Recession-Proof - a podcast by Ramp

Keith Masuda Transcript
[00:00:02] Keith Masuda: There are always people who get nervous especially in the economic downturn. Our job as finance professionals is to not only tell the truth about the financial situation of the company, but provide comfort to those people to make sure that they understand where we are.
[00:00:19] Alex Song: Welcome to Recession-Proof, a podcast by Ramp. Join us for in-depth thought-provoking conversations with finance leaders, executives, and investors on the current state of the market, and what this means for your business through 2022 and beyond. I'm your host, Alex Song. Hi, Keith, welcome to the podcast. It's been great to have you on the show, Keith, who currently heads up finance at Modern Treasury. Great to have you here.
[00:00:50] Keith: Thanks, Alex. Happy to be here. So excited.
[00:00:53] Alex: Definitely. Keith, first of all, I think congratulations are in order. I think earlier this week you guys announced a partnership with Goldman Sachs, which is really cool. Obviously, we saw it all over the news and in the Twittersphere and whatnot. What can you tell us about that?
[00:01:07] Keith: It's an exciting partnership with Goldman Sachs. We're partnering more with them at a technical level to get customers to work with Modern Treasury and Goldman Sachs together, especially those customers that are mid-market and up and who are moving money as part of their business. We think it'll be a huge win for us, for Goldman, and for our customers.
[00:01:31] Alex: That's really cool. Anyway, congratulations are definitely in order. It is a pretty big announcement. We definitely wanted to make sure that we flag that. Let's back up a little bit. Why don't you tell our audience a little bit about yourself, who you are, maybe your career path, and then maybe we can delve a little bit more into Modern Treasury.
[00:01:49] Keith: Sure. Of course. I actually started my career out in public accounting, spent six years at EY mostly doing audits of high-tech and biotech companies here in Silicon Valley. After that, the last 10-plus years or so, I've been working at various private companies, maybe notably Palo Alto Networks, which I was there for about four years, joined when it was private, and stayed until three years after it was public, probably something in that range.
Also spent four years at Segment, which later got acquired by Twilio, and a couple of other smaller stints, most recently at a company called Sqreen which was acquired by Datadog, and now Modern Treasury for a little over a year. Almost a year and a half now.
[00:02:38] Alex: That's very cool. That's quite a journey. Obviously, a lot of household names, I would say, at least in Silicon Valley. That's awesome. How did you find the team over a Modern Treasury? How did you and Dimitri find each other?
[00:02:50] Keith: Oh, man. Investor in Segment introduced me to Dimitri and the team. I had told them that I was looking for a new role after the Datadog acquisition. He said, "I know you don't want to look at FinTech, health tech, EdTech, this other kind of vertical SaaS companies, but you really should talk to Modern Treasury. They got something good going on there." I was like, "Okay, I'll talk to him." I talked to Dimitri and was really excited about what I heard about the company and the team. I felt like we had really good chemistry. Just kept the conversation going and lo and behold, here I am.
[00:03:24] Alex: That's really cool. Why don't you tell us a little bit about Modern Treasury because I think it's not consumer-facing, obviously, it's a little bit non-intuitive, you're deep in the infrastructure. I would love to hear a little bit more about what you guys actually do.
[00:03:38] Keith: Right now we're a payment operations platform and we help companies who move money as part of their business or part of their product to move money at scale. That's a pretty big problem and a pretty big challenge for many companies. A lot of times it's very manual, they have a lot of infrastructure, they build their own software, they have a lot of people monitoring these payments. We abstract that challenge away. We allow our customers to connect directly to their bank through APIs and move money through APIs basically.
[00:04:12] Alex: As another finance professional, I think that's definitely a problem that deeply, deeply resonates with me. Actually, the reason why I was a little late dialing into this was actually I was literally on my phone. I was on my bank app, I was releasing two wires for Ramp. I'm like, "Man, there's a little bit of a key [unintelligible 00:04:28] where everything is more or less automated, but occasionally you have to be the guy that goes in and releases certain wires." That's super cool.
