Kris Nygren: Handing from founder-to-CEO to selling!

In this episode of Two Commas, I sit down with Kris Nygren—an expert in business strategy, governance, and scaling companies to successful exits. From leading Optimal Usability through rapid growth to navigating its acquisition by PwC, Kris shares the hard-won lessons of scaling, selling, and transitioning leadership. We explore the role of trust in high-stakes deals, the nuances of governance, and what it really takes to align business growth with a strategic exit.

If you're an entrepreneur, executive, or investor thinking about scaling or selling, this is a conversation you won’t want to miss.

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Josh (00:00:00): Hi, I'm Josh and welcome to two Commas, the show all about the multimillion dollar exits. Today we've got an interesting conversation and journey as we welcome to the show Chris Nigra. Chris is a professional CEO as kind of the mantle that he's held, and he was brought into a startup to help them go through the international growth journey and then navigate through a successful exit. He's now a partner at PWC and he was the CEO of optimal usability, which also is known as optimal experience. He's obsessed with the value of human experience in digital physical design, and I love this quote. He's never met a whiteboard, he's never met a whiteboard he didn't agree with. Chris, welcome to the show. Thank you so much. So we start these conversations by a bit of an introduction of you to the audience and the viewers. Could you kind of give us the backstory of Chris, please?

Kris (00:00:52): Yeah, yeah, absolutely. How far back do you want to go?

Josh (00:00:55): Probably just soon after birth when you started to become cognitive and aware conscious. So maybe not back to the start of humanity.

Kris (00:01:02): No. Okay, good. Good, good, good. Well, if I wanted to go real far back, I'm actually a direct descendant of Charlamange and Robert Bosa, the Holy Roman emperor. So about 30 generations ago.

Kris (00:01:20): Wow,

Kris (00:01:21): That's just a cute quote. But look, I born and raised in Stockholm. My family still there, so my parents, siblings and so on. Oldest of three, lazy, not really that interested in furthering myself through school and university mom pushed. So I ended up going to university. So that was probably a good move and I just sort of scraped through. I think we spoke about that before. And then as part of my studies, I ended up wanting to go to Australia. So I went to study at University of New South Wales, not because I wanted to study there because I wanted to go to Australia and do the surf and beach and that sort of stuff. It's great. But when I was there, I met a girl, she followed me to Sweden, and then we followed back to New Zealand. That's how I ended up here. I was only 24 when I moved to New Zealand. (00:02:17): I pretty much lived here since I ended up actually going to work in a fast growing e-commerce startup in early, late nineties, early two thousands in Stockholm. But mostly I've lived here and I've sort of been a tumbleweed flying through different roles and jobs. Sometimes a job, sometimes there's no job, but there's work to do and often in the sort of digital and startup and customer experience space, sometimes in large corporates, which I'm not really a good fit, which is ironic since I have a partner at pwc, which is a big organization. So I was actually a corporate. I had hired this business, optimal, optimal usability to do some work for me. And I said, I love this. When you find that thing that you go, okay, these guys understand the importance of user experience, customer experience, human centered design. So I managed to wrangle myself a job there. I was initially the GM for that business in Auckland, and then I became the CEO, this is 2011, something like that. Great. Loved every part of it going from corporate to a sort of, it wasn't a startup, it had been around for about 10 years, but it was a boutique growing agency, if you like, and And then the journey from there, basically much faster than we thought. There was an exit on the cards. (00:03:55): Yeah. And now I'm a partner at pwc. I've been there for about 10 years.

Josh (00:03:59): Yeah. Okay. So the origins and the underpinning theme of this conversation is really around the startup who hires the external professional, who then becomes the CEO, and then how you navigated your way through that journey and then taking the business through to an ultimate sale, which meets the brief of what we're talking about on the show, but let's talk about the formation of that role. So you were hired as a general manager. You'd been a CEO of other businesses previously. So you had some leadership and some executive level chops about you. And so how did you as an individual navigate your way through from GM to CEO? Was that an intention, a design, or did it come about by accident?

Kris (00:04:43): It was always the intention. So the founders had been building and working in the business, had different roles for about 10 years from university. They essentially started this at uni, but 10 years on all three, the two founders and another large shareholder ended up moving on. We want to do different things. So one of them, Sam ing, he ended up working for, I think for the USAID or the World Bank or someone like that in Cambodia. And Trent Mankelow, who was the other key founder, had also, he was ready to move on. So they said, let's go and find someone who can be the CEO for this and run this for us, grow it for us, and we can take the next chapter. So it was intended, I came in originally as the gm, but I think it was only six months, maybe a year before I was made CEO. And at that point I had two of the founders on the board and some external directors as well. And it was my job to grow the business and with an intent at some point because the founders had moved on to different things other than board roles to say, well, do we really want to own this thing? So (00:06:03): That was the job,

Josh (00:06:07): And I know you have reasonable networks in and around the entrepreneurial space, and one of the most difficult things for a founder to do is to find someone who can not just replace them in the business and in the role, but then elevate that business. And so you were hired as a gm, I'm guessing it was a case of going, let's work together for a period of time before we give you the reins to the business, so to speak.

Kris (00:06:32): Totally.

Josh (00:06:32): So what did they ask of you? What were the key things that they were looking for during that early tenure to have the confidence to go, Hey, Chris, you've now got the CEO

Kris (00:06:41): Title. Yeah, yeah. I think in any sort of 30 person business, which is what it was at that point, the GM and the CEO ends up doing all sorts of things. But if I cast my mind back to what was the ask, so number one ask was don't be afraid of putting your mark on it. So don't worry too much about how we've structured things, what we think the strategy is, what we think the market is, you go and take it the way you want to take it. So that was one part. The other thing they asked was, we've been part of this business for so long, so have a look at culture and processes, growth options that we might've discounted because we didn't see it. So it's all the way down to, so how do we do financial reporting? How do we manage cashflow all the way up to, so what sort of business, what sort of clients should we go after? And then you're dead, right? The founder Trent was on was the CEO when I first started, and he was definitely asking me to keep my KPIs and report back and make sure that he could see that I was doing the things that were right, that they thought were right for the business. And must've gone well because I ended up, we're

Josh (00:08:02): Here.

Kris (00:08:03): Yeah. Here.

