In this episode of the Sourcing Industry Landscape, Dawn Tiura interviews Rob Bernshteyn. Rob Bernshteyn is the Chief Executive Officer of Coupa Software, a cloud platform for business spend management. After moving to the U.S. at a young age, what began as an interest in sports memorabilia turned into a profitable venture during middle school and high school to help fund his college education.
Dawn Tiura: Hello folks, this is Dawn Tiura with Sourcing Industry Group, also known as SIG. I'm really excited because I am going to interview somebody today named Rob Bernshteyn, and obviously you're listening to our sourcing podcast, you probably know Rob, but I've had the wonderful pleasure of experiencing Rob for the last 10 years and watching him become such a leader. So, I am going to be talking to Rob Bernshteyn. He's CEO of Coupa Software. He's also a Harvard Business School Grad, and he lives in the San Francisco Bay area. Rob, I just want to welcome you to the show. I just—I love talking to you.
Rob Bernshteyn: Thank you so much, Dawn. It's a pleasure to be with you.
Dawn Tiura: Let's talk a little bit about how you got to where you are today. So now, you are the CEO of a publicly traded company that is international and continues to grow every year, and is garnering more and more praise by everybody in the industry. But, I mean, did you think that when you were back in college? So, let's go back a few years.
Rob Bernshteyn: Well, I appreciate the question Dawn, and thank you for the kind words about our business. We're very excited about it. I can tell you that I had been thinking about running a business of my own for a number of decades. I've gotten excited about information technology back in college, and since then have been working in different aspects of enterprise software from ERP, to CRM, to HCM, and for the last decade in this spend management area. So, I had wanted to run a company of a meaningful size and magnitude, and most importantly we wanted to make a meaningful impact in the world of enterprise software for, frankly, as long as I can remember.
Dawn Tiura: All right, so let's go back, because you told me a story that I think really shapes—I mean, you were an entrepreneur from day one, and you were a go getter. So let's talk about your sports memorabilia collectables business, because I think this is such a cool story.
Rob Bernshteyn: Well, thanks for bringing that up. It is a cool story for me, personally, because it was my first experience with business. I came to the United States when I was six years old with my parents, and we were drawn to America. It's the land of opportunity, and the way that opportunity typically expressed is through business, and through capitalism, and through taking risks, and taking on challenges, and leveraging opportunities. So, as early as I can remember, I think 11 or 12, I had a paper route and saved money, and saw folks in the neighborhood, kids in the neighborhood, buying and collecting sports memorabilia, specifically baseball cards.
Rob Bernshteyn: So, I got into that a little bit, and realized there's an opportunity there. The dealers at these little card shows on the weekend would sell cards at $10 a piece and be buying them at, say, $5, and I saw the margin opportunity there, and I saw that if you kinda hustle, and you help people build out their collections, and buy in bulk, and repackage cards, you can make a bunch of money. Had a great experience doing that while I was in middle school and then part of high school. It helped pay my way through college through that experience.
Dawn Tiura: Wow. That is so cool, that is so cool. So, at a young age you were an entrepreneur, and I like the margin idea as well. So, let's then talk about where you went from there. You went to Harvard, and then you got into the big system type companies, and then you also spent some time consulting. So how did that shape your leadership skills?
Rob Bernshteyn: Interestingly enough, for me the initial focus was in college, I'll say before Harvard because Harvard I went for my MBA, but before that I went to Albany, a state school, and majored in management information systems. So I was first exposed to code there, and I also was first exposed to group work. In management information systems you're working in groups to design new systems, and pitch executives on how the value of those systems could help their companies grow, either save money or grow their revenue, whatever it may be.
Rob Bernshteyn: That was my first exposure. I was the president of my fraternity there as well, which is a business fraternity. So, I've been involved in group work for a long period of time in college, and was very proud of my accomplishments there. I mean, I graduated with a 3.99 out of 4.0 GPA, I mean, all A's except for one course. A lot of those courses were group work. That's the fun thing, Dawn. A lot of those courses were group work—how do you work together, bring the best talents to the table, create a diverse team, diverse in thought, diverse in background.
Rob Bernshteyn: So that was my first exposure, and it was exciting for me, and seeing the world being changed from information technology and having that exposure to leadership got me excited about, not only answering the working world, but then probably got me into Harvard, which gave me a chance to accelerate that even further.
Dawn Tiura: Of course, you were the president of the fraternity, and of course you graduated with almost straight A's—that's the Rob I know. So, the skill sets though...so you went to McKinsey for a little while, which is of course for the brainiest people out there, and then you went into SAP, and then you were at Accenture. So, do you think the consulting skills have helped you shape your leadership skills?
