When the pandemic began reshaping the world in early 2020, Sarah Riley was helping guide finance at Zoom through an unprecedented surge in demand. “You could see the volume of Zoom almost spiking up by the regions that were going into shutdown,” Riley tells us. What followed was unlike anything most software companies had experienced before. During her four years at Zoom, the company expanded from roughly $200 million in ARR to $4 billion, Riley tells us. At one point, Zoom spent nearly half a billion dollars on AWS infrastructure costs it had not anticipated, she explains.
Read MoreFor Riley, the experience fundamentally reshaped how she viewed finance leadership. Rather than becoming fixated on gross margin guidance or traditional planning cycles, she says the finance team had to continually reevaluate the “strategic heart” of the business as Zoom evolved from an enterprise software company into a platform supporting schools, consumers, and businesses worldwide. “Forecasting and discipline comes second” in moments of extraordinary change, Riley tells us.
That mindset now informs her role as CFO of dbt Labs, where she oversees finance, accounting, and data operations while helping guide the company through its merger with Fivetran. Riley says today’s defining challenge for software businesses is balancing legacy operating models with the realities of AI-driven transformation. “You need to balance that with how do we make sure that we’re investing aggressively enough in capturing what our user base is turning into,” she tells us.
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CFOTL: Let’s find out about dbt Labs and this opportunity. You joined as a senior finance person, but within two years you were in the CFO office. It seems like a perfect match. Tell us about DBT first. What’s the company about today?
Riley: DBT is an open-source data infrastructure company. If you talked to our CEO when he started the company nine years ago, his ethos was really about taking software engineering best practices that make code bases organized, high velocity, and easy to govern, and bringing those principles to data teams. Historically, data teams were running these spaghetti code bases that were difficult to manage. We’ve all had the experience of getting an opaque number from a data partner and asking, “Can you help me trace this back to the source?” and finding that incredibly difficult.
Read MoreWhen I joined dbt, the company had very little revenue — I think below $15 million in ARR — but there were already tens of thousands of companies using the open-source product. That told me the company was doing something special that really resonated with data developers. Since then, the platform has evolved into something much more robust that helps organizations govern data cross-platform at scale. In a world where CIOs and chief data officers are deeply focused on ensuring data quality doesn’t become a barrier to AI adoption, that’s become an increasingly important area of infrastructure.
CFOTL: Can we ask about the merger? I know there was a major announcement last year.
Riley: Last October, dbt signed a definitive agreement to merge with Fivetran, and we’re deeply excited about it. DBT and Fivetran have both become best-of-breed midsize players in the data platform space, and together the combined company becomes the third-largest standalone data platform company in the world behind Databricks and Snowflake.
It’s been a fascinating transaction to work on because the companies share so much common ground. Both organizations grew up at roughly the same time and both have very similar philosophies around being platform agnostic and supporting the user. It really felt like a once-in-a-lifetime opportunity to bring together two companies with such strong alignment.
CFOTL: Tell us something about your mindset when it comes to performance and what really drives performance in this business.
Riley: In addition to managing finance and accounting, I also manage our data team, so we spend a lot of time thinking about how to leverage our platform to create a truly data-driven environment internally. We’re very focused on product analytics, go-to-market analytics, and having absolute clarity around the KPIs that matter across every area of the business.
We invest early in building strong data literacy and accountability among our executives so that when we review financials, we’re reviewing them in tandem with business KPIs. Everyone understands that the investments we make are intended to drive specific outcomes. Every couple of quarters we revisit those assumptions to make sure we’re still focused on the right things. It’s really a hand-in-hand finance and data effort.
CFOTL: Before the results show up, what inputs matter most?
Riley: For us, the business KPIs are really the leading indicators. We focus heavily on the health and growth of our open-source community because that effectively becomes the top of our funnel. We’re constantly evaluating how customers are using new features, how that drives adoption of the platform product, and how we can make the experience even more compelling.
That thinking flows into our go-to-market planning as well. Do we have the right sellers? Do we have the right resources allocated? Do we have the right “chess pieces” on the board to hit our goals? Then we reflect back and ask whether those assumptions produced the financial profile we expected.
CFOTL: Can you share a little more about your insight into the customer experience and your efforts to understand it?
Riley: We try to be thoughtful about customer privacy, especially on the open-source side, so we don’t collect an excessive amount of data there. But we absolutely monitor feature consumption among customers who move onto the platform. We want to understand what they find valuable and what drives conversion.
For many open-source companies, the community is viewed primarily as a way to drive adoption or contribute to the engineering ecosystem. But from a finance perspective, I think you have to think about open source fundamentally as a distribution method. Our North Star is making sure that the commercial platform is valuable enough that it becomes an obvious next step for users. DBT’s open-source community is still growing about 70% year-over-year at scale, with more than 100,000 companies on the platform, so the opportunity is significant.
dbt Labs | www.getdbt.com | Philadelphia, PA