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The Rare Breed of Tech CFO, Investor and Consultant

Founded in Tech Episode 12

Join host Dave Garvey as he talks with Scott Buxton, who began his career at Deloitte in their Bay Area tech and venture practice. During this time, he focused on “next wave” software and internet media tech companies such as Yelp, Twitter, Zynga and more.

After gaining notable experience with high growth startup clients Scott went on to enjoy successful tenures at GitHub and Datadog. He was instrumental in Datadog’s successful IPO in late 2019. Currently Scott is based in Austin, TX where he invests in and consults at various tech companies throughout the US.

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This podcast was transcribed through a third-party application. Please disregard any misrepresentations.

Dave Garvey:
Welcome to this episode of founded in tech, brought to you by Withum and your host today Dave Garvey. With today’s episode, I am joined by Scott Buxton, who is recognized for his experiences at GitHub and Datadog as well as startup consulting and investing. We’ll learn more about his interesting path from Deloitte to the world of tech and venture to where he is currently involved with startups on both coasts. And most recently in the Southwest. I know Scott will share a lot of cool and actionable insights and ideas for people as they plot their paths in tech, venture and startups. And now a supremely warm welcome to Scott Buxton. Thanks Scott for joining us today.

Scott Buxton:
I really appreciate it, Dave, thank you for having

Dave Garvey:
Me. Yeah, of course, definitely a pleasure. It’s great to have you on here As you someone who I’ve been able to get to know and watch very closely over the years. Your path definitely offers a lot to current and aspiring finance and accounting professionals, as well as founders and CEOs of startups, especially in enterprise software and SAS, where you’ve definitely developed your own expertise. Um, so if it’s okay, let’s, let’s just go back to the beginning, right? So, you know, you grew up in the bay area. How many, uh, how many generations is it?

Scott Buxton:
Uh, six. Believe it or not.

Dave Garvey:
You’re a sixth generation San Franciscan.

Scott Buxton:
That’s right. Family came right before the gold rush in 1848.

Dave Garvey:
Awesome. I love it when you say that. So anyway, you are you’re in that area, right? You’re uh, you finished school and then you go join Deloitte. Right. And this is just to give context for people. This is, you know, this is Deloitte San Jose office. It’s really, it’s really the time in tech where, you know, things had started to recover from the.com bubble burst. And now it’s that next wave of startups. Can you just tell us what it was like to be there then?

Scott Buxton:
Yeah, that’s right. So I graduated UCLA in 2003 and, um, you know, that was a pretty rough time, I think, to be looking for a job and starting one. You know, you had 9-11, you had the whole Enron fallout, all that stuff. And so, started up in San Jose, as you noted at Deloitte. And I started in the external audit practice. And what was great is that I was also bouncing around the entire bay area. So I spent a lot of time up in San Francisco because that San Francisco, uh, Deloitte office didn’t have too many tech professionals. So they usually pulled from the San Jose office and it was just a, you know, it was a great place to start a career. I started in the external audit practice and I think what I found to be most attractive and appealing for staying at Deloitte is it’s, you know, a 200,000 person professional services firm. So there was a lot of opportunity to do things other than external audit. So, um, I would say that’s what helped keep me there for the almost 10 years I spent about 50% of my time doing audits and then 50% of this time and others. So it was a really a really great experience.

Dave Garvey:
Yeah. And so some of those companies that you, you know, at that time you had, that was really after the IPO market had kind of stalled a little bit after, you know, now we’re hit with the great recession, right. So , the market slows down a little bit and then it started to come back. You know, you were involved with some of the IPO’s of that time and just doing other advisory work for companies that were either about to become unicorns or eventually did, could you tell us a little bit about some of those companies that you got involved with?

Scott Buxton:
Yeah, absolutely. So, um, during my entire time there, I was working solely with technology companies, again, all around the bay area, bouncing back and forth between San Francisco and a traditional Silicon Valley down in San Jose. And so, like you said, it was really when this kind of next wave of software slash internet media, IPO’s just starting to hit the bay area. Um, and I was able to get, for example, Yelp as an audit client in 2006, they were very small company at the time. So sorry, working with them very early on, they went public in 2012. That was one of the main ideas I worked on. I also got the chance from a non-audit perspective to work with the consulting group, Agilent technologies, a very large tech company was divesting two companies, Avago and Verigy. So I got to work on that project. It was a little bit over a year.

