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With Scott Orn

A Startup Podcast by Kruze Consulting

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Scott Orn

Scott Orn, CFA

Bebe Kim of Basis explains how their financial platform connects data to help startups

Posted on: 08/02/2023

Bebe Kim

Bebe Kim

Founder and CEO - Basis.so

Bebe Kim of Basis.so - Podcast Summary

Bebe Kim of Basis explains how their financial platform connects financial and operational data to help startups get a complete picture of their businesses.

Bebe Kim of Basis.so - Podcast Transcript

Healy: Hey, this is Healy Jones, VP of Financial Strategy here at Kruze Consulting. And I want to say thanks to our podcast sponsor, ARC. At Kruze, we’ve got a number of clients successfully using ARC to manage their deposits, payments, access financing, all in one place. One of the things that ARC provides that’s really great is over a quarter of a million dollars in FDIC coverage. Their insurance program goes beyond the standard limit and it secures up to five and a quarter million dollars. So, startups that have even more cash than that can go and access treasury solutions to provide yield and safety. If you’re a startup looking for a secure financial solution that can help you scale, please check out our sponsor ARC at ARC.tech.
Singer: It’s Kruze Consulting, Founders and friends, with your host, Scott Orn.
Scott: Welcome to Founders and Friends podcast with Scott Orn of Kruze Consulting, and today my very special guest is Bebe Kim of Basis. Welcome, Bebe.
Bebe: Thank you. I’m a founder and a friend. I feel very honored.
Scott: I love it. I love it. I think that’s the first time someone said that before. That’s really cool. Well, I love it. And maybe start out just by retracing your career a little bit and telling us how you had the idea for Basis.
Bebe: Yeah, absolutely. So, first of all, basis creates FP&A software for forward-looking finance teams. And I got the idea because this is my third company. I’m the founder of through and through, so each company I learn something new and it all culminates into professional management of the company and what that means. And so, it boils down to FP&A. Absolutely rely on the FP&A process for deciding what budget to invest and where. And as a CEO and co-founder, you get a bunch of money from VCs or other funding sources, and it’s just placing bets. And so how do you place bets? How do you calculated bets that will pay off? And FP&A process is the process that gets you there or gets you comfortable making those decisions by yourself and as a team. And so, in that process, it’s becoming really data intensive. Lots of financial systems data is needed to create this process. And I think it’s a highly impactful process to help founders and team navigate, especially uncertainty like 2023. So, I created the software Basis to address this problem for everyone.
Scott: That’s amazing. And I’m one of these people who I always call the FP&A, the forward-looking financials, your map. As a founder, you’re going on this journey and you kind of know where you’re trying to go, but often it’s like a Pirates of the Caribbean movie. Johnny Depp gets waylaid a couple times, and that happens to all founders too. And so, knowing how much runway, how much fuel in the tank you have is so helpful. And also knowing if you’re not executing, if you’re hitting your plan, that’s super important. Or the converse. Say you’re just kicking butt and oh my gosh, we can go faster or we can raise more money and go faster. So, this type of software you built, I think is super-duper interesting.
Bebe: Yeah, thank you so much. That’s exactly right. We look at it as a navigation system. Sometimes you can model things out and simulate the route, and then it’s just like, oh, traffic, okay, let’s not go there. You don’t need to waste a bunch of money, and let’s reroute and take this other we way that has less traffic. And so, to me, that has become a discipline tool to help me scale what works, avoid what doesn’t work, and just really navigate all of the other tools with it, like product led. There’re so many decisions that an early team is faced with, and this is, to me, the tool that really helps with that.
Scott: How many people inside a typical client have access? Is it the CEO, founder and maybe like a CFO, or is it all the way down to the whole executive team? Who’s using the software?
Bebe: Absolutely. We think of it as the software is for internal budget owners, and those are people who have a budget or the authority and the insight and the experience to create calculated bets. So that in the very early days is the CEO; it’s the only budget owner. However, as the team grows, you’ve got now your head of marketing who is in charge of marketing spend. Hey, do we spend this money, Scott, on a podcast or a flashy website? We just talked about this earlier. And what is the ROI for that? One is 20,000, one is just 20 hours a week. And so that’s another budget decision. And as the company grows, there are more and more budget owners that need to collaborate together to spend money to spend investments together.
