What It Takes to Go Public Today | Inside the IPO Process with RBC’s Federico Acabbi

Summary

Run the Numbers: What It Takes to Go Public Today | Inside the IPO Process with RBC’s Federico Acabbi

Host: CJ Gustafson
Guest: Federico Acabbi, Investment Banker at RBC
Date: March 23, 2026

---

Episode Overview

In this episode, CJ Gustafson welcomes Federico Acabbi, an investment banker at RBC specializing in cybersecurity and infrastructure software. Together, they unpack the current climate for tech companies considering going public, delving into the evolving IPO landscape, investor priorities in a world dominated by AI and cybersecurity, changing market cap expectations, and the nitty-gritty of preparing, structuring, and executing a modern IPO.

---

Key Discussion Points & Insights

1. State of the Software Market & Investment Landscape

Timestamps: 02:42 – 06:45

• Risk-Off Environment:
  • The market is “in the red”—investors are becoming more discerning, evaluating companies based on their AI moats, exposure to AI risks/opportunities, and ability to manage change.
  • Companies need to demonstrate execution on the shift to AI; “change management is actually pretty difficult to do.”
• System of Record Moats:
  • Legacy enterprise software (system of records) still holds negotiation leverage due to its embedded nature—“not a chance they’re going to rip and replace those.”
• Shifting Purchasing Power:
  • The era of 10% price increases at renewal is gone; now, “the negotiating power is actually shifting to the customer.”
  • Growth will look different: organizations are content to utilize a fraction of features and supplement with proprietary solutions.

“The more I’m spending time on this, you have to go through this matrix. I think of AI risk, AI opportunity and tailwinds, and just plot software companies there.”
— Federico, 03:19

---

2. AI and Cybersecurity as Investment Priorities

Timestamps: 06:46 – 09:22

• Cyber Budgets Climb:
  • Despite budget constraints elsewhere, “cyber keeps coming up as the CFO's number two investment priority behind AI.”
  • Regulatory, compliance, and security risks (especially in FinServ, healthcare) fuel cyber spend.
• AI Boosts Both Sides:
  • Attackers leverage AI for industrial-scale phishing and malware (e.g., “Xantorox AI”); defenders race to secure internal AI use and defend the perimeter.
• DevOps Disruption:
  • AI and “vibe coding” are rapidly subsuming traditional DevOps/security tasks, automating work previously done by specialized tools.

“The number and the severity of attacks is only growing...the attacker is continuing to innovate, and we have to catch up.”
— Federico, 07:56

---

3. IPO Landscape: Scale, Timing, and Market Selectivity

Timestamps: 14:22 – 21:16

• The New Scale Expectations:
  • Median revenue at IPO is now ~$800M (2025), up from $400–500M in 2020; market caps for IPOs have similarly shifted up.
  • The days of 100–200M revenue IPOs “as standard” are over.
• Why Bigger is Better (and Safer):
  • Larger companies have more predictable/less volatile financials for quarterly, public expectations—“If you're smaller, you miss a deal at the end of the quarter and...it doesn't take a lot in this market to disappoint investors.”
• Opportunity for Smaller IPOs:
  • Still room for sub–$5B IPOs, but the selection is “very selective”—you must show enduring business fundamentals, great management, and durable economics.
• Mega IPOs:
  • 2026 features “jumbo” IPOs (SpaceX, OpenAI, Anthropic), further skewing all averages and sucking up available investor attention.

“Private companies have been staying private for longer. They mature, have a different scale, a different level of maturity and systems in place when they go public.”
— Federico, 15:20

“There are investors out there that can invest against these names, but...companies are waiting to be larger to be in a better position to predict their business.”
— Federico, 17:10

---

4. Secondaries vs. Public Listing: Liquidity Trends

Timestamps: 19:33 – 22:42

• Founders Selling at IPO:
  • Common for founders to sell 2–3% at IPO (for personal liquidity), not seen as a negative by investors.
• Staying Private is Easier:
  • Secondaries and new private capital structures offer founders, employees, and early investors liquidity, removing much of the capital-raising pressure to IPO.
  • “$230 billion in secondary dollars of liquidity” vs. “$40 billion public markets liquidity” in 2025.

---

5. The IPO Process – Behind the Curtain

Timestamps: 29:57 – 36:41

• Role of Investment Banks:
  • Services begin well before formal engagement; help with S-1 drafting, structuring, valuation narrative, investor relationships, running the roadshow, and ongoing aftermarket support.
  • Lead (“lead left”) banks do most heavy lifting; multiple ‘active bookrunners’ share responsibilities.
  • Diligence: Extremely thorough—legal, financial, customer, product, and export compliance. Involves management, issuer and underwriter counsel.
• Roadshow Evolution:
  • Pre-pandemic: ~9 days, multiple cities, bankers foot the private jet bill (“more of a necessity than a discretionary choice”).
  • Pandemic: All-remote, six days, more efficient but exhausting.
  • Now: Hybrid—core cities and Zoom.
  • “Cornerstone investors” (e.g., Berkshire with Snowflake) often pre-commit pre-list, de-risking the IPO.

“We used to say as bankers, you as a CFO or CEO, you date with the bankers, but then you get married with the research analyst.”
— Federico, 32:24

“There’s a lot of work that you put into an IPO process, it starts well actually way before you appoint your underwriters.”
— Federico, 30:09

---

6. Direct Listings vs. IPOs

Timestamps: 40:41 – 43:57

• Direct Listings:
  • Banks act as advisors, not underwriters; no aftermarket support, less scrutiny in diligence.
  • Best for companies seeking liquidity for existing shareholders (e.g., Spotify, Asana, Palantir).
  • Changes in regulation allow for primary capital raises via direct listing, but this is untested at scale.

---

7. How Banks Make Money on IPOs and M&A

Timestamps: 44:07 – 47:25

• IPOs:
  • Gross spread is 4–5% of capital raised (Figma’s $1.2B raise = $54M to banks), split among lead and active banks.
  • Jumbo IPOs may drive fees closer to 1%.
• M&A:
  • Fewer banks, smaller percentage (often ~1%), but the ‘cake’ is split among fewer teams; “very lucrative.”

---

8. Personal Stories & Memorable Moments

Timestamps: 50:46 – 56:06

• Junior Banker Hustle:
  • Federico recounts speeding on his Vespa at midnight to deliver a last-minute analysis for a Nokia deal, only to find it wasn’t critical—leading to the realization:

    “We’re not saving human lives... Is the stuff I’m doing really important and for whom?” (52:33)

• Creative Expense Fraud:
  • An associate created a fake taxi account to pocket cab fare allowances, reminding all that finance processes should remain vigilant.

