Diving deep into B2B SaaS metrics with Mohit Daswani, CFO at ThoughtSpot

Episode Description

In this episode of Diving Deep, Subscript's CEO, Sidharth, has an engaging conversation with Mohit Daswani, CFO at ThoughtSpot.

Sidharth and Mohit go deep into B2B SaaS metrics as they discuss:

How to use SaaS metrics to cut down to the truth of a business
The importance of segmenting your SaaS metrics when serving both SMB and Enterprise customers
The benefits of building a data-driven, transparent culture within Finance where the team runs at their problems
Why your company needs to maintain entrepreneurial energy as it scales
Mohit's heartfelt advice for Series B finance leaders
And more!

Show Notes

Follow Sidharth: https://www.linkedin.com/in/sidharthkakkar/

Follow Mohit: https://www.linkedin.com/in/mohitdaswani1/

Follow Subscript: https://www.linkedin.com/company/subscript/

About Diving Deep with Subscript

Diving Deep with Subscript is a video series where we dive deep and explore SaaS metrics with leading investors, CEOs, and finance leaders.

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Episode Transcript

Sidharth Kakkar
Since ThoughtSpot is all about turning data into actionable insights, I'd love your take on why do you feel it's important for a leadership team to understand metrics really well, especially when it comes to SaaS metrics?

Mohit Daswani
Yeah. So I think the best example I could give is from our recent, after three years of COVID, we had our SKO in person. We actually made it a CKO, had the whole company there. And we did two we did one here for our US and EMEA teams, and then we ended up going to India last week and doing the same there because we've got now over 200 people in India. But one of the sessions was when I did, which was called Metrics That Matter. And we throw around a lot of metrics, but ones that we take for granted that perhaps in finance that people understand ARR or NRR, etc, but I got some good input that like, hey, it might make sense just to break them down for people so they really understand them. And as you know, with SaaS, there's a bunch you could go after, but there's a few material ones that tend to be the common ones that kind of bubble to the surface. So I went through a 20 minute presentation. I defined what the metrics are, I defined why they're important, and then that's one. Two, where are public companies? Right? Because there's obviously a lot of transparency.

Mohit Daswani
Where are public companies on those metrics? And then what was quite interesting for folks is where are we relative to that? So it's good transparency around here's where we're like right there with where we want to be top decile here's, where we have some continuing maturing to do in the business. And then the last piece was, hey, what does this mean for people in the room? And tying back to, for example, for a CS person, which is you're doing all this work to drive customer engagement and retention, et cetera, ultimately, you need to be thinking about GRR, right, as one of those metrics all the way to someone in product, thinking about, for example, how do we build velocity in the business? Well, think about the product and the friction with onboarding and how do you simplify it. So I think bringing the metrics back to what they mean, why they're important, and then what can people do about them? It was quite powerful and engaging for folks, and there's a lot of great feedback from it that, okay, now I understand what that means and what I can do to move the needle. And I think at the end of the day, that's to me, the most important thing is are they empowering?

Mohit Daswani
Where it's like, okay, I get it, I get our North Stars. So, for example, it was ARR, it was Gross Margin, GRR and NRR. And then we talked about Magic Ratio given a big sales focus, and then Burn Multiple for the overall company to be thinking about our burn relative to our growth. And so I think people felt really empowered by it, understood it better understood where we are, which is motivating, and that we're doing quite well on a lot of metrics and then what they can do about it. So to me, ultimately, that's what you want, right? I think knowledge is power, and we exist in the valley where there's such a big hype cycle, as you know, and it's like, what's important? Growth's important, burn's important, this and that, forget it. Like, just focus on at the end of the day, a quality business in SaaS is easy to understand, right? And whatever the markets might be rewarding at that time, it's good to understand, but ultimately we're building towards what does a high quality SaaS business look like. And I think that's empowering for people to understand what those metrics are and come away feeling like I can go do something with them.

Mohit Daswani
And what's been great to see is we had our board meeting a couple of weeks later. We're all speaking the same language, talking about the key metrics we want to tie back to. We've now introduced in our monthly sales all hands, the concept of GRR and NRR. That to me, is it, right? It's like don't overwhelm people with metrics that they don't understand and they don't understand why they matter, et cetera. These things that connect to what people's day to day job is, and that gives some clarity. So that's why I think it's important. At the end of the day, these are businesses that you can break down to a few core metrics, right? And so you're going to be measured by that if you're a public company or certainly as any investors or boards. So we should be thinking that way as a management team. So that's how I feel. It's important and it's great when it's empowering versus like, oh man, this is some thing we're never going to reach. It's great when it's empowering and people are like, okay, if I can do this and this, if I can turn the dial on retention, if I can turn the dial on velocity each quarter, I can influence those.

