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're speaking to Mary Liu who is the CFO of Applied Intuition. Hi, there. Welcome to the podcast.

Mary Liu:
Hey, glad to be here.

Alex Song:
Before we start, I just want to say we have to spend a little bit of time at least on this podcast talking about hybrid work, working remotely, going back to the office because, prior to us starting to record, I know that that was a topic that we talked a little bit about. But I know that that's something that a lot of folks are thinking about, are very eager and that's one area that I'd love to pick your brain a little bit on.

Mary Liu:
Yeah, absolutely. We have a pretty strong philosophy on that. So, I'm happy to chat about that.

Alex Song:
Very cool. But before we delve into all of that, not to jump the gun a little bit, why don't you tell us a little bit about your own background? Where you came from, what you did before your current role and then let's start there.

Mary Liu:
Absolutely, yeah. So, my background is in the capital markets. Let's see. So, I studied econ at Yale then had some private equity experience in Hong Kong. Then I was in Manhattan for about six, seven years working across equity derivatives, mergers and acquisitions, venture capital, I was investing in Series A to C technology companies there. Moved to Silicon Valley after that, joined Google for the Google Assistant product. I lasted about a year in a big company and then joined Applied Intuition over three years ago now where I've been leading our finance and operations teams.

Alex Song:
How is the transition from that? Because I can empathize with that a little bit. I spent the first part of my career as well on Wall Street, would love to hear a little bit from you in terms of making that transition from more of an investing role, banking, into the operating role.

Mary Liu:
Yeah. So, I think when you're in the advisory side, you're the coach, you're the enabler, you're never really the player. And I think, Alex, you probably are understanding of that, you're just on the sidelines. It's very interesting, it's more transactional work but, to be honest, I underestimated culture, I underestimated the importance of team building, culture building when I was in New York City, it's also a very different environment as well to be working in.

Mary Liu:
So, coming to Silicon Valley and I think landing at Google was interesting, I think I learned how a blue chip company operated. But really, the growth and the learning at Applied, at this current company, really showed me the importance of getting it right in terms of getting the culture right and everything else flows from there. It's something that I would have never said, honestly, five years ago but it's truly something that matters a lot. The intention that goes into culture is what I think has led to our success,

Alex Song:
We'll try to talk a lot more about that particular topic but let's go first into Applied Intuition. What do you guys do? What do you make? Who are your customers? Would love to hear a little bit more about the company itself.

Mary Liu:
Yeah. So, Applied started in 2017 and we sell simulation and other infrastructure software to other companies building autonomous vehicles and autonomous systems. So, think of us as a horizontal tools provider to the autonomy space. Our customers range from automotive OEMs to construction, mining, agriculture. So, our customers are, for example, Toyota, General Motors, European OEMs. We also have a pillar in US Defense where we work with the US government as well. So, we're essentially a horizontal software and infrastructure provider to the autonomy ecosystem.

Alex Song:
And is this safe to say, and I don't know a ton about this space, I promise you, is this safe to say that, when you think about your customers, they might be anyone from the Teslas out there to the self-driving Ubers, Ford is working on one of the automated stuff. Is it like that or-

Mary Liu:
Yeah, so just to get into it a bit. So, Tesla, for example, has their own simulation systems internally, they're more of a verticalized approach. Think of them as equivalent to Apple, they want to own all parts of the process. For us, our simulation software and other products don't just necessarily need to work with customers, we're building L4, L5 systems. L4, L5 is just the level denomination of autonomy that means fully self-driving or fully autonomous where, imagine, you can just lay back in the car, go to sleep and the car will drive itself. We don't just have to work with customers who are building that, we work with customers who are building what's called L2, L3 systems as well. So, if you have heard of ADAS systems, so Advanced Driving Assisted Systems, anytime that there's software in the car, enabling the car to do something in an autonomous way, we can test and validate that with our tools.

Mary Liu:
So, as a result, to answer your question, our customers actually are not the more fully verticalized companies like Tesla, Uber, who actually ultimately spun out that that division, we work with mostly automotive OEMs although we do have other venture backed self-driving companies that you would know about such as Kodiak, for example.

Alex Song:
Got it. And maybe to level set our listeners a little bit, maybe tell us a little bit about milestones. Whether it's funding, growing the team, how big are you guys, which states and what countries are you guys in.