---

Notable Quotes & Moments

• On the changing IPO bar:

  “We’ve gone from an era where you could IPO around $100M in revenue... now you’re seeing closer to $800M.”
  — CJ, 18:09

• On modern cyber risk:

  “AI is helping industrialize a lot of these attacks.”
  — Federico, 08:22

• On the future for bankers:

  “We see the IPO as just the starting point of this relationship where we have many avenues to sell our services.”
  — Federico, 49:29

• On roadshow war stories:

  “It was midnight... I was chased by the police. The police pulled me over and I freaked out...”
  — Federico, 51:00

---

Timestamps for Key Segments

• Current state of software & AI / cyber priorities: 03:16–09:22
• Shift in IPO scale expectations: 14:22–19:04
• Liquidity & secondaries: 19:33–22:42
• Bank services and the full IPO process: 29:57–36:41
• Direct listings: 40:41–43:57
• Bank fee structures on IPO/M&A: 44:07–47:25
• War stories & human moments: 50:46–56:06

---

Conclusion

This episode serves as a hands-on playbook for operators, founders, and finance leaders contemplating the IPO journey in 2026. CJ and Federico demystify the new metrics for going public, the ongoing impact of AI and cyber, and the roles of investment banks, while also providing colorful personal stories from the trenches.

---

Memorable Closing Advice:

“You’re not saving human lives. It’s actually not rocket science what we do... Take a step back... is the stuff that I’m doing really important and for whom?”
— Federico, 53:20

Transcript

[A]

Do you have any good stories from your junior banking days?

[B]

Oh my gosh, I have so many stories. I've seen the good, the bad and the ugly. We were covering Nokia, right? So at that time, Nokia was actually a smartphone manufacturer. A question came up from the cfo like something was missing back in the days, couldn't work remotely. I had this like red Vespa that I used to actually commute to the office. I thought everything depended on me. I was going much faster than the speed limit. I think it was 60 miles per hour. I was chased by the police. The police pulled me over and I freaked out because I was like, oh, this is done. They're going to fire me. I was yelling, let me go, I need to go to the office. They're going to fire me. Call for reinforcement, put me on the curb. So they let me go. Obviously they sent me a very expensive ticket a few weeks later and then the deal launched. Anyway, my VP basically called me and was like, yeah, you didn't do that. But it wasn't that important. That event actually had me, you know, take a step back afterwards and really think about is the stuff that I'm doing really important and for whom, right?

[A]

Is this thing on?

[B]

Yesterday's price is not today's price.

[A]

Welcome back to Run the Numbers, the show where we talk with the world's top CFOs and finance leaders. I'm CJ, a tech CFO, and my goal is to unpack the frameworks and operating principles that make you better at your job. On today's show, I'm speaking with my friend Federico Okabe. Federico is an investment banker at RBC where he covers cybersecurity and infrastructure software. These are two areas that sit right at the center of the current technology investment cycle. On this episode, we go deep on why horizontal software has been under pressure, why cybersecurity spending continues to hold up, and how AI is reshaping both the threat landscape and the tools used to defend against it. We also touch on what it actually takes to go public today. The revenue scale, market cap, and investor expectations companies need to meet before considering an IPO invest, why the public markets may be more and more selective going forward. And finally, we talk about the IPO process and how it really works, what investment banks do behind the scenes, from diligence and roadshows to underwriting and pricing, and how banks make money on these deals. 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 talent. I've got you covered. I run a recruiting service that pairs you with thoughtful qualified candidates from our warm community of finance leaders, the type of people who think about CAC payback period on weekends. If that of interest, shoot me an [e-mail] and we can talk on to today's episode with Federico. Federico, my friend, thank you so much for joining me on the podcast.

[B]

I am excited to be here. C.J. thank you for having me.

[A]

I feel like this has been a long time coming because we met originally when I was at a private cybersecurity company and you've made quite your name for yourself covering cyber and infrastructure software now at rbc. So we're recording this in the last week of February. I think this will come out mid March. So just disclaimer like if, if SaaS companies start trading at 1x forward revenue. We recorded this a couple weeks prior. You never know what's going to happen these days with Claude and the like. But break it down for me. How are you thinking about the investability of the broader software category right now?

[B]

Obviously we are in a risk off environment right now. Everything is in the red and it's crazy, right? So if you are in software and even remotely software is not going to die, we're sure of that. I think the investors have to go through this exercise now. The next wave would be figuring out, really spending time figuring out who the winner and the losers will be. The more I'm spending time on this. I know everything is changing so fast, but you have to go through this matrix. I think of AI risk, AI opportunity and tailwinds and just plot software companies there and this goes across vertical, horizontal, cyber because you're going to have some winners and losers there. You have to figure out what the moats really are. You may find companies are in these, you know, AI tailwind, you know, quadrant and everything is going to be fine because they are so embedded in infrastructure. They have all this data, all these modes. Some others are, you know, way more challenged and there's, there are way more risks than opportunities. But the vast majority would be in this camp where yeah, there are threats, but there are also a lot of opportunities. And the question is, will they be able to execute and go through this change management management exercise, which is actually pretty difficult to do. It's difficult to change how people, you know, behave. There's a Runway that some of these companies clearly have to, to, to, to change. And the bet is like on this name so they're going to actually make it. I'm coming out more positive around some of the system of records that we have in software. Not because they are insulated. They are actually. There's a ton of risk there, but I think they have a longer Runway than most of the other companies. If you're thinking about Fortune 100, Fortune 500 companies that are deploying big enterprise software, system of records, not a chance they're going to rip and replace those. But when they are going to get into a renewal conversation with these guys, it's going to be very different from what they discussed one or two years ago. The procurement universe is changing in 2026. It's not what it was in 24 and 25. And so one of the big sources of expansion, net retention was usually we can actually dump a 10 increase on the renewal price because you're never going to rep and replace us. Never going to happen again. Usually within the IT budget, software is a pretty sizable part of IT for a large, complex hybrid enterprise. We're getting into like maybe 20% of that. That portion has grown much faster than the IT budgets. But it's kind of slowing down to a point where I think when you're going into these renewal discussions, it's more about the negotiating power is actually, it's actually shifting to the customer now that says, Look, I'm probably 10, 20% of your features, obviously. Yeah. Benefiting from all the data and the history that you have collected for me. But I don't need to spend more. I can actually vibe code on top of your platform. Some of the workflows that are actually much more specific to what I do as an enterprise. Right. So why should I pay more? I think that the growth prospects for a lot of these companies is definitely going to be different going forward. That doesn't mean they're going to go away. But they have this Runway. They have to figure things out. Meaning that I think they will have teams. They probably have teams right now. They are rearchitecting their system of records. So they're going to be AI native. This is not spring clean AI on top of what they have. It's just like re architecting everything they have to do it question is like, are they going to go full Jack Dorsey on it and just like 5, 50% off the employees because they want to change the culture. Can they do that with less than that? Because there's also this bloated argument out there.

[A]

Cyber keeps coming up as the CFO's number two investment priority behind AI. I think a lot of people are forgetting that. Oh, well, what's number two on the list after AI? It's cyber, actually. Are you seeing cyber budgets going up or down?

