Behind the growth episode two: Darcy Laceby of Absolute Collagen

Darcy:
We launched in 2017. Covid was not that long after that. 65% of our one product was one ingredient, being collagen. Massive risk because we used to buy it from one place, because we knew the exact farms, we liked what they stood for. I remember going into Covid and our manufacturer ringing me up and be like, Darce we're going to have to shut down production. And me going, I don't know how we're going to cope with that.

Lara:

Hi I’m Lara Lewington and you’re listening to Behind the growth, an S&W podcast exploring what it really takes to build and scale a business successfully.

Each episode features founders and senior leaders sharing the story behind their growth journey, followed by a conversation with S&W experts to explore the key takeaways for our listeners.

Today we’re hearing from Darcy Laceby, the co-founder of Absolute Collagen.

It is a brilliant story, from starting the business at the kitchen table with her mother, to building what is now the UK’s number one collagen brand.

Before that, I’m here with Laura Hayward, Head of London entrepreneurs here at S&W, welcome Laura.

Laura:
It's lovely to be here. Thank you.

Lara:
You're welcome. Now you've met Darcy before. You have also worked with a lot of founders and a lot of businesses. What should I be listening out for? To truly understand what it takes to scale.

Laura:
What I always think is really interesting is listening to their stories about what's happening behind the scenes. So some of the risks that they might have taken throughout their growth story, or some of the lessons that they might have learned from mistakes that have been made behind the scenes.

And also, what I think is really interesting is about how they bring together a team of people that move this idea of what starts is a very small idea along the journey of growth.

Lara:
Great thoughts. Let's see what Darcy has to say.

Lara:
Darcy welcome to Behind the growth.

Thank you for having me.

Darcy:
Pleasure.

Lara:
Now, what started off as an experiment ended up becoming a scalable business. At what point did you realise what you were onto?

Darcy:
Genuinely, for the first sort of two years, it was me and my mum who I’ll reference to as Maxine.

I went to uni to do food science then it was just her creating bone broth in her kitchen. I could take the product back to uni and use the labs to sort of develop it. Her friends were like, you’re looking great. Your skin looks great, your hair looks great, you look like you're glowing, you've got more confidence. Can I have some?
We tried to find a product online for them and there was nothing. So this is back in 2017, so nearly ten years we couldn't find a product online. Developed it for her, for her friends. Maximum of the best ingredients.

Minimum dose. Kind of like no hassle. And then still, probably for the first year, we didn't really ever have, like, a business plan or goals. It was like, okay, we've got this amazing product. How can we get into the hands of as many women as possible? That was it really? That was the kind of plan.

Lara:
Okay, so there's a lot to unpack here. First of all, how did you turn the bone broth into something that was a collagen people could buy?
Product development

Darcy:

We did some research. Gellatin’s great but it's really, really hard to absorb. So it's actually the collagen in it, we then wanted to take that and make it absorbable, basically. So when we found out, okay, where's the best source of collagen that we can buy, which was marine, where’s the best suppliers as well as both ethical, which we've been out and audited them all. And it was really just like speaking to a lot of doctors, speaking to a lot of scientists. The people at my uni really, really helped, and to find like the best source. And then we used to buy a powder and then we'd basically make it at home.

Initially lots of lots of trials, lots of errors and go to manufacturer who actually told us that it was a silly product, it would never work. Because of the way we blended it. It was so thick, but he actually apologised to us two months later when they did develop the product. And that's kind of how it all started really.

Selling the house for investment and DTC decision

Lara:
How was it working with your mother? Because not everyone can work with a relative.

Darcy:
Yeah, so I moved back from uni in my second year, I moved back home because of Absolute Collagen and I remember sitting down with my mum, we went to find a marketing agency. We knew the category in collagen was super nascent, it wasn't big. People didn't really understand it, so we knew we needed to go direct-to-consumer.

So we found a really great Facebook marketer. Again, direct-to-consumer was quite novel at that time. And I remember sitting down with Maxine and it was £8,000 a month. And I was like, we can't afford this. Like we have not got the cashflow. And she was like, let's remortgage the house.

So I was like no, we’re not doing that are we? We kind of planned it out and she's like, well, what happens if it goes wrong? She’s like, we'll just move into different house.

Lara:
And I guess she also thought, what happens if it goes right? As it did.

