Guest Tom Shea, founder and CEO of OneStream Software, sits down with show host Avanish Sahai to talk all things platform and ecosystem. OneStream Software is a company that helps its customers make sense of the data in their ERP systems. Tom calls this the notion of “financial intelligence” which helps CEOs, CFOs, and others identify key trends and signals as their business is executing. Tom has always thought of his company as a “platform” in that it connects various different systems and analyzes diverse data sets to provide financial intelligence.
Tom and Avanish kick off the session focusing on what it means to build a platform, and a partner ecosystem around that platform. Then, they dig into where Tom is on the platform journey. He’s been building OneStream for some time and it has grown amazingly well, with a marketplace of over 50 solutions and over 200 partners. They cover…
Guest: Tom Shea
Tom is an original founder of OneStream Software™, an original architect of OneStream, and serves as CEO of the company. He is passionate when it comes to delivering value, success, and support. Tom’s vision is to change the entire CPM ecosystem with a solution that combines power and flexibility with ease of use, deployment, and maintenance. Prior to OneStream, Tom was an original founder of UpStream Software in January of 2000 where he invented and architected UpStream TB and later UpStream WebLink. These products pioneered a new space called Financial Data Quality and achieved a better way to manage data quality for Hyperion products by providing a packaged product (UpStream/FDM) every company could use. Tom is a graduate of Oakland University, where he earned his BS in Accounting and Finance as well as an MBA in Systems Analysis and Design.
Host: Avanish Sahai
Avanish Sahai is a Tidemark Fellow and has served as a Board Member of Hubspot since April 2018. Previously, Avanish served as the vice president, ISV and Apps partner ecosystem of Google from 2019 until 2021. From 2016 to 2019, he served as the global vice president, ISV and Technology alliances at ServiceNow. From 2014 to 2015, he was the senior vice president and chief product officer at Demandbase. Prior to Demandbase, Avanish built and led the Appexchange platform ecosystem team at Salesforce, and was an executive at Oracle and McKinsey & Company, as well as various early-to-mid stage startups in Silicon Valley.
About Tidemark
Tidemark is a venture capital firm, foundation, and community built to serve category-leading technology companies as they scale. Tidemark was founded in 2021 by David Yuan, who has been investing, advising, and building technology companies for over 20 years. Learn more at www.tidemarkcap.com.
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You can find the full transcript here.
Avanish: Welcome, everybody. I’m delighted to kick off this session around what it means to build a platform, and a partner ecosystem around that platform. This is a big topic for a lot of CEOs and boards when thinking about how they scale their organizations organically. [In this series,] we’re talking to a few leaders who have been thinking about this, executing on it, and learning from their experiences, and sharing those learnings with you.
Today, I am delighted to have with us Tom Shea, the founder and CEO of OneStream Software. He’s going to talk to us a bit about his background and experience in building these kinds of platforms.
Tom, why don’t you share with us a little bit of your personal background and a little bit of background about your company before we dive into the actual set of questions we’ve talked about.
Tom: Thanks, Avanish. I’m really excited to be here and especially to talk to you. You have some of the biggest platforms companies in your experience profile, so it’s really exciting to talk to you and share these ideas. We all look up to these iconic businesses and how they have really leveraged platform.
I’m the CEO and one of the founders of OneStream Software. OneStream is in the business of helping large, complex multinational businesses take the data that’s being recorded at their ERP system level and turn that into information. We think about the enrichment of recorded information that’s happening every day in major businesses. What process does that data have to go through to become information? We specialize in the financial intelligence side of that business. A lot of data that’s being collected from the ERP, from the operational processes that are happening, is making its way through the financial value chain, if you will, to become a number that’s relevant for external reporting, financial planning, functional planning, or operational planning. All those pieces are interrelated, and we sit at the heart of that, not only in the manufacturing of the information but the visualization of it as well.