[B]

They're actually going up. Not all the spend in cyber is equal and we can discuss that, but they're going up for a couple of reasons. One is obviously companies want to deploy AI agents. They want to have people playing with LLM. How to actually safely do that is a big question because there are some other companies that can go all in. They just want to rush to this technology. But I can tell you, if you are in a highly regulated industry, whether it's finserve, insurance, healthcare, you are thinking three, four, five times before you're actually going all in. AI. And a lot of that is around compliance, security, figuring out which type of data the LLMs will ingest. One vector will be. We have to secure. We have to basically secure AI, how we're using it internally. And then the other vector, which is obviously, it's a pretty wild world out there. The number and the severity of attacks is only growing. Even if over the years we have created these layers of security. And we can say that now that we have a better posture than a few years ago. Despite that, the attackers are actually continuing to innovate. Right. So this is the only domain in it that is very, you know, pretty much adversarial. Right. So the attacker is continuing to innovate and we have to catch up. And just to give you like a sense of how bad things are out there now with AI, AI is actually turbocharging a lot of these from the attacker side. So I think it was in the news at the end of last year. You can basically go on dark web forums and find these kits. There's one that is called Xantorox AI, which is, think about those as ChatGPT without any type of guardrail. We are basically able to create with those malware or phishing or social engineering type of attacks and you are industrializing those. So basically AI is helping industrialize a lot of these attacks, right? Because of the severity of, of these attacks and what is happening in the environment. You a CEO, CEO, cfo, this is for them. It's mission critical. Like their job is on the line if there's a breach. They are not going to compromise on cyberspend in an environment when the risk profile of the company is actually getting more challenged.

[A]

DevOps specifically, Federico, it seems like it's getting disrupted by Vibe coding and AI assisted development. And then Claude Comes out where they said now you can scan your code within our own tools. How are you thinking about that subsector?

[B]

That area is changing so rapidly. C.J. i think a lot of the companies that we know about won't probably exist a few years from now. A lot of those capabilities are getting embedded in these AI code systems. Think about security testing or all the security features around, you know, application testing, software composition analysis, open source code scanning, all those things. I think they will be part of these offerings. They will, they will basically be embedded there. The role of the developer is changing dramatically and even the fact that we talk about these DevOps tool chains that the developer is using, they're probably changing to a point that they will go away because a lot of those tools, the agents are going to do the work. Right. But it's kind of the low hanging fruit for AI automation. Right? So if I wear one of these companies over there in that ecosystem, I would be thinking really about either embrace these or move to the runtime or do stuff in runtime where maybe I can actually have a longer Runway and be less subject to disruption. But yeah, that's an area that it's completely going to be different like in a few years.

[A]

Hey, thanks for listening. We'll be right back after a word from our sponsors. 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 Rylit, the AI native erp going head to head with netsuite. Yes, someone is finally doing it. I met Ryllit 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 wasn't built in the 90s, you need to check out Rillet. Book a [e-mail] cj cool, that's me, that's r I l l e t.com cj r I l l e t dot com cj tell him I sent you there. Ali and the team at Tabs are building something that directly addresses one of the biggest headaches I see finance teams deal with today pulling data from your erp, your CRM, your FPA tools and your usage systems and actually making it all work together. If you're running usage based pricing or complex contracts, you already know how this usually plays out. Contracts live in one system, usage data lives somewhere else. Billing happens in another tool. Revreck gets layered on top at month end and finance ends up just reconciling everything by hand to close the books. This is exactly the problem Tabs was built to solve. TABS is an AI native revenue platform built for controllers and CFOs. It brings together data from your ERP, CRM and real product usage into a single system of record. From there it automates billing, collections and revenue recognition without finance having to duct tape workflows together every month. If usage based revenue is core to your business, this is the future of how billing and Revrec get done. Go check them [e-mail] run. That's tabs.com run. We've all been burned. We've all bought that enterprise planning tool that promised the world, only to realize six months later that we've basically taken on a second full time job just to keep the software running. I want to talk about a company that was built specifically to kill that cycle, abacum. I actually remember my very first conversation with their founder and CEO Julio Martinez over three years ago. Back then they were just starting out in Spain. Fast forward to today. Julio moved the home base to NYC and they're the engine behind finance teams at Strava Replit and JG Wentworth. ABCOM doesn't turn you into a software admin. The integrations are actually self service. You don't need a $300 an hour consultant to plug in your ERP or HRIs. And they're doing AI in a way that actually impacts the things FP and A teams are doing every day. Things like creating variance summaries, building formulas and modeling scenarios. If you're scaling fast and you're trying to avoid that legacy platform trap, ABACOM is the move. They're building the future of our tech stack and they're doing it with a CFO's perspective. Go to Abacum AI to see it for yourself. That is Abacum AI. Now we got context kind of on the areas that you focus on day to day. What me and you trade emails on all the time is the IPO landscape. And it's funny because when we were planning a month ago for this podcast, Federico, I thought we were gonna be rip roaring through how Many companies are gonna IPO this year, but it's changed in just a couple of weeks here. But it still does beg the question, when is the right time for a company to go public in terms of scale and what metrics do you need to have in place?

[B]

So scale is getting larger and larger and I'll give you like a few numbers, but I think in 25 we had 22 IPOs. The media revenue was scaled, was 800 millions. Didn't really change much from 2024. And if you go back to 2020, it used to be between 400 and 500. And you know, I did it myself, but I did IPOs back in 2013, 20. So think about companies like 5, 9, CyberArk, Imprivada, all those companies, it was normal for them to be in that 100 million to 200 million range. That was the standard in those times. And obviously with that scale, the market cap is changing as well and getting larger. The median market cap for tech IPOs in 2025 was around 5 billion. It used to be larger a few years ago during the pandemic, obviously because of the frothiness and the valuation environment. I think that median was around 7 billion. But there's a wide dispersion in, of the market cap range. Right. So you can still have, you know, sub $5 billion IPO in, in 2020, I think when we're talking about this 7 billion average, if you're taking the, the bottom quartile of those IPOs in terms of scale, 1 billion was the median there 10 years ago. The bottom quartile of IPOs, we're talking about 500 million. Right. So clearly scale is getting larger. My sense is that this trend is not going to stop. Private companies have been staying private for longer. They mature, they have a different scale, they have a different level of maturity and systems in place when they go public, I think. But there's going to be still room for the, what we call this mid cap, which, you know, some investors are actually starved for those because there have been so many tech privates over the years. Right. So we have fewer companies in those areas now. The nature of investors investing in mid cap is going to be slightly different, but there's going to be Appetite there. Since 2022, we still had 18 IPOs sub 5 billion. Right. And they did fine. Some of them obviously traded less fine than others due to some company specific situations, but they didn't trade bad because of the scale per se. So there's still a market for those. It's Just very selective, right? I mean if you are small you still have to demonstrate this longevity of the business, the unit economics, the management team. So it's not only just growth, right, or profitability. Like there are a lot of intangibles that matter a lot when you're going public.

