Joe Garafalo of Mosaic on How to Bulletproof Your Business with the Right Tools

[00:00:00] Joe Garafalo: With a million active subscribers, if you don’t have the right technology and you’re not leveraging engineering resources, how are you gonna come up with all the financial metrics? ‘Cause you’re gonna break your spreadsheets. This stuff does not scale. And that’s when the light bulb for us really went off is like, “We need a solution designed to solve some of these modern-day problems.”

[00:00:19] Intro: Welcome to The Role Forward, a podcast for the next wave of finance leaders, especially those looking to transform their roles by making smarter, faster, and more profitable business decisions using the power of technology and a forward-looking approach to finance. Listen in to learn how to get out of the back office trenches and become a more strategic partner within your organization.

[00:00:43] Joe Michalowski : Hello and welcome to another episode of The Role Forward podcast. My name is Joe Michalowski, and this episode is brought to you by Mosaic, a strategic finance platform that transforms the way business gets done. And today we have a bonus episode for you. We had our COO and Co-Founder, Joe Garafalo, on Ramp’s FinOps Today podcast.

[00:00:59] If you don’t know Ramp, Ramp is in the spend management space. They do corporate cards, they do bill pay, they do expense management. A real sort of media darling in the startup space. They’re growing super fast, and we’re happy to be able to work with them to some extent. And, you know, it was great to have Joe on their podcast and talk about all the things that, that he’s been through, which is really going from a strictly finance role to, you know, shifting into sales and marketing as the co-founder of Mosaic.

[00:01:26] Talked about his take on spreadsheets versus like what a modern finance toolkit needs. And talked about kind of starting a finance function with, uh, you know, new hires and, and who should be that first hire in finance. So wanted to give a chance for everybody to get a, uh, a listen of that episode. I thought it was really great.

[00:01:44] And if you haven’t checked it out, Ramp has a, uh, new season. They do seasons of their podcast, and the latest season is about recession-proofing your business. At times like this, with the downturn in 2022 and 2023, looking a little tough for everybody, there’s a lot of great insights in that season of the podcast to find out, you know, how you can run your business and grow sustainably and keep things moving in the new year, while, while times aren’t as great as they have been in the last 5, 10 years.

[00:02:09] And so I encourage everyone to go check that out. I’ll put a link to it in the show notes. Without further ado, I will turn it over to the Ramp side, and you get to listen to Joe talk about, uh, his finance background. Enjoy. And as always, thank you for listening, and we’ll talk to you on the next one. 

FinOps Today and Joe Garafalo Introduction

[00:02:23] Alex Song: Hi there.

[00:02:24] Welcome to FinOps Today. On today’s episode, we are joined by Joe Garafalo of Mosaic. Joe, how are you? Welcome to the podcast. 

[00:02:33] Joe Garafalo: I’m doing great. Thanks for having me, Alex. Excited to be here. 

[00:02:35] Alex Song: Absolutely. 

[00:02:36] To Ramp and Mosaic, but we’ve actually known each other for, for quite some time. We work with you guys quite intimately on the FP&A side, obviously, and we also have a shared dream, a shared mission, right, of modernizing financial operations.

[00:02:49] And we’ll get into that much later on in, in the podcast. But for now, just want to congratulate you on your recent fundraise. Obviously, you know, very exciting developments coming into 2022, and it’s just very good to, to have you here on the podcast. 

[00:03:04] Joe Garafalo: Thanks. Excited to be here. And there, there aren’t many companies that I, I like more than Ramp, so thanks again for having me.

[00:03:11] Alex Song: That’s awesome. So Joe, maybe just to start, maybe you can tell us a little bit about Mosaic and what you guys do and give us the high-level overview, and then maybe we can delve into a little bit into your role, your experience, and you know, how you got to this place. 

[00:03:26] Joe Garafalo: Yeah, to start talking about Mosaic, I think it’s important to go back to kind of our Genesis story.

