One Financial Platform to Rule Them All: OneStream Software CEO Tom Shea

OneStream Software CEO and co-founder Tom Shea has a unique blend of technical, financial, and leadership expertise. As his career began, he was really an engineer cloaked as an accountant. The engineering side finally won out and led to him becoming an entrepreneur and CEO as well.

As the leader of OneStream and an architect of its cloud-based financial management platform, Tom’s success is in the numbers: OneStream reached $130 million in revenue in 2019, reporting a 50% year-over-year revenue growth and a 99% customer retention rate. Their customers are the CFOs of the world’s largest companies.

It was interesting to hear Tom discuss his transition from being a founder/specialist CEO to a generalist focused on helping the company scale and grow. Of note also is his insight that taking a pause due to the pandemic can be of value to a growing company that must reinvent itself every few years.

Joel: What was your journey to the CEO role? 


Tom Shea

Tom: “It’s interesting because when I think about it, I’m almost an accidental CEO. I spent 10 years in corporate finance first and was just writing software on the side. I started to realize that I sort of picked the wrong major. I was an accountant with an MBA, really focused around systems analysis and design.

Over that 10-year period, I started to gravitate more and more towards software. I’m also sort of an accidental entrepreneur, because being an accountant, I was extremely risk averse. I just kept thinking, ‘How can I ever do this?’ And I kept rising higher and higher. I worked at Chrysler, United Technologies, ITT Automotive, huge companies. But I learned the problem I was trying to solve by doing that.

I thought I wanted to be the CFO of a large company. When I was about 28 years old, I’d made it to a director executive position and just realized, wait a minute, I don’t want to do this for another 30 years. I think I need to figure out how to take my passion, which is creating software, and turn it into a business.

So I set out to learn how to write contracts and do a bit of consulting for about a year or two. Then I started a company called UpStream when I was almost 30, and that’s how I became a CEO.”

Joel: Tell me about OneStream and how you came to co-found it.

Tom: “We’re a company that’s heavily focused on customer success. Our approach as a bootstrapped company has been to speak softly and carry a big stick. I don’t want to sound negative, but the trend in Silicon Valley with a lot of software companies was to talk about stuff you’re going to do before you’ve done it and really hype it up. And then a lot of times that fell short of the actual result.

So we had this different, I’ll call it Midwest sort of mentality, which is to focus on one customer at a time, get at it and be successful. This is my second company. I had a go at this the first time with the exact same philosophy. So in 2000, I started a company called UpStream. It’s confusing, but that company was focused on moving data from a lot of ERP systems into a market leading product called Hyperion, which eventually acquired us in 2006.

I learned a lot on that journey and made connections with some really important engineers. This led to the ability to create OneStream a few years later in 2010, when two of us started creating the product. We said, if we do this right, we’ll be able to attract the best people from our prior life to be a part of this business and help us grow it. So today it’s the same ecosystem, the same partners, a lot of the same sales team. We were able to put together sort of a dream team.

‘One’ is an important word in the title of our name OneStream. Over about a 15-year period we saw companies such as SAP, Oracle, and Hyperion (financial reporting and planning software) make a lot of acquisitions and roll them up into their stack. Then their salespeople would show up at a company and try to sell them 16 different products. 

We saw that customers (in our case the CFOs) were starting to get more and more frustrated. After every acquisition or strategic move, customers would hope that the larger company was going to rationalize how all these products should work together. That never really happened, and these companies just kept trying to sell them more and more products. This meant more cost or debt, if you will, technical debt for the customer to manage.

We saw that opportunity and were able to step back. We didn’t have any of the sacred cows. We thought, well, what is good about all these different products? What are the important things about each one? Why are they needed? How can we rationalize all that into one product or a platform? Can we sell to these customers with a more rational cost of ownership and a product that allows them to go forward from where they were? That was the rationale behind OneStream.”


OneStream co-founders (l-r): Bob Powers, CTO; Tom Shea, CEO; Craig Colby, President


Joel: Financial planning is obviously critical during this period. I assume you’re seeing a lot of interest in your product?

Tom: “Yeah, that’s a great question, and it’s very logical. We’re fortunate to have strong interest in our product. Financial planning is more important than ever. If you think of the typical financial reporting process, 30 days go by and then you produce your financial statements. Then you end up reporting on the quarters and then to an external authority.