Scott Buxton:
Uh, then I had some more advisory work working on IPOs at Twitter, and then Zynga. And when I say advisor, I just mean anything that you can do in a non-audit capacity. Both those companies had different external auditors. So while being at Deloitte was able to work on many different projects with them, whether it was pre IPO readiness or internal control work or some evaluation work. So it was really great. Again, I feel like that’s what kept me has to void for the almost decade that I was there. As I got to see this variety of tech companies, either very early stage like Yelp or, you know, at a later stage and, and, um, you know, kind of already public. I also had a laser manufacturer company, um, in Santa Clara. So between all those companies that were pre IPO and working on the IPO’s themselves, as well as had more than a handful of venture backed clients that, um, were very minimal in revenue and obviously had aspirations to continue to scale and get to a more pre IPO state. Um, so I had a lot of clients like that then I worked with.

Dave Garvey:
Definitely. And what’s cool is I feel like, you know, even though that was not the first wave, obviously out in the bay area of this, in fact, some might say it was the third or the fourth, you know, fast forward to currently, you know, New York is finally in that sort of, uh, it’s that same pace with companies that are exiting and companies that are raising money. Uh, it’s taken a while for this sort of New York, this nascent market in New York to actually become that. Um, but before we get to you actually coming over to New York, you know, you decided after, you know, after that it’s a lawyer that, you know, it was time to go in a different direction where you, you ended up at GitHub. Uh, what, so what was it like to make that transition and what attracted you to GitHub?

Scott Buxton:
Yeah, so it was probably around year six or seven a while at Deloitte that I realized I really, um, was enjoying my time there, but I wanted to go to a venture backed company that had great investors, great products was growing very rapidly and just be part of that journey in house, you know, with seeing Yelp, uh, Twitter and Zynga, you know, a handful of others Open Table, LinkedIn, you know, again, it was very, it was very nice having those as clients, but when you saw them complete an IPO or potentially, you know, had a client that got acquired, you were just handed another client. And so around that year six or seven, I had realized, all right, I want to join a company, but I’m not going to just join anyone. And so I had gotten the opportunity at GitHub because the Yelp CFO, who I had gotten to know very well, um, was looking to leave Yelp and explore, uh, another opportunity after the Yelp IPO.

Scott Buxton:
And he had started interviewing for the GitHub CFO job. And so he had known that I was looking to leave, but again was going to be very, uh, diligent on what company I would leave for. I wasn’t just going to leave for the first company that was going to give me an offer. So he gave me a call and said, Hey, GitHub this company, they’ve just raised a hundred million dollar series A round in July of 2012, um, I’m exploring their CFO role there. I need a number two in finance. I know that you’ve been wanting to, to leave Deloitte, um, but just wanting to leave for the right opportunity and not just any opportunity, you know, are you interested? So I basically just started interviewing while he was still interviewing. And so this was now end of 2012. And the beginning of 2013 that I joined. The company was about a hundred people, um, less than 20 million in revenue.

Scott Buxton:
And it was a real, you know, it was a really good experience. And I think, you know, back to like pieces of advice that, you know, I’ve, I’ve learned throughout my career and try to share with others, it’s a very competitive market out there. And so when you’re looking at some of these hot companies, like a GitHub where, you know, Andreessen did that hundred million dollar series A round, which was almost unheard of at the time in 2012, um, you know, I was able to get that opportunity because of, because of my network, because I had gotten close to the CFO of Yelp because I had communicated to him kind of what I was looking for in my career. And I just feel like I can’t stress that enough, that as you’re exploring new opportunities or as you’re just, you know, working throughout your career is the value of that network. Um, obviously it’s about what you know, and what you can do and the experience you have and what you can bring to the table from a skills and expertise perspective. But it’s also a lot about who, you know, they can help, you know, open up doors for you. And so it worked out very well going over to GitHub and working for somebody I had already worked for for over five years, just in a, uh, client professional services capacity.

Dave Garvey:
Yep. And thanks for getting granular with that. I think that’s what some of the important things are to capture, um, your approach to, you know, how you’ve been told about different roles or pursued them all involved your network. Uh, I think it’s just an important thing that, you know, folks understand that varying degrees. Tell us before we talk about the transition you made from GitHub to Datadog and really how that came about. Tell us a little bit about your time at get hub before you made that move.