[00:03:30] So, my two co-founders, Bijan and Brian, we met in 

[00:03:34] 2012 over at Palantir. We were kind of the first wave of finance hires. And when we joined Palantir, they had just gotten their billion dollar valuation, and we thought we were joining this shiny company that had everything all figured out. And when we got there, it was quite the opposite, right?

[00:03:48] So we were a small team tasked with building all the models, understanding all the analytics about the company and everything at this point was still on paper. So how are we gonna, you know, grow this company into this hypergrowth phase with the infrastructure that we had? So a lot of the work that we did was, you know, building the financial infrastructure for Palantir, understanding how all these different systems were gonna be interconnected, and how we got information to different stakeholders across the business quickly and reliably.

[00:04:19] So spreadsheets were really the only thing that we had at the time to do that job effectively. And by effectively, it meant like we were sleeping under our desks every night. We were catching lots of late Caltrains back to SF from Palo Alto. So we, we had to figure out a better way to do things. And the better way was through technology,

[00:04:37] so all of us on the team learned SQL. We pumped all of the data from those different cloud-based tools into essential database and wrote a bunch of code to harmonize all the different data sets. So that essentially what we had was a golden framework that you can use to ask any question about the business and get a reliable answer from.

[00:04:55] And when we had that, that thing built, the rest of the business noticed pretty quickly that we were now able to answer really hard questions in less than three weeks, which for us was, was light and quick. So we built a front end for that tool, and different department heads were able to log in and see how the business was performing.

[00:05:12] And it really changed the way that we, at Palantir, were able to make decisions. So fast forward, you know, 10 years later, we’re building Mosaic. And, and Mosaic is essentially the productized version of that thing that we had built at Palantir, so that finance people can connect their systems, understand their analytics, and use those analytics to, you know, plan what the future of the company looks like, and, and get the right people to the right information at the right time.

[00:05:39] Alex Song: And who is an ideal customer for you, guys? What’s the right segment? 

[00:05:43] Joe Garafalo: Yeah, so we are focused on B2B SaaS companies today. So anywhere from, you know, 25 to, to 500 employees is our sweet spot. 

[00:05:53] Alex Song: Got it. And these folks are generally or exclusively based in the US for now? 

[00:05:58] Joe Garafalo: No. We’ve got customers all around the globe, so UK, Australia, South America.

[00:06:03] Alex Song: Okay. We’re, we’re gonna delve into that in, in quite some detail in a little bit. But for now, tell us a little bit about your personal background. Obviously, you spent some time at Palantir, but you know, what about prior to that? Were you always in a finance function and, and what does your journey look like from, you know, before to, to being a founder? 

[00:06:20] Joe Garafalo: Yeah, that’s a great question. I’ve always been a, a finance guy at heart, so I grew up on the East Coast in New York City. Went to school at St. John’s, very strong finance and accounting programs there. Right after school, I joined the Big Four. I was over at KPMG for about two and a half years until I got a call from, from Palantir.

[00:06:38] The thing that really attracted me to Palantir was they were helping stop IED explosions in Afghanistan. My best friend at the time was first lieutenant in Marine Corps. I was like, “Wow, this can save my buddy’s life. Like, how could I not join this company?” So, got to join Palantir, was there for more than five years. And then after Palantir, I went on to hold a couple other leadership positions in finance, vice president of finance over at Axoni, which is a, a blockchain company in New York.

[00:07:03] I think I’m actually representing them well today at my best. And then later at BarkBox. BarkBox has over a million active subscribers for dog toys and treats. And if anyone has the dog, shoot me a message, and we can connect with some codes. But, um, at BarkBox, this is where the data problem of finance really hit me.

[00:07:21] It was like with a million active subscribers, if you don’t have the right technology and you’re not leveraging, you know, engineering resources, how are you gonna come up with all the financial metrics? ‘Cause you’re gonna break your spreadsheets. This stuff does not scale. And that’s when the light bulb for us really went off is like, “We need a solution designed to solve some of this modern-day problem.”

[00:07:41] Alex Song: Incredible. And is this safe to say that now, you know, obviously at Mosaic… I mean, everyone works on finance, right? I mean, it’s what you do, but are you also managing the internal finance function, or how should we think about how your team, your company, what people are focused on? 