Darcy:
Yeah, exactly. So, there was a lot with absolute collagen that was on our side, but there's a lot of right choices that we made. But yeah, that was one of them because we wouldn't have had the cashflow and we didn't know about investment.

Lara:
The direct-to-consumer model that you started with, was it obvious to you that for a product like this, that's what you needed to do?

Darcy:
When we looked at who our audience was. So, at the time it was literally my mum and her friends who are all super busy. So it was like, let's develop something that should go straight through the letterbox. So all our products are like these little yellow sachets you just take or mix the water and drink. So, it just seemed the obvious thing to do.

Cash flow as subscription business

Lara:
As a subscription business, how did you manage cash flow?

Darcy:

So, we were quite cash generative in the early days because the infancy of Meta and Facebook and the landscape now for direct to consumer is so different, the cost of acquiring a customer is so different. But you could get cut through back in 2017, 2018, 2019, which allowed us to scale quite quickly but also manage cash flow well. We were really able to utilise direct to consumer, utilise subscription to be cash generative, allow us to put money into stock into research and things like that. Straight off the bat.

Realising you have a brand and protecting that

Lara:

What was the moment that you realised this was moving from a founder-led business to something which needed to be built up into a full structure and working company.

Darcy:
There's actually, like, a really pivotal moment in 2019. CEW, Cosmetic Executive Women is a really good award that you've won. So we're like, okay, we're going to enter this award. And we went down and I remember speaking to someone. There like, you're like, Hoover. And I'm like, what? And it was like, like Botox. I'm like, were kind of like Botox. Like, no, no, no, people don't want any vacuum cleaner. They want a Hoover. They're like people that want collagen they want absolute collagen.

But then it was kind of we went back and it's like, well, how do we, like this is a brand, this isn't a product that we're selling anymore. This is a brand that we've built that people care about. And how do we protect the integrity and the science, and never sort of let that drop.

And it was then for us it was like, okay, we can really scale this. It was never about money, it was never about scaling a business. It genuinely was always about getting this product that we've made, that isn't available anywhere else, to as many people as possible to, to kind of benefit them. So yeah, I think it was that moment, really.

They protect their brand

Lara:
What was the first step that you then took to move forward with that?

Darcy:
It was putting in processes and systems, I really think. From that event we met so many people and networking is never my favourite activity, but it really helps, like speaking to people that are in similar situations, have been through situations and even just getting a recommendation for an app, building out things a little bit better.

So, subscription is the heartland of Absolute Collagen, and so most of our revenue goes to subscription. And we're really good at it, but making sure that that app is set up right. You're never going to let a customer down because if you're on subscription, you've committed to someone and you can't run out of stock putting different systems in place, getting in our ERP system, for instance, and warehouse management system and that was really, really helpful. But then also, we didn't know what we were doing in terms of those systems.

So how can we speak to people and get advice and really people were actually always really wanted to help. And I think it's just showing a bit of naivety sometimes and just asking questions we don't know, because if you've got a load of customers, trusting in you to deliver on something and you don't, that's going to ruin your brand reputation.

Trust and scaling

Lara:
Yeah. And trust is a really good point, because how do you maintain the trust of the scientific perspective when you're scaling a business?

Darcy:
For us the collagen industry was really nascent and people didn't really understand the results, benefits or why they needed the product. So you’re giving them a subscription and we send out every two weeks or every four weeks. But really they need to take it every, well, for 12 weeks daily, consistently to see results.
And the biggest challenge for us was getting across that message, about why you need to take it, what results you're going to see, how you're going to feel. Because at the end of the day, collagen is literally the main structural post in your body. It's in your gums, it's in your ligaments. your tendons, your skin, your eyes, for instance.

And people can react so differently,

Lara:
Well, it also could sound like a sales pitch. You need to take it for three months, so it's how you actually get that across without it just sounding like that.

Darcy:
Exactly. And in the early days for us, like you can't afford big clinicals, you can't afford to run big, big tests, and you're relying on your manufacturer data, especially from a supplement point of view. So for us, it was how can we grab data from our customers? How can we get real-time feedback? That's actually going to inform our other customers, and that was bottom of the email, putting surveys out, constantly speaking to people to really get that feedback in. And then we can start to build out, kind of, a bit of a data pool.