[A]

This might be a weird way of wording it, but is it dangerous to be out there in the stormy ocean? If you're, I'll call it sub 10 billion dollar market cap company. It just feels like there are a lot of these 3 billion to call it 6 or 7 billion dollar tech companies that we thought were going to get out of the gates and hopefully once they were fully traded go up to like 15 billion. But instead they went the other direction.

[B]

Again, the market will be selective and I think it's going to be supply issue than a demand issue. There are investors out there that can invest against these names, but companies, one of the reasons why they're waiting to be larger is they want to be in a better position to predict their business and get into that B and race cadence on a quarterly basis. If you're smaller, you're just subject to this. You miss a deal at the end of the quarter and the quarter basically just like. Yeah, narrow range, Right. It doesn't take a lot in this market to disappoint investors. Right. So you really want to be in that situation. Scale will give you that ability to navigate through these bumps in a much better way. So I think it's more of a supply issue than a demand issue. But there's room for these companies like the high quality companies, even if they're small, they can grow from that scale. I mean think about some of the names that became, you know, double digit billion companies. They were very small. They actually had a sub billion dollar market cap back in 2015. Right. So it's possible.

[A]

So just to play it back, we've gone from an era where you could IPO around 100 million in revenue to then 500 million was kind of the sweet spot. Now you're seeing closer to 800 million.

[B]

That's what we see. And by the way, this year, right, Things are going to go to the extreme. You have the SpaceX and the open AIs of the world. And who knows about anthropic, right. We're talking about mega global IPOs. Jumbo IPOs. I don't even know how to categorize those 50 billion plus. We have never seen anything like that. It's double the size of the largest, right. So those will skew the metrics towards obviously the larger side. And obviously if you're thinking about First Mall and you're thinking about going public, assuming that everything like you check all the boxes from an investor perspective, obviously you don't want to go against these large IPOs that will suck the air out of the room. So timing will also be a factor. But yeah, this year the fewer, larger will continue to be a theme and I don't think it's going to change even in the next year.

[A]

So we're seeing companies like Figma that are now down 80% from their peak after their day one pop. There are a number of other companies that went out and are trading down. Navon is down, Chime is down quite a few of them. Wealth front is down. As a person on the inside, you kind of see what goes down. How common is it for founders to trade some of their shares and sell them off at IPO versus having to wait for the 180 day lockup like the rest of the employees?

[B]

It is actually very common and there's nothing against that. Now they're not going to sell a ton of their stake. We're talking about probably, you know, 2, 3% or a little more than that in terms of their, their voting share. But I think we have seen that in many situations recently. We've seen it for figma, we've seen that for others. Even when we do private capital is it's normal to have a secondary component for some of the funders. I mean we're talking about people that have been doing this for like 10 years, 15 years and they want to put food on the table. I think it's normal and investors have seen that and it hasn't changed from the past. There are no different trends that we see. Usually they monetize a little bit of their stake. There's nothing against that.

[A]

And I think the median time to IPO last year was 14 years from founding to IPO.

[B]

Yeah. And it used to be like 10 less than that and now it's getting to 14. Yeah, look, you have the secondaries out there, right? So you can actually stay private for longer. You can find new investors that come in and clean the cap table a little bit and obviously you give your employees some liquidity because they have their own needs. So the world is changing a little bit and the question is, okay, is it worth to go public? There are clearly some benefits in going public for some of the guys that are very capital intensive out there like OpenAI, they need to go public because they need to find new pockets of capital. So it goes without saying, but I think, you know, even for smaller private companies, the IPO is still, you get the brand with that, you know the maturity level with that. You get also currency for M and A. You are obviously not in this environment of the price valuations, but at some point when things will normalize, you can use that as a currency for M and A. So there are a lot of things to bring to the table as a positive of an IPO process.

[A]

I think I was talking to Howard Wilson, CFO of PagerDuty and they IPO'd when they were only just above 100 million in revenue. And I asked what pushed you to do that? And he said, well, for us, we're critical infrastructure to a lot of these companies. They want to be able to see that we're a going concern and that we're transparent about our business. And that was something that I hadn't anticipated. I had looked at it very much as like you go into prom. It's like a marketing event for the enterprise. But to many of these companies, like you mentioned, it is allowing the customers to feel confident in your infrastructure, among other items.

[B]

In the past you went public and it was a way for recruit people and talented. Now I don't think it's the main reason because especially young generation are more attracted by the upside they can get in private companies having that muscle inside the organization of reporting on a quarterly basis, those systems in place. There's a different level of maturity that

[A]

is required on the private markets. And how much liquidity is there? This stat, Federico, it broke my brain this morning because I was doing some research on it. So in 2024, there was $150 billion of secondary transactions. They just came out with the numbers for 2025. It's coming at 230 billion in secondary dollars of liquidity. The public markets, they produced $40 billion in liquidity. So it's more than five times larger in the secondary markets now. It's a brave new world.

[B]

We have been starved for issuance for a while and so that's probably the main reason. But yeah, you also have new companies and an entire infrastructure out there to provide flexibility in terms of capital and secondaries. Right. So that's basically a competition to the IPO market because of the number of companies that are going to stay private for longer. I think it's a, it's, it's absolutely needed. It's a necessity to have that right. Because not all of those companies are going to Go public.

[A]

So be real with us. How many companies in a, in a good market do you think we can digest? 20 companies a year, 30 companies a year.

[B]

Bankers have to be on the positive side, right? But those 20 to 30 IPOs that we've seen in the period of 2012 up to 2018, 19 and then we had that spike which was unreal. We had 105 IPOs in 2021. Crazy with 40 I think in 2020. And then we had nothing. Right. I think we are going back to a normalized level. We had 22 IPOs last year in tech. I think we're probably going to a number that is going to be between 10 and 20, maybe 15 and 20 and that's going to be a more steady state number. Look, the last 10 price technology IPOs they were oversubscribed by a factor of 10x or plus, right? So there's the capital out there for this. We're Talking about global IPOs here, right? SpaceX, others 50 billion plus the pockets of capital will change. I think they have to be more global. You're going to go, go abroad and you try to attract capital from sovereign wealth funds. So it's going to be different but I think there's enough to meet the, the supply for sure. I'm not, they're not going to be constrained.

[A]

So just reflecting on that. If fewer and larger, more mature companies are going public, how do you think that changes the type of investor that you attract compared to a smaller mid cap IPO we're thinking about?

[B]

Obviously the mutual funds spoke about the sovereign wealth funds but pension, large pension plans and you're going to have the large crossover funds. Anybody that can actually write large checks this smaller, like this mid cap IPOs I think I firmly believe there's going to be a market for those. The nature of the investor base is going to change a little bit and more skewed towards I think the hedge funds, some of the growth specialist names out there, the momentum oriented investors and by the way even the large funds, I have sleeves that invest into SmithCap. Right. So they're going to always play, play a role, different composition but I think they're going to be different people for, for, for different flavors of IPOs for sure.