Joe’s Career Journey and Transitions 

[00:07:57] Joe Garafalo: Yeah, so I’ve transitioned from, you know, the pure play, VP finance, CFO to leading our sales and marketing team.

[00:08:04] So that’s a whole nother conversation of, you know, are finance people well suited for sales? I think actually we, we, we can be quite effective there. Internally at Mosaic, everyone at the company has access to the product. And what that does is allows people to see the numbers and also allows the relevant teams to make the right decisions based on the data.

[00:08:24] We have a great internal accounting team. Shout out to Ann on our side, who keeps things in order. Because so many of us have finance backgrounds, you know, we have our model published in the application and people can build different scenarios and versions from it, and then we usually align around three that we share with the board.

[00:08:41] Alex Song: That’s fascinating. I, I actually, you know what? Let’s actually double-click on that. You know, as someone who’s definitely, you know, worn the, the CFO hat and the VP of finance hat, I actually do think that you, I think you’re probably our, our only guest so far who’s actually made that transition and now, you know, leads the kind of that sales and marketing like that growth role.

[00:09:01] Would love to hear about the transition, how it’s been, you know, similarities and differences. 

[00:09:07] Joe Garafalo: Yeah. So similarities, we’re still selling to finance people and to CFOs. And the thing that is the most important when you’re selling to, to this group, is that you can speak their language, right? Nobody in finance wants to get on the line with an AE who doesn’t really truly understand the pain of what goes into calculating ARR or how to produce the board slides, or, you know, what are the nuances of how to build a model.

[00:09:33] So that skill set has suited me really well to be in a, a sales position. But the same things, the, the, the pain, understanding where the pain is, both the obvious pain and the latent pain and the ROI, right? Finance people are so focused on numbers. So it’s really easy to ask the question, like, “You know, if it didn’t take you six hours to build your budget vs. actuals and it took you 30 seconds, what would you do with the other 5 hours and 55 minutes?”

[00:09:58] Right? So there’s been a lot of similarities, also some differences, right? Like knowing when to push, knowing how to ask for the business. Those were all new skill sets that I think are easy to learn, so that it’s, it’s been fun. 

[00:10:11] Alex Song: And how, how is your sales team structured? I’m just very, very curious. You know, is it a slew of AEs, AMs, you have customer success folks? You know, what, what is, what does that, you know, sales motion look like for you guys?

Sales Team Structure and the Sales Process

[00:10:23] Joe Garafalo: Yeah, so I think we can start with the marketing engine and the growth machine. The main goal for us and our North Star on the Mosaic marketing team is to provide valuable content that improves the day jobs, the life of people in finance. So we do that through, you know, relevant content that’s insightful, maybe templates that can be actually useful. So that even if customers interact with Mosaic, they are, are getting value from us, maybe even without buying our product.

[00:10:52] And that brings a lot of interests to the company, and that’s where the sales team will then pick up those leads. And the sales team is comprised as kind of an account executive function. And these are people that know how to do the Mosaic pitch, they handle the deal commercials, they shepherd folks through the process, but they’re also paired with a solutions engineer.

[00:11:11] And the solutions engineers at Mosaic are all people from financial backgrounds. So you know Marcus, who a lot of people have met, he’s former banker from Guggenheim, and he was lead leading Series C SaaS company, and now he’s, he’s in sales. We have a former manager of FP&A at Fitbit who’s leading the charge as well.

[00:11:29] So, a lot of finance folks that are now in sales roles, which is cool. 

[00:11:34] Alex Song: That’s super interesting. Any interesting observations from talking to some of these stakeholders and selling them? Any objections where are people generally frustrated by, where are they coming from? Are you swapping out a, a competitor? What, what does that interaction look like?

[00:11:51] Joe Garafalo: Yeah, so some, some common threads are everybody’s frustrated by spreadsheets, right? I think we all hold Excel and Google Sheets very near and dear to our hearts. And I would, you would think I’m crazy if I said, “Hey, we’re gonna completely replace spreadsheets.” That is, you know, not what we’re trying to do, but what we’re trying to do is have software do the majority of the heavy lifting for you and let spreadsheets handle the edge cases.

