From CFO to Boardroom: Financial Leaders Must Evolve or Be Left Behind

Speaker A: For me, the number one role of a CFO is to be a trusted business partner, to bring to bear data and information to help the rest of the team, the rest of the company, make better decisions. And what I've noticed is CEOs tend to live in the future. They're always thinking about what's Next. And bad CFOs live in the past. They're only focused on closing the books.

Speaker B: If you're listening today, it must mean you're a strategic cfo. Tune in regularly for tips, best practices and eye opening stories that will help you optimize your CFO experience. And don't forget to leave a review and subscribe.

Speaker C: Hello and welcome to FEI Silicon Valley's Strategic CFO Podcast, a series of conversations with business and government leaders that impact our lives here in Silicon Valley. My name is Jan Robertson, your host. I'm a past president and current board member of our FEI Silicon Valley chapter. My guest today is Kelly Battles, who is a board member, an audit committee chair. She sits on numerous boards including Genesis and Arista Networks. She's also a former CFO and has had an illustrious career path. And Kelly will be speaking on our panel in January, January 27 on how to get a paid board seat. So I'm sure she'll have lots of great tips and stories for us today. So welcome Kelly.

Speaker A: Thank you, Jan. It's an honor to be here. I appreciate the invitation and I'm excited to get to talk with you today.

Speaker C: Terrific. Well, let's dive into it. For starting off, I've given a little bit of background on your sort of bio here. How about telling us, you know, early career, how your perhaps your education, how you chose the finance path or how chose you, and then take us through to your board seats.

Speaker A: Okay, Jan, I'd be happy to. So first of all, I have to say I am not the person that laid out my complete career when I was 22 and kind of followed a series of steps. I did not have that forethought or frontal cortex development. Um, so a lot of my career has been kind of a random walk or maybe a lucky set of circumstances. Uh, although looking back on it, I feel very blessed because it has been certainly fun. I grew up in Birmingham, Alabama. I'm one of four kids. I'm the oldest, I'm the only girl. And our mother passed away when we were young and so we had a lot of learning during that stage of our lives as a family. I went from Birmingham to Princeton, New Jersey. Went to with an engineer. Princeton.

Speaker C: Okay.

Speaker A: Definitely some culture shock there, but loved every minute of it. Princeton was a fantastic four years. I learned so much. It opened my eyes up to so much. Engineering was very difficult, but very fun.

Speaker C: Mhm. Mm.

Speaker A: Learned a lot of problem solving skills, but one of the things I learned is that I did not want to sit in front of a computer and code every day, which is very funny now because most of us sit in front of our computers all day now anyway. And so, and so I loved math and science and you know, I really liked a lot of my finance. I had, I was in systems engineering, systems operations research. And so I took, I was lucky to take finance and accounting classes as kind of minor fill ins. And I realized that those are some of my favorite classes. And so being the naive 21 year old that I was when I started thinking about what I wanted to be when I grew up, I thought, well, I seem to like finance. And the only people that were recruiting on campus were investment bankers. And so I figured that was all I knew about finances, investment banking. I had no clue about the various paths of operational finance, strategic finance. I just thought banking, that's finance. And so I interviewed for banking roles and I ended up choosing JP Morgan. And looking back was an interesting precursor of things to come because J.P. morgan at the time had just gotten its investment banking rights. It had been a commercial bank. The Glass Steagall act was breaking down. Investment banks were allowed, uh, or commercial banks were allowed to have investment banking responsibilities for the first time. So J.P. morgan was moving. And when I interviewed with J.P. morgan as they were moving into this space, I was struck by three things. One, it still had the commercial banking, you know, the vestiges of the old commercial banking kind of team orientation, the more genteel culture which really struck out in the late 80s. And because most of the banks didn't kind of didn't come across that way. This is the era of liars Poker.

Speaker C: Like oh yeah, I remember.

Speaker A: Well, sounds like now what, what year?

Speaker C: I hate to embarrass.

Speaker A: This was 89. I graduated in 89, so I was recruiting 88. 89. And so, and so, so, so one, it was very team oriented. Two, because they were building out a new business. It was actually quite entrepreneurial. And I come from an American dream. My dad is an American dream story and an entrepreneur who built a very successful business despite many, many obstacles including growing up in poverty. And so I kind of, I love that entrepreneurial feeling. And then third and final, the only bank at the time that actually wanted you to Stay. Didn't want you to go to business school, wanted you to stay and build a career there. And, and also because of that they had a mini MBA program where they put both the investment bank, the corporate finance and the sales and trading people in a training program for I think it was like four to five months. And so as an engineer with very little finance experience, I thought, wow, that would be super helpful to get a little mini MBA and to not have to go to business school if I didn't want to. And so for me it's a precursor of things to come because team orientation culture was always kind of number one for me through my career when I chose opportunities and also entrepreneurial spirit. And so I, I spent three years in banking. I decided after three years of banking that I really wanted to think more about companies than debt and equity, which is a massive oversimplification, but just wasn't satisfied in that career. And so I did what a lot of people did when they didn't know what they wanted to do and wanted to get out of banking. I went to business school. And so I was class of 94 at Ah, Business school.

Speaker C: Yep.

Speaker A: And had a really wonderful time there. And again it really helped open up my eyes to like, different functions, different industries, different types of people and so. But I also, as a Southerner growing up in Alabama, who had gone to Princeton, then north, northern, more northern to New York, then more northern to Boston. I was in Boston for the winter of 92, which was the coldest winter in Boston's recorded history until recently. I was like, okay, I'm going the wrong way. It's too cold up here. And so I, I decided I wanted to go back to the south at the time. And it also was a typ person. I didn't know what I wanted to be when I grew up, yet also wanted to keep my options open. And I felt like the best way to do that was to just focus on really great cultures and environments where you can be around great people and great learning and so, and, you know, not rush into specialization. And so I, and I also wanted to go back to the South. And so I did my research, um, and the best opportunity that I, I felt kind of met all those criteria was McKinsey in Atlanta. And so I actually became a consultant, was a summer associate and then worked there in Atlanta at McKinsey for about three years. I used to joke at McKinsey. I loved everything about McKinsey except for my job. I love the people, I love the client engagement, the problem Solving the communication skills you learn. I love the culture. At the time, it was a very kind of true north cultural, uh, environment.

Speaker C: Incredibly welcoming to women as well. Because I know in my early career in investment banking, it wasn't very welcoming to women.

