Why founders should bet on first-time executives | Praveer Melwani (CFO, Figma)

So what's your theory as to why you've been able to be successful starting basically at a small company, IC first, biz ops, financey hire, all the way through CFO of a publicly traded company. Normally, a lot of times somebody comes in, they do great work. At some point, a more experienced person comes in and you get layered or you go into a special projects role or you, you know, like, whereas a company goes public, they want somebody that's taken a company public before. So, like, what, other than good luck and innateability, like, what is it that you did or evolved over the course of that time that allowed you to sort of end up in the top spot in the finance function? I mean, I think you glossed over really quickly there on the good luck and good fortune piece. I think so much of it has to do with, like, timing, finding the right company, finding the right, like, set of leaders that are willing to invest and bet on you in some respects. So I feel like I was fortunate to have that at Figma. It was a team and it was a leader in Dylan that felt like they wanted to support me through that journey. I was very candid on the things that I knew, things that I didn't know, and was empowered to, to go and figure it out. And for me, that meant asking the right questions, understanding, like, where are my shortcomings were, surrounding myself with people that could be my own, be my personal advocate where I needed them to be, and recognizing that I have to be this constant sponge of new learning. I think that a lot of this role can be learned, and a lot of, you know, just great leadership is first principles thinking and not actually being burdened in the way in which that historical decisions have, have, you know, impacted your current framing. Yes, I do think that they're helpful in relevant context, but I do think, you know, a lot of the things that we have gone through at Figma are very unique to our own circumstances. And so I think having this ability and framework, not necessarily to feel like I know the answer all the time, but I was seeking it out allowed me to continue to grow in the role. What are some examples of like the biggest phase shifts in terms of what you had to learn and grow in kind of each chapter that you've been at Figma? So I joined as an individual contributor. What's the story of joining the company? So I started my career in, in investment banking, lasted about a year and a half and got to a place where all my friends were looking at private equity venture, that sort of thing. And I was living out in San Francisco and I had a recruiter reach out to me about an opportunity at Dropbox. And this was like, you know, late 2013. That's like one of the hottest companies in 2013. Right. Totally. And they were like one of the only ones based in San Francisco where they were, they saw value in people with my background and, you know, I was 23, 24 at the time. And after going and meeting the team and you know, experiencing the office, I was like, holy crap, this is really cool. The ability to experience San Francisco for me was just like a fun thing to see and do. After that experience at Dropbox, you know, I got to see the growth of the company from a, you know, 400 person organization to about 1600, 1700 people. And I just had this desire to do it over. So I joined NerdWallet. I got really excited, thought the business was a really interesting one built on the back of organic search. And, you know, the financials are like pretty amazing to see that you could run a 35% EBITDA business without spending a whole bunch of money. And I was like, this is wild. I lasted about six months there for, you know, good reason, bad reason, whatever it is. Like I found what I was actually seeking was not to do it over like I did at, at Dropbox, but actually to be empowered to be the person to make a decision. And that was like the kick in the pants I needed. You know, it was the first time I really did a search of like what I was interested in and talked to a whole bunch of my friends that I had made at, you know, over the course of my time at Dropbox and, you know, living in San Francisco. And they're like, you should just go early and talk to about 30 odd different companies at the Series A type scale, 25, 30-ish people. And again, still pretty early in my career and, you know, luck and good fortune landed me to meet the folks at Figma just hired a COO. They were just trying to think about how they built out the rest of the, you know, the organization. They weren't even charging for it just yet. And I was like, this is perfect. Absolutely no one knows what I would do. I can just go in and just be a sponge and put my hand up to do anything. And so that's kind of how I ended up there. Sort of what are the big step functions in growth? If sort of Dylan made many bets on you sort of continuing to level up, like if you reverse engineer where you are now, what are those sort of milestones? So I think the first one that I faced is when our COO left about a year into me being there. There was this like gap of who is going to own a whole bunch of like the operations parts of the business. And what were you doing before that? Like what was day to day responsibility? So it was a lot on the finance and accounting side, managing our outsourced bookkeeper, putting our arms around like the initial sets of paid cohorts that we, that we'd started monetizing. And then spending a lot of time thinking about how we're going to evolve the product from what was completely self-serve