So, one of the things in the early days, it really helped us, especially from a customer trust believability point of view, when we didn't have those big clinical trials because we couldn't afford them was our closed Facebook group.

So when someone subscribed to our product, they got sent a password by email and your CRM flows, and that would give them access to our Absoluters Facebook group. That is really self-regulated itself, run by the community.

Lara:
You're pulling in all of this data about the usage of it to see what's going on, but also from your side, you're bringing in experts as well. What was the point that you realised you needed those experts and what did you prioritise there?

Darcy:
Super early on, actually, was when one of our first experts came along Eva Proudman. So she was chairwoman of the trichology Institute. And, we kept getting feedback from people that, like, my hair texture’s changed after two weeks and I'm thinking, that doesn't quite make sense.

So she did a trial following people with, I think it was, some form of dermatitis in the hair. The reason your hair is great and benefits from collagen is because your skin is growing the hair, essentially.

So that kind of made sense, it's logical. But she came on board, I think it was about 2018 like a year in.
And in the early days it was like, okay, how can we build the credibility within Absolute Collagen? And that was always through experts, coupled with the community and the brand reputation piece that people spoke about.
But I always thought, Maxine always thought, the science had to be there. It had to be there, it had to be credible.

Supply and risk

Lara:
When it came to supply, were there any challenges from the global supply chain that you were reliant on?

Darcy:
We launched in 2017, Covid was not that long after that. We don’t talk about that much now, do we? We were really lucky with our suppliers. Looking back, we were very reliant on Facebook marketing, 70% of us spend went they're. Massive risk.

We used to do all our shipping ourselves, quite a big risk. 65% of our one product was one ingredient, being collagen. Massive risk, because we used to buy it from one place, because we knew the exact farms, we liked what they stood for. We like the clinical, the data, the ethics and everything that was surrounding that product and the efficacy, more importantly.

But, now I look back and I was like, there's a lot of things that could have gone very, very wrong. And I remember going into Covid and our manufacturer ringing me up and be like, “Darce we're going to have to shut down production.”

And me going, I don't know how we're going to cope with that. And they ended up keeping, they had a small line they could keep on and they kept on just for us. They closed down the whole production facility but kept going on Absolute Collagen because the relationship we built with them and that was amazing. We still have such a great relationship with that supplier today.

But this is back down to things going right, versus a lot went wrong, don't get me wrong. But a lot was on our side with Absolute Collagen and looking back it was significantly risky. You know, one customer, one product, one marketplace, one sales channel even being direct-to-consumer. So, a lot could go wrong there.

And even going into Covid, we were direct-to-consumer. It was it was a perfect storm really. We didn't go into retail, which could have been detrimental to the brand at that point. So, there was a lot of right decisions made, which at the time we didn't really see the impact of, but it was the right thing to do.

Risk

Lara:
At the point you could see you were growing, that structure was in place, what risks did you feel that you were taking by moving forward?

Darcy:
My mum is a massive risk taker, as you probably got from the gist of this conversation. I am quite risk averse and I think that's why we work quite well together. So, I would logically think through pretty much every situation and plan A, B and C and I'll write it down and it’ll be spreadsheeted the hell out of.

We went a lot on feel, which was so valuable in the early days, like going off intuition, going off gut feeling and things like that. And if something didn't feel right, we wouldn't do it. And I think there's been plenty of examples of maybe not using suppliers, or just being a bit cautious in certain places, which really paid off for us. And we now marry that feel and that intuition with those data points and I think as a business it ebbs and flows. Like early days, pretty heart driven, then we probably got to place of investment that we're probably going too analytical and too numbers driven. And now we're at a really good place where we can marry the two together and I think that's also really valuable.
The team and why people stay

Lara:
How big is the team now and how was the process of building that team?

Darcy:
We still have a lot of the original team members, so there's about 70 of us. We have a CEO, so me and Maxine. I mainly manage people and product, and science, and then bit of kind of high-level marketing stuff. Maxine does more like the forward-facing PR, she's great with people.

Lara:
So, you're building the right team of people, the right combination of people to get on with, and it sounds like you're doing well at keeping them?

D
Yeah, we do. We have an amazing team and people are at Absolute Collagen because they want to make a difference. They know what we stand for, they like the fact we’re B Corp, for instance, they like the fact that we're trying to genuinely do something different in the market and not kind of be a follower in that sort of supplement space. And that was why we took investment, actually,

Investment

Lara:
Tell me where the investment came from. What made you realize it was the right moment to take it? And were you confident it was the right thing to do, or did it bring with it some questions?

