Founder story

^{Tushar Makhija (00:00:10):}

The most important takeaway for the CFO is headcount is your largest expense. You need TeamOhana to align your headcount strategy with your company strategy. That is the fundamental way of being successful, including making sure that your labor cost is not, as I said, non-linear increase in revenue should not result in a linear increase in your G&A labor cost, right? It is the best of all worlds coming together.

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_{Joe Michalowski (00:00:40):}

That is Tushar Makhija, CEO, and co-founder of TeamOhana. It's the workforce intelligence platform promising to solve headcount headaches. I am Joe Michalowski and I got a chance to chat with Tushar for almost two hours about TeamOhana's past, present, and future. The through line of this entire conversation I think is something that every company is struggling with right now, and it's this idea that if 70% or more of your operating expenses are wrapped up in people and those people are your most strategic assets, why would we all still accept headcount headaches, all of the headaches that come with your average workforce planning process. As you dive into this conversation between me and Tushar, you will find one, a deep dive into how headcount conversations changed almost overnight when the growth at all costs era died and capital got really expensive in late 2022. Two, what it means to treat workforce planning and management as an exercise in capital allocation. Three, the Trojan horse feature that made leaders care about TeamOhana's vision, even pre 2022 when capital was so readily accessible and headcount planning really wasn't at the forefront of anyone's minds.

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_(00:01:51):

And lastly, you'll hear about how Tushar and TeamOhana are introducing an agentic system of action to turn organizational data into real-time hiring decisions. I think whether you're a finance leader, an operator, or just an investor betting on all things efficient growth, I think you'll find a lot to chew on in this conversation. I know I had a great time chatting with Tushar. Honestly, I think you'll find if you listen to this, it's always a great time to chat with Tushar. So without further ado, let me just drop you into the conversation. Hope you enjoy it. Headcount planning is very much a cost center for businesses, so why do you think that it is still seen that way instead of seen as sort of a strategic investment? Because it's kind of what it's, so I'm curious why you think that doesn't come through correctly for people.

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^{Tushar Makhija (00:02:37):}

If you are the CFO of a company you want to look at, I mean, you are the steward of the person who is managing the entire capital, and if it's a private company, it's more so where should we invest this capital to get the maximum return so that we have something to show for before we run out of money so that we can go raise money again. And what is the company's largest expense or where does the company spend most of its capital? It is in people, and if you look at the evolution, it's always that the people are the most expensive and the people are the most strategic asset, which is if you have the right people at the right time doing the right things in the company, success is going to follow. Team sometimes is bigger and better than the idea, combined it with the right market and you have a successful company. So I think the most important thing for us to look at today is how do we use people not just as a cost center or view them as a cost center, but view them as a strategic asset and a strategic lever and with the right tooling and with the right mindset, I would say you can actually use that strategic lever to basically outgun your competition and become the successful company that you want to be.

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_{Joe Michalowski (00:04:11):}

I like this capital allocation idea. We had talked about it before. Mostly it helps me frame up how to think about this. You think about finance person, CFO or VP of finance being sort of removed from the day-to-day of every other department. So there's a stereotype of everything being just a line item in a spreadsheet. And so when you talk about capital allocations, like, all right, speak in the finance language. So in theory, let's just frame up the problem how to poor capital allocations regarding headcount impact the business. How should CFOs be thinking about this when they go about solving this problem?

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^{Tushar Makhija (00:04:55):}

Let's repeat right. The most important thing is the primary responsibility of a CFO is capital allocation. They have to deploy the capital to generate the highest return for the business. R&D is a capital investment. Go to market is a capital investment, and the tooling that you deploy in a company is capital investment, right? But if you think about people, your employees and your headcount, that's the largest, most recurring capital outlay for any company. 70% of a company's operating expense in not just high growth companies in old growth companies is headcount. So you cannot look at this from an operational lens that, hey, it is an HR problem or it is at the end of the day, this entire payroll cost becomes a line item in your ERP. So it is like a payroll cost problem. No, it is something to be viewed as it is a strategic problem that you have to solve.

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^(00:06:02):

And I think that is missing in how people are viewing headcount today and just look at the number of amount of effort and the tooling that we have in the world today to manage that 20% or 30% of the spend. I used to work at Airbase. I was selling spend management software. There is Airbase, there is Zip, there is Brex, there is Ramp. We are all talking about spend management and what are we talking about? 20% of the spend. The rigor that companies are investing and spending on that 20% of the spend. It is, we are not even as close to viewing and managing your headcount expenses or the headcount spend with the same rigor and basically that's what is the biggest problem to solve.

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_{Joe Michalowski (00:06:51):}

Do you think it's taken as just a given in an organization? Headcount is just, we're always going to grow. We're always going to have roles to hire. Every hiring or every department is going to come continue to ask for more people. And it's kind of just the reason it doesn't have that rigor is because it's like, it's almost like taken for granted how strategic of importance it is that you're just like, yeah, these are our people. They're supposed to go do their jobs, but we're almost not thinking about how to structure it. We're not thinking about it beyond just the heuristics of, oh yeah, this is what a department looks like and this is how many heads it needs.

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^{Tushar Makhija (00:07:27):}

I think nobody was forced to look at it that way.

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_{Joe Michalowski (00:07:30):}

Interesting.

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^{Tushar Makhija (00:07:33):}

If you just go back 10, 15 years, what is the number one thing that you do after you raise a round of funding? You increase the size of your organization.

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J_{oe Michalowski (00:07:43):}

The hiring button.

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^{Tushar Makhija (00:07:44):}

Hit the hiring button, and it was just understood that the more people you hire, the more output that you would get, which I think it has been proven in multiple ways that the more people you add, actually it's a tax on productivity of the organization, but that is not well understood because there are so many factors to this. It is a growing organization and growing headcount was seen in a very positive light. It was seen like, oh, the definition of an enterprise customer is you've got at least a thousand employees. And all of this was, I think it just became second nature to how organizations were growing and somewhere down the line, COVID was an accelerator to this mindset of grow at all costs. And what do you mean by growing at all costs? That okay, if I have 10 BDRs, suddenly I'll have 10 X pipeline, but if I have more sellers and more product on the street, I'm going to generate more sales.

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^(00:08:53):

I have more product managers and I'm going to ship more product. But that is fundamentally not true. But I don't think people saw a better way or stopped for a minute to think of a better way, and it was when capital was basically free. We always knew when our next fundraise is going to come A CFO walking in and saying, Hey, you need to allocate capital efficiently. We need to take a key deep look was seen as, oh, what are you talking about? Don't you want us to grow though? We are not going to be able to ship all of this product. It was this fear that was brought in that, okay, if I don't have the talent or if I don't have the people, I'll not be able to grow.

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^(00:09:41):

But fast forward when capital became expensive, now grow at all costs was you are not allowed to do that. You didn't know where your next fundraise is going to come from, how long it's going to take at what valuation. And suddenly the CFO now was able to implement that rigor. Then that opened a whole new thing about how to go implement that rigor and we'll talk about that, but at least that mindset shift was very, very clear that, hey, we need to grow efficiently. The same investors, the same people, same CEOs talking to the CFO about grow at all costs had now completely changed the tone. And there was basically you went from playing from Sinatra to Britney Spears.

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_{Joe Michalowski (00:10:30):}

Wow.

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^{Tushar Makhija (00:10:32):}

Complete chain of music and said, no, no, no, I need to take a deeper look at all our investments. That's why you see the acceleration of spend management software and similarly headcount spend management also came out to be front and center.

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_{Joe Michalowski (00:10:53):}

This is interesting. I'm glad you mentioned the mindset shift because like you said, we're going to get a lot deeper into this throughout the conversation, but I think when you were talking about the 20% sort of having all of this rigor almost because it's an easier problem to solve, knowing that I applied a card to the software, it's like I could choose to not buy that software, find a cheaper software headcount. There's so much more nuance to it than your average expense in other areas. And maybe I haven't been in that seat, maybe I have it wrong, but to your point, yes, we know we need to solve this problem. That's the mindset shift and it's like, okay, but how? It's like where do we even start? There's so much nuance to it.

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^{Tushar Makhija (00:11:40):}

Yeah, let's talk about spend management for a bit because you can draw some parallels, but at the end of the day, the real driver of that was the number of SaaS tools that we are using keeps on increasing there. And then there was this whole thing about automatic renewals, and then there was the second thing about I have all of these receipts that need to be matched, categorized, coded, and then I need to basically push all of this information into my ERP, QuickBooks, NetSuite, what have you. And it became more like an accounting nightmare that to close the books, it takes so long because I'm matching receipts all day long. Spend management just brought good technology and tooling to automate all of that for you. I don't think it was viewed as a strategic investment. It was not viewed from that strategic lens. And yes, it was easier to go and tell someone that, Hey, instead of having three accountants, you can have one because you can automate a lot of this.