[00:12:15] That way you’re spending 70, 80% less time in those spreadsheets, and you’re letting the software do to things the spreadsheet isn’t quite good at, right? We’ve all been there before where we have 50 versions of the financial model, and we don’t know actually which one is the right one. And if we made the changes in the right places and building those switches that toggle the high case versus the low case,

[00:12:36] so explaining that like, “Hey, we’re not, we’re not ripping spreadsheets away from you, but we’re augmenting them,” is a common objection you can get. And more and more this, the software is actually adapting to have, you know, familiar spreadsheet-like qualities, like the ability to write custom formulas and the ability to tweak metrics.

[00:12:53] So getting people comfortable that they’ll still be there as the crutch if you need them, but there’s a better way. 

[00:13:00] Alex Song: Maybe one last question on the sales and marketing front. Who is the, the persona that you are selling to? 

[00:13:08] Joe Garafalo: Yeah. It depends on the, the size and stage of the company, right? So at the earliest stage, you, you have really smart founders who

[00:13:16] just raised a bunch of money and closed their Series A. And now they have this new requirement of, “Hey, we have board, board members, we have board meetings, we have investors. We need to take finance more seriously. So we sell to you CEOs and founders.” Once they realize they need to hire a finance person, it’s usually the director of finance or a VP of finance.

[00:13:36] And then as the companies get larger, right, there’s, there’s generally a CFO or a director of FP&A and a VP of finance. So it’s usually within that office of the CFO. 

[00:13:45] Alex Song: That’s a good segue for us. At Mosaic, given, you know, your, your focus on kind of business intelligence, financial intelligence and analysis and whatnot, how is your finance team structured?

[00:13:57] Is there, you know, anything different or the same as other places that you’ve been at previously? Is there anything that, you know, maybe you just don’t need to step up, right, at FP&A because you’ve got everyone who’s, you know, more or less an expert. Would love to hear, yeah, how, how your, how your finance team itself is structured?

[00:14:15] Joe Garafalo: Yeah. I think it’s, it’s not too dissimilar than other organizations, but what I think is actually unique about us is, is so many of us have that financial background. You actually see really strong relationships between, you know, our VP of sales and our operations and strategy team. And the models that we’re building, because they’re from Mosaic, are deeply connected to the actual data.

[00:14:39] So an example, right, is you can sit down with your head of sales, and you can show them, “Hey, here’s how many new opportunities that are coming inbound from the marketing engine, plus the outbound engine from the SDRs. We know our average win rates on these deals, and we know our average selling price.” So now you have like these really well-informed conversations from VP of sales, operations and strategy through the Mosaic application that made the planning process like, you know, pretty easy.

[00:15:06] You combine that with like a view of your pipeline and all of the rep quotas and everybody knows where they stand and knows what they need to do to hit their targets. So I would say we are more, the finance team here is more embedded than I’ve seen at other companies, which is actually really cool. And that’s, it’s how finance provides that strategic lens.

[00:15:25] Nobody really cares if, like, you show them how they did in their budget versus actuals last month, right? What you actually wanna do is show them, you know, around those corners and what they need to be doing to hit their goals and where things are working or not working. 

[00:15:42] Alex Song: Yeah, I think that, that definitely resonates with me.

[00:15:44] I mean, it certainly resonates with the folks here at Ramp, right? We’re in a very, very similar spot in which, obviously, we’re building tools for finance teams out there. And it definitely is inspiring. It’s definitely empowering to have, you know, the rest of the organization, right, who are not involved in finance day-to-day.

[00:16:00] They still get it. They still know. Right? It still resonates, and in much more so, I think, than probably other places, right, for companies like ours, it’s much more one team, one dream. Right? It feels good. 

[00:16:13] Joe Garafalo: I love that. We have that motto as well in internally, “One team, one dream.” 