Speaker A: You know, I was lucky. J.P. morgan was. J.P. morgan was. I mean, I do remember the first time at JP Morgan a woman wore a pantsuit. It was 1991 and everybody was talking about. I'm like, don't we have more interesting things to talk about than a woman wearing a pantsuit? We had to wear hose. I mean, there are some weird things. My daughter, who's 25, can't remember, can't believe these things. But in general, I was very lucky. And again, I think it's because I always focused on culture and teamwork is my number one criteria. And so, you know, I think that's a big lesson for me is some people say, oh, focus on a big growing culture, a big growing market and product market fit. But I always started with people and culture because I just feel like you get the people and culture right, you'll get most other things right too. McKinsey in Atlanta was very, very friendly to women. You know, is a little anecdote, one of my first progress reviews, which is the big review meeting at McKinsey. Our client, I can say this, it's public now, but our client was Georgia Pacific Building Materials, which is a very, very conservative. It was at the time, it was like 1994. It was a very conservative, obviously kind of male oriented business. And I walked into it with a partner who was a man and the other associate who was a man. The three of us walked in. It was a room of like 10 kind of, you know, 75 year old white guys and us. So I was the only one in the room, and which I was used to by this point, but. And one of the old guys looked at me and said, hey, can you go get me some coffee?

Speaker C: Oh, my goodness.

Speaker A: Uh, the McKenzie partner just like blanched and she's like, kelly, you stay right there and I will go get the coffee. And again, you know, choosing culture. Choosing culture. And, you know, and great people. Yeah. And so that. But anyway, so I digress. So, you know, worked at McKenzie for three years. Met my husband there. He's also a Southerner who had gone to Stanford and he really wanted to move out to California. And so we came out, he totally duped me and he said, let's move out to California for five years. We'll work there until we have kids. And then, you know, once we have kids, we'll move back to the south so the cousins can all grow up together. He totally duped me. He never wanted to go back. He knew I'd fall in love with it. And so that was 27 years ago, or 28 now? 28 years ago. And so, you know, I kind of divide my career into three stages. Kelly 1.0 is more of a generalist. And so this marks kind of the rounding out of Kelly 1.0. I went to HP. I really wanted to go and do operational. By this point, I'd figured out I wanted to do operational finance in a smaller company. One of my friends introduced me to this luminary cfo, Brooke Sewell, who I think now works at nea. He probably won't remember. He probably won't remember me. But, yeah, I went.

Speaker C: Actually, a member of our, uh, chat. We know him well. He's a member.

Speaker A: Oh, yes. So he changed my career. He probably doesn't even know this, but I went to talk to him about working for Net Dynamics, which is company at the time I got bought by son. And he's like, Kelly, he's like, I need three things on my team. I need tech experience, startup experience, and I need operational finance experience. You have none of that, but I'll hire you anyway. Well, no, he said, I can hire you, but you'll be way below your pay grade. You'll be really frustrated. You need to go to a bigger company and get some product technology, like operational finance experience. And so I like a good soldier. I listened to Brooke and I went to hp and I worked at HP for six years. And again, more of an ivory tower role. So this is still Kelly 1.0, kind of more of a generalist role. I worked in corporate development strategy, and I did some operational finance. I got closer to tech, got closer to the product. Fortunately, HP was very diversified, so. And I worked for a lot of the different business units, so that was super helpful. But after that, you know, I had a baby. Carla Tiarina came in. We bought Compaq. There's just so much going on. My heart wasn't in anymore. And I was like, okay, I'm out of here. I'm going to go do what I want to do. And so thus launched Kelly 2.0. And so Kelly 1.0, generalist, like, really focused on great culture and just learning and keeping doors open. Kelly 2.0, you know, was kind of what I joke is like. I finally figured out what I wanted to be when I grew up. Which was the cfo. And so I, I, I, I, I called the first person that I knew, the first person that I knew who was at a startup when I decided this, who I'd worked with at McKinsey and also we overlapped at HBS. His name was Scott Weiss. He was the CE of A company called Iron For Systems. And I called him because he was smart and I wanted good advice. This is kind of the importance of the network. And, and I said, hey, I'm done with Ivory Tower. I want to be where the rubber meets the road. I want to do operational finance at a startup. Problem is I still don't have a ton of experience. I barely know the difference between AR and at, but I'm going to do this. What do you think? And he's like, I love it. Uh, he's like, I have the job for you. And he's like, come work for me. And so I was the first hire, first finance hire at a 50 person company called Ironfort Systems that ended up being bought by Cisco. It was a huge success. It was a wonderful experience. A bunch of, you know, new young leaders who just figured it out based on first principles, thinking what's best for the business in a very fragmented space. We differentiated, we got, we were purchased, we really scaled quickly. And you know, and I really learned in that role that was really my true mba.

Speaker C: Like I learned, I'm curious, sorry to jump in. Were you the controller then or did he make you CFO right away or were you working under a more experienced finance?

Speaker A: I was the finance leader. I came in as a director. I got promoted to VP very quickly. When I choose jobs, I focus on people and culture first. Then I focus on big and growing market. Then I'd focus on where is it in the product market, life cycle and where do I want to be. That can change. And then the role, to me, the role is always the least important. If you get the other things right, the role will follow. And my husband's like, you should be a vp. You shouldn't be be going from a director at HP to a director at Ironport. I was like, I don't care. And within six months I was the vp. It just didn't matter to me. I earned my strengths. He, they offered me the CFO role right as I was on bed rest with, pregnant with my second child. I said, no, thank you, we're getting ready to go public. I was like, no, I'm not going to. And this is an example of like, know your, know your body, know yourself. And, uh, good things will follow, but you don't always have to say yes. I said no. And I ended up being VP of finance. We hired a cfo. I think he was there six months. Then we got Buffet, Cisco. So. And actually I would say, you know, everybody's like, don't you regret that? Don't you wish you were CFO when you got by Cisco? And I said, you know, I didn't. It was the only time, I think I had three quarters where I worked for a cfo. It was the only time I worked with somebody who knew more about operational finance than I did. And so while it was a short amount of time, it kind of demystified the role for me and it became, oh, this isn't that hard. Here's how other people do it. And you know, instead of having to make it up, you can actually talk to somebody who's done it before. And so, so anyway, But Ironport, it was a wonderful experience and it was really the beginning of Kelly 2.0. From there, I've been CFO of four other companies, um, and scaled from various sizes. I would say one of the learnings from this portion of my life was I was the CFO at a hardware or VP of finance. I mean, I was acting CFO for most of my time at Ironport. Um, hardware, software as a service, infrastructure as a service, a consumer Internet company and a women's healthcare company. One of the fun things about finance is a lot of the skills are funded tangible across business models.

Speaker C: Totally.

Speaker A: And what, what kept me like. And some of finance can get pretty rote, as we all know. And so what kept me intellectually interested over the 20 years that I did this was the new business models.

Speaker C: Mhm.

