S4E18: “Building a truly trusted service business”, with Alex Cheatle (CEO of Ten Lifestyle Group)

Richard Medcalf
Hi Alex, and welcome to the show.

Alex Cheatle
Thanks for having me.

Richard Medcalf
I think you've got a great track record, you founded your business Ten Lifestyle Group in 1998. And I know you've now grown it to almost 1000 staff over 24 offices. So today, I'd love to really dive into that journey of CEO of a business, we started off as probably one of you or a couple of you. And you know, you're now this global lifestyle, business concierge business. I'm really keen to find out what, what the highs and lows of that journey have been. Perhaps before we start, would you just kind of give me Yeah, just give the listeners that 20,000 foot view. What's the business? And what what prompted you to founded? Why did you start?

Alex Cheatle
So the business is about helping people get the best for their lives. So we organize their travel and their dining and their eating out, playing out music, theater, sport, and all sorts of other things, very personalized service. And we aim to be the most trusted service business in the world. But back in 98, I took a sabbatical from Procter and Gamble, where I was a kind of brand manager there. And I started traveling around the world with a backpack and an a4 notebook thinking, What business do I want to set up? So I knew I wanted to set up a business. And I started off thinking what business is going to make the most money. And quite quickly, I realized that the businesses that were going to be the easy ways, easiest ways, the best ways to make the most money didn't speak to me. So I thought, stop thinking about what's going to be the most successful for, for your bank balance and think about what's going to be the most successful for you. So I came up with five criteria for the business I wanted to set up. And I wanted a business that was going to change the way the world works in some positive way. So it had to be big, and it had to be new. And then I wanted a business to play to what I felt was one of my defining strengths, which is not I'm good at complexity. So I wanted a business that needed to be complicated. And then I thought, and I don't dig too deeply on this, the psychologist said, you might want to find out why. But I still haven't quite quite discovered it. I decided it had to pass the Alex Cheatle pub test, which is that you're in a pub or a bar. When somebody asks you what you do, you're proud, and they are interested. And that pub test is still something I think about every six months or so is that still true. And happily, it is. And then lastly, I wanted a business where I would be forced to recruit through the logic of the business model people that I would really enjoy working with, again, that centers shared endeavor with good people, that really makes business fun. So so then the thinking was, let's have a big idea. And the big idea ended up being How can we set up the world's most trusted service, because that looks big and new and difficult. And something that people could commit to and suddenly I can be proud of and other people will be interested in. And we said to some of the world's most successful business, successful service, I should say, we we're gonna want to deal with individuals, we're going to want to be paid to deliver great service. So we don't want to make commission off the back end. Otherwise, you end up just selling stuff to people rather than serving them. We decided not immediately, but after a while that we'd want to focus on the top end, people that were earning 100,000 a year plus through two very wealthy people, because you got two sides of a marketplace and they can afford frankly great service to the mass market, maybe maybe can't. We were going to need to invest in technology because we thought the only way we can deliver fantastic service efficiently and well is by becoming greater tech and using that to personalize to the individual and to streamline the business and so on. But at the same time, we'd want to let people deal with human beings very unfashionable in 98 when they wanted to, in some ways, yeah, so many businesses don't want to hire people. They want to have servers in the old days as much stuff in the cloud as possible today, whereas we always thought the world service business would be a hybrid between technology and people.

Richard Medcalf
Well, if I just lay down on that it's it's the resonates with me. Obviously, I have a different sort of service business, right working with a execs and leaders and teams of different sorts. But I have a mantra, which is high tech and high touch. Yeah, it's kind of that balance of the tech and the human. You know, I believe in the high touch. You know, I think in a world where everyone's trying to do things of scale, actually, the super personalized service is, is powerful, and transformative. But there's also a place with technology, it can make a lot of things work more smoothly give you fantastic experience, you know, and when you bring those things together, magic possibilities, yeah, new possibilities emerge.