Obviously, you're trying to automate a lot of this at scale. You're trying to make sure companies are able to grow. Out of curiosity, what is the most challenging-- What is the most amount of volume or the number of transactions that you guys have had to help someone move?
[00:04:53] Keith: In the hundreds of thousands a month. We have customers who are moving hundreds of thousands of transactions a month and billions of dollars a month. Customers can really scale up on Modern Treasury. We have the capacity to handle that type of volume.
[00:05:07] Alex: Very interesting. This is currently across multiple money payment rails or is it on specific-
[00:05:14] Keith: Oh, yes. Multiple payment rails. We do wire, ACH, RTP, we have some non-US payment types, even some customers who are doing check.
[00:05:26] Alex: Got it. Very cool. I think leading finance at a FinTech company, I'm sure it is a unique challenge in and of itself. Tell us a little bit about just what it was like when you first joined, what has happened since, how you've grown the team, and maybe give us a lay of the land as to what your team looks like today.
[00:05:48] Keith: Sure. When I first joined, I was the first finance hire, everything was either outsourced or done by Dimitri, our CEO. We were probably only 35 people at the time that I joined, and now we're close to 190, 200, something like that. Some 200. The team has grown quite a bit. The finance team has also grown. We have today two people on FP&A, and two people on accounting and myself that make up the finance team.
[00:06:21] Alex: That's really cool. How big is the company now overall?
[00:06:24] Keith: Just under 200 people.
[00:06:26] Alex: Just under 200. Got it. It is still quite a tremendous trajectory. From I think you mentioned 30, 35, that was about a year ago, to 200. That's pretty steep trajectory. That's great. I'd be remised if I didn't touch on this topic, which is really the core focus of season two of this podcast, which is really just recession-proofing a company or recession-proofing a business.
In 2022, the environment is a little bit different than it was last year or two years ago. It's a little bit of an understatement. To grow the company and to take it almost 8X or whatever, in the last year, certainly has his own challenges. Now that you're in the midst of 2022, any changes with respect to company strategy, hiring strategy, growth, or the finance function?
[00:07:18] Keith: I think obviously, that growth and headcount came with a growth growing cash burn, but it also came with more revenue growth, and it also came with our ability to maintain our product, build out new products and features, and build new products. We accepted that trade-off. I think the thing that we're thinking about now is just making sure we're hiring carefully and we are still investing but in the right ways, and closing down investments when they don't make sense anymore, and investing in new areas where we think that there's some promise. I think we're being more cognizant now of the spend, and more cognizant of the hiring now that we're in mid to late 2022 now.
[00:08:07] Alex: Absolutely. I know this differs depending on the company, the industry, and the sector. Are there specific metrics that you guys pay a lot of attention to how they might differ from the metrics that you've looked at last year, and how might you and the finance team offer differentiated guidance to the rest of your team?
[00:08:30] Keith: Oh, man, that's a tough question. I think for a SaaS company in our space, a lot of the metrics are very, very similar. I think what happens though, for us specifically, is as we grow, we're looking at more unit economics and efficiency metrics. When you're fairly small, the efficiency doesn't matter too much. You're just trying to grow the top line and you're just trying to figure out how to get revenue to grow. We're still a little bit in that phase.
As we turn the corner here and get bigger, we are starting to focus a little bit more on CAC and LTV and some of the more traditional SaaS-efficiency metrics, maybe magic number, and trying to make sure that those numbers start looking good, or we can start seeing repeatable success with those numbers within benchmarks.
[00:09:19] Alex: This is actually an interesting topic. I know it was a tough question. The reason why I know is because I think you hear even at Ramp, we still grapple with what should the NorthStar metric be? Depending on the team that you work on or your function, it's not always going to be the same one. There are going to be folks who are a little bit more concerned with top line, folks who are going to be more concerned with gross profits and contribution, and then there are folks mostly in the finance side of the house you're a little bit more concerned with just the bottom line, net income, cash burn, et cetera.