Scott Buxton:
Yeah. So, you know, I mentioned the size of a, of GitHub about a hundred people globally, less than 20 million in revenue joined same time as the CFO. And there really was not a finance and accounting team. There was an outsource bookkeeper that was just kind of keeping the lights on paying invoices, you know, collecting cash from customers. And so when the CFO and I started really just kind of started building out the team and doing it very methodically, um, hiring out in accounting department. What was great about my opportunity to GitHub is he let me own all of the P & A and so that was one of the things, it was so nice landing at a spotlight that is with the first 10 years of my career being pretty dominant in accounting. Now getting the chance to cut my teeth into the more finance and strategy side of the house, while at the same time, you know, overseeing the accounting operations.

Scott Buxton:
So really focused on building out the team. The company didn’t have any international subsidiaries yet. So we had to get that all set up. It was a very global workforce where only about 15% of the employees were at San Francisco headquarters. The rest were around the U S um, and then contractors overseas. So had to convert those contractors to employees under international subsidiaries had to eventually get off that outsource bookkeeping firm. Had to implement systems that the company could scale with. You know, the outsource bookkeeping firm was working on QuickBooks. So we implemented NetSuite. So really all of the things that you can imagine, a company that was growing so quickly and expanding internationally executing go to market initiatives. So really executing on all of those things that were needed from a finance, accounting and operational perspective to help fuel that growth. So it was was a really great experience. And in the years I was there saw the company grow to north of a thousand employees, uh, approach, you know, 200 million in revenue. And that was in less than three years. So it was really hockey stick growth. So there was a, there was a lot going on. It was very exciting.

Dave Garvey:
Yeah, that’s cool. So, you know, you put your time in there and, uh, you know, I think it’s important to share. So, you know, you’re out in the Bay Area, you know, this is obviously a place to be for, for a lot of people, you know, a lot of people in the Bay Area might not consider actually going to the east coast. Right. For, you know, at least most tech opportunities. Uh, just given the view of how New York was still, uh, maturing at the time. But tell us a little bit about how, you know, the conversations and the interest and the people involved with why you ended up making that big move to Datadog in New York.

Scott Buxton:
Yeah, absolutely. So, um, again started GitHub in 2013 and, you know, one of the biggest, I think feathers in my cap while being there was the series B round of funding that we started in early 2015 and ended up completing in July of 2015, where we brought on Sequoia at a $2 billion valuation to join, join Andreessen on the board, tremendously successful, uh, fundraising event, you know, raised, uh, $250 million again at that $2 billion evaluation. And so GitHub was very well, you know, uh, capitalized and on its way to aspiring, to be a public company. And during that fundraising process Index Ventures, uh, another venture capital firm really wanted to invest in that series B round. Uh, didn’t get the chance to, you know, Sequoia again, led that round. But during that process, I got really close with a general partner at index ventures and established a very good working relationship, answering his due diligence questions related to the GitHub series B around his request for analysis, KPIs metrics.

Scott Buxton:
So really working, um, with him quite a bit and again, very positive working relationship. And so obviously he was disappointed that he was unable to invest in GitHub, but he had basically told me, Hey, I really like working with you. I’ve got a, another software company that I sit on the board of out in New York city. They’re looking for a head of finance. I know that, you know, you’re the number two person here at GitHub reporting directly to the CFO managing FBNA accounting, all that stuff, you know, would you be interested? And so the company was named Datadog. They had been through a series C round of funding. I actually had not heard of them before I considered myself to be fairly well-versed in tech, following, you know, all the news, headlines of hot companies and fundraisings and all that stuff. But I think to your point earlier, Dave, on New York still kind of not really being on everybody’s radar, Datadog was certainly one of those very early pipeline companies, uh, headquartered in New York that was up and coming and that a lot of people potentially didn’t share about.

Scott Buxton:
So I never wanted to turn down an introduction again. I think it’s back to what I said. It’s a lot about what your network can provide. And this general partner at Index was introducing me to, um, one of his companies. So it came, the connection came in via that network. And so met the metadata Datadog folks. And this was right as the GitHub series B round was closing. I think, you know, as I was telling people, I was interviewing for a role out in New York city, I got a lot of, Hey, you’re crazy. GitHub is one of the most successful top tech companies from a private venture back perspective out there in the world. Why would you, why would you look to leave? But again, never wanting to turn down an introduction, um, started the interview process and really enjoyed what I heard.