at the beginning to something that was going to have to have more of a sales-led motion overlaid as well. So, you know, working with the product team to help think through pricing and packaging, build out the cadence of like, how do we actually think about growing this organization? A lot of the planning elements as well. We obviously also gone through like a fundraise early days of me being there. So we were a Series B company at the time. The COO left. It creates this void. And, you know, there was a whole bunch of things that no one really knew how to build, but we knew was going to be important. Things like legal and security and compliance, sales operations function. And that for me was like really fun to throw up my hand and say, hey, I'd love to go and figure it out. You viewed it as a positive? Oh, I got so excited because like, you know, at that moment Dylan was like, come report to me, go and take on this stuff. And, you know, we'll see how far you can go with it. Hire the people where necessary. And so I needed to hire really good people and a lot of functions that I had no idea what great looked like. So that was like one of the first things that was really challenging for me is like, how do you go and you build muscle and, you know, and understanding what great looks like when you hire a great legal leader? And I had to meet a whole bunch of people and ask the questions and really understand what are the problems that we're trying to solve. And it's actually kind of wild. The person we ended up hiring back in 2018, 2019 is our GC today, a guy named Brent Brennan-Molynean. And I, um, you know, I'm so fortunate to be, you know, be working with him even today. But, you know, I similarly felt that across like accounting, across like, you know, partnering on the, on the biz ops and sales ops side. And so hiring those people, making them successful, really seeking to ask the right questions to help them get the most within the organization without um them feeling blocked at all. Like that, I think was like something that I needed to develop and a motion I needed to get good at. I needed to learn how to manage a number of different. How do I create alignment within our executive room around, you know, a set of ideas that I had. I'm someone who loves to live in the spreadsheet, will live in the data. My expectation was like, look, I should just show people this and they'll get it just as well. But I, you know, realized very quickly that building alignment is a lot more than just showing people your thought process. Like, I think you have to really understand their internal motivations, you know, think about a problem from their seat and use that to, to help influence and, you know, learning how to influence is not easy. And so much of my role today, and I think those were two of the things managing and learning to influence that I think allowed me to continue to scale. What's an example when you were sort of trying to drive to a specific direction or outcome and had to sort of influence or bring along the rest of the exec team? Like what's the story behind it? A lot of it, we're like, we're dealing with today on, you know, navigating a change, going from a completely seat driven model to one that overlays consumption for AI products. And I think, you know, developing a shared understanding with, you know, our full leadership team, but then also the rest of the company on, it's an entirely different financial model. We have to be thoughtful on the cost structure. We have to be thoughtful on, um, the amount of choice that we give users. We have to be thoughtful on, you know, Each one of those conversations is different. And so determining what level of altitude you need to live at, being really thoughtful about what you're sharing and how you present and whatever point information you're showcasing, especially on the public side, because anything that you say is going to come back to you. You know, if it's not the next quarter, it's the year after. What do you think is the difference between doing a good job, at least in the context of how you think about being a CFO, and doing a world-class job? Like, what is the gap, not between bad and excellent, but like you're doing a good job or you're doing an extraordinary job? It's having this, like, intellectual curiosity and willingness to continue to ask that second or third order question. I think if you get stuck staring at a P&L or, you know, set of statements and you don't have the ability to really understand the unique drivers around it, like, you're not doing your job. You're being a traffic cop. You're like, you're kind of just playing good guy, bad guy for, for certain decisions. And that's not helpful. I think if done well, your finance organization should be this strategic arm of the, of the company and help you understand when you should be making an investment decisions that impact the long-term of the business. And that's only really going to come if you have a hunger and excitement and passion for continuing to go deeper and deeper to really understand the root cause. Like my favorite meetings, uh, during the week are, we do a self-serve deep dive where we look at all funnel indicators and how all kind of live and living experiments. And it gives me an opportunity to slice and dice our business in all sorts of different directions and understand if anything is trending in a direction that I don't think is favorable, what are we doing about it? How are we action on it? And start to be another voice in the room to go and really go and push this change quickly within the