The Dispassionate CFO

Karan Bhople: Yeah, well, my foray into finance is somewhat circuitous and unexpected. I studied engineering as a college student because I liked math and I liked science. At least I thought I did. And then when I did undergraduate research in a lab while I was working, I was working four or five hours at a stretch during the day running experiments by myself, half of which worked, half of which didn’t. I realized that it wasn’t for me and that I wanted to work with more people and do something that has more of a tangible impact. And so I switched career paths and after finishing college, I joined the corporate finance department at the Walt Disney Company, specifically in the theme parks and resorts division, which I think today has a different name. But that’s where I began my career as an analyst. So at the lowest rung of the totem pole, but I learned a lot there and was there for two or three years, then left LA and left that industry and joined tech and specifically enterprise software. So it was the same profession, but a different industry and something that was much more dynamic. So I joined Salesforce, which is a large and very well-known publicly traded enterprise software company. And then after Salesforce, I moved into private companies, one of which ended up going public, which was my former company SentinelOne. And so I built my career doing finance in-house at tech companies. And today I’m the CFO of a tech startup in cybersecurity. And that’s how it all turned out.

Rohit Agarwal: Very cool. Did you get free passes to the parks while you were at Walt Disney?

Karan Bhople: I did. They called it, I don’t know if they still have it, but they called it the Silver Pass. It was great. You could get yourself and three other people into the park on any day except for certain blackout dates like Christmas, New Year’s and whatnot. So yeah, at some point I had to stop telling people I had those because I was getting too many visitors. And I couldn’t tell if they were coming to LA to visit me or to visit the parks. It was 50-50, I think, but it was a lot of fun.

Rohit Agarwal: Comparable to Google perks, I guess.

Karan Bhople: I guess, right? In a way. Yeah, yeah, totally.

Rohit Agarwal: Very cool. As you said, you kind of moved industries from what we would call a little more brick and mortar operation very heavy on the day-to-day operational side, I would imagine, compared to tech. What was the change from your perspective between those two industries? What you had to attune yourself towards when you jumped into the tech side of things?

Karan Bhople: Yeah, I think a couple of adjustments and transitions I had to make, one was around the pace of the job and the pace of the companies because I was coming from a place, the theme parks and resorts market and the theme parks and resorts division of Disney was growing at a single digit growth rate every year because it’s not a high revenue growth business. It’s a capital intensive business where the focus is on, sure, a little bit of growth, but focuses on profit operating leverage, gross and operating profit. And there’s something to be said about the correlation between a revenue growth in a business and the pace that you have to keep up with. When I moved into enterprise software, companies that were growing, 100%, 50%, or anywhere in the middle, year on year, the company looks very different after four years, or even three years, or even two years, whereas a theme product company that’s been around a while, it doesn’t look very different after 10 years. I mean, it looks a little different maybe, but so the pace is different, that’s one thing. And then the second thing was just adjusting to what metrics are important. When you switch from one enterprise software company to the other, there are some minor adjustments to be made in terms of understanding the particular market that you’re in. But SaaS software as a service as a business model and enterprise software as a service as a business model, the metrics don’t change. They’re agnostic of which particular space you’re in. If you’re in that business model, the same kind of metrics apply. The benchmarks may be different, but the metrics are the same. Whereas switching from a different industry into software, learning the metrics and it’s not rocket science but it just takes a little time to understand how the metrics are put together, what’s more important than others and what the benchmarks are and how the street thinks about it. And I think as a corollary to that, when you compare the parks and resorts and travel and leisure space, especially theme parks, It’s so different when you have a business that is capital intensive, where the payback periods are very long and you have net operating losses for Lord knows how many years, 10, 20 years. Whereas an enterprise software, especially high growth software, payback periods are much shorter, which is why a lot of money goes into investing in these kinds of companies because the returns can be phenomenal. So those kinds of adjustments. They were really fun. It was a really fun adjustment. It wasn’t too challenging. But adjusting to the pace of Silicon Valley is was important and something that took a little time.

Rohit Agarwal: And I guess what a way to start that journey with Salesforce, which is certainly one of the leading companies, I guess it was back then and still continues to be. So maybe tell us about your time at Salesforce and how maybe it was different than all of your other experiences.

Karan Bhople: Yeah, yeah. So Salesforce, when I was there, I mean, the company is still growing, as you implied. But when I was there, I was running analytics for the Source to Settle, a Procure to Pay department, which was under the CFO. So we were responsible for everything we buy, everything we pay for, and then later on everything we collect. because we also then brought in accounts receivable. And so I was running presenting analytics across those functions and some very large procurement projects while I was there. And what was interesting and perhaps what made it different from the other jobs that I had in my career, which were more bread and butter FP&A and strategic finance was really getting deep into working capital and the working capital management and the cash conversion cycle. Because when you’re in corporate finance or strategic finance, you obsess about the P&L and the balance sheet and you obsess about metrics that investors look at and all the classics, revenue growth, gross margin, operating margin, and the SaaS world, customer lifetime value, customer acquisition cost and the ratio of the two, payback periods, magic number, sales efficiency, all of that stuff. But in my job at Salesforce, the direct impact that I had was on how to optimize the working capital cycle, which is just away from the P&L. It’s about AP, AR, more balance sheet stuff, things like managing float, managing days payables outstanding, your receivables period, managing… doing a lot of spend management, which is a little bit different from managing budgets, like doing actual spend analytics, looking at where which suppliers you’re concentrating your spend on, what kinds of discounts are you getting. So it’s much earlier on than the P&L, it’s almost like upstream of the P&L, as in before an expense actually hits the P&L, how is it even generated? How is the supplier chosen? How to run an RFP? How long does an RFP take? How do you evaluate? an RFP. And it was a fascinating, so I’m grateful for that experience because it is not, as I said, all my other jobs are more traditional corporate finance, P&L, balance sheet, cash flow management, annual planning, quarterly planning, all of that. But my job at Salesforce gave me insights into very much the operational part of managing financial operations, which is different. Like if you have that and you combine it with your understanding of corporate finance concepts, it can be super powerful.

Rohit Agarwal: Absolutely, makes a ton of sense. And so then what led you to move from Salesforce to FinancialForce?

Karan Bhople: Yeah, yeah. So financial, it was not a strange move because FinancialForce was a Salesforce investment. So kind of long story short is, in my time at Salesforce, I had friends and contacts in different departments, one of which was the venture arm of Salesforce, Salesforce Ventures. And of course, they invest in several companies, private companies that they hope will be successful. And one of them was FinancialForce. And it interested me because, well, a couple of reasons. One is the company sells and sold at the time an accounting product and a professional services automation product and a human capital management product. So these were all GNA functions that they were supporting. And so because I had a finance and accounting background or at least experience, I could kind of relate to the product. In fact, when I joined FinancialForce, I was reporting to the CFO and he and I and several others on the finance and accounting team, we would spend a lot of time in the product and then giving advice to the product teams because we were consumers of it, which is not the same, you don’t have that in every company because most software companies don’t sell financial products, they sell all kinds of other things. So that was cool, that was attractive. But the other part of it was, it was a much smaller company, had relatively high growth. And because Salesforce was backing it, I was confident that, okay, it could go somewhere. And it was a corporate finance job where I was running FP&A because it was a small company. So I was coming in as an FP&A manager reporting to the CFO and we together, we would manage the plan, build the plan, model it out, review it with the CEO and peers. And so… That peripheral eagle’s eye view that only corporate FP&A gets into a company, I had a FinancialForce and that’s why I took the job.

Rohit Agarwal: Got it. And I guess you left that before the transaction happened, right, if I

Karan Bhople: Yeah,

Rohit Agarwal: have my timeline right?

Karan Bhople: yeah, FinancialForce rebranded into Certinia. And yeah, the sale, it recently got sold to a private equity firm by the name of Haveli Investments. And that happened, let’s see, yeah, that happened five years after I left. So I tell my colleagues and peers and friends that if you think a company has a shot at success, buy your shares. Especially if they’re cheap because you never know when you’ll be able to cash out on them So I was right in the case of FinancialForce, which was good

The SentinelOne IPO journey#

Rohit Agarwal: Very cool. And then let us take us through the SentinelOne journey. It seems like a pretty interesting company and a unique asset that ultimately IPO’d. So how did you get into SentinelOne and what led to that decision?