Darcy:

It was in 2020. And me, Maxine sat down and we kind of thought, what's next? So there was about 15 of us and we were turning over about £14 million, at the time. And we had this discussion about every decision that we've made up to that point only really affects us and a handful of people. But we're growing, we're scaling. The more decisions we make, the bigger the business gets, the more kind of riskier is for people involved.
We were cash generative. We didn't need the investment from like a monetary point of view, but it was how can we get the best people involved in the business to really secure it? Because every time you look out in the office and there’s 15 people sat there, you know that three, four, five other people might be relying on them, if that makes sense.

Yeah. So for us, it was always like that kind of me and my mum have this saying, it's like always do the next right thing. And if you know you've done the next right thing, you can sleep at night. But it was always just down to that, really. It's just the respect for the people around us.

But yeah 2020 took investment. We didn't know, you know, what that meant. So we went to, actually we went direct to an investment house straight, straight off, and they massively lowballed us and we thought it was the best thing ever. And we were like, oh my God, the companies values us at this? When it was actually a really lowball offer and they were just trying their luck.

Lara:
How did you realise that?

Darcy:
By, we were nearly the end of the process and we really liked them, but then we decided to just go to two corporate advisers.

They were really great and I think finding the right adviser is so key to all of this because you're going to spend late nights with them. So then it was like, what do we want? Is it minority? Is it majority?

And for us, it was we still want to be involved with the business. We knew that taking investment, we'd get in, I’d say a proper C-suite, but people with better qualifications than me and my mum. And we always knew that going into it.

Lara:
So you had a minority partner investment at this point and how did that actually play out? What did it mean for you? Aside from the fact you have more money in the business? What else did it mean in practical terms?

Darcy:
The experience that it brought to us. So, we completed our round in December 2020, and then it was like, okay, it is wild, isn't it, with businesses? You get the growth and then you might get a bit of a mellow period, and you always seem to be busy. And I've learned everyone says they’re busy all the time, but you are just you are busy all the time, right?

Lara:
Yeah, of course.

Darcy:
But it was them coming in and being like, we had a CMO finally. We had a marketing officer finally. And they were like, have you looked at these numbers? Have you looked at your cost of acquisition versus your lifetime value? I'm like, yeah, like our cost of acquisition is roughly, you know, one sale. And they're like, no Darcy these customers are staying. Like we can afford to pay more and the scale of the business just took off with that investment, and still growing now which is ace. But yeah, it just really unlocked the skills that we weren't, or just things you just if you're in the business all the time, getting that outside advice and perspective is just so important, isn't it?

And you can't be quite insular in your thinking and just really the broadening of your horizon, I guess.

Bringing in the right experts

Lara:
How about from a business perspective, because you knew your product well? You and your mother clearly had a really defined role in what this business is, but actually, the running of the business seemed to be the bit that you really needed help with.
What sort of experts and advisers did you bring in, to fill in those gaps that were either in your knowledge or your experience?

Darcy:

Yeah, we were really lucky with the people that we'd well, actually, I was about to say we were really lucky with who we found. But there was a lot of people in the early days that didn't want anything to do with Absolute Collagen. Yet I was 19, 20, my mum slightly nuts. Amazing, but that kind of crazy. You know, you've got all these ideas and we're driving to suppliers and it's mum and daughter that just turn up and they’re like, oh god. But the people that trusted us and believed in us, are the people we work with now and they were always more than happy to give us advice and help on things.

I had a really close accountant friend who would every evening help us with finances, for instance. Like I said, the trademark lawyers that we worked with would literally come to our house and help us with stuff. So we're really lucky from a financial point of view. We were really lucky with the marketing people that we found in the agencies.

When we started, there was three of us. When the agency we met and still use today started, there was three of them and we grew together. But I think we surround ourselves with really good people and that really, really helped but we just had a really solid foundation with me, Maxine and Brad, who looked after tech and systems at the beginning.

Our fourth employee, for instance, Katie, she was our community manager, which you think fourth employee, full time community manager, it doesn't make any sense?

Lara:
But why did that happen?

