of them said, no way.

1:11I kind of dropped the idea. Then I went to work somewhere, tried to get a good steady job. And then I told my parents, look, I really want to do this textbook thing. I think their dream was for me to become a bank or a consultant. And I was going to do, my mom says I do PDFs online. But yeah. And then interestingly i tried to raise funding in belgium very difficult came to the uk and then raised a kind of a million dollar round relatively quickly so incredibly grateful been building plague in the uk ever since and i think things like sas really helped me to to start because to be honest on paper i made no sense right didn't have any education background publishing background ed tech or scale up background um so i'm really grateful for some of our early investors who took a total bet on you know a young kid who who just had a passion to to build this thing did you always plan to be an entrepreneur were you sort of hacking around as a as a kid was there anything that you did that was sort of particularly special or like unusual as a kid that made you or others I suppose think this guy will be an amazing entrepreneur yeah I never I never sort of thought it would be my career but I just had a natural knack for some of these things so kind of when I was 15 um bizarrely i went on a family holiday to morocco and um it's not very professional what i'm gonna say but i you could buy you could buy cigarettes for like a euro per pack right and back in belgium cigarettes at the time were maybe seven eight euros i was like okay i'll buy i'll buy these cigarettes and resell them at school my dad to be fair quite bizarrely you were limited on the number of packs you could buy by ticket and we're family of six so he gave the whole family tickets and i came back to like thousands of packs of cigarettes and then i got in trouble at school because i was basically selling cigarettes at school like a dealer and stuff but i didn't even smoke myself but like that was one way i made quite a bit of money then when i was at university i did my undergrad in italy at a place called bocconi and bocconi's got a bit of this um you know people who go to bocconi quite proud of their studies and i noticed that no one had the hoodies so i was like okay i'll try and make these things called bocconi hoodies and you'd have basically the logo of your university on on the sweatshirt yes and that just went through the roof we had a facebook group and i think like the first year we sold four five thousand hoodies and by year three you know there were six of us selling these hoodies like from the back of a car so i've had a knack for it i've never been like okay i'm going to be an entrepreneur now but i've um always had a way of finding ways to make money and husking a bit yeah okay yeah no fair enough so identifying sort of commercial opportunity being really commercial and then maybe also sort of happy with taking on some risk with the cigarettes business um but i know that's that's great and um can you describe perligo to us like what exactly that's how it works yeah so it's basically perligo is a subscription service for books very similar to like netflix spotify you pay a monthly subscription fee maybe like 12 pounds a month here in the uk and you get access to millions of books we were focused more on higher education to begin with because that were that was where there was a huge pain point but now we have all the best-selling trade titles as well so you know shoe dog one of my favorite books the founder of nike we got all their content and then in terms of go to market we have a b2c model which is about 55 percent of group revenue and now we have a really big b2b model where a lot of universities corporates they buy pelego for their employees or for all their students so like in the uk leeds is a really big account for us they bought i think 18 000 accounts in america we got loads of big universities like west cliff is another one so So yeah, the B2B business has been picking up a lot in the last three, four years.

4:42And I think that was really accelerated from COVID as well. Yeah. And I mean, I suppose you would have been building this at a time where Spotify and Netflix were kind of exploding. And how much inspiration did you draw from those other sort of similar models? Yeah, a lot, to be honest, because the publishing industry was very similar to the music industry kind of in 2008, age in the sense that all the major publishers have seen their revenues declined quite massively and that was mainly due to piracy so the businesses are completely different and you know the industries you know book publishing to music publishing is very very different but i think what really helped me is a lot of the publishers were like oh it works for movies it works for for for music books is the natural next step where it's going to come to so that validation of the subscription model helped me a lot to be honest from using analogies in other industries and then like even with it so books was you know you could say it probably wasn't obvious at the time but to you it was obvious and um why textbooks had someone already done books more broadly like did it just make sense to focus on textbooks yeah it's a great question so the way you should think about the publishing industry is in kind of sort of four main buckets you've got kids publishing not interesting not expensive and parents buy the books there.