Karan Bhople: Yeah, so SentinelOne. So I was at FinancialForce for about three and a half years or so and decided that I needed a change. And the company had also changed leadership. So the year before I left, the CEO was changed. And then a few months before I left, the CFO, my boss, had changed. And, you know, change is not necessarily good or bad, but it is what it is. And sometimes it can be a signal for, for employees to think about, you know, what to do next. And so for me, for me, and it still is about learning. It was about learning back then. It’s still about learning now. And what I’ve noticed, you know, in a decent growth tech company, if you’re running FP&A and strategic finance, three or four annual planning cycles is good, and then you know what the business is. I mean, you know pretty much after three cycles. The times when that doesn’t apply is if the business model, not the revenue growth, revenue growth can be really high, but if the business model is changing, if a company that is doing only software suddenly starts selling hardware as well and starts having multiple revenue streams, and the business is really changing, not in terms of pace, but in terms of complexity, then perhaps staying longer, you’ll learn more. But if it’s a software company that’s selling one product in one year, and then the next year it’s selling two, three, four, but the business model is the same, you’ve learned all you need to know about the business after three or four cycles. So I kind of reached that point as well in FinancialForce. So as I was thinking about my next step in my career, I was thinking along the same lines as the change that I made earlier, which is I want to stick to my profession because I love it, but let’s see if I can change industries while sticking to the same business model. So stick to my profession, stick to enterprise SaaS because I got used to it and I really like it and I think it’s pretty cool, but perhaps a new different vertical. And I’d always been fascinated by cybersecurity. And I saw… I saw the job posting of director of finance at SentinelOne and LinkedIn. And I saw that I didn’t know anybody at the company. I literally did not know anybody at the company. There was only 200 people at the time, but I saw that I had a second degree connection on LinkedIn. And so I went to my first degree connection whom I knew because we had done some nonprofit work together and I said, Hey, can you link me to this person at SentinelOne and you know, they have a job opening. And then she said, sure. And she linked me to the person at SentinelOne who herself was a part-timer. She was a contract legal professional. And she was also looking to join the company full-time. But she had been there as a contract legal professional for six months to a year or something like that. And so I talked to her and I asked her about the company. And at the time, and of course, this is an evolution of companies, right? This can change, but. I had read the Glassdoor reviews of the company and of certain management team members and they weren’t terribly flattering. So I asked her, what’s going on here? Like, why are these Glassdoor reviews saying what they’re saying? And she just laughs it off. She’s like, don’t worry about that. They’re just upset employees who left a while ago and it doesn’t matter. Listen, the CFO is fantastic. The product here is great. And you should consider it. And I said, okay, well. I will consider it. How do you think I should approach this? And she said, you know, Bob, who was the CFO at the time, she said, you know, Bob loves people who are proactive. Why don’t you just cold message him on LinkedIn and see if he responds? I said, okay, sure. So I write this cover letter, I cold message, you know, and I, it’s nice two or three paragraphs, like, oh, I’ve done this, I’ve done that and whatnot. And then I mentioned. the person I talked to in the company and said, hey, I talked to Lital, she had great things to say. And I sent the code message on LinkedIn, fully expecting that this guy’s never gonna read it, he’s a CFO, he’s experienced, Lord knows how many messages he gets in his inbox, whatnot. Within half an hour, he messages back and says, thank you, do you have a resume? Because all I had sent was a couple of paragraphs. I said, yes, I do, I sent my resume. And 15 minutes later, he said, your experience is relevant, somebody here will be calling you. And so I got a call, I went in to interview with him, the controller and a couple of other people. We hit it off and I said, all right, let’s do it. And so, and that’s how I joined SentinelOne. And in the process, I had talked to a couple of mentors, a couple of people who are investors in the space. And the vibe I got from them was the product, the technology is outstanding. They are hiring, they need good operators to help scale the business. They had a bit of trouble earlier on doing that, so now they’re hiring operators. And I saw that they had hired a CFO the year before, they had hired a controller, they hired a head of sales, a head of biz dev, a head of product. So they were in that mentality after they had received their C funding. And I looked at the backgrounds of those people and they were all operating, like they all had scaled companies before, they were operators. And so that gave me confidence that, okay, if you combine a good product in a hot market, I mean, hot market, and different parts of cybersecurity are hotter than others, but this one was hot. And so combine a good tech with good operators, and you may have something. And that’s how I joined the company.

Rohit Agarwal: Very cool story. You started with the tech world, you started with salesforce, then you went to FinancialForce, which one can say it’s a vertical software company as they kind of basically cater to the service-oriented businesses. And then you moved to cybersecurity. So three very different areas of enterprise software. How would you characterize the similarities and differences between the three? And as a finance professional, do you need to, again, adjust as you move from one to the other. Are there specific transitions that you need to make in your job to be able to really do that well?

Karan Bhople: Yeah, it’s a great question. If you think about it, Salesforce and FinancialForce, Salesforce kind of standalone, huge platform application software, sales cloud, marketing cloud, et cetera. They cater to the front offices and to revenue generating functions. FinancialForce was an application that sat on top of Salesforce, which is one of the reasons why Salesforce invested in them and did back office applications, but it was still applications. And then when I moved into SentinelOne and cybersecurity, I basically moved from application software to system software, like one level underneath. And it’s a different dynamic for a few reasons. One is the cybersecurity value chain is so broad and there’s so much… to buy when you’re thinking about security as a company securing your own company that you buy from so many companies so Like if you contrast that with let’s say you’re a controller or a CF on your buying accounting software You buy net suite or Oracle or whatnot Let’s just choose net suite because that’s the one I bought for the last couple companies you buy Netsuite You buy a few bells and whistles on top of Netsuite you’re done like you’ve you’re taking care of accounting and accounting is huge Depends on the company, but it’s huge and you can take care of it with like one application with some you know side Applications on it right, but if you’re if you’re so if you’re the controller you’re taking care of you do that You’re done if you’re the chief information security officer or see so like you could have 50 tools that do a variety of different things because cyber security is so broad and so the value chains look a little different and so You know and so You are constantly trying to think, okay, how do I manage all these different tools as a buyer of security software? And how do I, what is high priority? What’s medium priority? What’s low priority? Because security, cybersecurity, as a buyer of security tools, you are managing real risk. Like once you get breached, like it’s a kiss of death. And you have to remediate it. And then there are all kinds of regulatory and compliance things you have to do. as well as managing the confidence of your suppliers and your customers. And so you’ve got to put a lot of money and effort in preventing breaches. And so when I joined SentinelOne, I saw how the criticality of the software that we were selling made the revenue streams more reliable than say, you know, the revenue streams of a FinancialForce that’s selling finance and accounting software. Now, simply because accounting software is great and once you’ve sold it, right, like, you know, the C and the controller, the buyer needs it, they need to renew it because they need accounting software. But it’s not protecting the infrastructure of the company the way a next-generation antivirus tool is. So when, you know, when the economy is expanding and we’re in good economic times, you know, versus when the economy is contracting and you’re in bad economic times and budgets are being slashed. you can bet that certain parts of the cybersecurity budget will never be touched. And so if you are selling software that’s within those categories, you’re relatively safe. Whereas if you’re selling application software, marketing software, professional services software and whatnot, and you’re trying to expand your revenue, it’s harder to argue that you’re critical, that you’re critical to a company’s infrastructure, right? And that’s one of the biggest learnings I got from working at SentinelOne. It was like, you know, cybersecurity is, it’s like the old, old concept you learn in economics textbooks when you’re learning, you know, econ 101 is, you know, what determines the elasticity of demand in a market. And one of the factors is, is the market for a luxury or a necessity? And the more necessary it is, the more robust the revenue stream will be if you figured out the product, right? And someone is an example of that. And SentinelOne’s competitors in that market are an example of that. And the way I knew that is because you had a lot of investors investing in not just SentinelOne, but its competitors as well, because they weren’t just investing in any particular company, they were investing in the market. Because they knew that there were these group of companies that had figured it out, and the demand was going to be pretty robust. So that was the main difference. And then to link it to finance, when you’re forecasting and planning and you’re doing annual planning, and when I was at SentinelOne, there was a couple of years pre-COVID, and then COVID hit and the world changed. And so of course, a lot of people in our profession, in my profession, when COVID hit, we had to do a bunch of re-forecasting, like, oh my goodness, remote work, we can’t go out, lockdowns, what’s this gonna do to our financials? What’s this gonna do to our cash runway? And so of course, because I was running FPNA, I wanted to do all of that. And I was running, you know, tens of scenarios and people were freaking out, Black Swan event, et cetera, et cetera. But what was fascinating is that in that market, COVID, which accelerated the work from home trend that kind of was already taking place in, you know, at a much slower pace, and that accelerated the need for faster networks, network access, cloud access, and then all the security around it in the market that I was in, that SentinelOne was in and is in, that was a boom for the market, for that particular market. Because suddenly now you’re accessing clouds, public, private clouds, networks from home, from wherever you are, because you’re not necessarily at the office, because you’re in a lockdown, or you have restrictions and whatnot, those… Those things, all that infrastructure needs additional security. And the security companies, not just SentinelOne, Zscaler, Netscope, CrowdStrike, you name it, were born out of it. And you have private companies like, for example, Wiz that was literally born in the COVID era. In 2020, it was started and took off like a rocketship because whether it was through luck or through intelligence, the Wiz founders realized that that this demand was high and they could grow fast. So that was the other takeaway from cybersecurity versus my prior companies. It was like, oh my goodness, the luxury versus necessity concept, combined with the trends of cloud and remote access, it changed the game.