Alex Cheatle
That's right. And a friend of mine is a big tech entrepreneur once said, he wants to differentiate tech business and a non tech business. He said tech businesses love spending money on tech. And most other businesses resented we're definitely a tech business by that measure, we, we think it's completely central to the vision for the business. And frankly, you know, every we've never run out of ideas, what we can spend money on tech, where it helps our members and helps us deliver better service more efficiently. So that was really important that the final thing I'd say about our business, wanting to be the most trusted service business in the world, you can't be the most trusted service business in the world if all you do is organize weddings, or help people buy cars, because people only get married hopefully once or twice in their life. And people only buy a car hopefully every few years. We wanted to have a breadth of this play to the complexity thing, we wanted to start by saying to people, what do you want, and then we would make sure that we could help in as many different areas as possible. So that we got that regularity of contact are really breeds trust. So we came back, we set the business up with private members. And then quite quickly, we discovered the banks in particular, but also other luxury brands and and other brands that have got an ongoing relationship with their customers would pay us to look after their top customers. Right? Yeah. And then we realize that if we went to restaurants and said, if we fill you, if we can fill you up with people that show up on time, and then spend twice as much as the average, will you give us guaranteed seating and access that you don't give to the public? And after many years, they said yes. And then we went to the kind of people that sell Ed Sheeran tickets and own venues and so on and said, if we guarantee you that real people come along to your venue and their pay, and they're paying, you know, 80 pounds for an Ed Sheeran ticket, and we've sold it to them for 80 pounds, and we buy it from you for 80 pounds, will you give us lots of access for those tickets, whether it's for the ballet, or rock, pop music sport, and they say why you must be mad not to want to make a margin inside or by adding on. But yes, of course, we make our money from subscription. So we don't need to. And then in travel, we'd say to hotels, if we book you in if we book our members in if your hotels right for them, will you give them early check in late checkout upgrades, and so on. And we've really followed the logic of that subscription business model through so we're now as far as we know, the largest subscription travel business in the world, which puts us on the right side of our membership. And we've got millions of eligible members and normal year, hundreds and 1000s of wealthy people all over the world will use our service and we've become global. And we are the best in the world of what we do. But hopefully getting better every few months as well.

Richard Medcalf
I love the I love this focus you had on the aligning the incentives, right? I mean, the point that the 80 pound ticket is 80 pounds, right? And you're not making Commission on those things. But you're setting the services as you know, as a as a subscription. I think it's really important to get those incentives aligned. It's one of those things like you know, you get you get it aligned at the start, and then everything else becomes easier. Because you're not always having this to and fro tension in the system. I see it in my own business, you know, some coaches and consultants sell things by the hour. And I'm like, well, that for me that totally distorted the incentives. You know, actually, everybody you know, the client actually wants the least amount of like the highest return in the least amount of time. Yeah, absolutely. Everybody wants that. Right. Everybody wants a fantastic result fast. On the other hand, when you do need help, you don't want to always feel that you're picking up the, you know, the meters gonna start to tick every time you want something. So you know, for every time what are the best tickets? I'm not that if they want to start putting the meter on something. Whereas if you pay upfront, you've committed to the idea of service and then you enjoy it.

Alex Cheatle
Absolutely. Right. And I mean, back this was essential for when we set the business up in 98. I was out in San Francisco, Yahoo. Just been valued at a billion dollars. And people were astonished and I thought, My God, I can see how technology is going to be used, it's going to be used to, because you're going to atomize data down to the individual companies like my old company, Procter and Gamble, are going to use that to sell stuff to people and manipulate them even more than we already do through TV advertising. And I thought that's gonna be a great business. And I definitely don't want to have anything to do with, I think it's rotten and awful. And, of course, it turned out not to be Procter and Gamble that did that it was Google and Facebook. And you know, their problems. Clearly, their success stems from their business model. But their kind of ethical conflicts also stem from the same business model. And we were determined, right from the start to not have to make that yes, yeah. And when we have had to choose between our ethics and our business model, we've chosen our ethics.

Richard Medcalf
Yeah. Pretty interesting. So what's the mind thinking? I had a conversation with it with a client just today really the same thing, right? Say, he runs a tech business. And he said the same thing, like, you know, we really want to stand almost in opposition against some of the big tech, you know, and actually stand for a different way of doing tech. So you just got to setting bells off in my mind, as we go here. Let's kind of put the focus back on to you. This is about SEO success factor. So what what are a couple of the key factors that have driven you know, your success driving building this business? I mean, what if I mean, I know you've had to probably put your finger in a number of pies. But what do you think is kind of core to your own leadership approach or how you've built things? Obviously, you've made some great foundations with a business model. But then as we got into the scaling of that business, what's driven that?

