Neil Patel

I hope you enjoy reading this blog post.

If you want help with your fundraising or acquisition, just book a call click here.

Tom Shea is the cofounder and CEO of OneStream Software which is an independent CPM software company. The company has raised over $600 million from investors like KKR. Prior to this he founded UpStream Software which was acquired by Hyperion which would later be acquired by Oracle for over $3 billion.

In this episode you will learn:

  • Bootstrapping into the millions
  • Becoming the Kleenex of your industry
  • The need to break your own business every few years as you grow
  • Planning your growth in stages


For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

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The Ultimate Guide To Pitch Decks

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Tom Shea:

Tom Shea is an original founder and CEO of OneStream Software.

Tom Shea 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 Shea is passionate when it comes to delivering value, success and support. Tom Shea passion and true strength stems from a deep, unique understanding of Finance that leads to truly innovative and revolutionary products.

Tom Shea began working on OneStream XF more than 8 years ago and his vision is to change the entire CPM ecosystem with a solution that combines power and flexibility with ease of use, deployment and maintenance.

Connect with Tom Shea:

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Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today, I think that the founder that we have is definitely super interesting, gone the full cycle, bootstrapping, now raising capital, you name it. I think that it’s going to be quite an exciting story. So without further ado, let me welcome our guest today, Tom Shea, welcome to the show.

Tom Shea: Hi, Alejandro. Glad to be here.

Alejandro: So originally born and raised in Michigan. How was life growing up there?

Tom Shea: It was very interesting. As you can imagine, if you see today’s times, when I grew up, we grew up thinking that we were the center of the universe with General Motors being #1 on the Fortune 500 for 75 years in a row – now being a fraction of Uber. So it was an interesting time to see that go that entire direction.

Alejandro: Did you have people in your family also in this segment? Also, did you have anyone in your family that was an entrepreneur or that had their own business?

Tom Shea: It’s very interesting. Yes, my father was an entrepreneur, but it didn’t work out well for him. He actually hit a snag and wasn’t real fond of it because he had to start over, but he had that bug. He really preferred that I go work at a large company and make that my career my entire – spend 30 years at a big company became the idea. So, I had to deal with a little bit of that in what I’m doing here.

Alejandro: Why did you go to University and study and develop that expertise around accounting and finance?

Tom Shea: Starting to think about these large companies, Chrysler, General Motors, and Ford, all being in my backyard here, you see this opportunity. A lot of my friends’ parents were in corporate finance in these large companies, and it seemed interesting. I liked Wall Street. I was reading every book I could back in the day like, Liar’s Poker and Den of Thieves, and I was very interested in finance, in general, which also led me down that technical path as a tangent – a lot of big corporations around us here and a lot of business and engineering in the Michigan area here.

Alejandro: That’s amazing. And you did go into the automotive space. It all started with an internship with Chrysler, and then it developed further over the course of the next year. So, what did you do there because it shifted quite a bit?

Tom Shea: Yeah, and I think it’s important to note during that time, I was really interested in finance, as I said, and it was hopeful to someday maybe become the CFO of a big company. So, that’s all I really thought about them. But, on the side, I was writing software just as an entrepreneur, just out of having a passion for programming that I had by having exposure and a computer in our house at a young age when a lot of people didn’t have that. My father kept that around, and it gave me that opportunity to tinker and eventually start selling software. That pushed me, while I was furthering my career, which I didn’t know, in finance was a strong and great way for me to understand business and understand business problems, become disciplined, learn how to be an operator and how big companies operate. At the same time, I kept coming home at night and reading and working on software and selling some smaller pieces of software to businesses in my spare time. Eventually, those two things collided later on.

Alejandro: Yeah, you ended up doing your own thing, for sure. So, after spending a few years in the automotive industry, then you ended up doing consulting, and then basically that was the segue later on starting your first business, your real business, UpStream Software. Why don’t you tell us what led you to UpStream, and how did you come up with the idea, and how did you bring it to life with your brother-in-law?