Rohit Agarwal: You’re certainly sounding like a cyber security lifer now.

Karan Bhople: I don’t know, I don’t know.

Rohit Agarwal: I’m

Karan Bhople: I don’t like

Rohit Agarwal: sorry.

Karan Bhople: to make predictions. I mean, my financial forecasts, I like to keep accurate with respect to my personal life or my career. I don’t know, who knows, right? Who knows? It was like, I don’t want to rely on cold messaging future bosses to get jobs, you know what

Rohit Agarwal: Hahaha

Karan Bhople: I mean? I mean, that was just like, so you never know, serendipity always plays a role.

Picking the company to bet your career on#

Rohit Agarwal: Very cool. I’m intrigued to understand, given the FinancialForce background, there’s always this question as to how much of your fate do you put in one particular platform? And I’m not saying that it’s Salesforce, now ServiceNow is coming up, like emerging as a pretty good platform and so on and so forth. Any of these platforms are not great, but again, you are putting a lot of reliance on one particular platform. With your background and experience, Can you give us a glimpse into how do companies think about it from internal perspective? Is there always a debate that, hey, should we diversify? Should we also build on some other platform? Should we also have a standalone offering, which may not be based on a particular platform like a Salesforce or a ServiceNow?

Karan Bhople: Yeah, it’s a great question because this theme of consolidation versus diversification, you see it in several contexts when you’re running a company. For example, just as an analogy before I talk about the tools themselves, it’s like where do you stash your cash? The company’s cash, how do you manage treasury? There are benefits to… holding them in one or two institutions to get better yields and to get better agreements if you’re also using the bank to give you loans and whatnot. But then every so often you get a crisis like what happened with Silicon Valley Bank where the bank internally was not managing interest rate risk very well and then had to reduce the value, write down the value of its assets that then created effectively a bank run. And I don’t think all of that was necessary, but it happened. I mean, that’s the nature of the bank run word spreads. And the next thing they, you know, they need a bailout. And so in that situation, diversifying where you’re holding on the cat, all your cash really helps. Um, but in the case of a, a tool or set of tools and the idea of, you know, how many platforms you would need, I think there is a natural push to consolidate. Um, There is, let me put it another way, there is incentive to consolidate because if you, let’s look at a couple of examples, let’s say, or from a couple of different angles, let’s say you’re a budget owner, and we could pick a different one, we talked about a CISO, but let’s pick about like a CIO, for example, who runs information technology, and you’ve got a wide portfolio of tools that you need for different things with respect to IT services, you’re largely a shared service for your enterprise. and you have a certain budget and Often when you run things through you run multiple things that you need through one vendor because they provide those things you get volume discounts you get you know You get better deals on future pricing for your renewals and etc etc. So you can Effectively kill many birds with one stone if you’re going through if you’re consolidating through fewer vendors So there’s a financial and budgetary incentive for a budget owner to do that. And if you multiply that across all the different budget owners you have in a particular organization, the head of IT, the head of sales, the head of marketing, the head of whatnot, in leaner times, they pay attention to that. There’s a natural incentive to consolidate. Now, what is opposing that incentive, the opposite pressure is, okay, when you’re consolidating spend and you’re and you’re becoming more efficient with respect to how you’re spending your money. Because you’re consolidating with vendors, you are also increasing your risk. Because if one platform gets breached or if one platform is vulnerable to something, then many functions are impacted or many workflows are impacted. And so what’s ironic in some cases in my experience in planning is that… when I often I would see individual departments budgets spend come down because they were consolidating. But then you look at the CISOs budget it actually expanded because the argument that the security team was making was, hey, there’s now suddenly there’s risk here and there’s risk here and there’s risk here which wasn’t there before, right? Because we’re too concentrated here and there. So I need more, more. So there was an offset to those efficiencies. But I think overall it was. consolidation can be a net positive because I think, to mirror that in the security markets, there’s a lot of consolidation, there’s a lot of M&A happening as well that’s allowing security buyers to concentrate their spend as well without necessarily incurring more risk. So there’s that going on. So I think it’ll be interesting to see how the future looks like because It doesn’t seem to be getting simpler. Like, because you, you know, as enterprises evolve, there seem to be, the tool stack seems to be growing. When enterprises grow, like double their head count or triple their head count or their revenue and whatnot, they start expanding into new countries, perhaps. They start having new revenue streams, selling different things. And that just increases the complexity and the tool stack, generally speaking, when you start doing those step function type of activities. And so there’s this, I think the incentive to consolidate will just be a constant thing because that’s one way to get more efficient. And ServiceNow,

Rohit Agarwal: All right,

Karan Bhople: sorry,

Rohit Agarwal: yep

Karan Bhople: you mentioned ServiceNow, right? I mean, one of the things that made ServiceNow really successful, I think, is it is a platform that connects with so many different tools and other peripheral tools that once you buy the platform, you know, the IT buyer will buy ServiceNow and ServiceNow takes care of its integrations with so many other tools, it’s very hard to get rid of. And so once you do a ServiceNow consolidation, you’re there, it’s like a one-way street. And so as long as the security around it is good, like, you know, you’re not gonna diversify after that. Like, it’s your one-stop shop for a lot of things. So I think that drive will continue to be there.

Joining strongDM#

Rohit Agarwal: Got it. Makes sense. So let’s talk about now your most recent move from SentinelOne to strongDM. How did that come about? I’m sure SentinelOne was having a pretty good run in the public markets. And I’m sure we’ll talk about the IPO preparations and what all went into it. But maybe if you can talk about that last move, what went into your head when you were making that switch.