It's certainly a question that even we grapple with. I'm sure folks everywhere grapple with. Do you find that it's been easy or hard to chat with non-finance folks inside Modern Treasury about the P&L and the financial metrics, or is that a little bit easier of a conversation because these guys work at a FinTech company?
[00:10:10] Keith: No, I think it's the same everywhere, I feel. I don't know about you guys, but I feel like it's the same everywhere. There's some level of education linked to with the employee base so that they know what's going on in the business. For example, once a month we have all-hands and I present the financial metrics, very high level, but I try to dive into a topic or two about the metrics.
Last month we talked about CAC and what is CAC and how is that calculated. What is our CAC? I think the month before we talked about LTV. We've talked about things like ARR, how is ARR calculated, when do we count ARR, things like that. We've really tried to bring the employees along and educate them through the process here so that they are educated and they know what's going on. It's pretty complicated.
[00:11:02] Alex: It is a pretty complicated business. These metrics could get quite nuanced, but I think my experience totally resonates with yours as well. Every time where I've done one of these presentations about something that's happening on the financial side of the house, actually, they get to be quite well received from non-finance folks. It's good. The educational process is fun. It's also part of the reason why we're here, I suppose.
[00:11:27] Keith: Yes, we get really good marks on the finance presentation that we do every single month. Employees are really happy that we do that. I think it helps that it's just more than just spitting numbers out at them and telling them everything is great. They can learn and evaluate for themselves.
[00:11:43] Alex: Yes, for sure. We'd love to hear some of your thoughts about just preparing for a potential macro downturn, and making the company potentially more robust. What are some of the things that you guys are thinking about, maybe not thinking about, as you think about navigating the rest of 2022 and 2023?
[00:12:04] Keith: Sure, yes. I think, actually, a lot of what companies and we did is pre-downturn. One of it was we're in a really fortunate position where we raised capital at the end of 2021 and early 2022. I take it for granted a little bit. I know that we have a pretty strong balance sheet, and I know others are not in as a fortunate of a position as we are. The things that we're thinking about are just being a lot more careful on headcount, thinking a lot more about where we're spending our cash, trying to look a little bit more at efficiency metrics, and trying to make sure that whatever investments we're making are going to return either on improving the product, maintaining the product, or driving revenue growth.
I think there's just a lot that can be done. Right now we're trying to balance all the things that we could be doing with trying to come out of this cycle in a very strong position. We're trying not to have too much of a knee-jerk reaction, and we're trying to be thoughtful about the things we're putting in place as opposed to going to any extremes.
[00:13:15] Alex: That's good. That's really good to hear. As part of my job, almost, I actually speak to a lot of our customers and their CFOs and heads of finance and whatnot, and generally speaking, there has been the attitude, which is certainly sometimes there is pressure, internally, externally, to extend your runway and to cut, burn, and whatnot.
I would say, by and large, the commentary has been and is if you had a decent corporate strategy and you had a healthy execution, then you should just keep doing that. There shouldn't be anything broken. If your strategy was working six months ago, presumably, it should still be working. Then, of course, at the margins, at the [unintelligible 00:14:02], you can always cut costs. I think that that's generally been how most people have proceeded in this environment.
[00:14:11] Keith: Yes. I think too it was unfortunate, but early in 2020, we had that COVID dip. I think what happened was a lot of companies were slow to react at that point in time to whatever was changing in the market, maybe probably for a lot of different reasons, but I think now, in 2022, we're seeing companies, they've exercised their muscle in 2020. They know what happened and how to play out some of this stuff, and so they were able to set themselves up to be successful in 2022 without a lot of big cuts or a lot of big changes.
[00:14:48] Alex: Just curious, are employees, whether finance or non-finance folks, are they concerned about macro downturn or recession and what, if any, of a role do you play in terms of further education or calming them down, I suppose?
[00:15:05] Keith: I think no matter what, employees are always concerned. There are always people out there who've been burned at a company. At Segment I had a recruiter who sat right behind me, and she'll know who she is. She would turn around, everyone's gone, and would be like, "Keith, do we have enough cash?" Because she was at a company that ran out of cash just prior. There are always people who get nervous, especially in a economic downturn.
