Episode Transcript
Lauren: Hello, and welcome to London Stock Exchange's CEO series, Be Inspired, where we talk to CEOs, founders and senior leaders of companies on our markets, and ask them to share their journey with us. We explore what it's like to be a company on public markets and how that has supported the company's growth and led the business to be where it is today. This morning, I'm here with Jonathan Satchel, CEO of Learning Technologies Group. Good morning, Jonathan. Thanks so much for joining us. I thought we might start with where you started. Where did Learning Technologies come to life and what did that look like for you?
Jonathan: So we need to go back a bit in the timeline for that story. I was a computer salesman in London in the mid eighties, and I fell into the training world, and I'm no training expert, by the way. I don't know. I know what good learning looks like these days because I'm surrounded by wonderful experts, but I'm not, it's not my background. I bought a video training business back in '97, turned that into an e-learning company, and sold that in the mid 2000s, thinking I'd probably leave the industry, and then my now today chairman and I were looking at various things to do and I came across an e-learning business, a market leader that was in some difficulty, and I went down to troubleshoot it in 2007, 2008, and we ended up buying it. Short story, just when the global financial crisis was beginning to evolve. So good timing... not. Spent a couple of years turning that around. It was pretty tough. It was based out in Brighton. I was away from family a lot. But we got it back on the road. We really did. And by about 2011, 2012, we were thinking about what to do next. And we started getting quite a few approaches from private equity about whether we could be the foundation stone for a consolidation, a buy and build. And I thoroughly agreed with them that the industry was highly fragmented, it needed that sort of player. And it started us thinking, do we want to go down that route? And we felt that we wanted to be a bit more in control of our destiny.
And my chairman, Andrew Brody, already had RWS Group on the market that was very successfully- was well known. And we decided that public markets gave us more flexibility and a sense that whilst of course we respect corporate governance and our needing to be accountable to our shareholders and investors, we felt we had more direct control over the way that we would run the business. So we decided that was our financing route. We then had the next issue of not wanting to sell down our own personal stakes. We owned the private business half half, because we really felt we could go on quite a journey. So we did something that was pretty unusual at that time. And of course it's very normal now called the SPAC. We went and actively searched out a clean cash shell through Nuis, and reversed it to that in late 2013. And that's how Learning Technologies Group was born.
Lauren: So that was 2013. And so how have being on public markets helped support the businesses growing through acquisition as well as organically. And how has being a public company really helped you grow the business to today?
Jonathan: it's quite a difficult question to answer because I don't know what it would've been like had we been in the shadows and less well known from a sort of private equity finance perspective. I talked to lots of other CEOs and some say that they find it sometimes very difficult to raise money. And that's the thing on the markets. I've been fortunate. I mean, this is, this is my first and only rodeo doing this. But you know, we've raised money six times and we've always been plenty of times oversubscribed. I've found investors incredibly supportive. We burst through that. I think Andrew was a big factor in this. We burst through that sort of not very interested in this gap very quickly because I think he garnered quite a lot of following and support.
So we had meaningful investors from the get-go. And I'm forever thankful of that. I think the profile of being a public company is helpful when you're trying to be, particularly in America when you're shopping for businesses in America, that additional veneer of credibility is helpful. And also when you are persuading a founder to sell their business to you, but carry on on the journey and they'll get further value as they help grow their particular business within the group. Showing what we've achieved with the public company progression is very credibility enhancing. And I think that's quite a differentiator from the private equity route. So, those probably are the main points of what I found to be beneficial. There are of course challenges as well, and the day-to-day scrutiny is not always something you feel comfortable with, but you get used to it. And, you know, we've been fortunate. I I was told from the very beginning, you know, make sure you under promise and over deliver. And it's a mantra I live by.
Lauren: Sometimes UK analysts and investors are accused of not understanding tech well enough. What's been your experience?
Jonathan: I think that's a bit harsh, to be honest. We are not living in Silicon Valley, and thank the lord for that. I'm afraid I don't subscribe to this notion that, you know, you can throw immense amounts of money at a business and just expect it to grow the top line with no regard whatsoever for the bottom line or how much money you're losing. I think it inculcates an irresponsibility in most cases. I mean, there are of course some spectacular examples of success, but you start to become less cost and margin conscious, and it's very hard to wean a business off that philosophy. So, I don't think that just because our investment community does not really subscribe to that point of view, that they're wrong. I've never found a situation where somebody who should understand the technologies that we deploy and how we're doing things, to have a problem in doing so.
Sometimes I think that we maybe get a challenge in that people think we should be much more pure tech, and it takes a while for them to realize that people learn from each other. People don't just use a screen to learn. Yes, of course, it's really important. We're called Learning Technologies Group for a reason. But we recognize that the blend of expert facilitation, learning the transfer of knowledge and theory through a screen, through some form of interaction or simulation that you do on your device, in your own time, at your own pace, all of that is really important. And sometimes it takes a while for investors to get to the point where they realize that blend is really valuable. But no, I've not found a situation where I would say that the tech aspect of what we do has been unsupported by investors.
