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- [00:00]
CJ
We all see the stats today that Figma has this hyper growth and best in class margins. What operational choices do you think along the way made that possible?
- [00:08]
Praveer Melwani
What AI has done is like it's changed my frame a little bit because if you believe that AI is almost this massive democratization layer of who can now participate in the product development process, your CAM just increase multiple fold.
- [00:19]
CJ
You as a CFO are reflecting on the admin's life cycle of having to play good cop or bad cop with approving the licenses.
- [00:26]
Praveer Melwani
What I've been able to do is like be engaged in some of these sales conversations when you appreciate the pain and ultimately your customer is your North Star and you got to really make sure that you got something that's defensible in front of them because you know you don't want that sentiment to shift and change. Especially if the community aspects of what you've built are so core to, you know, your future success.
- [00:43]
CJ
I want to talk about the IPO for a little bit. The stock kept going up and up and up. What, what was going through your head?
- [00:49]
Praveer Melwani
I didn't really have a lot of time to think at that moment in time. And what we were more focused on was like how do we get back in front of our employees to have them understand that regardless of what the stock does like nothing has changed. We are still the same company that we're at. The stock market is going to be a short term voting machine, a long term weighing machine.
- [01:06]
CJ
Is this thing on?
- [01:10]
Praveer Melwani
Yesterday's price is not today's price.
- [01:21]
CJ
Welcome back to Run the Numbers, the show where we talk with the world's top CFOs and finance leaders. I'm CJ at Tech CFO and my goal is to unpack the frameworks and operating principles that make you better at allocating capital and leading teams. On today's show, I'm joined by the CFO of figma, Praveer Melwani. He joined the company when it was a 30 person team and he was fresh off being laid off from his previous role. He went on to help scale Figma into one of the most iconic software companies of the last decade, culminating in one of the biggest IPOs in recent years. In this episode we go deep on the journey from IC to IPO cfo. The inflection points, moments of uncertainty and how you grow into a role faster than you might feel ready for. Forecasting and monetizing product led growth, how Figma thinks about expansion, LTV to CAC and predicting revenue when usage spreads organically across an organization and the reality of going public, what IPO day actually feels like, how pricing decisions get made, and the tension between company employees and the banks running the process. We also get into figma's approach to pricing in the age of AI, how to think about TAM when your users don't fit in a clean box, and the internal metrics that drive both growth and profitability. If you like the show, please remember to like and subscribe. It helps us with the algorithmic overlords. And if you're looking to hire the best finance and accounting talent, I'd love to help. I run a recruiting service that pairs you with thoughtful, qualified candidates from our community of finance leaders, people who, for better or worse, voluntarily research CAC payback period formulas on weekends. If that's of interest, shoot me an email@talentmostlymetrics.com and we can talk onto today's episode with Praveer Pravir. Thank you so much for joining me on the podcast.
- [02:59]
Praveer Melwani
Lovely to be here. Thanks for having me.
- [03:00]
CJ
So I just want to set the scene for people because when you started at Figma you were an IC and there were maybe like 30 people working there. I think I actually heard on another podcast that you were unfortunately laid off from the previous role you're at now. You were a part of the largest and most publicized IPO of 2025. It's quite the come up. It's, it's something they don't make many movies about CFOs as much as, as I would watch them. But, but that would, that would be the plot of a great CFO movie. Break it down for me.
- [03:31]
Praveer Melwani
I used to tell a joke to someone or one of my like two truths and a lie was like I I've been walked out of two of the last three jobs. First one was in banking when you know, I told them I was going to Dropbox. Like rather than letting me sit around that made me pack my things and walk through the whole hallway, which is fun. And then the second one actually, you know, walked out of my own two feet at Dropbox and then when I was at nerdwallet, lasted about six months, realized that, you know, just I wasn't necessarily finding the right fit of things. And when they went through a little bit of the change on the, on the leadership side, it kind of alienated a few of us on the business side and gave me an opportunity for the first time in my career to say okay, what are the things that I'm really excited about? What are the companies that are really Damn interesting. And I went to a bunch of my friends that ended up in venture and you know, I got lucky that one of the companies I ended up talking to was figma. And it was just this perfect blend of they had no idea what they needed. Gave me, you know, all the autonomy to go and figure it out. I was just really, really drawn into this idea that if, you know, if you really believe that, that the digital front door is going to be the thing that matters to organizations. You want to be at a company that's building, you know, a collaborative interface around, you know, how people make decisions on, you know, what those great products look like. And you know, they had been really, really thoughtful to spend the time building a really unique interface here at figma that was, you know, it was about four years, you know, heads down, building before they had something out there. What I started to see early on was just that folks were really excited about this. You had really large organizations that were willing to put their hand up and say hell yeah. And that, that was enough for me to say, hey, you know, if, if some of these large organizations are excited, I can figure it out and it'll be a fun ride either way.
