The Road to IPO: HashiCorp CFO Navam Welihinda on Going Public During Uncertainty

HashiCorp’s 2021 public market debut was a proud milestone for CFO Navam Welihinda (and the Founders Circle portfolio). It was the end of a three-year IPO readiness journey and Navam’s first experience leading the IPO process as CFO. The experience taught him a lot about planning during uncertainty, the importance of strong relationships with the CEO, board, and investors, and preparing for the operational rigor of public life.

As leaders within The Circle continue to watch and wait for the IPO market to reopen, we invited Navam to share insights and scar tissue on how to leverage the extra time to prepare and make the most of uncertain times. 

Here are the Takeaways from that discussion:

Time is Your Friend

Similar to what many CFOs are experiencing in 2022, Navam and his team dealt with a lot of uncertainty around the timing of our IPO during their planning process. Between the initial IPO discussions in 2019 and HashiCorp’s 2021 debut, Navam and his team went back and forth on timing and whether the company was operationally ready. In the middle of all our debates on timing, an unprecedented pandemic occurred in the world, causing even more uncertainty on timing. “Because of the pandemic, our field sales organization couldn’t sell the way it normally did, and there was general uncertainty around when the world would open up again and go back to normal,” said Navam. 

Ultimately, Navam and HashiCorp’s team decided not to take their foot off the gas and instead continued to put focus on ensuring the company was operationally ready for transitioning to the public markets:

“The IPO process to launch into the public markets, I would argue, is the easy part of going public. It’s learning how to operate during uncertainty and prepare for the amplified scrutiny and accountability of being a public company that takes the most time and effort. If you’re taking a company public for the first time as CFO, give yourself as much wiggle room as you can to correct things that are off course and build that operational muscle before prime time comes.” – Navam Welihinda, CFO of HashiCorp

Working through the gauntlet of 250+ tasks on HashiCorp’s IPO to-do list, Navam tried to give his internal and external teams as much time as they could afford. “When it came to things like SOX compliance and TAM calculation, we might have been unnecessarily early, but as a result, our team wasn’t overly stressed,” said Navam. “We never had to pull any all-nighters, and neither did our banking partners – I had several analysts and MDs thank me for making the process so orderly.”

Address Weaknesses, But Don’t Ignore Your Strengths

In building a pre-IPO team, a CFO’s natural inclination may be to “hire to their weaknesses,” but Navam learned it’s just as important to hire to your strengths, too. In Navam’s case, he knew FP&A and accounting were both priorities, but he felt confident prioritizing accounting first. “I had a strong background in FP&A, so I thought I could deal with that later or perhaps even manage it myself if necessary,” he said.

In retrospect, this approach was flawed. The final push of IPO Readiness and post-IPO investor relations consumes a vast majority of a private company CFO’s day-to-day, only to be replaced by new challenges of actually being public. “If I could do the IPO again with six more months, I would’ve built my FP&A team much sooner rather than waiting,” said Navam. “You need a strong FP&A team to have a solid operating, forecasting, and planning cadence. They have to be operating in very concise periods of time and landing the forecast in a very small range on both revenue and theoretical EPS before you go public.”

Navam added that FP&A and accounting teams need time to establish collaborative partnerships with each other and the business. “You need the FP&A and accounting teams to be closely embedded to ensure their information processes are aligned.” The longer you wait to hire in either group, the less time they’ll have to staff and coordinate all of the sub-processes.

Establish Trust and Strong Relationships

Navam’s promotion from VP, Finance to CFO coincided with HashiCorp’s decision to go public. As a first-time CFO, Navam knew he would need to instill confidence in the board and CEO that he was ready to step up to the challenges of public company leadership. 

“When you’re a first-time CFO, every conversation, board interaction, or meeting with investors becomes an interview. The CEO and board are evaluating you on your ability to do three things simultaneously: run the financial operations of the company, manage the IPO process, and build credibility with the buy-side.” – Navam Welihinda, CFO of HashiCorp

Navam felt confident on the operations side and surrounded himself with experienced leaders to help execute the IPO process, but focused a lot of time on building relationships with the buy-side and sell-side.  “We started engaging with the sell-side analysts almost two years before the IPO, with help from The Circle,” said Navam. “We got to know the major mutual funds which we thought would be our top five or ten investors.”

Early investor and analyst conversations gave Navam and the CEO ample time to build investor conviction in HashiCorp’s story, TAM, business model, and products. It also helped him establish credibility as CFO. “We had many at-bats with investors long before the actual roadshow happened,” said Navam. “In some cases, we just had to repeat over and over again what our long-term vision was until we started hearing it back.”

Building buy-side relationships also helped Navam and his leadership team dictate the key metrics supporting their IPO and growth story. “The first thing the buy-side tells you is, ‘here are the litany of metrics out there that I want.’ Instead of conforming to every metric under the sun, we spent a lot of time thinking about the KPIs and metrics we use to operate the business and what we wanted investors focused on when judging us versus the metrics that don’t quite match our business.”

Strive for Incremental Progress

As Navam reflects on his IPO journey and life in the public markets, his goal is now to embrace the process of getting incrementally better. “Knowing exactly where and when to time things, where to make investments in a timely manner, and ultimately drive more predictable growth – that’s a tough skill to learn,” said Navam. However, learning from past mistakes and measuring success in small steps can help CFOs get closer to the perfection they often seek.

Discover more pearls of wisdom about preparing for public life  from battle-tested CFOs in our IPO Readiness Guide. If you’d like to participate in future discussions like this one, we encourage you to apply to join The Circle.

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