Karan Bhople: Yeah, yeah. The rationale was not that different from the switch I had made going into SentinelOne in the sense that, you know, by the time I had been at SentinelOne for four years, and like I said earlier, once you do three or four years of annual planning cycles, you know the business. I had a great time at SentinelOne because, you know, growing from 200 people to 1,300 people in four years was great. You know, the ARR had grown by a factor of 20 in my time there. You know, it started at $15 million and by the time I left four years later, it was at $300 million. And so all that kind of what I was applying earlier is that kind of growth means there’s always something to do that’s exciting. That like, okay, you know, implementing new systems to support sales compensation, implementing NetSuite and accounting tools, and then a closed process and all the pre-IPO stuff that you need to do. which often involves putting more tools in, you know, implementing or starting like socks, all the SOX stuff and SOX 404 and that kind of thing. And it was to help scale the company to support sales and marketing, support revenue, but also lower risk by minimizing. the chances of a revenue restatement or other things that you don’t in the finance world, you just don’t want to have happen. So I was very happy to be part of all of that. But after four planning cycles, I was ready to learn something a little bit different. I had developed a liking for cybersecurity by the end of my time there. And so I wanted to stay in cybersecurity. and scaling things. And if something is scaled already, I tend to get a little bored. So there was a little bit of boredom was also there, was also a factor. But frankly, it was somewhat serendipitous in the sense that, you know, shortly before I left SentinelOne, I got a call from an executive search firm. a famous one that and they said, hey, you know, we love your experience. There’s this cybersecurity startup, different space, but, you know, very similar model and called strongDM. And they are looking for CFO, their first CFO here. And then they told me about the company, about the product and about the history in a little bit. And it was interesting enough for me to take a look at. And then I discovered that I knew two or three of the investors. And so, because they had invested in SentinelOne as well. In fact, one of them I had brought into SentinelOne to be a late-stage investor. And then the other one, another one I’d interacted with frequently, they were getting my financial reports from SentinelOne. So. So then I knew three of the investors, which was a vote of confidence, and these were top-tier investors. And so then I made a couple of calls about the technology, people who understood the space. strongDM does privileged access management in a cloud-native form. And so it’s in the PAM slash identity and access management space, which is not quite the same as next-generation antivirus endpoint security, which is where I was coming from. So that was cool. It was cybersecurity, but it was different. And so it gave me an opportunity to learn something new. But when I talked to people who understood the market and the space, they said the tech is great. They do not have enough operators, which is why they’re hiring for operators. And I said, ah, okay, this sounds familiar, right? And so, and what was interesting is when I started talking with the company, I started with the CEO at the time, and the CEO was one of the co-founders, and hit it off with her and talked with the other two co-founders, hit it off with them, and then I got a call from the search firm and said, actually, the company’s made a change, but they have a new CEO. And I said, oh, man, that’s a shame because I got along with the one I interviewed with. But then they said, hey, the new CEO wants to talk to you too. And I said, okay, cool. So I talked to him and we really hit it off and we spent a few hours on Zoom and whatnot. And so I hit it off with him and he’s the most important person I knew for a CFO job since that was a job I was interviewing for. And then I interviewed with the board and got similar themes that I was getting from the CEO. And I said, okay, this makes sense. The tech is good. They didn’t have operators in the right place. Now they’re hiring for the right operators. The investors are top tier, the market is big, there’s a lot of market to go after. So a lot of similar dynamics that I’d seen from my prior switch were kind of there, but the advantage here was that this was the CFO job and not like a director of VP of finance job. So I was actually going to get to run things which I was interested in doing. And so I said yes, and that’s how I ended up at strongDM.

The CFO diamond#

Rohit Agarwal: Very cool. Let’s dig into a little bit of your CFO role. I’m sure you have seen multiple CFOs over your career and have taken or learned something from them, good and bad, both. Now that you are a CFO yourself, how do you operate? What are the things that you keep as maybe like first principles to say, hey, This is something that is sacrosanct for me. This is something that how I operate. And these are the things that, you know, are on the other side of the fence for me. Maybe put it another way, like what’s your definition of a modern finance or a modern CFO that you are at strongDM.

Karan Bhople: Yeah, yeah. So fundamentally, I think the modern CFO has to be a strategic operator that also knows finance and accounting to a significant depth. And CFOs in the past, a large proportion of CFOs were accountants who were smart accountants who also had some strategy. in them and they were moved into the CFO role. I think now you see the majority of CFOs coming from strategic finance or operational backgrounds as well. So I would say, you know, I would say 50% of CFOs are from FP&A, another 40% maybe come from accounting still, 30 to 40% and the remainder, the remaining CFOs are bankers or from Wall Street. And I think those folks get. that get hired into positions or into companies that do a lot of transactions and that need that kind of experience. And so I’m in the first category because I grew up in FP&A in financial planning and analysis. But regardless of your background, I think for a CFO, the CFO’s job description is to maximize or optimize the value of the company. That is in one line, that’s what the CFO does. Optimize the company’s valuation. But then the question is, how does the CFO do that? And I think the way I see it, as I said, a strategic operator who understands the economics of the market that you’re in, understands corporate finance, in other words, what it takes to make decisions and financial decisions. and then who also understands cash management. And I think, you know, if you have those concepts down and understand what the principles are, then you can kind of put it together to optimize company value. But I think what’s also more important, you know, in addition to the theoretical understanding of those concepts and those fields is your partnership with four different groups of people. So I like to think of it as the diamond of the CFO. So in the top corner of the diamond is your CEO and your board, because those are the people who look to you to manage the financial aspects of the business and to keep the train on the tracks. So the CEO will depend, the way, you know, the analogy I use is the CEO decides the destination of the train. It decides, what train we’re all getting on, and what is the destination of that train? And once that is decided, the CFO helps the CEO keep the train on the tracks, keep the train going at a certain velocity, and deciding who’s on the train, who’s off, what the carrying capacity of the train is, so that it’s not overburdened, it’s not underweight, it’s going at the right speed. And so the CEO and the board will look to the CFO to help do that. That’s the first corner of the diamond. The second corner is the CFO’s peers, the management team, because they are the budget owners and the CFO technically owns the budget of the company. So the, you know, administering the budget, creating the budget, enforcing the budget, administering the budget is the CFO’s job. And naturally that involves strong business partnership with the peers. Cause if you don’t have strong relations with the peers, things can go sideways in ways that are not necessarily pleasant. And that’s why the CFO role is very much a people person’s job. It’s like, it’s very much a people jobs because you can’t do it without those skills. Um, and, especially when it comes to, um, your, your management team. And the way I view budgets, they are not, They are they enforce guardrails on spend certainly they enforce boundaries They establish boundaries and you enforce them, but I view budgets as a way to empower Empower your peers and empower all the functions that make up an enterprise that allow a company to come together And it’s empowering if in the in the planning process you’re being inclusive with those partners you’re giving them a voice, but you’re also establishing guardrails. And if you do that in a way where your answer to requests is not no, period, but your answer to request is no, comma, but let’s open it up, let’s change the plan, let’s see, let’s do the puts and takes and figure it out, then it can be really empowering for your management team and they will appreciate it. So that’s important, that’s the second corner. The third corner of the diamond is your own team. So the second corner is, the first corner is CEO on the board, you’re managing up. The second is managing laterally, your management team, which is your budget owners and you own the budget. And then the third corner is managing down, which is super important. I think the most important part of the CFO’s job is leading the team and managing the outputs of the team, empowering the team. And that includes very tactical things like being clear on the job descriptions, being clear on your expectations, paying them well, both in cash as well as in stock, and rewarding them in other ways as well. Rewards don’t have to be financial. They can be in other ways. You know, if somebody puts up their hand and says, hey, I want to do this other project and it didn’t align with, you know, perhaps the regular job description. But if it’s something interesting and it’s something that could be productive for the company, for example, say, yeah, go for it. And for them, they’ll consider that as a reward, especially if it’s an employee that wants to learn something new, things like that. So I think leading your team well and maintaining good relations with your team and empowering them. That’s the third point of the diamond. And then the fourth point of the diamond is managing external parties, which is investors, suppliers and customers. And I find that in my role as a CFO, you know, I am talking a lot to all three categories. I mean, certainly to investors. You know, most of the major investors, especially all the ones that have information rights to how the company is doing, I talk to them regularly. And it’s always, I view those conversations as a two-way street because they learn from me about the company and what’s good and what’s not, and what’s working and what’s not. but I learned from them about the broader trends in the market and what I should look for. So it’s very much a two-way street. And then talking to suppliers and customers as well in terms of figuring out how to make the contracts work well. And again, it’s all about relationship management. So what I found interesting in my role as a CFO, very interesting actually is, and what makes it different from my earlier jobs and lower-level roles in finance is that In my earlier roles, the majority of the job was quite technical and it was about very tangible outputs like a budget, a forecast, a multi-scenario model, a calculation for sales commissions for the entire sales field, a financial report, a fundraising deck, a series C, series D, series E deck, an IPO roadshow deck. Very tangible outputs that you would play a significant role in as a director of finance or VP of finance, whatnot. But when stepping into the CFO role, there’s still some of that in a startup. I mean, I’m still quite hands-on because you have to be in a small company, of course. And so I’m very grateful for all those technical skills that I’ve built. But it is largely a relationship management job. And it’s a people management job. It’s a relationship management job. It’s public speaking, communication, presentation. being able to read what the people across from you want and then figuring out how to bridge the gap. Across, as I said, you know, at least four different groups of parties, your CEO and your board want certain things. Your peers want different things and sometimes they clash because the investors want a budget that says X and your peers want a budget that says Y and you gotta bridge the gap. How do you manage that? And it’s not by doing a lot of Excel and spreadsheets. Yes, that’s involved, but in the end it’s about persuasion as well, right? Managing your team like, you know, and their expectations because you can’t give everybody everything, Investor, suppliers and partners. So it’s very much a relationship and people and communication job And and what’s ironic about it? I think what makes it a challenge for a lot of CFOs is They get a lot of training and accounting and finance they’re good at it But when it comes to this stuff unless they’ve been trained on it, or unless they did some things earlier on in their life that prepared them for it, they’re not prepared for it. And so it can be difficult for them, right? Because when you’re doing a lot of debits and credits and monthly and quarterly closes, or you’re doing a lot of spreadsheets and all of that, but you’re not talking to investors every day, or you’re not talking to the CEOs and boards every day, or you’re not presenting, you know. decks every day to try to get people to invest in you, then you need some way to be trained on how to do that. In my case, my training in those things goes back longer than when I was in college because I did public speaking in high school and I did four years of that. And so that helped me, ironically, 10, 15 years later. And longer now it’s helping me a lot because I don’t have to worry about those skills because I built them a lot earlier. My financial and accounting skills came a lot later. So I have that combination but you do see CFOs, you know sometimes in some in some situations if they don’t have that combination the job can get hard And as we know, you know boards of directors and investors They don’t have too much patience. Like if they see that somebody’s falling short They may give them, you know a chance and then after that it’s like okay we got to replace the person and so that’s where it makes a difference and that’s the biggest difference I think from between a VP or director or VP of finance and the CFO.

