Recession-Proof - a podcast by Ramp

Speaker 1:
You are listening to FinOps Today, a podcast from Ramp, where the world's most innovative finance leaders share what's on their agenda. Here's your host, Ramp's own head of finance and capital markets, Alex Song.

Alex Song:
Hi, welcome to FinOps Today. On this week's episode, we are speaking to Artem Mashkov of SwagUp. How are you?

Artem Mashkov:
Awesome. It's a beautiful day in New York City. Nice weather, so much better than Miami, JK. But yeah, played some basketball today. Really in a great mood. Excited for this podcast.

Alex Song:
That's awesome. Well, thank you so much for joining us. We've interviewed a series of CFOs from other like-minded and similar businesses out there. Mostly, we're going to try to spend the next half hour or so delving into the intricacies of the finance suite, the ins and outs of being a CFO. We'll delve a little bit into your background as well as your company's. Sound good?

Artem Mashkov:
Yeah. Excited for it. Let's go.

Alex Song:
Cool. Maybe to start, why don't you tell us a little bit about SwagUp and what your company does?

Artem Mashkov:
Sure. Essentially, when you start your new job, and you get an incredible gift, if you're lucky, some companies don't do this. But the great companies, you'll get an incredible gift, it'll be a box, and there'll be a bunch of really nice goodies inside. There'll be a t-shirt, could be a tumbler, it could be an Oculus, depending on how much a company loves you.

Artem Mashkov:
We are the company that makes that happen. We provide the pipes for getting those products from the vendors to you. So much so that not only do we provide the pipes for companies, but if anyone wants to plug into the network, we also provide the pipes for that. The same way Shopify provides the pipes for ecommerce. SwagUp provides the pipes for promotional ... basically the custom supply chain or a custom supply chain as a service company, and the best use case for that. Now is promotional products.

Artem Mashkov:
That Swag pack you get when you start your new day at the company, that's us. There's other uses for it. You could use it for your VIP clients. You could use for your investors. You could use it for fundraising. We've had companies do that. But essentially, that Swag that gets to your door or to your office we make that happen.

Alex Song:
Very cool. Well, we've got some happy Ramp employees who over the last couple of months have been able to enjoy some of the Swag. Maybe tell us a little bit about the history. How long have you guys been around, any money that you may or may not have raised? What is the scale of the company these days?

Artem Mashkov:
Yeah. We've been around since mid of 2017. Michael Martocci started the company. I knew him from before SwagUp, a buddy of mine. I do Angel Investing. The way I get my deal flow is I do pro bono consulting. Another friend of mine who I actually went to junior high school with and I invested in a couple of sports cars with introduced me to Michael.

Artem Mashkov:
He met him through Instagram. He's like, "Look, you have to talk to this guy. He's young, but super insightful, super smart. You're going to love him." Okay. We went. We had dinner. Introduced me. I'm like, "Look, you're incredibly smart. You know how to listen. I can't believe you're 19 years old. You're humble." I'm like, "These are all the ... I'm not that. I'm not humble. I'm extremely arrogant. I'm smart. But I don't know how to listen well."

Artem Mashkov:
I'm like, "I want to be your friend, teach me" I'm like, "In return, I'll teach you with anything you need to know about just like building businesses," because at that point, I have my first business at 19 that I started right before the first recession. We get in that later. But I'm like, "Well trade off. Then anything you do, just let me know, I'll help you with it."

Artem Mashkov:
Then he started a company selling Swag. I was advising him. Then around the year in middle of 2018, I was like, "Listen, you need to have a payroll. You need to have insurance. You should have this lease side." He's like, "Great. I don't want to deal with any of this nonsense. Can you do it for me?" I'm like, "Well, I could invest and then we could hire some people." Think, "No, I want you to do it. If you want equity, you're going to have to join the company."

Artem Mashkov:
I was like, "Okay, I guess I'll come on." I came on as COO originally, but it was very back office ops heavy and finance heavy. Actually, previous year I transitioned to the CFO role. That's how I got into SwagUp and how I met Michael. Then the company itself, we did 168,000 year one, three and a half year two, which is when I joined. Seven year 3, then 22 and then we just finished with 53 million before 2021.

