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Ep 52: How Vanessa Wu, GC @Rippling tackled Silicon Valley Bank’s collapse
107 Plays3 months ago
How do you raise nine figures in financing in twelve hours as the first Twitter-fueled bank run is happening around you and you feel the pressure of hundreds and thousands of employees depending on your ability to finish the deal so their paychecks clear?
Join Vanessa Wu, GC at Rippling, as she relives the moment her company overcame the disastrous collapse of Silicon Valley Bank and pulled through some lightning-fast deals to protect the income of the clients whose paychecks depend on them. Her department’s hard work turned a catastrophe into a boon to their company’s reputation, both with product users and investors.
Listen as Vanessa offers a masterclass in getting financing and deals over the finish line in record time, with tips on moving through the diligence process, keeping fees low, and why it's essential for lawyers to close as quickly as possible.
Read detailed summary: https://www.spotdraft.com/podcast/episode-52
Topics:
Introduction: 0:00
Becoming a top dealmaker at LiveRamp: 1:33
Moving quickly to close deals: 7:06
Offering operational solutions to small and medium businesses at Rippling: 10:08
Surviving the collapse of Silicon Valley Bank: 23:14
Collaborating with finance as a legal team: 36:21
Tips for a fast and low-fee financing deal-making process: 40:54
Favorite parts of day-to-day work: 41:54
Book recommendations: 44:22
What you wish you’d known as a young lawyer: 45:28
Connect with us:
Vanessa Wu: https://www.linkedin.com/in/vanessa-wu-7363359/
Tyler Finn: https://www.linkedin.com/in/tylerhfinn
SpotDraft: https://www.linkedin.com/company/spotdraft
SpotDraft is a leading contract lifecycle management platform that solves your end-to-end contract management issues.
Visit https://www.spotdraft.com to learn more.
Recommended
Transcript
Rippling's Bold Payroll Move
00:00:00
Speaker
We knew we had ah you know tens of thousands of American workers expecting paychecks that Friday. ah We decided to hit an emergency button at at Rippling to actually fund out of our corporate and bank account because we we were fortunate to ah have quite a bit of cash at that time. That would be able to cover, I think it was $130 million dollars of payroll at that time just to make sure those folks would be able to get paid.
Introducing Vanessa Wu
00:00:34
Speaker
How do you raise nine figures of financing in 12 hours? Well, the first Twitter-fueled bank run is happening around you and with hundreds of thousands of employees out there, depending on your ability to get the financing done so that their paychecks clear.
00:00:51
Speaker
Today on the abstract, we have a masterclass in getting financings and deals over the finish line. I'm joined by my friend Vanessa Wu, General Counsel of Rippling. Rippling eliminates the friction from running a business by combining HR, IT, finance, apps, all on a unified data platform.
Vanessa's Career Journey to Rippling
00:01:12
Speaker
I'm also going to ask Vanessa to give us her description of rippling and and the products that you offer a little bit later. Previously, Vanessa was the GC of live RAM, which she helped spin out from Axiom and she started her career at Latham and Watkins. Vanessa, thanks so much for joining me today for this episode of The Abstract. Yeah, happy to be here. Thanks for having me on.
00:01:33
Speaker
I'm really excited for this conversation. We're going to talk about sort of your education as a deal maker and then how you've been able to apply that to to really great effect today at Rippling. As you transition to sort of become a deal maker at LiveRamp, how did you learn that on the fly? How did you become comfortable getting deals over the finish line?
00:01:55
Speaker
I think sort of talking about deal work has been I think this may be the first time that I that I do it because I was a a litigator by background.
M&A Experience at LiveRamp
00:02:05
Speaker
So at Latham, I um was doing primarily antitrust litigation and also some employment litigation, commercial litigation as well. And when I when I went to live ramp, my my interest was really around privacy. But quickly after I started, our CEO came to me and said, Hey, you know, we actually are negotiating and have ah signed term sheets with two companies. And ah we would like to close these both in two weeks. um So you know, as maybe a couple weeks into the job, and was not a corporate lawyer by background, never worked on a deal aside from a more like supporting capacity from a
00:02:48
Speaker
antitrust perspective. So I did a little bit of merger work in that regard. So I'd like seen a little bit, but definitely not you know had had no idea being on the litigation side of the house what due diligence really looked like from a law firm perspective or or otherwise, and really just ah was thrown right in.
