ComplyAdvantage was founded in London, and today [autumn 2019] offers its 350 customers in 45 countries real-time, powerful and flexible tools for anti-money laundering compliance.
To learn more about ComplyAdvantage: https://www.complyadvantage.com/
Charles Delingpole, CEO & Founder, ComplyAdvantage, at the Balderton CEO Collective 2018. Watch a video interview with Charles from that event below.
What was the first spark — and your initial vision — for ComplyAdvantage?
Back in 2014, I was introduced by a Barclays money laundering advisor to the CEO of an international payments firm in Mayfair, central London. It was immediately obvious to me that without best-in-class anti-money laundering systems in place, the firm faced an existential threat to their company.
Given my market knowledge at that time — I had experience of anti-money laundering with my previous startup MarketInvoice — I felt compelled to set up ComplyAdvantage. I knew businesses had a problem. Compliance processes were extremely onerous and inefficient and done in an archaic way. It was absolutely obvious to me that this was an intractable problem that many others had tried and failed to solve. I knew that with intelligent technology and significant investment there was the potential to make a big difference.
That was five years ago now, but we are still very early on in the journey of where we want to go, even though ComplyAdvantage now has a team of 230 people [summer 2019] .
It was absolutely obvious to me that this was an intractable problem that many others had tried and failed to solve.
Charlie was also interviewed by Suranga Chandraillake at the Balderton CEO Collective offsite in France, in May 2018, a biennial event that Balderton hosts to bring together all the CEOs in the portfolio.
You talk of having a 'mixed' experience with venture capital at MarketInvoice. You could have started ComplyAdvantage without raising venture capital. What made you decide to take funding, and what questions did you ask yourself as a founder before you made that decision?
Ultimately it was about the people.
I’d met [Balderton Partner] Tim Bunting five years earlier at MarketInvoice and he’d been very straightforward, honest and fair. So I already trusted him from that experience. Yes, I’d had mixed experiences with some other investors, but it was the right choice to go with him.
From a founder’s point of view, startups often fail for similar reasons. You want someone on your Board who can help pre-empt those mistakes, so you can benefit from their experience. I'm always looking to improve and learn and in this respect, the partnership with your investor is very valuable.
You also have to think about external signalling. Having a well-known venture capital firm on your side is important for hiring and for attracting customers as it confers credibility.
You closed your Series A round in October 2016, and your Series B in January 2019. Looking back, what did you consider to be your key immediate priorities after closing Series A?
When Balderton first invested, we were at a seminal stage in our development — 15 people in a decrepit, squalid office in Victoria with non-functioning toilets. Plus, we faced humongous competitors.
After Series A, you’re trying to do a lot with not very much, and make it out the other end. The main focus after closing Series A was scaling and investment. You’re trying to reach this big qualitative inflection point in the company where it becomes capable of growing and sustaining itself, plus you’re trying to internationalize and run the company on infrastructure that doesn't have the scale you get to after your Series B.
Plus, you still have the same client demands. When you’re a small company, trying to get customers to trust you with something so existential is a big challenge. Large companies are less willing to take a chance on you and this is a huge hurdle to overcome.
Building an army of people who work well together on a difficult problem — is always a challenge. However, since Series A closed, we have grown from 15 to 230 people. Revenue has tripled every year. Headcount has doubled every year.
After Series A, you’re trying to do a lot with not very much, and make it out the other end.
How did your priorities change as you approached Series B – and beyond?
The first meeting we had with our investors, after our Series A, we talked about how we wanted, by year end, to grow to 60 people from 15, and reach certain revenue targets.
But in fact, revenue didn't turn out to be the most important thing. Building the best possible product was the most important thing. Later, as you go through B, C and D rounds, and towards IPO, the relative weighting of the sales and marketing team increases. But back then we came to realise it was all about the product, and that became the core focus — to realise the huge potential we saw.
Tim Bunting was a significant catalyst behind this. His guidance was, in effect, ‘I don’t care about sales right now, the priority is building the best product in the world’.
After Series A, revenue didn't turn out to be the most important thing. Building the best possible product was the most important thing
With Series B, did the focus begin to shift from product to KPIs and metrics? And if so, what were the main KPIs that you tracked?
KPIs are critically important for really understanding what’s happening in the business. But as you start to scale, the management mechanisms that worked in the early phase begin to degrade unless qualitatively altered. After a certain inflection point, it’s not possible to manage via anecdotal evidence or casual, informal systems.
For a SaaS company, the most important metrics are arguably recurring revenue and headcount. But also fundamental to success is the quality and breadth of the product, how you take that product to market, and then the telemetry and calibration across that.
Now that we have four offices — Singapore, New York, Romania, and London — 230 people and hundreds of clients, keeping track of everything is extremely important. Metrics are vital for being able to preemptively diagnose potential problems, or understand which teams would benefit from support.
As you start to scale, the management mechanisms that worked in the early phase begin to degrade unless qualitatively altered.
You mentioned you now have four offices, on three continents. What determined your decisions to expand where, and when, you did.
What we’re building at ComplyAdvantage is technically vast, extremely complex, and difficult and expensive to construct. So I knew I'd needed to find the best talent available globally. Romania was a key part of that talent acquisition strategy. Then we opened our Singapore office in December 2018, specifically to allow us to have 24/7 coverage globally. Scaling internationally puts a big overhead on the company, but it’s definitely been worth it.
Scaling internationally puts a big overhead on the company, but it’s definitely been worth it.
What were the biggest cultural challenges you faced when scaling to the U.S. as a European-born company? And did you make mistakes?