Mary Liu:
Yeah. So, we started in 2017, we raised around, almost every year, we're now at our Series D which was completed last year in June, we raised $175 million, our valuation is at 3.675 billion. In my perspective, when we think about fundraising, we actually didn't need the money but what makes sense is to negotiate in a position of power. I think, when the market is hot, you want to time it in such a way that you're not desperate for capital but you're in a position where the business is growing really well and it makes sense to take that capital to then further accelerate growth in the business. In terms of our offices, so our headquarters are in Mountain View, California, it's where our engineering team sits, it's where the leadership team sits.

Mary Liu:
We also have seven other offices worldwide. So, we have a presence in LA, Detroit, Washington, DC as well as Munich in Germany, Seoul, Korea, Tokyo, Japan, Sweden as well as a new office we just opened. It should come as no surprise because these are the automotive hubs of the world. And given the way we sell our software, it's important to have people in those local markets, who understand the customers and who can work with them very closely, whether it's in the native language or just face to face. And so, sending people from Mountain View to these locations, it just made more sense for us to have either offices or subsidiaries in those markets.

Alex Song:
Yeah, very aspirational. Hopefully, one day, Ramp can also have a multinational global presence but that's really, really cool. It makes a ton of sense. You're working with auto OEMs, et cetera, you have a few of these hubs around the world, that's really, really cool. Maybe let's switch gears a little bit, going back to our core crux of this podcast and the core topic, I would love to hear about your journey. Now, joining the company a few years ago, building out the finance function, maybe tell us a little bit about what that early role looked like, what your day to day looks like and how it may have evolved over the last couple of years.

Mary Liu:
Yeah, it's a great question because I think, in any early stage company, when I joined, we were in the 20s of people. We were quite early on, there was no one at the company who had what I would have said is an extensive finance background. Our CEO had worked in finance before but is really a core product and engineering person, just stellar in that arena. So, it's actually a great opportunity, I thought, to join as the first finance business hire and I was wearing a lot of hats.

Mary Liu:
And in that early stage, just to take a step back, we sell licenses for software, it's high margin software, enterprise licensing, we deliver on premises at times and what that translates to, actually, is not a complicated P&L. So, what we were able to do in the beginning is outsource our accounting to staff accountants, junior accountants who would help us do the monthly close, who would make sure our numbers are correct, so that was sufficient.

Mary Liu:
And then we built the team as needed. I think the conventional wisdom is that accounting needs grow with business needs. But I think what's worked for us is because our P&L is not as crazy as if we had hardware or a lot of skews as a CPG company or as a marketplace or even as Ramp where you may need funding, capital funding to support your business, we just build great software for other companies building autonomous systems. So, for us, it was actually not that complicated in terms of our P&L and, as a result, I think we've been able to leverage what I would call a hub and spoke model.

Mary Liu:
So, the hubs are the people internally who are high powered, high cognitive accountants, really just general athletes who can then manage outsourced teams. So, as a result, our internal finance and accounting teams have not grown linearly with business needs. If anything, it's been lagging that growth because we outsource both the labor intensive manual processes as well as the various specialized processes like tax or ASC 606 implementation. We hire consultants to do that for us because many of these things are either one time or episodic to the year, it doesn't need to happen on a daily basis.

Mary Liu:
So, from that, actually, our current team size is, frankly, only two people. We had one person leave for personal reasons but now we're at two people. We were three so, now, we're at two. It's myself and another accountant. And we're looking to grow the team, we're actually in the market to hire out on accounting as well as corporate strategy and FP&A. But aside from that, I actually think we've been operating sufficiently so far. We went through our first financial audit last year with Deloitte and that was a relatively streamlined process. We implemented ASC 606 with external consultants and we're a very healthy accounting and accounting operations business right now. So, I think from the ground up, we've discovered that this hub and spoke model have actually worked where the spokes are the consultants and the hubs are the people internally, the general athletes who are managing the spokes.

Alex Song:
That's fascinating. And give us some context, how big is the company overall?

Mary Liu:
Yeah, sorry. So, if you go on LinkedIn, it looks like we're two people because we're actually very quiet about our overall team size. We're seven offices worldwide and I can say we're over 200 people, I can't give you the exact numbers but we're in that hundreds of people. And recently, given our acquisition, we acquired a company based in Michigan called Mechanical Simulation or known to the industry as Carson so that adds team size as well. But yeah, we're in the hundreds currently.