Scott Buxton:
Um, had a bunch of phone calls because again was in San Francisco and they are in Manhattan and New York city. And then eventually flew out there in October for, you know, a couple of day, uh, um, interview session, uh, with the different executives, the two co-founders and, you know, again, really, really liked what I heard. So I was just wrapping up my third year at GitHub and decided to go on board and sign up for Datadog and be the, uh, be the head of finance. And so that was all towards the end of 2015 as Datadog was going through their series D round of funding that was led by Connick. And I became a full-time employee there first week of January of 2016. I had a weekend off to leave, GitHub and fly across the country and start Datadog that coming Monday. So it’s quite the, a whirlwind.

Dave Garvey:
Yeah, for sure. And I remember someone, you know, a mutual friend of ours telling me about the fact that you were about to take this role and that, you know, as soon as you landed in New York, that we should connect. And that was when you and I met those breakfasts at the Breslin bar, we have the yoga, uh, or the yogurt. And, um, you know, we had the other, we went over to the nomad hotel for breakfast, which I always liked a little bit better. Those were fun times, but getting to, you know, for me, someone who has spent the time in Boston and New York tech, you know, to really sit down with someone from the west coast, you know, on the operation side of things, not an investor to understand your trajectory was, you know, was, was interesting to me and to, and Datadog, to be honest with you in New York at that time, there weren’t a lot of people cheering about it then.

Dave Garvey:
And so it was a lesser known name, possible folks might have actually misunderstood what type of company it actually was with all the ad tech and other things happening in New York around that time, which was starting to, you know, go through its own sort of, you know, evolution as a, as an industry and a sector. So, you know, we sat down and spoke and you were there building things from, from the ground up. And so not a year there. And you know, there’s not this, you know, head of finance above you, it’s you tell us what does a master do in a situation like this to actually properly build out finance and accounting?

Scott Buxton:
Yeah, I mean, I think the amazing thing was that Datadog was about the same exact size that GitHub was when I had joined it and began in 2013, you know, Datadog, beginning 2016 was about a hundred people, a little less than 20 million in revenue had a similar type framework as GitHub where there was really no finance or accounting team. There were two lower level folks, but just mainly at the staff level. And then there was an outsource bookkeeping firms doing everything. And so it was a very, I would say, familiar situation at the end, given what I had just done the past three years at GitHub. But with that very important difference that you had noted, I was the head of finance reported directly to the CEO and co-founders. So anybody needed anything from a finance, accounting, operations perspective, you know, they went to me whether that was the, co-founders a Datadog the rest of the management team, or even the investors and boards themselves.

Scott Buxton:
You know, I was kind of the starting point. I didn’t have that, that CFO blocker, so really, really good experience. And that’s what really pulled me out of GitHub, was to take that next step in my career at Datadog, um, that along with all of the research I had done on Datadog and looking at the numbers or in the interview process, it really did have that feeling like it was going to be that next level hot company. And that’s what made me comfortable leaving, um, another hot company get hub, but anyways, so, you know, had to really focus on FP and a first and foremost, that was something that in discussions with the CEO, as we were trying to prioritize how to build a team and what the priorities and more urgent items were versus the kind of lesser important items, um, we really focused on FP and A, and so that was the first hire that I had made.

Scott Buxton:
What was great about Datadog is actually I was given, uh, the sales operations group, which only had one person at the time to build out and have them directly report up through me. So we had determined that that was the, uh, the second most important area to build in the company. We had decided that accounting was really working, you know, that the outsource firm that was doing monthly financial reporting, again, paying the vendors, collecting from the customers, all that stuff was working. And so we had some time to start hiring out accounting and over time, you know, wean off of that outsource, uh, bookkeeping firm. Other things similar to GitHub, uh, had to establish the French subsidiary, which the co-founders of Datadog were French. And so had to get that going established a handful of other subsidiaries globally back to systems, similar to get hub that outsource bookkeeping firm was, was doing, um, working on QuickBooks and so implemented net suite again for a second time, as well as billing system, expense reporting system, all, all kinds of other, other systems that were required for a scaling company.