Rohit Agarwal: I love that explanation, and especially the time and framework that you alluded to. Makes a ton of sense and give it a very concrete picture in anyone’s head that is trying to piece together what the role of a CFO is. You talked about the relationship with the CEO being the most important. Do you do anything specific about fostering that relationship on a regular basis?

Karan Bhople: Well, I try not to upset him. That’s the first thing. Because, you know, in my experience, even though in my last company at SentinelOne, I wasn’t the CFO, but I was still quite close to the CEO. And the company’s had a couple of CFOs, but I’ve always had a great relationship with the CEO, which is great, because the CEO honed in really early on once I took on FP&A that I was the person who knew everything. And so, I’ve developed… a deep respect for CEOs because it is the hardest job in the company, especially in a high growth tech company, since that’s the context that we’re talking about here. Because you have pressure from every which way. You have pressure from your board, you have pressure from investors, you have pressure from customers, you have pressure from your employees, you have pressure. And depending on the company and how big it is and how… You know, you have pressure from the public press. You have pressure from social media. You got pressure every which way and it’s a hard job and you have, you know, it’s all out of CEOs live complicated lives. You have pressure from your family as well. And you got to, you know, listen, like it’s like rank and file. And I hate to use that term, but I’m going to use it. Rank and file employees worry about things like, you know, work life balance and. and they ask questions about it, they try to make it happen, but nobody cares about the CEO’s work-life balance. Because at the end of the day, the buck stops there and the CEO will look like an idiot if he starts demanding work-life balance from his board, and I use the word his, her, his, whatever, their board or their investors, they’ll look like an idiot and the board will just say, okay, well, we’ll replace you, and that’s it, or if they have the power to do that. So it’s a, and I’ll also say that, you know, when you’re, let’s say you’re a director of sales or a director of marketing or director of finance, you look to your right, you look to your left and you see directors, your peers, directors in other functions, like, you know, and you talk and you’re like, okay, you’re managing a team, I’m managing a team, how do you manage this? How do you manage that? You have peers. And so it’s easier to have a social support system within the company. If you’re a, and then you go all the way to like, you know, C level executives reporting to the CEO, you know, chief of marketing, head of sales, head of finance, a head of legal, whatever. Okay, you still kind of have a peer group. It’s a lot smaller, but you can still, you know, talk to one of them. But when you’re the CEO, you’re the top of the pyramid, you don’t have peers at the company. You have nobody. Now you should talk to other CEOs, and a lot of CEOs do, right? Like founders, tech company founders will talk to other founders. But within their own company, they’re the lone ranger. They don’t have anybody. And so I can imagine how difficult that is as well, to some extent. So I have a deep respect for the CEO job. And so when the CEO is talking about things that I don’t necessarily agree with or is making decisions that I perhaps am not necessarily aligned with, the first thing I do is, OK, where is he coming from? And try to be as empathetic as possible. Where are they coming from? what information they have, do they have that I don’t have? And then, you know, and then be very, be an empathetic listener because the CEO, as I said, the CEO will rely on the CFO to keep the train on the tracks and to help execute their vision. And so they rely on the CEO for resourcing to execute the vision, for funding to execute the vision, and for operational support because as I mentioned earlier, the CFO has a highly operational role now, more so now than ever before. And so trust is really important, building a lot of trust with the CEO, listening to the CEO empathetically, and then, you know, redirecting them in places where you can redirect them, but giving them a good reason for it. And really articulating, and again, it’s about persuasion, articulating the pros and cons of the decision that you’re steering them towards. and the costs and benefits. And also reminding them that investors look at this a certain way and the market looks at this a certain way. And if this way clashes with your way, then that doesn’t necessarily mean we can’t do it your way, but just help me come up with a story for the investors, work with me, rather than me trying to dissuade you or block you and whatnot. So, corporations are not democracies. And the CEO cannot make decisions by asking everybody what they think and how it shows, you know, asking for a show of hands and counting the votes. At the end of the day, the CEO is the ultimate executive, it is the chief executive. And the CFO’s job once a decision is made, unless there is fraud or some kind of violation of fiduciary duty going on, the CFO’s job is to help the CEO execute the vision, right? And so, my approach has always been you know, to do my job well so that they trust me, make sure I’m accurate on the numbers, that I know the numbers off, you know, like the back of my hand, so the CEO depends on me for those, and then have a trusting relationship, and be a sounding board. And so, what I have found that is helpful there is, the CEO and the founders and whatnot, especially the head of sales and marketing, they’re allowed to be passionate. They’re allowed to get passionate, they’re passionate about the market, they’re passionate about the product. They’ll be in, you know, we’ll go to a company kickoff event or a sales kickoff event, and there’ll be a lot of rah and whatnot. But I’ve noticed that they, and especially the CEO, depend on me to be the opposite. If they are passionate, I am dispassionate. I have to be neutral. I have to be fact-based. And I will let the numbers tell the story because ultimately that’s what they do. And so… You know, I help by lowering the risk and by executing the vision. So I will do things like the CEO would not think of or would prioritize. Like when I started strongDM, for example, the first thing I did was do an RFP for external auditors. And I brought in three of the big four firms, did an RFP, chose one, we got an audit done. The company had been around for five years, never been audited. The back office was a bit of a mess. not a bit of a mess, quite a mess. The accounting books, you know, the reporting, tax, IT and whatnot. And so I got the auditors and I used that as a forcing function for the CEO to allow me to fix a lot of things, right? Because it’s easier when you have an external audit firm saying, you guys need to fix all of this, there’s a material weakness here, there’s an SD here and whatnot. And then I go to the CEO and say, see, I was right. now I need you to allow me to do this. And the CEO is like, okay, I can’t argue with that, go. And then we go and do it. And that also helps minimize risk. And so it upholds the valuation of the company. So things like that is where the CEO does not have to worry about all the back office stuff. It does not have to worry about whether your financials are in conformity with GAAP. Does not have to worry about your internal controls. because the CFO is taking care of all of that for the CEO. So making, you know, that part is like, it’s what you learn when you’re a lower level person, when you’re an analyst or just an engineer as opposed to a manager or a director and whatnot, or a VP or C level, you’re told, hey, how do you get promoted? The easiest way to get promoted is by getting your boss promoted or by helping your boss look really good. That principle still applies even when you’re a boss as the CEO, the same principle applies, right? And so I think the combination of all those factors and those principles is really effective in helping, in doing the job well and maintaining a good relationship with the CEO.