Artem Mashkov:
High growth. We've taken on it exactly zero outside capital. This was all customer. People say, "Bootstrapped or self-funded." That's not true. It was all customer-funded, coming straight from operating revenue, and profit. Yeah. That's where we are now at the current stage. It's a very interesting industry and one I'll dive into it a little bit later. But thankfully, it's not very good. That we've been able to take advantage of that and just be better.

Alex Song:
That's incredible, bootstrap business, 50 some odd million in revenue, that's absolutely incredible. But yeah, let's delve into your background and your history a little bit as well. How did you have the connections, the background, the expertise, Angel Investing, et cetera, that led you to this seat and how did you wind up picking finance as the area to focus on?

Artem Mashkov:
Well, I'll give you a quick background. I went to the ... It's funny because everybody that wants to go to school will tell you right away, they want to go to school. I went to Stuyvesant High School in New York City. I know you guys have a bunch of people on your team that went to Stuyvesant, too. That's the first thing we surely mentioned is that before colleges. That's the main thing.

Artem Mashkov:
I went to that school, was a little bit of a slacker there, legitimate just didn't send my transcripts to colleges at the end or the other colleges didn't send SAT scores. Didn't get in anywhere, because I didn't apply properly. All my friends were going to Ivy League. At that point, the only experience I had was either working in account, as account counselor for a nonprofit, or giving out flyers at a cellphone store in South Brooklyn, in Brighton Beach.

Artem Mashkov:
I went and I started working a cellphone store. I worked there for literally seven days a week for nine months straight, picked up the business like Malcolm Gladwell's Ten-Thousand-Hours of practice. Then the partners were leaving. They're like, "Hey, do you want to buy instead of business? We need money to start a new one." My mom made a terrible business decision. Hindsight, it was great. But at that point, it was terrible.

Artem Mashkov:
I would advise her against it. She invested her life savings into her son, who mess up applying to college because he didn't bother to send his transcripts in on time in a business that he's only learned for nine months. Like I said, at that point, terrible idea. This was in 2007. I paid her back within seven months. I insisted on giving her interest because I wanted to make sure that it was a business transaction.

Artem Mashkov:
Then 2008 hit. Everybody's like, "Oh, shit," retail, everything was very, very difficult. At that time, I just like, "Okay, how do I use this to my advantage," because nothing ... It's like matter. It doesn't go away. It just gets shifted, that barely gets shifted. What I ended up doing is I expanded when the leases were so low, because retail shut down everywhere.

Artem Mashkov:
I ended up going from South Brooklyn, into North Brooklyn, and we opened up a store in North Brooklyn in Williamsburg in 2008, essentially. We locked in a 10-year lease. I was also able to hire a bunch of people from Wall Street who are getting paid like 80K, but I was able to hire them for 40K is didn't ... That was the market for that. I ended up getting all these high quality people, and basically grew that business.

Artem Mashkov:
It was a wireless franchise, still active today, still active to this matter. We grew that business to up to 12 locations. We survived two recessions, basically, and we survived Amazon. We did that by really focusing on service and customer service. If you go on Google right now, and you type in Paging Zone, we have, by far, the best reviews out of everybody.

Artem Mashkov:
That allowed us to survive during COVID, too, because what we started doing is we ... Once again, was like, "Oh, people not going to the stores. There's less traffic. What do we do?" Well, we knew the people that are coming in. They really needed help. We're like, "Okay, we'll just do micro IT services." Instead of we're not going to sell as many phones, but a lot more people need Zoom setup on their computer, because they don't have an IT department on site anymore.

Artem Mashkov:
We ended up actually doing really well during COVID, too, because we were in such a service and we were setting up IT. That's the story of my base and it became essentially passive income. That's where I learned managerial accounting and managerial finance. I ended up actually dropping into school. I ended up going to Baruch College after I already bought the business because I'm like, "I don't know how to do any of these hard skills."

Artem Mashkov:
I need to learn. I graduated with a degree in entrepreneurship and small business management from Baruch College, took me around five years because I was working, still physically working in retail. Then the problem with franchises and franchising Verizon is they tell you how much you can expand. Essentially, if you're doing well, they don't care. It's like you go get one more and more locations. They have to give you locations.