Mohit Daswani
That's the best outcome.

Sidharth Kakkar
That's really cool. It reminds me of this book I read a little while ago called The Great Game of Business. I don't know if you ever come across it, it's not like super well known or anything, but it's like this person who owned a more traditional manufacturing business, but the way that he ran it is he would have the company sort of P&L as a worksheet every week or month, I forget. And you have everyone come in and fill in the worksheet and they would all have a copy of it and basically the gross profit line would be like, you have to calculate it, that wouldn't be filled in and you basically got to work through it like a worksheet. And he called it a great game of business because he basically treated it as like a game and your goal was to make the score go up, but the score was actually like the P&L, which is sort of what it is, but he made it a game for everyone rather than a game for the CEO. I thought that was so brilliant.

Mohit Daswani
I think it's great, the feedback that was there, which as a management team we get as well. We are very transparent as a company, right? Our quarterly All Hands, our kick offs, one is we want to empower people. Two candidly it's our mission as a company, which is, I know you're in the business of helping people understand their performance. Our mission is to build a fact driven world, right? So start at home and start doing that in your own business, so you can feel the power of it, so you're that much more passionate selling that to your customers. So we'll talk more. We use our product internally for that. All the metrics are visible, people can drill in, get it in real time. That's the whole idea is put it we want our customers to do that, having access to information in their own hands easily, so they can drive decisions. That obviously needs to be our mo internally as well. So you're absolutely right, we all have a bias. We obviously live in numbers, given our areas of focus, but I do believe that they're very powerful and you can cut down to the truth of a business true momentum, et cetera, by really understanding the drivers and the metrics.

Sidharth Kakkar
Sometimes people treat these as like, oh, those are things investors care about, so we're doing it for the investors. But you said something that I think is pretty spot on is like it's about building a good business. They care about it not for fun, they care about it because it reflects a good business. And I'm wondering, I suspect you've had that sort of conversation with people before and I'm curious, like, how do you get people to go from, Oh I'm doing this for investors to no you're doing it for the business?

Mohit Daswani
Yeah, I think there's a few things. One is we're all obviously shareholders in the business, right? And there's various motivations for joining a start up, including just being able to do great work, get in there, make a difference with a bunch of things. Let's face it, financial outcome and having a good outcome is also part of the bet. Joining a startup so again, rather than watching the stock tickers and wondering what's happening in the markets, which frankly, especially in current environment or in any environment, can be quite distracting, my view is the only thing you have in your control is to build a good quality business. And so why not understand what that means? So that is, one, it's just like, hey, it's, I think, centering two, yes, tying it back to things people want to do. So we talk about gross margin, for example, and hey, why does that matter? Yes, it indicates quality. It indicates an ability to the customers have a willingness to pay, et cetera. But at the end of the day, with a constraint of cash flow on the bottom, higher gross margin means more backs. And that means you can go build a team you want to, you can go run that marketing campaign.

Mohit Daswani
We can go invest in that next product. There's a direct benefit to each person in their job because, let's face it, no one's happy with the resources they're given everyone wants more. Drive gross margin expansion on 100 million of ARR. Guess what? A couple of points. That's another couple of million, which, yes, we have to put some of that back at the bottom line, but we're in growth mode. We're going to invest that. That, again, drives a lot of great behavior and motivation. And then, like I said, finally, yes, as you think about the difference between a higher NRR company and average as you think about the difference between high ARR growth versus average, all these metrics makes a big difference ultimately in valuation. Right. It's a very transparent industry and that benefits everyone to be a top decile company versus being a bottom 50%. Big difference in trading multiples, et cetera. So that also is, I think, quite motivating to folks as well.

Sidharth Kakkar
Yeah, I'm curious in the sort of theme of building a good business, there's a lot of ways to get at the same kind of thing. There's like a few different ways to get at sales efficiency. There's a few different ways to get at overall operating margin efficiency. There's a few different ways to get at is our growth happening sustainably or not? How do you pick? Like, do we use Burn Multiple or a Rule of 40 or do we use LTV:CAC or payback period? How do you figure out which are the ones? Because at the end of the day, especially when you're getting the whole company on board, you can't get everything, so you have to prioritize. Right?