Josh (00:08:03): Yes. So what I'm hearing you say is that you were given the freedom to operate within some

Kris (00:08:10): Guardrails

Josh (00:08:11): With some very clear metrics and some reporting lines. You were asked to look for the blind spots inside the business and spot growth opportunities, which you ultimately were able to take up. So let's talk about the governance aspect of that and then I'll wrap back to talk around the business growth journey that you went on. So how did you then collectively as a group, you talked about the board briefly, how did you collectively as a group go about ensuring that you were running and growing the business and meeting the objectives?

Kris (00:08:41): So pretty structured governance for a small business. So at any point in time, two or three of the big shareholders were on the board. So at least one of the founders was on the board. Also had a professional director who had a lot of experience working with through the growth of Xero and other organizations as well. So could see that. And we also had sort of a virtual CFO who was also on the board. So it was good capability spread on the board and quite formal sort of papers and reporting discussion. And I think I remember very clearly at one point the ask from the board was, okay, so tell us what we might look like in five years time. And so I worked with the founders, but I wrote that story. And in that story there was an exit and I think it was about five years down the track and said, here's how we're going to grow. Here are the opportunities. We're going to probably be this big and then here are the likely acquirers of that business. And it was a great conversation I wrote as a story. I prefer that to some sort of slide deck or numbers, a spreadsheet version. So it ended up that story with some variations ended up becoming true much faster than we thought.

Josh (00:10:03): Yeah, wow. Okay. Were you the main protagonist in the story?

Kris (00:10:06): I probably wasn't. I clearly had a key role to play. So Optimal had a very strong brand, and it was more about the brand and the people with me in it and telling a story that imagines you exiting that business to a new owner. It was probably a bit foreign, but they were ready for it because they weren't active in the business area.

Josh (00:10:35): As a founder, once you've exited the operations of the business, then you tend to remove those tentacles and that identity attachment from it to a certain extent. And so appointing a external professional, CEO to professionalize and to grow the business is a very mature and a very sensible thing to do, but very hard. What were some of the challenges that you experienced earlier on in that journey, if any, that you can share?

Kris (00:11:00): I think when you have founders and large shareholders in a business who are, some of them are on the board and quite close to it, and some of them are not. They might not even be in the country. In fact at 1.2 of them were not in the country. You have to sort of ensure that they're on the journey, especially if they're very interested in the business and interested in the value that they've built. So to manage shareholders who might have slightly different views, I think the board was a really good vehicle for that. So the chair who was not was an independent chair. If you managed that conversation very well and said the board makes the decisions, the shareholders have a say, but the decisions of that nature and the outlook is set by the board with the ceo.

Josh (00:11:52): That's wonderful. And mature governance to hear. So separation between roles, I always think about the differences of hats that you have to wear. And in a small medium business, often you have three hats that you represent in a forum like the board meeting. One is the shareholder and your interest is a shareholder, is to maximize shareholder returns (00:12:12): I dividends and potentially growth. One will be as an employee, let's say you might be CRO or CEO as the founder of major shareholder. And so your interests are as an employee, making sure that you meet your KPIs and achieve your long-term and short-term incentives, which might be around just growth, for example. And then as a director, you've got to make sure that all of the various stakeholders needs are met and that the company keeps itself clean and doing the right things by the right people. And those things can have conflict, especially if you dominate as an employee, you might want to maximize your own income, but that will have an impact upon the shareholder returns. And that could have some consequences for the directors because you've got someone who's being a bit of a rogue element. So it's really tricky to navigate you're wear on those hats. There any stories that you can share about that happening?

Kris (00:12:58): Well, I can share stories that wasn't really a problem with optimal because of the very experienced chair and also the nature and personality of some of the founders were to do it right? So it's setting up governance, but I now do consulting often to sort of scale up businesses that are looking from big investment. Could be from private equity, could be from sometimes it could be from sort of a trade investor. And the separation of roles is often and unclear. Often the CEO has gone on to be, or the founder has gone on to be on the board sometimes the hardest CEO who invests, who ends up on the board and they have a new CEO. And to simply separate what's your role and what's your role and what conversation should we be having if we're at the board with the CEO present or in the executive team or just the board is super important. And if you can clarify that, everything becomes much, much simpler.

Josh (00:14:05): Completely agree. I refer to it as being sticking to one's lane, so having clarity on what that lane is and what the measures are. And then the other thing that I love in the background of that is having an effective board structure where you're really clear on the metrics and the reporting that you're producing in those environments. And then just sticking to it. I'm not sure if you've seen this before, but I've seen it all too many times where the founder hires an external CEO general manager and then they second guess every move that they make, they start to trim their sales too much, metaphorically speaking. So don't give them the freedom to operate and then essentially kind of kneecap that person in the job. And so it works out to be a successful engagement for no one. Is that something you've observed?

Kris (00:14:50): Observed but not experienced? So that was not a problem in my role with optimal, but I've seen that, but also I've seen what's your role? If you are a major shareholder and you're on the board, who are you representing as if you judiciary duty to the business as a part of being a director on the board? Or are you trying to maximize your shareholder return? They might always, or timing is another thing. And then worse again, if they also have opinions and operations, which becomes very, very muddled and give the CEO, I mean there's a truism here, which bears the board's role is mostly to manage risk and hire the CEO E let the CEO O go.

Josh (00:15:39): Completely agree. I'll ask an open-ended question in that case. So an ideal world, how is strategy formed?

Kris (00:15:48): So great question. So one of the, because I often now in my current role often asked to help with strategy sometimes as cast, as help us with articulating our vision or our ambition and strategy, which is what are we going to do to get there? And my first question is, who owns strategy? And there's no clear cut answer, but I want to hear what they say. Often there's a very strong board, they will go, we own a strategy. The CEO recommends something, and we decide in reality the CEO has a much bigger influence on strategy. They know the business, they know the market, they know the people, they know the capabilities. And it tends to be, for me, the ideal outcome for me is we do something with the CEO and the executive. We take that to a joint conversation with the board, and then we might have a separate conversation with the board if that's needed, that means there's a trust issue somewhere. So ideally you get the strategy developed first by management together with the board who endorses maybe challenges, maybe say, well, what does this mean for the shareholders? And then it's decided there if you can achieve that, you're winning, I think.

Josh (00:17:12): Yeah.

Kris (00:17:13): Yeah.

Josh (00:17:14): Let's delve a little bit deeper. I didn't anticipate we'd go this much into governance, but it's a great conversation to have as I've found in New Zealand that we don't do governance all that well, typically in some instances there's shining lights of it. What about the chair? What do you see as being the critical functions of that role?