Darcy:
We didn't want anyone to be let down. From a customer service point of view. So it was always like, how can we get the right information to them at the right times? Every single, like we don't want anyone on social media going unanswered. Every single message needs to be replied to.

Culture

Lara:
It seems like you were such a tight knit group, you couldn't have got closer than mother and daughter to start with. So, as you scaled, how did you do that with the right people to maintain that culture that existed?

Darcy:

Yeah, I think that's it's so hard. And we've gone ups and downs with sort of culture in early days, you know, you're working quite hard, you're working quite a lot and that work life balance.

Well, I love what I do, so it doesn't really matter to me and I'm very happy but you can't expect people. This is my life Absolute Collagen. They have a life, this just a nine hours a day, which is still a lot, right? And we want people here to genuinely care about the mission that we're on.

They like what we're doing. Everything that we do at Absolute Collagen is fundamentally to help people age powerfully, through different life stages and people would give their all to Absolute Collagen in the team. And we got to a point where it's like, you guys need to just go home and chill, like everything's going to be okay. And people really, really cared, and we're in such an amazing place now with culture. I think it's nice when you hear that people are going to each other's weddings and people who are actually spending time with each other outside of the business.

And it can be the most smallest things, and we do net promoter scores employee surveys all the time, or we do kind of pulses every three months and then a big deep dive every year. They can be really useful, but I think never knock the small things that you're doing. I think people just genuinely care about being cared about.

So yeah, whether that's I make sure I say happy birthday to everyone or we send them flowers if something’s gone wrong. And just being compassionate and really caring and not dismissing things. And I think that that's run through the whole of the brand really.

Culture extension - the wrong hire

Lara:
How about what it doesn't work, when you employ the wrong person?

Darcy:
There’s this really great quote, “It's there's no wrong person, it's just the wrong job fit for that person.”
I genuinely believe that. There's been a couple of people at Absolute Collagen that I've thought, oh god I'm not sure if this person belongs here anymore. And sometimes they've left, which is fine. But sometimes we've been able to chat with them and been like they've been desperately unhappy in the role that they're in and we've moved them to a different department, and they're now thriving.
I really love seeing people progress, and what can be hard as a small business is people want development, people want structure, they want continuity and they want that kind of framework. And one of the biggest difficulties we have is you speak to people and they're like, I've got no development here. I’m like what do you mean? They're like, well, I'm not going on a course, I'm not doing this. I'm like, what did you learn this year? Like, what have you done? They were like, I did this, I saw this person, I met this, I've learned X, Y, and Z and I'm not doing this. That's real world experience, you're learning so much here. Yeah. It might not be a certification on a piece of paper, and right now we maybe can't do that. But you're learning so much here. You've grown as a person, and then people kind of get it.

Lara:
This is a beautiful story of you and your mother there in the kitchen creating this, it growing and growing and being really successful. But I don't believe for a moment this has been plain sailing. What challenges have there been along the way?

Darcy:
Do you know I don't celebrate our successes. I'm very much like restless, sort of dissatisfaction with everything. And it's the worst thing because for the team I'm like, okay, that's great, but how do we do better? How do we iterate? How do we develop? But that can be quite hard.

Lara:
Totally and it's interesting to hear that it is still an iterative process. There's a whole kind of growing market out there. How does that work from a business perspective, when you've got your product, you've got your subscription, but you're starting to wonder what's next, and you're wondering how much you should invest in experimenting further, getting back to those roots?

Darcy:
Yeah, what's great at the moment is our data insights team is awesome, and I try and take two hours a week to speak to customers just on the phone, and I'll like change the topic.

It might be longevity, or it might be your skincare routine, or whatever it might be. That's awesome to find out qualitatively, like, what are you actually thinking? What are you actually doing? But our insights team will do pieces of research all the time to figure out, okay, where's the market heading? And it always falls back to like convenience with Absolute Collagen’s customers. It's like, how can we make this easier for you?

Launching in Boots

Lara:
Yeah, I suppose also thinking about it from a consumer perspective, you might take us up for a while and then think, oh, I won't bother buying that again. Once you've signed up to a subscription, it's there. It's an extra friction point to stop it, rather than the friction point going to be to buy it. But then you ended up being available in Boots, which is brilliant.

Darcy:
Yeah, so we launched Boots last April so April 2025, and that was great for us. They've been such amazing partners.

Lara:
How did that come about?