Speaker A: Learning, you know, the different drivers. Like I always loved FP&A. Like the budget model was the last thing that got ripped out of my hands as I was letting go of FP&A. Just because I love that part of the business. I love understanding metrics and drivers and understanding how we're doing against those. What drives the business, how are we doing on those drivers? What can do to improve Those drivers? Learning four or five different business models. One was super interesting. And two, I think it helps me. We'll jump to 3.0, which is a board member, but it helps me be a better board member. And I also think it helped me towards the end just be a much better cfo because I'd seen so much and the pattern recognition, um, was so was. Is strong now. You gotta be careful. Another piece of tidbit is you gotta be careful about pattern recognition. Like one of the things I loved about Ironport was none of us had done it before. We were all first time execs and what we focus on instead of how we've seen it done five times before was what's best for the business. And first principle of thinking, which is an important discipline to learn. Mhm M. I think a killer combination is when you have that discipline but you also have pattern recognition and experience. Because if you can manage and balance those two things, I think you get to a much better career and advisory

Speaker C: role and professional talking about forecasting for the business. Forecasting is so critical and it's one of the skills as an M and a banker and we do mostly sell side is a lot of CFOs are not particularly skilled at being able to put together a credible or uh, supportable forecast with reasonable assumptions. Now it has to be a team. The CFO and the rest of the team have to weigh in. But certainly a skill that I see as missing. CFOs tend to be excellent at historical information and reporting and slicing and dicing. But how much did forecasting come into your roles?

Speaker A: For me the number one role of a CFO is to be a trusted business partner to bring to bear data and information to help the rest of the team, the rest of the company make better decisions. And what I've noticed is CEOs tend to live in the future. They're always thinking about what's Next. And bad CFOs live in the past. Only focus on closing the books. That's the, and, and, and closing the books is very important. Don't get me wrong. Like companies tank, you know, kill stock value at stock price when they can't, you know, produce accurate financials. So that is job number one. But you know, to me the key is to have an efficient close. You know I think I always like to do a five to like five to seven business day close and disclose process. Um, I know that sometimes the bigger companies that's really tough. But you want to get, you know, understand history as fast as possible, close the books, learn from it with your good variance analysis and your disclose process. Get it out to all the business partners with highlights on what's going well, what's not going well and then move to the future. What does this mean for the future? I think the challenge is a lot of CFOs come up through accounting, which is very important. And you know, it became even more important after stocks and all the Revenue restatements, that happened in the 90s. But I would say to good accounting people, good CAOs turned CFOs, you've got to embrace the 4 forecast. You've got to embrace the budgeting. You've got to embrace the drivers, the metrics, the FPA side, because truly, that's what you work on with your business partners, right? That's really. The forecast is really what drives the business. And so you got to get there, I would say. You know, I'm surprised you say that, because I think you, uh, know, it. M may be because I did come up through more of the FP and a side and strategy and kind of. But that was always the thing I started with. Like every company I started with as a cfo, I went around to everybody, senior person, and said, tell me two things. Tell me, what does the finance team do really well and what do they do badly? Finance. Uh, a lot of times there's others. Finance, legal, whatever you ran, whatever function I ran. And secondly, what are the key metrics that you care about that drive your business? And then with that metrics part, I, uh, then asked a bunch of questions like, okay, on metrics, you know, where, you know, I did a Venn diagram and the intersection of what everybody says, those were the corporate metrics, and then the hinterland of the Venn diagram were functional metrics. And I said, okay, you know, where are these metrics? Where's the single source of truth? I get access. And then secondly, you know, how do you judge success on them? Meaning, do you look at it versus budget? Do you look at it versus benchmarks? Do you look at it versus trends? Finally, how do you want to see these metrics? Is it monthly? Is it or is it daily? Is it weekly? Is it quarterly? Is it or monthly? Quarterly, year.

Speaker C: Right.

Speaker A: And then I tried to. To use that information to put together dashboards, reporting packages, et cetera. And so, you know, to me, that's job number one. And if you see finance people are weak on that, FEI should jump in on that and teach. Teach this stuff. Like you don't. I never took a class on budgeting. Right, right. You don't take a class on it. You. You typically inherit somebody else's budget model, dig into it, learn from it, create your own, and then iterate. Right? And so, you know, that's a shame, but it is important.

Speaker C: I don't see the weakness. I mean, just to clarify, I don't see the weakness in fellow FEI members because I'm not working with them. I'm Just socializing with them. Where I see the weakness is typically not businesses that are looking for venture rounds and that are rapidly growing and that are looking to either do their next round or go public. I see it primarily in well established, often closely held family businesses, mid sized businesses that are looking to get sold. So that's typically when we come in and they may have had a CFO who is not particularly visionary and someone who's just been sort of clocking the numbers. And then.

Speaker A: Bookkeepers. Yeah, bookkeepers.

Speaker C: And for doing M and A. Every buyer wants to know where's the forecast and what's ahead. Uh, and there's often resistance. So it's those kinds of, of CFOs and maybe even CFO is the wrong word for it, but that are less skilled and schooled.

Speaker A: Yes, got it. Yeah. Well, I think in family companies it's a very different environment. As somebody who has like, you know, I'm not in it, but I'm close to a family company and you know, it's just, that's just a different, that's a different beast than a venture backed startup.

Speaker C: Exactly. Totally.

Speaker A: Anyway, anyway, I digress. So that's Kelly 2.0 and then. And you know, Kelly 3.0 has really been about board service. And I know that's what we want to talk about today. And you know, I'm fortunate. Uh, you know, I have kind of, I've figured out that for the commitment I want the job I want to do, the commitment that I want to make, the quality that I want to bring to the companies that, you know, I think for me, I'm on five tech boards and then I'm also a labor of love on a ski resort board. But that I've been on for almost 30 years back.

Speaker C: I noticed that in Colorado.

Speaker A: Yes, yes. Sunlight Mountain Resort in Glenwood Springs. Yes. But so I'm on, you know, I'm on two fairly large companies. Arista is a public company that is a $200 billion market cap. It's kind of in this AI, uh, infrastructure whirlwind. Right now it's public Genesis, which is a, you know, this is public, it's private, it's, it's PE backed. We have filed confidentially with a press release to go public. We have put, put that on hold because of the market volatility. Yeah, those are two larger companies. And then I was on two kind of mid sized SA companies, DataStax and Clary. Both have been bought this year. I replaced the data stacks role, which was bought by IBM with Cumulo which is a mid sized SaaS storage company. I'm currently in the process of interviewing for the Clari board replacement spot. I just accepted it off this morning but it's confidential. And then I'm on a very small women's healthcare company called hello Alpha. What I would say is I've loved my board work. First of all kind of big picture. I was really worried that I was going to feel about my board work like I felt about working at McKinsey where I just wanted to be part of the team. The thing that I didn't love about McKinsey that I didn't like being a consultant and then leaving. And so uh, you know I really. And so I was worried that board work is going to feel like that. And so I did, I did test it out with Data Sachs which I had been on the board for seven years when it got bought this year. That was my first for profit board that was not family oriented or you know, didn't come from kind of a

Speaker C: Nepo situation, venture venture back company.

Speaker A: And then, and I'll get into how I found these in a minute. But um, but so I, and I, I really found that the board roles did kind of scratch the itch because what I feel like the great thing about working on boards especially I'm now a full, full time board person, like I don't have an operational role is that you see, you know, when you're on five or six boards you see so much at a senior level. And so the learning and the experience is just fun. It's challenging, it's fun, it's strategic, it's senior. The quality of people you're around is if you choose well, which that's the most important thing in these things. Choose well.