Scott Buxton:
And it, you know, again, it was really great being that head of finance, you know, managing what was being reported to the board in the board meetings themselves, presenting on all the slides and everything being that kind of go-to call it business partner to the rest of the organization was just a phenomenal experience because again, back at GitHub, you know, I was only in the finance section of the board meetings, which were about a half an hour, and I left for the rest of the board meeting to continue, uh, at Datadog. You know, I was in the whole thing from start to finish, really just looking back on it couldn’t have made a better decision to not only one move across country, which was a pretty big move, but jump out of a hot company and into an even hotter company. So it was really great and onsite

Dave Garvey:
Well, and especially your path. I mean, people have different ways of, you know, uh, advancing and, you know, you are someone who has always methodical, um, always took, you know, steps that were meaningful, but definitely incremental and always had a good, you know, picker for picking the types of companies that you wanted to work with, which, which has a lot to do with it. And so I’ve always respected that about you, you know, so now that you’re at, so you’re at Datadog doing all the things you described, building out finance and accounting, you’ve got sales ops group rolling up to you, you work closely with the founders, you’ve already got a rapport with a investor and starting to get to know the others, given your experience with that, you know, what would you say is important, uh, when partnering properly with the CEO, you know, partnering with the, you know, the investors, and other folks on the board.

Scott Buxton:
Yeah. You know, in both situations GitHub as well as Datadog, all the co-founders were technical. So the CEO at each company, were both software developers. And so, um, very smart, very bright, but when it came to finance strategy, accounting, sales, operations, you know, other operations really didn’t have much experience. Um, they were smart enough to obviously, uh, learn about it and discuss it, but didn’t really, um, have any point in their career in which they were responsible for that. So when teaming with the CEO, um, you know, co-founder Datadog a lot of it was from a educational perspective. So really, um, as you mentioned, Dave being methodical and calculated about explaining what the next steps were going to be, whether that was from a hiring perspective on the team in general or systems, or, you know, international expansion things with the financial model, whatever it might be, but explaining to the CEO, co-founder what it is you’re doing and why, and, you know, giving him or her the opportunity to ask questions back to, you know, potentially challenge you.

Scott Buxton:
Because I think, you know, CEO co-founders are very good, at challenging the executive team that they work with because they obviously want to be sure as things are progressing, that they themselves understand what is happening. And so in order to do that, they ask a lot of questions and then continue to ask questions until they, until they understand some things. So that’s important, really important to keep in mind, you know, especially for people that are on their path to being CFO, you know, really trying to put yourself in the CEO co-founder shoes and trying to empathize with them and sympathize with them as they’re at this hot growing company that tripling quadrupling in revenue year over year, what is they need to understand as to, you know, what you are responsible for things like just communicating, um, and not just the CEO co-founder like you mentioned to the board, you know, over communicating, you know, um, nobody likes surprises and surprises usually come up because people don’t communicate enough.

Scott Buxton:
So I think really understanding, um, what’s the right amount of communication and erring on the side of over-communicating versus opposite and potentially, you know, having a surprise come about. Because again, it’s just really important with, uh, obviously leading up finance and having all other departments, every decision they make, every goal they potentially try to execute on initiative or whatnot has a dollars and cents impact. And so being the head of finance, you’re responsible for ordering on all that or communicating what might happen to company or a certain department decides to go down a, a particular road. So really teaming with that CEO co-founder and being that kind of right-hand person. You know, I would say, you know, advisor again, call it business partner. However you want to phrase it is very important, especially being in a new role, especially being first, um, senior hire in finance. It’s very essential,

Dave Garvey:
Definitely in part of that partnership, you know, as a topic that we’ve talked a lot about over the years, which is KPIs and metrics, it’s always important, especially in, in, in enterprise software, you know, there’s many, there are many well-worn paths, you know, you know, to also just look at some disclosure analytics, to see some public company comp data in this area and are discerning about what, what applies and what doesn’t. Can you tell us just a little bit about, you know, what went into, uh, what you built so that you could see the right KPIs and be a good partner to the leadership and the board?

Scott Buxton:
Yeah, that was one of the first things I worked on at Datadog was really getting a monthly reporting package together that didn’t just have actual results. So it wasn’t just a, you know, accounting reporting package that showed how the month was from an actual perspective, but digging in much deeper and identifying those important KPIs and metrics to, um, one define and two, I think, track over time. And so that was all in this, you know, monthly reporting package and, you know, we slightly tweaked it for what was going to the board on more of a quarterly cadence at the board meetings, but also, you know, the investor reporting that would come out every quarter so you had a bunch of different reporting packages depending on who the audience was. And, you know, it was just very important obviously to focus first on top line.