- [05:05]
CJ
Were there any memorable inflection points along the way that come to mind, times maybe that you got to prove yourself by, by taking on more. You mentioned figma maybe didn't totally know what they needed at or times where you were actually unsure of yourself and just stepped up Anyways, yeah, I'm someone
- [05:21]
Praveer Melwani
who just will whip my hand up to do anything. You know, I was about 26, 27 when I joined Figma and I didn't really have an ego and so I was willing that I still don't have an ego so I'm still willing to like, you know, at the time it was like building a lot of our financial infrastructure so that I could do a lot of the basic querying and build all the connective, connective tissue necessary in order to get our close process done right. And you know, I just got excited by that kind of stuff and I realized that those micro decisions I was making that, you know, throw my hands up and just execute was providing these opportunities to learn business really quickly. And then when you ended up in these situations where you're like, hey, let's figure out, you know, our enterprise pricing or like our go to market efforts, like someone who had the context of what this all looked like was going to be the person that, you know, everyone was going to have to go and, and come and ask questions to and so that was my wedge. And then about a year into being at Figma, we had originally had a COO at the time when I joined. And about a year into me being there, he ended up leaving. And it just created this, like, massive amount of white space. And I was like, okay, well, who's going to figure out legal? Who's going to figure out compliance? Who's going to figure out, like, how we actually, you know, think about our sales ops and strategy pieces? And, you know, it was, it was the first time that, that Dylan, our CEO, I had a discussion with him. I was like, you know, I'm, I'm down. I'm down to try. I might not know how to do it perfectly, but I'm going to ask the right questions and, you know, I'll. I'll, you know, talk to all the different people in my network and we'll figure it out. And I've been fortunate to be empowered to go and hire great people, able to learn from them along the way. And, you know, my role is like, how do I. How do I ask the right questions of them to get the right answers, but then also just get out of their way at the right times in order to go and build. So everything from hiring our first legal person, who today is our gc, you know, to building out like an accounting organization, and you know, most most recently over the past year, it's been like, how do I, you know, put my arms around the CIO function? So that's a team that, you know, it's been fun to learn about, to build. I'm actually hiring a leader right now, so it'll be fun to continue to build, professionalize that in the years to come.
- [07:13]
CJ
It's wild because at many tech companies, the growth of the company outpaces how fast an individual can grow. So it's really refreshing to hear. And by the way, you were growing very fast at the time that you were able to personally keep up with that. And it sounded like it was just a series of putting your hand up over and over again to build trust and credibility with, with Dylan and others.
- [07:33]
Praveer Melwani
Maybe this is like, not completely fair, but I don't actually think a lot of the things that people have to deal with day to day are incredibly hard. I think that it does require first principles, thinking though, and an ability to know where you need to go and ask for help if you get stuck in your way of doing something. Actually having all that legacy of historical decisions can slow you down. And so I actually kind of view that as A strength for me is just, I just didn't know any better and I still feel like I'm, you know, on my growth edge quite a bit because, you know, a lot of the stuff we're, we're building for the first time, we just don't know the answer to. And so you can go and ask questions of others, you know, build your own intuition and then recognize that it's not going to be perfect. And you only really need to be perfect on those one way door decisions. The rest of them, like it's okay to be wrong, it's okay to iterate. And being comfortable along that lines is, is, you know what I think releases the pressure to go and execute.
- [08:23]
CJ
I love the concept of one way and two way doors. You talk about that on the, on the pod a lot. We talked about your personal growth. I want to talk about Figma's market growth and TAM expansion. We're going to hit on the company in the micro. But I'm just curious, as a cfo, how do you think about tam? Is that something that actually impacts the way you look at your operating model or is it more of an investor view of the world?
- [08:45]
Praveer Melwani
Measuring your TAM at any one moment in time is always going to be wrong. Famously Dylan talks about it when people were doing the math and trying to figure out what Figma's TAM was, they went and surveyed all the different folks that today or at the time were engaging in UX and UI jobs. And you know, it was, I want to say it was like 2,300,000 or something like that, individuals. And you know, that was just entirely wrong because the way to frame the problem was not, you know, how many current people with that job title are doing that work, but rather instead, like how will, you know, the responsibilities of individuals evolve if digital experience is a company's front door? And if that's then true, everyone's going to want to participate in that process. You know, everyone from, you know, your legal person who wants to go and edit the copy on, on a signup flow, your finance person who wants to go and review the, the, you know, the pricing page, your developers and your PMs, all of who want to participate in the ideation and product building process themselves. So if you think about, you know, your TAM by virtue of, here's the specific role types today and you put people in buckets like it's actually limiting in, you know, the, the ability to really think broad on how big things can get. And you know, that that for me is one of the larger learning experiences I've had here at Figma is like over time we continue to found ways to redefine and reinvent ourselves and we found ways to take to market offerings that allow us to, you know, serve our growing set of users in first class ways for for their particular needs. So you know what, maybe it started for that core design Persona and design ops individuals now something that all parts of you know your development team will have a need in Figma as they're trying to translate designs in the code and and then similarly you know your PMs who can use a product like Figma make to prompt and prototype an idea relatively quickly without necessarily leaning on a designer and developer as their hand. The TAM is now continuing to just multiply.
- [10:32]
CJ
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- [13:52]
Praveer Melwani
So for me, it hasn't made the forecasting process harder. I actually don't really think about it that much. I do think about it as an opportunity. You know, in the same vein I was describing the tam, when you really think about like, where is your true white space? What is the opportunity to go big here? And if you really believe that, you know, we have a solution that's going to be purpose built for many more users than just the core design audience, then that should give you an opportunity to believe that you can continue to grow durably at scale for some time. So, you know, that has been our focus and that's kind of how I use that information. And I think maybe at times the other ways that I leverage it and I use it is when I think about different seat types because there are different landing spots at times for different sets of end users. But outside of it, I actually view it as a strength to collect that information, to understand different job types and Personas. So that we can build unique forecasting models and checks along the way.