6:00Then you have trade publishing, which is, you know, the big publish like Penguin, et cetera. And to be honest, we didn't start in that side of the industry because if you buy a print book for 12 pounds, you want to read it on the beach, print is an amazing product. So there's not much of a pain point to create a subscription service for trade titles. Then you have professional academic, which is the biggest industry, right? It's kind of$20 billion industry, really declining quite massively. And it was, to be honest the pain point i felt myself like why was i buying a hundred pound book when i could just find a photocopied version or so that was the main pain point and also the reason i focus on textbooks and higher ed you're never going to keep a a beautiful well you might keep your your macroeconomics book but you have to consume the content just like the pharmaceutical industry right and students they were driven by price and price alone and to be honest they didn't really have they don't care if it's what from one publisher the other all they need to do is is pass the exams that's all they care about and then the final bucket is um more the journal more like monographs much more niche where you might sell three four hundred copies of a book in print we also have those now in the ecosystem but that wasn't a core focus for us to begin with so to answer your question personal pain point biggest industry and the biggest one you can solve something for both the publishers and the end user which was the student yeah okay no i mean it's funny so i funnily enough back at school i recognized the same problem right and um me and a friend would go and buy used text box off all of our off all the other students uh and just sell them and you know no one could be bothered to sell them on ebay so we'd get knocked down prices we were buying like 15 quid for 50p how we'd be going down to the post office like with 15 bucks a week so it's like uh it's i mean it's a great problem to solve if you like look at the education sort of content market is difficult and i you know the the sort of story of spotify is quite well known right it's super hard it's chicken and egg problem getting publishers or like artists or whatever on to these platforms like how how did you solve that chicken and egg problem or or even before that build conviction that you could the content side it was the biggest as it's exactly as you said chicken the egg you need content to bring users on etc etc where we started is we started with more long tail publishers who are much more proactive, much more pro digital publishers in like, you know, cybersecurity engineering and all that kind of stuff.

8:26And then we worked our way up with the big brands from there. So it was about building momentum with more proactive, more pro digital, more pro subscription guys start to build a bit of a ecosystem and build your way from there. And then also we started in Europe. And if we think about it, the big publishers were like, okay, you can test out these models in Europe before you go to the U S now available globally. in the US is more than 60 % of the revenue. But in the first instance, it was, okay, test it in a low risk market for us. You can have the four collections. So on a specific genre or subject area, and then on a specific market, prove it and scale it from that.

9:03Yeah. And can you remember any specific kind of inflection point? You know, I can imagine in those early days, it was very manual uphill battle, sort of persuading, you know, publishers to come on and persuading them that you have the right demand for their products. and then it probably got easier. But can you pinpoint an inflection point where suddenly it became easier and perhaps the sort of power balance shifted? Yeah, so kind of launched the business 2017. First two years was really tough. I think when we raised our kind of series A, I think that was a$9 million round. That was end of 2019.

9:34That really helped us. But the big, big inflection point was COVID. And the reason for that was kind of like three macro things that were helping us. One, everyone was going remote. So sometimes professors who were like, oh i want my students to study in print they totally appreciate it they have to you know use digital to a lot of the publishers were like wow our print business completely declined here you can have digital you can have e and you can sell globally and then the third is edtech really picked up as a boom during covid and that's when we raised you know 50 million round we were able to scale quite quickly so that helped us up helped us massively and that got us the critical massive content critical massive users to have a lot of scale to then get the remaining publishers we were missing yeah and the i mean you guys are in a fortunate spot where it seems like there's a really big business opportunity but it's also has a very positive impact on society right which you're definitely seen often as at odds with each other you know whether you can build a sort of positive social impact company that's also a huge business i wonder how you've balanced those two things like whether they have ever felt like they're at odds with each other and just the realities of running such a business that's also venture back so it's about first building an amazing business which is um and then everything around it is nice right the impact making education more affordable and accessible that's at heart why we started the business but it's sometimes i see a lot of entrepreneurs they're building a beautiful impact you know i've met many teachers who are like oh this is what i want to achieve but then there's not a real business sense behind it i think that you have to go in tandem and i know that a lot of people who work here they're fundamentally mission driven so you know the fact that they can resonate with the pain point etc is a big thing that helps us and makes us more competitive than others but first it was can you solve a pain point for the student and then all the stuff around it you know the was great but it's not think of it as great business first impact second not impact first and bad business second make sense yeah yeah do you think it's ever made your fundraising journey harder yeah edtech is not a sexy industry to invest in i joke next time i'm going to do a crypto ai platform and you know raise four billion and happy days do a bit of secondaries and move to secondaries at the pre-seed yeah exactly exactly education is really tough and i think a lot of people you might have read about companies like baiju 28 billion that's now worth pretty much nothing i think the big challenge with education is is it truly scalable across the world and that's something we've done from day one one of the things i regret is that i didn't go to the us or globally faster but palego truly one ebook you can sell everywhere and now we've brought on local languages so we've opened up you know germany spain france italy so you've got your local language plus english that's really really powerful but um yeah edtech is hard to scale to be honest yeah and there haven't been that many success stories and generally multiples i mean the biggest success story right now in the public markets as joe lingo yeah trading in a crazy multiple took them a good you know 11 12 years to get there but now they're absolutely killing it yeah that's interesting with the local um languages is that like a set of tooling that you offer to publishers to translate or or is it uh no right now it's you literally go to wiley and say give me your german collection give me your italian or french collection with ai there's a lot of stuff you could do around local translations etc however that would be infringement of our ip right so we don't do it today right okay yeah what about like product vision i mean building marketplace is really tough and you often have to build sort of tools that are valuable even in single player mode for the for either side of the marketplace like have you have you done any of that like do you build tooling for publishers yeah so for publishers specifically a bit you know the ability to upload your content quite streamlined.