Scott Buxton:
That’s, you know, obviously the backbone of any, any business, any companies, whether that’s year over year, ARR growth, bookings from an, from a new customer or upsell perspective, then you know, you look at net dollar retention rate and then gross retention rate to help you analyze churn customer growth over time, uh, you know, customers that are over a certain revenue or ARR threshold. So all of these top line metrics are certainly really important to have in that package. I think also, you know, when you take revenue aside. The other obviously backbone of any company is their cash position and how well are they capitalized? You know, how short up is their, is their balance sheet from a cash perspective. So, uh, reporting on free cashflow forecasting, the cash position and the cash, you know, burn rates, because obviously you want to understand how much cash you have on your balance sheet and how long it’s going to last for. Um, so that’s just as important as revenue and then other things, you know, head count metrics, whether that’s by department, you know, by geography, by office, um, with head count and, you know, salaries and, and all salary related expenses, usually being anywhere from 50% to 70% of a company’s total expenditures, that’s a really important one to have in that reporting package to have really strong understanding of the KPIs and metrics behind everything headcount related.

Dave Garvey:
And as you know, someone like you has gotten in the weeds on a lot of these different metrics. Do you and your unique sort of leadership role at Datadog, you know, you were able to also be a business partner to other CXOs. They’re like folks that like CRO and CMO. Can you talk a little bit about what that’s like as, you know, the head of finance working in partnership with all these other departments, uh, in a farm, especially as an enterprise software firm.

Scott Buxton:
Yeah, absolutely. So at both get hub and Datadog again, it all depends on what time you join an organization. But based on when I joined both those companies, the CRO’s and CMOs hadn’t been hired yet. So, you know, as a head of finance, you know, in the CFO seat, as those other C-suite positions are being hired, it’s really your responsibility to onboard them. And when they joined the company to sit down with them, explain from a metrics, KPIs, analysis perspective, how their department is doing. It’s a CRO going over all the various, uh, reps and the different sales segments, whether that’s enterprise all the way down to mid-market and SMB, where they’re geographically located, you know, what their quotas are, what’s quota attainment. How does attrition look like at the rep level? All of these things, uh, are very important as a, um, as a new exec is onboarded that the CFO can sit down and go over all these things.

Scott Buxton:
And then I think as that new C-suite person, you know, becomes to start executing on their initiatives and their goals and their KPIs and metrics and whatnot, staying really in touch with them. Because, you know, like I had mentioned before every, just about every single decision that they are making for their respective department, or there’s a chief revenue officer or a chief marketing officer starting to go down an ad campaign route or some other kind of marketing initiative that costs a lot of money. It’s exactly that right there, it has a dollars and cents impact. And so it’s your job being that business partner and being able to communicate what that impact might be from a strategic perspective, from a financial modeling perspective. If you go down one road versus another, what are the consequences of that? The impact, the top line, the impact of cash burn, maybe whatever it might be.

Scott Buxton:
And so I think that’s truly what the best CFOs can do to differentiate themselves is being that strategic business partner, because, you know, there’s many CFOs out there that can handle the table stakes stuff, and that’s the, again, the monthly financial reporting, and that’s ensuring that employees are paid on time. That expense reports are reimbursed that, you know, you’re doing compliance abroad with your subsidiaries or, you know, locally with sales tax in the U S or whatever it might be. I consider that, to all be table stakes and stuff that a finance professional should be able to do anyway. But it’s the, the ones that can team up with, you know, with the other leaders that really differentiate themselves.

Dave Garvey:
Thanks. Yeah, this is going great. I love all of this that you’re saying. Uh, so let’s switch over to the big event, or at least one of the big events for Datadog, which was, you know, the, the IPO. Not everybody gets to participate in an IPO, or at least that was the case when this was, you know, a year and a half ago or so. And even if you, where people are actually central to driving it and driving a successful one, that being your experience. What can you tell us about, especially all the IPO experience you had prior to this? What does that look like when you’re putting that all into a, when you were implementing that and executing and making sure that, you know, Datadog has the best possible debut?

Scott Buxton:
Yeah. I think my one piece of advice there is, you know, while you’re private, it’s never too early to start thinking about what the team would need to look like if the IPO path were to be gone down, obviously you’re not going to bulk up the team, you know, in a private setting as if you were public, you want to ensure that the IPO trajectory is there. And so that’s understanding at the board level co-founder level that this is a path that we’re going down, but it’s really never too early to start thinking about that because say it’s not the IPO path that you go down. You obviously have investors in this company that have given their money expecting a return on that. So if it’s not the IPO road that the company is going down, it’s going to be for some other liquidity event, you know, based on that, the investors wanting that, that ROI, that’s why that’s why they invest it in the company.