Artem Mashkov:
It has to be in the plan. We had all this money coming in. We couldn't use it to grow the business. We couldn't reinvest it. We weren't allowed to sell online. We started doing Angel Investing. That's how I got into Angel Investing. I did a couple of hospitality plays. I have a vegan creperie in Williamsburg, little chalk. It's my favorite pet project. Then I have a couple of other dating skunks, most of them did not work out. Selling them worked out really well as long as you win more than you lose.

Artem Mashkov:
I think that's the rule of investing. Real estate, real estate worked out pretty well, especially with what's been happening recently. Yeah. That's how I got into Angel Investing and just had money pile up and I don't like it sitting there.

Alex Song:
That's an incredible origin story. Now, all you know, here you are. First COO and now CFO of SwagUp. That's incredible. It's an incredible origin story. Have all of your company's been based in New York?

Artem Mashkov:
Yeah. Pretty much because I was very big into physical business at first. Then I had a company I started DevTribe that was based in New York, but we also had offices in Ukraine and Poland. But overall SwagUp was the first remote business. Although even though my companies are based in Europe, I always liked working from home more because you can really focus a lot more and just power through the day and get things done.

Artem Mashkov:
Yeah. SwagUp I would say was the first remote company and then I have another Angel Investing right now. The convoy, they're based in North Carolina.

Alex Song:
Yeah. That's fascinating. How's the remote experience then? I mean, obviously, with the pandemic, most of us had to essentially force ourselves from physical and proximity to some distributed work. How has that been? Maybe specifically with respect to just hiring, hiring your team, hiring a finance team, building out SwagUp from day one?

Artem Mashkov:
SwagUp from day one is we had an office in New Jersey, Union City, which is five minutes away from midtown New York. But overall, I'm a big proponent of making friends online. One of the best ways that I grew my initial business in retail is because I was on Facebook, and I connected well on my high school friends, and I was always socialized, throw parties. Then I would just like, "Hey, come buy things for me."

Artem Mashkov:
I was already making friends a lot. I used to play a lot of video games as a kid. For me, making friends online, wasn't anything new. I would make them either play sports in person, or I'll make them playing video games online. I think it's not very different. For SwagUp, we had people that were comfortable with being online already. We had people that were tech savvy. It was a very easy transition.

Artem Mashkov:
All right. Now you don't have to commute. Cool, thank you. I think there's a lot of downfalls to remote work. But I think the positives really outweigh. We have people with various disabilities that makes it easier for them to interact within a fully remote environment. Whether before, yeah, sure, you could be remote, but now you're the person that's remote while everybody else is in the office.

Artem Mashkov:
But now everybody is on equal footing and everybody's remote. You sound like, "Tom, let's Zoom him in from Ohio while everybody else is in a conference room." I think in a time where talent is constrained, and it's very difficult to hire, opening it up to remote employees ... We have employs in 27 different states right now.

Artem Mashkov:
Opening that up, besides timezone differences, I think has been a big plus, especially with opening up to people that have disabilities or have issues coming to the office for various reasons, people that have kids at home, or they want to spend more time with their kids, I think it's a lot more inclusive. Now, is it harder to build culture? Sure, absolutely. But I think that inclusivity really beats out the difficulties.

Alex Song:
Do you guys have a physical office anywhere?

Artem Mashkov:
Yeah. We have to. We deal with physical goods. We do have a warehouse and Piscataway, New Jersey, 40,000 square foot warehouse, and there's some office space there. Then we have a corporate office in Florida. That's it. I think long-term, we'll have satellite offices. They're like day camps, less work more fun. We need a place to hug each other and high five each other and then get creative and brainstorm.

Artem Mashkov:
But I think it's going to be less of the work, work that gets done in these offices and more of the play. I think that's the solution. That's the seatbelt. I always compare remote work and in-office work to horses and cars, and an absolutely cars are better. But you have to invent the seatbelt beam, you run traffic lights, there's also traffic. There's all these benefits that are very, very obvious, but then also obviously you have to mitigate the risks.