Our job as finance professionals is to not only tell the truth about the financial situation of the company, but provide comfort to those people to make sure that they understand where we are. Some of the things we do is we tell the team exactly where we are with cash balance every single month. We flash it in that monthly all-hands meeting, and we also talk about, I'm not sure if you're familiar with it, but default dead versus default alive. We tell the employee base where are we, do we think we can get to cashflow positive based on our current growth trajectory, our current cash burn, and the remaining cash balance?
That gives people, I think, a lot of comfort. Frequently, we have people coming back to us and asking, "Are we still default alive?" We try to run the business so that we are default alive and we won't need to make huge cuts or big changes in order to continue to survive. I think that gives the employee base some comfort, and the fact that we're transparent, I think, helps as well.
[00:16:30] Alex: Yes, that makes a lot of sense. Now, I want to ask you, you were a working professional during the great financial crisis back in '08, '09, '10 and then the slow recovery, obviously. We'd love to hear your experience then. What, if any, formative experiences you have, one, and two, what, if any, similarities or differences were there? I can think of a lot. [crosstalk] you were doing then and what you're doing now and just the reaction and just everything. We'd love to compare and contrast a little bit.
[00:17:08] Keith: Man, it seems like so long ago now, 2008, 2009. You're right, it was just such a protracted period of recession and slow growth. [laughs] Holy cow. I think that that experience has really made me much more conservative as a finance person. I think seeing so many people losing their jobs, so many people losing their 401(k)s and things like that and people not being able to buy homes, people not being able to sell homes, the housing prices just collapsing and liquidity completely drying up, something that I've never seen before where even if you have the cash to apply for a loan or you have the job, you just can't get it.
No one will even give you a loan to buy a house. I think I bought my first house during that time. It was a foreclosure and the process of going through that was just so painful. Fortunately, it was a good deal that has turned out well 10 years later, but man, during that time, credit was so frozen. Nothing could be done. It was really tough. The builder went out of business, basically. What have I learned from that? I think really, in my bones, I'm a lot more conservative because of that experience.
I actually remember I was here in Silicon Valley for parts of 1999, 2000, 2001 as well, and I remember all the paper millionaires that were made with the bubble and then how everybody lost everything in the bus. I think both of those experiences have really shaped how conservative I am on the finance side. Part of it is I look for companies that are going to be conservative a bit. One of the things when I talk to Dimitri and the team is trying to figure out, "Are we going to be freewheeling and burning cash like crazy? How diligent are we going to be about monitoring cash, and how prudent are we going to be about growing the company?"
At the same time, I will also probably be more prudent and I will probably also raise the flag a lot more to the exec team or to the company or to whoever to make sure that we're trying to take the right actions and avoid a situation where we're caught in a poor economic situation and a poor financial situation for the company at the same time. Yes, I would say it's had a huge impact. It's psychological for sure, if nothing else.
[00:19:38] Alex: Yes, definitely. I think it's interesting the generation of folks who maybe graduated into the dot-com bubble and bust, and then there are the folks who graduated into the '08, '09, I think there's always these cohort effects that persist for decades. A lot of it is psychological, has to do with risk aversion, it has to do with attitudes with respect to personal finance, and obviously attitudes about work as well. [inaudible 00:20:09] job versus are you super trigger happy with going to a high [unintelligible 00:20:15] early stage startup and whatnot. I think those cohort effects are very, very interesting to see. What about your day-to-day? Back in '08, '09, what were you doing compared to what you're doing now?
[00:20:26] Keith: Well, actually '08, '09, I was probably still at UI doing audits mostly. It was actually an interesting time. You get a really good cross-section of what companies are doing and how they're responding to the environments. As an auditor who wasn't planning to stay in big four forever, you couldn't find a job and a lot of our peers were unfortunately laid off, even high-performing ones.
Usually audit firms and professional services in bad times they'll trim the fat and people who aren't performing, they'll let those people go, but the cuts were so deep, it was people who you really respected and thought were performing well and really could contribute to the company who were the ones who were leaving. That was quite a shock, I think, to a lot of people.