I spent 10 years in corporate finance working for some really large organizations, and had the opportunity to learn about some of the challenges that exist in that process that I was just describing for you. When you’re doing integration work, you really are at the heart of a need for a platform; you need to have a single piece of software that can talk to many different pieces of the puzzle. That started me thinking about componentization and the ability to extend the product. Foundationally, that entered my DNA at that point, and it has also become a part of the OneStream platform vision.
Avanish: That’s terrific, and I think a perfect segue to talk more about that. You talked about blending your domain expertise with your engineering perspective. How did you decide to adopt the platform strategy perspective? What did it require internally with your team, with your co-founders, etc., to really think about these problems from a platform product strategy perspective?
Tom: That’s a great question. The thesis for OneStream really came down from being a part of the evolution of this corporate performance management (CPM) space. What I saw, and what you see in a lot of technology patterns, is a lot of best-of-breed products popping up that are related. Somebody will have the idea that they can lock in on a particular domain – whether it’s industry or business process – and build software for that, and there will also be a tangential product that’s close but not the same. I saw that happening with CPM with financial consolidation, financial planning, and other specific types of planning.
What we saw happening was people adding value to these businesses that they want to sell to, but in a sort of a 1.0 version, if you will. They’re also creating technical debt every time they sell because there’s a related nature to these products – typically an update to one is going to involve updates to multiple parts because the type of system that we’re talking about is typically modeling a business. As the business changes, you need to be able to make those updates. I’m describing a growing, foundational problem.
We knew we couldn’t just show up, talk to a CFO, and do the same thing that everyone else is doing. We needed an approach where we have the ability to provide the broad solution capability that they want – an evolving solution capability that has a more manageable technical debt profile. That was really at the heart of the thinking that drove it: how do I have that conversation with a CFO?
Avanish: I’m assuming that in those situations you were learning along the way. You’d find new requirements, find new integrations, new data sets, etc. Talk to us a bit about where you think you are on that journey. You’ve been building the company for some time, and it’s grown amazingly. You have a marketplace, about 50 or so partners. How far along in that journey are you?
Tom: When you’re in the software development game, you have this idea that it’s never done. You’re always improving and always working on it. There is, I think, an important distinction between the platform mentality and a product mentality. The reason I say this is because if you’re really a platform, you’re building other software on top of it. You’re creating dependency with your platform. Think of smartphones and how those are evolving, and the different engines that evolve in a smartphone like a camera or location services. More and more apps are being built on top of those features, and you need to improve the platform in a thoughtful way that doesn’t break those historical dependencies.
With that perspective in mind, the way I see it is that we’ve been combining technologies: financial intelligence, workflow, visualization capability, data integration capability, and we’ve now got a new AI service coming to the platform. It’s a very thoughtful evolution of the platform, done in a way where you can see the nucleus solidifying at the platform level. Then, you think about how we can take this further and really expand the development capabilities on the platform. How do we drive it further into the community, and make sure that people can really exploit the networks of technologies that we’ve invented at the platform level? It’s a mindset shift to solidify the platform and democratize its capability.
Avanish: I’d like to just dive into that for a little bit. You’ve got a set of end customers, obviously, but what I’m hearing is you also have a set of developers, partners, etc., that you have to keep in mind throughout the journey. You’re saying that it’s not just the end customer that we’re going to deploy to, but also this other set who need to understand how to build on top of the platform, how to integrate with it. Is that part of the mindset that you have to think about?
Tom: To me, the definition of platform is a platform that has the ability to be developed on. It’s something where people can create other software on top of your software without purchasing or using other third-party tech. I don’t know the best way to describe this, but it’s kind of religious. If someone believes in your technology, your platform, and they are able to create from it (which not only improves and offers value to whatever organization they work at but also to them personally in their career), that is the vision to drive at and enable that work. The platform can solve problems right out of the box – you don’t have to always develop up – but at the same time it’s this endless value proposition that you’re seeking. You’ve invested in this platform, it’s extensible, so let us make sure that we enable you to get the most out of it. Then you help us drive it further.