Kris (00:17:31): Good chairs for me own how the board should operate. So we will keep board members who might have confused understanding of what their role is on a board, particularly large shareholders, but also other investors that might be smaller in line. They need to do all the pre-work before a board. They should elevate the CEO to be you tell us what needs to happen in terms of the management decision. Could be operational, could be strategic, could be market decisions as a busy role ideally. So you're not just procedural, you need to do a lot of pre-work to ensure one at a minimum, understand everybody's perspective before you're in a board meeting or in a board workshop or whatever the thing is. But also, this is a side note, I spent about five years at Fonterra early when it was just formed, and I had the pleasure of being in some board meetings for decisions and the CEO and the chair didn't want to go into a board meeting without knowing everybody's opinion, what the discussion's going to be and what the outcome is going to be. So the meeting itself, it wouldn't have been totally true all the time, but the meeting itself should be, yeah, we're going to go through process, but we're not going to go in not knowing.

Josh (00:19:02): Yes, I've heard that said before actually that you should not call a meeting without knowing what you want the outcome to be and how the meeting's going to play out. And so that happened at fonterra. Do you think that that is effective

Kris (00:19:14): Governance? I think it went too far. This is past my time at Fonterra, but it certainly went too far in the previous chair and CEO set up where they were too strong. But there's definitely something to be said for have the conversations beforehand, understands everybody's perspective,

Josh (00:19:39): And then give them the air to kind of share that and probably coach them through an effective way to be able to share it so that it's couched in a way that becomes a discussion point rather than taken as a personal attack potentially.

Kris (00:19:50): Totally. And I would've walked into early, I wasn't that old as into board meetings presenting something, an investment or a strategic change or whatever, and not knowing that that was always the format thinking this is going real bad. I was thinking, oh no, there's no way this is going to happen. But then that board meeting the way quite open, so quite challenging directorships because you have farm directors on a Frontera board, but it was pretty clear with a couple of options where one thing was going to land, which I didn't know going, I didn't see that. So what the learnings.

Josh (00:20:29): Yeah, absolutely. It's attributed to Einstein, not sure if it's a fact or not, but someone smart at some stage said if there's two people in a room and we both share the same opinion, there may as well only be one. Which kind of relates to this having an effective dialogue. I was a guest on markovic's Governance Bytes podcast, and we were talking about the place of tension inside a relationship. And I think about a relationship as being at one end is harmony and at the other end is conflict. And neither of those things are productive. Harmony's a nice place to exist, and you want ideally more of that in your home relationship. But in the middle is this beautiful thing called tension and tensions went to people, to ideas, to ideologies, rub up against each other, and you can have an effective dialogue about those things. And my observation of New Zealand board environments having been, what am I, 15, maybe 17 boards that I've been involved in now, is that too often we strive towards staying in harmony and then we descend into conflict and then that disrupts the harmony piece and we don't become that effective at sitting in this place of tension. (00:21:33): Do you have a view on that?

Kris (00:21:34): Oh, totally. And it keeps in a job to some extent, where that either goes too far towards harmony. So we are just going to agree with stuff and okay, that's fine. I'll just agree versus no, we have real tension here. And often what's missing is the focus is too much on the here and now. So it seems like a really important decision or something needs to be done, but have you thought far enough out if we can agree with the direction we're heading that decision, you can probably be more flexible in that decision because there's often a lot of unknowns too. It feels like an absolute decision in the time. I know we're talking in concept here, but literally going, well, no, if at leads puts us in the direction that we all agree we want to head in. So having that conversation about where are we heading, which is looping back to the conversation about optimal and talking to the board about a story, where are we heading is so useful because you can step out of operations, you dunno what operation's going to look like. It's more about the big shifts and leave as you should pull.

Josh (00:22:47): Yes. And managing the trajectory, which is actually much more important than the decision right now. Is this getting us on the right path towards where we're going towards? Totally. Yeah. Curious Northern Europeans. I think this is correct and known for their directness.

Kris (00:23:05): I think some are.

Josh (00:23:07): Some,

Kris (00:23:07): Okay. Yeah, some are. So if you work with Dutch people, you've worked maybe with Germans, you're definitely going to know exactly what they think at the time. Some Swedish, like me, I'm stereotyping, there's probably a mix of that, but also trying to keep harmony and not upsetting people. So loss of face isn't really a thing, but I don't want to upset you and I'd rather this to be a harmonious conversation. Right, like

Josh (00:23:37): Kiwis.

Kris (00:23:37): Yeah. So yeah, we can talk for ages about the US where my main with doing business with Americans is they don't tell you no when it's No, it takes ages for them to actually say, no, I've told you 10 times. What I meant was, no, just tell me. No,

Josh (00:23:58): A hundred percent. The challenge that Kiwis have with fundraising, if they head up to Silicon Valley, let's say, and they go to Sandhill Road, is that they never get a no from someone. And the answer that they get is, this sounds like an amazing idea. Now it's just not the right time for us. Go away and maybe think about this and then come back to us. And I have these hopeful founders that have done that journey and they've got, I've got 25 people that are considering it.

Kris (00:24:23): I'm

Josh (00:24:23): Like, they're all knows. They just haven't said it to you because they want to keep the door open. They don't want to kill your confidence. And they also have the sense around just keeping a dialogue or something going. So yeah, it's super frustrating. I'm not sure about you, Chris, but I'm relatively direct with people. I favor clarity over the moment. I make sure that there's enough kindness around it these days. I perhaps was overly direct when I was a younger business person, but I let people know where they stand and I think that's a healthy thing for a relationship.

Kris (00:24:52): And I think so too. I'm probably more direct now than I was when I was, I dunno, early thirties, I was much more careful Now I will say in a nice way, radical candor, but in a kind

Josh (00:25:08): Way. Yeah, agreed. So let's jump back to optimal. And so you were brought on to, professionalize is probably the wrong word, but certainly grow the business. You painted a narrative on where the company could go and that involved telling a story around an exit. How close to the, it was obviously quicker, but how close to the story, the narrative that you provided to the board on that journey from there to exit was that path you talked about outlining who the particular acquirers were, et cetera, et cetera.

