00:00I mean, in five years, we've seen a lot. It's, you know, it's been COVID, it's ups and downs, it's
00:04terrorists, it's trade.
00:06Now it's everything that's happening with Iran and all the twists and turns with AI.
00:11I mean, does this moment in time feel different or more difficult than the past?
00:16Well, I mean, it's certainly, you know, a difficult moment.
00:19As you mentioned, there's mass geopolitical unrest around the world.
00:22There's, of course, conflict happening in the Middle East.
00:25The debt markets are more volatile than they've probably been for a few years now.
00:29So it's certainly a very, very interesting and challenging time.
00:33But as we were joking kind of off camera, not to make light of a difficult situation, we've seen these
00:39volatilities before.
00:40As you mentioned, we've had COVID in 2020. We had conflict in the Ukraine.
00:45We had all of the impact of that from a debt perspective.
00:47So it's not the first time we've lived through times and moments like this.
00:52So strangely, there is some degree of comfort in having lived through something like this before.
00:56What does it mean for Fortero?
00:58So, you know, one of the things that we're trying to explore is actually if you're at crisis number four,
01:02right, in five years, for various reasons, are you stronger because you're more nimble?
01:07Or does at some point, does it really weigh you down?
01:10I mean, to a degree, you know, you build up the muscle and the resilience to deal with these things.
01:16The thing that we've been incredibly protected by and the thing that we're incredibly grateful for is we support 25
01:22,000 mid-market manufacturers of components, you know, the things that go into automobiles, into aircraft engines, windows, doors.
01:32And there's a continued demand for those things, which means our end customers have continued to thrive.
01:38And it means that we've continued to enjoy an incredible position in supporting them in growing and expanding their businesses.
01:44So whilst a lot of things have changed, there's a lot of new threats and things to overcome.
01:49That primary dynamic has remained, and that's allowed the company to continue to grow and be incredibly powerful.
01:55Dean, there were a couple of days in February where a lot of the software companies that released it got
01:59absolutely slammed because of worries about AI.
02:02Was that irrational?
02:03I don't think it was irrational.
02:05I mean, what the markets technically did was they took a moment in time when there were some amazing announcements
02:10from some of the giant AI companies,
02:13and they just kind of swept those announcements across the software industry in totality.
02:18And as we know, not all software is created equal, not all software has the same moats, not all software
02:23has the same defensibility to these kind of challenges.
02:27So that was certainly an overreaction.
02:30But again, we've seen this before, you know, the shift from on-premise into the cloud.
02:35We had that similar hysteria that on-premise companies may not survive.
02:39But what did many on-premise companies do?
02:41They capitalized on that shift, moved their businesses into the cloud, and companies like Fortero, Oracle, SAP have become even
02:49stronger as a result of that market shift.
02:51And I don't think there's any reason to believe now that this change won't present the same amount of opportunity
02:57for companies like Fortero.
02:58Does it make you change your perspective, though, on how to, A, how to lead, but also how to look
03:04at the business,
03:05if something could take market share or actually change the perception or change what you actually do?
03:10I think, look, it's always been one of the primary defenses of a software company that it takes a long
03:15time to build and master software.
03:17And the advancements in AI have shortened that cycle to build and master software.
03:22So that's, of course, something that we need to take into consideration and be aware of.
03:27But we have 25,000 customers who are building things, who are making things,
03:32who want to remain focused on doing that for their customers.
03:36And as they have done for the last two decades, three decades, they look to us to help them leverage
03:42these technological advancements.
03:44And that's why it's just an amazing opportunity for us.
03:47This is a moment in time where we can leverage AI to deliver even greater value to these customers,
03:54help them be stronger, and as a result, make Fortero an even stronger company.
03:58Dean, what's your biggest concern right now?
04:00So there's a lot of talk because the price of oil is going higher first, it's energy prices, it's energy
04:04costs,
04:05that can't be good for business, it's interest rates rising.
04:08There's a lot of uncertainty.
04:09There is a lot of uncertainty.
04:11But, you know, my fingers always remain focused, you know, on the customer.
04:15So when things like oil prices start to creep up, as they have done for the last six or seven
04:20weeks or so,
04:21that translates into increased energy prices, increased prices in transportation,
04:26and those things hit our customers and they cause margin compression.
04:31So, you know, you need to stay focused on the customer because we need to help them respond and react
04:36to that.
04:36They don't want to pass those cost increases on to their customers,
04:40which means they need to become more efficient, and that's where software and companies like Fortero have a role to
04:46play.
04:47What's UK businesses, you know, what's the environment looking like?
04:50Is there enough funding or are people getting a little bit scared of what's happening
04:53so you have less venture capital or investors going in?
04:57The market's certainly more cautious, right?
04:59Decisions are taking longer.
05:01There's a higher burden of proof to get a decision made when it comes to funding or, you know, winning
05:05a new customer.
05:07There's less money flowing into the ecosystem from an investment standpoint.
05:12And there's certainly kind of mass hesitation happening, especially from an investor standpoint.
05:18But coming back to the earlier point, you know, if I go back to COVID, as COVID unfolded,
05:22investors kind of slowed down and, you know, capital became clogged up in the system.
05:27We came through COVID, you know, the new normals got defined, the investment landscape changed a little bit,
05:32and then that capital began to flow.
05:35And we're just in that period right now where there's a bit of hesitation, capital is clogging up in the
05:40system.
05:41We'll find our new normal, and then I'm pretty confident things will resume.
05:45How's morale among staff?
05:46I mean, this is, you know, we talk more about leadership.
05:48I have a new podcast, which we hope to have you on sometime.
05:51But a lot of the focus is actually, as a leader, your purpose is to see the vision, to keep
05:55the company safe,
05:56but also to motivate people.
05:58Is it harder after all the crisis that have come one after the other?
06:02I would say this situation is harder on that dimension, for sure, because whilst we've had conflict before,
06:09whilst we've had pandemics before, whilst we've had economic uncertainty before,
06:13the new nuance here is how AI can impact the placement of staff, how it can impact jobs,
06:20how people feel secure in their job and in their role.
06:23And that personal element of this, you know, hostility is certainly a new one.
06:30The fortunate thing for Forterra is we're growing at an incredible pace.
06:33So the message to our employees is, as long as we continue that pace of growth, we're going to need
06:40more capacity.
06:41We're going to need more people.
06:42And using AI to allow us to become more efficient is a positive, right, because we're in growth mode.
06:49If the company were not trading so well and if our outlook was not so good, it would be certainly
06:54much harder to keep employee morale high.
06:57Where's that growth coming from?
06:59I mean, is it also expansion into either other sectors or other countries?
07:03We've been incredibly focused on the industrial market, primarily in Europe.
07:08We continue to be focused in that category.
07:10We know it well.
07:10We love it.
07:11It's a thriving category.
07:13But we have acquired and built new capabilities that expand the offering from Forterra.
07:19So that's been a real source of growth for us.
07:22And even with the emergence of AI, I expect us to continue to be hugely acquisitive and continue to grow.
07:28Okay, Dean, thank you so much, as always, for coming on.
07:31Dean Forbes, the chief executive of Forterra.
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