Artem Mashkov:
I think satellite offices in various cities, that's going to be our approach to it so people can still interact and feel they're a part of the team.

Alex Song:
That's awesome. I think Ramp is in a very similar spot right now. We have folks in probably, yeah, 25 maybe 30 states. They are mostly working remote. We have an office in New York. We also have a smaller office that will be opening up soon in Florida as well. The idea is just how do we get pods of people in some of these other locations to come together and, yeah, high fived each other, just hang out and build the culture remotely. Yeah. That's very cool. How many employees do you guys have now?

Artem Mashkov:
We have 225 employees right now. We roughly doubled in size very careful with expansion. I would say even too careful. But that's the cost of being customer-funded. But yeah, we're at 225 roughly right now.

Alex Song:
Of the 225, how big is the finance function?

Artem Mashkov:
Not that big at all. We have a very, very lean finance team. Besides finance, I also have legal reporting. Technically speaking, there's five departments under me. We don't have a COO. I take the functions of back office operations, and we have an SVP for physical operations. Right now I have an accounting team with roughly three people and director of accounting. Then I have one FP&A person. Then I have a finance ops function, where it's one director and six people there, too.

Artem Mashkov:
This is just recent. Before that, we got to 22 million with two people in finance. That's all thanks to SaaS, honestly. But yeah, we run very lean. Finance has been on the backburner. That's also just because I'm very much a player coach. I'll go in there. I know how to bill everybody. I built Verizon Wireless for 10 years. If after billing Verizon Wireless, I could bill anybody. But now if you want to grow and want to scale, we started to build that on more robust team.

Alex Song:
Wow. Two people, and now you've got quite a whole host of accounting, FP&A, FinOps et cetera. What is kind of each of the respective teams do? Accounting, I think we kind of all know what that is. FP&A, sounds you've got a guy, financial operations and whatnot. Team of six seems pretty big. What are they in charge of?

Artem Mashkov:
I'll give you a little bit of an outline. The way I like to explain it to our new hires is there's almost three branches similar to government or even similar to Time. Financial operations is the present, accounting is the past, and FP&A is basically the future. Accounting is also the controls and checks on the other teams. Then finance ops, that team is large, mostly because our business model. Let's say, a traditional player in our space we'll have 10 vendors.

Artem Mashkov:
We have up to 500 vendors and around 200 of them active at any one point in time. On the flipside, we also have over 4,000 B2B customers, which is an incredibly high number, and then just I'll give you some numbers. We've processed two and a half thousand invoices in the last 30 days, where there's close to 3,000 payments. Then on the flipside, for the bills, we have over 2,000 bills and 920 payments to those bills.

Artem Mashkov:
That's all finance operations. Our DPO is very low because we try to pay our vendors right away, because we want to make sure that we get the goods right away. We do just in time. We have zero inventory. It's all inventory. That's purchased just in time. The efficiency of the finance operations is critical. We pay a vendor late, they're not going to ship us the goods, or those goods could just go out of stock, because there's other players buying for those goods.

Artem Mashkov:
Yeah. That's basically why finance, and same thing. We also don't start orders until the clients have paid us, which means we need to build them as quickly as possible so we can lock in the cash and we don't have to underwrite the order and get it out. That's why that bills teams are rather large. Not to mention that these orders are always in flight.

Artem Mashkov:
We have a little bit of agency style where we collect prepayments and then there's a lot of change orders that happen because something went out of stock or a client changed their minds like, "Oh, you know what? Can you actually move this logo three inches down?" Well, we can but then you would have to use it on ... You have to get a different product to do it on. Do you want to get a different ... There's a lot of change orders. That's why this finance ops function is the most robust one.

Alex Song:
That's incredible. I mean, your business I mean, it's quite a logistical undertaking. I mean, obviously, it makes sense. Of course, thousands of invoices, a lot of vendors, you've got merchants, you've got customers, et cetera, tons of money going back and forth. But also just sheer physical goods. I'm sure you need ... Is there a separate team that does physical distribution logistics, and I guess you can call it operations and that's a whole separate team?