Alex Song:
You are, without a doubt, without a doubt, definitely the leanest finance team I've ever come across. And yeah, two folks with some contractor and outsourced vendor help for a company that is north of 200, let's say-

Mary Liu:
To shout out Ramp, the reason we're able to do this is operational efficiency and making sure we continue to keep an eye on processes. A company like Ramp, using your systems, using your approvals process for expenses have helped us reduce time spent in the space. So, we're always on the lookout for good automation tools. And just a concept here, stuff that I really, really believe in which is, a lot of times, capital flushed, venture backed companies in Silicon Valley have misused the term scale. Scaling to a thousand people is not scale, scaling is doing more with less.

Mary Liu:
So, how do you continue to revisit your systems, your processes to make sure that you're actually doing more with less and not just growing the team because you have the money to do so? We really believe in building a sustainable business where the unit economics makes sense and we just wanted to poke holes at the conventional wisdom that some teams necessarily have to grow linearly. So, we don't have to do that and, with the automation tools out there, we've been able to not do that.

Alex Song:
That's fascinating. I want to talk a little bit about these tools. But before we do that, I actually would love to hear from you. So, I think you're definitely a much stronger proponent of maybe outsourcing and getting outside help on some of these functions. You already noted a few of them, tax is one great example, we also outsource a lot of that work. But what are some things that you view as non-negotiable or maybe nothing in terms of keeping in house? I'll list a couple. Maybe it's payroll or maybe it is payment operations or maybe it's budgeting and planning and forecasting. Which of these things do you think, "Okay, I definitely want to outsource," and which of these things do you really want to keep in house? Because I'm sure a lot of our listeners are going through the same exact struggle. I know I do, every day.

Mary Liu:
Yeah, it's a constant learning experience for me but just to put a framework around it. So, I think of the office of finance as five main functions and this is accounting, this is FP&A, this is corporate development strategies, so the M&A side of the house, tax and treasury and then investor relations, so the board decks, the fundraising. When you think about these five functions, some of these can't be outsourced. Investor relations, you're not fundraising through a consultant. FP&A and corporate strategy, you're not able to outsource that because you need to fundamentally understand the business and have even a sense of ownership in the business to make the kind of decisions that would lead to a positive outcome.

Mary Liu:
If you try to outsource M&A, that just makes no sense, right? You can't expect a consultant to think about corporate strategy and M&A like that. So, the two things left here are accounting and tax and treasury. I think the reason that these are easier outsourced is because they're very technical but also ended up being very transactional. There is a right or wrong way to do a ASC 606 implementation. Yes, there's an art and a science to it too but, with one or two strong general athletes in the company, you can bring the cognitive thinking in house and the technical implementation can stay outsourced.

Mary Liu:
So, just going deeper into that, within accounting, you can think of it as AR/AP, accounts receivable, accounts payable. So, getting paid and then paying the people we need to pay. There's the monthly close which, if you unwrap that, is essentially making sure the numbers that go through the business are actually notated down correctly and reported correctly so that, when you're auditing, you don't get in trouble. And then within accounting, too, you can think of it as staying on top of the changing rules that the US GAAP puts out but also making sure that, if you have international presence, those numbers are recognized correctly. So, the consolidations and reconciliations process. I think you need a couple of strong general athletes internally and I've said this word a couple of times.

Mary Liu:
What I mean by that is someone who … This is what we look for when we look for accountants in house. People who are proud of their craft who have this genuine curiosity of accounting as a language of business. Not everybody thinks that but there's this intrinsic motivation we look for for people who are like, "I want to understand every part of accounting. I want exposure into every part of this process and ultimately become a controller or ultimately become a CFO." And I think those people end up being amazing program managers at the heart of it to manage some of these other avenues. Like if we do a tax R&D study or to manage AR/AP folks and people who literally manually put invoices into bill.com, for example. Does that have to be in house? Probably not.

Mary Liu:
And then to your question, Alex, about payroll, we actually still use an outsourced payroll consultant. They're connected to our Gusto which is a platform we use and they pay our US employees by running payroll every two weeks. That's also a process that is very transactional, it's either right or wrong, there's very little strategy to it. So, I guess at the heart of it, it's where there is strategic element, it's non-negotiably in house. If it's purely transactional, even sometimes purely technical and transactional, that can be outsourced as needed.