The day-to-day it felt like things were grinding to a halt in terms of what was going on and what we were doing. It felt like a lot of business was going away, a lot of pricing pressure from our customers, our clients. We were seeing it right in their companies as well. Lots of layoffs, lots of pressure to perform. Man, there's no real day-to-day in auditing, to be honest. Every single day is a little bit different, which is interesting. I think that's what kept me interested for so long, and that's what keeps me interested in startups, quite frankly.
[00:21:49] Alex: Definitely. What you mentioned is interesting, here's what's interesting. We're in a weird confluence of events today. It's a very, very unique confluence of events. Here's what I mean by that, and actually I'd love to hear if you are seeing the same thing, which is, one, for getting jammed by our vendors in the sense that everyone is faced with wage inflation, price inflation, and the labor market to a certain extent is still very, very tight.
Our vendors are charging us price escalators and they're resigning and renewing contracts and they're charging us, they're like, "The inflation premium. We have to charge you 9% more this year than last year." I'm looking at this, I'm like, "Wow, that's very aggressive." At the same time that this is happening at the same time there's so much negative sentiment, I suppose, around a slow down, around less production, and weakening, employment, and all of this stuff.
Is inflation now so high that demand is actually contracting? It's such an interesting confluence events where I'm looking at. I'm getting sticker shock from a lot of the vendors who are jamming me. At the same time, the sentiment is also very tepid is definitely very different than '08, '09, which is the description that you just gave, which is everything was taming. Have you been seeing that as well?
[00:23:13] Keith: Oh, for sure. It's a very different situation and it feels very strange even on the hiring side. I remember 2008, 2009, even after that, it was very easy to hire. There were so many people out there looking for jobs. You open one wreck and you get 100 applicants and a lot of them are very or highly qualified for the role. Now you open a wreck and nobody applies.
Even though theoretically you would think that there are people out there who are looking for jobs, and sure, there are companies who are doing layoffs and things like that and people who are looking, but it's just not nearly to the same degree as it was back then. In my mind, similar to what you were saying, it's just like it's something doesn't click, the situation doesn't match what I feel like I know about the economy and how things are performing and what the Fed is telling us and things like that.
I guess they're not telling us that unemployment is high, so that's okay. That jives. They are telling us inflation's high and that there's risk. By raising rates we could see it inflate. If we're not in a technical recession now, then we could be.
[00:24:24] Alex: The next topic I want to do a slight deep dive on is just team building. You've been at a few different places, you've built out a few different finance teams. What does that process look like? Who are some of your first key hires and what is the path look like now for you? You mentioned you have two accounting professionals, you have two P&A folks, what's next for you as you think about starting a team, growing that team, and then scaling that team?
[00:24:50] Keith: Sure. I think very early on I try to evaluate what pieces do we need. I've done this zero-to-one finance team building a couple times and I try to start with, I'm here now, what support or what do we need as a company or as a team and who can I bring on to fill those roles? I also think I look a little bit at the market to see like, "Am I going to be able to hire the people that I really think I'm going to need?"
Sometimes that's really tough, but after that, then I try to look for the best possible people for the company I'm at. Everybody's always trying to find the best people or the A players, no one wants to hire C player, generally speaking, but there's only so many A players out there and there's some who are perfect for an early stage startup, and some who are perfect for a large public company.
I try to find the A players who are good for my company, my stage, and I try to make sure that the talent density of the team very early on is very high, because the first few or handful of hires you make are really going to make or break whether or not you're going to be successful as a finance team, and really help to establish the brand of the finance team, or how the rest of the company views the finance team. It's just very important to make those first few hires very selectively.
I think we're now at a point where we will bring on maybe more specific roles to the team. Very early on we probably bring on more generalists and those who can oversee broader areas of responsibility. In the future though, as we continue to grow, we'll probably bring on more specific roles. Maybe a payroll person or things like that and maybe try to figure out what skill sets we're missing as a team and try to bring those into the fold as opposed to trying to find maybe the best person who can oversee broad swaths of the organization. I think that will change as we move forward here.