We’re involved both in the management reporting and the external financial reporting. The customer data that comes out of our system is what’s provided to Wall Street. We’re the book of record, but we’re also the planning system. What we’re finding now is, and we’re seeing this even in our own company as we’re getting bigger, is we really need financial signals sooner. We can’t wait 30 days to figure out if something’s right or wrong. We have to be analyzing financials on a daily basis, getting better and faster.

This is not a new desire. It’s been around since I’ve been in this game. It’s just that with technology, the cloud and the way people are thinking about it, it’s more possible than ever with tools like ours. We’re seeing customers push us to this faster frequency.

The challenge is there’s lots of data that is collected by these companies on a daily basis, right? So when you think of all the data that’s flowing through all the ERP systems and all the operational systems, it’s not really financially intelligent data. So on a daily basis we help those customers take that data that’s being recorded about their business and turn it into a financial signal that they can use to steer their financial results, not wait for them to occur.”

Joel: What’s your typical customer? Is it mid-market, Fortune 500?  

Tom: “We target the largest businesses. OneStreams’ average customer is $3 billion in revenue. What defines the need for a product like ours is more the complexity of your business than the size of your business. We have a few customers that are under $500 million, but that’s not who we usually target.

We’re engaged with some of the biggest organizations you can imagine, such as UPS, Toyota, the Department of Homeland Security, the Federal Treasury, the largest shipping company in the world, and many more. We offer the most value to big, complicated businesses, because they have so much information. It’s a logistical battle for companies that large just to put together their financial statements.”

Joel: So now with hundreds of employees, a new employee probably doesn’t see you every day. What do you tell a new employee who asks, “What do you do as CEO?”

Tom: “It’s really interesting. OneStream had been bootstrapped up until March of last year, when we took our first funding round from KKR. Up until then, I spent a disproportionate amount of my time on engineering. I was the face of the company at all of our conferences and would hold all-hands meeting with employees. But I was seen as a driver of the product and steering it to fit the market.

Now, it’s dramatically changed for a lot of reasons. With the investment comes having a board and accountability. The company has transitioned from its initial survival point in its life cycle to one foot in prosperity. We’re trying to scale to the next level as a business. My role now is what I call engineering the company.

I’m involved in all kinds of organizational scaling, making sure that we have the right programs and communication in place, such as committees. It was very much one-to-one communication with all the top executives, where I would just have a series of calls every day. Now it’s trying to get that overlap in place to make sure that there’s sharing. I try to do 33% business development, 33% engineering and then 33% operations.

So my point to employees is I’m really just trying to conduct the orchestra or however you want to say it, to make sure that we’re optimizing in each of the core areas. I’m working with the leadership in each of those areas to ensure we stay in touch with the market, maximize our financial goals, and create and maintain our culture the best that we can as we start to grow.”

Joel: What have you done to focus on the culture, particularly bringing in outside investors? Having a board does changed things.

financialTom: “Well, our story is a bit unique from being bootstrapped. Our culture always centered around being somewhat conservative, and you have to be accountable. That way of thinking has stayed with us, even with KKR, one of the biggest investment firms on the planet.

The reason lies in our decision for why we would take capital in the first place. We were profitable and approaching a hundred million in revenue. We wanted to keep our growth pattern going plus 50% growth. How can we do that? We have to start looking two years ahead, not one quarter ahead in the way that we think about it.

So our senior leaders said now is the time. Because of the way we conducted ourselves, we had 10 companies make us offers for an excess of a billion dollar valuation. This allowed us to focus on a firm that would be a partner to us. We didn’t just pick the highest number. To protect the culture, we focused on making sure that we had a team that was going to help us and be a true advisory board. They needed to provide the depth of knowledge we require as we march towards IPO or whatever that next big step would be for us.

So that’s helped us. I shared that with the company, because I didn’t want them to think this was an act of desperation. This was a choice. This was a very stringent selection. We weren’t begging someone to invest in us. We were picking a partner, and I think that helped soothe and maintain our culture, which is really built around customer success as I said.

When we walk into a deal at these big companies, we hand out the list of every company that’s ever purchased our software and say, you can call anybody. And that’s what our entire company is built on. Now, when you think about that as a culture, if you lead with that, it gives people purpose, it gives them pride in maintaining that. And I think it wasn’t hard for KKR, Goldman Sachs is also one of our investors by the way, to get behind that belief because they saw the output or the benefit of it.”