Scott: That’s actually where I was going with it because as the company gets bigger, it’s actually pretty helpful to drive accountability through the rest of the executive team. That’s exactly what I was actually asking about because we’re in the dinosaur age so we’re still using Excel or Google Sheets, but the RVPs meet with our CFO to go over their group, their direct reports, their revenue line items, things like that to make sure they’re on track. It’s almost like a mini P&L. Do you find that happening with Basis?
Bebe: Absolutely. And I think there’s financial reporting, which is typically a very [inaudible 00:05:40], just sticking with the navigation analogy. And the forward planning is, at the end of the day, it’s like an orchestra. It’s a coordination problem between teams because the teams depend on each other to grow the business. So, marketing pipeline is what fills leads for the sales team, and the sales needs to have enough capacity to ingest and convert these leads into sales. And then as there’s customer success, there needs to be more capacity for that. So, it’s just all related capacity between teams, and this coordination is crucial to make sure that scaling up is happening hand in hand.
Scott: Yeah. It’s so helpful. You tell me, but I also find that the sales team, knowing what the marketing team is supposed to be doing, is actually pretty helpful. You kind eliminate a lot of excuses and a lot of he said, he said, she said, whatever kind of stuff.
Bebe: Yes. And I’m a lawyer by background and exactly. It helps you force definition creation. It’s like what is an MQL? And having healthy debates around that is amazing. And we do that all the time here. It’s just like, oh, this person, we don’t have integration for. Is that a DQ? And then there will be a debate on that. It’s just like, well, why doesn’t product have this integration? It’s like, well, right now we don’t, so it’s a DQ. What are you going to do? So yeah, all of these conversations are just extremely healthy to define accountability and create these definitional responsibility markers between teams.
Scott: Accountability is one of my favorite words in startups. That’s awesome. But when you were building this, what were some of the key features that you looked at? Because you said you built this because you had done two other startups. What was the killer app or the killer feature for you [inaudible 00:07:38]?
Bebe: Yeah, for sure. So, my first company was sold to a late stage [inaudible 00:07:43] company at that point called LegalZoom. We had a very well-oiled FP&A process. I was exposed to Adaptive Insights as a marketing leader just by virtue of accessing the P&L. So, permissions is number one, because at the time, we didn’t have this level of collaboration. And this is before remote office work too. Every month, the FP&A analyst would physically come near my desk with a ThinkPad and give me a peep of my own budget, and that’s it. And it’s almost like-
Scott: Like a quick here it is. [inaudible 00:08:19].
Bebe: Right, right, right. Exactly. It’s like a privilege. And then it’s sort of like going to Chase Bank where they have this screen, just like, oh, don’t show anyone else. And I’m like, wait, this is my budget. I don’t really know what’s going on and how it impacts the big picture. And then we would get this flashy quarterly review by the CFO once everything is consolidated and reported upon. And at that time, I’m like, oh, yeah, great. I knew this already, or I didn’t know this. I wish I did. And so I think collaboration is just key for me, granular permissions around the slice of the budget that you’re responsible for. Because if you don’t have access, how can you be accountable to that?
Scott: Yeah. Or you’re making changes too late. The quarter’s already baked and you find out that you’re behind or something like that. That’s the worst.
Bebe: Right. Exactly.
Scott: That’s really cool. And then when I was spending some time on the website, you’ve got a lot of integrations. How did you architect the product? You open APIs and pull everything in, is that the idea?
Bebe: Yeah, absolutely. So, I think I have two categories in integrations. One is native, so they’re highly consequential, like ERP integrations. We need upmost granularity in that. And then the other category is just like, hey, driver based data that needs to come through. And we outsource that to an integration partner because it would take forever to build each of them. We’re in a lucky era where we can experiment rolling out a product like Basis because up until this day, payroll data wasn’t even available through an API. It’s like the most close set of financial data. And shout out to Finch who recently raised the fund again, who I’m happy to be an early investor in Finch, of course. And so, they are experts at this data set and APIs to it. And it’s just great that they’re empowering this whole ecosystem of financial applications that didn’t exist before. FP&A is a use case, but there were also other use cases around compensation and whatnot. So really exciting trend there too. It’s this availability finally of structured, unified financial data from these heavy old school systems.