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^(00:12:42):

Instead of matching receipts and doing expensify, now it is automatically matched because there is some fancy algorithm there. And then instead of having three different tools, one for cards, one for expense management and one for bill payments, let's put all of it together. So it was acceleration of technology, it was acceleration of this idea. Let's bring these tools together. And most of these tools already existed. There was an amex, there was a bill.com, there was an Expensify, so it was not a new idea, it was just, Hey, how do we bring all of this thing together? People think virtual cards were something that were new. No, SVB was doing virtual cards for way longer. None of this was new. What was new? Marqeta giving you an API to do all of this? That was new and I think that was just beautiful that how people went and started doing things.

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^(00:13:39):

So spend management was just needed new spin. Also, it needed a new coat of paint and it needed better marketing and branding. And then if you put the cherry on top, which is cashback, Amex was not doing it at all, right? There was giving you reward points that nobody in business, the CS, sometimes the CEO is using it, CEO's family is using it. I don't know who was using points all these time, but suddenly when you come and say, I'm going to give you 3% cash back or 2% cash back, that's material money back into your pocket and that was the accelerator. Let's go and do it. Okay, I'm getting efficiency, I'm getting time savings and I'm getting cash back. Amazing. That's why if you look at the companies that are really successful, Brex and Ramp, they still don't charge you anything. They just make money on the interchange.

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_{Joe Michalowski (00:14:32):}

Yeah, this is a, oh man, this is so good. We have so much to get into. So there's one sort of broad question I want to use as a transition piece, and we've touched on, I think all of these, it is mainly what kind of a problem is this? We've talked about tech, we've talked about there is a technology issue in spend management that gets solved. Do we maybe not have that in headcount planning or workforce management? So is this, we've talked about mindset shift, we've talked about the leadership sort of mindset shift. Is this a data problem we need to solve a workflow problem, a leadership problem, maybe all three. I don't know. What flavor of issue are we trying to solve when we say that this is just a very difficult thing to do?

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^{Tushar Makhija (00:15:24):}

I mean there are three parts to this to what you just asked me. Let's start with the why you should solve this problem. First, let's repeat one more time. It's like each new hire is a long-term cash outlay investment bet in a way, right? Salary equity benefits, and unlike this tool or a SaaS software you bought that you can cancel anytime or it has to renew every year when you make a bet on an employee, or at least the cash outlay you are budgeting for or planning for is 12 to 24 months out. So it's a lot of money. It's not as $20,000, $30,000 worth of software. Just imagine average salaries in San Francisco or New York and most of the places is around 150 to 180K. Then you have to add costs around payroll, taxes, benefits, human capital costs around people need to be managed. So there is layers. So it's just the magnitude of the problem and the magnitude of the dollars is much larger. So that is the reason why you have to think about this differently first. Second, the return on this investment is also highly tied to the timing, the sequence of the role and the context. Example, should you hire a salesperson first or a BDR first? Should we get a product manager first to write a spec and then you get an engineer?

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^(00:17:06):

So what I'm trying to get to is that it is very cross-functional. When you think about spend management, and I sold the first 200 customers of Airbase, so I can say this, there's only one buyer, the controller, the CFO looks and says, am I getting, what is the cashback? Have you negotiated, as long as it 2% or more? I'm fine. Great, you want this automation, go and build it. No problem. But when you think about headcount, it is truly cross-functional. HR is owning the people in a way within hr. There is existing employees that is managed by the HRBPs, and then there is new employees that you're hiring that is managed by the talent team. The budget is managed by the finance team. Finance is not thinking about heads, finance is thinking about cost, and they're saying, as long as you are within this construct of cost that we have planned for, budgeted for, you can hire 10 people in India, you can hire 20 people in the Philippines, or you can hire five people in San Francisco.

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^(00:18:12):

It's up to you. You decide this is your pool of money. And companies, CFOs have been very good about the budget based planning side of things. We've got Anaplan, we've got adaptive, we've got the newer players like Pigment. That's what they're solving for. They're solving a budgeting problem. On the other hand, we have also done a great job with Workday, Rippling all the HiBob, which is, Hey, these are my existing people. That becomes like a compliance software. So you've got a system of record for budget, the planning software, you've got a system of record for the existing employees who they are, who do they report into? What level are they, how much are they paid? When were they last given a raise, gender, ethnicity, what have you. And then you've got an applicant tracking system, which is a system of record of jobs and applicants candidates.

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^(00:19:15):

But what is the source of truth of a company's current and future headcount? It does not exist. There is no way to manage your workforce within the constructs of a budget or a plan. And what do you do? Then you resort to spreadsheets and CFOs love it, right? That's the natural thing. It's like in the middle of the night when I'm hungry, I'm going to, I try and to eat a chocolate, but I'm going to eat a spoon of peanut butter. That's exactly, spreadsheet is peanut butter for CFOs. It is the easiest way to go there. Oh, let's just dump everything in a spreadsheet. But honestly, they know how to do this, but they are not doing this work. They have analysts to do this work, and then they have to hire, as they grow as a company, they suddenly have to hire more and more analysts and still the prediction and the forecasts are not accurate.

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^(00:20:11):

And then the finance analyst is blaming the HR person that their data is not clean. The HR person is blaming the finance person is that, hey, they're forcing them to work in spreadsheets, so nobody's actually doing their actual job. The analyst is there to make forward looking strategic decisions so that you can then guide the current state of the business into that forward looking business angle. But all of us are working in backward looking data then. So three systems of truth, no single source of truth. So do we want a system of truth? Do we know a system of record or what do we want?

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^(00:20:56):

And oh, let's not forget who is really making the decision on when to hire, whom to hire the VP of engineering and the VP of sales, so the VP of engineering, let's draw ourselves a picture. The VP of engineering is sitting down and saying, Hey, I need to ship the next big AI product. I need data scientists. I need MCP engineers. I need people who understand LLMs. They're not thinking about budget or they're thinking about in order to hit the goals that then these goals are going to take us to the next level in the market, help us generate more revenue. Who do I need as people? Then this goes to the talent team to say, Hey, how can we hire these people? In which markets? When should we start hiring? It goes to the HR team to figure out are we promoting someone from within who should be the right manager?

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^(00:21:51):

In which location are we going to hire these people? It goes to the compensation person to go price out all of these roles all this time, the CFO org is actually running high level numbers, not thinking about the role level details. The rest of the org was they are thinking about high level goals that, okay, if we have all of these metrics that we have to track, if these are the drivers of our business, this is the type of profitability want, this is the grasp margin we want in order to get 200 million in revenue, how much money can I spend? And then they have to think about burn rate. Then they have to think about profitability. They have to think about runway, all of these things, but they are not thinking about the rows on that spreadsheet. So it is just by e xplaining this to you, I feel overwhelmed right now. How the hell are people doing this?

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_{Joe Michalowski (00:22:48):}

As my dog was barking in the background when you were talking about peanut butter, I was like, man, this hits home so hard. It's like my dog, my dog could use peanut butter for this. It's such a good point. It's like, I don't know. This is just something…

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^{Tushar Makhija (00:23:02):}

If you're healthy, it is peanut butter with apples. I'm not that healthy. I'm just going to

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_{Joe Michalowski (00:23:08):}

Just shovel it. Honestly, I spent a lot of time marketing FP&A software for people, and I could attest the spreadsheets are indeed the shoveling of peanut butter. My favorite part of that was when you got so into the engineering sort of mapping it out, you took the glasses off, you're like, I got to lock in for this, and it's why I want to transit. Yeah, this is chaos. It's overwhelming. It's almost impossible to solve. One of the most surprising things I have learned about you is just why you are the one trying to help solve this problem. And when the glasses came off for the engineering thing, I was like, we chatted and I learned that that is where you started. So give me the arc of your career because it is not, at least to me, I've spent enough time talking to CFOs, talking to the finance community. It is not what you would expect coming out of someone building software for finance people. So give me the arc.

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^{Tushar Makhija (00:24:10):}

I'm an engineer by training. I was an early engineer at VMware. That's where I learned everything about technology. I would say that was cloud before it started being called as the cloud. We used to still call it virtual machines.

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_{Joe Michalowski (00:24:28):}

Don't age yourself Tushar.

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^{Tushar Makhija (00:24:32):}

Another story is in my first startup, we had our servers in the living room back in 2008. There was no AWS at that time, so I am complete. I'm aging myself, but yes, I'm an engineer by training. After 10 years of being in engineering and getting this idea about getting a green card important and then getting an idea about how systems operate, how large scale products need to be deployed and built, it was a very natural transition to see if I could do it in startups, and this was after my first startup failed. The great part of the best part of that was I got introduced to investors and founders who were doing better things than my first idea. One of those founders back in 2010, who now is my co-founder and CTO, but this was his company. He has just raised a $3 million round and he was like, look, we are building a product for developers, for mobile developers.