- [14:35]
CJ
So I guess it's somewhat of a related question about forecasting product led growth companies, they don't have the same pipeline predictability. Some, some would argue at least as sales led SaaS. As a CFO, how do you forecast growth when the adoption spreads organically inside of companies? Maybe it's a blessing and a blessing, not a blessing and a curse.
- [14:54]
Praveer Melwani
Yeah, if anything it gives me way more information. I mean when I, when I think about any one of our sales accounts and you know, the opportunities that we've got over there, they, you know, most of those users have started small pro teams or on starter plants. What actually is happening is our sales processes end up being much more quicker as a result because there's, there's already an engaged understanding and a champion that we've identified. So you know, I actually use that to help me size an opportunity to understand, you know, where is it, where is a relevant landing spot and then ultimately using a lot of the end product information to understand how quickly this account will grow. So you think about, okay, how quickly are files being shared back and forth, how quickly are new signups being being added? What does the adoption of new products look like? And so you know, we, we very much still measure and manage the, our business through an understanding of, you know, the core product adoption. And then if you think about on the self serve side, it's very similar. So you know, we offer the ability to both purchase our pro product via self serve offering as well as our organization's product. And it's a very predictable funnel for us. So you know, user signs up, you know, they hit a certain paywall at a certain point. This is what conversion looks like and you can kind of build a, you know, a fairly clean cohorted chart that obviously is going to continue to change as you roll out new products and different geographies, that sort of thing. But you know, I kind of love it. It's like it's, you know, it's a data person's dream and you can, and you can build some really unique way forecast your, your business as a result.
- [16:07]
CJ
You mentioned building out ways to track pipeline and user activity. When you first started at figma, were you nerding out on the cohorts from the very beginning?
- [16:15]
Praveer Melwani
Yeah, it was like the first thing I built and you know, I think it was like month three, I'm like oh my God, net dollar retention is what. Because we were landing people at like four or five users, a team and they were over the first three months ending up at like 15, 16 folks. I'm like holy shit. Like we're, we're like literally tripling the size of these accounts and no one is really dropping. Like we raised our series B within like two or three months of me being there. And it was that cohort chart plus the like the net dollar retention chart. You know, we had like a smile graph effectively like maps out over a 28 day period. Someone actually using the product and for folks that were, you know, paid and using it for, for work, you saw this real, real smile start to, start to emerge and we're like oh my gosh, we've got something here that's really, really interesting and resonating. And I think on the back of probably just those two key metrics was what, you know, Mamuna Kleiner got really excited about that like sparked this whole sort of rabbit hole for me on like trying to understand, you know, more thoughtfully what else we could be doing to really catch a handle on it. And the next thing that we did was add in, you know, a sales touch model to it because we were realizing getting pulled into the large enterprise very quickly.
- [17:19]
CJ
How do you think about the economic value of that very first seat?
- [17:23]
Praveer Melwani
I think given how quickly that we've shown an ability to expand our product portfolio and who's potentially addressable to figma, I don't actually think that we know what our long term LTV will be. You know, it's, it's a growing number is maybe my point.
- [17:38]
CJ
That's such a refreshing take. I often say I pray for the confidence of a seed founder with three months of sales history that claims their LTV to CAC is nine.
- [17:47]
Praveer Melwani
Yeah, I just don't people, I don't think people understand their LTV at the very beginning. You can't, you can control for like payback if you're really concerned about spend and paid marketing. We didn't run any paid marketing at the beginning because the contract was so viral. The value of that first individual in seat for me, you know what I would do every morning actually like would print out who were accounts anywhere that signed up, who came from a domain that I can recognize. And then we would very quickly say oh my gosh, like someone from Microsoft or Uber or Airbnb, whatever it was they, they signed up. Like let's just make sure that their, you know, salesforce is reaching out for them. And so I think it would depend on the scoring that we, that we had created on, you know, the value of that incremental signup or dollar and you can develop a lot, you know, more refined ways of thinking about it, you know, as you start more insight and understanding. But I don't think that I at least today understand what my long term LTV of a particular customer will be. If anything though, you know, what I get excited about is that you know, we've shown an ability to grow our share of wallet, you know, time and time again. And so you know, if we're, if we're aligned in building great product for end users that they absolutely love, like we'll find an ability to build a great business and we've proven that time and time again.
- [18:54]
CJ
We often talk about the financial signals around an account, what maybe product signals, uses CFO actually hone in on that. Tell you, hey, this account, I think it's going to explode in usage.
- [19:05]
Praveer Melwani
We spend a lot of time looking at, you know, sharing and virality, like how quickly are new users getting added to the platform, how active are those users, what products are they using, how many of them are using multiple products. Back to your point on like having access to all this data, you can make some really interesting damn predictions just just by sheer understanding of how people are, are using the various parts of your product and getting into like happy end states now it's actually, you know, a lot more fun because you layer in the AI features and credits as well. And so you know, you have like a, you have the ability to understand where are people starting, you know, if it's in Figma make, how are they then taking that idea into Figma Design. What we've actually seen is 80% of the folks that are active on full seats actually also go and are active on design. So the both, both of those products are used side by side. For us it gets, it starts to get like really fun to understand that like if these users are really using and seeing the value of the full platform that should drive, you know, more stickiness as a result. And you know, that I think is probably one of the things that if you really, really think, if you're really, really concerned about LTV should be the thing that you know, allows you to extend your ltv. You know, you're just having, having very, very minimal churn longterm.