Tom Shea: That’s a great way to think about it, bringing it to life because you really feel that it’s quite a process to start a company. After that time in corporate finance, I had learned quite a bit. I had good experience in interacting with executives and working on some sophisticated business problems at very complicated businesses, so I had a good idea of what corporate finance needed and was working heavily in the financial consolidation reporting area, and saw some of the challenges that were going on with these large businesses. Again, as I had mentioned, I had been writing software. I did spend a little bit of time in consulting at BDO, which gave me a chance to test the waters and make some more complicated software, write contracts for them, deliver it, sell it, and sort of practice. I was under the umbrella of a larger consulting company, but I had a lot of free reign, and it let me get a taste of being an entrepreneur with maybe a little bit of less risk. It gave me a lot of leeway there. That brief experience after my automotive experience gave me the confidence to see that – the way that I like to explain it is I say, “If I can go kill it, clean it, and cook it, why am I doing that for somebody else if I can do all three of those things? So, if I know how to find the deal, get the deal, sign the deal, I think I might have a fair chance here of becoming an entrepreneur and being successful myself. So I saw an opportunity to productized some of the custom software that I had been working on, which eventually became OneStream. Yes, that was started with my brother-in-law, my best friend, and that’s what led us – you had some people that believe in you pretty heavily to jump on board.

Alejandro: I would say that doing it with your brother-in-law is also a little bit risky because you don’t want to make the Thanksgiving dinners go awkward.

Tom Shea: Yeah, exactly. You always have to be careful about doing business with friends and family, but if it’s somebody that you’re really aligned with, and you can trust them, and they have your back, I’ve found that those are the best people to work with, at least in the early days because all entrepreneurs know that there’s a lot of doubt and that things are never as good as they seem, and they’re never as bad as they seem. So, you want to work together and make sure that you can help each other keep perspective.

Alejandro: Absolutely. Obviously, the outcome was successful, so I’m sure that the relationship is still there. In terms of the business model for UpStream, what was the business model?

Tom Shea: That was traditional software at that time where you’re basically selling licenses and maintenance, and you have a service component to implement the software. You think of a revenue stream, which is straightforward. You had a recurring revenue ARR component, but one, the traditional model versus the SaaS model, but still a great business in the sense that you’ve created intellectual property, and you’re reselling it. Then, you have a component to successfully implement that at these major customers. One of the things that was a hallmark of both of our companies was and is still a simplified mission statement, and that is, every customer will recommend our company and our product and our services. That’s all we focus on is that customer success, and we try to build the business one customer at a time because if you think about it as an entrepreneur, if I can get one customer to pay for my product or my service and be happy with it, then I probably have a pretty good opportunity to repeat that and just take my time and repeat it in a controlled manner.

Alejandro: Got it. Here, you guys didn’t raise any money. Why didn’t you raise any money?

Tom Shea: Again, it was this mentality of – probably back to the automotive starting point, you learn a discipline because automotive suppliers, at the time, – you’re talking 20, 30-billion-dollar companies. We’re not taking little companies, but they are typically low-margin businesses. I learned how to operate for ten years in a company and what it meant to manage cost and expense and how to manage cash. In starting this, we felt that we each put in $7,000 to start UpStream. So, $21,000 was used to start it. We basically bought a couple of printers, and a projector, and each bought a computer, and we were off to the races coding, and then started running around the country trying to demo the product. 

Alejandro: Wow. Obviously, that was something that worked out well because the company ended up getting acquired by Hyperion, and then Hyperion got acquired by Oracle. So, not bad. Why did you decide that the acquisition was the way to go because here you were already at it for close to seven years, so it seems that the trajectory and creating something that is self-sustained was there? Why selling the business?