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^(00:25:47):

You seem to be a person that enjoys really talking to people about technology. You may not. And then he also put me in my place is like, well, you're not the best engineer I have met, but you are the engineer who knows how to talk to people. Why don't you come join this startup as our, I don't even know what title we used is like business development person. It's basically we've got 3 million, we have a product, now what do we do? We got to generate some demand, and I don't think we are ready for a VP of sales or a VP of marketing because then they will not be able to speak the language to the developer. So that was my first introduction into a venture-backed startup. That was my introduction into actually taking a product and creating awareness, then creating demand, then creating sales. This company was called Helpshift. I was there for five and a half years, started as whatever, and left as the CRO. So that was, I would say, my education of startups.

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^(00:26:58):

After I left that company, I spent some time again meeting investors, meeting founders. One of those founders was the founder of Airbase. He had just started raising his seed round and he was like, Hey, do you want to do this again? Are you foolish enough to do this again, to take this journey? Because Helpshift f five and a half years, $0 ARR to 22 million in ARR. When I left, that was the opportunity. Back in my head, I was thinking, is that a fluke? Was I just plain lucky? And on the other hand, it was a completely new adventure. We were selling to mobile developers. It was a customer support software, and now selling to CFOs of spend management, I got a crash course because the interview period with Thejo was three months. I first met him in August, and he gave me an offer in November. So September, October, November, three months.

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^(00:27:56):

And he just gave me a crash course on what do CFOs think? Why do companies need that? And I don't think I was initially introduced to the CFO. I was enamored by selling into the CFOs. I always like to, I cannot sell sales software, marketing software. There are just too many people doing it. I like that it is harder that the CFO would take longer to get convinced. So I think I like that opportunity. But most importantly, the foundations of engineering and product. And then going through that zero to end journey with Helpshift and then getting introduced to the early CFO early spend management market, I think those were just ingredients that helped me think about this problem very differently.

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^(00:28:53):

I was not, what is that famous saying where they say that if we would have asked if Henry Ford would've asked people, they would've said, I need faster horses or faster carriages, what have you. And the unique insight for us was that we are not solving a CFO problem or a CHRO problem. We are actually solving this problem for the business leader and time. And again, as we speak, even today when we speak to customers, the CFOs who really get it, they're like, look, you're giving me control and visibility, but what you're really giving my team is collaboration because with control and visibility and still making the wrong hires and still getting that sequencing wrong, right? Hiring more people before the product is ready in sales or not thinking about the full picture of the organization, we are still going to grow haphazardly. And that's exactly what has happened in COVID.

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^(00:29:52):

If org charts have to be built in PowerPoint, you're not going to go anywhere in terms of organizational growth. You're just going to have organizational chaos. And I think that's exactly what happened. That's why you saw all this hiring and then you saw all the people getting laid off as well. Right now, we haven't even talked about the next era of AI agents and how it's going to impact the orgs of the future. But I'm just looking at, all of us have lived this from 2020 to 2024, I would say, is that quick hiring. We don't know who's doing what. Everybody's working from home, the redundancy based on redundancy, based on redundancy, and a large part of that is who we are hiring, why we are hiring, what are they doing? It's just silos and fragmentation of information, and unless it comes together, you can't make good decisions. And again, CFO has to make the best capital decision around people and they don't have the data or the tools to do it. Today,

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_{Joe Michalowski (00:31:02):}

What I like about the sort of arc of the career is you have seen this problem isn't new. It is not something that came with COVID, COVID and the whiplash of the market, which we're going to get to. And especially for growing TeamOhana in that time, it's like, we'll talk about that, but these aren't problems that popped up. Then it was like a forcing function of seeing them in that moment. But you were dealing with this in 2008. In 2012. In 2013, seeing firsthand the example, I mean, like I said, you took off the glasses, you lock in for the engineering discussion you were doing that you had to think about the structure of an engineering team, of a sales team and seeing that on the front line. You mentioned being someone with a different perspective. I was at a company, I was at Mosaic selling finance software, and they were the standard founder stories like finance people dealing with a finance problem who say, we have a better way to solve finance problems. And they find a company, they start a company that sells finance software. You, I think, are in a unique position by having this different perspective to force a new way of looking at this, which is interesting. It's what we'll get into more, but I just think that more important than maybe some people in standard upcoming finance software would realize that's critical.

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^{Tushar Makhija (00:32:32):}

Without naming names, I think there have been a couple of companies before TeamOhana started by finance folks who were trying to solve headcount planning, and they did not work out because it became more of, it is a glorified spreadsheet.

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^(00:32:49):

And I don't think we were saying we were making a better spreadsheet. We were replacing a spreadsheet workflow with a new workflow, and we always approach the solution with that lens. And I think a more recent story, I think a lot of people will, so I was VP of sales at Airbase and we had a great first year, we went to raise a fund, a series A. We raised a 20 plus million dollar round. I remember sitting in the meeting right after that, the investors came into the office, I was a little drowsy and I was a little tired because I had just had my first baby and my CEO was like, Hey, we still, hey, you need to come into the office. We just closed this round and the lead investor wants to meet you about your plan. And I was like, I don't only have a plan, but sure, I'll come down there and I will talk about this.

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^(00:33:55):

And the conversation was always about, we quickly have to grow. Now you're at a million five, 1.5 million in ARR. We have to get to five and we have to get to 10 and we have to start creating pipeline and we've given you money. Go spend it. So I was like, yes, it makes a lot of sense. Hiring a sales team today makes the sales team productive in three to four months, maybe five. Any investment you want to do in marketing today will bear fruit three to four months out. So I was like, I get it. The benefit of raising around a funding now is that we can spend so that we are ready. So this was October, so November, December, January, February, hired a lot of people, train them, get ready, March, 2020, COVID

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J_{oe Michalowski (00:34:47):}

Yeah

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^{Tushar Makhija (00:34:47):}

Same investor, and they were right. I'm not complaining about them. I have to take money from them as well. So I'm not saying mean things about the investors. They're like, too sure you are spending so much money. All of these salespeople, we don't know where you're going to get the revenue from. You need to get rid of these people. Or the right HR word was furlough. I was like, okay, now I'm sitting. So first I was building a sales capacity plan to hire all of these people in a spreadsheet with our fractional CFO, and I was basically telling him what I want, I want to do this. It takes three months ram, how much are you going to pay this person? What will be their quota? I'm just giving him all of this information and he's modeling it up. Now he's talking about who we need to go.

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^(00:35:34):

All right, I'm looking at, now I'm looking at the BambooHR roster. Who is my current people? How much are they making today? Who do I want to keep? Who do I not want to keep? Right? So it went from a first financial discussion now to a very HR people discussion. Good, okay, we furloughed people. All right? Three months in COVID is not a headwind. It is actually the most crazy tailwind any organization could have. You need to get all of these people back and guess what? These people are very smart. I hire good people. They're like, Tushar, you had me at 80K. Now my price is 100K, because you know what? Zuora wants to hire me. Okta wants to hire me, Zoom wants to hire me, Brex wants to hire me. I'm like, dude, I need you back. You're already trained. I trained you for four months. You know what? You will get your 100K. And you know what? Investor and Thejo, CEO of Airbase, we got to pay more. And they were like, don't worry, I'm going to raise another round in 12 months. Go, go, go, go, go.

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^(00:36:36):

And he did raise another round in another 12 months. That is a great story. But that was the whole idea. And now again, build out the team how much it is going to cost. All I'm doing is sitting down talking to this because I can make no sense of his model because that model, and this is exactly what happens in fp a software today, right? It is built for the FP a team. We talk about collaborative FP&A does not exist. It is hubris

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_{Joe Michalowski (00:37:02):}

And everyone knows everyone that buy every one of those. It doesn't matter how old the company is, how new the company is, that is a promise that has to be made because it is like a given that if you are trying to set, you need to solve that problem and none of them can. Essentially, what they're trying to do is give the finance person enough of their own control to then say, Hey, now you have time to go figure out how to collaborate. And what does that end up being? It's like, I don't know. I guess I can talk to them and do what I did with Tushar and just try to build a spreadsheet on a call while we keep changing. That is the key here.

‍

^{Tushar Makhija (00:37:43):}

And let's think about this. Every leader needs to figure out what their actuals are. There was a budget, there's an actual actual sit inside of NetSuite. Do I log into NetSuite? No, I don't. Every business leader has some sort of a budget. Do I log into an Anaplan or an adaptive? I don't. I think Anaplan adaptive plan for what we call the old guard, they never sold the promise of collaboration. They did not. They said, this is built like all true enterprise software. They sold it to the finance person. And that's what gets rewarded, sidetracked. When I go and tell someone that, Hey, in order for workforce planning is owned by the finance owns the budget, HR owns the existing employees, and then talent owns this. Oh my god, who are you selling to? No clear ICP. Big pain problem. That's not true. This is truly, it's a business problem. You when an abdominal pain becomes an appendix and it bursts, sorry, it's

‍

_{Joe Michalowski (00:38:53):}

A hard left turn. I like this. This is great.