Healy: Hey, this is the VP of financial strategy at Kruze jumping in to thank our sponsor of this podcast, ARC. At Kruze, we have a number of clients who are successfully using ARC's FinTech tools to store deposits, manage payments, get financing, earn yield, all in one place. But another thing that’s important about ARC is that they have a heightened security and safety feature. Because they partner with globally recognized banks, they’re able to offer an FDIC coverage over $250,000. In fact, they offer up to $5,250,000 in FDIC coverage. And if you have more cash than that, they have treasury solutions that can provide yield and safety for even more money. So, if you’re looking for a comprehensive financial solution, they can help you scale. Check out ARC. Go to ARC.Tech. Thanks again to our sponsor ARC.
Scott: It’s huge. The payroll companies, they are opening up a little bit now, but there’s a whole qualification-
Bebe: Yes. Except for Rippling.
Scott: Yeah. I haven’t checked on Rippling lately. We did an integration of Rippling a long time ago, but we don’t really use it that much. But I do need to check with them because I know there’s whole hoops you got to jump through and things like that.
Bebe: Exactly. No, the technology is there, it’s just the charging around it, that sort of thing. Suffice it to say, the data is available for the first time now. So apart from even FP&A tools, I’m just super excited to see financial applications.
Scott: I know. I know. It’s so nice. Also, you can create new products, like what you’ve done at Basis, and then also just better for everyone. The whole ecosystem’s better off because they can see what’s going on.
Bebe: That’s right.
Scott: It’s really, really cool. In your previous companies, was there, this is real dorky stuff, but a specific line item, a problematic line item, like the R&D team or the marketing team, the sales, was there someone who just drove you crazy because you couldn’t see what they were doing?
Bebe: This is hilarious. Yeah. Well, it’s so funny because let’s be real, it’s the legal professional services line item. That’s always, what did I spend? $48,000? Which was the premise of my last company Atrium.
Scott: There’s a lot of lawyers that listen to this podcast, so they’re all freaking out right now.
Bebe: Right, exactly. And also, it has to do with bookkeeping too. Are you incurring a service that you didn’t receive an invoice for yet? Yes. I started incurring this service. And also, is it happening on the right month? So, lots of these heavy hitting one-time expenses with lawyers and whatnot. A lot of the misunderstanding is just which month does it happen in?
Scott: How to accrue it in the right months, basically.
Bebe: That’s right.
Scott: That’s accounting 101 right there. The law firms, they invoice two months later and you don’t really know what’s going on, and then they’re pretty big invoices. We have a lot of companies that they get a stomach ache around that stuff, so that doesn’t surprise me.
Bebe: Right. It’s just like, whoa. So, there’s a lot of those types of things. And then commissions is another one. Everyone’s like, whoa, where did this come from? It’s just a lot of these one-off things. Otherwise, I think marketing’s always very granularly broken out usually. Early stage R&D headcount is the biggest driver of that, which is why the headcount plan when you have all the data together can really inform you how many months you have left for that.
Scott: Totally. Yeah. We always say 70% of all startup spend is headcount. It’s kind of that simple. It’s like a Moore’s law kind of rule. Every startup spends that kind of money.
Bebe: That’s right,
Scott: Is there a wishlist or things you’re working … And you don’t have to break any news here. I just always ask this question in case something’s coming out.
Bebe: Early on Kruze Podcast now.
Scott: Yeah. But what’s your dream thing that you’re working on? Or maybe it’s a sector you’re trying to get into. You’re like, oh gosh. The healthcare sector. If we could just get in there, we can make a lot of-
Bebe: Yeah, no, actually, Scott, it’s the early stage sector. So traditionally, enterprise FP&A SaaS is an established brownfield, meaning there is a G2 category or 10 around it, and people necessarily need it because there’s so much complexity around … There’s all this financial operations debt that are deprioritized until Series D, and then everyone’s like, oh my God, now we got to get serious. This is a priority now. We have too many entities. We can’t even consolidate our financials together. That’s when that category of software usually comes in. And we know that. And the features around that are scenarios, comparison, storing versions, consolidation. However, I think what’s really interesting is just more of a mid-market earlier stage segment, because that is pretty green and early adoption oriented. And it happens in Excel. And the whole API thing is new. Financial systems as a discipline is new because knowing how to model in Excel is a slightly different skillset than knowing how to implement a tech stack, if you will. And that is a growing role in light of how financial systems are impacting our financials today.