[00:16:16] Alex Song: That’s great. I wanna go back to an earlier comment you made.

[00:16:19] I actually didn’t know that you served a number of international customers, and, and I wanna double click on that. We, you know, here at Ramp, we’re still, you know, at the moment, we’re serving, you know, US businesses, US domiciles, you know, entities with US bank accounts and whatnot. Any special considerations with respect to selling internationally?

[00:16:37] You know, whether it’s currency, legal regulatory, or just, you know, different accounting conventions and whatnot. How does that impact how you approach the, the sales motion? 

[00:16:47] Joe Garafalo: That’s a great question. So the first thing that we realized when we wanted to talk to these international companies were, “Hey, they need to consolidate their numbers.

[00:16:56] In many cases, they have a UK operation and a US operation, or an operation in Canada, an operation in the US.” So building a feature that allowed us to connect multiple ERP systems and also handle what you just mentioned around FX and currency conversion is actually native in our application now. So you can plug in

[00:17:15] two QuickBooks instances or two Xero instances, and again, because we’re API focused, we have, you know, connection to a tool called Currencylayer that actually automates the FX calculations so that you’re not sitting there in a spreadsheet converting everything, pulling down the rates, and you’re consolidating financials or living in a spreadsheet,

[00:17:34] as a system of record. Our application can handle that. From there, really like the, the customer can control the presentation of their financials and make sure things look the right way for the right jurisdictions. And then, really like, you know, the model is flexible, so they can model however they choose. 

[00:17:50] Alex Song: Is, is international currently a, a pretty large segment or, you know, it’s still growing?

[00:17:56] Joe Garafalo: It’s a significant segment for us, but most of the companies that we are working with if you have a US presence. So we’re not actually, you know, out in the UK selling exclusively to UK companies, we’re working with US companies that have UK arms or Canadian arms or Australian arms, or vice versa. 

[00:18:13] Alex Song: Understood. The international, you know, component is obviously, you know, something that’s certainly worthy of discussion.

[00:18:20] And here at Ramp, I think we get that question all the time, right? You know, when are you gonna, you gotta issue cards abroad and, you know, et cetera, et cetera, it’s, it’s definitely no trivial task. I think it’s awesome that you, guys, have already been able to kind of enable 

[00:18:32] international support. 

[00:18:33] Joe Garafalo: Yeah, it’s been really cool, and the consolidations feature that we have is pretty unique.

[00:18:37] Alex Song: Yeah. 

[00:18:38] I wanna switch gears a little bit. This is, this is something that I ask, you know, almost every single podcast guest, which is hiring. We always wanna think about, you know, when, when you’re building a company, and I’m sure you know, this early as a, as a founder, human capital is, is perhaps the most important thing that you can have, right,

[00:18:56] when starting out or building out a team, putting together a company, et cetera. Any dos or don’ts specific to maybe making the first few finance hires? And this could be, you know, maybe from your Palantir days or from any one of your other experiences, even today. Who should be, let’s say the first three hires that, that any entrepreneur needs to put on their finance team?

[00:19:17] What are you optimizing for? What are they doing functionally? What are their titles? 

Your First Three Finance Hires

[00:19:22] Joe Garafalo: Yeah, that’s, that’s a great question. And I think there’s no generic, I think, answer for that. I think it depends on each company, right? I think a B2C company like BarkBox, where there’s a big inventory component, and there’s, you know, a loss of low-dollar high-volume transaction, you’re gonna need different skill sets than if you’re an enterprise B2B SaaS company doing large contracts that are, you know, few and far between.

[00:19:48] So with that in mind, I think, a controller is a really important first hire. I think you always want to have the books closed, you know, in three to five days. I think that’s world-class. And I think there’s a world where a lot of companies can actually meet that goal, even if you can’t. Like seven days is also perfectly fine, but you wanna be able to get into that rhythm and record transactions and also think about the hierarchy of how those transactions are recorded, how things are coded so that you can

[00:20:18] later do a really great analysis, which is the next great hire that I think would be, you know… A director of FP&A, I don’t think it needs to be like somebody that has the VP title off the bat. I think somebody who can come in and take the really good work that the controller’s done and build operational models and start providing decision support to the different stakeholders across the business. I think that person should probably have a really good skill set around revenue modeling

[00:20:45] because in the early days, you know, companies are typically flush with cash and your burn is less of an important priority. But nailing, you know, the top-line model and how the business goes out to generate revenue is super important. 