Avanish: I completely agree with you on that. Having been in some of these situations myself as a platform provider, that mindset creates this richness. Customers are increasingly looking to pick a few of these platforms based on their roles and industry and say that this is the organization/entity/company that understands my business and is helping me to manage it better, optimize it, and automate it. On that note, do you mind sharing a couple of examples of customer stories that describe how this value has been captured, and how that led to a tighter relationship with them?
Tom: Before I go right to the customer examples – you have to evolve to it. If you just come in and tell someone you’re a platform, it’s hard for them to believe you. You don’t want to oversell, so you typically are focusing on some particular, more specific problem, with the customer that you’re looking to solve. The real gratification comes when your use cases are expanding and you’re finding value in the platform.
I’ll give an example of a large professional services firm that uses us in its normal thinking – what we would consider normal – for CPM, which is external financial reporting, financial planning, and human planning (workforce capital planning). There are all these different flavors and common moving parts that you would find at this level across the spectrum. Our platform continues to evolve in such a way that not only are we able to provide a unified experience and replace multiple different products doing those three tasks, but we also started to expand into more transactional analysis. Another piece engine capability that we added was the ability to have our engine work directly after some transactions, instead of letting the ERP produce that data, so you could get more daily views related to your financials. We call that more signaling. These types of use cases, this type of pattern, this type of expansion, that’s all leveraging the platform.
With those four use cases that I just described, there’s a workflow component, there’s a heavy financial intelligence component for the external reporting, and there’s an operational planning component. It’s a good example of what I would consider a broad use case that explains the value proposition of the platform in general.
Avanish: That’s great. One thing that I’ve also noticed is that increasingly, there is more verticalization of those functions. Your customers come from different verticals. Has that required any change to how you think about product and integrations? Or do you think the core is somewhat common and each industry is configuring it to their needs? What’s that tradeoff like?
Tom: The platform really does play into the way you think about verticalization. I’ll break it down into two dimensions of domain-specific solutions. I typically think of it as business-process specific or industry-vertical specific. Both of those tend to narrow in scope in a traditional software development world, when you go through and ask if this is a big enough idea to systematize, relative to the cost of the full stack development that it takes to create a piece of commercial software.
Avanish: How repeatable is it or not?
Tom: We know you have the core financial things that are very repeatable and known: core reporting, core planning, functional things. Those have all been done for years and years. As we get to the edge, though, we’re finding a number of business-process and vertical cases that we can now attack with software through our platform and marketplace. The cost of creating a new solution in our marketplace, for our platform, is dramatically lower in both time and development effort because we already have these interrelated engines. I don’t have to reinvent the data integration layer, or the workflow layer, or the reporting layer; I can focus on the specific domain use case. We code around that and deploy it within the framework. That is a very important driver of the value of the platform.
Avanish: Based on our conversations, I know you have a lot of amazing lessons learned, and you alluded to some of those already. What do you think are some of the key success factors? What are some of the areas where you can say it’s worked because of the product strategy, alignment, or understanding of those adjacent categories that you described earlier? What are some of those things that people should be thinking about that you feel have been critical to the success and the scale that you’ve achieved?
Tom: The critical success factor here is really a recognition of some of these technology patterns. We talked earlier about some of the real marquee brands. If you look at the most successful software companies that are applauded today, there’s typically this idea that there’s a development effort on top of a platform because they realize that a customer is investing in someone who understands there’s not a limit to the value. The customer is not having to re-invest. If you try to swim against that pattern, you’re going to get a lot of resistance and eventually you’re going to make a lot of investments that you won’t get the return on. With respect to the tactical execution, it takes a lot of discipline because you really have to separate the platform thinking versus the traditional product thinking.
You have to think of the engineering mindset around the product management aspects. The platform is still a product, but you’re building it to build other things on it. You have to understand that you’re trying to componentize and create an extensibility framework, and be very conscious of the fact that you’re going to be building other things on it. Those other things can’t break when you change the platform or upgrade it. It’s a different discipline when you’re thinking about these two components, and I do think you need to separate it into those two ideas. The true value you give yourself as a business is the ability to pivot as new challenges, new opportunities, or new threats appear. Provide value to your customers and be in that new game that’s in front of you.
