Coffee with a startup CFO – Hugo Grimston at Paddle

As part of our Coffee with a startup CFO series I will be meeting with CFO’s within the tech startup space to discuss their views on the market, career experiences and how the future looks for them. This week, I caught up with Hugo Grimston, CFO at one of the UK’s fastest growing software scaleups, Paddle. Check out his thoughts here…

What do you make of the current UK startup market?

There has probably never been an easier time to start a tech business in the UK.  The costs of starting a business have decreased significantly owing to cloud based servers like AWS which you can dial up and down based on need.  The funding environment remains benign, although that may not last.  Tech startups are the talk of the town, so there’s a lot of capital chasing the good ideas. If you have a great idea to go alongside a great founder and story, then it’s as good a time as any to get funding. Finally, there’s a lot of support from entrepreneurs and a strong tech ecosystem in London so lots of people to bounce ideas off!

In terms of the trends of businesses that are being funded in the UK, I am most excited about FinTech and SaaS businesses where we continue to produce companies that are beginning to stand toe to toe with the best US companies.

Why did you move from corporate to startup?

I started at PwC in audit and left as soon as I got my ACA.  Audit for me was always a means to an end, however without it I wouldn’t be where I am today! Following PwC, I spent 7 years at Greenhill & Co., a boutique investment bank, where I advised UK and European companies on mergers & acquisitions and restructurings. I really enjoyed the variety of work there, however I got frustrated being in advisory and the short term nature of the projects.

I had a yearning to build things and I also wanted to get into technology given its transformative power. I had an idea to start my own mobile app, however that was vetoed by my wife (we’d just had twins and had enough disruption at home!) So I did the next best thing which was to find Christian, the founder and CEO at Paddle, who was 19 at the time and took a bit of a punt on him.

At the time, Paddle was 8 people, had practically no revenue and had just made a massive pivot from the original business proposition. I saw it as an opportunity to get my foot in the door in a highly operational role and learn a lot very quickly.  If it went bust within 6 months, at least I would have learned a huge amount.  4 years later, we’re still here and we are now 130 people strong and have raised $25m in funding. It’s been quite a ride!

What advice would you give to people looking to make the jump into a startup?

If you like structure, consistency, process and a steady 9-5, then don’t join a startup! There’s a massive difference between a genuine startup (early stage Paddle) and more like where we are now (scale up), where there is now a bit more structure.  If you like a challenge, are willing to roll your sleeves up and get involved in anything and have the ability to learn and improve, then do join a startup.  If you are a domain specialist, then it’s better to join a scale up.

How do you view the role of a startup CFO currently? And in the future?

For me, there are two parts to the role of a CFO.  The first one is similar to a senior finance role in a more mature company and it is to be the custodian of the company finances, cash and reporting.

The second part is more strategic: where to focus the company’s finite resources to achieve the highest ROI (i.e. where is developer resource being spent, should we prioritise product X over product Y)? It’s a 3D game of chess.  Also cash management and fundraising is key, you need to be on top of how much cash you have left, the burn rate and when to start fundraising. Fundraising should be done from a position of strength, not launched when you’re running out of money.

In the future, the nuts and bolts of accounting will become less important because more of it will be automated. There are already some awesome tools out there which have transformed the way bookkeeping is done (the likes of Xero and Receipt Bank).  The process will never be fully automated, however a lot of previously time consuming and repetitive tasks have now all but disappeared, which is a good thing! This means that the CFO role becomes more about providing real time data to help enable other functions rather than the monthly reporting cycle.

What’s the best part about your role?

The variety. It sounds very clichéd, but really no two days are the same.  I have a great team around me who ensure that monthly reporting runs like clockwork, so I can spend more time on the strategic decisions.  Fundraising is infrequent but can be great fun, as well as being pretty intense.

Can you tell me about a time in your startup career where you learnt the hard way, even though it was a great learning experience?

We’ve made tonnes of mistakes over the past few years, but the one mistake which always comes back to bite you is keeping on people who may be excellent at their job but create a toxic environment for other people (i.e. very negative, not team players, not aligned with your values).  We have learnt the hard way that not getting rid of these people can demoralise the wider team and lead to other good people leaving which is a nightmare.

How crucial is it for you to have a great team around you, both finance & SLT?

Having the right team in place is critical, after all you spend most of your waking hours with them so there needs to be a culture of both mutual respect and fun! We put a huge emphasis on hiring the right people and have a pretty robust interview process which includes looking for values fit as well as competency.

Our SLT is a good mixture of people who have been around since day one and super competent people who have come from blue chip tech firms.  It feels like we have a good balance of youthful exuberance and experience which is a pretty potent mix!

What is it that you look for when hiring a #2 & subsequent team?  

In the early days, we tended to hire young and ambitious generalists which served us well, as we couldn’t afford more experienced people.  Many of these people have stepped up and are now managing teams which is awesome.

Now we are bigger, more established and have more of a brand we can hire people with more specific skills and experience. For example, I’ve just hired a Head of Risk and Compliance who is a payments expert who has worked at Google and Intuit.

I think as we progress further along the scale up vision and become a 300+ person company, this trend of hiring domain experts will continue.

If you were to recommend a work related book, what would it be and why?

I’d recommend ‘The Five Dysfunctions of a Team’ by Patrick Lencioni. It’s about how to improve as a leadership team and how that permeates into the wider organisation.

Hugo is CFO of Paddle.com (www.paddle.com), an e-commerce provider for software businesses, which he joined 4 years ago as employee number 8.  Paddle is one of the fastest growing software businesses in the UK, growing at 200% year on year since inception in 2012.  Paddle now has 130 people based near London Bridge and has raised around $25m in funding.  Prior to joining Paddle Hugo worked in Financial Services with PwC and Greenhill.

‍