Financial Models: The Key to Successful Growth & Fundraising Rounds w/ David Greenbaum

ABOUT THIS EPISODE

The most challenging aspect of fundraising is telling a story around the numbers.

Most founders excel at communicating their passion and communicating the need their product is solving for, but it’s communicating the financials and the business dynamics—the FP&A—that often trip them up.

Wouldn't it be nice if there was a software platform that could help you out with this?

David Greenbaum thought the same thing while shepherding his previous startup, Boost Media, through fundraising rounds.

There wasn’t a platform at the time centered around financial models, so he built one—OnPlan—where he serves as CEO.

Topics covered:

-Combining the strengths of spreadsheets with engineering best practices

-3 reasons to develop financial models

-Why agility is the one true competitive advantage for startups

-The value of thinking backwards and generating scenarios

This discussion with David Greenbaum was taken from our show Startup Success. Contact David at david@onplan.co or on LinkedIn at linkedin.com/in/davidgreenbaum and visit onplan.co.

If you want to hear more episodes like this one, check us out on Apple Podcasts.

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Welcome to start up success, thepodcast for startup founders and investors here you'll find stories ofsuccess from others in the trenches as they work to scale some of the fastestgrowing startups in the world stories that will help you in your own journeystart at success starts now welcome to start up success. Today,David Green bomb is joining us, who is the founder and Cel on plan? His secondstart up, a David was the CEO and founder of boost media as well. So it'sgreat to have David in the studio. He has so much experience David. Welcome.Thank you for being here today. I appreciate thank you, so I'm excited totalk to. I want to get into on plan and what you're doing there, because I'veheard so many good things about it from the Brooklyn CFO team, but before weget into that, I want to talk and tell people about boost media, because it'sso many that just the dream right you went through. You know fun raisinground seed through series C, so many successful rounds, and then you werepurchased by ad labs correct after about six years, and there was a lot ofmedia around it, and I remember boost media as a marketing person. It was youknow, quite the thing back in the day, so tell us about that. You know whatwas the motivation of starting it and kind of the whole journey, because Ifind it fascinating yeah. So I was always interested in starting abusiness. Frankly, I would have been just as happy starting a Defermonpactor company, probably but yeah. I was working in PA for acompany called Interval, Leisure Group out of Miami. It was an IT port, poliocompany at the time, and I was involved in the acquisition of a hotel chain inHawaii, and I did all of the modeling and new diligence for it aloof the deDiligence for it presented it to very dillard Iz and we ultimately ended uppurchasing this hotel chain and when we...

...started we took over their digitalmarketing at the hotel than that we purchased and we saw that theiradvertising was underperforming. The bench marks that we saw, as you know,where it should be hitting, and so we ended up creating a competition with inour group. A to company interval eased a group to write better as the personwho ended up being my coke bounder for that business ended challenging us towrite. You know the seventy character text ads for better Gogle ads. Heturned out how we were able to write a better ad and we felt like there was areally powerful dynamic and that play there. And so, ultimately, we ended upbuilding boost media to allow ter the crowd horsing of ad text creative, andwe also ended up building for a software support. The market place andthe the software performance managed the ad contributions, and so you know,I think it's always gold as an oncet when you experience a problem firsthand and, and that really turned out to be a wonderful problem. So how do youbull generated and creative it as well as how do you ensure that you're running the bestcreative at all times yeah? It was very ground breaking at the time, becauseGoogle ads, you know is so it's very challenging. It continues to be selland it was such a fresh approach of looking at the problem, and so how isthe fund raising journey because you went through so many round successfullyand you raised so much money which you know is very difficult to do. How wasthat journey? You gonna? Ultimately, as a start up founder, you put a lot oftime and energy into the whole fundraising process and I think weended up doing seven different financing events o that boost, and Ithink, a lot of my experiences while I was at boost really. I was sort of asecond example of sort of getting this...