Scott Buxton:
So I think when looking at that way, really understanding that it’s never too early to have everything in order. And I think first and foremost, you know, from a predictability standpoint, that’s where most companies in the pre IPO stage, I think have a very hard time. And when they go public, if they don’t really have an understanding and can nail down the predictability of the business, that’s where they’re really going to have, you know, a first earnings release or one of the first within the first five or 10, they’re going to miss their guidance that they presented out to wall street, and then their stock price is going to crash. And I think that happens to a large percentage of newly public companies that right out of the gate within those first few earnings releases, miss their previously communicated guidance. So I think really nailing down that the predictability.

Scott Buxton:
So that’s building out the FP and a team back to the KPIs and metrics, really understanding what those important ones are back to the blocking and tackling. Financial reporting needs to be consistent. It needs to be done on a regular basis from accounting. Uh, it needs to obviously be accurate month in and month out. Quarterly closes are very important. I think, you know, also from an accounting perspective, the internal controls that are going to be required of a public company, all important things to do in that pre IPO stage, because based on the timeline, you know, you could get going at 200 miles an hour. And if you’re not thinking about all these things, and you’re not having, at least the initial building blocks in place, you’re going to be in a, in a pretty bad spot. And then I think as you get closer to IPO, and when I say that anywhere from three to nine months away, then you start doing that fine tuning.

Scott Buxton:
And those tweaks to the rest of the finance team, you know, you hire, uh, an in-house tax person because you’re going to need a tax team being a public company. You may be build out a procurement department because that’s an important thing from an internal controls perspective of, you know, thresholds for approvals and requisitions and how expenditures are being done. You know, you start hiring out internal audit, like all these different departments that back to being private, you would be crazy to have in place. You start doing that anywhere from that three to three to six to nine, even 12 months prior to IPO, when it is more and more apparent that you are going to become a public company.

Dave Garvey:
So that was a big, that was a big event for New York, that Datadog IPO. Right? Yeah. Maybe just tell us what was, what was most memorable about it for you?

Scott Buxton:
Yeah, I mean, I think from a, you know, enterprise B2B software perspective, that was really kind of just coming about in New York city, you know, Mongo DB had really paved the way for Datadog going public right before DataDog did. And actually the Mongo DB, uh, CEO sits on Datadog’s board, but, you know, really outside of that, from a tech perspective in New York city, you know, there was Etsy, there’s a lot of healthcare tech, there’s a lot of FinTech, but from an enterprise B2B software perspective, Datadog really helped put that on the map from New York city. And, you know, we priced the IPO at $9 billion, which was, you know, an incredible multiple from, uh, where the company was at from a top line perspective. So that was incredibly memorable looking at what we were able to price it at. And I think just, you know, the whole experience and having built things up for years at the company and seeing that all come to fruition, you know, it wasn’t just six months prior, he decided to go public and then you start building it all again, it really was a project worked on for years, you know, went public September, 2019.

Scott Buxton:
And I started at the company in January, 2016. So I think also very memorable that yes, incredible events, something to celebrate, but by no means, is it the finish line for the company? If anything is really the starting line, you know, now you’re public. Now you’ve taken on, uh, money from wall street investors and you need to start behaving and also performing like a public company. Now there’s millions upon millions of eyeballs on your company where, you know, prior to that being private, you would have quarterly board meetings. And, you know, they’re not a Bible as you had on the metrics and the numbers, you know, we’re less than less than 20. So all of that was certainly very memorable, you know, from a personal perspective, my wife and I had our daughter Monday, September 16th, and Datadog went public Thursday, September 19th. So it was quite the 72 hours from both a personal and a professional perspective. So of course that part was very memorable as well.

Dave Garvey:
Thanks. I knew, I was hoping you were going to say that and I love that you did, you know, I think that, I mean, listen, I know we only scratched the surface on all the depth you have with working with pre IPO companies. And, you know, I know I’ll certainly continue to send folks your way as they are trying to learn through that process, but let’s switch over to present day for you. You know, you’re, you’re no longer in New York, you made a move down to the Southwest, you know, tell us what it’s like now, as someone who is, you know, working with a wide variety of, of startups, you know, on both coasts and now in the Southwest and Texas, um, you know, either as a consultant or an advisor, and even in some cases, you know, as an investor, you know, there’s companies that seek you out, what do they tend to be looking for? And then also, what are you looking for?