Alex Cheatle
So we've we've got, we've had loads of mistakes, and a few things we got right. And some of the things we've got right is we've stuck with that vision of wanting to be the most trusted service business and made some quick decisions that could have been difficult, led by that original vision and those sets of values. It also, because we've always talked about the meaning in the business, it's allowed us to attract really good people to get committed to what we're doing. So we've had a lot of loyalty from very high quality people. And I was talking with my finance director two days ago about somebody else, we hope we're joining our leadership team. And I said, she's gonna have to take a bit of a pay cut, because this individual is extremely good at what she does. And he said, I took her, I took a 30% pay cut to join the business, and so and so took a 20% pay cut, so and so took a 30% pay cut. And all these people I think are very well paid, and they'll do sudo super well out of their options as well. But it's quite interesting that people are willing to take a cut to join us, because we're not just trying to make as much money as possible. We're trying to improve the way the world works. And that drives us as a team and always has done.

Richard Medcalf
I think it's so important. I mean, I always say that, that finances the fuel. I mean, fundamentally, money's not the end in itself. This is the impact multiplier, podcast, right? It's not the money multiplier. I mean, I think it's great the model, you know, it's great to motivate the money. But at some point, you have to ask yourself, what are we doing with this money, right, and how they actually feeding through so I'm offer great financials. But I think, if you don't have that sense of how we actually contributing and making the world a better place, like your management has become so tactical, almost, and yeah, kind of carrot and stick. Whereas if you have something that draws people to you create a vision that people watched, you're committed to, you're just become so much easier.

Alex Cheatle
Yeah, I think I think one of the things I'm really proud of staff is that the culture in the business, people know what a 10 person is, it's somebody that's values LED, does the right thing is open, honest, upfront, really quite unpolitical. Because again, you don't need politics. If you've got if you're, if you're values driven. There's always a bit. But you can have far less. And, and, and our people are kind of and defensive. People will say, well, let's involve Richard in this. He's much better than me or that a conversation like that are really common in the way that they're not in many other companies.

Richard Medcalf
So how did you do that? How did you What did you do to create that culture? I always comes from the top right.

Alex Cheatle
I think it's by modeling it. And then also by who we've hired, and who we've very occasionally fired, and the very first person I had to find we were 30 individuals in a serviced office that wasn't I mean, it wasn't like we work put it that way. It was kind of just about habitable and weird Hi, this guy had joined alongside two other people. And he was bullying the people that joined in with him. And I had to take him down, we didn't have a meeting with us the lobby of the hotel next door is how to take him down to the hotel lobby and fire him. And then I thought, I'm going to come back upstairs to my rather fragile startup the.com boom was running out of speed at this time, it's kind of beginning of the end of 2000. And I thought, people are going to be freaked out that I've made that I find somebody So, so brutally, and suddenly, who's only 10 days into their job. And I said, why I'd fired him, and explained it to the business and got a standing ovation, which I was not expecting, I thought they'd be anxious and threatened by it. Actually, they were delighted, because it just validated our values. And everybody had spotted this guy, as a standout problem person for our culture. And it's in moments like that, that really sets the culture but also stops a culture becoming toxic, the most likely way I think that I would spoil our culture, is by hiring somebody who had exactly the right skill set to do a job we needed doing. And just ignoring they didn't quite have the right values. And that is when you've let the right setting I think, yeah,

Richard Medcalf
yeah, exactly. That's the temptation, isn't it? It's like performance over values. And I always thought, you know, say, in a business, there's this performance, there's behavior, which is really values, you know, and then there's learning, you know, and then how do you optimize between these three parts in the triangle? Because, you know, if if you over rotate on short term performance, then you say you create toxicity, perhaps if the behavior start to go awry, you know, and, and also learning because if you want to be a learning organization, that involves messing up that involves experimenting, and that might involve taking a short term hit, whereas in culture with a culture, which is always so performance driven, okay, but do you have room for adaptation and growth?

Alex Cheatle
Yes. Right. I completely agree with you on that.