Mary Liu:
And then for the international subsidiaries, now, I oftentimes get questions like, "So, you have a GmbH, you have a GK in Japan, you have a Korean entity and a Canadian entity, how do you manage all that?" There, it's also transactional and technical. So, we use Reuter, for example, for Germany, we use Tricor for Japan, we use another small company called Nucleus for Canada and Korea. I'm happy to talk to these names a bit more but they've been really great partners in executing payroll, tax compliance and International Accounting Standards into our books.

Mary Liu:
So, that's actually been very helpful so far. Not to say though, our team is not too small. We are looking to hire a senior accounting manager, we are looking to hire another staff accountant, we're looking to hire internally on the corporate strategy and M&A side as well. So, we're looking to grow the team but I think the time is right currently to grow that team. And I think, if we were to do it earlier, it wasn't necessary and, as you can imagine, we're a very lean company so our recruiting resources are allocated to, perhaps, engineering or product and right now, I think, we can now prioritize some of these accounting and finance functions.

Alex Song:
That's fascinating. I think what you're saying is definitely very reasonable because, in my mind, I was exactly thinking of that as the follow-up question. Which is, wow, holy cow, these folks have seven global offices. I can only imagine building out the finance team, duplicating that seven times across every jurisdiction. So, I think it makes a ton of sense that you'd want to outsource at least that component of it across borders because it could get quite challenging if you kept it all in house.

Mary Liu:
Yeah. And don't get me wrong, I do spend a lot of time thinking about how we invest in the business, what are the core KPIs that we should be looking for across offices, across our entities. So, from my perspective, that's something that we do absolutely need in house and I need help on so that's why we're hiring now for it. But sometimes I think companies at the early stage also fall into a false precision and planning. You need to stay nimble, you need to stay flexible to how the market moves. So, if you're planning, honestly, even more than six months out, it's tough. It's tough to say that you're not falling into the trap of false precision. That then is coming from a place of luxury, I think our unit economics have done well, and so far, we're not fully cash strapped, we're actually quite cash productive so it's been helpful given that. But on the other hand, it's you need a plan but you have to be ready to throw that plan out the door if market dynamics change.

Alex Song:
Yeah. And going back to one of your earlier comments, what would you say have been some of the tools in your toolkit, whether it comes to scaling, getting operating leverage and getting the automations in place, who are your some of your favorite service providers, who are some of your favorite vendors? Ultimately, that's our north star, right? I think the idea of Ramp is just to give folks a [inaudible 00:20:08] operating lever so that you can focus on the more non-negotiable, much more of the strategic stuff. So, we'd love to hear who else is in that toolkit?

Mary Liu:
Yeah. And I just gave you a sense of our systems and I always find this interesting because I like to know what other finance teams use as their stack. We quickly migrated from QuickBooks to NetSuite once we had international entities because, as you know, QuickBooks doesn't recognize international subsidiaries. Within NetSuite, there are modules that help with some automation so really getting your NetSuite migration done well. Again, we use a consultant to help with that with someone internally to program manage it and that's been helpful so far in terms of our books.

Mary Liu:
On top of that we use bill.com which has been a great tool. I think, for us, the UI is very good, the permission setups are good. It's not rocket science, it's just having a clean, hygienic process. So, for example, all legal bills have our head of legal as a first approver and then I'm a second approver. We have thresholds where, if it goes above a certain amount, we have a control that our CTO will approve. I think many of these things sound simple but it's just pinning them down and then implementing it to a system and then it just runs on autopilot.

Mary Liu:
So, we use bill.com there, I mentioned we use Gusto. We use Expensify still for expense reimbursements although we might pilot Ramp's product for that, too. One of the reasons, by the way, I think we've separated … When you think about expenses, so you think about individual employees have their T&E, their travel and entertainment expense, their meals, their fun, the fun things that they do that they get to expense and then there's the part of their job where you have to pay for software vendors. So, our infrastructure cloud team has to pay AWS. Do we have them to go through an expense reimbursement for that or do we issue them a virtual card?

Mary Liu:
So, we've separated these two classes of expense reimbursement types, we use Ramp for the class of reimbursements that's software vendor, that's recurring spend, that's the larger ticket items and then we use Expensify for T&E, for the meals, for the travel. And I think that's been working okay so far. Again, I think the time is right now to revisit these systems, make sure they're automating our workflows at scale. So, now that we're growing in the hundreds of people, do we need another platform like TravelPerk or TripActions or can we use Ramp to consolidate both T&E and software vendor spend.