‍

^{Tushar Makhija (00:38:56):}

That's exactly what it is. If you think, oh, I have a stomach problem, and then you localize it to the abdomen or the, no, it's not that resulted in an appendix, go take a look at it. If it bursts, it'll get septic. And if it gets septic, then it's pretty bad. So what should I look into? So it's basically this is the full, it's a body problem. It's don't look at it from a localized thing. And when Workday goes and sells it, they go and take it from the HR person's budget. When Ashby or Greenhouse is selling you an A TS, they take it from the talent person's budget. When you're selling an ERP or an FP&A software, you take it from the finance person's budget. All of these three tools have different budgets and they have different silos. And the business leader at the end of the day, does not care about any of these tools that were sold as silos.

‍

^(00:39:55):

The business leader cares about, okay, tell me what is my budget? Tell me how much am I spending today? Tell me how many more people can I hire? Tell me, how long does it take you to hire? Tell me in my organization, which manager should I place this person under? They want all, oh, tell me who is at risk of attrition. And that means they're telling you, give me a spreadsheet, and they're going to go, and then they're going to leave comments in the spreadsheet that you're going to go and update. So you see how this just turns out to be, in order to manage a 200 person or a 300 person organization, you had two to three people in G&A at a thousand person company. Now you have suddenly 10 to 15% in G&A, right? So in order to, so let's assume at a thousand person company you're doing a hundred plus million in ARR.

‍

^(00:40:48):

So you are growing exponentially on linear growth in revenue and headcount results also in linear growth in G&A staff because then you have another ratio for every 200 people. I need one person or every 150%. I need one person. That is one of the things that CFOs are very annoyed about and CEOs are very annoyed about how can G&A expenses keep going up as I'm getting? Where are the efficiencies, right? The efficiency, the efficiency killer is a spreadsheet because you guys, one fp NA analyst is spending so much time. So you need an FP&A analyst just working for sales one, just working for product one, working with engineering because they all have different drivers, different assumptions. If you are someone who has customer support needs, then you need a separate thing for customer support. So it's just like the number of people you need keep on increasing. I was talking to a company which is 50 - 60,000 employee company, but I was talking to one divisional leader,

‍

^(00:41:55):

A Finance leader of one division, which is 8,500 employees. I have a call with him tomorrow morning as well. And he was like, I have been given this new role of managing our headcount for this one department, which is 8,500 people, but I have not been given any new headcount. That's why they came to us. They already use Workday, they already use Anaplan.

‍

_{Joe Michalowski (00:42:18):}

It's like, great. No problem solved. What do I do now?

‍

^{Tushar Makhija (00:42:22):}

He's like, oh, I suddenly have to manage this. And the only other, but the only match natural math was like 8,500. Do I need 20 people for this? Oh no, you're not getting even one new person. That's the new reality. And I think that is one of the key accelerators of four TeamOhana is that it's not just, there are three different things. First, people are burnt out, so you can't find good people. Anyways. The existing people, they are very expensive. The person you could hire at 120K today wants hundred and 180K. And then the third thing is, even if you get all of these for some, there's a magic wand and you can find, and you have the 180K to give, it's going to be a repeat problem as you scale, as you grow, because you need more engineers, you need more salespeople. That cost is not going away, but you don't need more G&A people. So now CFOs have suddenly woken up to this thing. Is that okay? Technology and new tooling can actually help. 70% of our leads are inbound.

‍

_{Joe Michalowski (00:43:33):}

It's incredible. This is great. I think that the transition, because we're going to go through, it'd be very easy to go into this and be like, oh, wow. And that is why Tushar started TeamOhana. But you didn't start TeamOhana yesterday. You started pre 2022 when this was kind of like a hard sell. Yeah. You said they've woken up to it now, but it wasn't the same situation in those wake of COVID years. So when we talked about this before, I really liked this and so I'm going to force it into the conversation is the Trojan horse concept. I want to start at the beginning for TeamOhana because what was the first thing you were like, okay, nobody's really woken up to this yet. Money is basically free. We talked about earlier, and I'm starting this company because I see this problem. I've lived this problem. No software is solving this problem. I'm going to go solve it. But nobody's really aware of what's going to come in late 2022, 2023. So what do you go in and start solving first? How do you Trojan Horse, your way into making this happen?

‍

^{Tushar Makhija (00:44:44):}

So I left Airbase in March of 2020. One of it's important to also talk about what was happening before I left Airbase, I had a whole year, say from March, 2020 to March, 2021, I had 12 months of sitting at home and thinking about a lot of things. Also in that timeframe, because the CFOs were more willing to talk to you, and I was just lucky or fortunate to have sold the first to the first 200 customers at Airbase. And we started a community. We were doing Slack groups. We were doing Zoom rooms, and as a good salesperson, I would say the opportunity was like, Hey, what more can I do for you? And there were lots of different ideas. One of the ideas was like, and it was more like a taunt, which was like, Hey, you keep talking about non-payroll spend Tushar when you pitch Airbase. Yeah, non-payroll spend, 20% payroll spend is the real problem. But the quota carrying sales rep in my head was like, okay, great. Let's write that down. Move on. But what about the 20%? Are you buying my software or not?

‍

_{Joe Michalowski (00:46:05):}

Yeah, what about Airbase?

‍

^{Tushar Makhija (00:46:05):}

Let's talk about 40%. But if it kept coming again and again and again, and now, hey, I had time and another thing also happened, and Airbase is now sold. We've all made our money. So I can say this, we were a 5 million ARR company getting valued at 600 million

‍

_{Joe Michalowski (00:46:27):}

Times were insane.

‍

^{Tushar Makhija (00:46:30):}

But when you hear about a company getting sold for a billion dollars, you don't know what's really happening in there. This was me. I'm the bloody VP of sales. I know the numbers in and out. It is my team producing. It is my team that is selling. I am the one talking to CFOs and I'm like, you know what? We have an X amount of 30, 35,000 average selling price. We are at 4.55 million in ARR, and we are suddenly getting 600 million valuation. I mean, before I went to engineering, I actually studied finance as a minor.

‍

(^00:47:05):

So I was basically doing my math in my head. I was like, the party's going to end, the party's going to end, and we were all going to be caught with our pants down and taking that, what is going on in the back of the mind and on the front end. So that's the back end. On the front end. I'm hearing from CFOs, payroll spend. Payroll spend, right? It's a nightmare. And it's a nightmare because I don't know what HR is doing. I don't know what VP of engineering is doing. I was like, there's something that's probably going to happen one day. The party is going to end. And being a 40-year-old founder helps because VCs are, I literally walked, I spoke to 10 to 15 VCs. We got two term sheets we signed on with Sierra Ventures, and we were like, look, we are not going to start building anything right now.

‍

^(00:48:05):

We are going to raise money on a deck because if we are selling to the CFOs, they want a complete product. They don't want something which is fancy and just works. I have to sell them the full vision. And then they would be saying, okay, this is something that I want to invest in. So for the first, from March of 2021 to October of 2021, when we raised our round of funding, I spoke to 100 of the CFOs again, and I told them about how I'm thinking about this, right? The first natural reaction was, yes, it is important because the CFO is like, they are smart. They get it. It's like, but Tushar, I don't think I can do anything for this. I need to spend the money to grow. And you know what? I cannot say no to my VP of sales. I cannot say no to my this. Yes. Are they hiring haphazardly? Sure they are, but you know what? You got to do it because money is cheap. Every time you hear that, you always go and question that, okay, one day the money is not going to be cheap. Now let's hope it is before we run out of our seed funding.

‍

^(00:49:09):

So the problem was validated. The timing was not validated, but it was a moment we knew that it's going to happen. So from 2021, October, 2021 to October of 2022, we only had 10 customers, but these were 10 customers who saw the vision, and our Trojan horse into them was, Hey, what is the most painful part about growing at all costs? They're like, oh, I cannot just, I can't track. Am I going to be hiring on time or not? I need to fill this role. I'm like, why can't you track? It's like, oh, my ATS does not talk to my spreadsheet. It's manual. By the time someone tells me an offer has been accepted, it is just too late. And finance is like, oh, yeah, they don't tell me when people are joining or when people are leaving. I'm like, why? The HR system is up to date.