Mohit Daswani
Yeah, no, it's a great question. And we also, to your point, we track a broader list of master metrics. But as I think about what noise versus signal and sharing with the company it's a subset right. The ones I shared. So I'll take it to why I picked these and then happy to talk about the others and why perhaps they're not as relevant yet, et cetera. But the notion of just annual recurring revenue is the recurring part is what? It's a headline metric. Like, let's face it, it's the size of your business, it's the first stat that people start with and it gives an indication of scale. But the concept also I like about it is it is recurring revenue, right? And so that concept why are SaaS companies so valuable because you have sticky customers that stay with you, that grow over time. So I really like ARR just as a headline focus even though there's a bunch of things that go into it. I will talk about the sales and marketing efficiency. I do think not all revenue is equal so gross margin is really important. Right. We made a move as a business to SaaS over the last three years and what's been great is that our teams have been able to really focus on our SaaS hosting costs.

Mohit Daswani
We've moved from being customer on prem deployment to now we fully host and yet we've been able to maintain high 70% to 80% gross margin. That's been fantastic, right, that's driven. But it took a lot of focus and sort of thinking through how to optimize. And so I do think like quality of gross revenue is important and so gross margins, especially in the context of moving your cost structure, became a real focus. Same thing with professional services is it's not a big part of our revenue stream, but we want to be there's two measures of PS. I mean, one is, are you seeing higher customer uplift engagement time to value all those things? That's critically important there. We also like to run that at about gross margin, break even. That's how we think about kind of PS, right? But it gives a lens for people to think about those. I do think GRR and NRR, which we can you know less on efficiency, but as just really key metrics to think about the quality of a SaaS business. It helps direct activities for not just CS but for product and for sales, thinking about expand opportunities with our current base.

Mohit Daswani
And then on the efficiency, yes, there's so many different things. I think we're a business with multiple segments and so the metrics we use is a reflection of where we are at a stage. And two things on that one is we've gone from just an enterprise focus three years ago to now majors, enterprise, commercial, right. Each of those as you could think about, has their own features in terms of how long sales cycle is very different for a majors where it might take six to nine months to go. But then you're talking million dollar plus accounts enterprise, hopefully a little bit shorter, commercial, more velocity. And so we actually look at the submetrics for each of those because they do have a different experience, right? Retention is different in commercial where you're adding digital natives. Take a look at more of a cohort view because you're going to have a bunch of companies joining. Some will churn, and then the others will grow very nicely. So when I sort of zoom out for managing the business, we look at metrics for each and an aggregate basis. I said, look, I like the Magic Ratio because it's our aggregate sales and marketing relative to how much ARR we're adding.

Mohit Daswani
And it just provides a nice lens on when you take that activity as a whole for a company. How are we doing on return on investment and go to market? So that provided, I think, the right company wide lens. But we do dig into each of those segments, and we do that in our product where we're running live boards created for our company. And people can look and I look at that quite regularly at how are each of our segments performing. So I think a granular view is important, but to keep the headline for a company, we like the Magic Ratio, and then we really only introduce you can do burn multiple versus Rule of 40. We're going through an inflection with our GAAP revenue as we've gone through the transition to SaaS. And so the GAAP revenue growth has had some noise in it, given that. So I chose to look at burn multiple as ARR growth relative to our burn because as we get through this and we're pretty much on the other side now, ARR growth and GAAP revenue growth come back in line, but there was some noise in it. So that's why I didn't use Rule of 40 last couple of years.

Mohit Daswani
But to me, the burn multiple was one, a couple of VCs obviously focus on it. I liked it because it's like everybody can be thinking about it, right? It's not just go to market, but it's also our R&D team. It's also our G&A teams. Hey, what are we burning as a whole relative to our growth? And finally, to close out, the reason I like it is we did a raise last year. We already had 150 of cash on our balance sheet. So we've got about $250,000,000 of cash. We have plenty of years of runway. So the question I get all the time is, why aren't we investing more? Why are we putting constraints on the business now? We've got more than enough cash, right? So back to your point of a lot of people think metrics are just for investors. I just want to build a business. Well, the burn has to kind of correlate and be appropriate for our growth rate and for our size of our business. And the more you're growing, et cetera, the more you can invest in the business. So I thought burn multiple captured that nicely as a very easy ratio.

Mohit Daswani
And you kind of tier among what does good look like versus what does poor look like. And I thought it's just a good way to focus again at an aggregate company wide level without too much noise in the number, being able to look at that and say, okay, I get it. So those are why we chose those metrics. Obviously, we could talk through any of those in more detail. But the important thing for me is managing the business right, is very much a segment view and a lot more metrics below the surface, but reporting at an aggregate level for the company as a whole. Those are the ones I found that were the right leading ones and that provide transparency, but also are fairly simple.

Sidharth Kakkar
I really love your point about sort of the segment view of the business, but I found that I think the segmented view of the business is almost exponentially harder than getting the whole business view because everything is set up to kind of report on the whole business, because that's how you're going to raise money, that's how you're going to go public, all of those things. But when it comes to segment view, basically someone, you, have to really care about being able to understand the business at that level. I agree with you that it's crucial, but I'm curious, like, how you think about why is it so important? Why is that a significantly higher level of effort so important? Because it's like a very hard data problem, right? You have to essentially make sure that everything is tagged properly and is able to be segmented and it's all intelligible and costs are allocated properly and all that stuff. It's not a trivial effort.