Speaker C: You tend to interview most of the other board members when you're uh, considering a board C or just the executive.

Speaker A: So let me come back to finding in the process. But, but what I, what I loved so what I was worried about was that it was not going to scratch the operational itch, you know. You know, and, or that also the management like I love to manage people and what I found is the mentorship that you have with specifically as audit committee chair with the finance team leaders is just fantastic because you're with these, you know, sometimes young, less experienced but such smart people that are sponges, want to learn, want to build, want to do these great things. And so working with them has been completely just been great. And then what I've tried to do is keep a diverse portfolio because on the bigger companies, they're really less hands on because like Arista is a well oiled, um, machine. It's so well run, you know, so you don't, you know, you're really focused on governance. I feel like as you, as you, if you have smaller companies and you like to be more of a doer and operator, you really get to opine more on operational issues and help more at that level. And so what I've tried to do is have two big companies, two medium sized companies, two smaller companies to help scratch those itches. Right. And that's worked out very well for me in terms of interviewing and how I've found these roles. You know, as we all know, it's all about the network. Absolutely. And so Arista and Genesis both are led by former Cisco execs that knew of me or knew me through the Ironport deal because iron it got bought by Cisco. J. Sri Ulal, the CEO of Arista, was the sponsor of that deal. So we met professionally and socially through that. The leader of the CEO of Cumulo worked at Arista, left to be the CEO of Cumulo Data Stacks. I had interviewed for the CFO role the day that I got my Quora offer and I'd fallen in love with the CEO and the, and what they were doing. But I had also, you know, my heart was already with Quora. But later when it came around, I had already planted, you know, we had mutually planted that seed, a mutual, mutual respect and admiration. The CEO, uh, at the time, Billy Bosworth was not the CEO and it got bought by IBM. But. And so a lot of it was, I mean some of it's just, let's be frank, luck and being kind of good luck, good timing.

Speaker C: Time. Yeah.

Speaker A: Yes, yes. I think though a lot of it is having the right experience and really focusing your, you know, I think Kelly 2.0 made good choices there, not only in terms of company selection, but diversification of business models and also worked really hard and built a good reputation. So I think a lot of, you know, it's some of it's experience and reputation and some of it's luck and timing and some of it is just like working the network. And that's why organizations like FEI are so important, because the network really helps, you know, or like going to business school. To me, the reason I knew Scott Weiss was hbs. We met at HBS and you know, a lot of people say that the only value of going to business school is the network. I don't think that's true. But I think a big part of it is and that's why I usually advise people if you're going to go to business school, go to a big name or don't go because it's a big opportunity, costs, it's a lot of money and you want that, that valuable network coming out of it. In terms of interviewing, it depends on the size of the company and how the structure is the committee, how evolved the committee structure is. You know I found with Arista I didn't interview with every board member, but I spent a lot of time with the CEO and the non gov committee.

Speaker C: Mhm.

Speaker A: Right. Because they had a very established committee structure, a very established process. You know I met with the finance team obviously, but with small companies I tend to meet with the majority of the board, smaller companies, you know, the majority of the board and um, you know, obviously the cfo, the controller and the CEO. I think those are the three important. If I don't, if I'm not asked to interview with them, I asked to meet them before I accept a role. So yeah, so that's Kelly 1.0, that's Kelly 2.0, Kelly 3.0, which I'm super happy. I live in the Bay Area, I'm happily married with two kids. We're empty nesters and really enjoying this stage of life.

Speaker B: FEI Silicon Valley is Silicon Valley's leading professional organization for corporate financial professionals and tax executives. It's one of over 50 chapters of financial Executives International, the leading financial network for CFOs, advisors, planners and more. FEI AH gives over 9,000 executives around the world a toolkit of ways to share best practices, opportunities and connections. Boost your professional opportunities by going to www.feisv.org.

Speaker C: i wonder if you could talk to us about some of the sort of highlights. I guess you've given us a lot of highlights, but perhaps some of the challenges along the way. And then also interested in talking about some interesting deal war stories. I love deal war stories. So you can take either one of those questions first. But you mentioned data stuff was sold. Tell us a little bit about perhaps war stories.

Speaker A: Yeah, I'd say that um, first of all on challenges.

Speaker C: Yeah.

Speaker A: You know I think I kind of view that uh, as macro challenges and micro challenges in terms of career and then cfo. And for me career, if I focus on being a cfo, to me the biggest challenge day to day or year to year was managing conflicts of interest. Mhm. And knowing when to go to the board. Remember because the, because if you're in a situation where There's a massive conflict of interest and it's not being handled well by the CEO or the executive team. You as a cfo, you have a dotted line to the audit committee chair.

Speaker C: Yes.

Speaker A: And you need to take that seriously. And I have had to go to the board Twice in my 20 years of being, uh, a leader in finance about really tough conflicts of interest. And that is gut wrenching. And I feel like if any of you are in that situation, my advice would be a lot of CFOs have gone through this or heads of finance have gone through this. They may not be able to talk about it, um, but they've had to go through it. And you have to remember that you report to the board as well as the CEO and you have to apply your true north and do ethically what's the right thing, even if it creates a situation where you're going to need to leave the company, which I have left a company after going to the board, not because I was forced out, but because I felt like, you know, it was, it was the situation where I was, I needed to go. Right. I just didn't feel comfortable staying. And so to me, that is the hardest part, hands down, of being a cfo. Is managing that difficult? If you're in a difficult situation, managing the board versus the CEO, that's very interesting.

Speaker C: I'm wondering, uh, I'm fascinated at that. Um, uh, you know, you're making this point and I'm wondering if without obviously naming any names, you've had a lot of roles, a lot of companies, so no one will know. But can you give an example of a conflict of interest? For instance, what jumps to mind for me is I've seen situations where the CEO maybe is favoring relatives or favoring friends, giving them favored treatment for certain contracts or certain types of business. Business I've seen that. But there are many different types of conflicts. Or skimming money for personal use, putting expenses through the company, especially if it's more widely held, that are more personal. I mean, can you worthy of that ilk or.

Speaker A: Yes, I think everybody, the number one conflict you see is execs having affairs and misappropriating funds to Sports. I think 25% of the people in our audience have seen this in a company. Right. So I think another area that's hard as a cfo, at least for me, I was always very active in sales operations. I personally think sales operations should report to the finance, not sales, because interesting, because sales operations often owns a lot of the reporting of sales metrics. And also the comp plans and administering comp plans. And I feel like that intrinsically is a conflict if you have that reporting to the VP of Sales. But independent of where it lives, the finance team needs to be on top of negotiating sales compensation. I feel like the number one content area, if you put away the conflicts of interest that we just talked about, the number one like kind of area that my cycle that I spent cycles on as a CFO that was difficult was working with VPs of sales on sales compensation. And I think there you've got to be really, really. Well, first of all, hopefully you have a VP of sales. You, you need to expect your VPs of sales to act like corporate stewards. Like I think what differentiates a good VP of sales versus like a regional director?