‍

^(00:49:55):

Oh, yeah, but it's manual. I have to go and take it. I don't do it enough. Someone like, okay, we've got this triangulation of you want to grow at all costs. It's basically you have a hiring plan spreadsheet. You want to know who's been hired, who's been left, and how many people are to be hired. Three basic things, and I always like to give this shout out to Merge, which is an integration partner of ours, and I was one of the first five or 10 customers, and I'm still very close to their founders. They're like, Tushar, we are building this API system that you can connect into Greenhouse and you can connect into Bamboo hr. And I'm like, okay, I can literally take this connector and replace a spreadsheet. So the Trojan horse was, I'm giving you a hiring tracker, which is connected. It is live.

‍

^(00:50:45):

It is real time. That's it. Then was like, oh, we come from Airbase. So we were building procurement software. So you have to, the hiring tracker saw the visibility, real time visibility, right? One thing we saw that people were suddenly very happy with Airbase to request a virtual card or in zip to go in, run through a procurement process to buy a software vendor. The steps. It's like an intake form that you fill out. So we were like, let's build an intake form for headcount and give it an approval matrix. So people were doing this in Jira, Zendesk, Slack threads. So again, it was nothing to do with capital allocation or efficiency, or not growth at all costs. We are just adding a layer of better productivity, and they're like, oh, why are you requesting headcount in a Slack thread? You have to now copy it from here, put it into your spreadsheet, and then you have to update it, and then something goes wrong.

‍

^(00:51:49):

There is no audit trail. You want an audit trail that like, oh, of course I want an audit trail. We still built a Slack app to approve headcount directly in Slack. Nobody cared about whether you were hiring the right person or this. It was just a workflow. So we took, Hey, let's connect all your data, disparate data systems into one system, thanks to the APIs that are available, give you a hiring tracker that is always real time up to date. Then go and give you an approval policy, a simple approval policy, so that we become this glorified intake form for you, and you don't have to do it in different systems, right? I don't have to do this. I don't have to do that. I have a hiring tracker software. Great. Let's just go. We said, basically we said we are procurement for headcount. Do you have Airbase? Do you have Zip? I know you have Airbase. I sold it to you, man. Come on. So there you go.

‍

_{Joe Michalowski (00:52:44):}

Tushar I would not want to be the CFO on the other side of the sales page. I feel like, I don't know. I don't know how much money you could get out of me for a software that I don't even work in this department, but I feel sold. I'm like, I'm in. Take it, man.

‍

^{Tushar Makhija (00:52:57):}

I think another thing was, if you hear what I'm saying, I don't use any jargon. I'm talking about simple workflows. I'm talking about you. I'm telling you that you remember now, again, I'm going to age myself that back in the day that if you had to lose belly fat, you were standing on this machine and this rubber thing was on you and it was running.

‍

_{Joe Michalowski (00:53:27):}

Come on. You weren't doing that. That was like in Madman. That was in the sixties.

‍

^{Tushar Makhija (00:53:32):}

Exactly. Maybe I saw it in Madmen. Yeah, so that's exactly what we were doing is like, okay, you don't have to go to the gym. I'm just going to give this to you. Just stand my friend. Just stand and let my machine do the work for you. I love you don't have to open Slack. You don't have to go into the ATS, you don't have to go into the HRIS. I'll send you all notification in Slack, right? I mean, it's as simple as what Ramp does when you spend money on their card, it immediately sends you a text message, snap a picture. Then it asks you a question, what were you doing spending this money? Select one for meal, two for entertainment, three for, don't ask me again.

‍

_{Joe Michalowski (00:54:14):}

But again, yeah, it's that, and maybe it's that simple quote, right? Not it's like quote unquote. It's simple, but not easy. You still have to build it, but it's like to the Trojan horse point, you and I were talking about this before. It's like you took the chaos of all this disparate data, made it look better. You were like, I've made this look slightly better and it works now. But I think what is really important is that point you made earlier where it's like, we sold the vision. Those early customers knew that you didn't go to market and say, this is what I'm making, and this is the billion dollar idea. This is tip of the iceberg thing, and I'm going to solve your growth at all costs. Like headache, today we're going somewhere. Yeah. When this party's over, you're going to be in a better spot. Hundred percent. So I think that the idea, and I saw the slide. I was like, the idea that this was just part one to me is so important to this story. It is just the tip of that iceberg.

‍

^{Tushar Makhija (00:55:20):}

Exactly. It's the Trojan horse. You call it the wedge that let's give you something that you can use the time to value and the time to implement. That was two weeks. Within two weeks, we brought you into a system and showed something really tangible and kudos to the CFO at Docker. They're still a customer. Docker was my first customer. They're like too sure. Just April, April 4th, 2022, he signed a contract and he said, I'll pay you after three months if you build this because you're solving this one problem for me. Very good. Just go and focus on that. The VP of finance at Modern Treasury and the CHRO at Newsela, all of these folks were hyper scaling. What are the unicorn valuation companies that were like, look, this is great. We can get you in. The price was right, but we always told them that don't.

‍

^(00:56:29):

So we think of ourselves as CFOs don't want another system of record. They don't want to buy any other system. The pitch to them was like, I'm going to increase the ROI of your existing systems. You need a system of action. You need a system of workflow. It's like, why do we even think about all of these different things? It's like I knew that siloed systems deliver experiences that suck, right? But in order to give that beautiful experience, we knew we had to first build a data company and all kudos to my co-founder and CTO BG. He was like, you are thinking of the front end. But in order to get this in to create a moat, think of us building our own data mart. The HR system thinks about organizational hierarchy differently. It thinks about people data differently. The FP&A system thinks about cost centers and budget items.

‍

^(00:57:34):

The applicant tracking system thinks about offers candidates, applications, jobs. Instead of relying on that data model, we said, let's bring all of this data into our data model. So now we own the data. One of our first investor said they had put money in a customer data platform, treasure data, and made a lot of money from that. They're like, Tushar, you are building an employee data platform. And I'm like, absolutely. Right? And fast forward four years. That is the reason why we will be the defining company to build AI agents because we own the data. It's structured data in my database. We'll talk about that. But that was the first thing, what the front end was. They just wanted workflows, request approval. How do I track a backfill? How do do I internal transfer? Joe, this is such a big, this sounds simple, but it's so hard.

‍

^(00:58:30):

Oh, you started looking for a ae, an account executive, and then you started looking in the market and then you suddenly realize, oh, Joe is my BDR. I can actually promote Joe. Alright? But Joe is already part of the system. This is not a new hire, but you go into your A TS and you give Joe a new offer. Now Joe is an ae, right? Then you go into your HR system and you terminate Joe as BDR and rehire Joe as an ae, and the finance team is like, what's happening? Oh, I'm also going to backfill Joe with another BDR. The hiring plan said, I want to hire an ae. All of this shit happened, and then you have to still hire A BDR. What's happening?

‍

^(00:59:16):

It's like, okay, and when someone leaves, you need to backfill someone. Are you going to backfill someone at the same price? Are you going to backfill them as one person or split them into two? So these were all workflows that our customers were simply telling us. It's like, Hey, it's not just requesting new headcount. No, it is all these other things. So we said, okay, now that we own the data, we need to become the system of workflow. Then came the fact that, well, you are doing all of this, but we need more people logging into the system. And I'm like, what do you mean? It's like, what about the hiring managers? I'm like, sure, let's invite them. Like, no, they need access control. Joe cannot see Tushar salary. I'm like, shit it one department, a separate department hierarchy. We have one team in Israel hiring engineers and we have a one team India hiring engineers and we have one team in the US hiring engineers all are hiring engineers but they can't see that compensation for each of these shekels.

‍

^(01:00:14):

More than rupees, more than dollars. I'm like, alright, so now we have built on top of our data model, we introduced workflows and on top of the workflows we built a permissioning and a role management system. Then came, the compensation team is like, hey, every time they request a new role, finance always budgets on last year's data, I have this beautiful spreadsheet which has all my salary bands. I bought it from Radford or pay what have you, but nobody reads it and then they complain why the offers were more than what we had budgeted for. We took that entire spreadsheet that they had built and brought that job architecture into TeamOhana. Now in all of this, our vision was still, headcount is your largest expense. It is your largest capital investment. You should manage it like a portfolio Internally, HR people don't like to hear, when I say employees under management TeamOhana today has 30,000 employees under management managing 6 billion of workforce spend. If you are a portfolio manager, you would be managing this correctly. So we always wanted to build that and this was the serendipity and this basically this beginner's mindset. You can see the joy in my face when I talk about this. I was learning new things

‍

^(01:01:40):

And I was trying to build and that is the excitement and the happiness of building software that is actually solving the real world problems and has tangible ROI and value for our buyers and they say, look, if all of this comes together, of course there's a good company to be built. Now Keith Rabois of X Founders for now Coast Cloud Ventures back in November of, or somewhere in November of 2022 had tweeted when the first rate hike happened that this is the beginning of the end, the party ends now, right? I'm still waiting for his tweet to come. Now we've got four rate cuts, but I actually went back to that thread and asked him on Twitter that Keith, is the party starting again? He's like, not yet, right? But he called it man, that guy called it Keith called it as the first, actually the rate hike came in December, he called it in November. I remember reading about the rate hike and I was like, Hey, Keith was right that the party's going to end.