Mohit Daswani
No, it's not. And I think you could argue for a company that's got 3 billion dollar divisions, it's one thing, but if you're still growing and you're at 100 going to 200 revenue, is it needed yet? And what I would say is ultimately, yes, I do believe it's important because they each operate pretty differently, right? So we talked a little bit about the behavior of each of those segments. But a majors team, you're going after large accounts, few accounts, and you're spending time with them and you're going to build each of your named accounts to hopefully multi million dollar customers, right? We're fortunate. We've got now a couple of dozen customers that have crossed a million bucks. So these are some of the largest companies in the world where it's like, yeah, you are going to go and spend your time with them. Because it makes sense to, because that initial land is only the tip of the iceberg and over time you're going to build up. And so the sale cycle is longer and the coverage ratio is sort of what someone is spending their time they're spending is different. The pipeline might be a little less defined, right.

Mohit Daswani
Versus new opportunity, 100K opportunity. Here's my pipeline. This one is like, I know what I'm building towards, and then the associated expense with that. Do you have a SC involved? You're going to give them a higher level, perhaps of CS coverage as well, because those are larger accounts. So I think they have their own nuance as far as how you run them. And then on the other end, just to take it to the other, is commercial, right? Which is? We want velocity. We want that to be our transaction business. And so we want to see that rapid fire deals coming in every month and we want to be able to have them benefit from our community, make that onboarding experience quite seamless. We won't scale if you need a CS person for every commercial account, right, we want to give them service and have a PS package in there, but over time we want them to be the product to do the heavy lifting so that those ratios are different in terms of CS reps to a customer in the commercial segment. So that helps us give it that focus. And then the CS team is organized accordingly as well.

Mohit Daswani
The PS team is organized accordingly as well. And then churn, some churn is okay, and it's okay in commercial where it's like, hey, we cast a wide net, we add a cohort. This is very much our experience at Square, where you're going to lose some of that cohort because either the health of their business or otherwise. But the point is, once you establish and then you have stability, that cohort should be growing nicely with you because you've got businesses at the early stage of growth. And so that's also okay, right? You don't have to freak out about some of the early churn. There is a natural, I think, occurrence there. And so just talking through that pretty different way you manage those segments and you incentivize and you think about behaviors. And so you can't do that if you're just looking at averages. You can't do that if you're just looking at aggregate. Our churn rate needs to be this and everybody puts in that box. Frankly, our retention should be really high in majors and Enterprise, it might be a little lower in the first year of a commercial cohort. So those are all okay.

Mohit Daswani
And coming back to why do metrics matter, it's because it gives you a lens through which to manage the business. I do think in having segments as different as that, it is important then to have the metrics as well that speak to that. The last piece I'd say is we're at different stages of investment with each of those. So our Enterprise business is our longest running business. Our metrics are more mature there. When I think about the magic ratio and things, more reps are ramped, productivity is high, all those things, right? We know how to market to that segment. We're pretty dialed in. So you expect efficiency, but commercial is younger and so we're on a different stage of maturing there in terms of thinking about those metrics, that's fine. The growth is there like we see the opportunity. It's becoming a bigger and bigger part of our business and we can look at that and say, hey, some level of burn, et cetera, inefficiency is okay because it's a younger business. So that's why I think it's important. We're a metrics driven business, we look at the business through that lens. We obviously take bets that we don't have an answer to, but we pretty quickly dial in, okay, what are we looking for?

Mohit Daswani
And it's the nature of our culture, again, just in terms of being an analytics business and it's the nature of how we run the company, being on a product that allows you to have that visibility at any level of nuance for anyone in the company. So it's a self fulfilling, if you will prophecy to some extent.

Sidharth Kakkar
Yeah, that's very cool. I mean, a lot of getting this right involves sort of the work involved to make sure that the data is right. Yeah, and then in general for the finance teams, you have to bring in data from a lot of different places and everything from operational to actual financial data and all these things have to come together in order for you to be able to sort of get that strategic view of the business that you want. I'm curious how you think about empowering your team with tooling to do this versus where you spend the time to just get it right. How do you think about sort of the finance team and how you operationalize this awesome vision for what the finance team is able to do?