Tom Shea: This is a really interesting part of the story, and it’s something that, in hindsight, you look really lucky, and it was fantastic, and at the same time, while you’re going through it. The relationship with Hyperion was one of – I’ll call it a love-hate-love relationship. We became a very strong partner with Hyperion early in our lifecycle because they were the leading company for our financial planning and reporting. Sixty percent of the Fortune 500 used them, and we oriented the company around their market and their customers. They’re a partner now, and all basic their whole ecosystem. We were successful in making their customers successful. But they also had products that competed with ours. When we would go and win a deal and win a joint with them, it would be that individual sales rep at Hyperion would love us. Craig, my partner and best friend and founder was all excited, but then, we would get threats from them on the other side that “We want to go and write this product potentially within our set,” because they had a competing product. The people responsible for that competing product did not like us. It was really, really challenging. But we kept persevering, and I would have one side of the claim, I would say, “That’s it. I’m really frustrated and angry about this because of the way the partnership was going.” Craig and my business partners, they would be thinking, “Hey, we’ve got to stick this out. Maybe we can get a deal with them.” We ended up signing an exclusivity deal with them on the long and short based on our success with their customers that allowed them to resell our product in a sense where they were basically paying their sales reps a commission to actually sell our product, and that was really transformative to our business. But, as you can imagine, along with that was exclusivity, meaning we couldn’t sell to their competitors, but we ended up going from ten sales reps of our own to the hundreds of reps that they have, and it really expanded the business. But as of that, when we signed that contract, you knew the writing was on the wall that eventually they would probably want to acquire us because we were almost acting as a unit of Hyperion or a business owned by Hyperion.

Alejandro: Very nice. After the acquisition, which was reported to be in the neighborhood of $50 million, so not bad of an outcome when it’s fully bootstrapped, and it all goes to your pockets instead of having to give it to investors. Here, you spent quite a bit of time. Obviously, there were no competes, the vesting and resting, you name it, but then eventually, as they say, once an entrepreneur, always an entrepreneur, and here you are thinking about what’s going to be next, and then all of a sudden, another opportunity, OneStream, comes knocking, so how did that happen?

Tom Shea: Again, back to the UpStream – the names, you can see there’s some confusion. UpStream was involved in moving data from ERP systems up into the analytic tier for financial reporting out to Wall Street. OneStream: the whole genesis of OneStream was about looking at what had happened over about a 10 to 15-year period in the financial analytic space with Hyperion, SAP, Oracle. They keep adding more and more products to this offering when a CFO is then left to put these pieces together. The One in OneStream is quite an important part in our name, and it’s all about the idea that we’re trying to collapse all these various product offerings into one. We saw that as our opening in our focus. The experiences that we all had, all the employees of UpStream and the partners that we met that were implementing our software, the engineers that we met at Hyperion as we were co-engineering products and working together. That created the perfect opportunity for us to come together after Hyperion was acquired by Oracle and say, “You know what? We know this market; we know the people that implement the software; we know the people that sell it. If we can rationalize all these different products and come up with a good, unified product, we see an opening here in this market; we can be an effective player and change the game. That’s what led to it. But there’s a critical person, another founder, Bob Powers, who is part of the OneStream founding group, and he was an inventor of some products at Hyperion. We hit it off early on in the early 2000s and always hoped to work together someday. All those pieces came together to enable the founding of OneStream.

Alejandro: Wow. Obviously, this was a big deal for you guys because you are literally competing with some of the biggest software companies. I know that there was a point in time for you where you were in your house, there with the phone, with your co-founder on the line, and thinking, “Are we doing this, or are we not doing this?” Why did you decide to go forward with building something against such big companies?