- [20:08]
CJ
So you've been there for a while. I'm curious when you look back, I mean we all see the stats today that Figma has this unusual and awesome combination of hyper growth and best in class margins. What operational choices do you think along the way made that possible?
- [20:22]
Praveer Melwani
I mean, I think there's like a few principles that we have. Like a lot of this also stems from Dylan's way of running the company. Like I, I think he's like really, really thoughtful to, to seek to understand all parts of the organization. And so it's really difficult at Figma to build teams that, you know, you aren't able to articulate the value of. We are really, really diligent to go and make sure that each individual that we're hiring, we understand exactly why, we understand exactly what they would work on. And then that also means that you also want to be really good at performance management. So if you're, if you, if the folks that you've hired are not kind of living up to the expectation that you would have hoped, like quickly nip that in the bud and ensure that it doesn't start to fester. Because I think worst thing that could happen in an earlier stage company is if you start to have these pockets of not so great talent density because that just is going to start to be a drag on the business for a while. But beyond that, the core business itself, prior to the launch of a bunch of AI features. We should talk about the AI features as well. It is highly efficient. We're basically storing vector drawings and diagrams. So the storage cost is relatively minimal. And I come from a background of working at Dropbox. I've seen the costs. It's very refreshing to see, you know, what our AWS bill look like. And then on top of that, it's, it's the compute. I mean the compute was, you know, it's, it's the compute and being able to serve the multiplier instance. And we've been able to do that in really thoughtful ways. And I think our infra team is, is pretty amazing. And so then you put those together and if you're running the core business prior to the, you know, if you looked at, you know, the business in Q1 of last year, prior to us, you know, rolling out our AI features, we were like 90, 91 ish percent gross margin. And so what that allowed us to do is to say, okay, well you don't actually have to have this massive stack of opex beyond that and then you're able to run the business free cash flow positive for some time now. And so then that becomes this reinforcing principle of we know that we have the ability to be efficient. Let's also just make sure that we're making intentional decisions on the hiring side and then really scrutinizing every dollar that comes in. I think what AI has done is it's kind of changed my frame a little bit because if you believe that AI is almost this massive democratization layer of who can now participate in the product development process, your TAM just increase multiple fold. What we aligned on as a leadership team is like now is the time for us to hit the gas and invest. Because if we believe that we have the opportunity to go very wide within our organizations or within the organizations that we're serving today, much more wide even than we currently are serving today, then we should trade that near term efficiency dollar for long term durable growth. And so that's kind of exactly what we've done. We've taken down our gross margins over the course of the last six months. So we exited at about 86% gross margin end of Q4. And that's because we were serving the cost of inference, you know, to power some of our new products and features. We'll start to monetize those features actually tomorrow, which will be fun to see. But you know, we really wanted to make sure that we gave ourselves an opportunity there to go wide. And I think that, you know, we want to, we want to give ourselves the flexibility moving forward and have this social contract with our investors that if we find that opportunity to invest for the long term, we'll take it.
- [23:13]
CJ
You teed me up so nicely there because I want to talk about pricing, especially with AI being front and center. Pravir, what gave you the confidence to launch an AI credit model?
- [23:24]
Praveer Melwani
Without it, you're sitting in a challenged place. Because you know, we talked a little bit about the cost to serve. The cost to serve these AI products is, you know, it's non trivial. If you don't have the ability to align your model to one where it makes sense to drive more utilization on platform and that's actually good for the business. Like you're going to end up making these weird local decisions like do I actually want people to use my AI products or not. Like that doesn't feel right if you made the intentional decision that, you know, it's important for us to have a play here. You want to make sure that you, you know, you're aligning your cost structure with, with a value structure that makes sense, a revenue model that makes sense. I think today everyone is, you know, more aligned on these consumption models that you know, they're not, not perfect tokens in as dollars out, but they're kind of stemming in that direction where, because these models are, are dynamic in their outputs there you don't actually know what you're going to get every time that you're you're going to put something in there indeterministic just by nature you do need to have something that allows you to have a varying sort of revenue model and credit drawdown model as a result. So it was kind of a no brainer. But then you end up having to race to see okay, well what is the best way to implement that for us? We have this product led premium type model roots and we recognize that giving people some opportunity to try our AI features by embedding a set of AI credits across all of our seat types was extremely important to us because you're really going to know that not going to experience the magic unless you try. But then also you know, if you're using the product in more mature ways, we want to give ourselves an opportunity to monetize some of that as well.