Mohit Daswani
Yeah, it's a great question and it's something that we've sort of looked at quite closely. Your ongoing general forecasting accounting, sort of just running the operation, we've got a good set up, we're a Netsuite shop and then we use Adaptive Insights for our broader planning and then we plug in to commission's tools, et cetera as well. Equity platform. So it's great. The world we live in, you can bring in different SaaS platforms and use best of breed so from an ongoing just running the operation, if you will, we have a full suite of software platforms that we use. For specifically this, which is the analytics, if you will, understanding the business by segment. That becomes a bit of a partnership then with the groups that are involved, in our case, specifically Sales Ops. Right. A lot of the data sets in Salesforce that we don't manage directly in finance, but it sits in Salesforce. Sales Ops manages that. There's some data with the product team as well and thinking about just customer behavior, number of active users, all of that. And so finance becomes a central point and what we find is then pull it into a cloud platform like a Snowflake and because you can't run analytics as well directly into a Salesforce, for example.

Mohit Daswani
And so we have our internal environment in which we've pulled that data into one place and then we use a platform on top of that so that finance can build that view, do the cost allocations, et cetera, have the rules sitting in the background and then provide that lens. And so that's where the finance team does then manage that piece. In our case, as I mentioned, the FP&A piece is Adaptive. The internal kind of publishing of segment level views we do through our product on ThoughtSpot. And what's nice is it's organic, right? So when we started with looking at a view of the business with Enterprise, all these metrics we talked about we had set up there, right? And then as commercial becomes a larger part of your business, we added that as well and looked at, okay, we have NRR let's now start to look at it by segment and each of those two different segments and how we're doing their majors added to that as well. And then let's look at how are we doing in terms of what's the pipeline coverage that we expect in each of these businesses to hit our number for the quarter, thinking ahead to public company forecasting and being able to guide the street.

Mohit Daswani
Because that's also quite different is how much pipeline coverage converts into deals in the quarter. Quite different for a major's team versus for example, a commercials team. So we rely and we work in partnership with Product, with Sales Ops. We don't have a central analytics team per se. I think it's more of a collective effort. But the way we enable it is pull it into pull all that data into a cloud data warehouse and then run our platform on top of it to create those views to help us run the business. And in our case, we do it in ThoughtSpot.

Sidharth Kakkar
Organizationally, I'm assuming that there's some level of data engineering and data science folks that do make some of this possible with getting the data into Snowflake, making sure that it's transformed all that stuff. Is that organizationally within the finance team or is that a separate team altogether?

Mohit Daswani
So we have an IT team that manages our internal platforms and setting up, for example, in Snowflake, our environments, what we call Champagne. And so that is done with our IT team that sits within the broader G&A organization. Our organizational structure is, yes, we have finance with IT, with People, with Accounting and so there's just good synergy as far as the data sharing and creating platforms within these groups. So in this particular case, yes, it sits within the same, within the same org which I manage, but we also work quite closely with, I guess you'd call it the sort of data science team within product, which is looking at when we're making for example, we rolled out consumption pricing not too long ago, right? Very different model in which to manage our business. As you can imagine there it's like laser focus on customer time to value, getting on boarded and then what are the key predictive elements of when they're ready to expand? Obviously hopefully renew, but then ready to expand. So we have to look at usage, how many monthly active customers do they have on the product, etc. And then more than that it's like we might have a customer with 100 monthly actives versus one with ten. The one with ten is healthier because they're actually power users. So it's running a lot of analytics there. So that sits within our product and engineering area, really deep product analytics and pulling source data. But ultimately we work collectively as a team to create insight from that and then more importantly, direct activity across the company from that.

Sidharth Kakkar
Really cool. I feel like this is the thing that I feel really passionately about, but it's hard to execute on, is getting the product data to kind of be crossed with the financial data, to be able to answer questions like predicting upsells or predicting churn. But it feels like so often those two areas get totally siloed. Like product data just lives with the product team and the financial data just lives with the finance team. But I feel like there's so much to be gained by just getting it together.

Mohit Daswani
Yeah. My view is part of reporting is not just a passive activity, which is like, all right, here were the results last quarter. And it's, whoa, here were the leading indicators of where things are going and we've set some a priority. We've set NRR as a priority. We know that monthly active users, as an example, might be the key leading indicator of propensity to churn or not. Let's make sure we're watching that every week, every month. My view is we shouldn't have any surprises. We're not yet a company with 5000 customers. We have a few hundred. We will we're scaling and so that will become we'll have less of an ability to look at each customer, which is why in the commercial segment, the cohort view becomes more important. But we're at a size where it's like we should have a pulse on what's going on with each of our customers. And we don't have to be talking to them regularly. We just look at the dashboard, right? And look at their usage and frequency of usage and how is that going relative to where we thought they'd be. And if that is starting to soften, let's get engaged before it's month eleven and it's time to talk about renewal.