Speaker C: Mhm.

Speaker A: You know, besides the normal stuff around that executive level versus a director, like thinking cross functionally and things like that is thinking being a corporate steward not just out for the team and themselves. And so first off you need a good partner in the VP of sales. But secondly you need to really, really uh, be data driven and model out scenarios. So I think the most important and, and have, you know, I think the most important hire I probably, you know, typically make after a controller because I'm not a cpa, is a good head of sales operations who is very, very data driven and, and technical. Right. In terms of being able to understand numbers and modeling scenarios, etc. Because you got to figure out loopholes and things like that. So to me that's also been a challenge and an interesting intellectual challenge. And then finally I talked about, you know, keeping the role, the rote part of the role industry and, and, and, and that has been something that, you know, I've really focused on innovating, you know, continually, you know, on strategy, people, process and infrastructure, innovating, automating, you know, just making things more and more efficient. AI is, you know, I'm not an operator now, but AI would be so fun to figure out how to apply to do that.

Speaker C: There's a lot of experimentation going on with AI and I'll tell you, we had a panel recently Fei, uh, and then I interviewed the presenter. There's not a lot of confidence yet in being able to actually use these AI tools.

Speaker A: Totally agreed.

Speaker C: Seeing the same thing, I mean it's, it's great for research and it's great for as long as you can double triple check the sources. There's not like set it and let it do its thing.

Speaker A: And where I'm totally seeing teams Innovate on this, but again from a board level. So I'm, I'm a couple steps away but is on the FPA analysis like you know, tagging numbers, replacing numbers for the quarter, like just doing all that rote automated stuff for report, report booking. And then also on like earnings calls like pulling in all the transcripts and putting them in a AI uh, tool to help summarize which companies are having issues where. How do we differentiate things like that? Just to help automate scripts and discussion points, whether it's public companies or to talk to boards about, about performance. Right. Uh, anyway, so keeping the role industry and just innovating and also I mentioned and not getting stuck in the same business model, I really, that was key for me because one, it kept me interested but also, you know, I think it really helped me be a better executive and a better board member. And again, people out there in finance like it's a great luxury in finance that the role is more fungible and that you can apply your role to different spaces, whether it's for boards, for, for profit, not for profit. I mean we should talk about how to get a board role. But, but I think one of the things that helped me get my first board member role was that I did know these different business models and could apply this expertise and pattern recognition across, um, you know, a new company.

Speaker C: Right, Company, Yeah. And I think also the investment banking and the consulting experience must have stood you in good stead having come up through those ranks myself. I know having dealt with every kind of business, whether it's it's resource based mining, forest products, manufacturing, software, you name it. And that's I think a tremendous experience for preparing you with, dealing with different challenges, both as a senior financial executive and also as a board member.

Speaker A: Yeah. And I think, I mean that was so long ago, but I do think the brands, again, kind of like the HBS brand. The brands help people take you seriously. Like they know, okay, they got a, she got a job at J.P. morgan, she got a job at McKinsey. That's, that's hard. It's a vetting thing. And uh, she learned some good generalist skills. I have to say though, in the Valley, consulting backgrounds don't parlay well because people, especially if you've done it for years, decades. Right, right. Because you know, people want, been there, done that. And I think sometimes if you've been in consulting or banking too long, they view you maybe banking a little bit less so depending on the type of company it is, but they view you a Little bit more of as an academic versus kind of a doer. So you have to be careful about that consulting.

Speaker C: Definitely consulting thing that I think that is perceived to be. And, you know, I think you made a smart decision diversifying out of consulting.

Speaker A: Yeah, I mean, I told my daughter who worked in Goldman for three years, I'm like, honey, if you don't want to be a. If you don't want to be a banker, career. Right. Because you're not going to learn the rest after that. And I think consulting similar to.

Speaker C: Uh-huh.

Speaker A: You know, once you manage a project in both of those, uh, organizations. Those types of organizations. So that's usually your third year. Once you're a manager, engagement manager or associate, you manage projects. I mean, they may be more junior, but you manage them. I'm like. And you talk to customers and you're not just crunching numbers in the background. Once you get that at third, maybe fourth year experience, everything else you're learning is going to make you a better banker, but it's not going to make you a better professional in a product company.

Speaker C: I think a more senior banker, certainly as managing director like RBC Capital Markets, found that I had to manage a big team, team of people. And so, uh, not. Not. Not only, you know, out schmoozing the customers and getting business, you're also managing teams of people, so you get that experience. But I, I agree with you. Unless you're switching industries and doing different industries day in, you know, it gets boring. So I'm curious. Nonprofit. A lot of. A lot of our. Our members who, you know, are aspiring for. Or public boards or even large private company boards, try to cut their teeth on nonprofit boards. And, and, uh, what's interesting with your. I didn't really hear much of that in your background. It was, you know, your route has been very different.

Speaker A: No, it's, uh. I just didn't mention it. But I. I believe governance is governance. So if you want to. And the first board is the hardest to get. Right. My approach was whatever came my way as long as. Again, as long as it met my criteria of, like, a good ethical team and culture, an interesting market, decent stage and a decent role, just say yes. Like, there are times in my career when I've been like, just say yes. Like, and m. You know, when I was young and then when I was working my butt off with two little kids, my husband was working, I was like, okay, it's not just say yes. It is, you know, don't feel guilty about saying no. And now, as an empty nester working part time. M. Like, okay, I can say yes again. But you know, I feel like with boards, your first board. Get it whatever you can. I, you know, I did a. My first boards, I had a couple family. I was lucky because my dad again was an entrepreneur and he had these different entities where he put me on this ski resort board when I was, you know, right out of business school. Which.

Speaker C: Interesting.

Speaker A: Yeah. Which is just fun and good learning. But like, you know, I mean it's some of. A lot of that is like farming, not software. Right. So anyway, but, but my first board in the Bay Area was a school board, a church board and a school board.

Speaker C: Oh, interesting.

Speaker A: And then I parlayed that into Wikipedia. So um, and again I got. Wikipedia is a top 10 global brand. It is not for profit, but it has an incredible budget, an incredible reach and it is one of the most complicated organizations on the planet. It's not governmental. It is so complicated. And so basically the Wikipedia role, while it was not for profit, was pivotal because it was a big organization, it was a top brand, it was very complicated and I was able to help bring about some very much needed difficult change. Uh, and, and so, and so I would say governance is governance. Get whatever role you can. Not for profits valuable. And you just have to tell your story appropriately when you're getting your first four private boards. Data stacks, as I mentioned, was my first for profit tech board.

Speaker C: Mhm.

Speaker A: Bay Area board. And I was a full time CFO at the time and that one came through an executive search firm. But I had met you or how did they found me? Okay, they found me.

Speaker C: Uh-huh.