- [24:51]
CJ
Hey, thanks for listening. We'll be right back after a word from our sponsors. I've seen a lot of FPA tools and a laugh is one of the few that gave me that aha moment. Within minutes I remember watching their founder shout out to Albert, connect my netsuite data and build me a full PNL live in minutes. Aleph is now trusted by hundreds of leading companies. I've had the CFOs from Turo 8, sleep, zapier and more on the pod and every one of them is a huge advocate. I also just published my second annual CFO Tech Stack Report and Aleph has been on the podium both years, including a number one finish in the 50 to $100 million segment. This year, instead of being just another planning tool, they built a real enterprise grade data foundation for finance implemented at startup speed with AI native workflows woven into its DNA. All your systems erp, CRM, hris, ats, product usage and more, powering one clean governed data layer that finance can actually trust. With AI moving as fast as it is, they're pushing even further. Mcp, custom AI chatbots, AI powered variance analysis and the list keeps growing. Try it with your own data@getalife.com run that is G E T A L E P H.com run tell them CJ sent you. So here's a pattern I keep running into when I talk to finance leaders at fast growing companies. You've outgrown the spreadsheet. You've probably outgrown your billing tools built in Revreck, but you're not quite at the point where you can throw a 20 person team at the problem either. That's exactly the danger zone. Right? Rev owns right? Rev is revenue recognition done right. It handles the messy stuff like high volume subscriptions, usage based contracts and mid contract upgrades. The things that break your ERP and the billing platform bolt ons. Here's the thing though. Your sales team isn't slowing down for you. They're closing ramp deals, usage commitments and mid quarter upgrades. And the longer you wait to fix the engine, the further behind you fall. So stop scrambling at month end and stitching together allocations across 3, 4, 5 spreadsheets to just have the numbers read. Well, that's it. That, that's the whole pitch. CFO's telling me it's like a glow up for the revenue books. That sounds like where you are right now, right? Rev is worth the look. Head to WriteRev.com CJ that's right. Rev.com CJ check them out. Being a CFO, you know how much I love tools that actually make the lives of accounting and finance folks easier. One of my favorite tools right now is Rillet, the AI native erp. Going head to head with netsuite. Yes, someone is finally doing it. I met Rylit two years ago when they were still in stealth. Since then they've absolutely taken the finance world by storm. Their mission is to make the zero day close a reality. And they're actually doing it. Customers are literally closing their books at 1:35pm on the first day of the month. They've got everything you need to scale your business. Complex revenue recognition, native integrations, custom reporting, multi entity close management and much more. They're only a few years in and are already supporting nasdaq Publicly listed companies. Yes. Seriously, if you want to scale your business on an ERP that, that wasn't built in the 90s, you need to check out Rillet. Book a demo@rillet.com CJ oh cool. That's me. That's R I L L E t dot com CJ R I L L E T dot com CJ Tell him I sent you there. We recently spoke with Dan Griggs, the CFO of Intercom and they leaned really hard into outcome based pricing. I'm curious if you ever thought about potentially going that route.
- [28:23]
Praveer Melwani
We thought about it. I don't know. I don't know. We've like, you know, fully aligned on what that specific outcome would be because the design process is so iterative. I think you know, Intercom's, you know, it's a much more obvious like where, where you'd end up. There's probably different ways that we could flavor it. I don't think that we've like all aligned or seen, seen the light yet on, on what that would be. I love the idea of, of thinking that, of that as a North Star. I'm just not sure that we've identified that.
- [28:45]
CJ
Where do you think margins ultimately settle for AI credits?
- [28:48]
Praveer Melwani
That's a good question. I got this a bunch from investors. You know, for me, I'm less worried about the specific margin percentage. I'm more thinking about like, you know, if you believe that, you know, you're going after a much larger TAM by investing in these AI credits and models. Like it should be gross profit accretive, you could be serving more dollars on the top line. Your cost to serve may be higher. I don't actually know the percentage, but I'm confident, I want to be confident that the overall gross profit dollars are growing because that's how you know it's good for your business in some way. I do think that, you know what that means though is like we also will start to see some efficiency across like our OPEX as well. Obviously our whole team is using across the company are using a whole variety of different AI tools to augment their own daily output as they invest in that. What that should mean is we should be able to continue to run our business more efficiently. I think net net that should put us in more positive income margin land, you know, over the long term.
- [29:37]
CJ
I love how you trace it all the way down to benefits for net income because I come at it from the perspective of an operator.
- [29:43]
Praveer Melwani
Right.
- [29:44]
CJ
I'm a recovering tech CFO myself, so I'm less interested in, you know, gross margin from an investing perspective of buying stock. It's cool to hear how you think about it. Like, hey, it's all connected, right? Like, even if you give up some points up here, it should play out in the middle.
- [29:59]
Praveer Melwani
I mean, ultimately companies are valued based off, you know, their ability to generate free cash flow in the future. Right. Like, I think that's the lens that you should. We all need to be thinking about like the value that we're creating over here. Like free cash flow per share is almost like the North North Star metric that I want to hold true. I think it takes a little bit to get there. Obviously. I always want to be making decisions that, you know, align to that over long term.
- [30:20]
CJ
That's your metric. If you had to keep one in your pocket, it would be free cash flow per share.
- [30:24]
Praveer Melwani
Yeah, I mean it's, I think like as an investor, it's the way that I think you're thinking about value and, you know, everything all the way through. Like, you know, that's ultimately where you're going to land at the end of the day.
- [30:33]
CJ
We forget sometimes that the, the main goal of business is to actually make money.
- [30:37]
Praveer Melwani
Right. The whole point here is it's long term versus near term. And I think you're going to end up making different decisions ultimately with the, with that long term frame in mind. And so, you know, it's not saying that there aren't going to be different things that you want to focus on, you know, in the near term. Right now we're very focused on growth and ubiquity, but I do want to make sure that, you know, we have an eye towards, like, how this all kind of makes sense or at least like a set of theories and plans for how we can kind of get to a much better end state based off the current decisions we're making.