Avanish: People often ask me, how can I become a platform? You don’t just become a platform; you have an application or platform mindset. How do you make the investments? How do you design the products, the applications, the solutions? It differs. And sometimes you have to really step back a bit and think about it in a more holistic fashion. What is your strategy? I’ve seen companies that are able to switch, and others where they have a pure application mindset, say they can do it all, and it’s a bit more challenging. I’d also say it’s becoming increasingly important to answer those questions because, to your point about how you make decisions and investments, it is not just a product decision.
Tom: Yes, you’re really thinking about these combinations of technologies. We’re a product-centric company and we want to engineer and make a great product, but you also have to think about the economic realities of what you’re creating because your success enables you to keep investing in the product and doing more. You can’t separate them.
To your point, it is a broad topic and there are real execution expectations in most software companies. The first thing any investor asks you is, what’s your TAM? What are we doing here? The platform really is a powerful part of that discussion.
Avanish: We talked about the key success factors and how you coalesce around that platform mindset. What do you think is the biggest challenge? What is the biggest roadblock for someone who’s trying to build such a strategy? If you were to speculate, where would things go sideways?
Tom: The biggest challenge is that you are taking on a lot more complexity, because you’re thinking of it in two steps. You actually always want a product because if you think of the go-to-market strategies, more narrow and focused is better. The market hears that; they understand and can connect your product to a need, and you can deploy it. The platform is the opposite of that. That is a real challenge. You need to develop your entry-point product with a platform, and code for platform on day one, but you still need to be able to focus and address a need in the market while you’re evolving the platform. You’ll get to a certain point with the platform where you have these targets that you’re going after to show direct alignment to a particular business problem.
I would say that is the biggest challenge in developing a platform-oriented piece of software because it’s easy to not be taken seriously if you are saying to everyone, “we’re a platform.” It doesn’t resonate. If you go to the other end of the spectrum and become very point-solution focused, you narrow the scope of your potential in the future. Modulating those two perceptions and making sure you give your go-to-market team something they can actually execute on, that’s going to be your biggest challenge in starting a platform-oriented business.
Avanish: It’s a bit of a balancing act, figuring out where you draw virtual lines. For example, Salesforce, which was initially a Salesforce automation company, was the repository of the customer record. Then the ecosystem built around that. It’s the system of record for customer data, but we can enrich that with a number of other capabilities: pricing engines, configurations, additional signatures, etc. At ServiceNow, a similar construct was the IT asset record. It was called, in technospeak, the CMDB – the configuration management database. The platform is about that core data, and there’s a whole set of use cases that can leverage that. I think that is a really important point, thinking about where that value driver is. Are they solving some real problems to start with and then extending from there?
Tom: You hit right on it. For us, it’s very similar. We really focused on being that differentiated financial intelligence analytic engine first, and thought about that same sort of book-of-record approach. But we surrounded it with all kinds of technologies that would allow us to solve many use cases. We could really laser focus on that foothold in the market so that we could, just as you mentioned in the examples of Salesforce and ServiceNow, have the credibility to ask to solve or be invited to solve problems. That is the evolution and process. You really need to start with a core thesis, but you need to develop and think beyond that core thesis – but not overplay your hand at first. Evolve to it.
Avanish: Back to the mindset, that is super critical. That is a perfect segue into one of the other topics we wanted to discuss. Platform thinking obviously has a huge customer angle to it, but it also has a partner angle to it. How do you think about the developers, the ISVs you need to work with, and how do they see you as a platform provider – perhaps as a competitor someday? Talk to me a bit about the elements of your developer or value partner proposition. What do you think has helped to attract these companies to work with you?
Tom: That’s another really interesting topic, especially when you think about the recent things happening in the Apple ecosystem. I’ll try to use as many examples here as I can, as I think it will help people understand it.