Speaker A: And I don't know how, I don't remember, but this was eight years ago. But again, I had already met the CEO because I'd interviewed for the CFO role the day that I accepted my Quora offer. And so, and so and so that I think I had enough experience and enough connective tissue. And again, those two things are very important. That's why the networking is important, to get that role. And then once I had that other role were a lot easier. And, and I'd say Arista was my first public board. And, and, and again Jay Sri knew me through the Ironport acquisition and Ironport had an excellent reputation at Cisco. We were a great product, we were an amazing team and we were really a fun group and people knew it. And so, and Jay Sri had reached out to me over time about her CFO roles and unfortunately, biggest mistake of my career. I'd always said no. About to interview for Arista because I was otherwise occupied. I just accepted something else, et cetera. And, but, but the third time of the charm, she called me and said, hey, what about cfo? Never worked. What about a board role? And I was like, absolutely. And so in 2020 I joined their board. And so again, once you have a few boards, not only you're no reputationally is it easier, but also you just become much more experienced because you learn and you see things. And this pattern recognition again is very important. And so you know, when Clarion Datastax sold this year, it was very easy. Like I literally didn't launch a search and a couple things kind of fell in my lap and I said no to a couple because they weren't right fits. I found two that were perfect. Incredible, incredible fits. And it was much faster and easier than finding data stacks way back when, eight years ago. Right. And so. Right. Yeah. And so I would say the first thing is be good at your job. Leave things better off than you found them. Build a great experience. That's job number one. To get a good board seat is you need to be a great finance exec. Right. But the, but the, the, the. You know best point one. But point one A is lucky you. Every board needs a financial expert and you are perfect because you are a financial expert. They need acting or prior CFOs. And so be great at your job. Build your, your. And then you have an in. Right. Second.

Speaker B: Second.

Speaker A: Network. Network. Network. Third, be choosy, but don't be too choosy. Right. Like a board, a church, a, uh, cause you care about, that's not for profit, is a great first step and then build on that over time.

Speaker C: I think that's excellent advice. Talk to us if you would about serving as Audit Committee chair. Because I think that's a, as you've said, a logical uh, role for finance.

Speaker A: Yes, yes, absolutely. And Audit Committee chair or audit Committee, either one.

Speaker C: Right.

Speaker A: Yes. It's a great start. Like I didn't start as chair of data stacks. I evolved into that chair role. Um, but now, you know, I'm chair on, I'm chair on all the, on all the boards. All the audit committees I serve, I'm the chair.

Speaker C: Okay.

Speaker A: With the exception of Arista, we have a great. Lewis Chu is our chair and he's amazing. So Audit Committee chair. I would say that I view this in two parts. There is the, the well defined Audit Committee role.

Speaker C: Mhm.

Speaker A: Audit Committee role and Audit Committee chair role. You can go on any proxy statement of uh, any public company, any charter. And you can read academically what that role is. Right. Gotta you know, mentor the finance team and you know, make sure they're producing accurate financials. You need to pick your auditor, you know, you need to be, you're in charge of these certain policies and making sure they get sent in a company. And sometimes some are varied, some have cyber, some have esg. But in general it's very well defined and you just need to do the stuff you need to do. Right. But again, coming back to the rogue part of finance that's important but can be rote. Some of that stuff is. It's all important, some of it's rote. I think that the best audit committee members and the best audit committee chairs.

Speaker C: Mhm.

Speaker A: Are people who um, understand to take the time to understand the business. They don't just swim in their lane but they take the time to understand the business. The drivers, the team, not just the finance team, the team. The pluses, the minuses, the people. I kind of view it strategy people, process and infrastructure. They dig in on all those things and then they are cross functional advisors as board members. They're not just in their audit committee lane. I've been told, told that one of the reasons that I am a good board member and a good autography chair, because I'm m a Swiss army knife, I don't just swim in my lane. Right. I'm very comfortable opening. Right. And part of that's because I understand business, different business models. Part of that's because I've run not just hr, I mean not just Finance, but hr Legal Operations Trust and Safety. Like I was always the yes person. I always ran whatever anybody else didn't want to run and, and, and loved it. Right. And so, so but what that does is that helps me have more of a cross functional view. And so people out there, again, little point of interest. I don't know if anybody read the Matthew McConaughey book Green Lights but he always stops when he wanted people to understand the point he was trying to make. He'd say green light moment. You know, I say green light moment here is like run as much as you can. Don't just focus on accounting and finance and you know, like run hr. Like make it fun, run legal, run. Yeah, because it'll make you a better exec and eventually a better board member, if that's what you're saying. And you'll learn to ask the right

Speaker C: questions in these different functional areas. And I think often in life or in business anyway, Asking the right questions is really, really key. Um, by the way, is that good?

Speaker A: It is a fun, it's a fun book. It is a very fun book. I listen to an audible and he narrates on audible. He's an incredibly charismatic speaker. Funny. It is very funny. I was laughing out loud. But also good, good lessons. One of the things I've learned also just generally zooming out on just boards, being a good board member. You know, one of the things I've learned about parenting actually is especially teenagers and above is parenting is not about having the answer, it's about asking the right question. You want to have all the answers. You want them to not make the same mistakes you made. But like part of their learning is they need to make those mistakes. And well, being a border like that too. I mean, you don't want them to make mistakes but, but they will. And like part of it is it's not about having the answers. You don't know more about this company than the execs do. The execs are in it every day. You swoop in every month or every quarter. M. You do your work, you're prepared. But come on, you know, they know much more. It's much more about helping. What's helping them? Asking the right questions to make sure they're thinking through the angles, they're looking at what's around the corner and they're, they're cross, they're crossing their T's and dotting their I's. Whether you're an audit committee person or you're wearing your general board hat.

Speaker C: Mhm.

Speaker A: And so, and so, you know, I've seen board members who are real doers and I'm a doer by nature. Future come in and try to micromanage companies and leaders. And that's not your job.

Speaker C: No.

Speaker A: You know, and so you need to make sure if you want this board role that you can let go and focus on governance. Because a lot of times you come in, you think, oh well, I need to have the answers and I need to know everything immediately.

Speaker C: I can fix this.

Speaker A: Like first time managers, right? And you're like, oh, you know, you see this happening, you're like, oh my God, it's like a train, train wreck. I'm watching. You know, you need to take the time to learn, take the time to settle in. These situations are complicated and you're more hands off. Take the time to learn, you know, ask the right questions. Be a good mentor, be a good sounding board. Apply your expertise in pattern recognition, but not in A way like I never, I try to say to my children, you know, I never try to start my sentence with you should.

Speaker B: Yeah.

Speaker A: Ah, right. It's more like, what do you think about. Right. And so I, I actually feel like that's a good lesson for boards too. Like, you know, you don't tell people what to do, ask the right questions and be a trusted advisor because sometimes

Speaker C: you have to threaten them and put them, uh, off base. I mean, that's a delicate balance. Asking penetrating questions, but not also.