organization. We do a similar thing on sales business and then even for some of our acquired businesses, you know, allowing us to really seek to understand what's going on within those businesses. And so it just brings me an immense amount of joy to like, you know, feel like I, I can really understand how that's working. And then in addition to that, like, I got a set of dashboards and set of things that I will refresh on my own to feel like I can, um, I can bring the level of depth to a conversation where I'm very well informed and pushing people's perspectives as we're operating at the surface level, um, kind of taking everyone that, that second order of depth. How is capital allocation and risk taking different today at let's call it a post ChatGPT moment today versus before other than like, we should be taking more risk. But like you as sort of one of the copeople that's making capital allocation decisions, what's different in this environment versus three or four years ago? A lot actually ends up changing just when you, when you play out, play out that idea. So, you know, we feel, we feel it from the perspective of, um, these coding agents have, have made it so easy for people to go and create software. And so, you know, even this vertical line that I thought were near, you know, near vertical line that I thought we were on, uh, when I joined the business in terms of the amount of software that, that was going to get created is now like, you know, near asymptotic. For us that, uh, at Figma, that actually is like, if you actually sit and think, that's extremely, extremely expansive for us. Now more people are going to be involved in the, in the software creation process. Design craft point of view is how you actually will win, um, in this day and age and, uh, how we actually then go and bring those tools to our, to our current users. But then also how do we think more expansively is going to actually define how the next kind of five years look, five, 10 years look for the future of Figma. And if you are operating in that shared context, uh, you want to make sure that you both create the constraints for the, you know, what are the bright lines that you don't want to cross, but you also want to be in a state of keeping your foot continuously on the gas because you believe that, you know, the opportunity has, has just multiplied ahead of you. So what I found ourselves doing is, you know, relaxing some of the constraints that we previously had. We were a business that was 90 plus percent gross margin a year ago today. And, you know, when we reported in Q4, we'd taken our gross margin down about five points to 86%. And that's because we were investing in servicing our AI products because we, we recognize that in doing so, we widen the overall aperture of who can participate. So we have to continue to think long-term, um, but you wanna not constrain the business to make the decisions that allow you to get there. And so I think that I think is one of the things that has changed. In addition to that, how are we thinking about organizational effectiveness and efficiency, is something that's continues to be top of mind for us. I mean, it's been pretty cool to see, not just within the areas that, you know, everyone seems to be talking about, like your software engineering, your product building teams, your support and sales led parts of the organization, but even some of the operational parts of the organization can, can get extremely efficient through adopting some of these tools and taking out a lot of the manual toil in their day-to-day, sharpening their pencils and, and the frameworks and opinions that they put forth. That then gets your mind turning on, okay, well, we can really augment the output of the people that we already have. We still have bottlenecks for sure. I very much think it's important to have domain experts within the organization, but I wanna take all the manual toil away. And so you should believe that long-term, we can be more effective as an organization just by virtue of adopting a whole set of these tools and being willing to experiment. Today, that means that we want to make sure that we're empowering people with the right tools to go after that. And recognizing that at some future point, we're gonna have to be a little bit more constrained, but it's, it's actually pretty cool, both like how much bigger the opportunity gets and how much more effective the organization can become. And it allows you to be a little bit more aggressive in your investment strategy. If you think about the sort of number of bets that you're going to take as a company, do you want them to go up dramatically in an environment like this? Are you willing to have more go to zero risk in each one of those bets to sort of get the one power law bet that's going to define the next chapter? Like how do you think about bets and bet sizing, failure tolerance today versus pre-ChatGPT, if you will? We're an organization that moves fairly quickly, um, with a high degree of craft. So I think our bottlenecks today are not necessarily like, do we have the right ideas, or we, but it's more so, are we building them with the right leadership and thought behind it? So I want to make sure that even if we end up in a world that's like, you know, we've got a hundred, I don't know, whatever, you make up a number. You got a whole bunch more bets that we're driving those with more quality and more action and more, you know, the right amount of resourcing to, to allow them to be successful. I don't necessarily just wanna throw spaghetti, but I want to allow those to be well-reasoned