...direct exposure to pain, points thatultimately led to meet the founding on plan, and so I think it was myexperience is both friend in the fundraising process as well, as isfrankly operating the business that really set the stage for wanting tostart on plan, and I think what I was experiencing when I was running thebusiness boost was that there really wasn't an FA software in the marketuntil you got to maybe around two hundred employee side. Now, at the time,sort of the low and soft part that you can purchase with adapt of insight, Ithink, was called at the time rather than planning, and so I just realized-and I was feeling like I wish there was a soccer carom that but helping or helpme both to run the business as well as when it comes time for fundraising.That would allow me to most effectively communicate the business dynamics.That's interesting and I'm glad you brought that up, because in ourconversations and in the work we do, that's the challenging part in the funraising around is telling that the story around the numbers right, becausethe idea- and all of that is you know the founders so excited about it. Butit's the numbers. So, let's move into the inspiration around on plans. So afterthe acquisition of boost media did you immediately move into creating on plan?I mean I want took a whole time off, but a orning to the vivor ideas in myhead and the thing I kept on coming back to was:What's the thing that I'm passioning about and in some ways I think I thinkabout myself as the twenty year. Excellent freshes nerve really is notnoisings rat and I started. I started thinking about how I realized thatspread sheets are the one thing: the consistence you through all of theroles that I've had, whether it's been as an Antroni everdent in centrecapital PNA and all you know in all of those rolls of intensible usingspreadsheets, and I think that anyone...

...who has spent a lot of time in spreadshe has this love hate relationship with them. And so you love spreadsheets, because it's a coding language, I would argue, they're powerful,they're, flexible, they're extensible. You have many billion dollar companiesthat are running their entire FA processes of bread, pies sort of on thelove of the Ledger, but with equally chose people, hate spreadsheet and theyhate spreadsheets, because you're constantly trying to import datainto them. They're not intuited. In your key data set sources, they're, notvisual environment, they're, not collaborative in the way that you knowwith roles and permissions and spread tods are fundamentally switch.Armani Ed. You know, I think, there's two billion spread. You Know Excel atseven hundred fifty million users GC five, hundreds and millions of users,and so they're designed to spread sheets, but they're, not optimized, forthe use cases on fpend. So things like a scenario, analysis and things likevariant. Analysis require a lot of extra effort to both produce and thensort of and to maintain over time, and as I thought about the company that Iwant to build next, and I think the idea that I had was I'd love to buildsomething more. I can keep a thing that a lot of out the spread she I eitherfamiliarity and the flexibility and then fill in the deficiencies. And thena lot of the deficiencies can be very easily addressed in a in a formans environment, and I thinkthere was another key thing that I've thought about, which is the way thatteams and people are doing tpa have not evolved substantially. In the pasttwenty or thirty years, you know there have been purpose: bills have tools forsells and marketing and HR and often engineers to make them more productive,but when it comes to finance it for the last team that is still working, youknow exclusively in spreadsheets and...

...that I started to think about it. Istarted think excel and J when you're building your model, you're reallyacting as a software engineer, so there's a lot of parallel to theengineering industry, but we haven't really adopted a lot of the bestpractices that are common in engineering. As an example, I thinkpeople build financial mol in a very organic method. You don't necessarilystart off with architecture. You don't mass things out ahead of time and manycases you end up with these Horo Spaghetti models. People are nottracking the changes, they're, not commenting the changes and you're notsort of tepti individual component of the model, and you know the bestpractice. I Pi haven't really adopte to separate the role of the builder andthe Qa team, a D and, ultimately the end user, and so I think a lot ofopines and co can relate to going into meeting and not being a hundred percentcomfortable with the numbers and, if you think about it, you know like theperson who's building the financial model have the unenviable role of alsoin many cases, haying the model and what really ends up happening is theCEO or the board and becoming sort of the Qate for the financing,which is a term that AFI. So, ultimately, you know wanted to buildsoftware that leverage the strength of spreadsheets and he also helps peopleto adopt the bat practices of of the engineering world into the I wor. Thatis such an excellent answer, because, first of all, you explained that theneed so well and the problem out there. I've heard that from so many people onthe BOKLA team, about spreadsheets that love hate and where you know it hindersf PA and then the the need that you're trying to solve. You can just hear yourpassion around it so tell us, then more about on plan and how you're solvingfor that, because that's what I hear all the time when I interview founderson the show is that nervousness about...