‍

_{Joe Michalowski (01:02:52):}

This is so if I did, I was going to say, if I were to write out a structure of this, I did. As we were prepping for this from the outside looking in, it would look like, okay Tushar, what were you planning to build in 2021? Okay, then things changed at this inflection point in November, 2022, but we already talked about that situation, but you didn't. It wasn't, oh wow, we need to change direction. I think the important thing is the vision spans through it and you're adapting to what is the immediate workflow need? What is the most valuable thing I can build right now that supports that vision? Because ultimately you have to bring it all together. So you've gone through a bunch of different pieces that have been built and I just think this isn't a story of how Keith, I can't remember what was Keith?

‍

^{Tushar Makhija (01:03:49):}

Keith Rabois

‍

_{Joe Michalowski (01:03:49):}

I was going to butcher his last name if I tried to say it, but when that happens, you're not like, oh my God, I need to go fix the vision I had for TeamOhana. It's like, okay, we're probably about to get a lot more inbound activity because I've already built this thing to support this. I just think that is core to where we are today for you guys.

‍

^{Tushar Makhija (01:04:15):}

November of 2022, we launched the scenario planning product.

‍

_{Joe Michalowski (01:04:19):}

Beautiful.

‍

^{Tushar Makhija (01:04:20):}

And it was already in the making and what the scenario planning product did was first it exposed the hiring tracker in a different analytical lens. So it started by saying, Hey, don't look at number of heads in this. We are saying, Hey, you wanted to be a company that started the year thinking that your annual run rate spend is going to be a hundred million. Right now I'm projecting 120 million Scenario planning is now you going in and taking action and saying, oh, I need to, what if I stick the planned headcount for Q4 and just not hire any of them? How much money will I save for an analyst to do that many hours of work? And the problem compounds the larger the company is in TeamOhana, you basically are searching for, Hey, let's filter down to all the roles that are open in Q4 bulk action. Select then simulate what happens if I move them by 30 days? Oh, you save 300K, what happens if I move them by 90 days? Oh, you save 600K.

‍

^(01:05:32):

We were building this more as an annual planning software, which was like, hey, you take the top down budget and you build a bottom up plan. Don't do it in a spreadsheet, do it in TeamOhana. It is access controlled, it has got real-time data, it's got the actual compensation information. You can move people around departments if you want. You can create new managers, you can add new positions, but the rate hike was more like, oh, I need to now think about cost reduction, deferred cost, and basically that was one other additional function that we had to quickly build in. What if scenario of, Hey, what if I don't hire these people? What if I actually simulate a riff? What happens if I eliminate these roles and eliminate or should not say eliminate but terminate the existing employees that I have shrinking. Now you're talking about headcount shrinking and not headcount growing or headcount being deferred, headcount being put on hold. It suddenly went from being a headcount discussion to headcount dollar discussion and we were right there.

‍

_{Joe Michalowski (01:06:47):}

Brings us back to where we started. I mean we talked about rethinking this problem in terms of capital allocation, managing a portfolio and essentially that rate hike was the start of the party being over and a forcing function of that becoming the norm. You have to think that way now because if you don't, I guess you just don't really have a business. You can't really run that role,

‍

^{Tushar Makhija (01:07:10):}

Don't do it. If you had Peloton in your portfolio during COVID, you were very happy,

‍

^(01:07:19):

But right after COVID you wanted to get rid of that stock because you knew that the parties ended, right? It's exactly that's how it is that you have to always think about this from a portfolio perspective. It is a portfolio of employees or portfolio of headcount. Each of these portfolio has a recurring cost, right? It is valuable. So let's not discount that if I have the world's best AI engineer asking for a million dollars, I'm not going to let them go at this point in time, but at the same time, now I know how to balance it up that do I know the other 10 engineers are doing something totally else. Where do I save money in order to fund this and suddenly this in boardrooms. Now this became, it was not a taboo to talk about this. It was basically, hey, you cannot grow at all costs.

‍

^(01:08:13):

Efficiency, operational efficiency and t mohana was right there to capitalize on it and saying that, okay, all this while you had an operational plan, now we are bringing your plan as close to execution to give you a real time view on what is it that is going to happen in the future. And I think no business leader, no VP of engineering, no VP of sales. If you had asked them at that point in time, Hey, what is the number of employees? What is your headcount? Everybody will give you a different answer. Are you talking about button seat? I'm talking about no button seat, but you've got five offers out that are joining in the next two months. You also have three people leaving the company and what about the 10 contractors that you are also holding on your payroll? Oh my god, how many people do you have?

‍

^(01:09:04):

And now who is the best and what was the biggest unlock that our scenario planning was not, again, not just built for the finance team. Finance team became the team that is collaborating and is literally saying, I don't know what headcounts you want to eliminate. I'm just giving you a new budget target. Go and run your own scenario. Now the VP of engineering together with the VP of HR is sitting and saying, who should be hired? Who should be fired? Who should we remove? What promotions are not going to happen? How would you do that in a spreadsheet? People are actually using Miro boards for this without

‍

_{Joe Michalowski (01:09:45):}

Yeah you almost have to it's got to be a visualization but it doesn't work.

‍

^{Tushar Makhija (01:09:47):}

Miro boards are again pretty looking boxes without any dollars and cents associated with them. So what did you do, right? Oh yeah, we are going to let go of all our engineers in Mexico that's going to save you pesos. That's not what I

‍

_{Joe Michalowski (01:10:01):}

Problem solved. Got it.

‍

^{Tushar Makhija (01:10:03):}

Right? Again, it was not suddenly it went from a head count count problem to a head headcount dollar problem, a spend problem and

‍

_{Joe Michalowski (01:10:13):}

We talked. I'm oversimplifying, but I want to get sort of the line right? There was a point early in TeamOhana's days we're solving specific workflow, workflow problems that will enable people to use this product in the growth at all costs times. The biggest inflection point for you all, it wasn't about the vision, but it was like scenario planning comes when the rate hikes hit and this becomes our pillar of the product that is enabling people to succeed at that time. Are there any other things that should be called out? Because we got to talk about agents, we got to talk about where TeamOhana is going and what else? That was late 2022. So in that time, what other sort of pieces have been added? What else has been laying the foundation for you all essentially today so that you can move forward into essentially what we're going to talk about, which is that age agentic future, which is now but very much in progress. What else has to be called out if anything?

‍

^{Tushar Makhija (01:11:20):}

I think the most important thing that needs to be called out is that at all times, the one standard question that will always pop up in people's minds is that why can't a FP&A tool do this? Why can't an HRIS do this? Why do I need yet another tool? And I think first thing that is what we call is the FP&A gap. The difference between workforce planning and workforce management is that there is a gap between managing the workforce within the constraints of a plan. So you end up, there is no tool for that and there is no system for that. The next part is the success of an enterprise right now hinges on speed of decision making, but precision and speed both are important.

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^(01:12:07):

Traditionally what has happened is that having these data silos or system silos, it requires a lot of manual coordination and data reconciliation between departments, between people and companies can no longer afford to spend that much time making these decisions. I read this somewhere is that companies can no longer afford to move at the speed of yesterday. If your systems don't talk to each other, your teams can't move fast, your competitors will outpace you. So at the end of the day, it is all about speed of decision-making with precision data, but we are all humans, right? There is a reason why we don't like working in a spreadsheet. There's a reason why Anaplan is complicated. It's a very, it is a brilliant piece of software but it is complicated because the experience for the non-finance people, it just sucks. And one of our key insights was the systems of records are not built for action or experience.

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^(01:13:23):

They're never designed to make workflow. They are very good at transactional, they're transactional, they're rigid, they are known for recording data, but there is no flow between. They don't help workflow. So one of the things that we are not replacing your systems of record, we are making them better. We are creating this unified experience layer that enables work to flow across all the teams. So again, if someone is saying that what is TeamOhana? It is not replacing your HR system, it is not replacing your FP&A system. We don't want to become an ATS, but we are the connective tissue that turns these existing systems into something which is much more powerful and I like to call it is that we are the system of action. We are where decisions are made and we unite TeamOhana simply put unites people processes and systems.

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^(01:14:29):

It is, that's why it is important for us to understand this and where we are going in the future is to be honest, it's been four years. So there has been enough information, there are enough customers, enough conversations, enough information and product analytics for us to understand, hey, what have you really built? And in the last 12 months, every week I think about what if I was building TeamOhana today, what would I do differently? My CTO is already telling me that Tushar, the AI copilot we built last year, it's throwaway code. I'm like why? It's like, oh, technology has completely changed, right?

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_{Joe Michalowski (01:15:19):}

It changes so fast.