Scott: Totally agree. And people like me, Excel wizards getting older, I think more financial analysis happening in the browser basically and different apps and things like that, and things like Basis. So that’s really, really cool.
Bebe: That is interesting because we sell to younger FP&A or finance managers. They grew up in the Notion era, and then they’re just like, I don’t want to learn this in Excel.
Scott: Yeah. The flip side of that is we have a lot of CFOs who are like, oh, I don’t really want to learn this new tool. How do you guys onboard new clients or new users? How do you teach them how to use Basis?
Bebe: Oh my gosh. Still figuring that out honestly. I thought finance was going to be easier than legal. So, in legal, I’ve been streamlining professional services with a risk averse group of professionals for about 10 years. And take a LegalZoom for example. It’s 150 plus streamlined legal products, defined value-based pricing. And so, I think change in this industry comes from that first. It’s not even about a tool. It’s about a mindset of, hey, am I billing hourly still or am I open to doing this value-based deliverables? And the cool thing is, once you get your mentality adjusted to that, FP&A is the dream recurring delivered service scope product because it has clearly defined periodicity. It’s just like, hey, this happens every month, monthly close, quarterly review, re forecasting. It has this subscription cadence to it. And once you start to charge subscription fees, which you guys do, then it incentivizes the teams to become maximally efficient, which Excel just isn’t at a certain point.
Scott: I think also what you’re touching on is your tool, your service, has an incentive to become even more efficient itself too and save everybody time because your profit margin goes up, the people are saving more time, so their margin goes up, they can do other things. So, it’s a nice way of structuring everything.
Bebe: That’s right. So, we appeal to two segments. One is [inaudible 00:18:24], CFOs who have subscription pricing and they want to scale. So, with those two factors, you have to look into automation. And then the other is in-house finance teams, which naturally they’re on a budget so they’re incentivized to become efficient. So that’s one thing. And the other thing is just I think every FP&A professional did not enter the profession to pull data from financial systems. And so, we really tell the story of elevating you to become true business advisor and to really discuss the issues at hand versus, oh my God, which version is this? Where is this file? File management and doing that kind of stuff.
Scott: The worst part of the job because it’s keeping you from doing what you need to do and you’re formatting or downloading or whatever.
Bebe: And I think there’s a tailwind of for better or worse. In the US, accounting professionals are leaving the industry so it’s becoming harder and harder to retain talent in this field as well. And so, I think it’s all the more reason to abstract away the work that is not fun. I actually find FP&A really fun to do when done right. You’re at the center of decision making really, and orchestration of the entire company, and it’s just a very, very illuminating, powerful position to be in.
Scott: I love it too. You nailed it. Well, you built a cool product so I’m really excited for you. I’m excited to watch you roll it out. Maybe you can tell everyone how to find you if they want to work with you, how to reach out.
Bebe: Definitely. So, Bebe, clothing brand, B-E-B-E. I live in the Bay Area, so if anyone wants to have coffee, let me know. And I can be reached at through my email and LinkedIn. So, my email is Bebe@Basis.so. Yeah, that was the cheapest domain we could get.
Scott: Nothing wrong with that. Nothing wrong with that.
Bebe: Exactly. And really, we love Notion as well. We’re inspired by the UIUX of it. But yeah, would love to hear from everyone. I also invest, advise, do a bunch of startupy things on the side and would love to just chat with whoever is down.
Scott: I love it. Well, thank you for taking the time. Super cool. And I love that you lived the problem so you built something to fix it. That’s always the best sign.
Bebe: That’s right, that’s right. We’re truly engaged.
Scott: Love it.
Bebe: Yeah. Awesome. Well, thanks so much for including me in your profession and in your podcast.
Scott: And I love that you said you’re a founder and a friend. That made me feel really good. So, thank you, Bebe. I appreciate it.
Bebe: For sure. Awesome.
Scott: All right. Take care. Bye.
Bebe: Take care.
Singer: It’s Kruze Consulting, Founders and Friends with your host, Scott Orn.

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