Artem Mashkov:
Yes. Yes. Absolutely. Yeah. We also have a separate purchasing team. Our purchasing team is actually an ops. They not so much care about the cost, as they care about the efficiency of the order going through. We want to make sure that our margins are good overall. But the way I like to describe it is for ordering from us like ordering from GrubHub, it's where you want your food, you want in 45 minutes, you don't want your money back in 45 minutes. You want your food.

Artem Mashkov:
If you don't get your food, you're going to be hungry. For us, purchasing actually is an ops function and it's all about how quickly and efficient it is and, obviously, the distribution. When I spoke earlier about our team being 225 people, it split off into thirds. A third of that is physical operations and warehouse, and we own the logistics, which is an incredible benefit and incredible nightmare and headache.

Artem Mashkov:
A third of the team was just that, logistics and fulfillment. A third of the team is technology, product team and engineering, because we are very tech heavy, otherwise, we wouldn't be able to survive in this industry right now at this scale. 95% of companies are under $2 million in revenue in this industry, because they don't have the technology and they're not able to scale out. They just have a traditional agency model.

Artem Mashkov:
Then the other third of the team is finance and sales and marketing and design and all of these corporate functions, I would call them. Yeah. We have a whole entire team of physical operations.

Alex Song:
Got it? Well, I think the time has come. Let's talk about your SaaS stock. I mean, this is a tremendous business that is extremely complex. You've scaled it over the last five years, quite tremendously. What is enabling you to do all of this with a very lean team, obviously, one that you're growing now? What do you like, what you dislike? Yeah. Tell me about how you're enable all of this growth?

Artem Mashkov:
I mean, it depends different things for different teams. A lot of our stuff is actually built on Salesforce. We've managed to convert Salesforce into an ERP system, because very early on, that was the only system we could afford to be an ERP system. We're looking to move over from that now, because things are busting at the seams.

Artem Mashkov:
Our accounting is done at QuickBooks, once again, not the most robust system for what we're trying to do at this stage where we've just grown so fast. But some systems are pretty scalable, and pretty repeatable. How we were able to process literally thousands of bills and make them accurate? Very early on, I just saw people sending credit card numbers in email, say, "Hey, just charge your card."

Artem Mashkov:
Then the purchasing team was also doing the payments. I was like, "Whoa, whoa, whoa, hold on a second. I know how this game is going to go." Then I started auditing our charges. Of course, there was Best Buy charges on there and this. If you think about the fact that we have 250 vendors, at that time, and there's X times employees, we're not doing proper, like KYV, I guess, Know Your Vendor.

Artem Mashkov:
They have random employees and these mom-and-pops like, "Oh, credit card number, let me get a PlayStation 5, PlayStation 4," or whatever it is at the time. A lot of fraud going on, obviously, and very hard to track because there's so many invoices, and so many numbers coming through. I'm like, "Okay, how do I solve this?" We were using American Express at the time. I call American Express, like, "What do you guys have for me? I need to solve this problem?"

Artem Mashkov:
They're like, "Well, we have a partnership with bill.com, you could offer virtual credit card numbers." I'm like, "Don't connect with bill.com." Now every single invoice, I shut off all the credit cards. I literally turn them off, issued new cards. I said, "Hey, if you want to get this paid, it has to go through my department, through this one person, send them the request, and then he's going to issue you a credit card the same way it's going to go through your email you're going to have."

Artem Mashkov:
But the way it is it's locked to that invoice amount and expires in 30 days. They could steal the card. I don't care take it. If it was already been used there's nothing you can do about it. Then obviously, we were matching the cash out to bill.com. Couple of issues there, not every vendors accepting American Express. There's this stigma with American Express that they charge higher fees, which is true or not true in certain cases.

Artem Mashkov:
The fees that you're charged by your merchant service provider depends on the benefits your credit card provides. The higher the benefits, there's Visa, MasterCard, they charge higher fees, they're American Express. If you get level three processing data, the fees could actually be lower. Anyways, American Express has the stigma that they charge higher fees and a lot of mom-and-pops just don't accept it.

Artem Mashkov:
That was always a problem. Actually, that's when I was like, "Okay. I guess we'll throw it on Chase, but then I have to still order that Chase Card every time because then those vendors." I'm like, "What am I going to do issue a separate employee Chase Card for every single vendor that doesn't accept American Express?" The thing is I don't get a choice on these vendors because they have products that we need and we actually need a lot of these mom-and-pops because they can faster, they can do it higher quality.