Rob Bernshteyn: Absolutely, and I'll tell you what I discovered. Doing implementations of SAP at Accenture, and then doing strategic consulting at McKinsey for a short period of time, I saw that there was a clear disconnect between the execution side of things and a more cerebral and strategic side of things, and if you could be the person that is at that touch point, in other words, the person that can lead teams and people of bridging that gap between strategy and academics at a pontification, and actual execution of energy through the use of information technology, wow, you'd really have something big to offer the world. So, I've stayed within that realm since my MBA coming out here to Silicon Valley, and developing my career.
Dawn Tiura: That's neat. So, let's talk...you joined Coupa, and tell me about Coupa when you started there. It was 2009, a very different company than it is today. So, what was it like when you first took over the helm?
Rob Bernshteyn: Well, I came from a company called Success Factors before, where we built the company from our offices here at Greylock Venture Firm where I was the head of product marketing and products, and we took that to be a public company that I wound up leaving after a year and a half of being public. So, I had a visualization in my mind of what can be done in the spend management area based on a couple of decades of enterprise software experience, but most recently the experience of building company pretty much from the very early days to being a public company that's well regarded in its industry.
Rob Bernshteyn: So when I joined we had 19 people or so, and there wasn't a lot of money in the bank. First order was to figure out the people, and three months in only six of the 19 were the same people. [We] wound up churning through the first significant round of those people, and wound up raising money, which was in a very tough time in 2009 when it was hard to get money, and then we really started to build the company out in the latter half of 2009. Now we're into it 37 quarters, Dawn, taking it one customer at a time, building out a business that we think can stand the test of time, focusing on use cases where information technology could really be helpful, and partnering with CPO's, and CIO's, and CFO's—and in many cases CEO's with their agenda around what we call business spend management.
Dawn Tiura: So 19 people, did you have a software system? Was Coupa fully...well, not as it's developed today, but was there already a Coupa software, or is it still in development stage?
Rob Bernshteyn: There was initially an open source project that the two founders initiated, and then they did go to market largely going after relatively small businesses, and the average deals were $3,000 a year type of type of transactions, and there really wasn't a lot of volume there in any meaningful way. So, revenue, I think in 2008, was around $300,000 or so, and then 2009 was about $1 million, and then 2010, $2.5 million, then $5.5 million, then $10.5 million, then $25 million, $55 million, $110 million, and now our run rate is well over $200 something million.
Dawn Tiura: That's amazing. I mean, to be able to do that in...it's been what, just about nine and a half years, you completely transformed the company, and I had the pleasure of knowing you early on-
Rob Bernshteyn: That's right.
Dawn Tiura: -and you were a very different person then, and you were aggressive. You were a little bit brash, but you're a straight shooter, but you pushed, and pushed, and pushed, and you came after the big guys, and so it's been an amazing journey for me to watch you grow into this amazing leader. You've got the charismatic—you don't talk bs, you tell the truth, which is...that's a little bit rare in some Silicon Valley CEOs, and I've just come to admire who you have become as this amazing man now. So, as you develop your skills, and I apologize if I offended you by calling you a little bit brash—you have developed such a skill set. So tell me, what do you look for in people that you hire and that you think are the rising stars from your company?
Rob Bernshteyn: Well, number one is authenticity. I'm in my mid 40s at the moment, and I look at folks that have maybe later on in their careers they've seen things done a certain way, and I'm also exposed to a lot of people even here in Silicon Valley that are a lot younger generation of folks, and what I see in the younger generation is that they assume authenticity, and transability, and access. They grew up at a time when you could go out to, obviously to Google and look up anything yourself. You don't have to rely on anyone if you don't want to, and I liked that thought around transparency and authenticity because it removes a lot of friction to business, and it removes a lot of nonsense that can slow you down in many ways.
Rob Bernshteyn: I mean, you think about all the legal work that we do when we close some of our deals with some of the largest companies in the world, and I just want to say at the end, "Look, here's the deal, we've got this recurring revenue business with you, and if we don't continue to drive value for you and make you successful year in, year out, you'll cancel. So, I know we're going to go through five months of legal T's and C's, but the reality is, this is a better relationship of honesty, transparency, and authenticity."
Rob Bernshteyn: So I try to find, and I think my team and everyone in our organization tries to find those individuals that want to, number one, are grounded in an authentic way of being. They can be transparent and honest. They're honest about themself, they're self-aware, they know where their strengths are; where their development areas are.