[A]

Hey, thanks for listening. We'll be right back after a word from our sponsors. If you're paying for A level finance talent, they shouldn't be doing B level tasks. CFO time is expensive. Senior finance hires are wicked expensive. And yet in many companies, highly paid operators still spend hours reviewing expenses, chasing receipts and reconciling systems that should already be automated. That's where Brex comes in. Brex is an intelligent finance platform that combines corporate cards with built in expense management and AI agents that automate the repetitive work finance teams usually handle manually. Transactions are categorized automatically, receipts are matched. Policies are enforced in real time. Reconciliation just runs in the background. So instead of adding admin as you grow, you increase output Per finance hire. Brexit is already automating hundreds of thousands of hours of manual finance work every month across 35,000 companies including Anthropic, Coinbase and DoorDash. If you want your finance team focused on performance instead of paperwork, check out brex.commetrics that is brex.commetrics. you just launched your new AI product. The new pricing page looks great. I'm talking crisp but behind it, last minute glued code, messy spreadsheets and running ad hoc queries to figure out what to bill. Customers get invoices they can't understand. Engineers are chasing billing bugs. Finance can't close the books. Well, with Metronome, you hand it all off to the real time billing infrastructure that just works. Reliable, flexible and built to grow with you. They turn raw usage events into accurate invoices, give customers bills they actually understand and keep every team in sync in real time. Whether you're launching usage based pricing, managing enterprise contracts, or rolling out new AI services, Metronome does the heavy lifting so you can focus on your product, not your billing. That's why some of the fastest growing companies in the world like OpenAI and Anthropic run their billing on metronome. Visit metronome.com to learn more. That's metronome.com Here's a growth tax nobody talks about Every new monetization model you ship creates a nightmare for your finance team. Ad usage based pricing. Now you're tracking consumption against commitments. Launch product bundles. That's multiple performance obligations per contract. Offer mid cycle upgrades. Good luck reallocating revenue manually. But that's exactly where RightRev shines. RightRev is the revenue recognition engine built for companies that can't afford to let accounting slow down growth. When your Revreck is automated, your product team can ship new pricing without asking finance for permission. And your sales team can close creative deals without worrying about downstream chaos. To get up on my CFO soapbox for a sec, I love talking about creative pricing models, hybrid pricing credits, tiered usage. But I've seen too many companies where the sales team is celebrating a huge quarter while finance is still trying to figure out how to recognize half of it. In a world where your pricing model might change three times next year, that flexibility is everything. If you want to scale your monetization without breaking your books, visit right rev.com that's right, rev.com where modern monetization meets bulletproof accounting. Federico, if you'll humor me for a second, can you speak to the role of mutual funds and IPOs? Because a lot of the people listening, they come from the private markets dealing with VCs and private equity money. They may not realize how deep these pockets are. For some of these mutual funds, they're

[B]

very deep and they are long term oriented holders that will give stability over the long run to, to stock. So when you're thinking about an issuance, you say for a company, you're thinking about initiatives, you're going public. We can talk about the role of, of the bank and how you actually put together the, what is called like the book, right? There's always a component of the long oriented guys that you want to have, the believers in the stock. There will be, you know, the mutual funds are in there, they have very, very deep pockets. You also have some of the more kind of momentum oriented or the hedge funds guys, they are an important part of the ecosystem because they provide liquidity, right? So the mutual funds get in, they usually maintain these positions for a long number of years. Edge funds, you don't want to create the entire book on an hedge fund, obviously on hedge fund type of investors, but they will be in and out of the stock and provide the liquidity that is also important. So it's a balance.

[A]

I like how you said that the hedge funds play a role in this because some people take a pretty myopic view of it and they say, oh, they're just in it for a quick buck. They want to turn and burn. But you need liquidity if you want your shares to float.

[B]

One of the key roles of a bank is also to provide kind of the stability in the aftermarket. And hedge funds are actually helping with that. Honestly, they're not going to be the majority of your allocation in an ipo, but they're clearly a pretty healthy component.

[A]

Well, it tees me up to the next thing that I was excited to talk to you about. I'm hoping you can walk us through what services a bank actually provides on an ipo because I think a lot of people outside finance, they don't fully understand the scope of the work.

[B]

There's a lot of work that you put into an IPO process, it starts well actually way before you appoint your underwriters. Right. Usually when you appoint the underwriters and you start the process with the banks, it's at least like a six month process. But all the preparation that also comes before that. Right. The things that we were thinking about, getting the system in place, the people doing mock interviews, earnings interviews, figuring out that bid and race cadence, you can do that with some banks as advisors before kicking off the process. You can also hire some dedicated IPO advisors like Means, like ICR and Blue Shore, help with that, with the preparation. Right. And also they help with the banker selection. There's a syndicate of banks, so there's a group of bank that actually is appointed. They have different roles. You usually see in the prospectus, the different roles of the underwriters. At the top you have the active underwriters, the active bookrunners. And then you have, the more you go down, then you have the passive, then you have the co managers. Most of the work is done at the top, the active bookrunners. And if you move to the left, you're going to have usually the first name is the lead left bank. There could be more than one, there could be two co leads. They do a lot of work around the preparation of the S1, for example, the prospectus from a regulatory perspective, the roadshow deck. So how you actually market the story to investors, they craft the investment thesis, the valuation narrative, they help with a lot of that. All the active banks have a role in establishing relationship with investors. That is something that, you know, people think about the roadshow as the moment you actually connect with investors. It starts way before that, Right. There are a lot of touch points with investors over time and obviously the leads will manage all the logistics around the roadshow. There's the book building when you actually get the orders and you create the book, right? Demand and supply, you create the curve and then, then you have to allocate the shares. And it doesn't really stop there, the ipo, because there's a lot in the aftermarket that you have to provide as a bank, as an active bank. Usually the lead is more involved in this. But after market support, when the stock goes down a certain level, you want to buy in the market to keep it, you know, close to where the issue is. If actually there's the nice pop that we've seen in many IPOs in the past, all banks have the options to exercise the green shoe, which is basically you purchase more shares from the, from the company and create more supply in the market. So you, you buy at the IPO price, but then you sell in the market to provide more supply because there's a lot of demand. You want to, you know, you don't want the price to jump too much. Right. So these are all mitigating mechanism that we have. And there's also research coverage, which is very important. So there's a part of the bank which is, you know, the research analyst gets involved in the process early on, understands the story, understands how the model is put together, what the KPIs are. They have to go out and issue a report. The initiating coverage report usually comes out, I think 25 days after the IPO. And then every quarter, you know, they're out with their reports. We used to say as, as, as bankers, you as a CFO or a CEO, you date with the bankers, but then you get married with the research analyst. Because the research, the research analyst is going to stay with you for the entirety of your public, you know, life, the life of a public company.