- [31:02]
CJ
So your net dollar retention rate, it's bonkers. Do you ever worry that toying with the pricing model could introduce more volatility?
- [31:10]
Praveer Melwani
We've seen time and time again an ability to inflect this metric. So through the launch of new product, new tiers, and over the past year, it was both like new product as well as we had a pretty large pricing and packaging change that we made. So I'm not necessarily worried about the volatility it creates. Again, if I think long term over here, we should be making decisions that best align for the business over the long term. What, what I'm most focused on is ensuring that, like, our customers really feel like they're getting a ton of value and we can figure out the right moments in time to share in that value. And so if that means that, you know, your net dollar retention rate ebbs and flows a bit like, I think that's totally natural. So long as, like, you're also making sure that you've got a viable path, you know, over long term, where this makes sense.
- [31:50]
CJ
When you think about pricing more broadly, what do you think is the hardest trade off if trying to maximize revenue per seat? I think you kind of hit on that before how much you're getting per user or maximizing adoption across the organization. Or maybe it's just preserving product simplicity.
- [32:06]
Praveer Melwani
I mean, I was actually going to suggest simplicity because that is one of the things that we constantly think about. One of the decisions we made last year was to actually move from an unbundled product like seat model to a bundled model we recognized we were shipping a lot of product very quickly and if you then thought about the admin experience like we went from four to eight products last year. If you think about managing access to eight products as an admin, that's just a pain in the ass. So we need to simplify that. You can make the argument that it may have been value maximizing to have these unbundled seats in certain ways but like the simplicity of the offering, making sure that like you're making decisions on the pricing side that also like you know, your buyers challenges like if, if you know administration is annoying, if procurement doesn't love it, like it's just going to start to create these headwinds for you. You know, we also made decisions before where we knew that it was going to create a headwind to our expansion rate. But we did it and we made those changes because it was good for, you know, admin trust and visibility. And over the long term we think that it puts us in a more positive light. So we shifted the ability for a user to land in a new product from a user driven upgrade model to more of an admin approval model. So the admins still had the ability to review in that old world, but they played, played like you know, bad guy at the end of the day versus like if, if you pull it up allows them to have the sensibility of control. I do think it's a constant push and pull and balance. Like it's like user sentiment. You have to be really thoughtful. You know, I don't think that you ever want to have the value equation shift completely into the company's behalf where it feels like your users don't feel like they're winning here.
- [33:35]
CJ
I have to give it to you, man. We often talk about on the show the importance of meeting customers where they are and thinking through the customer lifecycle journey. You as a cfo reflecting on the admin's life cycle of having to play good cop or bad cop with approving the licenses. So that's, it's really cool to hear that.
- [33:52]
Praveer Melwani
I mean it's, it's actually pretty interesting because I would have argued that the old model that we have, I still kind of stand by it a bunch. But I also recognize that even if it feels like it's net beneficial to, to your end user, if you can't communicate it well, if you can't like have them really understand and feel like it's good for them, even if it is like it doesn't matter how good of how good that offering is they just have. If they don't believe you, they don't believe you.
- [34:15]
CJ
Well, I've been in that seat before too as a finance person, where it actually was with Figma, I think, where we had a bunch of licenses and then suddenly boom, it exploded. And like, like, it's like, cool, I'm glad you're getting usage out of this but like, I kind of have to play bad guy here to make sure like we don't like give everyone in the. Org license and it doesn't get used. So that was just like a great tactical story from your end of understanding how the licenses are provisioned. And it's not just the value to the person doing the design work or whatever else they want to do, it's the person who's, you know, signing the check for it.
- [34:45]
Praveer Melwani
And I want to be in the place where like, you know, we've built the trust, being able to grow, grow up with the company. What I've been able to do is like be engaged in some of these sales conversations when you appreciate the pain and you're like, okay, I get it. I have to like broaden my horizon and thinking and you know, it's not just whatever my spreadsheets is saying. Like I, I do think various perspectives matter and ultimately your customer is your North Star and you gotta, you gotta really make sure that you got something that's defensible in front of them because, you know, you don't want that sentiment to shift and change. Especially if the community aspects of what you've built are so core to, you know, your future success as well.
- [35:16]
CJ
I want to talk about the IPO for a little bit. Take me back to the day you went public. The stock kept going up and up and up. What, what was going through your head?
- [35:25]
Praveer Melwani
You don't really have a lot of time to think during that day. It kind of felt like my wedding day. You know, like you get up, you get dressed, you know, there's, there's someone that's like waiting to take you to the exchange and you're bombarded with photos and people telling you where to go. And so even after you ring the bell, you're like back to back on press interviews. And so then you're like actually have a moment to go and talk to the, you know, the, the market maker to really understand, you know, what's the stock going to open. And you get like a two second response and you're like, your head's spinning but you don't have a lot of stuff that you can really do to action. You've put all the wheels in motion at that point and you know, I think you let the process kind of take care of itself there. There are some things that you can control for, but there's a lot that you can and you just have to make sure that you know, you're ready to deal with whatever the outcome is.