13:27Then we provide them all the data back in terms of consumption trends. So in traditional platforms like Amazon, et cetera, you get no data. Whilst here they can literally see this user in the UK has read three out of the five chapters. This user in Botswana has read those four chapters. So the data has been critical for the publishers. I think on the consumer side is we're building a lot of stuff to make education much more engaging. If you think about it, right, the print product hasn't changed for four or five hundred years so now that we have the content there there's a lot of cool stuff we can do so you might have seen we launched a researcher system which is an ai generated basically you can search across all our books and it will generate a 300 word answer pulling out the content of the of the of the books we're now looking at uh so on all our books you can now listen to premium ai voices so a lot of the major books are not available in audio formats are huge for accessibility and now that we have the content there you can build a lot of tool set layers on top flashcards quizzes etc to make the content more engaging so you're really moving away from that analogy for a subscription service for books an ecosystem where you can find all your core learning material and then you've got all the collaborative tools on top and you know you've heard of quizlet maybe the flashcard company well if you've got the content you can build that all in there right is there is there anything um that you can do like around ml to provide insight on what kind of content works to publishers so you can you know you can see that one publisher has published a certain topic arranged or laid out in a certain way that you know from looking at your library of other similar books actually probably isn't going to land could could you get like that granular with insight at some stage for sure so basically we can go in our own kind of custom acquisition cost side of things we now anything from activation because you read these three books will give you those two books that you've got to read we can now do predictive analytics on who's reading what and how much time what kind of retention profiles that we look into but i think the most important thing for publishers is you can give them aggregate data of which chapters are being consumed which are not so what's really interesting is you've got like heat maps on the books and you can see where it's getting highlighted which chapters are you know more popular than others and sometimes it's fascinating to see that maybe like some of these best-selling textbooks only 70 percent of the content is getting read and so the editors then go back and say okay chapter nine is never being consumed we've got to redo chapter nine yeah so that kind of stuff we can do can i do predictive analytics based on highlights etc not right now but it's something we're looking into yeah what what kind of strikes about this is that it does seem like you that perligo is roughly what you set out for it's it's you've basically executed on that initial vision whereas you know it's pretty common it's probably more common than not to have a bunch of pivots like do you see that journey is as as being kind of linear in your in your vision or have there been sort of diversions away and experiments and points where you thought maybe you'd have to do something slightly differently?

16:32No, so I've always been true to the vision. And I think when you talk to someone in the pub, it's really easy to explain what Pelago does, right? Super simple. And I think the simplicity is super key at heart and something we've had to, I've always pushed. But now I think what we've seen over the last two, three years is the content deals are kind of done and now it's building everything around it. So Dialogo, which is our research assistant, that's a really cool product, which think of it as like perplexity but on all the book content right very very cool so you're building up on your vision now with other things around it and that i hadn't you know that i hadn't seen six seven years ago so now you're kind of accelerating building your vision a bit bigger a question i get asked a lot is will you ever go into self-publishing and allow you know hector as a professor to come directly on the platform i'm not doing that today because a big thing is you want to make sure you have the best publishers and the best quality and I feel like self-publishing sometimes isn't the best quality.