[A]

Right.

[B]

Underwriters are, you know, liable. Everything that is in the prospectus has to be complete. Right. And so a lot of that is, comes out of the sessions that underwriters start to have, you know, before, you know, when you kick off the process, up until the confidential filing of the S1 to the SEC, but then even after, because the diligence has to be a continuous process and you continuously want to understand if things are changed and if there are things that have to be disclosed in the S1. Right. For completeness.

[A]

I think people from the outside don't realize the diligence process that banks go through. There's legal work streams, IP cyber customer checks, export controls. It's pretty intensive. I was joking with you. I didn't know that you were doing customer checks in the background.

[B]

Oh, it's, it's very extensive, right. Anything that is missing, you know, you're liable, you can be sued by shareholders if anything is not in there. And the way a bank can defend themselves is, you know, the due divisions they have done during the process. So all these are sessions where you have, you know, are deeply involved with the management. Right? These are multiple hour session. You have issuer counsel is involved, you have the underwriter council that is involved. So you have legal guys obviously on both sides of the equation. And obviously you have bankers, you start to have a business and financial diligence, just understanding the business, the product, you know, the financial diligence. But then you do a lot of around, as you say, legal export controls. Where are you selling your products? Is there anybody in Iran I don't know or a sanctioned country that is downloading your software? Right. What about your cybersecurity posture? Have you been subject to breaches or anything like that? If you find, if there are findings in the diligence, they have to be in the S1, right? There's actually the section of the risk section is one of the first risks after the. One of the first sections after the box. Right. So you're going to put the findings over there. And it actually happened to me. We went through these diligent sessions in the past and, and we had a situation where we had to disclose findings in the sram. When you do a lot of customer vision calls for enterprise B2B software, you want to talk to the customers. If you're doing a tech ipo, let's say it's consumer electronics, you're not going to go to the end customer, but you're actually interviewing distributors, manufacturers, partners. Like you want to get a better sense of the product ecosystem, how it's put together. And those are diligent sessions where you also have the research that is involved because it's very important for them when they actually create their own reports and they have their own story, understand how the product is used, you know, the advantages, you know, the pros and cons. They're not involved in a lot of the diligence that I talked to you about around legal and ip, but they definitely are. They have a central role on their customer divisions and vendor divisions.

[A]

Talk to us about the roadshow because you start with what you call a non deal roadshow deck before the actual IPO roadshow. What's the difference between the two?

[B]

So I mentioned you start to have relationships as a company with investors way before the ipo, right. So usually the CEO and the CFO starts to have these non build road shows. So when the investors know that this is coming, you basically want to give them, you know, updates around the company. Obviously you want them to understand the narrative.

[A]

Right?

[B]

You may have a bank that an advisor. It's not, you know, still appointing on the IPO process as an underwriter, but helps taking management to New York and have a set of meetings with investors. Or you may actually have the opportunity to attend conferences that these banks put together where you actually have a number of one on one meetings with investors. By the time you actually get into the IPO process, a lot of investors know about you. The NDRs are, there's a lot of flexibility if you are outside of the IPO process on what you can disclose to investors. Usually it's high level stuff. I mean, obviously you want them to understand the mission, the product, the roadmap, and you give them some high level overview of the financials. Maybe where you are of an ARR perspective, it may be stuff that you actually have on your press release, maybe public, but you don't, don't go into projections or anything like that. When you actually start the IPO process, and obviously that's a highly regulated process, there's a period of time between the confidential filing of the S1 and the public fleet. You're going back and forth with the SEC on changing the prospectus, right? You do a, you know, two or three amendments. You have a few months before you actually decide to do the public fleet. So everybody can see the prospectus in this window. You can actually meet with investors in what we call testing the waters meeting. These are a little more structured than the ndrs, in a sense that you may use an extract of the actual roadshow deck. So it's a more similar document than what you want to have on the roadshow. But you cannot disclose anything more than what is in the S1. That is very important. Right. So no projections. And you can definitely do some of the historicals. You record the company doing the presentation of CEO, cfo, maybe others. You put them on camera and then you actually upload the video of the presentation on a platform. It could be a net roadshow or another one. Even before you meet investors. Investors will have a number of touch points. They will also have the opportunity to see the video on that roadshow. Right? So most of the roadshow is actually going to be around Q and A, not repeating the story, but getting deeper into the questions. Right. And by the way, what is happening in recent times in the last few years because of the relationships you have built with investors over time, you may be in a position to put one of those on the COVID of the S1 as a cornerstore or encore investor. They have developed such a confidence around the story that they may want to commit to buy some shares. So part of the offering will be already spoken for by this investor at the IPO price. And you can put it on the S1, which is a powerful message because it risks the IPO and it gives a lot of excitement to other investors. Okay, investor Y and X or X is already on the, on the S1. It means like this is like a good offering, right? So it creates momentum before the road show.

[A]

Remember, I Think Snowflake had Berkshire Hathaway and somebody else on the COVID Yeah.

[B]

You have a mix of crossovers, public investors, large investors. Yeah. Again, having a cornerstone investor really helps in some of these situations. Creates this momentum.

[A]

How has the roadshow format changed? Because it used to be private jets, city to city. What's it like now and what are the stops along the circuit?

[B]

The road shows. Back in the pre pandemic era where usually nine days there was a private jet and by the way, the private jet, the cost of the private jet was actually. The bankers were paying for those. I mean it was basically coming out of the underwriters fees. But it was more of a necessity than a discretionary choice by management. Because we were like a ping pong ball. We were going back and forth between the east coast and the west coast. In these two weeks we're going back and forth at least twice between San Francisco and New York and having stops in the Midwest. Right. Everything was done in person during the pandemic. The model shifted completely to it's all remote, it's all on zoom and it's in six days and you can do everything. It was exhausting. But on the other hand, right, because you were not moving, but it was like back to back group meetings, one on one meetings on zoom. And now we are in a hybrid situation where we have taken some of the benefits from both modalities, I want to say. So you always start in New York, the roadshow, like you want to go there. Usually the issuer goes to the active bookrunners offices to do a teaching to the salesforce because the salesforce will also talk to investors all the time. They need to understand the story well. And then you meet investors, you go to Boston, you go to Baltimore, there are some big investors like Tiro over there. You go back to San Francisco, you are going to probably skip now some of the stops in the middle. Like I don't think people will go to Chicago or Kansas City anymore. You can achieve a lot by just being on Zoom. Right. And so in this situation you can still use a private jet if you want, but it's not a necessity. It used to be a necessity, now it's not anymore.

