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Voices Amplified: FloQast CEO Mike Whitmire on Best Practices for IPOs and Rapid Growth Companies

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FloQast CEO Mike Whitemire Talks IPOs and Rapid Growth Companies on the Workiva Blog
6 min read
Published: October 15, 2021
Last Updated: October 28, 2021

Mike Whitmire is CEO and co-founder of FloQast, a provider of accounting workflow automation software created by accountants for accountants. Prior to founding FloQast, Mike was part of the accounting and finance team at the rapidly growing Cornerstone OnDemand. During the Los Angeles-based tech company’s IPO preparations, Mike first devised the concept for what would become FloQast.

Mike presented a breakout session at our 2021 Amplify conference, focused on building the right tech stack for rapid growth companies and IPOs. Check out his advice based on what he's experienced first-hand and seen throughout the industry.

Key Takeaways: 

  • Businesses must invest in technology to make accounting easier during times of rapid growth
  • Expect constant change in regulations, basically every 18 months
  • Don’t build your business around who you have—build the team around where you see your business headed
  • Practice quarter closes and earnings calls ahead of time
     

Q: Can you articulate the importance of using the right tech stack to meet the accounting needs of going through an IPO while also managing rapid growth or M&A activity?

A: There are a lot of demands that can come around growth. And it depends on business strategy, the executive team, what's going on in the market. When an investor puts into a company, they're expecting either a sale at some point or an IPO. They want books clean. Back office is often the last thing to get invested in, but it feels like over the last five years the importance of accounting and finance and the whole transaction is really being contemplated. People are more open to buying solutions like FloQast and Workiva earlier than they would have historically just because it's more of a known issue.

I've heard horror stories of the accounting team not being able to produce some report, and they missed the IPO window, or the acquirer goes away to buy some other company. You're not going to make any friends doing that. When we went public at Cornerstone, we then had all the new requirements come down. SEC reporting, SOX compliance, we're all doing a bunch of stuff. Then our CEO and CFO come over and they say, “We acquired this company out of New Zealand. Can you audit it and try to fold in the accounting operations?” There's no appreciation for the amount of work that's going to have to go into that. 

So, all of a sudden, we were just absorbed for three or four months making that happen. Meanwhile, we have the day job still closing the books, getting bills out. Mergers and acquisitions activity is something that comes out of nowhere. It's on top of your day job. It throws things off in a big way.

Q: How much do regulatory changes play into this rapid growth mindset?

A: Revenue in particular is really hard because you work with a lot of the different functions within the organization. If I'm allocating consideration to a certain deliverable on a contract, I need legal to understand that we need to parse things out appropriately on the sales order so I can actually perform that exercise and get through the audit.

It's just like orchestration across different functions. The thing about FASB and other agencies is they constantly put out these changes, which is lame because it creates a lot of extra work for us—but it's also really cool because it creates a lot of extra work for us. There are a lot of jobs in accounting as a result of it.

This is something we should all basically get used to. Every 18 months, there's going to be some new form of guidance that comes out. It's going to be hair on fire. This will be a never-ending thing, which is fun but kind of lame at the same time. 

Q: Having the right tech stack is important. Where do people come in?

A: Loss of talent and turnover of people is such a huge loss for a company. When someone leaves, you lose the institutional knowledge, then you have to take the time to hire the replacement, then ramp them up. That's consuming a lot of resources. Software helps document what they're doing. They can figure out how the work is done. 

We help with the onboarding process in a really big way because I think the reality is we probably need to accept that within finance and accounting functions people are going to quit because we work a lot. There's burnout, particularly during demands of growth. I think it's just something we should accept, try to build the best culture possible, obviously, but be prepared for people leaving and the need to onboard new folks. 

Q: How do you like to build out your organization, knowing that there will be growth and organizational changes? 

A: A common pitfall is you hire people and they have certain skill sets. You build the organizational chart around them and you end up with these weaknesses in certain areas. The better way to do it is to sit down and say, “Here's the org chart a year after we're a public company.” Have the org chart without thinking about the human beings that are in your department and start to slot people around and figure out how you can build this out. It's just a better way to do it. We found if I talked to a controller at a public company and asked five different controllers who report into him, it's different for all of them. It's based on their skill. I talked to one who has internal audit reporting into him. Do I think that's an independence violation? I don't know how that works at a company, but that doesn't seem appropriate. So, be more thoughtful about what the future state-of-the-art chart's going to look like and really try to hire the expertise into those roles as things go. 

Q: Any additional advice on the people and processes that you would like to offer? 

A: I like having a practice quarter ahead of time. I think it is really healthy. Try to do a mock close, and get through a quarterly review. I would in particular suggest a practice earnings call. We've seen our best clients who are going public doing a mock earnings call before they go public, if not a year's worth of earnings calls beforehand. Believe it or not, that's very prepared. But some people out there are doing it.

For more insights from finance and accounting leaders, check out these other conversations from our Voices Amplified series:

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