Tom Edwards has spent 30 years delivering business value from digital transformation, as a C-suite executive, head of delivery and operations, programme manager, consultant and developer.

Most recently he was CEO of CubeLogic, a PE-backed B2B SaaS software product business providing market-leading risk and compliance management solutions to the global energy, commodities and financial services sectors. 

Tom joined CubeLogic as COO and was previously the COO of award-wining fintech Xceptor, another PE-backed B2B SaaS company.  .  Although most of his career has been in financial services and fintech, he started his career developing hardware and software in the defence industry.

 

1. Can you walk us through your career progression from COO to CEO?

My move from COO to CEO was a planned transition at CubeLogic, which we had discussed as part of the recruitment process.  Our PE investors Growth Capital Partners (GCP) and the Board recognised their investment cycle would include growing and professionalising the business.  As well as hiring a CTO, CFO, COO and CRO, they also anticipated Lee Campbell, founder and CEO, would transition to Executive Chairman and hence a new CEO would be needed.  GCP saw merit in that being a COO to CEO succession.

That also aligned with my aspirations to develop myself and build on my previous experiences.  Therefore when I joined, although it wasn’t widely known, there was a plan for that transition.  It was good to have support from Lee as Founder CEO, Richard Shaw at GCP and our non-execs David and Mario in learning the business and preparing for the CEO role while doing the COO one.

The plans were publicised internally six months before I formally became CEO.  That enabled me to take over some aspects in a phased way.  Importantly, that including owning business planning for my first year as CEO.

It’s also important to say there was no “hey presto” moment when I became CEO.  As well as the 15 month planned transition at CubeLogic, I also developed key foundations at Xceptor and GBST.  I first made the transition from a functional role to a C-suite role at GBST and had strong support from CEO Rob DeDominicis, the exec team and our external coaches.

 

 

2. What were the key challenges you faced during your transition from COO to CEO?

Not what people might expect! I took over from Lee, a founder CEO who continued to be very actively involved in the business as Executive Chairman.  That was potentially confusing for people.  But Lee and I (and the Board) talked a lot about our roles post-transition and we communicated that to staff.  That wasn’t just once about the big picture but also regularly about the practicalities, such as who would be involved in which topics and decisions.

What I hadn’t anticipated was the significant workload and bandwidth challenge.  Some of that was driven by the business, which was growing at 30% a year and hence all areas needed to anticipate and scale at that pace.  Some was also driven by wanting to meet or beat our 2023 targets ahead of a likely new investor selection process.  We had also decided not to hire a new COO straight away and to run with the role partly being covered by me and partly by my direct reports.  The intention was to hire a new COO once we had a new investor on board and had confirmation of growth plans and the type of COO required.  That approach would have been OK, except we grew at over 40% in 2023 and brought forward product investment for a major client.  With hindsight, an interim COO for some of 2023 or extra seniors in the delivery and operations team would have alleviated this.

 

 

3. How did your experience as a COO prepare you for the CEO role?

I’ve chosen to work in software businesses where customer delivery is a major part of the proposition, as well as the software products themselves.  That includes the initial onboarding and implementation, which is usually part of a wider digital transformation initiative by the customer.  It also includes ongoing services, such as upgrades, product enhancements and consultancy on usage and solution tailoring.

My experience in delivery in multiple companies has also meant involvement with sales, pre-sales, product management, software development, account management, customer success, SaaS operations and support.  That meant I had a good understanding of the different functional areas of the business.

I’ve worked in several high growth companies and also in transformation roles, so I have been closely involved in defining strategies and plans and translating that into change initiatives.  Having that cross-business understanding is key.

Looking back, the big transition for me was moving from a functional role to my first C-suite role.  That required a fundamental mindset shift, to prioritise thinking about the whole company and working together as an executive team rather than simply managing the team that reported to me.  What Patrick Lencioni refers to as “First Team” thinking.

 

 

4. Can you describe the two successful PE exits you were involved in? What were the key factors that contributed to their success?

The first point is exits are a team effort.  That team is formed specifically to work on the transaction. As well as company exec and leadership, it includes Board members, your existing investor and a number of external advisors.  Having a great, well-aligned team is key.

Secondly, a successful transaction starts way before the deal.  You need clear goals for the business, plans to achieve them and then deliver on the plan.  Investors are looking for the future potential of the company, but they’re also interested in the ability to set and consistently achieve goals over several years.  After our transaction in February, our first offsite with our new investors, exec team and advisors included defining goals for the next transaction in four-to-five years’ time.

Thirdly, the transaction process needs planning and preparation.  You need to think about that in advance – a 12 month run up in my most recent case.  That helps to build interest and engagement with potential investors, work out which are best aligned and foster a degree of competition.  It’s important to remember it’s a two-way sales process: you want to attract a great investor and they want to pitch why you should choose them.  Good preparation also means the formal bidding process and deal execution can go quicker.  At CubeLogic that meant we had no second stage process after bid submission and completed the deal six days after the submission deadline, a timeframe which is often several weeks.

 

 

5. What strategies did you implement to maximize the value of the company during these exits?

There’s a metric called “The Rule of 40” used to evaluate the performance of SaaS companies, essentially that the growth of annual recurring revenue and profit margin should add up to at least 40%.  Alongside this, there are a few further metrics that influence valuation: gross and net retention, revenue mix, client concentration, growth consistency year on year.