Mary Liu:
So, those are the constant questions that I'm thinking about when I think through our systems. Beyond that, I would say the vendors that we use, some of the stronger contractors have come from contracting agencies. We just onboarded a contractor from an agency called CVP, they've been pretty great to work with. And we actually had, I guess I'll shout out a company called CBIC or ARC, A-R-C, they were acquired by CBIC, C-B-I-C. This firm came recommended to us by Andreessen Horowitz, one of our early investors. So, we really leverage our investor network too to get the right names of vendors and system providers that we should be using.

Alex Song:
Yes.

Mary Liu:
That is a boring topic, Alex, but these are the tactical things I look out for.

Alex Song:
Honestly, it's definitely not boring to me. This is great. Any specific, and I don't know, maybe this is getting way too granular, any specific localization, any specific vendors that you're specifically using for a specific locale? I'm sure, across jurisdictions, there may be things that come up from time to time whether it's taxation, legal, regulatory, any specific local vendors that you found to be very useful?

Mary Liu:
Yeah. So, we use Reuter, R-E-U-T-E-R for GmbH or Germany, we use Tricor for Japan and we use Nucleus, a smaller company for Korea and Canada and they've been very helpful. I think I'd recommend anyone to test them out if they're looking to build a subsidiary. If you don't have a subsidiary, we use a PEO called Deel, another venture backed company, D-E-E-L, as the employer of record for our employees in, say, Sweden, for example.

Alex Song:
Very cool. Yeah, we're customers of Dell ourselves, actually. We also have, not a hub and spoke model, we don't have international offices yet but we definitely do have quite a number of international employees and so we've been using that as well. That's very cool, that's very cool. Maybe let's shift gears a little bit. I promised I would come back to this topic. Let's talk about back to office. I know that from our prior conversations, you guys, your company has a very, very, I would say, differentiated view on this as well. Maybe let's talk about that a little bit.

Mary Liu:
Yeah, it's-

Alex Song:
How are you guys thinking about coming back to the office?

Mary Liu:
So, anytime I tell people that we're five days a week mandatory in the office, I get crazy looks. But I think what we've discovered, and we've been in the office since day one, but ever since the pandemic, we had to have a period where we close the office. There was a mandatory work from home, I think California had restrictions against even being in the office. So, begrudgingly, we had everybody work from home. But as soon as we could open, so I think that was June of last year, in 2021, we opened the offices. We had to shut down again around November of last year given Omicron and then we're now fully open as of February of this year.

Mary Liu:
So, all that's to say is, truly, the magic happens in person. And what I mean by that is the conversation, the way you make decisions, the relationships that you build with your team, none of this can be done through a screen. And I think as much as we think that communication can be done through screen, as you know, 80, 90% of communication is nonverbal, too. So, that body language, the way you communicate, all of that is lost and it's hard to say that you can build the same type of camaraderie and same type of bond within a company while remote. So, I think we've taken that to heart.

Mary Liu:
There's obviously examples of companies who's done well. GitLab is a very famous example of a company that's fully remote and has done very well, highly respected CEO and they went public, so it's a great company. But for us, I think what we've done well on our side is we recognize that we build highly sophisticated software that's never been built before. Necessarily, that leads to engineers having to work closely together in person, make these decisions in person, whiteboard in person and we recruit against that philosophy which is, if you join us, you join a rocket ship, you join a company that recognizes that the bonds that you build in person can enable better and more successful business.

Mary Liu:
And you could argue that's one of the reasons that we've grown so quickly from the past four, five years and I think we'll continue to do that until there's a reason not to. There's arguments to be made in terms of recruiting. So, if the model currently is people are demanding hybrid, the talent pool is demanding fully remote. Yes, that is a factor we consider but, thankfully, we've been able to tap into the pool of talent who then recognizes, "Actually, I don't want to sit at home all day, I want to be in the office and work alongside colleagues." And for now, we've been able to grow like that, not to say that we won't change in the future if we need to.

Alex Song:
Yeah, I think, obviously, you guys do also benefit from just talent density and the density of human capital out in the Bay Area. And I guess my follow up question to back to office, are there any considerations with respect to your global offices across different locales? How have folks outside of the Bay Area found working remotely or in the office and how did you manage that?