Joel: Has your mission and vision changed a little bit, as you’ve matured as a company and brought in investment?

Tom: “No. As you can imagine people start to focus on metrics and sales. So two board meetings ago, I challenged the board on whether our mission is still to produce a happy customer or to get every possible sale we can. The board agreed unanimously that customer satisfaction should remain our philosophy.

And that may mean putting the brakes on if we tip this equation too far on the demand side. Otherwise you run the risk of not being able to deliver or implement, because consulting is a big part of what we do. Maybe the partner community around supporting our product isn’t there, or the customer is not ready or the knowledge transfer isn’t there to keep up with the demand. In any case, you’re not going to end up with a happy customer.

So we’re taking a long view of the business. We’re much more metric-driven than before, so changes are happening. But we’ve been able to get agreement that sales growth is not the metric, sales growth is only a part of the story.”

Joel: How have the current virus issues affected the way you’re running the business?

Tom: “The first thing you notice right away is that the employees need to hear from you, because the anxiety is growing. We stepped up our communication cadence to help them understand how we are viewing this challenging time and managing it.

I really tried to be transparent, because no one has all the answers. I think the number one lesson that I learned, because we’ve gotten a lot of positive feedback, is don’t act like you know everything when you don’t, and be honest.

I told employees, ‘Hey, you’re at a safe company, there aren’t going to be any layoffs. We care about you and your family.’ I’m proud after 20 years of being a CEO that I’ve never laid a person off. I assured them: I’ll focus on the business. We’ve got a great partner in KKR. They are more bullish on us than they’ve ever been.

From a capital perspective, I told our community and stakeholders that we’re just taking our foot off the accelerator, not really jamming on the brakes. We’re still growing this year and had already hired over a hundred people. But that’s going to be probably 200 short of what we would have hired in 2020.

I also assigned certain staff to help us understand the possible duration of this, what the slowdown might look like, and how we’re going to know when we’ll transition back to growth. I also advised employees to be proactive during this time. If we’re down, if you’re slower, if one of your clients isn’t there, make sure that you’re doing something proactive. So the next time you do that task, it’s better.”

Joel: How are you thinking about the next 12 months economically? Do you think everything will be back to normal in six to 12 months, or is this a longer problem? 

Tom: “We see it as a lot of software companies are seeing it: 65% of expectations in Q1, Q2 obviously the worst, maybe like a 50, 60%. Then 75% in Q3 and 100% in Q4. That’s sort of how we’re operating right now, meaning that we would be back to our normal level of business in 2021.

Now with that said, our demand has been driving new interest in our funnel. We’re really, really pleased with that micro view of our business. What remains to be seen is the close rates. So even though we’re putting all these companies in, are the close rates what we’re accustomed to? That’s really heavily dependent on the macroeconomic situation that everybody’s in.

We are seeing a gradual uptick right now. We sell to all industries. Clearly we have some customers that are really challenged, from airlines to some large hotel chains. We have other segments that are just killing it such as some segments of retail. So we’re hopeful.

To us, this was just a pause. And in some ways, a nice pause because we’ve been a 50% plus grower our entire lifecycle as a business and that’s hard. As a growing company you break every couple of years. You have systems and people and processes in place and in two years, it doesn’t make sense anymore and you’ve got to rethink it. So this has given us a chance to really look inward during this time.”

Joel: Any other trends you’re seeing that maybe other CEOs and other industries should be aware of?

Tom: “The big trend that I’m seeing is an increasing need to have an financial analytics foundation in your business. It’s not a luxury anymore to have the ability to examine it and see your business much closer to real time. This is an accelerated digital transformation, and it’s exposing those who are unable to adapt to it quickly. I think this trend is going to continue. And I think this is going to burn in and be something that people learn from.”

Something else I would advise: If you’re a CEO looking to take on a partner, you can have a great one if you run yourself responsibly. We have an unbelievable board of directors with people like General David Petraeus and John Kinzer, who was the former CFO of HubSpot. We have a great think tank that’s been there. If I have any kind of question or concern, having that knowledge base to draw on has just been unbelievable.”


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