Rob Bernshteyn: Secondly, people that have a certain level of passion, they want to change the world through whatever gifts they have. Maybe through their experience with the domain of spend management. Maybe it's through their strength in information technology. Maybe it's through their strength in re-engineering work, or process design—whatever it may be. So we want to fit people into this organization that are grounded in authenticity, are driven by a passion to change things for the better, and they can bring a certain skill set forth that can help us get there. That's the way we've been building up the company every quarter now. We're roughly a thousand or so employees around the world.
Dawn Tiura: That's amazing. And you've inspired so much loyalty by the people that work for you. I just think you've done such a good job. They're loyal to you, they're passionate about the company, they're passionate about their clients. So, you've done an amazing job, as I said before. So, where do you see the future of sourcing going, and let's say in the next five to 10 years. If you had a crystal ball, what are you predicting?
Rob Bernshteyn: Well, let me frame it this way, Dawn. I think what's happening is there's two extremes on that dimension. On one extreme is to say that there's going to be all of these amazing AI technologies and everything is going to be what's the next thing, ‘what's the next thing’, kind of mindset, and I can share with you my thoughts on that. And then there's the other extreme, which is a lot of companies around the world are still using paper, and spreadsheets, and old systems with minimal adoption, and they're stuck, and they don't know where to start.
Rob Bernshteyn: So, I think it's a continuum, and so if I give you the answer on the former, which is where's the future go, that might be interesting for some of the people that are listening to this, but it may not be very tangible to where they are today. If I give you just the answer around the latter, which is you have to automate and streamline, and get off of paper, and spreadsheets, then that won't be very visionary.
Rob Bernshteyn: So, let me give you the continuum here. What we've been doing here over the last nine and a half years is we've been getting people to a place where they see the vision of a highly integrated, information supported set of capabilities, information technology supported set of capabilities, that helps their company be super, super smart about the way they spend money on all the goods we need so they can be a highly operationally efficient organization that is going to stand the test of time in their industry, that's going to beat their competitors in whatever industry they're in, it's going to help them grow and help them drive shareholder value. That's the vision that we're pursuing, and we're trying to apply the most modern, the most scalable, the most thoughtful types of capabilities to help them get there. That's our vision.
Rob Bernshteyn: Now to get there, we're beginning with wherever the pain may be. Is the pain that their expense management process is so confusing that their employees are complaining? Is the problem that they only have 20% of their spend under management they can't even see it. Let's automate and streamline their purchase order process. Is the problem that they are spending so much on the accounts payable department processing all the invoices coming in and everything is manual that they need to get into a world there it's automated, and streamlined, and all the three way match happens seamlessly, tolerance checks the handle, and all of that. Is the problem that they don't have any complex sourcing capabilities where they can look at multifactorial measures around price, and delivery time, and freight costs, and everything so they can optimize their business processes in the company?
Rob Bernshteyn: So, we go in and in a very consultative way, per your point earlier, leveraging consulting skills. Where are the biggest pains, where is the lever that we can drive value for this company, and let's begin there, locking arms as partners on this journey, because we have a subscription business. I mean, if you want to leave, you can leave. So, you're going to stay with us only if we're going to continue to drive value. Let's agree to where we want to go, and let's take steps every quarter, every month, every release that we come out with, to get you further and further on that path.
Rob Bernshteyn: We've got customers that are beginning with just baseline automation, and we've got customers from the largest companies in the world now that are beginning to really orchestrate. They've got a vast majority to spend on their management. They can see it, they can optimize it, and they can show their executives how they're deriving real strategic value. That's what we're about. That's what we're about, and we're happy to enter this journey with customers at whatever phase that they may be in at the moment.
Dawn Tiura: That's neat, and I love the fact that you're supporting our vision at SIG, which is elevating the role of sourcing within the organization to be seen as so strategic, and the more you come out with these improvements and help these executives, the better off we are as an industry. So, keep doing what you're doing.
Rob Bernshteyn: Well thank you, and I'll tell you one of the other things I hear to that point, Dawn, I often hear it at your conference and some of the other conferences in around the sourcing spaces, the ability to attract bright, hardworking, passionate talent to their organizations as well. One of the things we take a lot of pride in here is that very often we're a draw for those folks because they see that they're using Coupa, they're using modern technology solutions that are intuitive, that are usable, comprehensive—all the great things that we're proud of here in terms of what we offer. That actually helps draw some of that talent to them, which is very, very cool to see. [That’s] Not something that I initially went in thinking would be a driver, but it's actually becoming a driver in our space.