Mary Liu:
Yeah, we try to encourage everyone to work from the office when possible, obviously, being respectful of local restrictions given COVID. But for example, our Los Angeles office, our Washington, DC office, everyone there is in person and then we currently are changing offices in Munich so folks are in person there. And we actually just signed a lease in Sweden for folks to be in office and Tokyo and Seoul have been in office, too. So, for all intents and purposes, everyone around the world is working in person. And if you think back to telecommuting, that's not a new thing.

Mary Liu:
It's something that companies like IBM, Intel, they first were able to enable this for people to work remotely and that was fine. But then, Google came about and discovered, just like we're discovering, the magic that happens in person. So, one of the reasons, I would think, that Google has these amazing amenities and this fully flush campus to have people be there in person is because they recognize the value of people staying in person and working together. So, I don't think it's anything new or novel that we've stumbled across, it's just something that's worked in the past and it's something that we'll continue to invest in as long as the talent pool also exists that want that.

Alex Song:
Yeah, I can definitely see the difficulties with respect to recruiting but I can also see the organic interactions, the learning by osmosis and the different ways in which you can juice efficiencies once folks are actually in the office. So, it's definitely a little bit of a two sided coin, I would say.

Mary Liu:
Yeah, that's exactly right. I think that operational efficiency comes down to not just systems and processes but how people operate and the environment in which they operate. And just to be a little more specific about, okay, so how do you make sure people are efficient? One of the ways that we make sure this happens is we have a very tight onboarding system and it's not just us that says this. So, Marc Andreessen has been on our board since our Series A, when he came to visit our office to give a lunch and learn, he actually also called out onboarding and the context in which he called this out was …

Mary Liu:
So, we asked him this question which is like, "Why do companies on our stage, the Series C, Series D stage, why do they fail? What are those patterns?" And he had this great phrase that still sticks with me today which is, "Most companies at your stage die from suicide and not homicide." So, in that, what you would get from that is that it's not you think as competitors are outcompeting you, it's not the market or some external factor that leads to failure, it comes down to execution, to the internal processes that surround how your employees operate, so getting the culture right. And one of the ways you get the culture right is making sure onboarding is done right.

Mary Liu:
So, onboarding, if you don't do it well, it can take three months, six months and I think Google has taken up this understanding that like, "Oh, it will just take three to six months for someone to become fully productive." I remember when I first started at Google, I think week one or two, I had lunch with a couple folks and they're like, "Oh, take it easy. It'll take another six months for you to be fully ramped up," and that was shocking to me.

Mary Liu:
Can you imagine losing six months of productivity? So, for us, it's like, "No, we want you to be fully ramped within a couple of weeks, if not week one doing your core tasks," because what better way to get ramped up than to learn on the job and doing the work that you're supposed to be doing. So, for us, we have a very tight onboarding system. I think it's led to some operational efficiencies that have driven the business forward and have, again, led to our strong unit economics.

Mary Liu:
Another framework on culture, I think, again, this is coming from Marc Andreessen who has just given us some really stellar advice. So, one of the other reasons why you should make sure onboarding is done right and culture is done right is because, even if you're 200 people today, the next 201 people that you hire will then make up more than half the company and, therefore, become the dominant culture. And that really stuck with me as well because you have to think about that as a smaller scale in regards to your team.

Mary Liu:
So, Alex, for example, if you have 10 finance people, for us we have two, if we were to add just a few more or, for you, if you would just add a handful or more, it can easily then become the majority of your team and, therefore, a dominant part of your culture. So, how quickly that shifts is something to, I think, just be very mindful about and we've been very mindful about in terms of our hiring process and we're very proud that we also have very low attrition as a result. We hire slowly and necessarily, we invest in our people and expect people to be happy and stay at the company.

Mary Liu:
So, all that goes to where's the leaky bucket in operational efficiency? It's onboarding slowly and people leaving the company. Those can be some of the biggest costs in a productive environment and we try to make sure that those two things, people starting, people leaving, how do we really treat those two ends of the spectrum in a careful and intentional way?