00:03:07
Speaker
But I guess I am maybe that poster child that it isn't necessarily rocket science. I think sort of any ah legal training can prepare sort of any lawyer to ask questions and also work with outside counsel and advisors and get through that process. I went to an initial meeting on these two deals that we were trying to accomplish and some some business folks had a question, which I probably shouldn't repeat here, but it was something along the lines of whether or not you could use some of the diligence commercially, which the answer is you can't, you cannot. And it was in that moment that, and and we did not to be clear.
00:03:50
Speaker
is actually one went through. So it was fine. It was in that moment that I thought, Oh, you know, I'm not a deal lawyer by background. But even I know that maybe actually in this room, I know the most about M and&A ah shockingly. And so I do have something to contribute and add here to advise this group on on how this gets done.
00:04:10
Speaker
so That was my entree, if you will, into M and&A. but's ah That's a pretty fast start. Do you think your CEO ceo at the time had sort of any idea what what he was asking for and getting two acquisitions done and in the span of two weeks? Absolutely not.
00:04:28
Speaker
ah but ah But Travis May, who was the CEO of LiveRamp at the time has gone on. to have found another company and is is doing great VC work now, um has since done a number of acquisitions himself. And so, um you know yes, there was a little bit of trial by fire, but also I think we at LiveRamp thought those two acquisitions were were actually really well executed. And if you don't shoot for the stars, you don't get close to the stars. And so you know that is something I always really admired
00:05:01
Speaker
of him is that he was able to dream big and we did execute these two deals simultaneously at the same time. I remember folks like Fluent did one signing and then Fluent did the other signing and then told both companies about one another because that was a big part of the strategy and and it did ultimately get get done.
00:05:24
Speaker
I do remember, though, that last day prior to closing the M and&A transactions, and we were working with Wilson Sancini at the time. And I remember having a ton of respect for the the stamina of of the Wilson Sancini associates for not sleeping that night um because I was getting emails at 11 p.m. and then update at 1 a.m. and then an update at 2.30 a.m., then an update at, like,
00:05:54
Speaker
4 a.m. and then 5 30 a.m. Every hour, hour and a half, we were getting updates from from this team that was clearly not sleeping. um And that next morning, I remember sitting in this conference room with our CEO and and him saying, you know, who knew so much went into M and&A deal. I'm thinking like, I can't remember if I thought it or I said it, but I was like, i've actually a lot of people think that and and know that, but I love the the kind of like naivete, but also like boldness to go for it anyways. so and And it got done. That's hilarious. yeah I mean, lawyers at law firms get a lot of flack from time to time about billable hours and this and that, but clearly, right? Like there are some circumstances where we'll really burn the midnight oil for you and and you wouldn't have been able to get done without those outside advisors or but without that outside help. Yeah. Yeah. No, huge, huge, uh, kudos to, to lots of attorneys at, uh, law firms and associates who, who earn more than the midnight oil to businesses and, and, um, you know, in-house legal teams accomplish these goals.
00:07:05
Speaker
I'm curious. you know that's That's a fast start. It's a successful start. But I know you've told me a story before also of a deal that that you lost while you were at LiveRamp that that really has also shaped your thinking. So around how to get financing done and the and importance or how to get deals done and the the importance of moving really quickly. and can Can you tell us about that circumstance too? Because I think it sets up your current approach it at rippling really nicely.
Rippling's Business Platform Evolution
00:07:34
Speaker
My prior company, LiveRamp, ah was initially a subsidiary of a larger public company, and so we were well capitalized. And then while I was there, um we had then um sold essentially the parent company for $2.3 billion to a media conglomerate, it's IPG. Yes, it's ipg yeah yeah yeah to IPG. And so suddenly we were a relatively smaller company with you know over $2 billion dollars in cash on on the books. And so burning a hole in our pockets. And and and and so it made sense for us to look because we could add a ah number of other companies and think about growth both organically and inorganically.
00:08:21
Speaker
And so we did a number of acquisitions while I was there. All of the ones that we wanted to do, we were able to execute on except one. And that one transaction I recall occurring over the holidays. And we let our exclusivity period lapse by two days over New Year's. You know, it was one of those, okay, I think we had a shorter exclusivity period, not the full standard 30 days. And in those two days, another company, I think it was WeWork um was able to swoop up this company. And so it was a good lesson in sort of time kills all deals, lots can happen day to day.
00:09:05
Speaker
um speed really being a critical factor in accomplishing any sort of transactional work and activity and and just it it behooves sort of internal teams, particularly legal teams to really move fast. um And so I saw firsthand how that could completely change the deal from getting done to not getting done. And I think since then, we've only seen how many Black Swan events are now becoming like part of our day-to-day lives like COVID do happen, the market could crash, that financing might not be there anymore, you know, a bank could collapse. I've now lived through enough of these events to know that when you have something, you know, like the the goal and the objective from the legal perspective should just be to get that closed as quickly as possible, responsibly, but as quickly as possible.