Building a winning team#

Rohit Agarwal: Very cool. It’s a great explanation. Let’s switch gears a little bit and take you back to the times maybe when you joined SentinelOne. It has had a really good run from an IPO perspective, but I’m sure there’s a lot of effort that went into it. Can you tell us a little about when to start preparing for an IPO? and what are some of the tangible steps that one should take en route to that IPO journey.

Karan Bhople: Yeah, that’s an important question. I think everybody who goes on the IPO journey, they have stories to share and a lot of it they have in common and then some things are unique to their experience. In my case, in an hour case at SentinelOne, it was a fast IPO and I won’t share all the details, but it was a fast IPO where The decision to go public was made in a certain month, and then we rang the bell in the NYSE five months later. And I don’t recommend such a fast approach. So to answer to, it was energizing, it was a lot of work in a fast amount of time. But because the company was doing well, we were kind of motivated to do it. So it’s different when your company’s doing well and you’re riding that wave, it feels different. The energy level is different. You feel like, oh, I’m not getting tired. No, I can do more. Yeah, I can do Sunday evening calls and I can do Saturday morning calls. And no problem, let’s go, let’s go, right? Because it’s an event. And so it’s like going through a regular season, if you’re playing a sport versus preparing for the Olympics. It’s like it feels different and you just suddenly have more energy because the incentive is a little different. But to answer your question, Rohit, I would say that you start prep a year before, ideally, which is not what we did. But you would start a year before. And let me start from the finance perspective, since we’re talking about the finance context and what a CFO and finance executives should do. I think the most important thing in my job there was to ensure that the financial model was robust and reliable. And we had a beat and raise model in place. Because unlike, you know, when you’re running a private company, you’ve got a you’ve got a plan, you’ve got a quarterly targets, you either hit them or you miss. If you beat them, you explain you have to explain why. And if you miss them, you have to explain why. And that’s it. Right, either way you explain the variances. And as long as you’re doing it with sincerity and a certain amount of transparency so that your investors have confidence that you’re on the right track, you’re good. But I think when you are a public company, you have to manage expectations every quarter. You have to give guidance to the street, ideally every quarter. You have to… decide on the metrics that you want to disclose before you actually go public. And you have to have a beat and raise mentality where you set an expectation that they will accept that the market will accept. You then beat that expectation in the following quarter and set a new expectation that you will then beat the following quarter and so on and so forth. And that’s the game you play. And I think different CEOs and CFOs can play that game with a few different permutations but generally that is the game that is played and you’re not used to it if If you’ve all you’ve done is run a private company Because the dynamics are a little bit different the beaten raises unique to being public. I think and so What I think what I would recommend people who are considering IPO do or in the finance function is have your beat and raise model ready a year before ideally at least three quarters before and then test it for the subsequent quarters before the IPO where you establish beat and raise model and then after the following quarters close you see if it worked if you actually beat and you can actually raise and then you actually do the practical thing like a mock earnings call where you prepare your CFO for the full book. to prepare them for an earnings call that you would have, do a mock earnings call, have bankers on the call or your advisors on the call, give you feedback, do that for two or three quarters before you’re going public so you’re comfortable with the dynamics because that’s something to get used to. And so I think for a core FP&A perspective, those are the really important things to start a year before the IPO. Have a beat and raise model. Do mock earnings call and stress test your model so that even when unexpected things happen, they can be within the range of your guidance when you’re public. Because once you’re public, like that’s it, you have to be ready. And then, I think I mentioned it earlier, but I’ll expand upon it as, decide what metrics you’re going to disclose, make sure they don’t disclose too much, and make sure that your calculation methodology for them is robust. because it is not great when your calculation is wrong because you didn’t have a robust methodology that you have tested, and you have to then tell the street in a quarterly earnings cycle that, oh, my bad, like the number we disclosed last time was wrong and here’s the adjustment. You get punished in real time. There is no teacher like the market. And when you’re working at a company whose security is traded publicly every day, you know, from nine to 430 or 930 to four, or whatever it is, and then YSC or the NASDAQ or whatever. It’s a different experience because you, the market does not have patience. It’s not terribly forgiving. If it wants to punish, it’ll punish in real time. If it wants to reward, it’ll reward in real time, and that’s how it is. And so that dynamic, I think single-handedly, the difference between that versus a private company where Your valuation is in every fundraise, and then it stays that way. Or in every 409A valuation, which is once a year, perhaps, minimum, right? Or after every fundraise. It’s not being traded every day, it’s not liquid, so you don’t know what’s going on a day-to-day basis. Whereas in an actual market, you know. And so the beaten raise is super important. Other than that, I think other aspects of IPO prep is, Making sure, having an internal audit function in place, getting ready for SOCs. You don’t have to be fully ready the year of IPO, but I think the following year you have to be ready for it. So internal controls matter, they’re huge. And of course you worry about them as a private company, but as you’re going public, they’re huge. And then having your investor relations function staffed up, you know, and so hiring for that. And then with respect to your team, the CFO’s team and FP&A’s team, making sure that all the functions are adequately covered in the forecasting and planning process, and they have coverage. Because I think in a high growth, and this is a difficulty, a challenge that I was confronted with as I won. And I think with a… With more prep time for an IPO, it would have been easier. But making sure that you had your FP&A leads in place for the major functions, so that when you do your monthly forecasting and your monthly close and whatnot, you have adequate coverage, you’re not missing anything. It lowers the probability that you’ll miss your forecast. It lowers the probability that you’ll miss your guidance. Because that’s important. FP&A becomes three times more important in a public company environment. Because, and again, it’s tied to what metrics you’re guiding to. you know, SentinelOne guides to revenue and gross margin and operating margin, I believe. And, you know, other companies do just revenue and operating margin. Other companies do more. It depends. But, you know, if you’re talking about margins, well, then you have to be good at planning all the functions. And because if you miss, if you have a miss, you could have a miss in everywhere. You could have a miss in the way you calculated, you’ve forecasted sales compensation, which directly impacts your sales expense. You could have a miss in the way, you know, you’re capitalizing your R&D function, because if you underestimated or overestimated that, that hits your R&D expense. You know, everybody’s focused on margins, especially in this environment. So, having that, you know, for a few quarters before the IPO set, and having the right people in place. So what I also found is that in the few quarters before the IPO, there was a lot of hiring and firing happening. More hiring than firing, of course, because you’re growing the company and you’re IPOing, so there’s a lot of hiring, not just in finance, in IT and in HR and in other functions, of course, in sales and marketing and support. But in the GNA functions, there is some firing as well because you have to… You have no choice. You have to have people who are competent because there’s no patience when there’s a restatement or something like that. That’s when the crap hits the fan, so to speak. So that was an interesting part as well. And then again, from a finance perspective, that beat and raise model that was talked about is super important, having it robust because you will introduce that model at a high level to the Wall Street analysts that will then cover your company. post IPO, you know, for the buy side especially. And so they will get insights into how you think about the metrics that will inform the way they forecast and they, you know, they price you essentially. And so establishing clarity there with them during the IPO road show, they call it an analyst modeling session. And you do it a couple of times. And it’s very interesting and you have You have representatives of a bunch of financial institutions who just want to see as much as possible, open the kimono and just get everything. And what I learned was also having a clear understanding of what to disclose and what not to disclose, which as a private company, you don’t think much about because hey, you’re in closed board sessions with investors who own a significant chunk of you. You can talk about whatever you want. And your investors are advisors. Hey, tell us the more you tell us the more we can help you kind of thing. Right. I mean, that’s what growth, growth stage investors and venture capitalists like to do, especially if they’re a company that you care about, um, or they’re, you’re a company that they care about rather. Um, but, um, once you’re, once you’re public, you know, the investors are more diverse and they’re not going to advise you, you can’t go and call them up and say, what should I do? Um, and all they want to do is know as much as possible so they can. advise their clients, these analysts. And so you have to be much more careful about what not to say. And that is a psychological shift as well. And that’s why I think mock earnings calls are important because for a CEO and CFO who are used to talking on the board and spilling the beans on everything and saying, oh, we did this, we did that on earnings calls, it’s about keeping your mouth shut as much as possible and not disclosing things and having the judgment to know the difference. And that requires a little bit of practice, a little bit of coaching. And regardless of how successful the CEO and the CFO are, they could always do with some coaching when they’re moving from private to public. Especially if they’ve never done it before. I have not done that before. It was my first IPO, hopefully not my last. But those are some of the things I learned.