17:27But no, we've always stayed true to ourselves from that perspective and sometimes it's taken a bit longer, right? Some publishers have held out, but once you scale and build more revenue, those discussions get easier and easier. Yeah. Gautier, are you a solo founder? I've got a co-founder CTO, not yet, but when it comes to fundraising, publishing deals, etc., I have to do all that kind of stuff. And would you, in whatever you do next, if you do something next, would you want a co-founder again yeah for sure so i've got a close friend who i work with a lot my next company i'll do with that individual yeah and matt and i matt's a perfect compliment to me i think actually if you're doing a big scale up three founders is probably the best i don't really believe in the solo founder thing too much to be honest i think the you know there are quite a few cases of huge you know generational companies being built by solo founders and like i wonder whether there's a kind of a certain type of character that can it sort of has the resilience to be a solo founder and just you know and therefore actually just having one person's vision not having too many cooks sort of ruining the bra kitchen yeah um but from a support perspective in both the highs and the lows like i think having co i would agree that three is pretty ideal let's see maybe you know second company you have two co-founders who who see you know you need one core leader one majority shareholder right that's important and then if you look at those elon musk those guns all had co-founders in their first or second companies and it's the third fourth company that they just went all in but they also used all their own money right so just like screw it let's do this house so i think like now for my second one want to build another big scale venture-backed business we can definitely do it with other people and then who knows your your third one you'll see right after that but i think it's a journey still so what what's been the biggest benefit to having a co-founder real perspective is it like is it the moral support is it the well you're probably not technical he is is it just the pace that you can build at um for me i'm really good at sales i'm really good at fun fundraising i'm really good at setting the vision hiring etc and matt is incredible at the technical side of things right so for our last round a big thing we were doing was pitching these new ai solutions that we were building and matt had gone to build all that i was able to package it and then deliver it to become a sellable asset so for me it's just pure complementary skills and because i'm not technical he is way more technical than me and he overcompensates there whilst he's not a great sales guy and i i balance that out for both of us yeah how how's other things whilst he's focused on building basically yeah and how how has your role changed over the years a ton so in the beginning and i think that's something i miss is before you're a total generalist you're doing the deals you're doing a lot of the stuff and then you go into a bit more of a specialist and now again a bit more of a generalist but you've got to change all the time right so for example never scaled a business in the US.

20:32So I was in the US probably every three weeks for the last two, three years, because you're the first sales guy and you set up the team there, et cetera. So no, you're constantly changing. I'd say your role changes probably every six to nine months as you're scaling. I think it's a really interesting conversation because there's a lot that you can read and a lot of people talk about sort of best practice for how a CEO or a founder's role should change over the years and through the different phases of growth. But I think the risk of that is that you end up not being authentic as a founder to like partly what you enjoy and therefore probably what you're good at long term.

21:08Like how much do you listen to the sort of playbook around company building and how your role as CEO should change versus sort of feeling your way through it? That's a great question. when i was more a bit more insecure as a founder or more immature as a founder i would listen to everyone and i've made so many mistakes right one of my biggest mistakes is hiring senior execs from big publishing houses to come and work and build at palego one of my big lessons is it's much better to hire someone for an amazing attitude that doesn't have industry experience than someone who's got that 30-year experience but of course when you raise big funding your border like look could be a good thing to hire these kind of senior execs.