[00:26:58] Alex: That makes total sense. Actually we added our first payroll specialist right at the 200 mark, and I think it could not happen one minute too soon actually. It was a nice time to have brought on an additional person to help alleviate some of those issues.
[00:27:14] Keith: That's a perfect time. I think 200 people and depending on how complicated you are, how many remote employees you have, that's a good ratio.
[00:27:22] Alex: Definitely. One topic I am super curious about and I have to ask you about, which I'm sure you have some interesting observations. Let's delve back the clock. Palo Alto Networks. Would love to hear about the process of joining the company when it was still private. You're being there, building out the team, building out the company, and then eventually taking that company public which nowadays I think everyone knows it, but I think probably at the time not many people knew what you guys did or who you were. Would love to hear about your experience there. Having spent a couple of years and then seeing through the IPO process.
[00:27:58] Keith: Oh man. That was quite a wild ride. I joined as I think an SCC Reporting Manager or something like that basically working on the S-One. I was pretty scared, honestly. I knew the team, I knew some of the Palo Alto Networks people from my auditing days, I knew some of the new people who had joined from Sun Microsystems. It gave me a lot of comfort that I knew these people. If I take myself back to that time, there were not companies going public at that time. I think-
[00:28:30] Alex: Actually, sorry, give us some context. When you joined, how big was the company and then how big was the finance team at that time?
[00:28:37] Keith: Yes, great question. I think we were probably in the 300 to 400 people range at that point in time. The finance team was maybe 15 people, I want to say. There were some contractors and some temporary resources in place, but it was relatively small team to gear up for an IPO, and small but mighty team. I would definitely say small but mighty team.
A lot of what we had to do over the next 9 months before IPO was really built out the capabilities of the team, really sharpen the close process, really sharpen the reporting process, really look at the accuracy of the numbers and streamline a lot of things so that way we could not only issue the S-One but report 10-Qs and 10-Ks after when we were public. The whole team really had to come together to do this huge lift.
I remember one of the first things we did when I joined was called a huge meeting together with all the people and said, "Hey, we've got to actually turn these historical financials into quarterly financials that we can put in MD&A or something like that. Man, that was a huge process. The whole team was basically there and I outlined the steps we needed to go do to accomplish that. To their credit, man, everybody just picked up and worked really hard and got all of that done.
That's usually one of the most difficult parts of the process because you're running as a private company, you're doing things, some accrual basis, some cash bases. Sure, you might have some audits under your belt, but the annual numbers are the only things that are accurate at that point in time when the company's growing so fast but to their credit, we were able to do it.
To be honest, it's a lot harder at a hardware company, which Palo Alto Networks used to be, it was like almost all hardware and support and a few subscriptions at that point in time. Now it's largely software and subscriptions, but at that point in time it was largely hardware, and that type of business environment it's much more difficult than a pure software company.
[00:30:44] Alex: That's an interesting comment. Why is that? Was it just investor appetite or is it actually something intrinsic about the financial reporting or the accounting?
[00:30:52] Keith: It's intrinsic. You have inventory, you have warranty, you have spares, you have the margins you have to worry about. As a software company, sometimes you have less pressure on margins and you can discount, but with hardware you have to make sure that you have good gross margins, you have shipping logistics that you have to worry about. You may have, probably getting a little bit in the weeds here, but you might have to have a crosstalk and like all different things.
You have distributors that you have to hold inventory and sell onto end users. You have import export controls that-- You still have import export on software companies, but it's not nearly to the same degree as hardware and especially in the security space where the government definitely doesn't want you selling some of these things to certain embargoed countries. The complexity is much higher with the hardware type of product. I think even with consumer hardware or consumer wearables and things like that, the accounting, the finance, all the processes around that are much more difficult and challenging.
