We’re delighted to launch the sixth episode of ECI’s podcast, “Building Successful Businesses,” in which we speak to CEOs about the building blocks of success and the lessons they’ve learned along the way.
In Episode 6 we chat to John-Paul Savant, CEO of ATG, the operator of the world’s leading curated auction marketplaces. John-Paul discusses ATG’s recent IPO, how auction houses have been impacted by the pandemic, and what he’s learned during his career about building the right team for your business.
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Fiona: Welcome to ECI’s podcast, “Building Successful Businesses,” where we speak to CEOs about the building blocks of their success and the lessons that they have learned on the way. I’m Fiona Evans and today I’m delighted to welcome John-Paul Savant, CEO of ATG, Auction Technology Group, the operator of the world’s leading curated auction marketplaces. Hi, John-Paul. Welcome to the podcast.
John-Paul: Hi, Fiona. How are you?
Fiona: I’m good, thank you. First of all, congratulations on your recent IPO. ATG debuted on the London Stock Exchange in February and it looks like it’s been going great guns since, having gained more than a third from its IPO price. You must be delighted with how well it’s gone.
John-Paul: We’re very happy so far and it’s the very beginning. So, lots to prove still, but it’s nice to have a good start.
Fiona: Obviously investors are showing quite a lot of interest in ATG and its technology platform, just as ECI did when we first invested seven years ago. What does ATG do and how is its tech transforming how auction houses operate?
John-Paul: ATG is an actively managed digital marketplace, and what that means is that we don’t just provide the technology but we also actively bring the buyers to our brands, who then buy from our brands as well as from the auctioneers. So, we basically bring the auctioneers onto our system who provide the inventory, the bidders come to our technology and then we match them up. Overall we match up over 2,300 auction houses now with bidders from 150 countries around the world, and we run about 35,000 auctions per year on our technology. The best way to think about the value that we’re providing these auctioneers is we make small companies big. Many of the companies that work with us could be 5 to 50-person family-run businesses in every small or medium-sized town across the U.K., the U.S. and Germany, and none of them would have the funds to invest in the type of technology we can provide if they were doing that independently. And that means that they couldn’t reach the bidders, and that’s even more important than the technology, because technology is good, but technology can always be replicated. The bidders are even harder to replicate than the technology.
Fiona: How has that been impacted by COVID? Because I’m guessing quite a lot of these auction houses wouldn’t be able to open and operate in a normal way. Has that seen a benefit to ATG?
John-Paul: So I think where ATG has really benefited is that the auction industry is one of the last big industries in the world that’s moving online, and there was a structural shift happening even before COVID, but now what COVID did was accelerate a structural shift by another three or four years.
Fiona: ECI invested seven years ago and you’ve been at the helm of ATG for about five of those years. How have you seen the business change during that time?
John-Paul: So the team that founded ATG did a great job of setting the the foundations of a digital marketplace, but they weren’t the right team for the second phase of the journey and I think that’s where ECI really came in. ECI invested, and they supported that founder team, but then that founder team also felt that they were not ready for that next stage of the journey so they voluntarily stepped back. The founder became the vice chairman on the board, and then they brought me in, and the founder was part of the interview process with me as well. I think the mandate that I had from ECI was, one, professionalize the business, and number two, really turn it into a digital marketplace leader as opposed to a very nice niche player. And that’s what we did over those five years. So we transformed the team and invested heavily in the technology. When I joined we were trying to be a digital market leader but we only had six engineers. Right now we’re 250 employees with about two-thirds of them in either engineering, product, or data. So we’ve really shifted the mix of the company to have the skills to enable us to be a digital market leader.
Fiona: And why was it that ATG looked to IPO? I’m guessing you’ve been working on this probably for a long time before February, but what was it that drove that decision?