We knew that the U.S. market would always be important to our success but it was a difficult challenge that took time.
Every American salesperson claims to have single-handedly sold 30% of U.S. GDP that year. That can make it quite difficult to distinguish between who’s good and who’s not!
Plus, salaries in the U.S. are high relative to international standards, and as a startup you often cannot afford to pay massive salaries. Many salaries we pay now would have been more than our entire revenue in the early days. One way around this is to incentivise early hires with equity.
Separately, there’s also building brand awareness. It’s fairly easy to make an impact in London, but in New York, it’s much harder. There are so many more companies, there’s so much more noise. It’s just a much bigger market.
We knew the U.S. market would always be important to our success — but it was a difficult challenge that took time.
What would your big lesson be for a European founder who’s about to embark on a similar journey to yours, from Europe to the East or West coast of the U.S.?
The cliché is always ‘Send a co-founder over’. For me, as the only founder, I did not have that luxury. But being on the ground is definitely a huge inflection point. I wouldn’t underestimate the power of having someone who started the business over there sitting with the team.
Where you’ve got an eight-hour time zone difference — e.g. between London and Singapore or where a management team are on their own after 2 pm in New York — you have to have the best possible people in those locations, because they’re so far away.
So, as ever, the hiring becomes critical and it’s important not to underinvest in those hires. Personally, as the only founder, I’d fly to the U.S. as much as possible. Ideally, every two weeks would be helpful.
Culture: there’s a huge debate in tech startups about how much of the business you ‘localize’ when you expand internationally – where do you stand on the ‘standardize’ versus ‘localize’ debate?
The best precedent I’ve heard is if you go to IKEA in Saudi Arabia or Singapore or South Africa, the culture is still very distinctively IKEA. You still get the same meatballs and herring even if the staff are wearing abayas.
The culture should be a reflection of the practicalities of what you’re doing. If you’re mining coal or manufacturing cars, you’ll want a much more metronomic, process-driven culture. But if you’re doing something creative, difficult and technically challenging, then you need a culture which reflects autonomous decision-making, innovation and learning.
People also want to be part of the start-up experience, so wherever they are in the world, you need to communicate extremely well at scale with the whole company to quench this thirst for understanding what’s happening and being part of something meaningful.
Ultimately I’m for creating a globally consistent culture with strong communication, and against a balkanized idiosyncratic culture. But at the same time, with time differences as they are, you need great local leaders as these people will be on their own after 2 pm in New York and before 5 pm in Singapore.
Culture should be a reflection of the practicalities of what you’re doing.
When it came to growing your executive team, from Series A onwards, what were your initial priorities and which were the roles you needed to get to grips with first?
At first, it was not necessarily obvious how the organization and team structure and roles all develop. For example, if you haven’t got a product manager or a QA person already on your team, then you don’t know what they look like, and you haven’t yet understood that category of role. In retrospect, it’s super-obvious, of course. But at the time, you’re still feeling your way around and trying to ascertain which roles and categories will be most useful.
For example, one day your company may just consist of either developers or salespeople. Then as you grow to potentially thousands of people, there are endless specialisms along the way. Each sub-team, and each job will divide and become more specialised. So part of the challenge is figuring out what those specialisms are and what the functional configurations are for the team.
There’s always an element of figuring that out as you go and learning lessons. Looking back, for example, the one area I wished I’d focused on earlier is marketing. Early on, we underinvested in brand.
In terms of senior hires, there are two different ways of doing it. Either you can get people in at a less senior level and try them out and test them. Then promote people who’re really awesome.
Or you can go out and get big hires with big names on big salaries to come in.
The former is obviously less error-prone. The latter means you’re potentially getting people with more experience.
We’ve placed a huge emphasis on the quality of hires, as well as our ability to integrate people into the team. As we scale, we have now augmented the team with great people who have been through similar scaling journeys and have made the mistakes and have the know-how to accelerate growth.
I also suggest never allowing it to be just one person who has sole authority over a hiring decision — we’ve found we get to the optimal choice with about four people having interviewed a candidate. I also recommend getting a candidate to simulate their end piece of work — for example, a trial day, or give them a problem to solve.
Today, about 30% – 40% of my time is spent on hiring. But for other CEOs, it may be more. The percentage depends on how much you delegate. I personally don’t meet every candidate, but if people hired badly that would change. We’ve been hiring well, and we’ve got a good hiring algorithm in terms of the process and systems in place.
We’ve now [summer 2019] got about 10 internal recruiters, and a Head of People and they’re all hugely important. If you’re serious about building a company, you should probably bring in a Head of People day one. If I was doing this again, I would probably have hired someone a lot sooner, and I would have been way more aggressive about hiring.
Today, about 30% – 40% of my time as CEO is spent on hiring. If you’re serious about building a company, you should bring in a Head of People day one
How have the demands on you as a CEO changed as ComplyAdvantage has scaled? Given this is your third startup, how do you think you’ve developed and changed as a CEO?
I’ve been working to get to this point since I was 16. I’ve been preparing myself for this role my entire life. Everything I’ve done — education, reading, learning, contacts — has been trying to get here.
But now [summer 2019] we’re 200 people. It’s very different from when we were 50 people.
If you have 50 people in a room, then you can talk to everyone, every day. Whereas now you might see someone for five minutes every month. Plus, they’ll remember exactly what you said to them last time you spoke. If you try to get coffee with them, they might freak out and think they’re about to be fired.
So you have to be really careful about communication. But also you can’t just do it bilaterally. When you have to communicate with 200 people and keep them all on track, and all motivated, it's definitely a challenge.
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