[00:31:55] Alex: That's interesting. I love it. First of all, for this podcast, we love digging into the deep, deep nitty grit of these details. Do not worry about that, first of all, but that's actually a very interesting commentary. You would claim that, it does sound extremely complicated and and non-trivial, but at a place like Modern Treasury, like you just told me, for a single customer you might be processing hundreds of thousands of billions in transactions. I think you're saying that even then, reconciling that and managing around that, in some ways is actually easier than managing finance and accounting for a hardware company.
[00:32:32] Keith: Oh, definitely. The discipline you need as a business is much higher at a product company. You have to pay suppliers on time for your hardware or they will shut you off and then you will have nothing to sell. If you have a third party manufacturer, there's a couple large ones that that many companies typically use and if you can't pay your bills or if you don't pay your bills on time, they will shut you off and if they shut you off, you can't sell and then you can't complete your cash conversion cycle.
It's a pretty big risk. The streets, investors, they don't like to see you losing money on hardware. People don't really like that but with software, it's a lot harder to see but it's a lot easier to make money on software and charge more premium gross margins, and it's a lot harder to see where you are losing money on an individual customer basis on your P&L.
[00:33:26] Alex: I love it. The number of times that the words cash conversion cycle that have been said on this podcast is actually not very high. I'll never get off this soapbox which I think working capital management is so, so, so important. I think a lot of the times, particularly for high growth tech, SaaS startups, I think it's often an area that that is probably under appreciated. Whereas certainly for a hardware company, you have to focus on your inventory, your sales cycle, cash conversion, and how you're managing working capital. This is an area that I personally always pound the table on [unintelligible 00:34:12] managing that.
[00:34:12] Keith: Yes, definitely. I think the equivalent for a SaaS company is probably like CAC payback or something like that where you're trying to keep it within 12 months or something, whatever benchmark you've set for yourself. That's probably the closest analogy, but it's like you're not on a razor thin timeline. It's like, "We need the cash back in 12 months." It's not like, "We need the cash back this week." It's a much different situation.
[00:34:36] Alex: That's awesome. I didn't realize that we were going to be talking about this, but this is awesome. That's a super interesting observation. I guess back to the IPO process, coming back full circle process. You went through this process, it sounded like it was obviously a big undertaking and obviously kudos the team for getting that through. Another area that I'm pretty curious about is during one of these fairly extensive processes, you've got consultants, you've got bankers, you've got advisors, I'm sure you've got PR and comms people as well helping you draft all of the S-One and MD&A and all of that stuff.
By large, are these guys actually helpful? You're paying them tons of money, but it sounds like your team was probably doing a lot of the work, how helpful were some of these external folks?
[00:35:20] Keith: I think for us, we try to actually do a lot ourselves, probably more than most companies, and maybe part of it was because we had a pretty strong internal team. Our CMO at the time was top notch and he was great at writing a lot of the information that we shared with the street. This wasn't people's first rodeo at Palo Alto Networks. We leveraged a lot of internal resources to do a lot of the work and we probably leveraged external resources less than most companies.
I have mixed feelings. I think there is a place for outside consultants to help with things, and if you can be very defined about what you need and monitor them and keep them on track, then it can really be a huge benefit. For example, we used consultants to prepare us for SOX 404 compliance. They weren't working on the S-One, but they were working on a work stream that we needed to be a public company.
Having them there was really helpful and it was expensive but unfortunately, based on our time of timing for IPO and based on our size and everything, we had to be compliant basically two weeks after our IPO, and so having them on board and having that extra bandwidth was extremely helpful during a time when we were really, really crunched. I think that there's a place for it, but I think you do have to be careful.
There are a lot of people or a lot of firms out there who are looking for business and looking for companies who are trying to go public and trying to sell you something and it may not turn out as well as you'd hope. You do need to be able to manage them and you do need to be able to figure out what are the best pieces to give these service providers. What are the best work streams or best things that you can give them to work on?
[00:37:10] Alex: Yes, this is fascinating. I could talk about this for hours. I could literally talk about this for hours. Maybe we can talk a little bit about your time at Segment as well. I think for a lot of our listeners, probably another household name or near household name, certainly I think a lot of people here probably use Twilio. I would love to hear about your experience there and another company that obviously exited slightly different type of exit and also very different business model, much more traditional, which is B2B SaaS. What would have been there making that transition and building out the team there?