Alex Song:
I love this discussion. Honestly, just over the course of the X number of years where I've worked in various industries, I think one thing that's always stuck with me is actually people will never forget their first day and their last day at a job. And I feel like I've taken that to heart because God knows I've worked at a number of different places previously on Wall Street where they did not treat that with probably the appropriate seriousness or importance. But I think that's something that we take into consideration here at Ramp as well. I think onboarding, so, so, so important and so significant. And yeah, we also want to make sure that folks are, especially for us, we're a little bit more remote friendly, I think, than you guys are, and so it also makes it a little bit more challenging to do remote onboarding on top of everything else.

Mary Liu:
Exactly and that those are the trade-offs you have to consciously make. If you go hybrid or fully work from home, yes, maybe you'll get more talent in terms of the talent who's ready to join a remote company today. But then, the cost of that is potentially a consistent onboarding process or even a good process because it's hard to learn without someone maybe next to you for engineering function or something that needs that more hands on ramp up support. So, it just comes with trade-offs and I think being intentional about those trade-offs is the first step.

Alex Song:
Yeah, totally. Maybe let's zoom out a little bit. Let's zoom out a little bit and, in your function today, to the extent that you can share, what do you think are some of the things that keep you up at night? What's top of mind for you right now? What are important projects that you're going to agonize over in the coming weeks and months?

Mary Liu:
I described the five functions of the office of finance but what I didn't describe is the overlay on that which is the hiring and the culture and I think what's top of mind for me constantly is hiring, frankly. I know I've talked a lot about outsourcing and leveraging that but hiring is top of mind. I think we are too small as a team and what keeps me up at night is making sure that we're hiring fast enough, not just in finance but also in operations as well as the entire business. Our amazing recruiting team, I'm honored to have them report to me and really thinking about how we can enable a good recruiting process so that the entirety of the funnel from sourcing to closing candidates make sense.

Mary Liu:
And that keeps me up at night because I think we've grown sustainably and slowly currently but, as the market grows faster and as we want to ramp up growth, how can we balance this quality versus quantity? We want to hire faster because we're leaving money on the table if we don't, we're going to miss out on market opportunities if we don't scale up fast, but also, we want to build a sustainable team. You can hire too quickly, erode the culture and then you've essentially sold the farm to get some short term gain. I think I just mixed analogies there but the point is we want to really be conscious of that tension between quality and quantity and that does keep me up at night, it's very much top of mind.

Mary Liu:
And then beyond that, I think, we think about the strategic roadmap. We've made one acquisition and that was Carson, it was fantastic and there's a lot of great synergies, quote, unquote, ways to work together well that we've discovered with Carson. And I think, in the future, how we want to accelerate growth by pulling forward time to hire or time to market. So, in terms of acquisition, we think about it in three main buckets of strategy. It's it a great team, is it a great product or is it a great market and, in each of these three categories, if we acquire a company, it just pulls ahead the time to realizing each of those three benefits.

Mary Liu:
So, a great team, a great product or a great market set of customers. So, really, ahead of us, I think top of mind is also what are some of the other acquisitions we want to make in that build by partner decision that makes sense and how can we make sure we're doing that in a way that isn't value destructive. As you know, most M&A ends in value destruction if you've seen the research, so how can we avoid that and-

Alex Song:
Oh, boy. Yeah.

Mary Liu:
I think, for us, with Carson, at least, coming in with a clear intention and clear plan as to how we'll integrate, not just the financials or the systems but, really, how do we integrate the team culturally and then how do we make sure the product can be integrated with ours in a way that, when we go to market, the full suite of products that we then offer make more sense.

Alex Song:
That's great. I think that really resonates with me. Same, right? Even our day to day, I think we're focused on, strategically, how do we grow horizontally, vertically and we spent a ton of time on recruiting and agonizing over hiring and spending time. I actually personally did one of these calendar audits for myself, actually, a few weeks ago. It's something that a few of our investors and board members believe very strongly in. And I was looking at my calendar over the last couple of weeks, I think I spent something around 25 to 35% of my work day just in interviews, talking to candidates and, I'll be honest, I actually think that number is a little low, I think it actually could be a little bit higher. So, yeah, it's one of those goofy exercises that I actually thought was quite rewarding and-

Mary Liu:
No, no. Actually, it's a fantastic exercise. We do that more consistently internally and, to be honest, when you said that was 25, 30%, actually it could be more and we try to aim for 50, 60% or higher of time for teams that need to grow faster. So, for us, everyone's a recruiter and we say that to hiring managers internally, we say that to junior software engineers. The idea is you not just rely on the recruiting team to find great candidates and bring them to the process, every manager is a recruiter. It comes down from our CEO, I think he's essentially our lead recruiter and I think he'd be happy if I were to say that about him because he truly is able to inspire and tell that story and make sure that we're cohesive as a team. So, it comes top down, I think it does need to come from leadership to push into the culture this ownership of recruiting. So, as a result, all of us spend a lot of time recruiting to make sure that our teams are good, stable, growing fast and people are happy and productive.