John-Paul: I think last year in 2019 when we began the sale process from ECI to TA, we contemplated an IPO at that point in time, but Tom Hargreaves, the CFO, and I, both felt that ideally ATG would be bigger. We also wanted to have a bit more diversification in our revenue. And critically our biggest competitor was for sale in North America, and to have an opportunity to buy a big competitor in North America at a reasonable price doesn’t come along very often. We were able to do all three of those things over the next year, and then when we relooked at the IPO in October of 2020 we looked and we said, “Well, people were interested in us before and now we’re much bigger and much stronger and we’re just a better company,” and so we felt more comfortable taking it forward. But the big reason behind the decision is that, as I said, there’s a structural shift going on from offline to online in the auction world, but auctioneers have now gone, especially post-COVID, from maybe 10% to 15% of their volume being online, to anywhere from 30% to 70%. As a result our belief is that they are going to be looking even more for a professional player who can be with them for the long term, and what we looked at in terms of an IPO and what that would do for us, it basically means your strategy is public, your financials are public, and you have a public level of accountability that no other player in our space is willing to hold itself to. If you look in the art and antique space, we’ve got eBay at the bottom end of our antiques and collectibles where, I believe, the average selling price on eBay is about $50 per item, and then you have Christie’s and Sotheby’s where it’s $20,000 to $50,000 minimums. In between eBay and Christie’s, we really realized that say between $50 to $15,000, there really was no brand in the space for secondhand art, antiques, and collectibles. And so we really believe going public gives ATG an opportunity to be that first brand between eBay and Christie’s.
Fiona: And having gone through the process of the IPO, is there any advice you would give to business owners who are considering it now?
John-Paul: Yeah, I definitely would. I’d say first of all, it’s a lot more work than you would ever expect. I think I somewhat naively believed that, as we were running a really good business, they were interested before, our numbers were a lot better, we had a stronger team, we had better financials, more diversification, stronger technology, that this should be even more straightforward than before. And the reality of it is you have to tick a lot of different boxes, especially when you are not one of the massive American companies. If I’m Uber or somebody like that, everyone pretty much knows who Uber is. When you’re coming out as a mid-cap company, there is lower level of understanding as to who you are, so you have to tick a lot of boxes. Your addressable market has to be understandable and sizable. You need to have structural factors in your favor. You need to be able to explain your competitive position and understanding of the other players in the space and how you’re going to mitigate the risks there. They look deeply at your executive team. You have to have a broad and deep executive team and it’s not just the CEO and CFO, even though they look mostly at those, you still need to show that you have other people who can execute against the strategy that you have and a track record for doing it. Then on top of that, you have to show performance in the business and clarity around the actions that you’ll take both near and long-term. All of that has to be wrapped up and they have to believe that you are excited about the future because they’re betting on you as a CEO and CFO team very much to take that company forward. And so you have to look yourself in the eyes, and I think with full integrity, be able to look an investor in the face and say, “Yes, I am gonna be here to take the company forward because you’re investing in me as much as you’re investing in the business.” I think that’s a key part of it. Then finally you just have to get ready for having your team run the business heavily without you for a period of time because the CFO and I were probably 60%-plus out of the business for 6 months.
Fiona: It’s interesting because you mentioned earlier about having built up that strength and depth in the ATG team, and it sounds like that’s really essential to stepping back and trusting your team to be able to run the business without you, effectively.
John-Paul: Yeah, exactly, and you can’t do it at the last minute. I think we began rebuilding the ATG team five years ago, and people have transitioned to new roles. I think it’s really important when you’re building that team, you have to look out and see people not only who can do the job right in front of them today, but particularly if you’re going to be thinking about going public which means the expectations for growth are even higher, you need to be saying, “Well, in two or three years where do I have people in the organization who can grow another level or two above where they are?” And if you don’t have them, then you often need to be looking at making very difficult decisions.
Fiona: So, if you’re thinking about IPO then plan early.