Artem Mashkov:
It's not I'd be like, "Okay. Let's tell you it's just fun that they don't accept their payment method." But that was a nightmare. Then that's I connected with TK from your product team who wants to [inaudible 00:25:12] with me. He's like, "Hey, you guys should probably use this." Then he's like, "Use Ramp." I'm like, "Okay, yeah, cool." We got Ramp. I'm like, "I could create a separate card for every single vendor, and it's a virtual card, and I could lock it only to that vendor."

Artem Mashkov:
I'm like, "That sounds great." It's not as good as like per invoice. Do you guys don't have that function at that time? But I'm like ... At least, if I see fraudulent transactions, I'll be like, "This is the vendor that's doing this." I can be like, "Hey, you guys got a clean house. You got to look at your employees or who had access to my card?" Yeah. I on boarded Ramp.

Artem Mashkov:
Then what ended up happening is I was originally going to just use it for that. Then people start traveling or using it or paying for McDonald's and stuff like that for corporate dinners, I guess. Isn't that sounds terrible now? But I remember [inaudible 00:26:06]. McDonald's is a corporate dinner. Then it was coming up with American Express.

Artem Mashkov:
I'm like, "This is impossible to reconcile. This is a nightmare. Nope." I started turning off American Express for our ... even our executives. I'm like, "You're using Ramp now, because it's going to be easier for me to track. I don't care, just use that." I didn't even want to use it for that purpose. But once I saw how easy it was for this, I was like, "Use it there."

Artem Mashkov:
The reason I didn't want to use it is because here's another tip, by the way, anyone that has American Express, if you have a high bed or variance, a lot of mom-and-pops, if you're spending all of it on AWS, or whatever, or even Starbucks, it's not going to work. But if you have a lot of mom-and-pops, they're getting charged high merchant fees, because they haven't negotiated a good rate.

Artem Mashkov:
Because of that, there's more space for cashback. What American Express is actually able to do, use their Plum Card is they're able to analyze your spend. Basically, if your merchants are paying high fees, you'll get a pile of cash back from them. I was able to lock in 2% cashback for American Express, which I'm sure, Alex, nobody offers anymore at scale.

Artem Mashkov:
Capital One offers it with their Bitspark, but they top you off at 60K, I think, credit lines. Then I think Citibank has it with a double cashback. But that's only a personal profit. Besides those two, nobody else offers 2%. I was able to negotiate that. This almost like, "Okay. I want to use the 2% because that's going to get the most cashback."

Artem Mashkov:
But Ramp being easier to track and validate, and allowing me to hire less people to do all of this was worth it more so than the 2% versus the one and a half that that's offered. I told you earlier, I was going to tell you the story of how your product is better than even though the deal is not the best, but the product is so superior that I was essentially forced to use it.

Artem Mashkov:
I love it ever since. We've grown. Our spend has grown 10X with you guys. When I'm originally talking to you I said, "We're going to give you 50K or 60K a month or something like that and just out of my control, because the product is so good and put more and more spend your way."

Alex Song:
Well, thank you so much for that very strong endorsement. I love it. It's safe to say that we are your favorite vendor of all time, right? I'm just kidding.

Artem Mashkov:
No, no, no. Hold off. Hold off. You're not far off. I think the only other SaaS platform that I've used that is close to you in terms of user experience is Square. I've used that for [inaudible 00:28:42]. Square has an incredible user experience, their POS system and growth marketing. But besides that you guys, Typeform, Trello and then I'm a big fan of Google Suites, just I really loved them. But yeah, I think by far in Fintech, you guys and Square are probably my favorite two companies in terms of user experience.

Alex Song:
Amazing. Well, thank you vote of confidence and that endorsement. I think user experience, customer experience is super, super important for us.

Speaker 1:
You are listening to FinOps Today, a podcast from Ramp.