...the numbers in their pitches, rightthat that's where they're going to fall apart, because that's the part, youknow least totally so thin. The first thing that you know so the way that weaccomplish this dream, a sort of are this goal of giving you the basketballwork, giving you the best of spread sheets as well as the bout softwarewe're. Actually we built on on top of Google seeds, and so essentially, what we're doing is: We'veadded data integrations Davida, Ization role and permissions scenario,forecasting you know and variant analysis natively into a fat layer, andthen we've also built out a multi dimensional data vas, because breadsheets are awesome for many things, but the more data you put into them, theless performe they become, and so we've added both Adinit as well as us. APPENApower tools onto Google sees to make the team more powerful and to reallygive them a forthand tool like every other department and one of the uniquethings about on in you can log into an pine use it rect corect lit from there.You can build a formula that you can run becret, but you can also use itdirectly in Google sheet, so you literally do not have to give up yourspread for the modeling work that you have and so got be. The analogy that Ilike to use is that we're giving you what I would call an iron man suit or asort of super powers for your Google seats, preaches and mals, and then youknow, ultimately, why do you want to build a financialmodel like? Why is an important develop financial model? What, and you know Ithink, at the end of the day, I think there's really three key things thatfrom an end user perspective that are critical one, I think, is it's reallyimportant to over visual at your data. I think PA is to Tabular, and so Ithink, you're able to strand and...

...understand performance much better in avisual format. I think the thing that Hun does head and shoulders you know, Ithink it's really our strong as suit is the way that we do scenario forecastingand I think, at the end of the day. That's why you build a financial plan,is to be able to generate what it scenarios and then, of course, what'sequally important, is to understand parent and all doesn't understand howyou're out he your performance as deviating from you know yourportapotties operating plan, and so you know those are really that it sort ofthe use case is the DADIVAE, the scenario, analysis and the variantanalysis that we heared on Clint on Pine Port, that's great especiallyaround the visualization, because that's where some of the bestconversations happen. You know when you can really see the trends and what'shappening, and then the scenario planning I mean we all saw that withcoved I mean you know. Our clients that were prepared could pivot a lot faster,and you know they're doing really well right. Now we saw some really greatpivots. You can come out of those things stronger when you're preparedfor them undergo. I think you need the agility to be able to generate thescenarios on the fly to be able to have the different teams contribute to them a big colters. You know the internaland external state holders. I mean you need a strong, FO partner. You know tohelp you to understand what the lever should be with the right number offactors to vary between them, but I think yeah important. You know theCovin has given us an appreciation for the need to you know reforesting thefort could be important as in cold, be an annual protest, and I think wevolverin seeing that really something that we need to be able to do on a much more.You know on a port early in the best hit on a monthly basis and so yeah. Ithink that it really, I think, the injust you know our that PA world. Iscenario planning is really a pretend center be right. Do you have a successstory you can share with US yeah. I...

...think terms of success stories. Thething that, for me is the most gratifying is when customers have anarray of options to choose from, and you know helping them to guide thispath of potential future outcomes, and I think the most start example. Thistends to be during Sun races when you're preparing it and really, I think,we're here towards companies that are probably know series a series B, R Cand so watching these companies going through their fun, raising propiceswith you know, watching them go public even and then watching the investor iscoming and to evaluate the scenarios sort of lookunderstanding what parts of the doesn't they're drilling into. I think that's.That's really one thing that I found very gratifying and then you know, Ithink the other thing that I'm really excited and happy about it isultimatelywe've built the tool for finances, but really the vision, andthe hope is that this can be a tool that that finance sort cast caveinto the rest of the organization and one of our clients has rolled this outactually to their entire organization, and it's pretty fascinating and reallythe idea that you have the FPS have their views of their performance andtheir views of how the opportunities that they're generating are flowinginto the can. Then you have, I ibot account in executive. They canunderstand if they're on plangon target for hitting their metrics, their quotasat our commissions are going to be the Tiensiert e Thas all rolled up into anaggregate, podcast and really is sort of you know you see the cat getting on.These O cares from the bottom to the top of the str understands, but you sitkein opportunities that I'm generating one howers that relative to my to mygoal. My my target, you know how the...