ideas because I, that's where I believe the bottlenecks are. It's not actually the creation of the product, but like, are you designing with like the end users intent is an actual problem that we're trying to solve. Um, have we been refined in our thinking to, to of what, of what we want to build? To answer your question directly, I'd love to be taking more bets. Like I, you know, I think that, you know, the cost to build has gone down and like that should allow us to do that. And we have this large active user base that we can experiment, um, new products with. And I think that they get really excited to, to try these things with us. I think you have to be thoughtful around the framing of it and how you actually take those to market. We very much like welcome a future where that continues to accelerate. It's, it's already kind of happening. Like last year, we doubled our product portfolio. We went from four to eight products in a year. And we went and we built our prompt to prototype tool called Figma make in a matter of a couple months, two, three months. And then we went from that like initial beta to full GA in about five and it's used by like, you know, 50% of our hundred K plus customers are creating, uh, and make on a weekly basis on, you know, at the end of Q4. And so it's actually been pretty cool to see how, how you can, through speed and velocity, build really quickly. Do you think when you just sort of plot out the next few years that being a world-class CFO looks materially different in a post-AI world versus a pre-AI world? I mean, I'm finding my workflow changed. Uh, and so if you're not integrating and leveraging some of these tools, then yes, I, I do think you're probably gonna be left behind. Um, I think, uh, we're all gonna have, you know, a little bit of this company Jesus moment on, like, are we, you know, are the things that got us here That, I think, is the... That is something that I think is, you know, part of the hiring process and then part of the experience that you create within the organization. So, like we were sharing, I want, you know, everyone within my organization to be viewed as business accelerants and people that can unblock the rest of the organization. And if I empower them to create those sets of experiences where they can learn about go-to-market and what it means to integrate an acquired business or what it means to strike a really thoughtful partnership, like I want them to learn that because I think it will allow them to be extremely well-rounded leaders, regardless of where they go within their careers, if they continue to grow at Figma, if they grow it elsewhere. I'm actually indifferent. I want everyone to feel like they can build these really well-rounded experiences and then be advocates to one another thereafter. In recruiting and building your team, if I were to look at the managers that sit underneath you, so let's call them VPs or whatever term you have for them as VPs, what's the thread that ties them all together? Like, what are you looking for in a VP of this or a VP of that that is not just functional knowledge that is like a prerequisite that you care the most about? I want someone who's like an extremely first-principle thinker. I don't care if you've done this thing like eight different times over. If it's not right for our circumstances situation, it's not right, even if it worked before. I want someone who feels like they can live in the details. And, you know, we had that discussion earlier, and I think it's important to feel like your leader understands the work and is not a manager of managers. That is not like the culture of our organization nor the, you know, the type of people that I'm drawn to. Building community and organizations is very important to them. Willingness to think around, think team first versus individual is important to me. Yeah, those are a few that, you know, I think... And then I think, like, we test for that. What have you noticed about developing people into executives as opposed to hiring executives? Is there a good condition for one or the other? We've definitely done both across our organization. I have a bias to want to build from and promote from within if we can. Because of the existence proof. Totally, totally. I mean, I've seen the benefit that that shared understanding and context can build to the way that I operate. And then I've also seen that now time and time again. A lot of folks, even on my leadership team, we've elevated over the course of time. But there are moments where, you know, that individual isn't growing as fast as the overall organization or, you know, the rate of change there isn't keeping up, like, you have to go and make changes. And I think being able to be clear-eyed about it and act quickly once you're starting to get the signal on it, like, that, I think, is the challenging part. It's always going to be easier to stay the course, but then if that staying the course is at odds with, like, you know, what the business needs, like, that's where you really need to look hard and make a hard call. And they're not easy conversations to have. There's lots of examples all the time of when it works to hire external leaders and have them be super successful. I have theories. I think it's, like, hard to build context in, you know, the way in which companies are building today. Like, we're a very remote-friendly organization. We have, like, offices in San Francisco, around the world. But, you know, it's not as easy to go and look over your shoulder and, you know, ask someone a question as it used to be. And so if you're