- [36:08]
CJ
I totally empathize with you there. And I can also picture you just being like ushered from like interview to interview. Like you're like this widget on this factory line. From a human perspective. Did you ever look at your phone and you were just like this. I think this is actually going too high again.
- [36:24]
Praveer Melwani
I didn't really have a lot of time to think at that moment in time. And so you know, what we, what we were more focused on was like, how do we get back in front of our employees to have them understand that regardless of what the stock does, like nothing has changed. We are still the same company that we were at. Like the stock market's going to be a short term voting machine, a long term weighing machine. And what I actually think Dylan did really thoughtfully is like at close that day, you know, he had the ability to go and address the full company and he never once addressed the stock price. He kind of, you know, addressed the point that, you know, there's going to be these up and down swings whatever may happen. Like we have to be completely focused on build, building a generational business. And you know, it's easier said than done. Like, like a drunk elephant dancing in front of you. You got, you know, it's, it's hard not to stare. But I do also think that, you know, having that, that principled view of thinking long term was the right one at the time. And you know, it's one that, you know, I continue to try to reinforce with my team. Not too.
- [37:18]
CJ
We've spoken to a lot of the CFOs whose companies have recently went public. Core Weave Chime Navon and I remember talking to Bill Cofed of One Stream and he was saying the biggest change for him day to day is like he'd just be walking around the office and employees are, you know, having, having a coffee, checking their phone, looking at the stock price and he's like, I wish I could just take, take the focus off of that because it's almost like this extra pressure that we put on ourselves. And I know there's a totally like a CFO friendly answer to all of this, but do you think there is any undue pressure to, to try to keep the stock at perhaps like an unrealistic range for employees, especially with, with
- [37:55]
Praveer Melwani
a lockup in the background, your mind goes there. But then, you know, the real reality also strikes in. And I think the reality of, of what we had set up and you know, many of these IPOs that, in the way that they're constructed, it's, it's, it's a fairly small amount of the float that's trading and most folks don't haven't yet fully, you know, digested and understand your story. You can play all these games with yourself on like, what do you think you're able to do and what, what you, what you, you know, you hope you will be able to do or you could, you know, not try to fight it and you just again, focus on the long term versus, you know, trying to play these games of trying to maximize in the moment. You know, obviously there, there are things that run through your head. You're like, how do I, how do I potentially take advantage of the moment from various sort of capital structure mechanisms and thought, but other than that, like, I didn't, you know, go through a whole bunch of hoops in my head suggesting otherwise.
- [38:41]
CJ
It's almost like you don't even have time to go through those things because you, to get back to actually working on the company.
- [38:47]
Praveer Melwani
I, yeah, I mean that, that has been always been my focus. It's like, you know, I recognize that being a public company is adding a whole bunch of new priorities and new stakeholders that I need to be really thoughtful of and I think they're very important. It does end up being a different draw in my time than, you know, what I was working on even, you know, a couple years ago. And so I want to make sure I'm doing my best and putting my best foot forward, but I also want to make sure that I'm able to back to the core building pieces. That's the parts I enjoy and love and I think are very, very important, especially given, you know, the environment that we're living through at the company today.
- [39:17]
CJ
I've heard you say before that you kind of have, and I don't know if it's a formal thing or informal thing, but kind of like a kitchen cabinet of people that you go to for help with decisions that you're making or things you're going through. I'm guessing you've been to them quite a few times, including the IPO process. As a first time CFO who's also taken a company public, have you been, have you been relying on that board of like personal advisors more to help you.
- [39:40]
Praveer Melwani
It's the only thing that's kind of kept me here. You know, you mentioned before like, you know, the only, only way that I think I've been able to scale or I hope I'm scaling with the company is by virtue of having the opportunity to go in and reach out to people who've kind of done this before multiple times over. It's such a privilege. Honestly like so many of the things that we go through, they're, they're not like first of its kind and you know, there's so many different allegories and similar sets of experiences that people have gone through and being able to draw upon them and having the benefit of, of the platform that Figma has given me to learn from them is like something that I just feel so blessed for. I don't take that for granted and I recognize that, you know, I'm privileged in my position to be able to go and ask those questions. I know, I know that not everyone is going to be able to get that same, same level of access, but I then keep it in my head is like how do I then return the favor? Many of the things that I've been, I've been through in my experience I can now go and help others with early stages of building a team, you know, fundraising to, you know, going through a sale process of the company and understanding all the fun parts of regulatory or even now going through the public process. I very much recognize that I've got a story to tell and help others with as well and I very much also value the perspectives and help that I've got along the way and want to return that favor.
- [40:48]
CJ
This might be a very meta question and we can strike it if there's no answer there. But I do feel like at least in my career I to get better at how to ask a question to people ahead of me to get like the answer back. Do you think you've gotten better at asking for questions from your advisors so you have actionable stuff to go back and work on?
- [41:08]
Praveer Melwani
Yeah, I mean I love to take like an actual problem versus like a theory of a problem and I think like if you're able to actually show them and help build context really quickly by showing that you've thought about the problem really well, I think you're going to get a much better answer and a much better like back and forth. What I don't like to do is to take like open ended questions like what would you do in this situation? But it's like more so let me take you through my frame of thinking and help push back on like you know, what are the things that you would do differently or set a context that you'd want to have in order to make the best decision here. So I think like if you brought people these nebulous ways of solving a problem or open ended questions, you're not going to get the right answer. And so I think like being crystal clear and how you build that context is important.