Darcy:
It was kind of a bit organic. We'd kind of been speaking to each other for a while, and it felt like the right time for us. Like, direct-to-consumer, you get to a point where you're like, okay, who's the best retailer for us? A retailer for us in terms of trust. And that was the biggest thing. And Boots is literally one of the biggest and also one of the trusted retailers in the high street, really in terms of wellness and beauty. And they're also doing a massive push on bringing supplements and that kind of beauty wellness approach together.

What’s the biggest complexity - working out who the customer is and what their needs are

Lara:
What's the toughest complexity that you've had to face which is actually ended up becoming an opportunity?

Darcy:
Definitely figuring out who our customer is. I think we've always based it off my mum and her friends. And as we talked about, the collagen market has grown rapidly over the past 7 or 8 years, and even now is growing rapidly. And who is the customer coming into the market now? What do they want? What are their needs? Because that's always changing as well. Like, how people kind of perceive themselves and what they want from a product is changing and how they kind of work within that kind of supplement ecosystem. So just making sure that our brand is on point for the person that we're going after, but also making sure that the person we're going after is actually the person we're going after. It's very circular.

Underestimating the challenges of growth - motivation and passion

Lara:
Yeah. When it comes to founders’ journeys, do you think they often underestimate the challenges of growth?

Darcy:
Looking back, Maxine jokes. She's like, do you reckon we’d do this if we knew that it was going to be this hard and I'm like, yes, we would have done. But I think you do need that passion like you do need that motivation. I would spend every weekend on Absolute Collagen and if it was a bit quieter, I do a course on, I don't know, skin science or cosmetics or something like that. Just to get extra information, because I genuinely loved exploring that side so much and like the knowledge that you can have can be so great. And I think if you have that passion, you have that motivation. Without that, whatever your motivation is. That might be money, so entrepreneurialism makes sense. But for me it's product and it's science. And if I can uncover something. Me, our doctor and our product director, always just sat banging ideas around and it's like, well, no, that hasn't been done like that.

Yeah, but could it be, like, how do we make this better? It's just figuring out because you’ve got that passion and that motivation. It's when we got told in the early days that our product was silly and wouldn't blend. It was like, yeah, but we do it like this, so it can. And it's always finding your ways around problems.

Lara:
With hindsight, is there any adviser that you would have employed sooner?

Darcy:
Yeah, definitely on the contractual side. Contracts, if you don't get them setup right in the first place, they're going to bite you down the road. And I would genuinely spend the time on your supplier contracts, whether that be negotiating percentages on quality checks for, I don't know, for a food product or cosmetics that you want. 3% medium failures or less, or something like that.

And it might seem at the time this is a bit tit for tat. It's not and you fighting for your payment terms and things like that, is going to be only more and more crucial, especially as you scale and you protect your business from that. Even having, you know, non-competes in with your suppliers. If you can get that, even if you're like a small company and things like that, is really, really helpful for, like, down the road.

So I would probably say on the kind of, I guess the CFO really. CFO, friend, our CFO/COO, so finance and operations. I'd probably say that kind of person, I'd get in earlier.

Lara:

We have a quick take round to do here, which is a few speedy takeaways from you that we like. Just a sentence for each answer. What's harder starting or scaling?

Darcy:
I think when you're starting up you have the motivation and the energy and I still have the passion, but it's you don't have anything to compare it necessarily to.

But scaling, you're comparing yourself to so many other brands and competitors and there's so many more people involved.

Lara:
What do you look back on and see your biggest success or win being?

Darcy:
The team that we've got and how they work together, even in like when times are a bit trickier.

Lara:
Oh that's nice. What would you say to others who are going on a similar journey?

Darcy:
That if you've got the motivation, you’ll succeed with it.

Lara:
Is there any system or process that you feel has saved the business?

Darcy:
Definitely, our kind of weekly trading reports and analytics behind that. If we didn't have that data and that visibility, we wouldn't know the next step.

Lara:
What do you look for in a trusted adviser?

Darcy:
Someone that can be real with you and doesn't mind telling you no.

Lara:
Darcy, that was brilliant. Thank you for joining us on Behind the growth.

Darcy:
Thank you for having me.

Lara:

Hello again, Laura. What an interesting story and I think something that really stood out to me was that Darcy is quite analytical, but her mother likes to follow her instincts. How do you work with founders to bring out the strengths in all sorts of characters?