Tom Shea: Yeah. It’s all about – and I think this is clique to say, but really, you have to be extremely passionate about what you’re doing, especially the more difficult the problem is, the more passionate you have to be because that’s what sees you through the late nights and the doubt and the work. I think what we saw is, we tried to take an easier road that we thought was an easier road, and maybe sell a product that was tangent to the large companies that we would be competing with. But, in the end, you could see there just wasn’t a big enough market. The incident to which you’re referring is, I remember the day that we all realized that following a conference that we had attended, what we thought we were going to enter into this tangent market. We returned from this conference, and we thought, “There’s just not a business there.” It was sort of a moment of, “Wow. We’ve been working here, and we think we have something.” We just realized that we didn’t. We all got on the phone and said, “Okay. This is what we were meant to do, which is to build what we know from the Hyperion days, and we can’t just look at it and say that these large companies are there and that we don’t have a chance. We have to say, “Let’s build what we know, what we’re passionate about. It doesn’t matter if it’s hard, and let’s see what happens.” That’s what we did. We put our heads down, really worked hard. The important piece there is the transition for how do you do that? Don’t look five years down the road, and how do I get to a thousand employees? It was how do I get one customer to believe in this vision? That’s what it came down to. 

Alejandro: That’s incredible. In terms of now that you’re mentioning customers, how do you guys make money? What is the business model so that people listening really understand it?

Tom Shea: Back then, we started the same way that we started UpStream, which was the exact same model: one customer at a time, build this on Customer success, sell software maintenance and services. This was early in the SaaS-pricing subscription ARR view. We always valued ARR in terms of maintenance on your software was a really important part of the economic model. But, at the time, in the business that we were in, as you’re probably aware, you see how prevalent the cloud is, people were still reluctant in the early days to think, “We’re a publicly-traded company. Do we want to put our financials in the cloud? Is it secure? Is it safe?” There was a lot of doubt, and the verdict was still out, or the jury was still out on whether or not that was going to be something that people would ever get comfortable with is moving your financials to the cloud. We sat down, and we knew that technically we had to architect the company for the cloud technologies, which we did from day one given all that we had learned and started, but we were guarded into how we would move into the business model that we’re in today, which is fully all SaaS cloud focus. It was an evolution where we had to ride that along with our customers. We really needed to be in tune with our customers and react and learn from what they were telling us, and these are large Fortune 500-type publicly-traded companies – a lot of them; some were private, as well, but complex, large businesses and learning from them on that journey one success at a time. 

Alejandro: One thing that is definitely interesting here on this story is that you’re coming with this background of bootstrapping. On the last business, UpStream, you literally built it, scaled it, and exited it without taking one single penny, and obviously, the outcome was fantastic. So, here you are, really doing a very good job on the execution side, things are moving in the right direction, and then you decide to raise a round, and a big round, $600 million. I haven’t heard of a first institutional round this big. It’s pretty amazing. So, why did you take this money?

Tom Shea: As you say, it’s kind of interesting when you think of the people that joined and started to believe in that vision that I just described that “We’re about to try to recreate something here that’s big.” It’s a lot bigger than UpStream. This was multiples, not only in the outcomes and in the potential of the business, but the complexity, the people, what it was going to take to get this company to a place where we’re realizing what we all thought it could be. If I think about the offer that I would – in the early days of UpStream, it was quite a small investment relative. We didn’t invest that much more as the founding, bootstrapping of OneStream, call it $150,000 or something like that across all of the partners that were involved. But the offer that I had to make to people in those early days was, how about you come and join us because we knew that we needed the best and brightest people in services, in sales. We needed the top people in this industry if we were going to compete with these big guys. We had to get the right people on our side. We had to build a great product that they could believe in, but then we had to get the right people to help us implement it, sell it, and they had to have that experience and come from our prior world, and that was really, really challenging. The kinds of offers that we had to make to people were, “How about you leave your job where you’re making a lot of money – and, by the way, it’s going to cost you x to buy-in to help fund this, and you may get paid in a couple of years if we can get the sales going at that point.” That’s the definition of bootstrapping right there. It’s wet equity and really working hard and being able to sacrifice and work towards that process.

Alejandro: It’s amazing because you founded the business in 2010, and typically, people would wait 6 to 12 months, or maybe 24 months, and then go out and raise money. Here you are, closing the deal and announcing it in 2019, nine years later. What was that moment? Was there a specific moment where you say, “Now is the time when we’ve got to make this thing happen”?