Kris (00:25:38): Yeah. We did not have PWC as an acquirer. We might have spoken about, I can't actually remember the story exactly, but we might have had professional services or a large consultancy, so probably more in the design space. So I think that the learning is, so we're going to put the steps and the building blocks together to head towards what we think this business should be, can be and be most valuable. And we certainly put in those steps together. But how it actually played out was not expected. It's not the story I told, which I think it's just true in life. Do good work, have a vision, have a direction, do all the right things, and then how it actually plays out in the end. It's probably quite different from what you thought. Speak to anyone our age about their career. Did you think you'd be here?

Josh (00:26:35): No. No idea.

Kris (00:26:37): No. Yeah. So it was a couple of things that ended up triggering, which was unexpected. Yeah,

Josh (00:26:46): Yeah. Optimal really punched above their weight. So as a small design consultancy, they had really some Hallmark master customers as a part of their stable a SB and New Zealand, I think warehouse Spring to mind. What were some key things that the business had done before you turned up and then you continued through that enabled them to really win some of those incredible brands as customers?

Kris (00:27:13): It's a good question. I think that there's a couple of things. One of them was when Optimal was founded, user centered design, humans at UX wasn't really a thing. There was a few professionals here and there was a thing in the US mostly, but these young guys had said, no one's doing this right? They were working in it, looking at how poorly things were designed for the end user and so on. So they took that idea and belief that this is something that we need. And they started that business and then smart guys to start with, but also young, so that Trent in particular is a reader. So he would go, okay, I'm going to read a book about what's the best way to run a business, what's the best way to motivate a team? What are the best practices and methods in this space? And then hired people both from within New Zealand and from overseas to come in and be the talent and then deliver really good work every time before me, they engaged a client, they delivered value for that client, and they were early in the curve. Now some really good businesses almost who does that work? Who a lot of the teams that work there have their genesis and optimal.

Josh (00:28:43): Yeah, okay. So New Zealand's PayPal in some ways, but in a different space

Kris (00:28:49): For ux for sure.

Josh (00:28:50): Yeah, for sure. Yeah. Got it. So a desire to innovate, a willingness to learn from others adjacent or in the same space. And then a intention just to move ahead and give it a bit of a go is what I heard.

Kris (00:29:05): And also connecting internationally, given that when Optimal started that were the only business doing that more or less in New Zealand. So where do you go and learn? So Trent was on the board of the User Experience Association globally. He would meet with businesses like Optimal and other parts of the world who were ahead of the curve.

Josh (00:29:29): Yeah, so CEO navigating this journey through Growth New Zealand businesses, going to Australia is what have, I heard the expression, the Tasman is littered with hopeful companies that have endeavored to grow in Australia and have not managed to do so. What did you do to make that work?

Kris (00:29:51): So by the time I joined, there was a partnership, sort of a joint venture in Sydney also at that point called Optimal Experience. We would call optimal usability. And it wasn't going that well. It was passionate, very talented people working, but it wasn't working commercially. So one of the moves I did was to bring that business ends. We had a trigger in the partnership agreements. We took ownership of that business and rebranded as optimal experience across both Australia, New Zealand and ran it as one business applying the sort of disciplines that we had in New Zealand to that part of it. I would say the honest answer is semi-successful or less than semi-successful, I would say it's hard. It's very different doing business in Australia, especially as a New Zealand business trying to impose itself and say, we know that we did this stuff really well. And through that journey I spoke with a lot of other Kiwi businesses who were trying to do the same. Were sending a few people over sending it off an office in Melbourne or Sydney, and it's hard going

Josh (00:31:04): Very, very hard. I struggled with my business, but the platform company and I found that the cultural differences were more than less and the nuances around communication meant that it was just really, really challenging to navigate your way through partnership processes and sales processes. We were talking about the Americans a second ago, it's really hard to get a know out of them, exactly the same experience in Australia. And so what I took away and what I made it mean, we ultimately did win some customers there, but what I took away from it is that Australians were actually culturally more aligned to Americans and way more culturally aligned to the Brits. I've lived and worked in the uk and so had that experience a number of years ago. And so what else would you add to that in terms of differences? Because this is a really, really helpful conversation for people wanting to be able to do this.

Kris (00:31:55): Yeah, I think generally speaking, Australian leaders, buyers are much more hardnosed. You have to be a bit more brash. You have to be put up a very confident proposition to them. And if you can't, they're just not going to buy. And I think that it is quite a big difference if you walk in the New Zealand business is largely based on trust networks. I can check with someone, do you know optimal? Do you know Chris? Do you know someone of these people? Yeah, I know them. Okay, well I'll give them a chance. That doesn't happen in Australia, certainly not as a Kiwi business coming can't. It's more about the commercial and the deal than it is about Yeah, I like you. I'll give you a chance.

Josh (00:32:42): Yes. Yeah, I've always said that New Zealand is, we do business on network partially, but trust really quickly. And the relationship becomes super, super important with the belief that if something goes awry, then hopefully we can kind of correct that course and get back into the right place,

Kris (00:32:58): Right?

Josh (00:32:59): Australians are very litigious as well. The Americans are, and so if things go wrong, they're very prepared to go through the court process, whereas we're almost allergic to that in New Zealand.

Kris (00:33:10): Yeah, no, and look, I mean we had some great creds that applied there too. So as you say, before we worked with in New Zealand, but we also worked with all the big banks. We've worked with both, all three big telcos at that point in every sector. So whatever the opportunity was for the client, we could show that we've done really good work with a big business. Still hard.

Josh (00:33:36): Yeah, I get it. Hey, let's jump on and talk about the exit. So at what stage did the process begin around considering how that journey could look and what were the early first steps that you took?

Kris (00:33:50): So I said before that it didn't play out at all as we thought. So we had had the conversation about strategy and a potential exit and how do we grow this business with the board? And they were excited about that and we were excited about that. But the way it played out was Trent, one of the founders had sort of moved on it, had some sort of exec jobs and scale up businesses, but found himself doing some consulting and he was doing some consulting alongside Deloitte, and they said to him, Hey, why don't you just join us and join Deloitte and do you work through us? And he said, no, I'm not really that interested in that, but I have a business you can buy. So they said, oh, let's have a look. So that's how the conversation started. As soon as that conversation started, we said, well, it has to be contestable. So we ended up approaching about five or six different businesses. Well, this is a conversation that's happening with another potential acquirer. Are you interested?

Josh (00:34:56): And you did that yourselves?

Kris (00:34:57): We did that, yeah.