[00:20:58] Alex Song: In terms of growth, you know, the first couple hires are solving… That, that definitely really resonates with me.

[00:21:03] In terms of scaling and growth as a company gets larger and more sophisticated and complicated, would love to also hear from you what, what are ways in which finance teams can gain some operating leverage? And, and I think there’s probably two components here and I’d love to hear your opinion on both.

[00:21:19] One is just, maybe just outsource some of it, right? Get contractors, find folks who are external, can perform some of these services, right? And we’ve certainly heard from some finance folks that definitely rely on more external resources. Two is, you know, instead of human capital, maybe you just rely on software and automation and whatnot.

[00:21:39] So we’d love to hear along those two dimensions, what are some kind of best practices that you’ve seen? Things that you feel strongly about, you know, the good and the bad and the ugly? 

[00:21:49] Joe Garafalo: I think outsourced folks, mainly on the bookkeeping side and outsourced CFOs in the early days are, are super important.

[00:21:57] And most companies that we meet have those teams in place to do some of that legwork, but I still think the controller is really important to properly set up the chart of accounts and direct the bookkeepers and the outsourced CFOs to, you know, do the right things for the long term. So I think that’s, you know, an important call out and distinction to make that without that controller, that person in seat, it’s easy for the outsourced firm to go off the rails and do what they do for every other customer

[00:22:28] and not take into consideration the uniqueness of a business, maybe like Ramp’s. So outside of the, the outsourced firm, I think making hires that have seen the end state of where the company wants to go. So if they’ve seen it before they know, “Here’s all the gotchas along the way,” they can actually set things up to later on scale.

[00:22:48] The last piece of ways to gain leverage, I think, are these digitally native first companies, they’re gonna grow up on Snowflake. Right? And you can actually get to a world where you’re doing things and kind of this philosophy that we have at Mosaic, which is like transaction to reporting framework, where if you record your transactions the right way and you’re pushing all of that data into your Snowflake database, you can actually automate a lot of the important analysis and reporting.

[00:23:17] So that it’s, it runs for you. And that’s, you know, another plug for Mosaic. We, we do that, just that, but having somebody that’s technically minded and oriented that could think about the data architecture, what are the required fields, how does this stuff then push to a database and automate some of the analysis section there.

[00:23:35] Alex Song: Do you guys use any outside vendors from a software and SaaS perspective to help you guys along? Whether it’s, we don’t have to just stay within the field of finance, right? It could be finance, could be ERP, but it could also just be sales compensation or, you know, anything else. Have there been anything that really jumped off the page that’s been a very good experience for you guys to work with?

[00:23:55] Joe Garafalo: Yeah. There’s, there’s been so many great tools. I think we can start on the go-to-market side, since that’s where I’m, I’m most familiar. I think the, the tool to call out that’s gonna been life-changing for us on the go-to-market side has been like a Gong. The ability to just listen to calls and understand sentiment and figure out how conversations are actually, you know, trending has just been, you know, a game changer for us.

[00:24:18] It also helps distill information from customer calls to the product team, to the engineering team. So super happy with, with that purchase. On the marketing side, HubSpot has been great for us. Couldn’t live without it for all the marketing automation that it does, plus the analytics and dashboarding are are pretty spot on.

[00:24:36] On the finance side, obviously, tools like Ramp are incredibly helpful. I mean, we have our, our entire company coming to you to Cabo for retreat on May 1st. So having folks being able to spend, being able to put rails around things so that people feel empowered to make decisions, but within the right guidelines, it’s been awesome.