Dawn Tiura: That's neat. So, if you could go back and talk to your younger self, who was quite entrepreneurial obviously, what advice would you give yourself?
Rob Bernshteyn: You know, it's a personal question I'm more than happy to answer. I would say to you, personally, I would have been a bit more confident in myself earlier on. Everyone has their own path, but I think that for me, having started as a programmer and a developer, I like to get down to the bits and bytes of everything. I mean, I want to see where's the data's stored, what's the [inaudible] thing and what's the query? I want to see things at a very detailed level.
Rob Bernshteyn: Now, the problem with that is then it's very hard to abstract yourself and have a lot of confidence and a whole host of things if you want to see everything at that detail level. The power of that is that when you do see things at that detail level in every functional department, which I've had the chance to have been exposed to it in the software industry, you really understand the big picture and the details, and it gives you a lot of confidence. So, what I would say is, I'm a little bit of a later bloomer, if you will, but the good news is that it gives me a very strong base from which to build off of.
Dawn Tiura: You are-
Rob Bernshteyn: So the advice would be more confident early on, I would say perhaps.
Dawn Tiura: How on earth can you call yourself a later bloomer when you're in your mid- forties, you've taken a company public for God's sake, and your name is known throughout the world, like seriously? What you wanted to do it by 35? For God's sake, you're an overachiever, and that is-
Rob Bernshteyn: I appreciate that.
Dawn Tiura: -that is just hilarious. I'm...oh my gosh. Okay. So, just wrapping up since we want this to be...this is for people in sourcing and we've got some younger folks that listen to podcasts obviously. What kind of advice would you give someone who's just getting into sourcing today? What kind of advice would you give them to be successful?
Rob Bernshteyn: Yeah, that's a great question. I would suggest that they maintain an open mind and bring—especially if they are coming in to this area without having a background in this area. I've seen a lot of people be very successful enter the world of sourcing that actually didn't grow up in it, because it gives them a chance to look at things completely fresh, question old assumptions, it gives them—because there is, truthfully and for good reason—a bit of cynicism also in our space. Like, "Look, we've been fighting to get access to the executives. We want a seat at the table. We're doing things that a very strategic. Why can't they see that?"
Rob Bernshteyn: I think when new players come in with a fresh mind, they can question old assumptions, they can bring a new energy into our industry, and they can reach for conversations with executives that are grounded in things that are more simplified, that are more streamlined without having the baggage of some of the ways maybe things have been done in the past.
Rob Bernshteyn: I think we've seen something very similar, frankly, in the HR realm. I spent six years in the human capital management realm where we saw this evolution from personnel departments, if you remember those, to HR departments, to human capital management, and now we see more chief talent officers, and chief people officers. I think there's the same opportunity in our domain of this evolution from buyers, to sourcing professionals, procurement professionals, to what we would love to see is chief spend officers. I mean, the people that are at the table with the CEO and the board saying, "Hey, you know what, I'm responsible for all the spend that happens at this company, and the technology that's needed to support it, and the best practices, processes needed to support it."
Rob Bernshteyn: It requires a certain level of energy, intensity, and wherewithal to really understand the businesses for which these sourcing professionals work. Looking at the annual report, looking at the stock, listening to the earnings calls, understanding what's important to the CEO and CFO, and mapping their agenda to that as they build up their careers in sourcing. I think it's very early days for what's possible here. I mean, I really think a chief spend officer type organization is in the process of being developed, and people entering this field now have the opportunity to develop their careers and to being those people.
Dawn Tiura: That's great. I love that. Well Rob, I'm real excited to invite you back to the podcast, because I know you're going to be continuing to do great things. So, I'd love to have an open invitation to bring you back at a later date and get an update, and hear are the other exciting things that you're doing. Is that all right?
Rob Bernshteyn: Absolutely. Thanks so much, Dawn. I really appreciate it.
Dawn Tiura: Well, thank you, and folks, once again, Rob Bernshteyn with Coupa Software. Obviously an incredible tale about a man who's come so far in a very short time. An underachiever in his mind, because he only did it by mid 40s. But with that, Rob, thank you again for your time, and thank you for inspiring so many people. And I hope you just continue on this bright and fantastic journey that you're on.
Rob Bernshteyn: Thank you so much, Dawn.
Dawn Tiura: Thank you. Have a good day, and folks, please join us for another podcast very soon. Thanks, bye.