Josh (00:34:59): Yes.

Kris (00:34:59): We didn't have any advisors. There was me, Trent, some directors were involved and so on. And then we basically cast out in the network and said, so I ended up having coffees with people. Unbeknownst to me, pwc were looking for a business of our shape and capability to add to a gap that they had and an offering. And one of the deals partners had been speaking to, I think it was Rods Gras, who was at Spark and Rod, we did work for him at Spark. And he said, you should look at Optimal. So literally it was serendipitous. Our process as the conversation has started loosely with Deloitte and PWC was looking at the same time. So by the time I had my first coffee with someone at PWC and saying, well, this is happening, they were already ready. So in fact, we spoke to Deloitte, PWC, ey, and a couple of others who were sort of just loose conversations, but we were all talking value and it was DD with two.

Josh (00:36:06): Yes.

Kris (00:36:06): Yeah,

Josh (00:36:08): You made it sound like it was lucky. I don't think it was because doing that work and understanding who's the logical acquirer that would represent value for both organizations and contacting those folk, maybe Rod SNOD's kind of introduction, could have been, that might've been lucky. Rod's a great guy, but let's talk about the early stages of them assessing the fit of optimal with the PWC business.

Kris (00:36:36): So on the surface, both consulting business, both through time sheets, both charts for hours, we had a particular proposition that would fit in a gap that PWC had, less so a gap with Deloitte. So both did didi, we basically create an IM and give you this and they've said, let's have a look. But culturally, very, very different. And if you are, it's a fine balance to say, well, they possibly are a natural owner of this capability that we've got, but we have to be super careful with what's the rub that you might end up with if the deal goes through and you end up joining. That rub definitely played out and that was probably the hardest part of the process. But that's for post deal. (00:37:34): Yeah, look, so we were meeting with all the right people, the people who needed this capability and they're part of the business. We were talking to the CEO, we were talking to all those people and pitching ourselves, literally saying, this is how we do stuff. So PWC could definitely see the value, probably not a hundred percent understanding what we did, but that's fine because that's how large consulting businesses work. We say, yeah, we understand. We can hear from clients that we want, what you can provide, whatever it's whatever. It's right. So it was really interesting conversation and they looked at that. It did proper DD and pwc and has a very, very good deals team. So strong dd, I can tell you that.

Josh (00:38:25): Yeah. Give me an insight into the duration and the involvement from the optimal team into that

Kris (00:38:32): Dd probably, I would say through that period, it was quite fast. So first conversation, real sort of indicative, we were interested sort of February, the deal was done and dusted in July. So including everything, contracting, Didi, everything. So quite fast. It was mostly me, some of the CFO, it was a virtual CFO and some of the board founders had to be involved. And then occasionally we would get senior people on the teams. I need this type of information, I need this type of information. So yeah, mostly me though.

Josh (00:39:15): Okay. And so buying a services company is quite different from buying a product company. And so there's people, there's processes, there's systems that'll sit in to support that. Obviously customers agreements, all that sort of stuff. During that process, what did you ascertain were the critical kind of things for pwc to wrap their head around that could have been deal enhancers or deal killers?

Kris (00:39:37): Yeah, retention of key people. So I mean I've heard this afterwards as well. The team on the PWC side said, whatever we do, let's not crush this business because it's in New Zealand, a 25 person or so business coming into, what's that stage, about 1200 people. They were very aware of that. So we want to retain, and one of those retentions was we're going to make Chris a partner when he joins, which is, that's retention. Also some very key senior people. And then very carefully managing the sort of transition with the culture. What offices are you in? How do we manage? So there's people retention, then there's client retention. One thing that a professional services firm, particularly an audit firm like us would look at is how many of those clients you have really good relationships we work with because we audit them. So that's always the independence is a key issue. So there's probably a handful of reasonably good clients of ours that we said, we're just going to have to let them go. We can't work with them.

Josh (00:40:51): Yeah, got it. Okay. So established over the DD process that there's a good fit, there was enough non overlap to get to the stage of going, these guys are going to be good. Talked about a post deal transition into the business and establishing key person retention, and then obviously probably client relationship and expansion opportunities as well. So let's talk about the deal itself. So whatever you're able to share of the offer, the negotiation, how close those numbers ended up being. And it may not be specific numbers, but it might be timeframes or multiples or that sort of stuff.

Kris (00:41:27): So

Josh (00:41:27): What can you share?

Kris (00:41:28): So I'm trying to cast my mind back, but there would've been sort of an MBAO. So look, it's some sort of non-binding. We think you're worth this based on your IM and the conversations we've had. And they would've based that on here's how we think we can grow this business. That really played out too. So it really grew after that, leveraging relationships. And so that's the math that would've done at the time. And then they got in and did dd and because I had done, there was mistakes in the numbers, all that sort of stuff that you find, because I was doing it right. So I didn't have any advisors doing this stuff apart from the CFO helping. And they said, well, is that right? Oh, no, that's not right. So we didn't actually know. So there was an offer, there was actually two offers, one from PC, one from Deloitte, very different. In fact, there was a 50% difference

Josh (00:42:32): In price. In

Kris (00:42:33): Price.

Josh (00:42:34): That's remarkable. I presume PWC was the higher

Kris (00:42:37): Correct, yes. Yeah, but also a better fit. So I think that if the fit had been different, they might've considered a difference in price, wasn't that much about the money they wanted to land. Well. But yeah, it was a big difference. Natural reasons for that. Deloitte already had a large business doing what we did in Australia and started that in New Zealand, so pretty close in the end. So the actual negotiation on price, I didn't do the board did that. So partly because I ended up having a dog in the race, literally there was an opportunity for me personally.

Josh (00:43:26): Yeah. Got it. And was the business valued based upon a forward EBIT multiple? Was that kind of the estimate on the price?

Kris (00:43:34): I suspect that that way they priced there then looked at that there was an EBIT multiple, which was probably, I suspect was quite high for a services business because they could see the growth potential and the gap it felt and then they would've priced it on. So what value can it bring over time? A partnership looks at value very differently from if there's a commercial business buying it because the profit is shared differently. So I am not privy to the internal calculations still

Josh (00:44:12): That

Kris (00:44:12): PWC did. But yeah, even

Josh (00:44:16): Cool. And there was an Australian business. And so the partnership structure you mentioned is interesting because you've got folk that own the local entity and then there's shared global and bits and pieces. I don't really understand the complexities of it, but what happened with the Aussie business?