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^{Tushar Makhija (01:15:21):}

The RAG architecture no longer holds true because we are now in the agent world. So he, and this again all kudos to my co-founder, he explained this to me. He's like, Tushar, the way we built TeamOhana was TeamOhana is the app. So there's a layer of APIs, the app is running on top of the APIs and then the interface of interaction is buttons. We took people away from spreadsheets but we brought them into a more controlled environment to press buttons. So if I ask myself what is the future? Let's draw the parallel again, APIs app, the interface is buttons, the new world is LLMs agents and the interface is natural language, it is chat, it is conversations based. I heard this somewhere else. Someone said NLX is the natural language interface. The new UX is NLX. The new user experience is actually natural language interface. And if we are now talking about all of these different things is like the next frontier for us is not about just operational efficiency. The world has moved and you can clearly see that the future is going towards you need to 10 x your employee.

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^(01:16:58):

I don't think agents are replacing employees. The agents are replacing employees that don't know how to use agents. That's fair. It's all about and how are we going to be there? How are we going to be standing at that forefront? And now the CFO's quest is not about, Hey Tushar, you're replacing our spreadsheet, you're bringing organizational rigor, you are bringing cross-functional collaboration. You're helping me make decisions fast, but I need to still grow. What are you doing for me? Because TeamOhana today still is enabling it is two x or three x productivity gain, but I still, as I go from a thousand person company to a 2000 person company, I would have to hire more people.

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^(01:17:49):

How do I take that one FP&A person and make them 10 x of that person? How do I take this from that? If you are managing a hundred to 200 employees per business partner in finance or HR and now make it like one finance business partner is managing 1000 employees or maybe more and I think we have been thinking about this and I think we have this opportunity to go and completely reimagine the interactions that you're going to have with our product and also we can't just say everything is replaced by an agent immediately, so we have to take certain, I would not call them baby steps, but I would call them very coordinated and well thought out steps.

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_{Joe Michalowski (01:18:41):}

Well, similar to your, I mean it's not a Trojan horse at this point because you're not a brand new startup, but it's a similar idea where it's like where do we start to get down that path so that when certain improvements to the product come that one piece explodes into a much larger piece of value? Not I built this one thing, it's a standalone thing and now I go over here and I build this other thing and it's its own standalone thing, baby steps. It sort of downplays its value. I think it's more about that Trojan horse idea without the secrecy, I suppose.

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^{Tushar Makhija (01:19:19):}

I would extend that to in a way, again, going to this natural language interface that we are talking about, right? Yes. It's about today. TeamOhana gives you analytics dashboards. You still have to be a very smart person to look at a dashboard and a chart and spot the anomaly. What an LLM and what now AI's superpowers are, it is going to spot anomalies for you faster, probably better than the human naked eye and that is our first product. It is AI insights. Think about an observability layer running on top of your entire workforce platform.

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^(01:20:02):

How is my cost going up? Where are there opportunities to save money? A very good example is that we are sitting on top of a goldmine data from your applicant tracking system. It is in real time telling me multiple things. What is the productivity or the throughput of your recruiters? I am the system of record of the plan so I know how many people do you need to hire. I also know what is your attrition rate and how long it takes you to backfill that, those people that you lose also how much it costs you to backfill those people basically. Now we are going in and converting these analytics dashboards into AI insights which are simply telling you, look here, this is the place where you must take action. These 20 headcounts that are right now open in your applicant tracking system and you think they're going to close on June 15th, no, we are telling you that you are going to close these roles on July 13th.

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^(01:21:17):

That means you have so much money that is deferred cost. You think that you are not going to lose people? No. And you have made this assumption in your model of 5% attrition rate, no, your attrition is seasonal. This quarter is going to be 8% or 12% and you're not going to be able to hire all of these people. So now you can look at this from both lens if you're the CFO and say, okay, I have so many extra dollars that I had locked up in my plan that I can go and invest somewhere else for a higher ROI. Let's not forget they are the chief capital allocation officer wants to generate the highest return on the investment. If I'm telling you you're not going to spend this money, you must go and invest it somewhere else or if you look at it from the other side, if you're not going to be able to make these hires on time, that means you are jeopardizing or it is threatening the goal that you have set for Q3 and Q4. If you are sales hires, then you're not going to have enough capacity. You're not going to hit your revenue goals. What do you want to do? You must have this AI now gives you these God eyes into the future and I'm Hindu, so the Shiva, the Hindu, God had a third eye. Basically that's your third eye. Shiva now is in your MacBook Pro. This is great. I think we should call our new AI copilot Shiva, right?

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_{Joe Michalowski (01:22:48):}

I think we just rebranded the company honestly. Yeah there we go. It's got to be available, come on.

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^{Tushar Makhija (01:22:58):}

And that is step two like, okay, great. You gave me this insight. What's next? We've also been tracking. Tracking is not a good word in this day and age, but we know how Docker hires and how Docker grows. We Docker, Vercel, Scale.ai. We have such good information that is again, I don't want anybody to hear this and say I'm training an LLM on your data, none of that.

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_{Joe Michalowski (01:23:29):}

It's anonymized data. The information is there. It's the whole point. It's what we talked about earlier.

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^{Tushar Makhija (01:23:36):}

Exactly right Now we are now able to suggest an action. Hey, we have seen that when your hiring is slow, you usually move dates out by 30 days or 45 days. I'm just taking a simple example, right? Hey, you are going to backfill for this role. On average you spend 20% more than the person's salary was that person who left. Let's just help you make better decisions and help you take better actions. But I call this micro agents. These are atomic agents taking atomic actions. The third thing is, which is not too far away. If we have to go and influence the capital cost of managing your workforce, which is the G&A cost. If we have to give you those 10 x returns and outside returns, basically you remember how I was talking about that when at Airbase I was trying to explain to my CFO what I wanted to done and he was doing it. Yes. Now that is possible with the new NLX am the VP of sales. I log into TeamOhana and I speak to it

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^(01:24:48):

In natural language TeamOhana. I want to hire 10 new reps. I already know what type of reps you hire. I know how long it takes you to hire them. You just need to tell me where you want to hire. I also know your headquarters locations and the offices that you have. Do you want to hire them in London? And then you tell them, Hey, let's model. We are hiring three new reps every quarter. Great. I am now able to take all of this information and generate a scenario for you. And I'm not just going to generate one scenario. I'm going to give you options as the VP of sales, as the rev ops leader, whoever is in charge to say, look, if you do this in plan A or option A, it is going to cost you X dollars and it is going to take you Y time to fill these roles.

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^(01:25:42):

And hey, I also know your financial budget. You're going to over budget. I have a plan B where you're still over budget but you're only over budget by 5%. And I think by natural understanding of hiring, because this is again a simulation, this is a good plan. So I gave you one or two options. You are still the person who is choosing which option, but you saw there was no FP&A person involved. There was no analyst. This is all happening in your world talking to the TeamOhana's AI agent. That is again, and I'm not saying that I'm going to write a recipe for you or I'm going to create, this is all the information that is native to TeamOhana and to you the customer. We know how you hire. We know what is your average tenure. We know how long it takes you to hire people.

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^(01:26:29):

We know what's the throughput or the recruiter capacity that you have. We also know how much budget you have. We have all of this information for us to generate a simulation or generate a recommendation. Let's just call it a recommendation that has the high confidence of being true. And you have done all of this without the help of anybody in the finance team. That is how you 10 x the one FP&A person that you have, you take this grunt work away from them and now you are inviting them. So they are moving away from being this workflow or work people to center of excellence. They are here to approve. They are here to suggest, they are here to elevate your recommendation, which will take much less time because the finance team and the CFO trust that TeamOhana has realtime data from all of my systems. It is up to date. I can trust TeamOhana. I have built that trust over the last four years into our platform. And they also know this is all coming from not some benchmark that was run by talking to a hundred companies. This is modeled on my information, which is only used to model for you, not for anybody else. That unlock is unprecedented. It's not seen.

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_{Joe Michalowski (01:27:58):}

This is when I had to basically create content and market FP&A modern FP&A software. I guess the idea was strip out all the grunt work, get rid of all that transactional like rote manual process. So that FP&A person, your single fp, probably that department specific FP&A person can spend the strategic time doing that scenario you talked about earlier where it's like basically being talked to by a department head, told what they want and then modeling it out. And so to me what I hear is TeamOhana essentially helps a VP of sales, a VP of engineering, a VP of whoever it is that is in a department, translate what they want into a language that finance trusts and understand so that that conversation is not, let's make sure your numbers tie out. It's talk about whether or not that is the right scenario.