Mohit Daswani
Do it in month three, month four. That's where you could course correct and figure out what's going on because there's various reasons. Sometimes it's the data set up at our customer isn't quite ready yet. And so that's good feedback for the sales team. Like, hey, when you're picking your ideal customer profile, these pieces need to be in place. Sometimes the initial champion left and it's like, hey, the team migrated and we've got to make sure we're plugged in with or otherwise. So there's various reasons. My view is, yeah, don't wait for the churn to show up. Don't wait for your pipeline conversion number to surprise you at the end of the quarter. Be managing it actively because that's how you can be nimble and stay ahead of it.

Sidharth Kakkar
That's such a good point. You mentioned how your last CKO or post COVID CKO you went through all the sort of education part of here are the things that matter for us as a business on an ongoing basis, are there like ThoughtSpot dashboards that folks in various departments are looking at to see all the stuff they learned back in CKO, like how that's going on a real time basis?

Mohit Daswani
Yeah, no, thanks for the opportunity to talk about that. Absolutely. So we call them live boards and the only reason is they are just that they are a start when you pull up. So all of us are tracking metrics in what is a live board. But the beauty of the product is you can then sort of if we're using it on a monthly review, we can just drill in right there into the underlying activity to understand what was the blip in customer engagement here in this segment, for example, last month, we can drill in and look at the customers and look at their particular usage, et cetera. And so just the nuances why we call it a live board. We do run the business on them. Our CMO, Scott Holden has all of his key metrics in ThoughtSpot across pipeline generation from where by segment, etc. What's coming from events versus online activity, et cetera. Our CRO uses it. Now we use third party platforms as well, right? So we use other platforms for the team. We use Salesforce, et cetera for the day to day guts of the business because those are good platforms for tracking CRM, et cetera.

Mohit Daswani
But ultimately, yes, when we're doing our reviews together and he's going every morning to look at like, okay, how is my pipeline maturing or deal activity maturing? He does have that all in ThoughtSpot. We just had his monthly sales all hands yesterday and it starts with a review of those and we might then otherwise use it as a management team where we start meeting with it and we can drill in and look at areas that perhaps need addressing. So it is very much a data driven culture. It is very much a transparent culture. Going back to the team, initially, we feel it's empowering for people to do it. It's a good way to run a business and you're open about the good and the bad because to me, there's no failures. It's like, hey, if there's an area that needs improving, that's just what it is. It's an area that needs improving. It's not like we suck and you throw in the towel. It's just like go after it and work on the plan to improve it, that's fine. The worst thing is to run away from your problems. The best thing is to have a culture where the problems are open and it's okay and go run at them.

Mohit Daswani
If you have a culture of hiding problems, that's when you're in trouble, because people just want to avoid it. Versus I see it as a great thing, like, hey, we want to build a great business across the board. Where do we still have work to do? Let's get after it. So, yes, we very much do that, and it's a big reason I came here. Right. I think it's a good, healthy way to run a business, and I think people appreciate it. People appreciate the transparency, and I think those who have a good sort of mindset around it like, yeah, let's get after it, because it's not always I mean, again, going back to I find working in venture is interesting and venture-backed companies because you always want to maintain that everything is great, we're going to the moon, and then all of a sudden the market changes, like, all right, we're not going to the moon. No, just be clear where you are on the journey every step of the way, because it is a journey and there's no surprises like, okay, we know we're really good here.

Mohit Daswani
We know we have some improvement here. Boom, we're doing it. And I think it's good. I think it's empowering. Long answer to your question.

Sidharth Kakkar
No, I couldn't agree more. But a couple of things. One, judgment is actively dangerous because it encourages you to hide from your problems because you don't want to see the judgment instead of actually solving them. I couldn't agree more with that. And then I think the other thing I've definitely learned over my sort of career in venture-backed companies is people often think of not scaring people with what's going on or hiding certain things or finding the right messaging or whatever. Where it turns out if you just trust people to be able to have the maturity to handle the truth of what's going on. They will handle exceptionally well. If you don't trust them, yeah, they're not going to handle it well. But if you just trust them, too then everything works out great.

Mohit Daswani
Absolutely. And because companies will come out and be like, all this great press in this coverage and whoa, things seem to be going amazingly, and then a few months later, there's some news that comes out that says, oh, it's churn is high or bumpy or this and that. Just stay grounded, stay grounded. Build a great business as we're doing, and the outcomes are going to be good. But I'm with you. I think we worry too much about that and, whoa, can you be open about opportunities and challenges? And I absolutely think if you trust people, I think people appreciate it and want to help do something about it.