Kris (00:44:32): So we were at that point now one business, we had brought the Australian business in as fully owned. And the honest answer is the Australians already had. So pwc Australia already had built a team doing what we did more or less. They said, look, we'll take the team, but we're not interested in the contributing to the value of this thing. Got it. And that's how it played out, which also reflects on how long those people lasted in Australian business because they weren't really, it wasn't a desire. The Australians didn't really care.

Josh (00:45:08): Got it. Okay. My understanding anecdotally, and it's conversations that we've had over time, but from others that were in your team, and I know Trent as well, is that the transition was actually handled really well.

Kris (00:45:20): The transition was handed well, and we would talk it very, very carefully. So credit to how Trent had built the culture, and then I had carried it on, but essentially as soon it was the real interest on the table. We told the team this might happen, and we ran a rolling sort of FAQ. Anyone could ask any question, we'd ask us what we could. And it's like by the time we actually landed in the business, there were still shocks, but for me included, right? Yes. I didn't really know how a PWC worked and the independence and risk management and all that sort of stuff that we weren't doing. So the transition was handled, I think, well, very, very loyal people. And one of the key learnings I think was loyal, thought we'd handled it as well as we could being very transparent and open, which probably meant that more of the optimal team stayed longer than they should have, which six months in eight months and 12 months in caused some frictions when they say, I feel like I should stay, but I don't want to.

Josh (00:46:38): Yes.

Kris (00:46:38): Right. So that's a

Josh (00:46:40): Loyalty thing. (00:46:41): Yeah. Wow. Yeah, that's remarkable. That level of transparency is actually, it could be considered from the outside to be almost reckless, highly risky because people would go optimal usability, optimal is a independent, nimble dynamic. Opportunistic, innovative. And then we've got pwc, which is in those days, I didn't mean to call this out, you're a partner at PWC wearing a t-shirt and trainers, which I love, by the way. I'm the guy dressed up, dressed up, and I'm the ex tech CEO. So there you go. But from the outside, I would imagine that they couldn't see an almost more different culture, maybe unless Fonterra or someone like that, maybe a bank. But so different,

Kris (00:47:27): Very different. Very different. And definitely culture shock. And I want to say about, I don't know if it was three months in or four months in, when we actually moved in, we put a lot of work in to make sure that what we moved into felt like we actually got PWC to clear a whole floor for us and make it look like our place. So very different and pros and cons of that, by the way. But in the end, the business just about stopped for our business where people go, what's happening? So that took a lot of effort, hiring people early, who are the type of people we were hired at optimal, but never worked at optimal before. PWC was critical. So getting people who, guys, I don't understand this thing. Why, so this is great, let's go. So we did that early and a lot of those people are still with us now because they get both the advantage of the ethos and the culture that actually remains even within pwc, which is hence the way I look now, but also they go, this is amazing. We also get access to amazing networks and opportunities for work that we would never have had (00:48:49): At optimal. So yeah,

Josh (00:48:53): Cultural and dynamics stays the same, but opportunities expand and there's probably things like people and culture within a place like pwc. So there's learning and growth opportunities. You've got cross promotion opportunities, so career things. Totally. So yeah, that's an incredible story. I'm not calling the team dogs, but there's a thing about having, if you move a dog around, you put their bed in there first and their toys and kind of pretty much, pretty

Kris (00:49:17): Much. And also mammal, get some new puppies,

Josh (00:49:20): Right? Extending the metaphor slightly. I love it. And so you've, before going to PWC had a bit of a varied background, including working for some corporate startup, insider, corporate, both, and then back in Stockholm as well. But tell me about your personal transition and going to work for a very large partnership based organization.

Kris (00:49:43): So partnerships. So I had experience, I'd worked in Fonterra, I worked at Sovereign, which is now a, a large insurer. So I understood the politics and dynamics and the slow moving nature of large corporate. So I had made some assumptions. That's what a partnership was like. It's not at all that it comes with a bunch of huge strengths and also comes with drawbacks. So when you're jointly and severally liable for everything that happens in a partnership, we keep each other in account.

Josh (00:50:20): Literally that's the case. That's the case. The entity is a registered partnership. Wow, okay. Joint and several is intense. For those that dunno, it means that you assume the responsibility and the negative outcomes of every other person that's a party to that agreement.

Kris (00:50:35): Correct.

Josh (00:50:35): That's intense.

Kris (00:50:36): Yeah. So but it's also real strengths, which means you have at the moment of pwc, it's like 150 or so partners who are all driven business owners understand that I can't go rogue because that's going to impact all these people I'm in business with.

Kris (00:50:54): Yes.

Kris (00:50:55): So it adds, there's some layers of, it creates, I call it a fabric that we're all connected and you can sort of pull the fabric and it doesn't break easily. It's quite powerful. It was quite why it survives for 170 years or so.

Josh (00:51:14): We had Mike Ma on the show this morning who is a serial acquirer. So he's made 15 acquisitions and he talks about the rope and having multiple strains to it, and they're all wrapped together. So individually the strains are not strong, but together they are strong. And so the fabric analogy is not dissimilar. So as much as you can share, we're a services-based economy in New Zealand, and so a lot of services companies here. And so for those that are considering what the options might look like, one of the options is to go to join a professional service as a bigger firm. And so we've talked about what the environment's like the way that the business is run, but I'm really curious about how you are measured and how you are remunerated, if you can share.

Kris (00:52:03): So for people who are partners is different. So essentially it's more or less we're in business together, we share in the profit, you retain some things for investment. It's like being a working director in a business. And essentially my income will fluctuate with the fortunes of the market, the fortunes of the business, and also this progression. And you can have different roles and all that sort of stuff. So the simple answer is you can view us as a cooperative. So if you're a fonterra farmer, you get paid, you say you expect to make this much money for all the farmers in a year, so we're going to pay you some of that through the year. And then depending how well we do at the end, we pay the rest out. Very similar.

Josh (00:52:56): Very

Kris (00:52:56): Similar. Yeah.

Josh (00:52:57): So there's a bit of individual business unit performance, the STI if you like, short-term incentive. And then the LTI is based upon the business and broader businesses performance.

Kris (00:53:09): Yeah, yeah. So in that sense, it's quite similar to a large corporates. So you go, well, how are you performing? How's your business unit team performing? How's the firm performing? That all adds up to rent.