00:10:00
Speaker
We're going to chat a little bit in just a minute about those sort of Black Swan events and and some of the ones that that you've you've been through. I gave a little bit of background in my intro, but I probably did not do justice exactly what rippling does. And I think that that context is actually pretty important for what we're going to talk about next. Would would you be willing to describe rippling's business, the products you offer, who you serve, and and how ultimately like consumers and workers are affected by by rippling as well, even though you're B2B.
Advanced Disclosure Practices
00:10:32
Speaker
Yeah, no no, definitely. I think even though I've been at rippling now over five years, I haven't quite nailed the elevator pitch, but I'll do my my best. um you know Rippling is an all-in-one platform across HR, IT, and finance.
00:10:48
Speaker
What that means sort tangibly is that we we create software that helps small businesses and medium-sized businesses run their day-to-day operations, so payroll, and an ah HR system to help ah employees onboard and offboard and change roles as they grow and develop with companies. On the finance side, there's also corporate cards and expense management and reimbursements and bill pay. On the IT t side, we do app management like Okta and device management so that folks can kind of receive and their laptops and have them provisioned ah correctly. So all-in-one HR IT finance to to help businesses ah run their business and do what they do best.
00:11:36
Speaker
And you joined early on, right? You were the first lawyer at Ripling, is that right? I was the first lawyer at Ripling when we were about 100, 125-ish employees. And then over the five years, we are now, I believe, over 3,000 employees globally. Oh, wow. in pretty That's even bigger than I thought. Yeah.
00:11:57
Speaker
Talk to us a little bit about the first financing that that you did at at Rippling, working with Parker Conrad, the the CEO, and and how that might have given you a slightly different perspective, or how you brought a slightly different perspective to the table about how to how to get venture financings done well.
00:12:14
Speaker
Yeah. So the, the very first financing we did, what that I did with rippling was our, our B round. We had actually taken some safes, which is pretty atypical before our B. So after the series A, which is when I joined, we had, um, certain additional demand. And so we said, sure, you can, you can write an uncapped safe if you would like. So there was some sort of pre financing work.
00:12:41
Speaker
that I had worked on prior to the, to the B. The B though occurred after COVID started. So we weren't planning to take financing ah or do a financing at that time. But if you remember back March, 2020 shut down pretty spectacularly software perspective throughout April, just markets cratered and no one was really sure if anyone would be buying software anytime soon. We were fortunate to have been well capitalized, but we we also, like everybody else, was not sure what the the economic recovery would look like after that. So we were considering many options, but as it looked like things were going to progress, we thought it might be wise to have a little bit extra in our war chest at that time. And so we had some investors who were
00:13:36
Speaker
ah very interested. a Founders Fund ultimately led that round. We only went to a couple insiders and a couple other parties at that time and and did that first financing in July. But it was a very turbulent, choppy market. Again, as I mentioned earlier, we wanted to make sure we were closing that deal as soon as we had our term sheet very, very quickly, but also very responsibly. And I can talk about that too a little bit if that Please. Yeah. I think it's super interesting. Yeah. So some things that we do differently at rippling in terms of our financings is we prepare what we call our advanced disclosures. Um, in any financing, you sign your financing agreement documents and
00:14:24
Speaker
you agree about a whole bunch of things, not just price, but also you make all these representations about what your business does and doesn't do. um So like requests that you represent that you comply with all applicable laws and all am all ah requirements. And you know you have no contracts anywhere in the world that um are are ever imperfect. And you know just sort of you're saying like our business is spotless.
00:14:54
Speaker
And then you pair that with a document called your schedule of exceptions, which is just a fancy way of saying disclosures. And so you have this this disclosure document, your schedule of exceptions that you pair with your agreement. And what we do is we um create an ah abridged version of those schedule of exceptions, because we you kind of know what disclosures to expect from investors. They're they're pretty standard.
00:15:18
Speaker
And so you can kind of prepare in advance what all of your disclosures look like and and and what you want to know about your business. We shared that with our investors prior to the term sheet. And we we said, you know, we want you to review this and we want you to ask us, you know, material questions so that this is eliminated as a major item um as part of a standard due diligence as we press in the deal. And it's not that you're not allowed to do diligence, but we want to make sure at a high level you understand sort of our critical risk factors prior to signing a term sheet with us. um And that's what we did in the B and we had, you know, some light diligence conversations ah with ah founders funds outside counsel at that time. And then we've obviously went into the deeper discussions actually during the diligence process, but before the term sheet, we did that too.