21:49And actually every CEO I speak to, every founder building their company, there's kind of been a pivot over the last 18 months with like, you know what? No, I want to go and do those deals. I want to build that myself. So for example, one thing is in the early days, I was doing all the content deals and it's something I'm good at and I'm passionate about. It was said that I had to focus my energy on the US and other things and take a step back, hire execs to come in. What we've realized is quite candy that didn't work out went back into doing the content deals hired a few more junior and ambitious people and they're doing so so well so i think the answer is i've made mistakes and i've tried to be someone i'm not i love being a deal maker and i love doing deals and i love the kind of nitty-gritty of the business and that's what i've got to double down in so now for example i'm still involved in content on the big deals and the content team reporting to me because essentially content business is a really important thing but then other things like i used to do the finances in the early days i did financial modeling and all that stuff for the business now i'm out of that because that's not where my strengths lie yeah double down so what i'm trying to say is i don't think people change that much during their careers and it's about doubling down on what are your super strengths and just honing in on the super strengths and surrounding yourself with people who are complementary to your weaknesses so like my attention to detail is not great so i've got loads of people around me when it comes to legal and finance who you know will look every cell and everything i'm not into that kind of stuff and it's not my forte well what's shocking i'm to say what's shocking is that people enjoy it and thank god you know thank god people are different yeah i think the that that flip in the last sort of 18 months two years has been something that i've noticed and we have a couple of portfolio companies episode one which have made that change actually they've you know scaled incredibly far they're two of the top performing companies and across the funds and they both looked at their sort of middle management and thought were just a bit underwhelmed and thought and actually ripped them out and brought in really hungry people in their late 20s you know early 30s who felt like a role a senior role with a lot of responsibility in a company a rocket ship like these companies are would be the opportunity of a lifetime um and actually something they could really truly get rich from way outperformed those sort of traditional exec experienced middle management type folk and like you see it all over the place it's definitely you know only in the news recently was bending spoons the company that right you know that they've got a 28 year old running evernote and it's like you know this i think it's really good that that is sort of proliferating because these young people they may not have experience but if you're a super fast learner you're going to come at things from first principles unencumbered by sort of ways of working that may long no longer apply um it's proven to be super effective if done well yeah and i think i wasted time hiring to your exec to bring them in in the next one just hire for pure pure talent and energy and the ability to learn and that's all that matters and i think before you you know when you're first time founding you kind of think i've got to do these things but now just be true to yourself and today that's exactly what we've done and Yeah, it's a mistake, but in the grand scheme of things, it was a mistake of 12 months, basically.

25:01When you're trying to hire those sorts of people, what kind of questions, what kind of exercises, what kind of job specs do you need to put out and do to attract them and find them? It's a great question. I think the more generous the role, the better the people will apply. What I think is really interesting in terms of questions, I ask some of the things like, you know, how have you failed? I ask questions. one thing i've really noticed as well is ultimate positivity is something i buy into and you need to be you know i'll tell you honestly heck everyone rejected me in the early days right and now you're further down the line it's kind of funny because you bump into ex-professors or ex-investors like amazing i believed in you from day one but it wasn't the case and it's just because i've been relentlessly optimistic and i've been incredibly resilient and that's the most important thing in a startup so you've got to try and test for the resilience you've got to try and test for that positivity and i also think you learn a lot from your failures so like honestly i think building a startup is just failing a lot and learning a lot but making those mistakes cheaply and efficiently and so you ask questions like how have you failed before and things like that and you get a general good sense for people i once had someone who did really well on the interview and then i asked kind of you know some of the positivity questions i asked and that person was really negative and And that was just a very strange red flag for me.

26:20And then bizarrely, I go way more with my gut than I used to. In the beginning, I had all my papers and I would do all my interviews and stuff. If your gut says it's a no, it's a no. I'm going to ask you that question. So what have you failed at? What makes you so resilient? Oh, funny story you'd ask me. I'm actually writing a book about all the failures I made. I'm trying to do it in a jokey way. So many. So one of them is a big one is be more American. So I was in the US a few weeks ago. I'm so shocked in America. It's a bit corny. So I'm from Belgium. In Belgium, if you're successful, you go from your town to the next town.