SDR contributing to the overall annualplan. You know where we at in an annual plan, and so you have he sells in themarketing teams and like the Harky, well all understanding how theircontributions within each of their functional areas contribute to the bigpicture goal of the company, and so ultimately you know I will Juliosuccess. You know I one of the keep things is how far and how prevale youknow. We can sort of push into the entire organization, not just thefinancial department, that's fascinating, because, as somebody in amarketing role, you want that data. You want to be able to contribute to theoverall strategic, you know, plan of the company and have that informationto show where you are and where you can improve yeah. I think it's even morethan that. We want to facilitate discussions and conversation and whereit's not just sort of a unilateral sort of like where there can be feed backlips, and you know where you can take dollars from one house with them into adifferent channel and even cross departmentally. You know what happensif we take this software purchase and sell instead of allocated towards anextra you know: Product Marketer, for example, but allowing feedback loopsand I'm really facilitating the collaboration between departments andthe scenery of planning the podcast. You know sort of allowing marketing tounderstand various iterations of their plans, and we want to make it much moreof a bidirectional conversation rather than sort of unilateral like pushingand falling right and those feedback loops. Those are what help contributeto. I think you know startups some of their early successes. You have to beable to make those adjustments. I think, when you're running on those kind oftight margins, as you know, yeah I e agility is the one true. You KnowCompetitive Advantage that start up have relatives to incumbents and youreally want to maximize that strength...

...as much as you can. I love that sobefore I let you go along those lines, any kind of last words for advice forstartup founders, just because you've had such an Accessu run with boostmedia and then now you're already in the midst of something. That'sincredible. I know any insight you have would be greatly appreciated. Yeah, Ithink, O two thoughts. I would say the first one. I think the thing that I'vealways found most helpful is to work fat for in general and to constantlyyou know, push yourself to think backwards, think backwards formilestones and really understand all of the investments that are necessary toget you there and to no sort of a reverse engineer. You know, but but youknow you have to be queer on what the thresholds are, that you're targetingand then you know, align your resources against those, and then you know I'm ina you know, I'm a spreadsheet Nerd, I would say not just an ex elner and Ithink, being able to generate scenarios and being able to have a really strongforce, that of data and place. Your actual need to be good, your data thatneeds to be good and one that in play, you know being able to to generatemultien for the future, understand the implications of each of those and usethose to generate even more scenarios. I've found to be incredibly usefulstartups are very fluid businesses. You need to be putting yourself in aposition to understand. Like am I on the right path. Do I need, to coursecorrect and really you're always a course corect and how hard you need topull your various levers, but so I think, really to think backwards, oneand then to just generate scenarios for the future to understand theimplications of the course corrections. You're constantly making that's great-and I like how you phrase that you're always course correcting, because I'veheard that from other founders e that...

...that's how it feels so, hence why thescenario planning is so important. So how can listeners get more informationon on plan yeah, so you can go to plan the CEO and you can call it on Linkedinand our facebook, or you can email me on David, that I'm planned that see youout to the best way follow fantastic David. I know you're very busy, sothank you for taking the time to be here today with really insightfulconversation. It's always fascinating here from people who have done it andare doing it again. So thank you for your time. I appreciated yeah. It's agreat opportunity and thank you. You've been listening to start upsuccess to make sure you don't miss out on future episodes subscribe to theshow in your favorite podcast player. Like would you hear Hap the number ofstars? You think the show deserves an apple podcast for more tools andresources for your own start up. Success check out berkely associates.Thank you so much for listening till next time. I.

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