Speaker A: Yeah. And the other thing I'd say about is, is it's important. One of the things I think we in this, on this podcast have as an advantage over venture capitalists or like financial investors is m. We have, we should have much more operational and entrepreneurial empathy.

Speaker C: Mhm.

Speaker A: Right. Because we've been on the other side of this mess sometimes. Right. And so I hope that, that, you know, I feel like that helps me being on the other side and CF dealing with boards from that angle. Which by the way, is a great talking point. If you are interviewing for your first board role, say, hey, I haven't been on a board, but I have dealt with fab boards as a cfo and that, you know, you learn a ton from that. And you, and what you. One of the things, one of some of the most important things you learn are this operational and uh, and, and entrepreneurial empathy. Like, you won't make the same mistakes that bad board members have made with you. Right. And I mean, you don't want to diss on people, but like, you've, you're, you've taken those learnings, you've applied them to the approach of why you're going to be a better board member. Right. I think that's very important. And also you just see governance and you're in the room, so you see governance, it demystifies. Even if you're a CFO and not a board member, you see how governance works. And that's the most important thing is being in the room where it happens. Because then you know what it looks like, independent, uh, of which side of the table you're on. Right.

Speaker C: Sometimes I've seen boards and I've dealt with a lot of boards more, you know, as an advisor over the years, but boards that have lawyers on them. And sometimes I've seen situations where if there's certain timidness, you know, concern about, you know, legal things, number one, then the lawyers, if there's a lawyer on the board, a particularly strong voice may, may try to sort of dominate Things perhaps, you know, scare people. Have you seen any of that in your board experience or has it been better balanced?

Speaker A: Uh, I mean, I have in one particular board, it was actually a school board. Well, here's the thing. Lawyers are paid to be negative. Lawyers are paid. No, they're paid to mitigate risk. Yeah. They're not paid on upside, they're paid on minimizing downside. Whereas the typical leader, especially in a growing company, a leader is paid on upside. Right. And so you're going to have a natural conflict there. And actually I think balance is good. Like having a contrary opinion is good as long as it doesn't dominate, as long as it doesn't get to in the weeds. So I have seen a situation where a lawyer was afraid of his own shadow and we had to manage that. On the flip side, on my little ski resort board, I became chair three years ago and we completely. And part of my, I've been on the board for 30 years. My, my two families bought it out of bankruptcy in 1992. And so I've been on the work forever, but I haven't been that active. But three years ago I took over as chair. One of the things I did is I'm like, if I'm going to be chair of the board, we're going to blow up the board. We're going to have profiles, we're going to have committees, we're going to hire experts, you know, really help. And this five point that was, that was point number one. One experts we had did add was an employment lawyer. Uh, interesting. Now, now in a ski resort, ski resorts, hospitality, hospitality is very different from software. You have an HR issue a day. Right. I mean software, you may have one a month or you know, depending on a lot of. It's like mental illness, like people are depressed or anxious. But like in hospitality you have serious problems. Like you have people pulling guns on people. You have like, I mean it's just, it's crazy. And so we added an employer lawyer. Mhm. And he has, he's worth his weight in gold. I think it comes down to, you know, a board is like any team you need to figure out as the CEO, uh, or the chairman of the board of the lead independent or a combination of what expertise do you need on this board. And then that leads to profiles and committees and then recruiting spec sheets and good recruiting processes. And that's exactly what I did on the ski resort board. Like we literally blew up the board. It was a bunch of 70 year old lawyers, um, who were aging out and did not, didn't bring functional expertise. So instead of that we have a finance expert. I couldn't be that because I'm the chair. We have a finance expert. We have a sales and marketing expert. We have an employment lawyer. We have two CEOs. We have an operations expert because the ski resort's very technical. We have a water engineer and soil engineer because that's very important in ski resorts. Um, and so, and we went out, we, and we have three committees. We have a finance committee, finance, investment and strategy. We have a compngov committee. I um, wanted to combine those two which is kind of a trend because ah, comp is non gov is a pretty easy committee. So I feel like that's easy to combine. And then we have an ops committee and so, you know, things like that. But, but in this case we needed an employment lawyer. It was clear in other companies you may not need that, right? In other companies you may not need. You always need a finance expert. You always need a CEO in my opinion to help mentor the CEO. Uh, there's some things I think is, are pretty, pretty, pretty common. But you know, then you have to model the board. And as somebody who's looking for a board seat, play to your strengths, right? Like if you are a person who, you know as a hobby that if you're a runner and you really love Strava and Strava looking for a board seat like you know, go talk to you know, whatever, play to your strengths play, you know, or if you, if you have an expertise in. And you know one of the things that we talked about was CEOs kind of CFOs coming up through different ranks. Well, if you came up and you spent a lot of time in banking, um, go to, you know, your value add is much greater in a company like Open Door who's the majority of the finance job is to raise capital and manage the street because they're so capital intensive. Don't go to a cost of a uh, manufacturing company that needs heavy, heavy duty cost accounting knowledge and expertise and manufacturing experience. Like you have no experience that probably coming from banking. And so you gotta play your strengths both as a CFO trying to find the right company, but also as a board member looking for or as a potential board member looking for your next board job.

Speaker C: I think that's excellent advice. I do think serving on nonprofit boards can be good experience. I'll share a personal story. Um, and not a good one. Um, I was asked to serve. I'm very involved in the arts I sing in a big choir. I've been involved in symphony and the arts over the years. And I. Oh, this goes back 10 years. I was asked to. I've lived here 28 years, and I was asked to serve on a symphony board here on the Peninsula. And it ended up being one of the scariest and worst experiences of my life. The executive director ended up in jail. I swore to myself I would never serve on another not for profit board. And, um, I think in that case it was very clear that governance overall was seriously lacking.

Speaker A: And. Well, in any. Is this. Oh, sorry, go ahead.

Speaker C: Yeah, I'm just going to add one more thing. I've, uh, also heard that condo boards. Friend of mine, lawyer said that one of the worst boards to serve on is a condo board, because there's more litigation involved in condo boards based on the quality of people who end up serving and to never serve on a condo board.

Speaker A: Well, here's the thing. I mean, we can dig down into, like, little cases, but I feel like whether it's being a CFO or chair of an audit committee or just a board member, again, I come back to, you've got to choose. Well, because there's, there's risk in these things. There is an audit committee chair, you are a primary fiduciary, and you can go to jail for things. Right? I mean, I think unless you're really outright fraudulent, most likely you'll just be taking reputation hit if something goes wrong. But. But you've got to choose well. And that's why I keep coming back to people and culture first, because. And people in culture, there is always a leap of faith in that. I mean, in any relationship, there's a leap of faith.

Speaker C: Right?

Speaker A: There are ways to minimize that leap. Right. And it's either through this connective tissue we talked about with networking, or it's through research and backdoor references. Like, I. Whenever, like, I've been interviewing for boards since Clarion data, um, Sacks got bought. I have gone on, I have checked references on people. I've figured out connection points that we know.