00:16:14
Speaker
And you continue to do that today, this this practice of having a set schedule of exceptions or advanced disclosures, sharing that, even in advance of receiving a term sheet. I mean, I guess one, just to call out for the audience, this is unusual, right? It's it's like a slightly different practice than than what a lot of other companies that are doing venture financing are doing. But two, I think it enables you to close these financing rounds faster is is is what you found. Can you talk a little bit about about that? Yeah, no, absolutely. So I guess, you know, one question folks might have is is why why do you do that? This is not just unusual. It's extremely unusual. I've not heard from outside counsel or anybody that any other company has ever done this. You know, why over disclose and why disclose before your term sheet? It's just like really,
00:17:05
Speaker
you know, it's it's a lot. And part of this is and like, and we fully acknowledge this, our our CEO has a history. um He had a prior company. and And at that prior company, there were issues with some of the disclosures made in a financing. And so he personally feels really, really strongly that we disclose and ensure that our disclosures are very comprehensive. Uh huh.
00:17:33
Speaker
to a degree that I think most companies just don't do. And we've had a number of discussions about this, the CEO of Rippling and myself, on the value of disclosure and um how like a lot of companies are actually afraid to disclose. And so they end up you know taking more risk and that actually it's a helpful thing and helps the company and him sleep at night that we disclose all of our risk factors and that we are very comprehensive with it.
00:18:03
Speaker
um know I have talked to him about you know the risk that when we send these disclosures out that they get all blasted all over ah the internet or or shared. And his view has been these are you know generally investors that are more trusted parties. um you know They want to do a deal. We want them to really understand what they're getting themselves into. It benefits all the parties. and I agree with that and now that we've sort of done this repeatedly for our B, our C, our D, and you know now our our E, it's kind of just become part of the pattern and practice of of rippling financing.
00:18:44
Speaker
um which is really cool. I also think it enables us to not sacrifice the diligence that our investors are able to do on rippling while still enabling us to maintain speed yeah so that we're like doing diligence in parallel to the more business pricing negotiations happening.
00:19:05
Speaker
I mean, a couple ah a couple of thoughts there that I'd love your reaction to. and And then I'm curious to start talking about these sort of black swan events and SBB. I mean, one is you know the immediate reaction when su you would tell someone perhaps, like we did a financing in 12 hours or 36 hours or 48 hours is, well, you've got to be sacrificing on diligence somehow, right? but with this approach, not necessarily. The other the other thing that I'd be curious for for your sort of view on is it actually probably sets you up very well. I mean, this is getting a little bit ahead, but like sets you up very well when you're going to be a public company someday, perhaps, right because you're going to need all these risk factors in an S1. And it's more comprehensive disclosures are are going to be required and necessary at that point in time. Anyways, so, you know, maybe maybe the fact that so a few companies do this is more a function of private markets than than anything else Yeah, I i think actually maybe something I didn't mention is we have this level of exceptions which responds to each of the representations you make in the Purchase agreement, but we actually also have a full set of risk factors and that we also attach to our schedule exceptions, which we are not required to do, which we understand from outside counsel, no one does, and no one tries to put that in our schedule exceptions, and all of the like, never, never, never, never. But then we talked about like, but we want to do it. And we want this to be in our schedule exceptions. And now it's become part of our documents ever since that B round. And I do agree, I think ah set us up for a level of maturity to be able to produce these disclosures as not a one time thing, but something that we try to keep up to date at rippling to have that level of
00:20:56
Speaker
you not not like I definitely don't think we are doing the full public company disclosure process.
Spotdraft Sponsorship
00:21:04
Speaker
sure and It has enabled us to really, and and myself especially, understand what's happening at the business from a risk perspective.
00:21:13
Speaker
from the get-go, trying to produce these disclosures and keep them evergreen regardless of whether we are financing or not. That's actually really interesting. I hadn't quite thought that piece through, which is is someone who's running legal and compliance and risk. Or even if, for whatever reason, you go out and you want to recruit and a new CFO. or right I mean, you have something to hand to to that person beyond just here are the board decks and minutes from the past few meetings, or here's our financials, right? And you can also use this set of risk factors to to drive parts of your roadmap, I'm sure as well.
00:21:54
Speaker
Yeah, no, no absolutely. you know We have areas that we have disclosed as our risk factors, and we say we would like this to not be a risk factor by that state. And so so that can be you know very helpful for us to kind of see what our holes are, not just sort of experience you know the various gaps, and like but like see them so we can develop maturity plans around um what this would look like when we disclose.