Tom Shea: Yeah. That’s great. Once we got all those partners on board, and we got into executing – I look at this as life cycles. In the very beginning and what I just described with those individuals, you’re really in survival mode. Can we get the product, can I get one customer to pay us for this and get successful? Then, you look at it as can we do this in a controlled way and repeat that to ten customers? But you’re still refining the product. Remember. We’re selling to Chief Financial Officers, a very risk-averse community. We had to do things right, so it has to be very controlled. There’s no opportunity to fail there when you think of this long time run. As we started to get to 10 customers, and then you get to 20, you’re able to actually start a planning process. You’re starting to exit survival, and you’re not into thriving, but you start to focus on distribution, and how can we start to scale this business to the first level of scale? Clearly not at a public level, but let’s set a five-year plan for ourselves, and let’s see how we could take this business from zero or $5-10 million to $100 million, and really put some thought behind it and some planning. What you saw happening there in the timeframe that you just described was execution toward those milestones. In 2016, 2017, we started to see the hockey stick in that distribution, and our demand generation engine really picking up, and we could see that the business was starting to pick up, and it was time to start thinking further down the road. We had worked through that first five-year plan, and we’re seeing this loose goal that we set for ourselves of 100 million dollars in sight. We were in the high $80 million that year that we made this decision. We said, “How do we reset here? What do we want this to become?” Because if you’re at the growth rate, the trajectory we that we are on, you couldn’t think quarter-to-quarter anymore. You couldn’t think year-over-year. You had to think three years, four years, five years out. At the same time, it went from needing to hire 10 new sales reps to hiring 50 to hiring 100. You start to have more and more capital pressure on the business, and more and more need for strategic planning. That’s what led to that sort of event. But the thing that I would say about that event that’s so important is, we were discipline operators making money, producing successful customers, which made the event of looking for that partner and think five years down the road in building a great company enjoyable because a lot of firms were attracted to us as an investment because of the discipline that we had instilled in the business for all those years.

Alejandro: Got it. Obviously, when you take the money – that’s quite a bit, $600 million; you need to deploy it. I would assume that people have been one of the areas where that growth has been going off the roof. I’m taking a look here on LinkedIn, and I see that you guys are close to 200% in the last year or so in terms of employee growth. How did you also grow yourself to have that leadership skill set to grow in pace with the business, but then also in order to really gear the ship with all these new people that you were adding? 

Must Read: Oleg Tumanov On Raising $200 Million To Create The Rival Of Netflix In Russia

Tom Shea: I think most entrepreneurs know this, especially if you’re taking a business through these different lifecycles, what I would say are now firmly into this scale, refinement, maturity part of our life cycle where you’re looking to put the people process and system in place to account for all these people that you’re adding. As most entrepreneurs realize, if you’re going through this, you kind of break every two years. When you’re a 30-million-dollar revenue company, and you try to become 50, the people and processes you have in place kind of break at 50. Then you’ll right-size yourself and work toward a 100, and all the sudden, you hit 100, and you realize that you’re still not right, and you’re breaking again. Now, we’re getting to that point where you start to build out all the different functional areas of your business, and you’re investing in areas that you might have underinvested when you bootstrapped where you needed more people, and you needed specialization and dedication so that you can then layer in. What you’re seeing is a maturity of the business happening at that point, and you start managing through that process. Our investor, our partner, we were looking for somebody that could help us rationalize that scale, give us the capital backdrop that we wanted, help us be more sophisticated in the way that we think about the business financially, and be more strategic and think further down the road.

Alejandro: Very nice. Imagine, Tom, you go sleep tonight, and it’s a tremendous snooze, and you wake up five years later, and you wake up in a world where the vision of OneStream is fully realized. What does that world look like?

Tom Shea: For me, the example I love to use on this – we always want to be the de facto product when it comes down to this type of relationship with the CFO when the CFO needs to do this financial reporting at a large, prestigious company, we want to have a reputation through this timeframe that we’ve been doing through this ongoing customer success that when you arrive at a new business, and they don’t have OneStream, it’s like asking for a Kleenex. You don’t ask for a tissue; you might ask for a Kleenex. To me, having somebody ask for OneStream is, as the default, we have to have it, tells me that we’ve achieved what we’ve set out to achieve, which is that globally recognized brand in our space.