Sidharth Kakkar
Yeah. As you think about companies at various stages, especially on the venture-backed journey. Do you feel like the metrics that you should obsess over change over the course of that journey? Do you feel like a good business is a good business is a good business? How do you think about that?

Mohit Daswani
Yeah, it's a really good question. I think it's part of the art versus science of building a startup, which is and I actually think it carries over into public companies. And I'll share my experience from Square. At the end of the day, you build value if you start with a large market, and you start with a large market that is going to provide a runway for years to come and then you have an offering that's differentiated, right, and really has an opportunity and some kind of catalyst for you in the market to go and capture share. Either it's a brand new market starting from scratch, which everybody's running after with start of the internet or the cloud, or you're entering a market in which there's still a lot of opportunity. At the end of day, you have to stay focused on that. And what I mean by that is you have to stay entrepreneurial, right, and sort of keep going because a lot of companies can build 500 million, maybe a billion, and then you're kind of done. And so I do think you always have to be thinking long term and seed new ideas that can germinate into your next billion dollar business.

Mohit Daswani
And I learned that in large part, that's what Square did, right? Square built a billion dollar business in the core SMB payments, but didn't sit on that. They built then an equally large business for consumer in Cash App, right. Which is mind blowing. And we were public at the time and very candidly, if you just did a strategic MBA analysis, you'd say, what the hell are we doing? There are other payment networks out there that already do this. But it was a vision Jack had. He said, look, we got to build a platform here of companies. And he was absolutely right. So I do think you have to maintain that at any stage, even as you're public and say, look, Amazon has done this obviously really well. Google's built multiple products, maybe through M&A, as well as organically, because I do think that's how you build massive value over time. It's not just saying, all right, we hit this use case, we penetrated the market, built a billion dollar company, okay, good, you're going to build a lot of value. But if you're thinking in multiple phases of growth, I think that's fun.

Mohit Daswani
It's also just a good way to think about it. Now, you've got to manage that with yes, you do have to show in your core business you can build a really good, efficient and financially prudent business. And so as you get more mature and you have maturity in that core product. You do have to take that with that lens, right? And especially as you think about going public, it's like, okay, I know what you care about, right? I've got gross margins that we know how to manage our expense base. We're fiscally kind of oriented towards that. We obviously have to show the ability to provide a good return on sales and marketing. Because it's not that you can't burn money, right? You can burn it's just that you have to show that that's a good use of money to be burning it. And you get it back in a certain period of time and those customers grow with you and you can keep them. I think you do start to get more focused on those metrics as you get further along into the maturity of a company. But I also think about it as the maturity of a product line.

Mohit Daswani
And you should always have some bets that are being seeded as well, which are the next things that you've bought product can build on. Because I think building a platform is pretty exciting. And if you have customer trust, if you have a large enough TAM, right, if you've proven to them you can deliver on the initial pain point use case, I think you're going to have a seat at the table to introduce other things and be like, I can also help you with this, and you're going to be learning from your customers. I think companies should never give up that entrepreneurial energy. And that sometimes happens when you've kind of gotten the win and gotten the initial one. So that's how I think about it. So yes, absolutely. As you get further along, you should be thinking about those efficiency markers. You have to balance that with some entrepreneurial energy. The question I think, which maybe for another day and I'd love your perspective is how early do you start to focus on those efficiency metrics in the life of a business? Because there's one school of thought that's like, just get it now into the DNA, right?

Mohit Daswani
Companies that do PLG and learn how to do it early, man, they're cash flow positive really quickly because they've just super focused on, I want to make this experience really great for my customers. They come to my website, they self on board. So we have a team's edition now that does that, right? And that's what that is. How do you take out the friction? We don't want to touch it from a sales team. Find us. Plug it into your own data. Data is in the cloud. We're in the cloud. Get up and running. Whoa, we wow you with the product, right? And then now maybe you become a bigger customer. So like, in that area absolutely. From the start, there's no SDRs calling. There's no SEs getting involved. It's very much self serve. So that's different though, from a majors account where we want to spend time with them. Understand their pain points, etc. And so I guess my point is, depending on the nature of your business, it is good to use metrics to drive what is the experience you're trying to create, right? And so I don't think it's ever what I'm trying to say is never too early to introduce metrics because I think it helps you define what kind of company do we want to be.

Sidharth Kakkar
I think that's such a good point in that it's never too early to introduce metrics and then also you can be intentional about how you want to treat certain of them and as long as you do it intentionally, it'll probably work as opposed to ignoring them unintentionally.

Mohit Daswani
Yeah, like, we're going to go burn 10 million on this. We know we're going to experiment before we learn, right. But it can become a big product line for us. That's a known bet, right? At least you know what you're doing, you know what to measure and you see the return. That's the lens I look at it. Never too early to use metrics. The rigor at which you apply depends on the nature of the product and the stage you're at and always have that entrepreneurial energy to have some bets that can create your next billion dollar business.