Josh (00:53:22): Yes. Got it. I'm going to you here. Scaling a business isn't just about growing revenue, it's about growing influence and trust. That's a really good strong pithy quote. But how do you come about growing influence and trust,

Kris (00:53:38): Chris, depending on where you are and what role and what organization and all that sort of stuff. Trust is critical, especially in a service-based business where you have to keep winning work and delivering well and winning more work and so on. Without trust, you are going to be dead in the water pretty fast. So that's super important influence. I can't remember the origin of that quote, but influence for me is if you're in a large organization, getting the network effect, the internal network effect is super important too. So can I leverage the relationships and the skills and the networks of my colleagues and to sort of further what I think the business should grow in? And they will do the same. So the influence. And then at the end of the day, what I love to do is to work with, it could be the scale up examples we've spoken about before on a corporate to go, I think I have an idea of how you can improve your business. So how can I influence you to move in that direction? And sometimes I have a 1% influence, sometimes I have a 20% influence. As a consultant is really more than that because the business owns itself and the board is responsible. But yeah.

Josh (00:55:00): Yes, I love the notion of influence as to me, leadership is only influence. Management can have power attached to it, but leadership is about influence and sales is actually also about influence. And so as a partner at pwc, I understand that part of what you do is leadership and part of it is sales, essentially. Is it? Totally. Yeah. And then another part is governance, I'm guessing as well,

Kris (00:55:24): And a lot of delivery. So very hands-on as a partner. And it's not like a large corporate where you might go, well, we have the sales manager or the BD leader has sold something and a team delivers. That's not how it works. Literally, I own it. My feet are to the fire for all sorts of things, both in terms of to the client, but also to all the other partners. So to go, because how I show up and deliver for a client might have a direct impact on the next piece of business. That's another partner. So yeah, it's very, very

Josh (00:55:59): Important. Got it. Another quote of yours, and it's actually become an expression, the hobbit effect. So this is going back a few years now. It's something my research had dug up. Tell us about what that is and the origins of

Kris (00:56:13): It. I can't even remember it.

Josh (00:56:14): Oh, okay. I'll tell you in that case, so I can't remember the publication you were quoted in, but I think it was back in optimal days. And you were talking about the difficulty of building a UX, kind of heuristics, et cetera team in New Zealand. And at that stage you'd noticed what you then coined the hobbit effect, which was that New Zealand was put on the world map by Sir Peter Jackson, and so we were able to then start attracting talent from overseas.

Kris (00:56:40): Yeah,

Josh (00:56:40): Yeah,

Kris (00:56:41): No, that's right. And you need some way of cutting through. So that's a cut through. And that must've been the way New Zealand was known at the time, right? There'd be other things now that can allow you to start a conversation and allow you to be on the consideration list for the best talent. So we were really lucky. We hired, we've managed to attract people who are at top of their career in our field, from the uk, from the us, also Germany and so on. Literally they went, we can see what you've done. We can see the culture you've got. We now understand what New Zealand is. So happy to consider you.

Josh (00:57:27): Yeah, yeah. You've been at the forefront of digital for actually a long time, since the early days post-graduation. So very much aware of the trends, the mega trends, how people are interacting with technology, what's coming, and an influence of that stuff as well. So the last couple of years have been tectonic in the change that we have seen from the way that we are working and the post covid things, artificial intelligence obviously. What's your view on the next couple of three years in terms of what's going to happen around this massively rapidly evolving space?

Kris (00:58:04): Yeah, I think we've been talking about the rapid disruption with digital since I came out of uni. And obviously there's the increasing pace. If you look at generative ai, how that's developed, how fast it's going and how quickly it's changing things, I suspect, well, I have a belief that you can only move as fast as you can shift people's mindset. So the human influence in this is going to be massive. So what decisions might execs be willing to make around how fast are we going to go? How big leaps are we going to take outside of the post trials? We've replaced our whole tech stack with ai, fine, but that's 10 years away from most businesses. And the culture shift, the human capability, the relationships you have to create all that sort of stuff will probably be the limiter on all of that. Not withstanding that. PWC is actually quite a good example. Probably the leading adopter of generative ai, upskilling and tools of any scale businesses, New Zealand. So everybody at PVC has access to and can use AI tools, and we keep expanding that and get encouraged to, but it's still taking years. Yeah,

Josh (00:59:37): Years. It's the contrast between consumer level and individual level, which for those that are innovators or early adopters of technology, they'll be going out and using this stuff relatively widely at the moment. And it's a generational thing as well. Neither you nor I digital natives. I think we are migrants, is the term that we Oh,

Kris (00:59:57): Is that,

Josh (00:59:57): I think that's the term that we have. You actually might be a digital native because you were so early on. No, no, no, no. My kids definitely not. Yeah. So what I've observed with the utilization of artificial intelligence, I had a company back in 2018, is that

Kris (01:00:12): There was actually quite a lot of organizational inertia that's surrounded it because there's massive

Kris (01:00:17): Valid concerns such as security,

Josh (01:00:20): Access to data utilization, disruption of workforce and workflows. And another thing that I've observed, curious on your thoughts on this is that a key part of what I do in my professional life is I assist organizations to go through the process of building value inside their asset. And a lot of that value is about their ability to utilize and create intellectual assets. One of those things is processes and systems and automation inside their business, which is almost as dull as you can get in business. And so most people don't do it. Well,

Kris (01:00:50): That's what we do.

Josh (01:00:52): Well, most people don't do it. So I'm not understanding the importance of it. It is vital to get right. A recent report, I forget who it was from, might've been Bain and Company showed the shift as a proportion of company value from 20 years ago. It was about 25% was intellectual assets 2020 odd years ago. Today it's 90%. And so what I know, and I'm sure you are the same curious on your thoughts, is that you can't automate until you've got the process. 70% of process implementation projects fail and nearly always because of the humans, but you've got to have the humans involvement, not at the stage of completely no humans. And so you've got to kind of move through a gradual journey. That's my perspective on it. What's your thoughts on that,

Kris (01:01:34): Chris? Oh no, I totally agree. So if you keep digging, there's a human there somewhere. And that goes for process automation. It goes for how to change the business model for an operating model, whatever. This is sort of human and the collective human culture and behavior and mindsets. And that is true both in the organization to operating a business. But it's also true at the leadership level, it's true at the board level. So you used the word organizational inertia, but the organization isn't a thing.