Alex Song:
Maybe switching gears a little bit. Let's talk about a topic that might be top of mind for a lot of our listeners. We're recording this in mid-Feb. There has been a little bit of chatter on the Twittersphere about early stage companies, startups, employee compensation, equity options. I think the CEO of Bolton may or may not have started a fire store somewhat controversial thread about that. I was just curious.

Alex Song:
Do you have a view on talent? It's a tough hiring market, compensation et cetera. How you treat everyone well and fairly. Any thoughts about something that's probably top of mind for a lot of folks these days?

Artem Mashkov:
Yeah. I mean, we're actually doing this process right now ESOPs. We just had a 401(a) done by Carta, another great product, a big fan of Carta, great user experience. Don't want to do so much with the market share. But yeah, we're doing ESOPs with Cooley. I think, yeah, at a certain stage, people don't care about money as much. Because once you reach a certain point, okay, cool. But they want equity, obviously.

Artem Mashkov:
Now, the trick is, are they getting overpriced equity or not? We're bootstrapped. We're considering raising. That's because we ... In order to get to where we want to get, we want to get there earlier rather than later. It's hard to get there earlier if you're just using operating cash flow. But overall, I think that there's a lot of grandstanding, and saying something is a good deal, when in reality, it isn't.

Artem Mashkov:
I think there's not enough financial education for employees to realize when something is a good deal, or not a good deal. If you're being given equity at a valuation that's inflated, and you're being told to borrow money to pay for that equity, that might not be a good deal. That's fine as long as you're not pretending like it is. I think that if you're going to treat employees fair, treat them fair, and not in words, but in actions, and in reality.

Artem Mashkov:
I think that, overall, we need ... people need to listen to more podcasts like this, actually, because financial education. We're very good at content marketing. We're very good at attention grabbing. A 10-year-old get a million views on TikTok, but a 40-year-old doesn't know how taxes work. I think that's the problem. I think some savvy people, or ruthless people are taking advantage of that. There's not a lot of transparency when it comes to equity and how that works.

Artem Mashkov:
I'm not saying that it's other companies are doing it better. I think there's a lot of companies that are taking advantage of the lack of financial education. But it irks me more when companies are pretending they're acting in the employee's best interest, and they're just doing the same thing, or possibly even worse. That will be my comment there.

Alex Song:
Yeah. Absolutely. I mean, I think financial literacy, financial education, employee education is super, super key. I mean, it's super top of mind, especially if you're growing quickly, or hiring quickly. Oftentimes, a lot of folks just don't know what they're getting themselves into. How much of your time? I'm curious. How much of your time do you spend on stuff like this, stuff like this being payroll, HR, equity, compensation, et cetera.

Alex Song:
It's a little bit of a different mindset, obviously, than processing invoices and managing payables, accounting, et cetera. Do spend a lot of time on HR related topics?

Artem Mashkov:
Actually, yeah. Like I said, I'm not a traditional CFO. I'm very operationally heavy CFO, which means that before we hire a chief people officer, both town and HR rolled up to me. For me, those departments are near and dear. I was just having a budget discussion with them the other day, and I'm like, "It's very hard, because I'm very biased towards you. I have to be extra hard on your budgets, because I know that internally, I think that you guys should get all the money."

Artem Mashkov:
I'm a firm believer that your product doesn't matter. Great, you guys have a great product. You know why you have a great product? Because you have a great engineering team, and you have a great product team. If the minute you guys take away that product team, and that engineering team, your product is going to fall behind. Same thing, you guys have great customer service, it's because of the team.

Artem Mashkov:
The only thing of value and this I learned for retail and hospitality, you can have the most incredible food in the world. But if your service is trash, you're not going to be a good business. Same thing in retail, you could be selling the best product. You could have the iPhone. If your service is trash, you don't have the right people, you're not going to make money.

Artem Mashkov:
For me, I think that if you're investing, wherever you're investing is going to call people first. Then what you want to do is you want to maximize your best people. That's why SaaS is there to augment not to replace. Yeah. We spend a lot of time on this. Like I said, we had a very lean back office team. It's taking us some time to line things up to get the 409(a) done and all of that, but we're doing leveling up all the time.