00:22:26
Speaker
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SVB Crisis Response
00:23:07
Speaker
Make your contracting easier today at spotdraft.com. Let's, let's talk about maybe sort of the, well, besides COVID, biggest black swan event or a black swan event that really drove a financing round for, for rippling. And that's the collapse of Silicon Valley bank, um, ultimately got bought by JPM. Nobody's going to expect you to have sort of the authoritative history. Did I get that right? I saw you look away. would Was it public or got bought by by
00:23:44
Speaker
forget their name. That's okay. I can't I can't recall one of them got bought by JPM and someone else got bought by someone else. public by j p morgan that's right No one's going to expect you to have this sort of authoritative history on SBB, but can you talk us through from sort of like Thursday when this started to come to light and then and then through the weekend, you know, what happened here? How was rippling affected? How did you get get sort of pulled in to an all hands on deck effort to raise money over the course of a weekend and and why?
00:24:19
Speaker
I'm taking a moment to to to recollect because I think all of us at at Rippling who experienced it um have tried to not relive the the trauma. it was in me It ended up being an amazing ah moment for Rippling, but in the moment, it it did feel like the world was possibly ending. So that Wednesday night, SBB had made a disclosure that started spooking the markets. And over the course of Thursday, it it happened quite quickly that things went from my feeling a little bit unsettled about SVB to SVB CEO getting on a call with all customers around noon to say everything is fine.
00:25:03
Speaker
you know, we are going to be able to cover all deposits so long as not everybody pulls out all of their money, ah which is not what anybody really wanted to hear because then everyone's thinking about like, well, I better not be the last person because then what I'm hearing is there's money for most of us, but not if you're last last.
00:25:22
Speaker
man or woman standing. yep And so so then I think sort of like that deep panic started setting in towards the afternoon of Thursday. But most folks thought you know like this wasn't meaning like there is going to be no SVP in ah by the next day um folks that were like ah multiple people who were who were circling as buyers and and and other things we at rippling sort of take very swift action so we ourselves did have board meeting that night
00:25:55
Speaker
ah discuss ah transitioning over to our other banking partner, JP Morgan, by the following week. um And we thought that was quite drastic and doing it in a week would be quite drastic. And we started getting folks spun up quite quickly. um But we did not predict that by the following morning, that Friday morning, the world would have just completely changed. So that Friday,
00:26:22
Speaker
I woke up, there is an unknown phone number. Someone had found my phone number, a woman in Tennessee, to ah call and ask if I worked at Rippling and that her employees had not received their paychecks. um And so you know I think it was probably five in the morning, you know got online.
00:26:39
Speaker
um and saw lots of people scurrying around because we were starting to get calls in from the East Coast that paychecks were not being received for Friday payroll. And a lot of hourly workers typically get paid on Fridays. They're on weekly or biweekly schedules. So these tends to be every day American workers who are paid on average of like $50,000. So good wages, but not ah sort of tech salaries, if you if you will.
00:27:09
Speaker
sure And so folks who are more likely to live paycheck to paycheck, so we knew immediately that this was a huge problem. And I think we had, you know, 40, 50,000 American workers across the country who were expecting paychecks via rippling that day. So we sort of sprung into action at at SVB. They had told us the payments went out. They were just delayed.
00:27:34
Speaker
um And so they were somewhere in the ether between ah leaving SVB and you know landing in these bank accounts. And then um we saw on the news, at the same time everyone else saw on the news, SVB had been taken under receivership by the FDIC. And we were in active communications with folks at SVB. I recall they sent an email like we're about to step into a meeting. And then one of them sent an email back that just said,
00:28:02
Speaker
no wires going out today. And I remember writing an email back immediately. What about ACH? And I got bounced back by like 30 different people at SVP who were on this thread. And that's sort of when I knew we were on our own. Just as these communication systems were fully cut moments prior, they were telling us this was all still going to go out. And that's when we really spring into action. We knew we had tens of thousands of American workers expecting paychecks that Friday.
00:28:31
Speaker
We decided to hit an emergency button at at Rippling to actually fund out of our corporate bank account because we we were fortunate to ah have quite a bit of cash at that time. That would be able to cover, I think it was $130 million dollars of payroll at that time just to make sure those folks would be able to get paid. We were in conversation with JP Morgan team. They had a few dozen folks working with us to move our entire payroll system over to JP Morgan, so that would be up and running on Monday, and we would be able to facilitate paychecks. That next Wednesday was mid-month pay, a day as March 15th, so that was gonna be a really big one. And then Parker, our CEO, ah wanted to make sure that we were gonna be able to pay folks that following week for March 15th, no matter what.