Scott Buxton:
Yeah. You know, Left Datadog September last year, and now down here in Austin, Texas, you know, over the years have had the chance to do about 15 personal investments. Um, you know, writing, um, direct checks into these companies at the seed, uh, angel sometimes series a stage. And you know, about half of these investments have advisor relationships that come with them, um, where they grant me a little bit of equity that that’s over time. And I just work with them on a defined set of projects or more ad hoc stuff. And they just reach out to me as they need help. And so that’s been, that’s been really great working with different co-founders sometimes with the finance professionals at the respective companies and helping them, uh, really prioritize what they’re doing at that particular company. So it’s been, it’s been really great, you know, I think certainly able to add value with what I’ve seen at, at both GitHub and Datadog, and then, you know, as it relates to what’s next, I would love to take another CFO role somewhere.

Scott Buxton:
I think, you know, there is a lot to say of being in-house, uh, somewhere, you know, kind of what drew me out of Deloitte to be in-house at, at GitHub, you know, having these personal investments in these advisor relationships. It’s great. And again, I am adding a lot of value, but from a consistency standpoint, from a really getting close with the team and working, you know, with them becoming, you know, a very, you know, trusted, respected co-worker, it’s, it’s very different when you, when you’re, in-house somewhere versus, you know, kind of one of these fractional type situations. I’m just kind of patiently taking my time to see, see what’s out there while I continue to look at other companies to invest in, or have conversations with other companies potentially about, you know, advisor roles. Um, and it’s been, it’s been going well so far, I’ve been really enjoying it, but still at the same time, talking to other companies about that kind of full-time, uh, CFO roles to see if, uh, see if I have another one of these, these me.

Dave Garvey:
Excellent. Scott. Yeah. So, you know, with some of that you’ve described how, you know, what it looks like to be involved with all these different companies and in what capacity, you know, looking forward, are there companies, you know, are there, is there a certain strike zone for you? Like, is it a certain stage of company or is there a certain requirement that they have, you know, whether it’s an advisor investor or even that, you know, that right CFO type position, you know. What is, what are some of those companies probably look like that are most compelling to you?

Scott Buxton:
Yeah. I mean, I think what’s most important. There is the fit that you have with the team, right? Whether that’s the co-founder team, the investors at that particular company, the rest of the management team, if they have a finance team, what your fit might be with them, because, you know, that’s, the advice I have is you really got to evaluate, as you are deciding to team with anybody, whether it’s, uh, investing, advising, or in a full-time role, if you’re the right fit, because you’re not going to be the right fit, every word, you know, there’s going to be some oil and water situations. And so the sooner you can recognize that whether in the interview process or whether you’ve been working with them for a little bit, you know, the better off both sides are going to be. So I think that’s really important. I think obviously having the expertise to be able to help the company out enterprise B2B software, being the space.

Scott Buxton:
I know very well. So if I were to be looking at say like a manufacturing company that has, you know, supply chain issues and is B to C and what not, um, yes, I have experience with that with Deloitte, but that was many years ago. And so in say a CFO capacity that would look pretty different. It could be a pretty different kind of challenge than if I were to be talking to enterprise B to B software company. So I think those things are really, really important to evaluate, because again, back to what I was saying previously, as, as the CFO, as the consultant advisor investor from a, from a finance perspective, you really are that business partner and you really are that strategic voice and communicating, you know, again, the dollars and cents impacts on what the company is deciding to do or not do. So having that right fit, um, is obviously very, very important.

Dave Garvey:
That’s great. And that’s actually a perfect Scott and a great way to end this, uh, this episode. It was awesome as always, you know, I see a future episode maybe where where we catch up and see, you know, what other successes you’ve had with some of these companies that you’re advising and investing in. But just want to thank you so much for joining us, look forward to keeping in touch and just appreciate you being here today.

Scott Buxton:
Yeah. We’d love that, you know, future episode, Dave, and, um, you know, just let me know on that and thank you for giving me the opportunity to, to chat with you today and thank you to Withum as well. I really appreciate it and it’s just always great to chat about these things. Um, I very much enjoyed it, so thank you.

Dave Garvey:
Cool. Same here and definitely want to thank, uh, they say thanks again to all our guests and our audience. We are committed to creating content that brings value to all of you. So please feel free to reach out to me directly with ideas for future episodes, or if you are interested in being a guest on this Founded in Tech Podcast, and then the meantime, please enjoy and be well.

Speaker 4:
Thank you for tuning in. If you liked it and want to hear more, you could follow us and subscribe, and we’ll see you next time on founded in tech.

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