26:54Then I came to the UK. And in the UK, it's like, be more ambitious, but have that sort of Anglo-Saxon realistic ambition towards it, right? You know, like in the next five years, we'll do 100 million. That's good. In the US, I meet these 25-year-old founders. They're like, we're going to be 45 billion in the next six. Oh, this is so corny. You know what? That ambition fuels into other people's ambition that positivity it feeds into it so i would say be more american that's number one other mistakes i've made so so many in hiring is my biggest mistakes i think and this is again something that i i think is maybe going to be a bit on them i don't so this is quite a punchy one but i don't believe in it and i should but i don't believe in 100 remote work so why is palago so successful is the early days we were just a bunch of 15 people in a room and just trying everything thing and we're sitting together but if you're going to build a company remotely I just don't think you can build that startup culture that you need so again next one today we have a bit of flexibility and people come in three days a week but I truly believe culture is set by sitting next to your colleagues and so one of my mistakes is when we were COVID we became 100 % remote then we saw the culture kind of go down a bit then we came brought people back in so just stick true to yourself and be true to your values as a founder and don't try and please everyone and I think I've tried to you know sometimes you want to make sure everyone's happy and i think culture is also about saying what you're not than what you are you know so do you think it's hard once once you've gone to like even partially remote to go back to fully in the office is that just how people need flexibility right so i'm totally for flexibility but i think i meet these early stage founders and i'm furthered in my journey right we're a big company now and and like it's about scaling and optimizing but in the first two years you need to be in a room with five other people and just you know breathe the the energy from from the founders so yeah i think it's critical in the early days and i do think as you scale you need to offer more flexibility but i don't believe in 100 remote which is punchy how do you feel about it what do you think um and i i totally agree i think some flex so i think they're different i actually think it's partly about authenticity authenticity again so there there are of course counter examples which disprove the rule you know there are great companies that have been built fully remotely but by being fully remote you have a way lower chance of being incredibly successful so i i'm i'm completely agreed on that but i think i think you know if you if you compare like revolute to monzo culturally like they're both super successful business businesses but revolute is an order of magnitude bigger and they have an intense culture i don't know if they're fully in the office but i would imagine that they pretty much are and certainly it's a much more aggressive culture and i think that's authentic to nick and you you know what you're signing up to whereas you know they've always been the more cushy option and um they haven't moved as far as you know i noticed years and years ago i was early customers of both of theirs and like product velocity was just way slower at Monzo like things weren't shipping and so you know I think there are all companies that bridge those two extremes and I think can build like really healthy cultures but you know at the end of the day the people who win are the people who work smart and hard you can build something good by working smart but you're going to be beaten by the people who are also working hard yeah like Tom the founder of Monzo is an investor and player lovely guy did really well with Monzo amazing but then when you listen to Nick you're like wow I'm gonna work 23 hours a day and uh you know I will forego the birth of my first time first child to make sure that my uh the new product is out on it it's just exactly that energy is different and and both work great right models are beautiful I love the company love love it and it's it's more fluffy more nice Revolut is just like ruthless ambition and ruthless execution and you can't be both basically is what I think.

30:54It filters, it's a funny conversation because it filters down probably from the founder and the founder's ambition. And I don't think anyone could say that Tom is not an ambitious guy. You know, he's built like multiple, unbelievably successful companies. He's one of the most successful entrepreneurs in the world, realistically. And yet there's like Nick, who's this other level. But it just depends on what you're optimizing for as a founder, right? Do you want some balance in your life? Do you care about things that are happening outside work? Or is all you care about your business and its success?

31:31I do think when Tom and Nick were in the early days, it was head to head, right? They were pretty much same valuations, et cetera. And it's kind of when Tom left, I think three, four years ago, that Nick just went. And that's why I think I found the lead side of things still so critical to get to super scale and success. And TS, the CEO of Monzo, amazing, great. but you can feel it's not as founder driven as when Tom was there basically. Yeah. It's more of a frank. Yeah, exactly. Yeah. And it's great. I use it. I love it. Cool. Yeah. Really good discussion. What's been the hardest lesson with Pileguy?

32:06Oh, great question. Hardest lesson for me as a founder, as a company, what do you mean? Yeah. For you as a founder, like something that you maybe didn't want to believe, something that was just really hard for you to get your head around or some change that you needed to make. or something where you went down the wrong road and had to change. Yeah. I think my biggest regret is not scaling internationally faster. We only went to the US in 2020, and we'd already been around for three years. And so my learning for the next one is be global from day one and then build local. So do local adaptations to the business.