00:29:24
Speaker
Because a lot of those funds for March 15 payroll were held up at SVB, and we were not sure when they would be released. And so, you know, very quickly, we just he he started making phone calls, we could fundraise, we could take a loan, we could, you know, do a whole bunch of different options. and One of our great partners, Green Oaks, big shout out to them. They were like, you know we would love to do a financing with you. We will provide $500 million dollars to RipLink. They understood we would then possibly just loan that all straight out to our customers to ensure that they would be able to meet their payroll obligations the following week. and The critical thing was that it needed to be done.
00:30:10
Speaker
over the weekend by Monday so that those funds would be in seat and we could tell customers that that's what we were going to do. So those were kind of the key conditions of the deal dictating the the timing of it all. So in effect, all of that sort of prior experience that you had around learning how to get deals done really quickly, the approach that Rippling had to get other rounds of financing done. i mean In some ways, you know you're you're perfectly positioned to be one of the few companies that might actually be able to raise $500 million dollars over the course of a weekend as opposed to with
00:30:46
Speaker
two weeks or two months or whatever it is to negotiate the term sheet. I'm really proud of a few things that weekend, like in addition to all the people who were who were working on this deal and also how how we responded to the the crisis and situation. like I'm also proud that we did not sacrifice diligence through that process. So, you know, Parker and I were talking that Friday morning, he said, I'm going to go out and see and and see what we can do fundraising. We were all just like in emergency fix it mode and said, great, I'm going to prep on my team.
00:31:21
Speaker
ah We were going to prep all of our materials so that they were ready to go. And so we did a full refresh of our disclosure documents and our agreements, financing agreements. And like they were already in pretty good shape. You know, we did a refresh of all of our document disclosures as well. And so by the time that term sheet was signed, which was like that,
00:31:46
Speaker
late afternoon, early evening. just He's like a fundraising ah like magician. No, we were signed term sheet. Who is your counsel? Can you work with counsel that we've worked with previously? Actually, I think they worked with, oh yeah, that we that we worked with previously. And so that was Gunderson. Gunderson also represented um some of our prior investors. And one big shortcut trip that I love to do is have ah your investors work with counsel who has represented other investors and has seen diligence in your company. Because then you can just ask your investors to share their diligence memos and notes.
00:32:29
Speaker
So, you know, immediately contacted the leads for our series B and our series C and said, can we share diligence notes with ah the Green Oaks team? right And then also here is a level up of our documents and here's a level up of all of our disclosures so that we could get through that really quickly.
00:32:46
Speaker
and And just before I ask you maybe a couple more questions on sort of your approach to financing, just to put sort of like the cap on this. Did rippling end up needing the money? Did this work itself out? like I mean, I think everybody would agree that this was a huge event for positive reputation that rippling has.
00:33:10
Speaker
you know in that investor community in Silicon Valley, i mean obviously should be with you know all of the small businesses and their employees too, right whose whose paychecks would have been backstopped. What ended up happening? yeah so so um We were working on on the financing. Sunday night, the government made the decision to back all deposits, so not just up to the $250,000.
00:33:38
Speaker
in that they would do so by Monday morning. So by Sunday night, we you know felt that a lot of the the monetary pressure was off. Theoretically, the government had said they were going to do this. And so we actually had a decision at that time in terms of whether we go through with the financing. And we decided that we wanted to continue with the financing, even though we did not need the funds at that time, that it would be a good war chest to have as a company for future resiliency. We also thought the terms were good to kind of
00:34:16
Speaker
fund future innovation efforts. And also, um you know, we believe quite strongly in in the term sheet, yeah, that, you know, both parties had agreed to these terms and, and like Green Oaks really stepped up to the plate here in terms of you putting together a pretty extraordinary deal for us over the weekend. We also weren't sure what the next week would bring. We were for the right time running payroll on a new, the new banking partner. A lot could have gone wrong. We also didn't know Monday morning as SVP came back online, whether or not that was going to go smoothly, like quite easily, they could have
00:34:56
Speaker
been overwhelmed with volumes. I think they were in the beginning of the day. And so just from a resiliency perspective, we thought it would be a good idea to continue through with the ah financing. From a reputational perspective, we didn't really know what to think. We also were concerned that folks would think we were unstable um and that we would take a hit.
00:35:17
Speaker
And so this this financing would be good as a bridge if that happened. What actually ended up happening on Monday is because of the rippling response and covering all of this payroll on Friday out of our own bank accounts and moving so quickly to the other system with JP Morgan.