From the beginning, we recognized everything we’ve been talking about here. We came to the conclusion fairly early on that we needed a platform. We wanted to extend, and we thought we would own and curate the content of our “store” (the things built on it first) while we built out the platform, vetting and designing the patterns and practices that we decided are the best ways to develop on our platform. Then we would take that to the partner community. Well, the partners that have been implementing our software have been developing on it customer-by-customer. We’re starting to see bigger customers that have centers of excellence starting to do sessions where they are actually holding hackathons with our software, internally, to see what they can do with it.
We’re at an inflection point right now where we feel confident. We have over 60 type-solutions in our store right now, credible business apps that can compete. They go from utilities to full applications that compete with billion dollar market-cap companies. This is where it’s so interesting to talk to other companies because there’s not one answer. We thought about using a highly curated model where we almost act like a Netflix and talk to people that are really interested in developing, but we know there’s a high-demand for this type of solution. Can we fund them, work with them, and partner with them, somebody who understands that domain, to write it? Then we really control the quality. My original thought was, “Oh let’s do it like Apple, and everyone that wants to develop can come to us. We’ll just charge a fee and we’ll put it all in there.” But then you end up with a lot of overhead. Are you getting the right content in your store and on your platform if you’re trying to stay focused?
As you look at evolving this, it means figuring out what the model is going to be and how you really engage with the developers. We have our end user conference, and we will start to have a developer conference. We’re really trying to learn from other brands; Salesforce happens to be one of them. We called them up. My original thesis was the Apple model and they said to be careful. Make sure you’re thinking of all of the elements that go into people developing on your platform, because when you open this up, you can’t close it down. It’s one of those gates that once you go through, you can’t come back.
In terms of how we’re thinking about engaging with developers, we’re trying to be really thoughtful. We want to make sure we create a highly curated experience. We’re thinking about the things we want to have in the store, that serve the community already using the platform but also the developer community. We want them to push it. It’s a balancing act of all those things.
Avanish: I think the evolution has come to quality over quantity. The curation element you mentioned is super critical. The customers are expecting that as platform providers, you have done some vetting, some validation, perhaps even some certification. You’re saying to customers, “Trust me, this is written in the right framework with the right APIs and integrations, and it’s going to do what it says it’s going to do.” I think that is a big evolution of the cloud ecosystems in the last few years. I do love the Netflix analogy. I do think it’s right. It’s a brilliant way of thinking about how to be the platform but also how to curate some of the production.
Tom: We’re trying to find that. It’s fun because it is innovative, but it does test lots of elements of the organization. It is super iterative and super fast. What does the support model look like? That’s how it’s different from Netflix. Once a movie is released, you don’t have to do maintenance on the movie. That’s where the analogy ends. People just watch it; you don’t have to enhance it. We have to change the ending all the time. We’re really working hard in this area to engage with partners and make it as formulaic as possible, not only in idea selection but also iterating on that idea. We call that fit to evolve. We have a highly iterative market fit process.
Again, the things that we’re trying to solve with the marketplace are typically very domain specific, very process specific. The technology is changing very quickly from what we were seeing a few years ago. There’s a highly iterative approach in the marketplace side of it that places demands on the organization to evolve to where it’s part of the engineering process. It’s a process every platform company has to go through. What does that process look like? And how do you get more people involved?
Avanish: Picking up on that thread, it isn’t one-size-fits-all. Every company, every platform, and every category is going to have to think about it. Even so, if you step back a bit, and say you’re having a beer with a peer of yours, what advice would you offer? What key questions should they be thinking about?
Tom: If I’m talking to someone really thinking about developing a platform, let’s assume they already see the value in the platform. From an engineering perspective, that’s a lot of what we’ve been talking about. Everything is about componentizing. It’s modular thinking, in a way, because you’re trying to think 4-5 moves ahead how things can come together and what you can possibly build on it. The advice I can give you is you need to play that out. You need to think through those moves, think of the possibilities, but you just have to go and build and iterate on it.