Richard Medcalf
It's like I like to say it's like, you know, yeah. We used to think of businesses as machines. But they're more like organisms, because they need to adapt and grow and change. You know, and even like, today's best phone, it's the highest performance device you can buy. And it's obsolete really quickly. Because it's kind of it's it's optimized for performance, you know, under a certain fixed set of rules. So, I love the whole thing around. Yeah, getting that that idea of the 10 person, right, the values led individual, not being political won't be defensive. Having that vision, and really making decisions based on that. What about dark sides, like, you know, it's part of the, you know, your leadership style, obviously, being very values driven visionary, thinking those things out, you know, what are things that you've had to kind of know, mistakes you've made on the journey? Or, you know, the dark side that you're always having to kind of think about? Am I keeping this part of me in check something come to mind?

Alex Cheatle
So, yeah, quite a few things. I would say that, suddenly, it took me years and years and years to learn, is that motivating other people is very different from motivating myself, I'm very, very well motivated by fear of failure. So the way to get myself operating well, is to imagine it all falling over. And I find that motivates me, brilliantly, I think well, under that kind of pressure. And so for many years, I would try to inspire that fear of failure in my people, sometimes, particularly a crunch times. And I now realize that that works for about even 50% of normal people. Most people think best and are most committed when they're positively motivated, rather than negatively motivated. It took me so long to learn that. And I'm still learning I think I've kind of internalized it well, but not completely to this day. So that's definitely one thing that if I went back in time as the leader I am now I think I do a better job for that reason. I think

Richard Medcalf
I just got I just Yeah, my question. What's the impact when you try to motivate people? by pointing at the failure, failure risk?

Alex Cheatle
Well, look, short term, it works. So in the moment, it sets up, urgency. commitment. I think what it damages is, a lot of people's brains stop thinking. When they're under attack and they feel under attack. you're wanting to show them a shared problem and get them excited. about solving it. Because if we don't, where we're screwed, what they feel is attacked, and their brain shut down, so lights my brain up, but it shuts down many other good people's. So that's something that I've had to learn. And it's something I wish I'd known. And even when I learnt it intellectually, I wish I had sat with it properly and actually internalized into how I operated under pressure. That was one of my big learnings. I think, other things that I've learned kind of that cost us delegation is really interesting. So I'm not somebody that thinks that, you know, delegation itself is a brilliant thing, it's for me, you've got to have the right people in place to delegate to. And many startup entrepreneurs shouldn't delegate, because they don't yet have a team of people they can delegate to, they should own it all. And most successful entrepreneurs I know, were very poor delegators. When they first said their business aren't quite right to that's a model of success. If you don't have talented people to delegate to, but learning how to delegate, and learning, learning how to get people up to speed. So you can delegate effectively, is really important. Because I've certainly have historically gone from not delegating, because I didn't trust my people, to delegate to manage some of the things I wanted to delegate through to hiring people who could do what I wanted them to do, and then not briefing them properly. delegating too early saying, well, this person's done this hundreds of times before she'll be fine. And that not working either. So I think I've got better still not brilliant at it. But I think much better at learning what I need to do so that I can empower people and delegate to them earlier. Although I do think I always was willing, in fact enthusiastic about hiring people that were better than me. And then making sure that people knew how good they were in the organization. And what they were best at so that other people can also have that trust that they can then delegate to them as well, or at least work with them. Without without real trust, I find the entrepreneur who can't grow his business past 30 people, it's quite often because they don't allow other people to be leaders in their business. And I hope that's not been the case. For us.

Richard Medcalf
Yeah. I guess at 1000 people, you've definitely broken that barrier.

Alex Cheatle
I definitely have now Yes.