Artem Mashkov:
There's a lot of inflation, obviously, which is affecting people's salaries. There's a lot of jokes around that, "Hey, I didn't get her seven and a half raise then I lost money," and all of that. I think that's going to be top of mind. Look, everybody's been hit by the great resignation. The thing is, it's not always financially connected.

Alex Song:
Absolutely.

Artem Mashkov:
Yeah. For me, that's the only thing that matters in a company. It's a virtuous circle. I think Richard Branson talks about is that your employees take care of your customers, your customers take care of the company, and the company has to take care of their employees. It's not like customer's always right. No, no, no. Your employees are always right when you're the leadership and you're the company.

Artem Mashkov:
Then your employees make sure that customers are happy that your customers pay you to make sure the company is happy. I think that's the only thing leadership should be thinking about is HR and talent, not sales, not anything else, because all of that will come if you have the right people. If you have the wrong people, no matter how great your product is, they just won't call. They just won't work.

Alex Song:
It's fascinating. I mean, if you had to pick, it's the almost picking a favorite child of all the different functions that roll out to you and we talked about compensation, HR, payables, et cetera, accounting, if you could spend more time and dedicate more resources, say, I gave you extra bandwidth 30% more bandwidth, what piece of your function or piece of your business would do you want to focus on more at the moment?

Artem Mashkov:
Yeah. I mean, I think removing obstacles, removing blockers, once again, I think it's very hard to find good talent in a market like this, because just talent and sourcing is broken. People sourcing is broken. Companies, especially at a young stage can't measure performance. I think all of that is very, very difficult. What I would do is once you have good people in your company, just do everything possible in removing blockers and making their focus be on something that they can impact and make it worthwhile.

Artem Mashkov:
I think FP&A actually has a lot to play in there, because they're the ones that are predicting the future, which is going to predict ripple effects or blockers. Right now, we're grown FP&A function, and then I have another department underneath me, which is business ops. We're thinking of building an internal consulting team, basically, ex McKinsey BCG type folks.

Artem Mashkov:
I know, McKinsey always gets a bad rap for being ruthless, and destroying universes. But that's only because we've incentivized them to destroy universes. If we incentivize McKinsey to do good, or McKinsey in place to do good, they'll do good. That's essentially what I want to do. I want to build a scene that will just ... If people are able to do what they're good at, they'll be happy. If they're happy, they'll stay longer, you'll reduce churn, and they'll also bring people in.

Artem Mashkov:
That's basically what I'm focusing on for the rest of this year is free myself of getting that 30% so I can build this business ops function and remove blockers and just empower the right people that we have in the company to do their jobs more efficiently and better.

Alex Song:
That's great. 2022, anything that you're excited by? It doesn't have to be business related or anything else. Anything in the news, in the markets, in a macro that you're particularly interested in following or excited for the year?

Artem Mashkov:
I think ... I'm Russian. I'm very cynical. I'm excited for a lot of the bullshit to be uncovered right now. I think there's going to be a squeeze on companies with bad unit economics. I'm excited that the companies are doing things the right way are going to get a big boost from this. The companies that are cheating the system essentially, or covering up things, or Band-Aids, they're going to come on down.

Artem Mashkov:
Then I'm excited for that town that's going to become available that then we could move into the companies that are doing things right. I think there's going to be a big opportunity. We've seen this already happened. There's a bunch of layoffs and that's terrible. But once again, there's a labor shortage. Layoffs without a labor shortage is terrible. Layoffs with the labor shortage is great, because those people are going to be taken out of bad situations and put into good situations. I'm super excited for that to keep happening. I think that's going to continue.

Alex Song:
Well, it's been great. I mean, it's great to have you on this show. I really enjoy the stories. I really enjoy everything that you've been able to tell us about your company. It's been a real pleasure to have you on the show today.

Artem Mashkov:
No. You too. Thanks Alex. You've been a great host and I'm excited to see the show grow. Joe Rogan I think is within spitting distance. You're almost there, just got to get more controversial.

Alex Song:
That's right.

Artem Mashkov:
Get the farmer bro on here. Let's see what he has to say.

Alex Song:
We have dozens of listeners, dozens of listeners demanded. All right. Thank you so much.

Artem Mashkov:
Have a good one.

Speaker 1:
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