What are the challenges you are trying to solve? Do it, and that elevates you to a new plateau where you’re able to look around and adjust. The best advice I can give is that you have to think about this interrelated nature you’re trying to create. It’s not a straight requirement list; it’s a blending of technologies, capabilities, and components and then it’s the possibility of what you’re doing on top of it. My advice is: don’t be afraid of it being nebulous. You have to think in that building block sort of way. Think like Lego.
Avanish: I love that. I think that’s super insightful. The one thing I’d add, having lived through it a few times, is that there’s not one single function that owns it. The dependencies are across product, engineering, marketing, sales, and partnerships, and you have to really work across all of those no matter how big your organization is. If you build a platform, engineering and product have to be aligned so that they are thinking about this from a set of use cases and users that aren’t just the end customer, not just professional services. If a developer is going to build around it, they’ll need to know how to build an API. They’ll need documentation, they’ll need support, they’ll need the deprecation policy. On the front end, if you have a partner that may also be a competitor, how does the sales team align around that? Those are the kinds of things you have to get aligned around. It’s not a single-threaded approach.
Tom: I’m smiling ear to ear because that’s what I should have mentioned. I thought about it from the engineering perspective and that’s why I went down that way. One of the biggest challenges is exactly what you said. It was easy at first because we tried to treat it like an engineering problem, but when you start to think about where we are now, a platform delivering software on top of it, it magnifies and is so cross functional. There are economic considerations, go to market considerations, partner considerations. It’s a fun challenge, but it’s a unique skillset.
We look at our marketplace team like Pixar: our own internal studio. I still need the people who are sitting on top thinking about what types of movies we need. What are the economics? What’s the support model? Even if I have the skills to create it, do we have the people to implement it? It's a great place to be, but you can’t underestimate what’s involved. If you can, tap people on the shoulder who have been involved in it before, because no one has the absolute right answer, but they can tell you to watch out for this or think differently about that.
Avanish: Hey Tom, before we wrap, a couple more questions. We mentioned some companies along the way, but you’ve been building this, living this, thinking about how to scale your business. Who are the companies you look to who have executed this well?
Tom: You’re already mentioned them. We want to be Salesforce or ServiceNow. Both of them, for different reasons, have represented what we think of as true content providers. I really divide this into three buckets. The hyperscalers like Google have end-to-end, they even have data centers. Then you have those in the middle that really understand their role in the enterprise software world, deploying great, scalable, software on a hyperscaler. You can’t compete with the hyperscalers on a data level. That’s obvious for me. But you have other companies that are kinda caught at scale. You have the people right in the middle - the ServiceNow, the Salesforce, the Splunks, the AI companies coming up – that are all platform-oriented. They all know they are content providers to a hyperscaler.
I look at everyone that has that platform mindset and try to learn the steps that they have taken. Not only how they have gone to market with their solutions but how they deployed it for who they are trying to serve. Multi-tenant on a hyperscaler? Single instance? Why did you choose that? How does your platform perform? Those are big considerations in how flexible you can be. The top two that come up are Salesforce and ServiceNow. They are just such good examples of execution. We’re customers of both as well.
Avanish: Two plugs for my former employers! This has been terrific. Any final thoughts, before we wrap?
Tom: I think having a platform view of what you’re doing, worst-case scenario, gives you lots of opportunities to pivot if you were off-base on what you were trying to solve. Best-case scenario, it gives you endless expansion capabilities on the solution that you picked. It’s worth trying to have this approach and engaging with this mindset in your development cycle, in your process. I’m just a firm believer in it. I could never see myself starting a software company or technology company that didn’t think with a platform orientation, just because that flexibility really helps you on your path to success.
Avanish: Tom, I am biased, but I love hearing that. I think it’s amazing how you’ve thought this through and built it. I truly appreciate you taking the time and sharing your thoughts. I look forward to staying in touch and seeing how the story continues to evolve.