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_(01:29:04):

It's not okay, we get rid of the finance person from the process, make sure when we start talking to each other that we have the highest level, most strategic baseline so that we can really hash out the promise of being more strategic. For a finance person. It's like now you actually can, that is the promise here is that that person can look at it and say, well, have you thought of this? I mean, I know that this is based on our data, but what if we did this instead and get a different perspective? And to me that is probably where you come up with maybe the inflection points for a growing business. What changes between what you're doing, what your competitors is doing, because it's going to be different. You're going to have to make creative choices. You're going to have to make a decision about which scenario you're going with, how you're going to go about this. So anyway, I'm rambling. I'm not the person with the vision, but that is what I hear when you talk through all this stuff.

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^{Tushar Makhija (01:29:59):}

I mean, in a nutshell, it is AI that unites finance and the business leader, you can say finance, hr, and the business leader. And from the very beginning, the fundamental tenet of TeamOhana has been cross-functional collaboration. The collaboration layer is, that's why the category we are building is collaborative workforce intelligence platform and it's not workforce planning because we have planning software and a plan is a very good planning software. Adaptive Insights is a very good planning software because the motivations about planning and budgeting is different. Workforce management. Workday is a workforce management platform. It is a very good workforce management platform that is managing your existing, but in seat workforce intelligence platform brings all of these things together. It's the connective tissue that fills this void or plugs this gap and just by AI now, as I said, it's a new interface of interaction of doing work, but unless if we were not the platform where buttons were getting clicked, we cannot become the platform that unleashes and unlocks this new interface. It just doesn't work that way, right?

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_{Joe Michalowski (01:31:28):}

Enormous headstart on anyone. It's just, what'd you say, 6 billion in headcount spend. I can't remember the number of customers, but it was like this is a massive amount of data that you don't wake up one day and have this idea and suddenly solve this problem because you need that there. That foundation needs to be there.

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^{Tushar Makhija (01:31:55):}

I was thinking about this is like, hey, and you peel the on and think about the why. Think about the what, and it's basically finance wants precision, HR wants agility, but the business demands faster decisions to hit the goals. And that is what it is. They all need this alignment. We have not used this word enough in the last, in this conversation, but that is what we want. We need alignment between these functions so that you can deliver on those goals and you can make decisions precision with speed and you can trust those decisions, right? It is basically AI that connects the people who plan the data they need and the outcomes that move the business forward.

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^(01:32:50):

And that is how the, and if you say, okay, so what are the results? It's basically you're going to cut waste, you're going to plan smarter and you're going to move faster. It is moving fast is what I think is going to be the fundamental difference between the successful companies of the future and those who unfortunately do not make it. And the faster we build using ai, the faster you as the buyer, as the CFO start utilizing its benefit. And we are going to make some mistakes, but the time is now to move, to act, take action.

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^(01:33:35):

We cannot be sitting on the sidelines. And if you are a future investor of TeamOhana, if you are a future customer of TeamOhana, if you're a current investor of TeamOhana and a current customer of TeamOhana, you must fully understand where we are going after and what we are trying to achieve here and what we are going to achieve here. Gone are the days when you're saying, oh, why can't FP&A do it? How many years did Anaplan have? Why haven't they created the company? They built the company, they sold the company. It's going to be resold by P in a few years. Why haven't they already built it? It was not designed for that workday. It never will be. It is the greatest company on the planet. Carl Eschenbach used to be the VP of sales of VMware. I literally grew up looking at that guy and it is going to be the greatest company and we are not going after replacing Workday. But Workday is not solving for this either. Workforce planning is different, workforce management is different. Workforce intelligent is different. So let's talk about what changes are we going to implement, what business value we are going to drive, how are we going to create a 10 x productivity and efficiency leap for the CFO organization? How we are going to cut waste, how we are going to save you labor, cost dollars. Let's not talk about why these old systems can't do it.

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_{Joe Michalowski (01:35:05):}

Tushar, I had a whole section where I was going to make you do a lightning round of defining this category, but I'm looking at the questions I had for it and I'm like, Tushar just does a really good job of summing these things up. If I asked you the question, I was like, he just answered these questions like a second ago, which is wonderful because we've been talking for a long time. There is one question on that category list other than what we've gone over that I want to make sure we touch on because we've talked about who these buyers are. We've talked about what we're calling the category. We've talked about how TeamOhana will now and in the future fix these cross-functional disconnections and how it 10 x is employees. Something I want to make sure we're very clear on is this last question of what's possible in the next 12 months that wasn't possible a year ago. When you're talking about category moving fast, this whole genic future thing, I feel like it's going to be about this, but what can you do and what's on your roadmap that you probably didn't even think was possible a year ago?

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^{Tushar Makhija (01:36:12):}

I don't think that anything that I explained about the AI agents was possible because we did build an AI copilot. We did have a copilot where you can ask, but there was no context, there was no memory, there was no reasoning. Every time you asked a question, I was loading the entire context into the prompt and that's why the answers were not great and you were hallucinating as the LLM was like, Hey, this is just too much information. And again, LLM is a large language model. It is good at outputting language. It is not good at outputting analytics or insights. You have to build that using the LLM. What the LLM is truly doing is synthesizing the text that I inputted in understanding this and converting into machine code that I can run on my system so that I can generate that insight for you.

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^(01:37:03):

So there's a lot of work that we had to do. First thing we did was instead of using just Postgres, we now use Click House, which is an time series database. It is built for agents to get real-time information. The insights are already coming out. It's already in beta, enhanced with a few customers. We are basically making it better. And what is that going to do? It is going Imagine TeamOhana is place where you're making headcount changes, your hiring plan changes. The applicant tracking system is where offers are getting sent, resent denied. Accepted Workday is where all your employees are getting Orged, reorged compensation going up. All of these are changes. Our AI synthesizes these changes and allows you to basically query with the question is that what has changed in my workforce in the last 30 days with a summary that you can copy and paste and send it to your boss with the confidence that this is the data I can trust because I have been trusting it for the last four years. For us, October and November is always where we take big leaps because it is annual planning season, right? Everyone is happy to try out something that is going to make their life better because everyone is dreading. 

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_{Joe Michalowski (01:38:25):}

It’s the worst thing everybody does every year. So they're like, please solve this. One year happen.

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^{Tushar Makhija (01:38:31):}

The agentic future of me as the head of engineering or the head of sales using natural language to make a plan is six months away.

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_{Joe Michalowski (01:38:42):}

That's a really cool spot to wrap up on, which I love. I have two very, I want one sentence answers to these.

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_(01:38:56):

We have talked for a very long time, and if somebody goes and listens to this entire thing, I hope they do. I suspect that they'll see clips and pieces of it and articles written out of it. But if somebody makes it all the way to the end and they're still listening to this us, there's two audiences here. There's essentially your buyers. These champions are CFOs and there are people investing people like you'll talk to that will help you sort of realize this future. So I would love a one sentence takeaway for somebody to sum up this conversation. What should A CFO take away from this conversation? And maybe it's that piece that like, Hey, we're six months away from finally solving your biggest headache in these processes. And what's the biggest takeaway an investors should have at the end of this?

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^{Tushar Makhija (01:39:41):}

I think for, the most important takeaway for the CFO is headcount is your largest expense. You need TeamOhana to align your headcount strategy with your company strategy. That is the fundamental way of being successful, including making sure that your labor cost is not, as I said, non-linear increase in revenue should not increase, should not result in a linear increase in your G&A labor cost. It is the best of all worlds coming together. For the investor. It is. When you think about the TAM, you must think about the TAM that every company, if you're not a growing company, then basically we don't care. There are other problems that you need to go solve for, but if you are a growing company, you need TeamOhana. So when we think about as an investor, you think about Team Traction Technology, TAM. Four Ts, right? TeamOhana’s workforce intelligence planning category check, all those four boxes. So that's the opportunity for you to go now and discuss, elaborate, deliberate on, and then come find us.

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_{Joe Michalowski (01:41:10):}

TeamOhana. The fifth T. There's five T's.

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^{Tushar Makhija (01:41:14):}

Five Ts.

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_{Joe Michalowski (01:41:16):}

Oh man. Tushar, I love any chance we get to chat. So I just want to say thanks for one. I mean, I asked you a lot of questions and I sort of peppered. You asked you follow up. We talked about an outline. I scraped the outline probably halfway through and I'm just asking you questions of different things. So I appreciate you bearing with me. I think there's a lot of really great stuff in here. There's a lot of stuff we're going to do with it. So just want to say thank you and yeah, man, it's a pleasure.

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^{Tushar Makhija (01:41:44):}

No, it's an absolute pleasure. I think what we, and thank you for spending the time with me, helping us tell the story. I think what the world is now brought down to is this bite-sized stories and TikTok videos and long form content still is the medium for meaningful deep, I would say category defining, world changing conversations. That was my attempt to spend time with you and not try to shoehorn everything into 140 or 240 characters, but tell the full story of TeamOhana from my personal lens and to show where the future is going and how we at TeamOhana are so well positioned to capitalize on that future, which benefits the investors and our customers.

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