[00:37:50] Keith: Surprisingly it was a little bit of a culture shock to me, moving from Palo Alto Networks to Segment. I knew what I was getting into, but I couldn't remember. It was too long. I'd spent four years at Palo Alto Networks, maybe more. There were 3000 plus people at that point in time when I decided to leave and I joined a-
[00:38:10] Alex: Actually you went from you said 300 or 400 to 3000.
[00:38:14] Keith: Yes. We were pretty big and public. Going to Segment, it was a sub 100 person company at the time and obviously private and earlier stage. It was quite a culture shock. I was the only finance and accounting hire. I remember the HR team being very gracious to me and including me in their meetings as part of their team so I wasn't just a one man show just floating on the island by myself. They provided a ton of support to help out as well.
It was quite a culture shock. It was funny I came from Palo Networks where we were building hardware primarily, and where we had maybe data centers and things like that to completely like serverless infrastructure. We had nothing on-prem basically, other than maybe some routers to make sure the Wi-Fi was working. It was quite an eye opener, especially moving from--
There is this culture gap I think between companies that are in the South Bay or Peninsula and those that are in San Francisco especially. This shift has happened over the last decade or so where the companies in San Francisco these smaller very nimble software type startups, even a lot of FinTechs in the city. The culture is just so much different than what it is in the South Bay. I just remember going, "Wow, this is crazy."
I was probably one of the youngest people at Palo Alto Networks and I became one of the most experienced people at Segment. It was a very interesting time. Obviously not experienced with Segment, but just overall career experience, definitely on the higher end there. Quite a shock.
[00:39:56] Alex: Wow. That's crazy. Well, Keith, I promised that I would not keep you here all day, although I feel like we could chat about this and stuff like this all day. Maybe I'll leave you with one last question. Reflecting on everything that you've seen, it sounds like you've had a wealth of very interesting and really cool experiences. This is definitely not your first rodeo, definitely not.
Coming to Modern Treasury, being the first finance hire, building out the team, and hopefully seeing it through over the course of time scaling up the team. We're at the confluence of a couple of different macro headwinds and tailwinds and whatnot. Would love to hear what's the one thing that's keeping you up at night, and one thing that you're really looking forward to in terms of the rest of the year or going into next year?
[00:40:42] Keith: Oh, man, what's keeping me up at night? Again, fortunately, we're in such a great position where we've got the cash on the balance sheet. If I'm totally honest, there's not too much. I think, for us as a business, we need to keep the go-to-market flywheel moving and growing revenue, and that is very important, we're super focused on that. Of course, as you mentioned earlier, the Goldman Sachs announcement, our partnerships with banks is extremely important.
For me, those are the two things that we are really focused on as a business. I wouldn't say either of them are keeping me up at night yet, but those are the things that that we keep our eye on. I'm really looking forward to seeing how some of this stuff plays out, especially in the global economy. I think obviously there's some pain left to go as the Fed continues to raise rates. It's always interesting to me to see how these things play out, people earlier on were saying, "Oh, soft landing, soft landing."
That's exactly what they were seeing in 2008, 2009, I don't know if you remember, but all the news reports were like, "Oh, soft landing, soft landing," and being pretty hard. I'm really interested to see how this plays out. I think, we'll have a much better view in the next few months as to what the Fed is going to do next year, as we close out this year. I think that will inform how things turn out here.
It's probably terrible to say, but this is the time when the finance team really shines. This is the time when you're really glad you have the finance team you have in place or you really have the experience that you need on your side. Hopefully, myself and my team we can step up to the challenge here.
[00:42:29] Alex: Very cool. That's a really great note to end this on. Well, ladies and gentlemen, Keith Masuda of Modern Treasury. It's been really, really great having you here. It's been awesome spending the last 45 minutes with you chatting about your experience and the macro environment. Thanks so much for the time.
[00:42:47] Keith: No, thank you, Alex. I had a great time.
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