Legal and Finance Collaboration
00:35:37
Speaker
We had, I think, our largest demo day on Monday. It was like just, I remember it being such a gratifying moment because we ah We really thought like we didn't think that was what was on the other end of this. We thought that it was all net negative for rippling and that we were going to lose ah customers and folks would be concerned about our stability. And instead what we saw was customers really respecting the response, seeing that like we really cared about our customers and that we were actually quite resilient and had taken all these steps and had the ability to move to an even more mature and secure
00:36:15
Speaker
banking platform. Just a ah few more questions for you, Vanessa, around this this topic of financing. It's you and and the legal team who who are really driving a lot of this or owning it. I would say, can you talk about how you work or collaborate with finance, whether or not you think that the way that that you own it is is also unusual? Or if you see that amongst a lot of your peers as well, like how does that legal finance relationship work at RipLang?
00:36:44
Speaker
I would um say like I definitely don't own a financing end to end and and and our finance team is very involved for sure. In terms of how this is done at other organizations, I actually, I'm not ah super sure. I've sort of what colleagues of mine say, but I do think folks sort of approach these things very differently. I do feel, um you know, sometimes I ask outside counsel, like,
00:37:11
Speaker
You know, are we like the craziest people you work with? Are we super organized? Are we disorganized? You know, where are we on on the scale? And generally what I hear as feedback is we are equal parts like conservative and aggressive or aggressively conservative and like it all together. And that that's a sort of a rare combination. But I do think we try to keep all of our stuff in order and then push really aggressively on timeline for, you know, in the vein of of time killing all all deals. To the question about like the partnership between finance and legal, I sort of see finance being a big part of getting to the term sheet. You know, they are definitely the driver in the financial story and they are doing the bulk of that work up to the
00:38:03
Speaker
the term sheet more with the legal team in the background getting prepared for like right before the term sheet with our advanced disclosures. But then really once that term sheet is signed, I sort of review that as our go clock. yeah Yeah. How quickly can we get everything to investor counsel so that it's all sitting with, you know, on their side of the fence.
00:38:23
Speaker
Um, and then ask them for, you know, when we can close. And our answer to that is we like to try to get everything to diligence council by the next day after a term sheet. Wow. So all diligence and drafts of the stock purchase agreement and all financing docs.
00:38:39
Speaker
Maybe one follow up there, you know you talk about asking for sort of benchmarking with ah from from outside counsel around how rippling is relative to other clients that they have or and maybe something that's unusual that rippling has in a lot of these financings is that we haven't talked too much about is is some leverage, right? In that hot company, growing company, grown even faster than I knew in terms of employee headcount and and obviously that's tied to revenue as well. um Does leverage fit into the equation here too in your ability to get deals done fast?
00:39:13
Speaker
negotiating leverage comes in and I think we've definitely been a really fortunate position to do financings because we have a very solid company and metrics behind us that it that it comes into play mostly with getting into the term sheet. It is you know sort of eliciting that investor interest around sort of the fundamentals of your business and getting to the and getting to the term sheet.
00:39:39
Speaker
I think on the on the legal side, you can tie that in to like take a more conservative position around disclosures as we have done. you know it It certainly doesn't hurt, but there are still things you can do as a legal team to drive timeline on your own.
00:39:58
Speaker
such as you know having all of your disclosures and documents ready to go. you know I think what I did with the B is before we knew we were financing, I said you know to our outside counsel, send me your most recent growth diligence checklist, and we just work through it in advance. and we deliver We don't ever ask for someone to send us a diligence checklist. We send them what we think their diligence checklist should be along with the set of diligence. And then it's, if there's anything else, let us know. And usually they're just like, this is too much. We're not dumping. It's just like we we give everybody everything we think that they would need to know and and we do it all at once and upfront. and so
00:40:47
Speaker
you know There's not a ton of follow-up needed on additional documents or additional questions um that come up. Any final tips you might have as we close this part of the conversation for folks about how to keep processes moving faster on deals or even how to keep fees down?
00:41:06
Speaker
I have one I love on fees, which is in every term sheet, there's a part that says like how much of the fees of diligence counsel the company is going to cover. And that tends to be tied to like how much diligence you should expect to from diligence counsel. And so If you have those at like 200,000, you're probably going to get $200,000 worth of questions. And if you have parties bear their costs, then folks are going to be tied more towards like where they actually think there's risk. And so I wouldn't have that just be a throwaway item that you don't negotiate as part of term sheets. I actually think drives a lot of what that diligence process looks like as well. I like that. That's a good tip. I've got a few fun questions for you as we start to wrap up. The first is if you could tell us maybe about your favorite part of your day-to-day. You have a super interesting job that touches all sorts of different functions within rippling. Is there something you get to do every day that that you you really, really enjoy that that you know gets you out of bed in the morning?