Alex Song:
I want to be mindful of your time, we'll wrap up with one last question. This could be an interesting can of worms, actually. 2022 is shaking out to be a pretty crazy year right?

Mary Liu:
Mm-hmm (affirmative).

Alex Song:
Market volatility, multiples compression, you're looking at interesting levels of interest rates and inflation and whatnot. What do you guys make of the macroeconomic indicators? What does the rest of your 2022 look like? How is it going to shake out? Is there anything that you can offer our listeners?

Mary Liu:
Yeah, I think from the capital perspective, if you looked at the total size of LP commitments to private funds last year, it was still high watermark. What that means is there's still at least a four or five, six-year horizon where the private markets are going to have access to abundance capital. And what that translates to is, as a private market, for you, for Ramp, for us, we're less afraid of macro public market conditions and, of the top 10 things that we look at, we're not trying to react to macro conditions.

Mary Liu:
Yes, macro conditions can affect our customers and their budgets but, thankfully, we're also in a space where autonomy in the R&D budgets that are allocated to autonomy aren't as volatile and aren't as, I would say, tied to what's happening today. So, these are usually two to three to four, five-year plans that get approved and our customers are running against those timelines. One of the major reasons actually is because Tesla has been so successful in deploying autopilot and really leading the charge so we're seeing our customers in the automotive OEM space wanting to accelerate that investment.

Mary Liu:
So, thankfully, our growth has been cushioned from some of those macro impacts, whether it's through COVID in 2020 or 2022 this year. So, what's ahead for us in 2022 is very much, thankfully, separate from the macro conditions, it's just heads down execution. Again, I take that comment very seriously from Marc Andreessen which is companies at our stage die more often from suicide than homicide. We're not looking out into the market, we're looking internally to make sure our execution is being done well. And it's not rocket science, it's just making sure you're constantly grinding against the targets that you have set ahead of you, supporting our customers, it's the basic building blocks and I think, for us, there's a very common sense approach that we've taken to building the business.

Mary Liu:
Is there a commercial application to our R&D efforts? Are we avoiding this trap of building what's cool and thinking that they'll come? The Silicon Valley, sometimes, has a notion of like, "Oh, let's just build something that's neat and then maybe we'll find customers." For us, it's like, "No." It's what makes sense in the market? Yes, we have a vision driven by macro trends but, today, what makes sense for the market, what makes sense for our customers and we'll build that and make sure that, in the way that we build it, the gross margins makes sense. And we can leverage software dynamics which is we build for one customer and we amortize the cost of that build across multiple customers.

Mary Liu:
So, yeah, 2022 is continue to focus on execution, heads down strategy. And again, you go on LinkedIn and we look like we're two people and we're proud of that. So, we're happy to keep things under wraps and just focus on building movements that we'll build in 2022.

Alex Song:
That's phenomenal. Mary, this was great. Thank you so much for your time, thank you so much for joining us. You, obviously, had very, very differentiated views on a few of these topics. I think our listeners are going to absolutely enjoy and love everything that we talked about. Culture, hiring, office, back to work, outsourcing, et cetera, this has been a phenomenal discussion.

Mary Liu:
No, thank you, Alex. And I just want to say, we're assertive but we're humble. And I think, for us and for me, for our team, we want to be nimble and flexible to the market. So, I'm not saying what I'm saying today is going to be the truth for the next few years. We don't have that truth with a capital T, it's really about learning and building from the ground up to then finding emergent truth to how we operate. So, thank you so much for having me on here. It was a pleasure talking through this with you.

Alex Song:
Yeah, thank you.

Speaker 1:
Thanks for listening to this episode. If you enjoyed it, please rate and review us on Apple podcasts, Spotify or wherever you listen to your favorite shows. It really helps to spread the word. Until next time, this has been FinOps Today from Ramp.