Lauren: And as you go forward, what do the sort of next five years look like? How are you gonna, that's a big question, right? But, what does that look like for your time on market?
Jonathan: I always put a health warning on this answer and say, you're either going to think I'm arrogant or mad. We've been astonished by, and, and frankly humbled by, the journey we've had in the last eight years, to achieve the size that we are now and, and, uh, and have the array of capabilities and unbelievable talented team of people is just great. And I don't just use those as throwaway lines. I really do sincerely mean it. It does mean I keep on recalibrating my horizons. My wife complains at me all the time about this, you know, you get there and then you just want to get to the next one. And I don't know, it's just within me. And we genuinely think we can do something quite special here now.
And we are not a small player in the market. Now, would we call ourselves a global market leader? I don't think so. I don't think we're justified to do that yet, but we have a global footprint or a footprint in most of the vital business centers around the world. And we have emerging financing fire power. So we are certainly able, I think, to begin to contemplate making acquisitions that might be in the many hundreds of millions of dollars, possibly even beyond that. Now that's where someone's going to certify me as sounding mad. But we're a business that is going to be doing 750 million of revenue this year according to what analyst views are. And very profitable. So I think that we can start to genuinely think about where we go next. And that will be further software company acquisitions most likely in America. I think that there's no reason to believe that we can't see a revenue of in the one and a half to 2 billion range in the next five years. And dollars I'm talking now, just because most of our revenue is derived in dollars.
Lauren: You clearly have a really good picture of your own business. What advice would you give to someone setting out on this journey now or looking to to grow a business in the UK either in tech or in other sectors? What other sort of key learnings for you over the time that you spent with the business?
Jonathan: Naturally, the advice varies, or the emphasis of it varies depending on their stage of development. But of course, I suppose the general principles are a little bit back to what I said to you about the way Silicon Valley growth capital approaches things. I would say, of course growth is important, but recognize the balance and the tension between revenue growth and profitability. So at first, of course, everything is tilted towards revenue growth, but there is a time where those have to, to marry up and run in parallel with each other. I think there are two or three essential skills for an entrepreneur. One of them is a sales focus. And I mean that just in the very broadest sense, you know, customer facing, staff facing, emphasis on persuading people to do something that's selling effectively.
That's the essence of selling. So having that focus and also always remaining true to your original purpose. Be prepared to adjust it, but remain true to what you originally tried to achieve. And do focus on the numbers. At the end of the day, I'm old-fashioned at heart. I'm afraid my view is that profitability and cash really matter. You know, cash is what drives and is the lifeblood of a business and ignore it at your peril. And if you are always going to be looking over your shoulder thinking, oh, I'm going to my funding round Z next, and I'll still be able to carry on spending the money as I'm spending, one day, that funding round won't be there. So always be careful about being cost conscious, margin conscious, and running the business in a sensible way and I don't think you'll go far wrong and, and caring for your customers and your people, you won't go far wrong.
Lauren: And for you personally, what have been the things that have helped you along that journey?
Jonathan: Oh heavens, loads. I have a pretty indomitable sort of willingness to pick myself up and dust myself down from the mistakes. And I'm not embarrassed by failing or mistakes. That's American culture, fail fast and go again, I'm very comfortable with, and believeing me, I've done it plenty of times. I think learning from mistakes, making sure that you carry people with you who have a similar philosophy,who are also willing to learn and make mistakes in front of you. I have a small executive team. I've garnered it from a few of the founders that I've been lucky enough to buy their businesses and they've stayed with me for the journey. We've brought in some people from the outside, and we all have very similar philosophy.
I think alignment of intent is really important. I'm fortunate, I'm a founder of the business, therefore, of course I'm very interested in the economic value of the business. You have to share that throughout as much of your team as you can, certainly the senior executives have to be aligned with you about what you're trying to achieve and growth, which of course, neatly aligns with shareholder expectations as well. But we've had some pretty wonderful results to things like our share save scheme in mainly the UK and the US where regular members of staff and colleagues have, have been able to put deposits down on houses because of the share save scheme and so on. And that makes a huge difference when you have that alignment of goals and principles. So, those are the things that have really mattered to me.
Lauren: Jonathan, thanks so much for joining us and sharing your story with us. It's been really, really interesting chatting to you, and I'm hoping that lots of businesses listening will have a greater understanding of what it's like to be a founder and a creator of such an incredible business.
Jonathan: Well, I'm not sure I've achieved that, but thank you very much for listening. It's been great chatting with you.
Lauren: Thank you. Please do go to londonstockexchange.com to find other episodes in the Be Inspired series.