[00:24:57] Salesforce obviously has been crucial for us, I think. Finance people are, are typically married to the ERP system, but so much rich data lives within the CRM that I think finance people need to start becoming more and more familiar with it and not be as afraid of it as I think they have been in the past.

[00:25:14] But it is a scary thing if you’re not super familiar with it. 

[00:25:18] Alex Song: Yeah, it’s fascinating. 

[00:25:19] Definitely same, same here. We’re happy customers of HubSpot, happy customers of Salesforce. Gong. Same. You know, we’ve used this since day one, just recording some of these calls, right? 

[00:25:30] It’s been tremendous for us. 

[00:25:32] Joe Garafalo: It really is cool. And within Gong, I’ll just call this out, you can actually use hashtags so that you can start to bring together all of the unique shout-outs for, or things that you want people to listen to in one clip, which has been just really cool for customer ‘wow’ moment, moments or product feedback. 

[00:25:50] Alex Song: Maybe we can kind of take a step back and look at the macro a little bit.

[00:25:54] We’re recording this podcast right now, kind of mid, you know, late April. 2022 has been a, a little bit of a crazy year for all of us, right? We have stuff going on in Europe. We have crazy market volatility, right, multiples compression, and you know, there’s definitely, you know, quite a bit of noise in the markets, right around inflation and interest rates and what and whatnot.

[00:26:15] Would love to hear from you what are you most focused on right now, whether the pros or the cons? And, you know, what are some things that you guys are, are planning for, for the year ahead? 

Outlook on and Plans for 2023

[00:26:27] Joe Garafalo: Yeah, it’s, it’s a really great point. I think the environment has changed, right? Obviously there’s lots of things that are causing the environments to change, whether it’s the, the Fed raising interest rates, whether it’s the, the CPI that keeps going up each month,

[00:26:41] whether it’s the war in Europe, but it’s definitely changed, you know, the macro environment that we’re in. And I think that’s scary. Absolutely. But what I’m passionate about is enabling finance and CFOs, the office of the CFO to be a more strategic partner to the business. So in times like this, it’s actually a chance for us to shine.

[00:27:03] And what are the things that finance people should be doing, should be directing their CEOs to think about, now is kind of like the moment where we can become that strategic partner to the business and kind of break that mold of like a finance is the backwards looking, you know, be in counting organization.

[00:27:22] The guys in the back room with the green eyes, or the gals in the room that are working really hard, but nobody knows what they’re actually up to. So with the environment that’s shifting one thing to call out, we have a really great investor. He leads the fund called Friends & Family Capital. His name’s Colin Anderson.

[00:27:37] He was the CFO of Palantir. He publishes a report every week that, you know, talks about the best public company multiples. And over time, through 2022, you can see those multiples in the public markets start to compress. So if you look at that, like that will eventually hit the private markets. And if you start taking note of the VC deals and the flow of VC deals, it’s, it’s starting to slow down.

[00:28:00] It’s definitely not as crazy as it was late last year. So with, with all that in mind, what does that mean for finance folks? Right? It means the VCs are probably still gonna, you know, look for growth, but more efficient growth. And unit economics are gonna matter more, things like burn multiples, which are… Just talking to a customer about this the other day.

[00:28:21] Like, you know, your net new ARR divided by your gross burn, what is that multiple? Is it within range? So yeah, more things for finance people to, to look at now that it’s under a microscope. 

[00:28:33] Alex Song: What is some of the chatter that you’ve been hearing from CFOs and, and finance teams out there, you know, from the perspective of 2022 and, and the, the effects that you’ve described? Are people actually seeing maybe a modest or significant reduction in spend?

[00:28:48] You know, what, what are some of the tangible impacts or, or chatter about some of these impacts that you, you’ve heard? 

[00:28:55] Joe Garafalo: Yeah, I think the, the chatter is just, you know, the funding environment is just slightly different. And I think it’s probably, it’s probably fine for, for seed and Series A. I think those will probably be relatively unchanged,

[00:29:08] maybe valuations, but down a bit. But for those later stage, those growth stage deals, the companies just need to show a bit more maturity in their, their finance functioning, that they’re thinking about the upsell motion, that they’re thinking about how to expand ACDs, how to cross sell and upsell that the unit economics make sense,

[00:29:27] the CAC and the payback periods make sense. So just a renewed focus on businesses that are gonna be here for the long term. But definitely have heard that, you know, the next 12 to 18 months things are still in that uncertain territory. 