32:42And that probably cost us a lot of revenue because we thought, okay, let's crack the UK market and then we scale. We should have gone global from day one. and then another thing which is a bit more difficult is building a company in europe is so much harder than building a company in the us i think most likely my second will be first us-centric first and i'll come and build in europe but where you build your company makes a huge difference and don't get me wrong you can build amazing companies here in europe at a much cheaper price but you need to be in the us to get that ambition to get that what i've raised here in the in the uk great i'll multiverse best funded ed tech company but in the us i probably would have raised double and it is something but money compounds more success because you can take more risk and push harder so yeah unfortunately my big lesson is probably go go international from day one and raise in the us because it's your likelihood of success is much much greater and we've raised from us investors and the way us investors think it's completely different and since you know i've started playing seven eight years ago a lot of those sequoia didn't exist in the early days right when i started and the the way they think about building companies is so much more different than european vcs when you meet sequoia they don't care about the financials they care about the long-term vision and you can see their long-term holders while some of the more european investors are okay how can i you know exit this to amazon in five six years as an example for playgo but i'm making this up right but just to illustrate the difference how much have you raised today 95 million to date yeah yeah yeah and the um international rollout like how in practice how would you have done that earlier like you know what did it what did it take and could you have done exactly the same playbook if you'd done it years earlier yeah so in the early days you're thinking just about survival can i get to my next revenue target to raise my next round of funding one of our biggest growth channels is seo for every single title we have on Pelego you have a unique URL which people go macroeconomics free pdf and Pelego is the first result but SEO takes time to compound right it took us seven eight months before you see the results of the work you've done before so I should have invested in SEO earlier being more confident about my SEO strategies because that's a literally a zero cap way to scale the company and also internationally and I had a lot of traffic coming internationally but I hadn't opened up the payment provisions through stripe you can literally open up anywhere in 10 minutes right so we just should have opened up payment provisions globally and be more bullish on that seo strategy which was great interestingly we saw seo dip a bit last year because of all the ai changes but then what we've done is we've done a few changes here and there and seo is back on like all-time high so yeah i'd say try and find a low cac way to scale internationally because then it didn't cost us anything to have users across the world and we should have just offered more payment solutions faster yeah okay and i mean it sounds like you might have another business in you at some point but what continues to drive you with paligo now yeah so right now i think i'm kind of at the the third stage of the company the first stage was can i prove this is a concept that works and can i survive done that amazing second stage was can i scale this internationally can i continue to execute on the vision and essentially build plug into big company done that amazing the first stage is scaling internationally and working towards an exciting exit to big group or maybe you know and that's the kind of final stage or chapter of of my career so that i can say i went from zero to exit so i'm excited for that now right we've got a lot of interest from strategic players you can see that mna is really picking up since september there's a lot of work there I think the final stage I want to explore is see it all the way to the end and then work for a strategic for maybe one or two years so I think for my own career that's the final bit I'm still missing right as a founder I've done a lot of the standard tranches and then if you can say wow I went from zero to exit in this time period I've built the whole vision I think as you can see there's a lot of appetite for investing in second time founders and so you can be even more bullish even more punchy on your next business and you can be much more long-term thinking whilst historically i was always about survival survival i can literally go to invest and say look give me 10 million i'll see you in two years i'm just going to focus on product product product but i think you need a win under your belt in europe to do that yeah no 100 percent and um well hit me up when you do the next yes i will i'm thinking the textbooks ai no no yeah um no that's I said, how proactive are you with his sort of exit route?

37:21Because I think it's something that often isn't a boardroom discussion, particularly early, because sort of people don't want to, you know, founders don't want to insinuate that they're thinking about an exit for fear of spooking investors. Investors don't necessarily want to raise it for fear of seeming like they're losing faith in the founders or the, you know, the execution or whatever. But it's a really sensible thing to do. We have started advising our founders to just gently, on the back burner, just building certain relationships, maybe with customers, with partners. Think about who might be the people you'd exit to in future.

37:59Because you want to be ready to go when the opportunity is right. But how proactive are you? How much time do you spend on that exit path? Yeah. So I think the way you should think about it, I learned this from the founder of Shazam, who sold his business to Apple. you should always be having discussions with your big strategics right and at the same time you should build an amazing product and know what strategics are interested in you most likely with Pelago and we've had this in the past we've had a few inbounds and then you talk to one or two strategics see where they're at I think one thing which is quite interesting is a lot of founders you see you've probably seen this in some of your portfolio companies people who are really good at the early stages are not that good at the later stages but what I've noticed is if the founder isn't part of the story, the equity value or the EV multiple drastically declines.