Sidharth Kakkar
I love that. I have one last question for you, which is, given all the things you've seen in your career, if you think of a piece of advice to our core audience, a finance leader at a Series B company, what would you say?

Mohit Daswani
I would say it comes back to what we've talked about, which is John Rainey, who was the CFO at PayPal and now is CFO at Walmart. And I worked with him a little bit when we were together at PayPal. When he joined, he's like we talked about why did you choose finance? People think sometimes FP&A is passive. It's just reporting. He said, look, I loved it because you have your finger on the pulse of the business, right. You really kind of see what's going on. And he was at United for a number of years, CFO there. So think about the complex business and so you kind of could direct things because you could see what's happening. My view is take that view. You're not a passive partner on the journey. You have an incredible position of influence because of the knowledge you have and because of the insight that you can get. We call our team finance and strategy. It's something we did at Square because we didn't see strategic as some whiteboard exercise pie in the sky. Like we kind of know where we're going as a company. We know where we want to play.

Mohit Daswani
The strategic decisions aren't that complex. Ultimately it's how do you execute against them. And your execution against that strategy is what's going to define whether or not you win. And the best way to do that is have a data driven view on your business right. Have an ability to look at like we were talking about what bets am I making, how am I doing? As opposed to, hey, did I get the overall aggregate growth rate? No. Did I actually execute in each of these products? And so you own that in finance and you can bring a ton of visibility. Right? We see a lot of our customers do that and they use ThoughtSpot because it's like, I want to drive visibility in my business. So that's one. The second is I think take a partner approach. It is really hard to build and land and kind of go get those next few customers. Right? It's like each day in the trenches for sales when you're building product and you're on deadlines and you hate, like, having bugs, but it's going to happen. So I think my main point is have finance is a more internal function.

Mohit Daswani
Obviously you've got customers who are your board and your investors, et cetera, but a lot of the activities internal. Have empathy. Get to know what it takes to go run the sales cycle. Get involved. Get involved with understanding the road map and how it's kind of set and what are the things that come up along the way. I think it'll just make you a better finance leader. You'll understand the business better and when you do, say no or saying, hey, look, we got to hold off on this. It's not just like you're the bad cop. People know you're in there and roll up your sleeves and want to help build the business with them. And so I think have empathy, be proactive, get to know a business, especially Series B where the finances aren't that complex. You can go get in there and learn the business. I think that will serve finance leaders really well. Also make you more effective as well as just a better partner to the business.

Sidharth Kakkar
That's really cool. I have this sort of slightly unorthodox I think view and I'm curious to get your take on it, which is that finance is actually just a data job. Not just a data job, but it is a data job in that like, almost everything about the job is about managing, understanding and interpreting data for the rest of the company. I'm curious what you think of it.

Mohit Daswani
That's an interesting way. I mean, let's talk through it. I've had a lens on it, which is a bit of an investor job, allocation of capital. Part of that is my bias. I did that for the first ten years of my career. It's not just here's your budget, it's, hey, here are the bets we're making as a company. We're deciding to put dollars here versus there, right? Maybe open a new international market verse to invest more in the US. That's a decision. And ultimately it's around creating a larger company. So making those decisions, I think it helps to have more than a passive lens but a bit of an investor lens. As far as data, I think you're absolutely right. I think we do talk about it being the source of truth. Finance is the source of truth. That's probably the third element I would have added, is you got to remain objective in a company in which everybody's pulling for more resources, everybody wants to do more, you need to maintain that objective source of truth. And in that lens, I think you're absolutely right. Coming back to the data is really important. It's not well, I think we should do this.

Mohit Daswani
It's here's what the data says. Here's how we're doing. We made this bet two years ago. Here's how it's going. Maybe a pivot is needed. Right. Or look, this area, we know we want to add more people on the West Coast, but if you look at, for example, Japan, they're beating their number every quarter. Why wouldn't we add there? It's just a better, like there's demand. It's proven. And like, we know we're going to go put a next rep to work productively to have the data. And I think it's good for the business. It creates trust and credibility for you and the finance team. And I think you're absolutely right. I think it is in large part a data job. It's not just the reporting the data would be the difference. Right. It's being able to make sense of it and help drive decisions from it. So there's that, however you want to call it, investor angle or judgment angle, that sits on top of it as well.

Sidharth Kakkar
Totally. I've actually always thought of the CEO job as the capital allocation job, and the CFO job is like the core input to the captial allocation.

Mohit Daswani
I agree. Absolutely. You have to advise the rest of the team on capital allocation.