Rohit Agarwal: You mentioned about hiring and firing, not only of course in the finance team, but broader sort of GNA and so on. Maybe if you can talk about specifically from an IPO perspective, but also in general, any traits or any secrets you have in terms of creating a winning team. How to really pick the right kind of people for the right positions and maybe, you know, over the period of building from the very early get-go of a startup to maybe an IPO. what are the key positions to hire for as companies scale to that eventual journey.

Karan Bhople: Yeah, yeah, yeah. So I’ll say a couple of things. So with respect to how to hire a winning team, I think you have to look at it, look at each role, individual and each person individually, but then how those individuals come together as a team. And so that’s important because if you, you know, oftentimes, Sometimes and oftentimes, I’ve come across candidates for a particular role that are outstanding, but they don’t necessarily, that are individually outstanding, super smart, they know the nuts and bolts of the job, but they don’t compliment the rest of my existing team as well as I need them to. And so sometimes I’ve passed over those really good candidates for others who perhaps were not as accomplished in that role or were not as technically brilliant, but they complemented my existing team and complemented me much better because they had complementary skills and complementary strengths. So that’s one thing that I noticed because different folks, even within the finance and accounting world, different professionals will have different strengths and weaknesses. And what you want is as you round out your team, as you add people to your team, and as you eject people from your team, you want the whole team. to be covering as many bases as possible that you need. So somebody will be really good at revenue, at revenue forecasting, they know the SaaS waterfall model backwards and forwards, and they can do all that, but they’re not good at sales commissions, or they’re not good at supporting R&D because they can’t do project-based finance because they’re not used to it. Okay, well then I need two different people with two different skills, and then later on, they can cross-train each other and we can move people around. Right? Because people always, good employees always want to learn more once they’re comfortable with what they’re doing. Right? And so that’s one thing. And that’s a generic kind of observation, not specific to IPO-based hiring, which I can get to in a moment. But the other thing that’s also generic is I look at character and personality first and then technical skills and abilities second. In fact, I would go a step further. I look at character and personality first, then I look at communication and people skills second, and then third I look for are the technical skills, generally speaking. Now, I won all three, but I’m just saying those are the order that I look at when I am talking to potential candidates. Because I think, you know, in a corporation that’s growing, that you want to help scale. The people skills in finance and accounting are super important, are more important. Well, I don’t know if one skill is more important than the other, but they’re super important. And often they get overlooked because by hiring managers in finance and accounting because you’re like, oh, I need an SEC reporting person. Like I need somebody like, let’s look at the bullet points. You’re reviewing resumes, you’re reviewing bullet points. You’re like. or this person has done SEC reporting at two other SaaS companies. Okay, okay, let’s talk to them. And then you’re looking for that and you’re focusing on that and then when you’re, and you gloss over the other software skills that are important and they end up, and then you end up having to fire that person like nine months later because they weren’t doing what you needed them to do, kind of thing, right? So it’s easy to fall into that trap. And especially now in the context of an IPO, especially when you’re, going public quickly and you don’t have that much time, you start cutting corners in terms of, you know, really evaluating candidates for the positions that you have open. So that’s why I caution against fast or shotgun IPOs if there is such a thing. I think if you can argue and persuade your CEO and your board to take a little bit longer so you can… bring together the right team, it pays dividends in the future. Because when you’re going public, people think that going public is the goal. It’s not, it’s just the beginning. It’s just the beginning. Like it’s not about going public, it’s about growing your valuation and goes back to the fundamental of a CFO. Your CFO’s job, private, public, no matter who owns you, the CFO’s job is to optimize the valuation of the company. That doesn’t change when you’re public. In fact, it becomes even more important because now your security, your stock is traded every day. So it’s like, all right, well now how you handle this on a daily basis. And so, cause you could have market changing and company changing events that happen in the middle of a quarter and you’re not ready for it and whatnot. So it’s about the time after the IPO and it’s about showing. Because you’re doing it, because you’ll have a lot of new investors in the IPO who will then expect to generate a return on what they’re investing three or four or five years out. So the IPO is just the beginning for most of your, well, for a lot of your investors, right? And then it’s even for your earlier investors, it’s not the end for them. It’s actually a middle point because they will want to wait longer to sell their holdings for higher capital gains. And so the post IPO world is more important than the event of the IPO. And so when you’re hiring a team, you gotta hire a team that will be good in that post IPO world. And that’s difficult because the, and this is difficult especially for companies that are growing at 100%, 150%. I can only imagine what companies like Snowflake experience and how they do. You have to be somewhat um ruthless in the way you hire and fire because ultimately The reality is most people are good at companies for certain limited parts of the company’s life cycle like there are certain dna that is good At early stage companies private companies then there’s a different dna for mid to late stage private companies And then there’s a different dna for post ipo Publicly traded companies and to find the DNA it’s hard to find people who are good at all those stages of a company’s Lifecycle it is much easier and much more Practical To have the spine to hire and fire at different stages and fire Fire may not be what you have to do all the time It could also be rearrange or rejigger move somebody into a different job that can still be in the post IPO world, but that they’re more suited for because they can’t handle whatever it is that they were doing in a public company context, right? So being creative as a leader and a manager, so that, hey, everybody hates firing people. Most people hate the idea of firing somebody, but you still need to be effective in your functions. So… Be creative in how you can replace people, place people in new roles where they can be effective, but the company can also be effective, and then use firing as a last resort. I mean, you have to do it inevitably in some contexts, but use it as a last resort. But that’s important, and I think good leaders and good CEOs, effective CEOs, and C-level executives, including CFOs that I have seen, do this very well. They realize that most people, you want everybody to be good all the time. It’s not going to happen. So you have to have that understanding as part of your approach to running a company.

Rohit Agarwal: We have seen a lot of technology advancements in the field of finance as well. How does that interplay with creating a winning team? And over your career, have you kind of came to a conclusion now that, hey, this is kind of my kind of ideal CFO technology stack that I can then pair with a winning team and really make it a powerhouse of a finance function?