John-Paul: Yeah, if you think it’s even a possibility, you need to start building depth on your team and be willing to incur that cost. If you try to come to market with a strong revenue, strong profitability, but they look at your team and see that it’s you and your CFO or you and your COO, they’re gonna take your numbers and add, you know, millions to it to try and add the right team because they’re going to only invest in you after you’ve built that right team.
Fiona: Obviously now you’re a CEO of a publicly listed company, but I wanted to find out more about your journey to get here. So if we go all the way back to your first ever job, what was it and what did you learn from it?
John-Paul: My very first job ever was as a landscape gardener working for one of my dad’s friends, but my first job out of university was working for JPMorgan, and that was a job that I went into back in the mid ’90s not knowing what the business world was like. My father was a professor of English literature and the classics, and my family is more doctors and teachers than business people, and so for me that was a complete shock getting into the working world and working on Wall Street and doing that. One of the things I found out within about six months was that I didn’t want to be a banker. I was one of seven people promoted in the first year but I didn’t understand why, to be blunt. I wouldn’t have promoted me. And JPMorgan was a great firm. They treated you well, it was a classy place and a great job, but I hated it. I realized only over time that I’m not really excited by the transaction and everybody in banking seemed to be loving the next deal and the next transaction, and for me I really was somebody who liked building things that you stayed with for a long time. I liked being part of a team that you stayed with and you grew things with, and where you build products and evolved. I only found that out five years later because I left JPMorgan after three years, went to business school then to strategy consulting, and that was the same, and I was trying to figure out why don’t I like this either? I thought this would be different. And then I got hired away by a client and once I got into the corporate side I realized, “Oh, I really prefer this.” And then I went to PayPal back in 2003.
Fiona: And what was the learning curve like at PayPal because it must’ve been such a fast growth company at that time?
John-Paul: PayPal was probably the biggest single decision I made in my career because I actually went from being a VP in an oil company to taking a step two levels down. So, I went backwards to a senior manager role and I was the sixth person on the PayPal international team. Our job was to figure out if PayPal would work outside the U.S. I was hired as the head of and then the director of international strategy and I did that for 10 years, getting promoted over the years, and I ran product experience and consumer engagement for Europe, Middle East, and Africa at the end. But the PayPal journey was great because you were taking something from nothing to something huge. We grew from something like $10 million of cross-border revenue up to about $1.8 billion of revenue over a 10-year period and to well beyond that now. And the fun part there was you were growing really quickly, and because everything was growing so quickly, it formed a unique team at PayPal because they attracted lots of really smart people. The colleagues that I worked with at PayPal were amazing and they’ve all gone on to do really well, but it was just a lot of fun because when you’re in a high growth company like that, there’s room for lots of egos. So ,there’s no kind of trading off, wondering who’s going to leave so that you can get the next role. There was so much opportunity for everybody, it created a very positive culture, and so it was a lot of fun for those 10 years.
Fiona: It’s quite a gutsy move to step backwards for a step in your career with the faith that essentially it’ll be a long term, big step forwards. Did it feel like that at the time?
John-Paul: It did, but it was actually more personally driven than professionally because I was 30 at the time, and for me the reason I actually moved back was because my mother had been diagnosed with cancer. I was living in Boston and she and my father were in San Francisco, so for me it was more of a decision to move back. guess I’ve never actually worried about the job. I’ve actually never interviewed since or chased a job since, I think, I don’t know, business school maybe. I felt my mother wasn’t given very long to live and I figured taking a demotion for a few years was not going to impact my life and I’d get to see my mom more regularly. So my sister did the same. My sister left veterinary school and moved back to San Francisco as well.
Fiona: That’s interesting how there’s all these different priorities that play into decisions and certainly it’s not always a case of just chasing growth. It’s also about how it plays into your life and your own personal needs as well.
