Managing Hypergrowth and Achieving IPO in a Downturn Economy

In this episode, Jim Kelliher, the CFO at Drift, shares how Drift became the fastest-growing tech company in Boston, and how they navigated strategic challenges during a downturn by being customer-centric, trusting the team, and investing in the right processes and people. He shares insights into managing hypergrowth and achieving IPO during a downturn economy.

Episode description

Starting a company is the fun part. The hard part is growing a company from a handful of small clients to a CRM full of enterprise clients — and then finding more.

Jim Kelliher is the CFO at Boston-based tech marketing company Drift, but this isn’t his first rodeo. It’s his fourth time as the CFO at a venture-backed startup working to scale.

On this episode of Spend Culture Stories, Jim talks about making smart decisions with your budget, working across departments towards the shared goal of growing the business, and his experience taking companies from opening the doors to preparing to IPO.

Speaker: Jim Kelliher, Chief Financial Officer, Drift

Jim Kelliher is the Chief Financial Officer at Drift, a Boston-based tech company. Drift is a revenue acceleration platform that uses conversational marketing and conversational sales to help companies grow revenue and sales. He is an expert at building tech startups through escalating organizational processes and expanded systems of growth as a financial executive. Jim shares his skill set on adapting towards a long-term market scale and how investing in people-based training and development aligns with the strategic goals in a growing company.

💵 What he does

Chief Financial Officer at Drift, a Boston-based sales and marketing platform.

💡 Key quote

“At Drift, we’re really focused around one set of company goals. We understand sales has a job to do, customer success has a job to do, finance has a job to do. But at the same time, we’re trying to help one another and have the flexibility to help the company be successful.”

👋 Where to find him

Twitter | LinkedIn | Drift Profile

Listen to the Episode Here:

Listen to Spend Culture: Stories of CFOs and Company Culture

One important lesson he’s learned is to think long-term. “Drift’s founders went into this with the idea of building something that’s going to last. We want to do the right things that are going to have us become that enduring company,” Jim says.

With the company’s current efforts focused on securing its future, Jim shares his advice for identifying priorities and being a team player in management.

Episode Summary 

Starting a company is the fun part. The hard part is growing a company from a handful of small clients to a CRM full of enterprise clients — and then to find more.

Jim Kelliher is the CFO at Boston-based tech marketing company Drift, but this isn’t his first rodeo. It’s his fourth time as the CFO at a venture-backed startup working to scale.

In this episode, Jim talks about making smart decisions with your budget, working across departments towards the shared goal of growing the business, and his experience taking companies from opening the doors to preparing to IPO.

For startups worrying about the runway, Jim recommends experimenting before putting all your eggs in one big, expensive basket: “Figure out if it’s going to work or not without making a big bet.”

Jim and his team also applied these cautious strategies to the shifts forced by the COVID-19 pandemic. In March 2020, Drift stopped its recruitment drive and switched its team of recruiters to generating sales leads. It also pivoted from targeting small businesses to enterprises.

“It really made us focus on where is the important area to spend and to continue to invest, and let’s only do what’s really necessary to help grow the business, take care of our customers, and develop the product,” Jim says. “We put real focus around making sure we’re spending our money in the right spot.”

With the company’s current efforts focused on securing its future, Jim shares his advice for identifying priorities and a successful IPO.

Top takeaways from this week’s conversation

💸 It’s true that you need to spend money to make money, but that doesn’t mean you should waste it 

The word Jim and his team use to describe Drift’s spend culture is “frugal.” He explains: “I would not say that we’re cheap, but that we’re spending money in the right fashion.” For the Drift finance team, the focus is on “spending the money like it’s our own money.” 

The determining factor in whether something will convince him to hand over the company’s cash is its potential to help Drift grow further down the road. For example, “bringing on salespeople six months before I want them to actually be productive, or investing in the enablement organizations so that we train our people around value selling,” he says.