Laura:

So, when a founder is early in their journey, that energy and determination is really important. And I think what works really well with Darcy and Maxine is that they bring different elements to that founder profile, which can be really important when trying to scale a business. But I think as a business grows, more and more people depend on what is essentially a founder's gut instinct.
So, employees and investors are all depending on those founders making the right decision. And so when a business is scaling, sometimes that gut instinct just isn't enough. And so founders really need support with whether that's data analysis, whether that's financial modelling or whether that's putting a good governance in place.

Lara:
When it comes to that governance, this felt like quite a heart-led business at the beginning. How do you enforce that in the right ways?

Laura:

So, what's really important with founder-led businesses is to get that governance in place really early in the journey. It never fails to amaze me how I see businesses that have scaled really fast, without proper governance in place, and that's especially important in Darcy and Maxine's story because there's an added complexity because they are mother and daughter.

So, proper governance means thinking about all of the what if scenarios. So you might want to think about things like, what if a founder wants to exit a business?

What does that mean? What if there is a deadlock in decision making, If founders have 50 over 50 shares in the business? And what happens if, god forbid, there's a death or will you be working alongside your co-founders, family members? So thinking about those sorts of what if situations early on in the story can really help to make sure that problems don't arise throughout that scaling journey.

Lara:
So many what it's hard to navigate in any area of life, but how on earth should companies do that?

Laura:
So, it's about getting the right support to think through those decisions early enough in your journey. Getting advice from people that have seen all of those what if scenarios play out in real life can help you to understand all of the problems that you haven't even thought about yet.

Lara:
Darcy spoke about the risk that her family were taking on. Her mother re-mortgaged the house for the company, and when they actually started to take investment, it was more about skills than the money.

What advice would you give to people about how they take investment?

Laura:
I think that's an incredible story and it's one we come across quite often, is that founders very often use their own resources to bootstrap a business through growth, which is great. But I think what more founders need to do is understand what the investment landscape looks like and how they can get the right capital, the right investors with the right expertise into their business. And so what we can do is help founders understand what that investment landscape looks like. In the UK, we have a couple of really well incentivised investment schemes to get those investors on board. Now the first one is called SEIS, the Seed Enterprise Investment Scheme.

And the second one is for slightly further stage businesses, the Enterprise Investment Scheme itself. And those schemes offer really attractive tax breaks to investors, to help lower their risk and means that they are attracted to get involved in these early stage businesses and support them on their growth journey.

Lara:
Something that Darcy had encountered was a valuation of the business that was too low. How do people have the confidence to believe in the valuation that they think they should have? And what do they do about getting that right?

Laura:
When founders are at that stage in the journey, what they're really worried about is how do we take the business to the next level? How do we solve our massive cash flow problem? Or whatever it might be that they are experiencing at that time, and what we tend to find is that founders can feel really pressurised into accepting an investment without getting the right advice around what value they've created and what their business is actually worth.

And so, what it's really important for founders to do is to understand the value that they've created in their business, to help them go to market in the right way and attract those right investors.

Theme 6: Retaining key people

Lara:
And of course, it's not just about getting the right investors, but also having the right employees. How do you make people want to stay committed to the company long enough?

Laura:
So, this is another problem that we find founders experiencing during their scaling up journey is that they need to attract the right expertise into their business with skills that they, as founders, don't necessarily have. Of course, the problem that they're up against is that they are a small early-stage business, and they can't always pay market value salaries to attract that top performing talent.
And so founders need to be aware of strategies that they can employ to help attract and retain those really talented individuals. And that might be using another tax incentivised scheme, something called the Enterprise Management Incentive Scheme, which can help attract employees and give them a share of the growth that they help build in the company, which hopefully they will realise further down the line.

Takeaway:

Lara:
I love Darcy and her mother's story, but if we take a step back from it and look at the bigger picture, what is there that other founders could learn from it?

Laura:
So, I think the one takeaway from listening to Darcy's story today is that successful founders don't grow and scale on their own. They get the right experts involved, at the right time, to help them on their growth journey. So, not taking away from your entrepreneurial instinct, but helping you lead with clarity and structure and grow your business alongside your own values.

Lara:
Great insights. Thank you so much, Laura.

Laura:
It's been great to be here. Thank you.

Lara:
See you next time on Behind the growth.