John-Paul: Yeah. I think that’s a huge thing, and also just figuring out what you like because it’s tough when you’re in banking, and you see smart people around you, and you see a good firm, and you can see that you can make money. You go to consulting and it’s the same, but even in PayPal someone wanted me to be the head of international FP&A at one point. I knew that there were much smarter people than me in the financial side of things, and that if I went there, I’d probably end up being limited. Plus, I didn’t want my career to be focused on numbers only, even if I felt comfortable with them. I decided to stay in product, and it probably delayed my promotion by another two years, but I really preferred being in product.
Fiona: Was there anyone, when you look back on your career, who was maybe a mentor to you or someone who’s given you really valuable advice?
John-Paul: So John Donahoe was the CEO of eBay, and when I left eBay he said, “Look, as a CEO think of yourself as a baseball player, and if you bat one out of three you’re among the best.” He said, “Don’t wait for the perfect pitch, swing and swing often. If you get one out of three then you’re a winner, but don’t wait too long.” And I’d say Bob Swan who was the CFO of eBay at the time, was one of the best people I’d ever seen who could take the intellectual concept of strategy and operationalize it for people. He could break it down and go, “Okay. So you’ve told me that the business wants to do this. Here are the numbers and how it ties up. Here are the projects.” And then I see he’d break it down and make it easy for the VPs to figure out, “Okay, this is what we need to do.” And so I’ve tried to do that in my job, understand how do you take strategy and operationalize it for your team.
But I’d say probably the biggest person that has influenced me would be my father, maybe because he was a professor, he always was somebody who would look for the best in people. He also coached baseball, football, and basketball, and so I think he had an instinct for finding what people were good at and building that up in them. I think for me a big part of a CEO’s job is figuring out what other people are good at, and putting them in the right role, and that’s what I’ve tried to do because, my core team that I have now, they’re all much better than me at what they do, and my job really is putting them in the right role and keeping things out of their way. But I’m not coming up with every idea for every function.
Fiona: Did you ever find that difficult, to take that step back and allow other people to thrive at what they’re doing, or was that something that came quite naturally to you?
John-Paul: No, that was definitely a transition point, and that I think was in the days of PayPal going from director to VP. When you move to VP at PayPal everybody gets assigned an executive coach, and the coach I was given I think really helped me actually with that because he said, “Look, John-Paul, you know everything about PayPal, every number, every product, and you’re involved in the detail of everything.” He goes, “You gotta start shifting that. You have to start understanding how to delegate, how to break down work for other people or you’re not gonna make it as an executive.” He was instrumental in that…it takes a while to learn. It doesn’t just happen overnight, but it’s hard. You’ve usually been promoted to a certain level because you’re good at something and you wanna cling on to that but you do have to learn how to engage in a very different way.
The fun part is that you do get to think differently, and particularly if your business is performing you get a lot of freedom. I found that with ECI. And especially when we were doing well, you get a lot of freedom to act out the vision that you have for the company, and it’s a privilege and a lot of fun.
Fiona: Was ECI your first experience with private equity? Was there anything about the partnership which maybe surprised you or was unexpected?
John-Paul: I think I’d heard, you know, some horror stories about PE and what would happen if you ever missed a number or if something bad came along, and I think my experience wasn’t that. We had some challenging times at ATG in the first two years and I felt that, you know, David Ewing and Tom Wrenn were very much behind what I was doing. There are two sides, I think sometimes CEOs, when things get tough, can batten down the hatches and almost say, “Everybody stay out of my kitchen. Let me do my job.” There has to be a collaboration. When PEs put that much money in, they have a right to be involved, but it’s a collaboration. I think to me, as a CEO, you need to communicate even more in those times and start with the bad news so that they know that you recognize it, and then describe how you’re going to take care of it, because explaining why something didn’t go to plan is ultimately not what they care about. What they care about is what are you going to do about it. I think that was the advice also that the coach gave me ages ago was that when you work with the senior executives, 10% of your time should be explaining what you did or what went wrong and 90% on what you’re going to do. And so I think with that kind of engagement – and you know Tom and I met almost every week – I think we had built enough of a relationship where he believed in what we were doing even in the difficult times and therefore stuck by us. I’ve had really good experience with ECI. I thought Tom was great, and, you know, somebody who I definitely stay in touch with. So we feel we’ve been fortunate.