Karan Bhople: Yeah, it’s a good question. I’m still trying to come up with the right answer to this question because there are new tools that are coming out, but new needs as well. I think in finance and accounting, you’re dealing with a lot of, especially in the modern tech company, you’re dealing with a lot of disparate sources of information and different sources of data. And I think one common challenge for finance executives and CFOs is, how do I get a single pane of glass, or at least what looks like a single pane of glass into all the inner workings of the enterprise? And it’s not just financial metrics, it’s operational metrics, it’s functional metrics. And so, and the thirst for insights is almost limitless, like. There’s always insights that people want. You always wanna know more about what’s going on, but you’re limited by time and space. So there seem to be a lot of tools. I mean, obviously, in terms of a tool stack, you want a good accounting system that allows you to close the books on time, that produces a balance sheet and other income statements, that has good reporting, that has all the necessarily internal controls, that has a lot of automation around the controls so that it’s very easy to pass an audit. You just show the audit logs, you show the… You show the workflows from the system, print them out, send them to your auditor, you’re done. Those things are pretty bread and butter by now. But then there are more peripheral tools. So there are a lot of accounting tools out there. There are a lot of spend management tools now that I’m noticing that CFOs are looking at. I won’t name specific vendors, but there are tools that help you govern your SaaS sprawl, so to speak, because you’re doing a lot of. You know, companies that are grow, they use a lot of tools and they’re spending a lot of money. And then when they try to get efficient, they need, sometimes they need software that helps, ironically, software to manage all the other software, right? So spend management tools are starting to become popular among financial managers, among CFOs. I think, as I said earlier, a lot of CFOs are becoming more operational. And so they’re doing a lot more into traditionally non-finance tools, like, like CRM tools and forecasting tools that are not specifically financial forecasting tools, but pipeline and sales related tools. So I spent a lot of time in the sales forecasting tools that we use at our company, even though I don’t manage the sales team because I’m not the head of sales. And then there are connectors across these tools, like how do you get your data from your sales CRM into your accounting system in a… you know, bidirectional way so that your, so that your PO invoice receipt, like three-way match happens, or your, you know, billings, revenue, and collection matches and all that stuff. So that’s also kind of bread and butter, but it’s interesting to see the need for connecting across all these tools. That’s one common theme in the finance tool stack is I’ve got a bunch of tools, I need something to connect all of them. Then I think in the future what will be I mean, it’s very hard to get away from Excel Like everybody uses it Excel or Google Sheets, but regardless of what you know fancy planning tools there are and I get I won’t name vendors But they’re all kinds of you know There are there are several tools because the barriers to entry to make a planning tool are relatively low So there are you know people who get you know, especially people who have a finance and accounting background I think they have they have an idea for a great financial planning tool that nobody else has built. They’ll you know bring a bunch of engineers together, lay out a vision, and say, make this tool, and then they try to sell it, and they’re competing with 15 others because they’re all roughly similar or different. There’s a lot of feature parity. Because the barriers to entry are low. I took SentinelOne IPO on Excel. We didn’t have a planning tool. We didn’t need one. And it was fine. And I would be surprised if they’re still on Excel. I mean, I’ve been out of there for more than a year and a half. But why? Because we were good at Excel, and because the business model was not so complicated as to need something different. And we did a beat and raise model in Excel. We managed it and it was great. And we had several interlocking models that brought the forecasts and everything together, but it was all in spreadsheets. But having said that, is that optimal? No, it depends on the context. And I think, you know, so those are the, you know, kind of three or four different areas. I think accounting and the accounting tools absolutely spend management is becoming more popular. getting into CRM and pipeline tools, the CFO is starting to do more of, and then spreadsheet tools. And there are even different spreadsheet tools like smart sheets and some others that I’m starting to see now, which is interesting. I think for the future, if you were to look to the future, what I can’t tell, because I still have to get my hands dirty with it, is what AI tools will do to a lot of this, especially around… forecasting and planning. Because I can envision AI tools taking disparate data sources, putting them together, you give it certain instructions and certain inputs, and it pops out forecasted scenarios for you in a way that you couldn’t do before. Even with the tools that existed before, you would still have to do a lot of the work. But I can imagine AI doing a lot of forecasting. which makes the future of FP&A and strategic finance interesting. But I’ll leave it there because I have no prediction to make, because I’m not smart enough to know where it’ll go.

Career reflections#

Rohit Agarwal: All right, very cool. What does a successful career look like to you?

Karan Bhople: Yeah, I think in the in the context of the CFO job and the finance executives job, I think a successful career is if you look back on it, you can say that you grew value of companies that you worked for. And it just goes back to the fundamental of finance. financial manager’s job, whether it’s a CFO or VP of finance or whatever, but the profession’s job is to optimize the valuation of the company you work for. And so if you could go back in time, you know, in your career and your track record and say, hey, yeah, when I joined the company, the value was X, and then I grew it to Y, and now it’s at Z, and I left it, you know, and then I went to the next company and it was… A, and I grew it to B and whatnot. If you can show that that’s what happened with those companies and that you played a role there, I think that’s a successful career in this profession. And then I think, you know, when we talk about exits or transactions, whether they’re sales or IPOs or similar things, That is nice to talk about, like, oh, yeah, I did an IPO. Yeah, I sold this company to Company Y, and that was a good transaction. Those are good to talk about, but I think they are just correlated with the first thing, which is, did we create value? Was value created? And was wealth created as well? And by wealth, I mean not just for yourself, but for your fellow employees, which is another measuring stick, I think. Because if you grow enterprise value, and you have, it naturally follows that if you have employees who own part of that value in the form of stock and the form of shares, and you grow the enterprise value, you’ve done a good thing for your employees as well, and for your peers and colleagues as well, and that’s great. And that’s the beauty of the corporation and of free markets and capital markets and labor markets and product markets is they’re connected in that way. And the central theme is growing value. And if you take the next step, not logical step of how is that value grown, it’s really supporting the vision of the CEO and of the executive team, supporting the company’s vision in either making an existing market more efficient or creating a new market. Because ultimately, that’s how companies survive and thrive. Because in a perfectly fair, Perfectly competitive market, nobody makes a profit. The way a profit is made is by differentiation and with some amount of monopoly power. And the way you do that is by making an existing market more efficient, which is what companies like SentinelOne and CrowdStrike did, in that there was already a next-gen antivirus market. Symantec, McAfee, and others were doing that. But it was inefficient because the products weren’t as good as they could be. And then other companies came in, created a better product, met the demand that existed, and made that market more efficient. And every time you make a market more efficient, you create wealth. And then the other way to create wealth, which is harder, but companies do that, is create new markets. It’s a much harder and more rare thing to do, but creating a new market also generates wealth. And again, if you allow your employees, which most companies do, to be part owners, regardless of how small, part owners of the company, then you’re creating wealth for them. So I think that is, those are signs of a successful career. If you can look back, and in the context of a finance executive, if you look back and say, I grew Enterprise Valley for these companies that I worked for, and I generated wealth for my colleagues and peers across these companies that I worked for, like you’ve had a great career.

Rohit Agarwal: If you could change one thing about your career, what would that be?

Karan Bhople: Oh gosh, yeah, hindsight’s always 20:20, right? But I think, I’m not sure I would change much about my career, but I would have changed something that I did perhaps even earlier on, which is with respect to my approach to school and education, is I would have actually delayed starting college. I would have delayed it by a year, and I would have used that year to do a lot of different things and to really sample different jobs. Because if you can take a year or so in between high school and your undergraduate experience, assuming you’re moving on to do an undergraduate experience, then you know that you’re going to end up in school in a year, and you’ve got this year in between, and you have a lot of freedom to experience different kinds of jobs in short bursts. You can go and do two months of an unpaid or a low pay internship at a startup or at a large company, doing something very basic, but you get exposure, talk to people at lunchtime and whatnot, see what they do, see what their life is like. Then you can, you know, do something else like be, you know, a ball boy at a tennis stadium, you know, for like a tournament and like see what that’s like. And it’s totally different job. You can, you know, Be a waiter or something else that you know, if that’s not what you end up You know choosing to do for your profession and you didn’t even think of it But you know go and do it experience different kinds of jobs experience different kinds of activities To get to really sample what the post-school real world kind of looks like Before you’re in the situation of being post-school and being in the real world because then you can then go into college and have a much better idea of what’s what and what the world kind of looks like. And that allows you to focus and prioritize what you want because college today, and I’m an American, so I’ll talk about the American context, but college today is a bit too much of a buffet. It’s like a smorgasbord. You go in and there are all these different things, there are a hundred different things you could do and most of the times you don’t get clear direction on what’s good for you and what’s not. which means that you need to know yourself really well and know, have a much clearer kind of picture of what your end goal is to be is, and what is good for you and what’s not good for you. Because it’s about, not just about what you do, but also about what you choose not to do that defines your life experience. And so I think that kind of experience before college where, you know. you have the opportunity to do a wide variety of things because it’s low risk because you’re going to school anyway. So try out a bunch of different things. You don’t need to make money at that time. And then go to college with that experience under you and with focused perspective. So if I had done that, Lord knows where I’d be today. Maybe not in my current profession, who knows? But everything happens for a reason. But as far as my career is concerned, I’m not sure what I would change. I think the switches that I’ve made and the changes that I made, they were logical and at least they seemed well thought out at the time. Obviously, companies are different. Some companies do really well, some companies don’t. If you have a corporate career, that’s the nature of working for companies. As long as you’re comfortable with that, then you can have a fulfilling career.

Rohit Agarwal: You come across as a very calm person. What’s the secret behind that calmness?

Karan Bhople: I let out all my frustration at the gym. So that’s my, I sweat it out and I’m done, which is also why I go in the mornings. So I go to the gym at 7 a.m. and I lift heavy objects for 45 minutes. And personal training helps. I mean, somebody’s there to check your form and all that, which is great, but really exercise is medicine. It truly is. So that combined with eating healthy or trying to eat healthy is, is I guess my secret if I have one. But it’s, every morning I’m either at the gym or playing tennis and that helps a lot because it’s a break from, it’s a break from the back to back, you know, corporate kind of day to day things that I have and the frustrations around that. It’s like a reset every day. So that’s my secret. Different people do different things, but I think exercise is a wonderful way to reset.