Josh (01:02:04): No.

Kris (01:02:05): Right? It's literally the humans who make it up. So back to the influence and trust, am I ready to shift with you or not? How scared am I about letting someone who talks about a technology I don't understand to let that loose on my business? Do I trust you to do that? All those sort of things. And then is my organization ready for it? So whatever you keep lifting rocks and you're going to find some humans.

Josh (01:02:37): Hopefully. When you said keep on digging, it's not a corpse, it's at the bottom. That's right. Maybe some companies. So parting couple of questions for you. So the first is, what are kind of a couple of guiding business philosophies for you? So things that you hold to be truisms and how you operate and how you carry yourself. So the things that you've operated within. And if someone operates in a way that's incongruent with that, different to that, that it would be repellent to you. So your core business philosophies.

Kris (01:03:09): Yeah, trust people. Give them opportunity and give them opportunities as early as you can to run their own thing. So if you have teams, delegate is the wrong because it's a management word for it. I think trust people to get on with it. And if you've hired smart people and they're good at what they do, let them get on with that. So I'm not a command and control type person. Sometimes that's required and that's fine, particularly in a place, in a partnership where my feet are to the fire. That's one. The other one for me is simplify. Simplify everything. The larger the organization, the more complex we make it. And then you have culture sometimes on top of that. That makes it even more complex. Is it really that hard? What's the simplest way? How can we make sense of something that's simplest possible way? Talk about whiteboards. That's a very good tool for that. You can always use a whiteboard to sort of simplify something down. There are other tools for that also. And then I'm a big believer in storytelling. So you can, you'll probably get much more influence and traction and clarity by telling a good story than you do by showing a spreadsheet or slide deck. Yeah, so storytelling is huge because it'll capture people's hearts. The human side of it. (01:04:44): I can see myself in that story as opposed to, oh God, okay, I understand there's a strategy page or whatever. But

Josh (01:04:51): Yeah,

Kris (01:04:52): Those are probably three

Josh (01:04:54): Great philosophies. I like them a lot. The storytelling piece I've heard it said that it's the origin of our species. Our ability to communicate and to cooperate is what has enabled us to get to where we are as a species. And we learned to write, they believe about 5,000 years ago, the Sumerians, everything up until that point in time was about stories. And so that's why it's so deeply rooted. Our core, the ability to craft an effective story, have an arc to that story, protagonist, a bit of risk involved, all these sorts of things. A bit of excitement and an outcome that is hopefully one that we can kind of connect to.

Kris (01:05:28): Yeah,

Josh (01:05:28): Totally. So you mentioned doing work with early stage businesses, and so not giving anything away here, but I'm really curious about a couple of companies, preferably New Zealand, ones that you're really excited about at the moment.

Kris (01:05:42): I have to be careful here because I'm invested in some of them. I understand. But if I was to pick one, which is a real, what I would call bingo is open star. So fusion technology developed in Tony by some smart people against all odds, I am invested in that business. I think it's a low percent chance. I don't want, it's a real

Josh (01:06:14): Bet

Kris (01:06:15): And it's good for the world. If they can make it work or if one of their peers can make it work, it will solve a lot of things. So love that, love their story, love how they're doing it as well. So very iterative, very experimental (01:06:28): Learning. They have a very strong founding technology thesis that they are building on. So that's one I really, really like them. There's a bunch of really smart scale up businesses too. Some of them, if you pick a halter or all those businesses, they are quite, we know about them, so we know about them for sure. And they probably, a lot of professionals would know about them or a lot of the public would know about them. But then there's a bunch of smart businesses out there. Some of them just turn up and I've never heard of them. And they've done something amazing with technology, right. It's great. Love that. And it's a very New Zealand thing, I think.

Josh (01:07:11): Yes. Yeah, I completely agree. I get really frustrated by the New Zealand bashing that can happen from time to time. So in a challenging environment, it can be easy to look at the sector and blame the sector or the government or the talent or whatever it might be. And another thing that I've observed over the last couple of years is everything's getting super expensive here. Well of course it is, but you're being paid more as well. So this is just kind of life. And if I say to people who complain about the price of things here, when was the last time you traveled overseas? Have you been to the States or Europe lately? You should really go well or not go, I wateringly expensive internationally. Now Bali still remains cheap. We were just both there at the same time before Christmas. You can get yourself a good deal in Bali, but also pay a lot of money for things as well. But back to the point, I completely agree with you that we are absolutely living in paradise. We have many, many, many opportunities. And so sure, we've got some challenges to overcome. The competitiveness index is one, but working together and having a bit of a vision and driving towards it, not bugging off to Australia.

Kris (01:08:12): That's right.

Josh (01:08:13): Yeah.

Kris (01:08:14): And I think those two things overlap. So if you think about the startup community, there are entrepreneurs that exist, the people who just go for it. And some people who are repeating, they're coming back and now they have some exit money they can use and so on. That combined with the productivity growth that we're going to need, I think there is, there's a big overlap there. Yeah,

Josh (01:08:34): Yeah. Completely agree. Hey Chris, one last question for you. The alternate universe, the one where there's the other Chris Nire who has a career that he's deeply satisfied, that's not the one that you've ended up in, which was corporate, corporate startup, running a business through to a point of an exit and now being a partner in a big consulting firm, what would that alternate career be for you?

Kris (01:08:56): I think, so my dad's an architect. He's a really creative guy. He loves what he does. He's in his late seventies still working. My granddad was also an architect. So when surely end of high school and I said that's what I want to be. Unfortunately I didn't have the talent to do it, but I could have imagined if I'd had a little bit of that creative talent, I would have laughed to have been there too. So yeah, it's creating something, something that lasts for a long time, making a statement. Yeah, it would've been really interesting.

Josh (01:09:34): Yeah, I actually had a similar interest at high school, was the technical drawing thing in those days, but I didn't have the talent to be able to see my way through to that career. So yeah, good story. Chris, we've had a fascinating conversation today and we've covered a bunch of subjects that I didn't anticipate, which I know will be super, super helpful, especially as we were delving into the realms of effectively running a business and the governance and the roles that people play. Really, really helpful. I thank you for your candor and great to have you on the show today. Thanks so much for coming.

Kris (01:10:06): Yeah, thank you. I enjoyed it.

Josh (01:10:08): It's a pleasure.

Kris (01:10:09): Alright.