not intentional about how you actually go and, you know, seek to understand within an organization. And then I think, like, it's also challenging for someone coming outside in to really understand, like, how an organization ticks. Everyone is putting up a little bit of a front, you know, through that interview process, but it's not beneficial to anyone. You know, the more transparent that you can be... Which is counterintuitive for a lot of people. Totally. But, like, there's a good reason why people do that, right? They want to show up well, share that things are kind of working. But at least how I've internalized it, the more open that I can be about the skeletons that are living in whatever closet, the more likely it is that someone is not going to feel like, hey, you pulled a fast one on me. Like, what the hell? Or be successful ultimately. Totally. Like, you may, at times, decrease your close rate, but you're going to increase, is the person a long-term successful person in the company? Totally agree. And I, you know, I think about some of the folks that we've added to our leadership team over time. And I think we've been lucky that we've hired pretty well. But, like, many of those interviews, we've been getting to know those leaders for some time. Like Shant, our CRO, I think, like, I think I remember going back and forth with him for, like, nine months, maybe more. He had come in and we had given him, like, full data dumps of, like, parts of our Salesforce instance. And so, like, he had been able to really internalize and understand, like, what the heck was going on so that, like, he could be in a place to say, okay, like, I better understand the organization versus saying, like, I, you know, I came in, I had to learn everything for that first three to six months, whatever it may be, as it happened with, you know, other leaders that we brought on too. So I think if you're very quick to pull the trigger and not sharing, like, and you're hiding, it's not helpful to anyone. But then it's, you know, an organization also wants to fill those seats quickly and you want to, and sometimes it's better to have a leader than not. So it's always a balance. What do you think is unique about your exec team relative to 10 other great exec teams at great publicly traded software businesses? The majority of us have, like, four plus year tenure working together. I don't think that happens in a lot of places. Your perspective is a lot of people end up turning out pretty quickly or they end up with these shorter stints. And so just this, like, level of understanding of what each other's coming from. So many of us have gone through these life events together and created this scar tissue around what it's been like to grow this organization. But then also on, like, the personal side, so many of us, like, got married, had kids, like, have, like, this set of connections with one another that it's been really cool to see it come together. Like that's pretty interesting. There's everybody has been in the seat for the first time except for one person. What else is surprisingly beneficial about that? Well, I mean, you come with like no priors, right? Like there's, you know, you can learn a lot. You don't have a baseline. No. And I don't think anyone's trying to do that at all. And I think there's also this, like, desire and understanding that we're all going to be just as in the weeds as one another are because we understand that it's important to the organization. That ability and desire to go deep there is unique to the organization and the leaders that are around the table because we've all kind of grown up in the organization as well. You've shared before sort of the importance of acting like a public company before you are one. It's something that you did at Figma. Maybe you could share a little bit more about that and, like, at what point should a company be trying to run like a public company, even if it isn't one? I can say it now that we're a public company, but like, when I first started to get the questions from our board, I don't think anyone really understood, at least internally, like, the level of effort that would need to go into it. So I, you know, I pulled the checklist when someone asked and I was like, yeah, yeah, we're doing these things. We'll get there. It felt like more of this exercise that we would dip into at some point, but it didn't actually feel like as urgent. I think in in candid, the, the moment that I started to feel the urgency was when it felt like an inevitable outcome or like an inevitable place that we'd like to go. And I first felt that maybe in early part of 22, and we go public in 25, but early part of 22 is when I felt it. It's actually when I first stepped in the CFO role. It was like the conversation I had and I said, okay, like, here are the things that we're going to start to, to get going on. And the first things I told Dylan, I was like, here are the people that I need to go and hire that are going to be important people that are going to drive this process forward. So it was like an IR leader, a, you know, it was a controller, a tax leader, that kind of stuff. So people and process were the places I started. We then like go through that, that acquisition process with Adobe in the early part of, or rather, I guess it was in August of 22. And so then we're all kind of sitting there being like, okay, well, that was fun. But then we hired a whole bunch of these people. Like, but how do I actually continue to have them stay motivated and keep moving? We came up with this, this framework and way of operating where it's