Fiona: I think it’s all about having that kind of good and honest relationship and working out what the steps are to go forwards. That’s then the key thing that everyone’s behind.
Fiona: Is there anything that business success has taught you about yourself?
John-Paul: I probably waited too long to make tough decisions around people. I used to think you should keep giving people a chance. I think the reason why I was like that is I didn’t like the idea that I felt like I was judge and jury over somebody’s eternity. But, what I realized over time was that you’re not making a judgement on that person as a person. You’re simply saying they’re not right for the job or they’re not the right fit for your company, as long as the energy that you bring when you let somebody go is not condemning them or being frustrated with the lack of productivity that you’re upset. You just say, “Look. This is not the right fit for you and we’re gonna move in a new direction. The best of luck to you.” It’s a lot easier way to approach those difficult decisions when you realize they’re probably going to be happier and they’re probably going to succeed more. And you need to make that decision much earlier. So I’d say now, in the last four or five years of my career, I’m much quicker to identify when I think an exec or a senior manager is not able to do the job that’s required and then I move more quickly to move people out, and every time I’ve made the choice the business ends up better. So, that would be one thing, not letting your emotions get tied in too much but coming with the right energy. The second thing around the energy is I think I realize now how much as a CEO your own energy and mood impacts the entire company. Your execs feed off stress, they feed off whether you’re calm, and you have to become even more self-aware than you were previously.
Fiona: It’s interesting because at ECI we definitely think a lot about people and values and culture, and actually so much of that can come directly from the CEO. They lead the way and they inspire people, but also if they are stressed or in a bad mood, that then feeds down across the company, which is a really hard thing to then go back on.
John-Paul: Yeah, exactly. And I think what you have to realize, particularly as a CEO, is any comment you make lands 10 times harder than one you made even as a senior executive, right? And that one time blowing up at somebody can completely change the relationship for years. You know, I had a phone thrown at me once by one person I worked for, and after that you just say, “What the heck happened there?” You know, you completely lost it. And I think as a CEO you simply can’t lose it.
Fiona: So aside from how to dodge phones, is there any advice you’d give to business owners or CEOs at the start of that journey that you’ve been on?
John-Paul: I guess a couple of things. First of all, you have to really believe in what you’re doing, no matter what you’re being paid. I do believe that you end up really struggling to succeed when you don’t believe in what you’re doing. So I’d say find something you really actually believe in because that then carries through to the energy you bring to the rest of the organization over the years, and that’s one of the things I’ve loved about ATG. For me it’s been the best job I’ve ever had, and partly it’s because I fundamentally believe in what we do and that it’s providing a good service to the world. It’s enabling auctioneers and bidders, bringing better access to millions of unique and specialized items that they couldn’t see otherwise. And on top of that, we’re green because everything we sell is being recycled. But I’d say the biggest thing I would say to somebody is making sure you look out as CEO two to three years, and then build your team for what you need to be and build the capabilities. And then operationalize your strategy into chunks that your exec team can get excited by delivering against. I think those are some of the biggest things.
And then the last thing I would say, is there’s so many different jobs you can get involved in as a CEO on any given day, and what I try to do at the beginning of every week is to sit down and say, “What can I work on this week that nobody else can get done?” and I ask each of the execs to do the same. There’s certain things at each functional role or exec that they can do that nobody else can move forward, and if you focus on doing those big things first then you don’t get lost in the weeds as much.
Fiona: And it goes back to your point about working out what people are good at and that’s your role, but people individually need to work out what they’re really good at and what difference they can make as well.
John-Paul: Yeah, exactly.
Fiona: Thank you so much for joining me today. Congratulations again on the IPO. It sounds like some really exciting times ahead for ATG.
John-Paul: Thanks, Fiona