Speaker C: I have.

Speaker A: I've looked, I've watched YouTube recordings of them speak to get a sense for their style, what they say, how they live their lives, how they show, what they represent. Like, there are so many ways in this day and age to do your research. My main point is you have to choose well, and people and culture are the most important thing because you can introduce risk if you're around fraudulent people into your life and you don't, don't be lazy, do do the work. Work. Just like with anything, you got to do the work and choose well.

Speaker C: And I think these days there's a lot more information available on how to research people. I'd say in the last several years, I guess. One final thing or you know, we've come up to the hour here, one final thing. I'm curious to know if there's anything in particular you learned when Data Stacks was sold or any sort of deal experience that either as a board member or as you CFO that you'd like to share with us. Any sort of interesting learning war stories?

Speaker A: Uh, yeah, sorry, we never. I didn't get back to the war story. So I mean I, I have been a part of so many M and A deals. Like I worked, it was my job at JP Morgan, M at hp.

Speaker B: Yep.

Speaker A: And then financings like I've raised hundreds of millions of dollars as CFO of all these companies and IPOs. I mean Cisco and, and then the major deal is Cisco get buying my beloved company Ironport. Yeah, I mean Data Stacks to me like kind of a. Less of an interesting case study, but I would say Cisco Ironport was very interesting. The other thing that's very interesting is getting a company ready to go public from a board, from a, you know, in terms of deals like an IPO and just that whole transformation process, you know, getting it ready, which again is all that's very complicated. So I'll start with the Cisco Ironport deal. Um, you know, we talked. So Cisco was our first enterprise company and we talked to them for two years about being bought. And I guess the main learning that I learned there is you gotta be patient. Cisco started out offering us $400 million and we were getting ready to go public and we. Well when the conversation started, they offered us $400 million. We said no. And we said we're gonna run a dual track process. We're gonna get ready to go public. So, so we went through the whole process of getting ready to go public and our bankers told us we were worth, we probably go public one to 1.2 billion mhm. And, and so, and, and, but, but we, there was hair on that because this was at the time of BSOE where you know, it's the precursor to 606. And so we had this interesting business model where we had a hardware appliance but we also had sold software on top of it. So like anti spam, so these antivirus, these software subscriptions. So one of the, these are some of the first SaaS businesses. And we went to 10 analysts on the sell side. And we said should we establish BSOE and try to spread all of our sorry. And take as much upfront as possible or should we give up? Because it's very complicated. Because every time we introduced a new software blade we'd have to restart our estimated selling prices and our whole. It was just terrible. So we said should we do this work to establish it so we could take revenue up front? Because at the time upfront revenue was gold. It was like a drug. You know, you wanted it because it was faster growth, right.

Speaker B: And then.

Speaker A: Or should we just give up and just ratable everything? And five analysts said establish VSOE and five analysts said don't. So we're like, okay, we're screwed. Because if the analysts don't understand this and it's not clear we're going to be penalized by path to market when we go out no matter what decision we make. And we were also an appliance company that had a hybrid hosted solution but the world was moving to cloud. And so we're like, yeah. So we had this whole okay, we could go public and be standalone for 1.1 to 1 2. Cisco is offering us 4. We got Cisco up to 835 million over two years. This happened, this negotiation, this constant dance and we're finally bought.

Speaker C: Ask were there any other. So I'm sure your bankers ran a uh, process, not just dual track preparing for the ipo, but also talk to other potential buyers. Were there any other potential buyers in the mix or it was just IPO versus Cisco.

Speaker A: We bucked the trend on this and we did not run an auction or process because we wanted Cisco. Cisco was the perfect home for us.

Speaker C: Strategic.

Speaker A: It was just the perfect fit. And they said don't run an auction. And we felt like we're going to say that. Well uh, of course they say that but. And again because we had, we were, were a healthy standalone company. We had the IPO was a viable option because we had that option. We felt like that was enough leverage for us and it was. It ended up now we got into 835. Could we have gotten them more? Maybe. But we felt like the 1 to 12 first of all, IPOs aren't liquidity events. Right. You gotta wait for your lockout and there's all sorts of hair on that. Then we had this hosted slash cloud problem and the biggest big, you know, Microsoft had already bought that company in the uh, space. Google had bought Postini like we there were. The consolidation was happening.

Speaker C: Yeah.

Speaker A: And m. So we. So I guess so. So we ended up deciding to sell and we had this situation where the other learning here is a lot of times the executive team and the venture investors are not aligned. There's conflict. Right. So the venture investors have these uh, these bizarre dynamics around their funds. So we were the star in an adventure investors fund. Um, and they really, really wanted us to stay standalone because they were trying to cover for the rest of the fund. And an $835 million exit would have been a 10x but they needed a 20x. Right. And so they did not want us to sell. One of the learnings here was our founders were super first principled thinkers again and they negotiated a term early in the term sheet that wasn't standard standard that said if the company's exit, if we got an offer for twice the venture amount invested, it went to a common vote instead of a preferred investor vote. And because this 835 was the 10X, we could basically say to the preferred investor, sorry, common wins because the founders had a bunch of common and this employees. And so we were able to do something that the venture investors would have tried to stop us. And so the lesson there's there, it's not a war, a horror story, but the lesson there is.

Speaker C: Mhm.

Speaker A: Early on finance, you got to help your, your, your founders and your CEOs make sure that these deal terms make sense. Even if they're market, they may not make sense for you buck the trend, especially if you have leverage because you set a precedent that you can never change. They could come back and bite you. The other lesson is, you know, don't be greedy. Like we ended up taking. It was a very great outcome for our employees. Even though we didn't go public public, we got faster liquidity. And it was, it wasn't as much money, but it was a very good deal and it was a great home for the stock.

Speaker C: For stock or was there cash? There must have been some cash you could choose.

Speaker A: Yeah, you could choose in cash. The problem is you, you paid taxes if you didn't have capital gains already. And so people who needed to invest, uh, you know, kind of let the capital gains clock start to take stock. But if you wanted to get cash, you could take cash, which is also so, uh, uh, really nice. So I mean there's so much I could talk about that deal, that experience. But yeah, it was a wonderful experience, a great company. My husband was like, you're so lucky. Some people spend their whole career to work at a company like Ironport. And never see it and you get it right out of the game as your first startup. I was like, let's better be lucky than smart, my dear.

Speaker C: That's a wonderful story to end on. Well, Kelly, I'd like to thank you very much for being our guest today. It's been a real pleasure, uh, interviewing you, and I'm looking forward to our panel on January 27th.

Speaker A: Thank you, Jan. It's a pleasure.

Speaker B: Thanks for listening to the Strategic CFO. To learn more about FEI Silicon Valley, go to www.feisv.org. you can find our posts on Jan Robertson's LinkedIn or the Finding Financial Executives International Silicon Valley LinkedIn page. We'll see you next week on the Strategic CFO.