Richard Medcalf
Yes. Perfect. So, motivating and delegating I mean, that they're kind of interesting, in some sense that the parts of the same issue, right, they're part of the this part of the same thing. You talked about a feed of fate, fear of failure, I think the thing, there's actually three things, right, there's fear of failure. I mean, people are often are they motivated either by just hit the positive side like achievement? I think fear of failure is the flip side of that. And then there's also kind of the whole learning part as well. So other people, you know, are motivated by that. And I think probably everybody has their own default setting. And I think is a great point that you made, that what motivates us isn't going to motivate everybody else, necessarily. And then I think around the delegation, I think the point that I'm hearing in what you're saying there is, yeah, it's really important to, to master that handoff, right, in terms of setting the context, I like to say to my clients, like make sure you have, like, what's a success checklist? If I'm going to, if you've delegated this thing to somebody, imagine that they don't even ever come back to you, I just email you with a quick report, you know, with a few bullet points, what has to be true? What do you need to read in that email for you to go, Oh, that's great. If that's true, I don't even need to look at the finished product. And like, what are those success criteria? Which basically, we go, Okay, that's fine. If we did it like this to this budget on this time, this person was involved, and these people like it, and this was the outcome, then I don't need to know anymore. And that's quite a good way of, yes. Okay, boiling it down to the essentials, like what actually make you happy, what outcome would actually satisfy you? And some people it might be like, you'll need to use two fonts in the presentation. I mean, whatever it is, make sure it's clearly articulated because if you don't articulate it now, you will articulate it when it comes back to you. Five, you know, five different fonts and different sizes or whatever in the presentation. So

Alex Cheatle
well. I think that clear articulation is so One thing which I absolutely recognize that, that that's been crucial for us when we've done well, and it's also been one of the main reasons when we haven't grown as quickly as we could have done. It's from not articulating things clearly enough. Yeah. So we would, I'm, I'm one of those people that, you know, when I wash up a meat, you know, after a meal, doing the dishes or whatever, are wash up almost everything, I don't normally leave a couple of things in the sink. And the problem with that, when you're writing a brief is that, you know, I'll, I'll explain 90% of what I want, but not 10%. And today, I'm closer to 99%. And historically, I was closer to 80, explaining 80% of all right wanted to do, and then you'd wonder why people hadn't delivered or had waste, maybe wasted a bit of time building something that wasn't necessary or whatever. And that's certainly something I've got better at still haven't solved. But I'm, I'm on a journey, as they say about that as well, just actually trying to force myself to get clear, rather than just put down some parameters, and then hope that people

Richard Medcalf
can can get the rest out of it, just by guessing. Yeah, it's like, you know, you're storing the boundary conditions, right? Or during the frame that you know, anything within this is going to be okay, but these need to be true. Yep, absolutely. Right. Yeah. Very fascinating. So this kind of go into the future a little bit. What's next for the business? I said, You You said you were coming here, 24 offices, you coming up 2000 people not not far off, you know, what's going to be different if we were talking in two or three years.

Alex Cheatle
So I think I think we I think we're already the best way in the world to organize meals out, and music, theater and sport all over all over the world. And I am we're very good at travel as well. But I think we're gonna get much better than anybody else in the market. That's a bold claim. But I think we will be by quite some way, the best place to organize, travel, dining, you know, many lifestyle, most lifestyle things. And the reason is that, because we've got this subscription revenue stream, we get paid to do what we're doing, we can then just completely focus on working with the supply base that we need, whether it's restaurants or hotels or whatever else to get the right result. So once that's married up with tech allows us to personalize and scale it and deliver it through really good UX UI. Then the world's our oyster, what I've realized over the years is that companies that make all their money off the back end, whether it's a retailer with a markup, or whether it's a travel agent that's making an inside commission of you know, 15 20% on most holidays. In the end, they can't move to our model. If the world's best travel agents today had to declare the margin they made on their holidays, their top customers, they'd be bused in a week. And we don't we haven't built with that kind of history of dark secrets. And so that means that we've been we've we've gone a different evolutionary route very difficult for other people to copy us. So I think we are accelerating into our marketplace and the world for the world's top 2%, let's say, households earning more than 100,000 a year. They're 50% of the world's travel, sunlight 80% of the world's fine dining, there's something like 50% of the world's concert tickets. That's a huge multitrillion dollar market. And we're in it. And we think we've taken an evolutionary route to do very well in it. And it gets better with scale.

Richard Medcalf
Got it? So how that gets as you do that? How you know, and the business continues to grow, and you've gone to these extra areas, you go into the market, how are you going to need to change as a leader, right? So I'm sure you've had Mary's various evolutions in the last 20 years? Or more?

Alex Cheatle
Where are you?

