Why We Invested in Cube: Spreadsheets are Finance's Best Friend

I came of age during the rise of the personal computer. I remember mowing lawns as a teenager to make enough money (>$250!) to buy an additional 8kb of memory for my personal computer.  5 ¼ “ floppies, loud phone-based modems, Atari camp - yep I was all of that life.

I came of working age during the rise of the internet and distributed computing. When I first entered the workforce after college, I did so as a division controller and as one who was more computer savvy than most.  In my role, I was responsible for setting and managing departmental budgets as well as reviewing actuals versus target with each department head. Yes - this was pre-email days and when folks smoked in their cubicles.

This fun process entailed:

• Printing each month reams of green and whitepaper on some type of printer that jammed all the time with the actual numbers on them spit out by our DEC Vax based Ask ManMan system
• Highlighting manually what I saw to be large variances with a sharpie
• Scheduling meetings to review with the managers where I would lug the giant stack of connected papers together and discuss with them highlighted variances
• Admonishing folks for poor answers or big variances and writing up in MS word a document for executives summarizing my findings
• Updating the budgets going forward in some type of green screen terminal-based program
• Creating a master budget model (which was as we can dis-connected from actuals) in MS Excel because Excel was innovative those days and incredibly useful on a personal level

Not a very efficient nor effective process to say the least! It was way too manual and worse there was no easy way to have department budget owners to “own” their budgets, understand variances and make forward adjustments in real-time.

So in 1995 (a big year with Windows 95 coming out), we made a decision to invest in a product called FYPLAN by Pillar. It had the promise of allowing companies to set up plans & budgets and manage them with all of the appropriate upstream and downstream manner. It even worked on people’s personal computers and could be connected to a master copy on my computer! Sounds awesome? Not so much:

• The reality was this system was hard for anyone but financial types like me to navigate and use
• It didn’t make many innovations in regards to how people could look at detailed actuals. In fact, each month (remember this is pre-API world folks), I would print out the same old sheets and enter in by hand the actuals into FYPLAN.  
• It became yet another system I used in finance and then had to print out / download excel versions of and review with end-users as they refused to log in to the application.

Ironically, this company eventually was acquired by Hyperion which became the first real big company in the EPM (enterprise performance management) space.

Flash forward 25 years.  

The need for real-time budgeting, forecasting, and planning has not gone away. In fact, the need has never been stronger in regards to ensuring companies are driving their growth forward in an agile way. If COVID-19 has taught us anything, businesses need to become much more adept at scenario planning to deal with unplanned supply or demand shocks. COVID aside, especially in the world of software companies, where there is a lot more capital available to them than in 1995, reacting and planning in real-time is a real skill that the long term winners have mastered.

There has been a ton of innovation from a technology perspective across almost all of the horizontal business functions since 1995 - i.e. salesforce for CRM, Atlassian for Dev, NetSuite for financials, etc. - the list goes on and on.

However, if you look at the finance function, or more specifically the FPA function, whose needs and an organization’s demands from them have increased dramatically, there really has been very little innovation.  Yes - there have been subsequent next-generation successors to Hyperion like Anaplan, Planful (formerly Host), and others but nothing that has fundamentally solved their needs in a way that actually gave them time back to actually plan in a strategic way.

Net-net - companies use excel or google sheets for as long as possible as everyone knows how to use them, including end-users until they feel like they have to “grow up” and invest in EPM.  Ask every well-known tech CEO today and they will tell you that they relied on some clever young person who was a master of spreadsheets and excel for the longest time.

Companies push off the move to an EPM as they know it will be painful and lengthy to deploy and that their business end-users are simply not likely to use the EPM - rather they will say “just send me a spreadsheet”.  Nonetheless, they do make the move because at some point, excel and sheets break down as the FPA process moves from single-player mode (ie a few users, a few sources of data, etc) to multiplayer mode - where do you need to have multiple data sources, multiple users, workflow, and governance.

With that backdrop, you will start to understand how we decided to make the investment in Christina Ross, Josh Holat, and the team at Cube software less than sixteen days after first conversing with them - and we did so in the middle of the pandemic with the DOW down 9,000 points and no safe means of meeting the team in person!

As you can sense, we at Bonfire do believe there is a real need in the market for a new player that enables Finance folks, regardless of their individual or company’s relative financial planning maturity and needs, to do what they need to do easily and powerfully.  For all too long technology has gotten in the way of rather than assisted Finance to do the following basics:

• Plan - i.e create an accurate plan and budget and as a bonus, inject some flexibility for different scenarios in those plans and budgets
• Budget- i.e. easily create budgets with budget owners. Hold budget owners accountable for budget performance.
• Forecast - i.e. easily provide accurate forecasts to the business and execs.
• Report - i.e. easily close the books on time and report appropriately to stakeholders with clear explanations on deviations from actual to expected / budget.

Everyone in finance hangs on for as long as possible to excel or sheets because everyone knows how to use it and it's incredibly flexible. They will make the move to EPM only when they are forced to. Therefore, in our view,  if someone or some company can come up with a better approach and a better mousetrap to help finance nail the basics and go home at night and rest easy, we believe it will be a big and impactful company.

After meeting Christina - we knew we had found such a company. Christina is a rock star with significant experience as a CFO at a number of meaningful companies who set out to tackle the pain she had lived with for years - a founder model we love to invest in. Just as importantly, she partnered up with Josh (who will humble brag that he is just a back end guy) and delivered a product that would have brought me to tears in 1995 and saved me and so many thousands of companies the pain and missed expectations of using traditional EPMs.  

In short, Cube’s product combines the best of spreadsheets and the best of EPMs while leaving the worst of both models behind. Watch their updated demo here but Cube is quickly gaining a following with its early customers as they are enabling the power and sophistication of an EPM with none of the pain - namely:

• There is NO LONGER a heavy lift to get started - as Cube allows customers to start first with the spreadsheet models they have + other data sources to create a new model quickly. In fact, most Cube customers go live in less than a week.
• There is NO LONGER a high cost for finance to manage - as Cube enables customers to easily pull into multiple sets of data regularly instead of remapping those into a classic EPM. Cube also allows very easily modeling and formatting changes for admins as it’s easy to use as a spreadsheet.
• There is NO LONGER a very likely high rate of end-user rejection - as with Cube,  business/function owners view, manage, and format their budgets in what they know - Excel & Sheets

We are super thrilled to back Christina, Josh, and Cube and their vision for changing how planning happens in the very near term future.  We are also psyched to be joined in the round by the powerful and fierce team at Operator Collective and so many influential fintech and individual investors.

If you have any need for some progress in your financial planning and analyses (and you know you do), hit the team-up - you will be more than pleasantly surprised.

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