[00:29:40] Alex Song: Yeah, that’s very interesting. 

[00:29:41] It’s almost, it’s, it’s almost this weird counter-cyclical effect, right,

[00:29:45] where companies like, you know, Mosaic is, you could almost think of them as recession-proof, right? Because exactly when, you know, things quiet down a little bit, exactly when people are a little bit perturbed, a little bit unsettled by the macro environment, that’s exactly when they need to be, right, very circumspect about their financials, their performance, how they’re doing, measuring KPIs and whatnot.

[00:30:07] I can definitely see this is one of those things, again, it’s almost counter-cyclical in nature. 

[00:30:12] Joe Garafalo: Yeah. I think you’re spot on. And the cost of the tool, right, it shouldn’t be prohibitive. We’re not gonna say, “Hey, like this is gonna be your biggest expensive company.” So it’s a small price to pay for that peace of mind to be able to see into all the financial corners of your business.

[00:30:26] And to not only understand what happened in the past, but be able to anticipate what will happen in the future. So that when times like this you come around, you’re able to pivot and make adjustments and see around those corners, which is really again, where I think finance can add a ton of value. 

[00:30:43] Alex Song: Is your revenue model today just it’s exclusively software and SaaS, or is there, you know, additional components, services or something like that?

[00:30:52] Joe Garafalo: So today we’re all software licenses. We have two products. We have an analytics product and a planning product. Each of those are kind of unlimited seats. Our view is we want as many people in the application getting as close to the numbers as possible. We don’t wanna be prohibitive about who can access and can’t access.

[00:31:10] So two simple platform fees for each product, and we can always discount if people buy both products together. 

[00:31:17] Alex Song: You’re obviously surrounded by a lot of very smart people, a lot of former, you know, investors, bankers, finance folks. Any thoughts in the future about potentially providing more of a services component or an advisory component where you can maybe almost be a little bit more normative or prescriptive with, you know, some of the stuff that you’re, you’re seeing?

[00:31:35] Joe Garafalo: Yeah, absolutely. I think one thing that we see really often is like, people, they want help, right? They want help cleaning up their CRM data because they didn’t pay enough attention to it, and now if they can’t actually get the right insights that they need. So actually, customers have been pushing us to do some of those cleanup services or those advisory services.

[00:31:54] I don’t think it’s ever gonna be a, you know, a large part of our business, but if it helps our customers get to where they need to go faster, we’re we, we think about it. 

[00:32:03] Alex Song: Yeah. Joe, it’s been great to have you on, on the podcast. You know, we’ve certainly, you know, our two firms have known each other for, for quite some time.

[00:32:11] I know that, you know, my FP&A team certainly feels that you guys are extremely, extremely valuable partner. How do our listeners find you? 

[00:32:20] Joe Garafalo: Yeah, our listeners can, can find me on LinkedIn. I’m Joe Garafalo. You can also find us at info@mosaic.tech or our website mosaic.tech. 

[00:32:29] Alex Song: Very cool. Well, thank you so much once again. Thanks so much for taking the time and, you know, offering some of your observations, opinions, and insights about growing FinOps and automation and just getting operating leverage in the business. Has been absolutely tremendous having you on, on the podcast. 

[00:32:44] Joe Garafalo: Yeah, it was a ton of fun. Thanks for having me, Alex. Happy to join you anytime. 

[00:32:48] Alex Song: Thank you. 

[00:32:50] Conclusion: Thank you for checking out this episode of The Role Forward. This show is powered by Mosaic, a strategic finance platform that transforms the way business gets done. If you enjoyed what you learned in this episode, make sure to follow The Role Forward wherever you listen to your favorite podcasts or visit mosaic.tech/podcast to get immediate access to all of the latest episodes.