[A]

How does all this change, Federico? If it's a direct listing, they did

[B]

a couple during the 20, 20, 2021 era. There's this belief that basically direct listing has completely disintermediating the banks. Right. It's all done by the company. It's not true. I mean banks still have a role in a direct listing, but it's different. You're not an underwriter, you're not doing a ton of diligence, you're not doing investor meetings. You may facilitate some of the meetings, but they are done by the company that is trying to basically market themselves. What they do, they help you with the regulatory documents. The regulatory documents don't change. You still have to go through an S1. Maybe you're going through a roadshow deck anyway, so they can help with all that kind of stuff. They don't do aftermarket support. Right. So if you're doing a, a direct listing on the day of trading, it's really demand and supply. Right. Wherever they meet, you start to trade at that point. But there's no aftermarket support. So you can actually go through pretty large swings. Companies were doing direct listings because they wanted to avoid some of the fees to the underwriters. Yeah. You're still paying your advisors less than what you pay like a full syndicate because you didn't need all those banks, but you're still paying your advisors for what they do. And you also wanted to avoid that pop. Right, that underpricing on day one. I think the direct listing made sense for secondary shares. They were all basically existing shareholders selling existing shares. Not primary shares, not new shares to the new capital to the, to the company. I know that the rules have changed in 2021. So now you can do primaries in, in direct leasing, but we haven't seen any of those. The reason why a SpaceX or an OpenAI will not do a direct leasing is because the, you know, the sheer volume of capital that they need, I think they need that distribution that banks actually can give you because otherwise it's like if you are alone, it's you. Right. As a company that have to go to the old institutional investors. It's like it's a lot of work. I mean, banks will give you that distribution channel to pockets of capital until that's why they will go to an ipo. Another listing.

[A]

I'm still trying to figure out why a company would want to do a direct listing. So I think Spotify was a big one, if I have it right. Asana was a big one.

[B]

Yeah. Palantir is another one. They add more of a, I think, need to create liquidity to their own.

[A]

Own shareholders, not primary.

[B]

Yeah, all of them. I think maybe the underpricing argument was one. But the fact you're, oh, we're not going to leave money on the table. Right. If you do a direct listing. Sure. And also you get like there's no lockup. Right. So it's, it's an immediate way to basically get to that path to liquidity. And if that is like a significant factor, I think it makes sense. I'm not sure how a direct listing would work with primary shares, even if, if the regulators gave it uk because nobody has done it before. The other reason why you can do a direct listing if you want, if you have that brand and those connectivities with the level of connectivity with investors, even the retail investors, by the way, because they're going to be a source of demand in the market. I think it's fair if you are more of like a less known name, maybe B2B name. I think it probably makes a little less sense like you want to have the support of an underwriter. You also have to take into account the fact that as an investor, not having an underwriter means that you don't have the same level of scrutiny around diligence that I told you about.

[A]

This is a perfect segue to talk about how banks actually make money. So break it down for us on an ipo. How do banks structure this with fees and monetize it at a high level?

[B]

An IPO is almost always a firm commitment where the bank is purchasing the shares and it's placing the shares, selling the shares. The IPO price, they keep a spread. That gross spread is actually on the COVID of the S1. So in the case of Figma, you will have a table that says, okay, Figma raised 1.2 billion during the IPO. The gross spread was 4 and a half percent. You can calculate it because 54 million in total went to the banks. Those are the fees that the banks got. The whole syndicate. Yeah. All the banks involved. Right. How is that split? Right. Among banks? There's a way to find out. You have to go to the underwriter section of the S1 and see how many shares were allocated to each of the banks. There's a table there. So you can see that you do your calculation. You see the percentages. In the situation of Figma, there were two colleagues, Ms. And GS, and they were splitting economics at 28% each, which means that they also probably split the work stream equally between S1 Roadshow and all those things. Right. And then there were a couple of actives that got 14% each and then passive book runners which are more in the 5% bandwidth.

[A]

It.

[B]

This is kind of typical. So this is what we see. Usually the, the, the lead book runner, which will do a ton of work, will be more will be closer to 30% and then you will see the other active. It can be like 3, 4 banks usually less than 20% but in the mid teens and then the passives are usually less than 10% of the economics. Co managers, they don't do much. They get, you know, single digit percentages of the economics. So this is the split and it kind of goes hand in hand with the, with the amount of work that is done, you know, during the process.

[A]

Obviously sometimes you just gotta give the guy the ball and let him cook. That's what people come to the show for. So thanks for bringing real tactical examples here. You mentioned 4 and a half, 5%. I think that was on Figma. Is that amount, is that negotiable? Is it fixed? How does that work?

[B]

It's not fixed. It depends on the amount that you are actually raising in a market. Right. So traditionally in an IPO the growth spread can go from like, you know, 4, 5, 6%. That goes out the window in the case of a jumbo ip because the in that situation we are talking about such a large amount of capital that if I were OpenAI in SpaceX I would just like sit down with the bankers and figure out what the gross spread would be in that situation. My sense is that it's probably going to get closer to 1%. Damn. Much closer to 1% than 5%. Right. So which makes sense like we're talking about even your 1%. It's hundreds of millions. Right. So it's going to be a big event. But the goal spread will go with the, with the size of the offerings for sure. And it's subject to the new.

[A]

So you mentioned lead bankers. How many leads is too many chefs in the kitchen?

[B]

I mean two colleagues have been situation as a co lead it works well because you're splitting things equally. The rest of the active banks, usually they just chime in. They can review the S1, provide comments, but they're probably not as involved as others. I don't think you're going to have a situation where you're giving like three banks equal economics and they're all co leads. Most of the situation is there's one lead, there's a clear lead and then others that are going to chime in because you don't want to create too much. You want to have checks and balances. That's why you want to have, have you know, a healthy number of active book runners that are just checking the work and then providing comments. But you don't want to have too many cooks in your kitchen, as you say. So I think usually two colleagues is. You don't see more than that.

[A]

And if you think about the services a bank provides on an IPO versus M&A. So that could be in the private markets or after the fact. Is one more attractive to you as a banker than the other?