These metrics are the outcomes of how you run the business.  It’s vital to understand how your business model impacts these and translate it into an execution plan that is meaningful for the team.  As an example, we could sell to a few large clients to grow revenue quickly, but that adversely impacts client concentration and revenue mix, as large clients typically have higher non-recurring implementation costs.  Hence a mix of sales across tiers and opening up more mid/lower tier sales with shorter implementations is positive.  Improving retention includes ensuring low churn (driven by customer service and product capabilities) but is also affected by cross-selling to existing customers.  That in turn is driven by product suite, enhancements, account management and customer success.  When you’re growing clients and revenue rapidly, you also have to consider how the cost base will grow.  For example, where do scale economies start to come in and what cost growth is lumpy rather than linear.

Growing at 30%+ a year, you can’t just do “more of the same”.  You have to grab more of your market and also grow the market and how much of it you can capture.  For a software product business that means moving up and/or down client tiers (addressing more complex and more simple use cases), expanding across sub-sectors (for us from oil & gas and power & renewables into other commodities like metals & mining and agriculture)  and growing geographically.  It also includes cross-selling products to existing customers and working out what new products would be attractive to them.  Partnerships and acquisitions can help support all these too.

The other factor that helps maximise value is how you run the exit process, to ensure a good range of suitable new investors who are interested and engaged.

 

 

6. How do you identify and capitalize on new market opportunities?

Talk to clients about their pain points.  Talk to industry experts about challenges and trends.  Listen to your user group.  Run forums and workshops.  Look at what competitors and other suppliers to your clients are doing.  Think about adjacent sectors and sub-sectors.  Think about how your products and solutions could address a similar client problem in a different context.  Above all, be curious!

Refine issues and ideas with your product and industry SMEs.  Then road test them with current and prospective clients.  Challenge what will really resonate with clients and create value for them (and hence they’ll pay for!), and how easy it will be to deliver.  There are usually more things you could do than the available organisational bandwidth, so clarity on doing a few things well is key.

 

 

7. Can you share an example of a successful strategic initiative you led as CEO?

Expanding into lower client tiers.  Historically we’ve worked with clients in the top and upper mid tier, in terms of their risk management approach.  We wanted to expand into the mid and lower tiers.  That means clients with smaller risk teams who are interested in a “best practice” solution rather than something heavily tailored.

We tackled that with an “Express” approach.  That’s the same software underneath (which helps with support and later client expansion) but configured to provide a core suite of interfaces, processes and outputs.  That’s quicker to implement, so time to value for clients is quicker.  It also means you can train new consultants and external partners more quickly, so you can ramp up delivery capability more easily.

The first clients have gone live on the Express solution and some have gone on to add further features.  Soit’s proven market demand is there and can be fulfilled.

 

There is more to do to refine the core solution and delivery methodology, and build capability with delivery partners.  Targeting the right types of clients for an Express solution is important and it is sold in a different way to the top tier.

A key point is we started with an idea, pursued it and it is being refined in light of feedback.

 

 

 

8. How do you foster a positive company culture and ensure team alignment with the company’s vision?  What methods do you use to motivate and retain top talent?

 

A lot comes down to communication, both sharing and listening.  You can never over-repeat a few key messages about the company: where we’re going, how we’re getting there, what it means to work here.  Goals and Aspirations are the core of every staff and leadership update.  Successful client outcomes are at the heart of it.

It’s also important to be collaborative and inclusive.  People need the opportunity to understand the goals, and translate them into how it affects them and their team.  They need to be part of shaping the “how” so they have ownership.  Our start of year offsites enable the exec team and senior leaders to contribute to the goals and plans, which they then discuss with their teams to feed in to departmental and individual objectives.  Progress is discussed in different groups across the company monthly and quarterly.

Keeping great people depends on a mix of clear purpose and goals, interesting and challenging roles with suitable support, opportunities to learn and progress, and a stake in the success of the company.  I believe in broad staff participation in equity or other incentive plans linked to value creation.  As people progress from managers to leaders they also need to gain more experience across the business, either through role rotations or working on cross-company initiatives.  Fast company growth can be exciting and also scary, so helping people see the opportunities and know they are supported is important.

 

 

9. How do you handle conflicts within your executive team?

It’s important to create the right foundations and environment.  That includes trust, mutual respect and openness amongst the team.  There needs to be clarity and alignment on the company’s purpose, goals and plans – this is the reference point for any difficult discussions.  Healthy conflict and debate is important and everyone needs to be comfortable raising and talking about points of difference to get to an agreed resolution.

Sharing a common aim helps focus on outcomes and makes it less about individual opinions or positions.  Being clear about what it means to do the right thing for clients is a key guiding principle.  Getting that right usually means you’re doing the right thing for the company, shareholders and staff too.

 

 

10. What has been your most significant learning experience as a CEO? What advice would you give to someone transitioning from a COO to a CEO role?

It’s lonely!  You’ll have support from your Chairman, Board members, investors and executive team.  But often you need a different sounding board.  Building a good network of peer CEOs is very important for that.  It was something I didn’t appreciate until well into my first year as CEO.  It takes time to build that if your existing network is mainly CxOs rather than CEOs.  The other companies in your PE investor’s portfolio are great places to network and there are external organisations who run CEO networking groups.  It’s mutually beneficial too – other CEOs are facing similar challenges and sharing what you’re facing and have tackled can be helpful for them.

It’s also worthwhile finding a good coach.  If you aspire to be a CEO then having one during your CxO role will help you prepare for the transition.

Camino Search would like to thank Tom for sharing his incredible insights and knowledge in this article.