Richard Medcalf
Where you need to go now? where's where's your growth edge, if

Alex Cheatle
you like, Where's your opportunity to shift how you operate? I think I would spend longer on recruitment and making sure that we keep the culture by recruiting the right people into leadership positions in the business. I think I'm gonna have to spend longer communicating and using interesting and different means to do that. And I'm, I'm excited by that and frustrated by it as well. I'd like to be able to just say at once and have everyone understand it, but I think what we've learned is that you've got to say in different ways to different people, for an organization to understand what they're all about. And the best gift you can give as a leader to a business is clarity. have purpose. And then many of them will have to then be clear about the parameters on a particular project. So I think we have to get better at that. I think also, you know, in the end, I was brought up in a very kind of middle class household, my mom was a secretary, my stepdad was a school teacher. One of the things that I have to battle is intellectually, I'm extremely ambitious. But I don't come from a background where I expected to just, you know, be running the world. And I got to be, and I'm not planning on running the world. But I am planning on having a wildly successful business. And I find that I have to remind myself and help myself believe That actually, this organization that I'm giving my life to, will give my my working life to, is, can be one of the world's greats. And that's something which I've always believed intellectually, because the logic of our business model and how we execute it lends itself to that. But you've also got to somehow believe it inside yourself. You know, I've always been, I think carp is it kept the grow, to be as big as they are, depending on the size of the pool that they think they're in. Right. And, you know, I've got to keep raising my own ambitions for my business to succeed without becoming a narcissistic, lunatic at the top for business. So you've got to grow your ambitions and your self belief whilst remaining wide open to the very real truth that you are imperfect, and often wrong.

Richard Medcalf
Yeah, exactly. It's, yeah, it's not drinking the whole CEO Kool Aid, right? Because when, when you're in that position, as a founder, you get a lot of respect and no adulation and various things. And it's kind of being grounded, whilst being ambitious, right? It's the game. And I think for me, one of the ways that I see people do that is by expanding their ambition to serve. Right. So, you know, in terms of how much you know, how can we have a bigger positive impact? Right? How can we actually make people's lives way more, you know, fulfilling or satisfying? Or whatever it is that you're doing in the business? Yep. Yeah. Because it kind of takes takes the edge off that kind of own the ambition of older kalbi, you know, my empire is becoming the base shifted to the company people were actually impacting. Yes.

Alex Cheatle
I think that's absolutely right. We've we've recently launched a plan to take us out to 2030, I'd rather predicted vehicle 10 obviously, the business 10 2030, you could you could see it, trophy off the tongue. And that's all about, obviously, what do we want to do? But why do we want to do it? How do we want to do it. And that's super important, because then other people can take and can make the decisions in that context. And part of my job is just to help express what we're trying to do to attract the right talent, and then for other people to make the right decisions. Whereas maybe five years ago, 10 years ago, I would have been making a much higher proportion of the decisions in the business.

Richard Medcalf
So this is good forward, then it'd be a great place to put then you know, you're in 2030. And what's going to be the most satisfying part of that for you? What we believe what, what what was the outcome, what were you looking at, they'll give you the biggest sensitivity to the most satisfying.

Alex Cheatle
So we say, by 10 2030, we'll have 3 million people using our service regularly. The most satisfying thing is that from 3 million people using our service regularly, getting to 10 million people using our service regularly should be relatively straightforward. So I think what's most exciting about 10 2030 years 10 2040 right? And, you know,

I'm trying to figure out how old I'll be by that anyway. I'm sure they'll find something for me to do. If I if I don't, I'll get the chief. Exactly that point. Perfect.

Richard Medcalf
And it's been fantastic conversation. Thank you much, so much for sharing. And if people want to find out more about you, or Ten Life Style group, where do they go?

Alex Cheatle
tenlifestylegroup.com is the website. Then there, there's videos on there. And there's case studies and there's all sorts of things and we are always on the lookout for fantastic talent as well. So please be in touch speculatively, if you're brilliant, at our mission speaks to.

Richard Medcalf
Yeah, if you've made a great case for it on this. So thank you for that and stay in touch speak soon.

Alex Cheatle
Thanks so much, Richard. Bye Bye.

Richard Medcalf
Goodbye.