Alejandro: Very nice. I think that it would be super interesting if for the people that are listening, maybe there’s anything that you can share so they can get an idea on how big OneStream is, maybe like employee count or anything else that you think could be interesting.

Tom Shea: Yeah. As we think through the business right now, employee count, which is interesting. Even as we go through COVID, we’ve still been in a hiring mode, and I think we’ve recently crested 560 employees, so we’ve still added more than 100 employees this year, which is still significantly lower than our original plans, but we’re still happy to be powering through this and working in a way and being smart. Again, I think, to add to that, and I guess being able to continue to grow and manage through this, being bootstrapped and having that mentality is a great preparation for events like we’re managing right now because when you’re bootstrapping a business, your life is capital constraints and cash flow. That’s all you think about on a weekly basis, so there’s no greater preparation and having that operational discipline to be able to have a business and grow a business through these types of trying times that we’re all seeing here.

Alejandro: Absolutely. So, how do you think about culture because I’m sure that has shaped up the culture a little bit too? 

Tom Shea: It has. As this uncertainly has – in OneStream, we’ve been growing so quickly. Basically, our entire existence has been between 40% and 60% growth rate. So, you’re constantly just grow, grow, grow. Culturally, everyone is heavily aligned to that success and that journey. As you get to this and you slow down, you stop, and you reflect, you can see that people seem to appreciate the culture that we’ve developed even more in the sense that, again back to that discipline that comes from being bootstrapped, that’s a comfort that you can offer to your employees, as well, culturally as you go through this. “We’re responsible. We’re not trying to get too far ahead of ourselves. Don’t worry. We know that there’s anxiety here. Our story hasn’t changed. Our belief hasn’t changed, and we’ll keep working as hard as we can through this, and the journey hasn’t changed for you, we’re just slowing down a bit here as we run through this.” I think, again, the startup culture and transitioning to the mature company is always a challenge, but it’s something that you can do just by being transparent.

Alejandro: That’s really, really, really amazing to hear, Tom. One of the things I typically ask the guests that come on the show is – this is your second rodeo. Obviously, this one seems to be a really meaningful one, probably the biggest one that you’ve done to date. I’m sure that you’ve learned a ton of lessons along the way, either with OneStream or before with UpStream. If you had the opportunity to go back in time and you were able to speak with that younger Tom, maybe that younger Tom that is thinking about launching a business, what would be that one piece of business advice that you would give to your younger self before launching a business and why knowing what you know now?

Tom Shea: The one thing that I focus on a lot is to try to keep your emotion in check because when you’re an entrepreneur, you live your business. It just becomes part of you every day, and if you’re not careful, you can lose your objectiveness in terms of how you’re looking at a business problem because you become so emotional. I look back at some of the challenging times and maybe the weekends that I ruined or the things that I focused on that were emotion-based versus business-problem-based. That’s one of the things that I’ve really learned over time. That is something that I’m able to then complement with really smart people around me and rely on them. I know that’s not that tangible. There are lessons I could learn about – that I could say about capitalization and things like that, but you can see a competitor, or you can see a thread, and you can make a decision that dramatically impacts your business based on emotion rather than the true facts of the business case. I think those are some of the things that I’ve been able to get good advice on it and work maybe more diligently as I’ve been doing this longer and longer to see business challenges for what they are.

Alejandro: That’s very profound, Tom. For the folks that are listening, what is the best way for them to reach out and say hi?

Tom Shea: I’m on LinkedIn, so definitely that would be a great place if you want to hit me; you’ll see me on LinkedIn. That’s the best place to make contact with me.

Alejandro: Amazing. Well, Tom, thank you so much for being on the DealMakers show.

Tom Shea: Thank you. I really appreciate it.


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