38:43A lot of people, when they're acquiring a business, they're buying the founder team, they're buying you. And so it's so critical. So it's not like I'm spending all day, every day on it. Every time I fundraise, I go and see my strategics and we've had a few inbounds on the back of that. The way I think about it is the opportunity cost of my time and the return to my investors. So now, you know, what could I do? I can sell to a big group, exciting. I could raise a big, big round and maybe do a bit of an M &A consolidation? I'd say, yeah, it's important of checking in every six months with the big strategics, but I wouldn't make it my full-time job.

39:17Build an amazing company, amazing business. And what we've seen is the inbounds arrive. Every time you fundraise, you get something at the same time, right? So it's about when you want to do that. But yeah, there is something disingenuous with a lot of founders where a lot of them are kind of scared about that. And then what they do is they'll bring in a professional CEO. And then I've seen a lot of founders have to come back and re-fix the business. so my views are as a founder it's your responsibility to see it to the end and sort of saying oh i'm tired and i want to leave because i've done this for five years i'm good the early stages for me that's a bit of a cop out to be honest and for you as an investor you'd probably be disappointed as well potentially yeah depending on the scenario or the situation but um because at the end of the day where you're at episode one is an early stage right so you're buying into people people people that's all it matters yeah yeah business will change everything will change some business that you thought were going to be so yeah it's quite funny because we had a adv legal in general and they had a company of 32 companies and i think there only like three left and the partner managing part of the time thought palego was never going to make it and he thought this other you know crypto company was going to make it and so you know it's like you can never tell your winners basically you really can't he's just backing the individual back the individual is yeah i know for angels it's just oh is this found do i believe in this family that's all that that it's all we do and yeah i mean goes yeah it's been a fascinating and far-reaching discussion i feel like we've got into weeds sort of operationally had a lot of insight around building scaling internationally fundraising what might come next so tons of nuggets for our audience who are gonna absolutely love this episode we have some sort of default questions that we want to ask you so three three dinner party guest games two party guests and you would have to dinner and they can be dead or alive oh great question okay so number one has to be phil knight founder of nike the guy who wrote shoe dog what an inspirational story that book changed my life literally because we think of nike today as this massive success story but almost fails halfway through then on leadership someone i aspire to probably obama i think i love his leadership star he's so good at like joking with people but then also being very serious at same time and i think today we lack probably that quite a bit this third oh it's this third i don't know sorry i don't have it on top of my head yeah give me an intimate dinner you'll get much more of a fair yeah barrett and then we also ask um for a future unicorn prediction um any company that you think oh very interesting does it have to be a company or could it be like a theme yeah it's got to be a company hmm great it's got to be a company great question so it's a future unicorn is anyone you want to plug from episode one no i mean so do you do any angel investing or um a few massively right do you think that what they're doing now what you think they'll do in future will be a unicorn okay so there's a cool company that i i'm involved in and have you heard of public domain books before these are books which come out of copyright after 60 years okay yeah yeah no i mean i know of that i didn't know the term yeah and basically what's quite interesting is you can then add your own isbn and then you can resell it right now it was so interesting with some of the developments in ai a lot of these public domain books they're really bad quality and i met this founder who's able to extract the text and build a beautiful typeset book create a book on the back of that and then do print on demand through kindle so it's still in its early days but basically imagine like you could take all this content all this public domain content that people are looking for make it beautifully typeset start selling it i'm pretty bullish on that company yeah it's quite a hacky idea quite yeah but i thought it was really clever when i saw it i was like wow it makes sense awesome gotier i've absolutely loved um chatting to you it's been brilliant uh and that is that's the end of the show.

43:13Awesome. Thanks, Hector. Lovely meeting. Have a good one. That's it for this week. Thanks very much for listening. To stay up to date with the latest episodes, please follow or subscribe on your favorite podcast platform. We also have a newsletter called Reading Unicorns, which is another great way to get every episode direct to your inbox. Please tell your friends about it and engage with us on social media. And we'll see you on the next episode.