🤝 Being CFO means coordinating and cooperating with other departments because you all have the same goal 

“Finance really exists to help the business grow,” Jim says. He adds, “Sometimes that means we have to trust some people or some processes in other areas.” As CFO, he’s learned that getting the whole management team on the same page ultimately helps every department achieve their individual goals and the company’s overall goal of growth. 

For example, when sales negotiate with a customer, finance is ready to be flexible but knows what can go on the table and what can’t. “We’re open in that discussion, making sure the sales organization understands those areas and the reasoning for why we can’t do certain things,” Jim says.

🦆 Get all your ducks in a row before you IPO 

Jim was CFO at LogMeIn when the software company went through its IPO. Now that Drift is considering going public, he has the opportunity to put those lessons to good use. First, he says, “make sure you have control around the business.” You need to know that everything that’s going on will fly through the legal and financial processes involved with an IPO. 

Second, have solid forecasting capabilities, “not only from a sales perspective but an expense perspective and renewal perspective.” You have to know that the good business you’re doing now is repeatable in six months’ time. “Only approach the markets if you have a business model that makes sense and can scale,” Jim says.

Spend culture highlights

💡 Adjusting for COVID-19 fast paid off

[3:09] “When COVID-19 hit, we were able to immediately press pause for a little bit to figure out, “OK, how is this pandemic really going to affect our business?” We’ve adjusted our business model. We’ve done really well to push through it. We have not had any reduction in force here because of the business discipline that we’ve had. And in turn, some business opportunities have been presented to us through COVID-19. So I think as a business, we adjusted pretty well and took our foot off the gas just at the right time.”

💡 Shifting the workforce to save jobs (and prevent layoffs)

[6:24] When COVID-19 hit, we had eight full-time recruiters. We repositioned some of them into business development and sales, where instead of trying to recruit employees to come work for us, they were out recruiting prospects to become our customers. So we were able to invest our workforce without having to reduce it in areas that weren’t going to get much attention. We had flexibility in both management teams and the people, and we feel really good about the way we’ve done that as a company.

💡 Putting employee stability first

[7:33] “A big part of the company is the employee base, and we didn’t want to take apart something that we felt really good about. We knew that eventually, the pandemic would be behind us and in the end, we were going to have to replace that or rebuild that. We felt good about what we had, and we wanted to make sure we retained it.”

💡 Going after bigger customers and scaling up to meet their needs

[13:22] “We’re selling into the mid-market and to the enterprise, and that’s different than what we had a couple of years ago when a big part of the business was SMBs. As we grow as a company, we need to grow that skill set and ask: How do we show value when we’re selling to enterprise customers? How do we provide the services that enterprise customers need? How do we develop the platform so it can continue to scale within the organizations that we’ve sold into, so we can continue to expand our footprint in those organizations? The biggest challenge for us is doing all that stuff in a scaling environment.”

💡 Lessons learned from a career move that didn’t go as planned

[25:28] “I’m all about building companies and organizations that are going to last, and helping companies grow. In one particular career move, I was moving into an environment that looked from the outside as if it was growing, but when you got on the inside, the objectives were different. I spent a couple of years there and we got some things done. But it wasn’t what I had expected going in. I should have spent some more time understanding the environment and the business plan and models before jumping in with both feet.”

Top quotes on managing hypergrowth

[11:41] “Our mission for Drift is to build an enduring tech company. To do that, we need to make sure we have the right processes and controls in order to scale the business and help the business grow. What we are really focused on as an organization — whether it’s finance or customer success or sales — is how we do that and how are we positioning ourselves for growth in the future.”

[12:44] “Anytime you’re managing hypergrowth, the challenge is to keep up with it. It’s making sure the systems and processes can keep up with the growth for the company.”

[22:31] “We spend money where we think we need to. We don’t do it stupidly and we do it in ways that we think is going to benefit us in the future.”

[24:25 ] “It is going to get tougher to raise money, and therefore businesses or finance executives are going to need to plan a model that will scale. The capital markets are going to look for that: how are you going to scale this business and be profitable?”