[B]

Take M and A is a standalone product because we can get into why the IPO is actually super important. But the M and A deal is very lucrative. Right. The difference between M and A and IPO is there are fewer banks involved, especially on the SaaS side. You have one or two advisors, right? So you're splitting the cake. Either you're taking the entire cake or just splitting it with somebody else. The equivalent of the gross spread in the M and A situation is there's something similar, which is basically this concept of a percentage of the transaction value value. And we're not talking about, you know, 4 or 5%. You're depending on the size. It's actually something that is smaller. It can be like 1%. If your transaction value is around like 1 billion plus. Like there's a ton of precedent analysis there. But because you are the only advisor or the lead advisor or there's only another bank involved, it's very lucrative. Right. So you're getting the full pie or the majority of the pie. The other thing is from a profitability perspective, there are fewer people involved, usually in an M and A deal than in an IPO deal. Ipo, you're bringing in Equity Syndicate, you know, the salespeople, research. Right. There are a lot more costs in that, you know, six plus month process that I told you about. So I haven't seen the real all the numbers there, but I think I know that there are more costs and it's a little less profitable trade than M and A, where you usually have coverage. And M and A bankers, it's smaller team, right. That is doing the work. So it's a more profitable trade thing. But if you're thinking the ipo, that doesn't mean that the IPO is not preferable. I think the IPO is a phenomenal start of a relationship for a banker. Right. So you actually start before that. Right. If you want to have a seat on the ipo, you usually start to develop a relationship years before that. You may be in a position, you are doing a private capital raise for a company right? Before the ipo, maybe. But when you do the IPO and the company gets the public market, as a banker, you can sell more things to them, right? Because you have have fx, interest rate edges and then you have all the capital markets product across equity and debt. Right. So usually companies go public and then they will need to go again and look for capital in the form of maybe a follow on offering or a conveyor offering or you're going to the debt market. Right. And the bank is going to be always involved. Those deals are lucrative because they are shorter in the time frame that they happen. It doesn't take six months to do a follow on offering or a convertible deal. It's usually like a one or two day deal with a, you know, a couple of weeks of preparation maybe. Right. But they're very lucrative. Right. So we as bankers see the IPO as just the starting point of this relationship where we have many avenues to sell our services and then continue to, you know, nurture the partnership.

[A]

This is why I always love catching up with you because you put it into a different perspective formula. We always joke from the operator side of the table that the IPO is just the start. Right. Then you have to start guiding on a quarterly basis. You have to learn the beat and raise. You have to operate like a product public company. But to you and your relationship with the company is actually also the start because there's so many other services now that they have access to deeper pools of capital and debt markets.

[B]

Yeah, exactly.

[A]

Maybe gearing towards a close here. You've been doing this a long time. I mean you look young so you must have a great skincare routine. Do you have any good stories from your junior banking days that would be fun to rehash here?

[B]

Oh my gosh, I have so many stories. I've seen the good, the bad and the ugly. And most of the interesting stuff comes obviously when I was a, you know, the days when I was a junior banker. Right. When you're in the trenches in the late hours and you see the weird things happen, there are many, but there's one that is like my story is the. And it also kind of highlights how naive I was when I started this job. It was one of my first deals back in 2012, 13 period. Right. So we were covering a company out of Europe, Nokia. Right. So at that time Nokia was actually as smartphone manufacturer. I mean they tried to catch up with Apple and then they just focus on infrastructure. So they became a completely different company. But at the time they were trying to go to the market to get capital to finance their latest smartphone launch to catch up with Apple and they were doing a convertible deal. We were covering the company from West Coast. So it was a big difference. Those guys in Europe, they were supposed to launch the deal. I think it was a Monday morning day of time. It was late in the evening of my time on the west coast in one of these situations. So we did work with a company and we got to a point that was one of those bring down vision calls. Before launching the deal, a question came up from the cfo, like something was missing. And my zealous VP told me, I was an junior associate at the time, like, we have to do this analysis right away, otherwise they cannot really launch the deal. It's important, right? And I was like, oh my gosh, I have to do this analysis now. Back in the days, couldn't work remotely. We didn't even have the infrastructure to do this. That for many reasons, right. It was really difficult for us to even scroll a PDF from. Oh, I had this like red Vespa that I used to actually commute to the office. And I, I didn't even take my, my documents. I just went on El Camino. It was midnight on Sunday. El Camino Real is this road that basically connects the. All the towns in the peninsula I had to go to through Mello Park. And I wanted to get to the office as, you know, as soon as possible. I thought everything depended on me. So I was going much faster than the speed limit, I think it was 60 miles per hour. And I come in, I was chased by the police. The police pulled me over and I freaked out because I was like, oh, this is done. They're gonna fire me. I was already off the Vespa and I was chasing the policeman yelling, let me go. I need to go to the office. They're gonna fire me. The policeman freaked out because he doesn't see stuff like that in very quiet Menlo Park. And so pulled out a gun, called for reinforcement, put me on the, on the curb. Obviously I didn't have any document. I could just like, back up what I was saying. So it took me a long time and a lot of people around me to basically explain the situation. Luckily, I was already on the database of the police in Melopark for another speeding ticket that I got. I wasn't a great driver back in the days, so they let me go. Obviously they sent me a very expensive ticket. A few weeks later, I got into the office, I log in. I was like, oh my gosh, I have to do this stuff. And then the deal launched. Anyway, my VP basically called me and was like, yeah, you didn't do that. But it wasn't that important, right? I mean, you knew that we were launching anyway. And I was like, what are you talking about? I thought it was super important, right? So I went back home, it started to pour, right? I didn't even have a jacket. I got back home and I was soaked and my wife on the, on the door was like, you're a complete idiot. And she was totally right. I was like, oh my God, the morale of this. And by the way, my wife, she's a graphic designer. She carried one of those deal toys for me after this. And it was something like she wrote, you know, keep calm and think. You're not saving human lives. I was like, as a junior banker, I really thought, like, this is the priority. What we're doing is super important, right? Everything is important. My internal client is, my external clients. It doesn't matter. We're not saving human lives. It's actually, actually not rocket science what we do. That event actually had me, you know, take a step back afterwards and really think about what am I doing? Is the stuff that I'm doing really important and for whom, Right? For the client. For the internal client, right? When you're a junior bank and you want to demonstrate you are crushing it, you're doing like some stupid stuff. And so that was an interesting one.

[A]

Last one I got for you. I usually ask CFOs this question about the craziest thing they've ever had someone try to expend. Either maybe you're looking through the diligence rooms for a company that's going to ipo, or I know bankers, they always have an amex. What's your story here?

[B]

As you know, as a junior banker, you have a certain number of allowances for late night meals. People stay in the office late in this job, right? I think back in the days I was getting 25 bucks per meal. Now it's more than that, obviously, with inflation, but we also got an allowance for going back home after 11pm if you wanted to actually grab a cash. We didn't have Uber back in the days, right. So people were getting cabs if they didn't commute to the office. So there was another junior banker was very, very innovative in the way he was thinking what he did. He was commuting to the office with his own car. But then he also, what he was doing, he basically created a fake taxi company account on Square. So he had one of these devices where you could swipe the car, right? So every night the guy was taking the car back home, home and then swiping the card and basically just taking money off of the corporate card into his own account. And nobody knew about this at all. And he went on for months. The way he got caught was because I think he was too greedy and he became an outlier. It was basically the associate that was expensing the most amount of money across entire office base of this global bank. It's a little bit of an extreme case, but it shows how things like these happen everywhere. Right? So. And you have to keep an eye open to this kind of stuff.

[A]

Federico, this has been an absolute pleasure to catch up with you. Thanks for joining me.

[B]

My pleasure. It was great.

[A]

CJ Run the Numbers is a mostly media production. Yelling an intro by Fat Joe. Artwork by Meg d'. Alessandro. 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.

[B]

Peace.