- [41:46]
CJ
I'm going to take you into what we call our long ass lightning round. If you could tell your younger self something, knowing what you know today, what would you tell them?
- [41:53]
Praveer Melwani
Don't think so much. Like just trust your instinct and you can figure it out. Most people don't know what they're doing anyways.
- [41:59]
CJ
It is true though like the higher up you get you notice that people are just kind of like making it up as they go.
- [42:04]
Praveer Melwani
I mean it's my day to day. I do think that you have to trust your instincts, you have to trust your first principles, thinking. But there isn't a right answer most of the time. You gotta make the most with the information that you've gathered and some things are gonna be the first time that, that you have to deal with it and it's okay again to the point on like one way versus two way doors. Like don't screw up the one way doors but like give yourself the freedom to, to make mistakes along the way. Cause I think speed through hyperscale is like the, the most important thing that you can, you can probably optimize for
- [42:30]
CJ
next one I got for you. What's the basketball mural you got behind you?
- [42:34]
Praveer Melwani
I'm from Toronto. So this is you know the 2019 run with Kawhi hitting the shot in the corner. Our house was like white walls everywhere and it kind of looked like I, I was sitting in asylum and so I needed something to spot.
- [42:45]
CJ
I got a question that is not nearly as interesting as the last one. Can you walk me through your finance software stack? What tools does your team use to get the job done today?
- [42:53]
Praveer Melwani
And we constantly experiment with new things. So I mean we, we, you know RERP's Netsuite, we use like stripe for a whole bunch of different billing zip for procurement, we use pigment for financial planning. You know the thing that I'm actually really excited about is like spreadsheets are still my love language and we spend so much time in them and I spent a ton of time you know still in hex querying a whole bunch of stuff, but I think we can build some really unique, you know, even forecasting capabilities and methodologies by leveraging tools like, you know, chatgpt or cloud code. And even over the last few weeks, like, I've been messing around with our, with our finance team on like, what is a better way for us to forecast throughput for a particular model that we need to, we need to go in, build a capacity model for. I mean, you could do it in Excel or you could just, you know, build a regression in Python and allow yourselves the flexibility to, like, minimize your error rates and actually save the company a lot of money if you know how to leverage these tools really well. So I'm finding our team experiment a ton more and I think a lot of it also has to, you know, come for me to be able to show people that, you know, that's the way I want to operate too. So I think it's a fun time to be operating in, you know, in a finance or ops role because, you know, these tools are very much democratized. Who can have a good idea?
- [44:00]
CJ
You strike me as a guy who likes to build a lot of shit.
- [44:03]
Praveer Melwani
Yeah. I mean, my team knows if they don't send me the spreadsheet or backup with something, it's like the first question I'll ask.
- [44:09]
CJ
Have you had like a WTF moment yet with like, Claude as like an Excel plugin or any, like, just take me into some analysis you did late lately and you're like, holy shit, I can't believe I can do that.
- [44:19]
Praveer Melwani
We have these agreements with all different sets of frontier models because, you know, we service them in our products in, you know, a whole bunch of different ways. And in order to unlock better pricing or, you know, to provision throughput or lower latency, you need to be able to step up and commit in order to do that. And so having the ability to forecast what is like a need, that's obviously going to vary as users are going to come in and use your tool at different times of day. You're basically buying a parking lot and have a whole bunch of unused spaces and you want to make sure that you're minimizing the amount of unused spaces. And so it's actually kind of interesting to be able to build a model there that is optimized for what is the cost of it? If I coming ahead, what is the on demand rate? How does that, how does that actually potentially translate to a lower number of errors? So there, there isn't like a perfect answer, but at least like, you can, you can very clearly see and articulate. What are you optimizing for and what are you comfortable sitting on?
- [45:11]
CJ
Last one I got for you. What's the craziest thing you've ever had someone try to expense?
- [45:15]
Praveer Melwani
I mean, we've got our fair share of, like, fun dinners and, you know, hockey games. And the funniest one probably is, like, I had a pretty tight grip on expenses, and I felt so bad. We. We had just rolled out credit cards to a whole bunch of folks in company. One of our, you know, early design leaders, he had expensive haircut, a really expensive haircut on his corporate card because he realized that he just didn't have another one. And he, like, came to me tongue in cheek with a, you know, it was like $150 check. I was like, what barber did you go to? But that was. That was, you know, definitely put a smile on my face.
- [45:48]
CJ
What did Deion Sanders say? Look good, feel good, play good.
- [45:51]
Praveer Melwani
Right?
- [45:52]
CJ
Privier, thank you so much for making time for me. Like I said, this is a bucket list interview, and I'm a huge fan of everything you built.
- [45:58]
Praveer Melwani
Yeah, thanks for having me. It's a lot of fun.
- [45:59]
CJ
Around the Numbers is a mostly media production. Yelling an intro by Fat Joe. Artwork by Meg delesandro. Show is executive produced by Ben Hillman. Nothing said on this podcast is intended to be business or investment advice. It's the sole opinion of me. A guy who feeds his dog way too much ice cream and has a history of net operating losses, lol. If you like this podcast, hit subscribe and give us five stars. It will take, like, two seconds and our algorithm overlords love it. Drink water, call your mom, and have a great day. Peace.