00:42:14
Speaker
it it de pet you know what i What I most like is that no two days are exactly the same, honestly. I think the part of legal work that I enjoy the most is like getting to work on regulated products and sort of you we at Rippling use our product and our legal team uses our own products. and so It's kind of cool to think about what you would like to see out of a product and then have it realized into real life. And so that that's definitely really fun. And then like I don't get to do this every day. It's actually quite rare. um But the former litigator in me actually sometimes finds disputes where we feel like we've been ah like wronged. We don't sort of pick fights that we don't feel strongly about that sometimes.
00:43:05
Speaker
fun to scratch the Litigator X Litigator itch from time to time. a message to all of our listeners, don't cross Vanessa, uh, whatever company she said, how about maybe your biggest professional pet peeve? This can be light. This doesn't need to be, need to be too deep. No, I, so my, my biggest pet peeve is just unnecessary deadline or unnecessary fires. I say that all the time and like, I yeah do not stand for unnecessary fire drills.
00:43:36
Speaker
Because in the legal role, there's so many necessary fire drills, like unnecessary ones just that like could have been prevented with better planning or like communication just did. I don't, I don't have much tolerance for that. That's great. I really liked that. Every company can learn from, can learn from that pet peeve. I don't, I don't find it to be fun. You know, like it's just we, we in like the legal and compliance functions. Yeah. yeah are often already on the receiving end of ah fires and like undoing a lot of firefighting. And so if that fire didn't need to happen, like why are we having getting all bent up over something that doesn't doesn't actually require that reaction?
00:44:22
Speaker
Last question before my traditional closing question for all of our all of our guests. and Is there a book that you've read recently or you know you mean um you're very busy, it could have even been in the past few years, legal or otherwise just for fun that you would recommend that folks pick up for their next vacation?
00:44:43
Speaker
Ooh, for a next vacation. Or for their commute across the country on a plane or or whatever it is. I mean, I don't think this is beach reading, but um i I really like the Matt Levine ah money stuff column. Oh, yeah. He writes for Bloomberg. I think he just does an amazing, amazing job of turning kind of dry, complex, financial and legal topics into like just really digestible, humorous, and like really well-written, well-informed articles. and And I am, you know, super fan and jealous of his writing style and abilities.
00:45:26
Speaker
That's a great recommendation. My last question for you, Vanessa. I like to ask this of of all of our guests. This is, you know, if you could look back on your days, maybe at Latham or or just graduating from law school, just getting started, something that you know now that you wish that you'd known back then.
00:45:45
Speaker
So when I joined Latham, that was the first time I had worked at a company that was for profit and made money, aside from like when I spent, i think like a a blip at like Nordstrom's doing like annual sales in high school. and and so I did not think I was going to be um like at Latham for a very long time or doing ah for-profit work for a very long time.
00:46:15
Speaker
And doc review definitely doesn't like elicit a desire to like join that profession long-term either. um but i and you know And I used to complain unnecessarily like as a first-year associate as well. um Apologies in advance for the folks who who i've worked with me at that time.
00:46:35
Speaker
um But then I had ah like a change of heart or a flip in mentality, which was that I was going to like work on things I thought were interesting, or thought like are interesting. And I guess what I would tell myself like now back then is like that that is like definitely like something that has served me well, I've seen serve other people well, because you just don't know where your career is actually going to go and how all of those experiences kind of come come together later on.
00:47:09
Speaker
Um, and so there are a ton of experiences at Latham. I would take on, like, I really enjoyed working with one particular partner who did sort of executives doing bad things, employment work. And I, and then as a result did one wage an hour case with her. And now I met at HR tech company and I like actually know a lot of the wage an hour laws, um, and what that looks like because I did this one matter because I, um, just thought it was interesting.
00:47:36
Speaker
Um, yeah I was a a third year associate at Latham. You never know exactly when a piece of knowledge that you you pick up because you sit in on a product team meeting, or you read a book on vacation, or you talk to somebody interesting will prove useful. yeah Yeah. Well, that's a great place to leave it. um Vanessa, thank you so much for joining me for this episode of The Abstract. This has been so practical and interesting. And if anybody out there is writing the history of the SVB crisis, they should listen to this one too.
00:48:09
Speaker
Yeah, I mean, thanks for thanks for having me, Tyler. I can't remember when we probably first met back at like some tech GC dinner. yeah And years ago, but sort of, you know, in the spirit of, of like coincidental meetings that become you know peers and colleagues, you know you're definitely one of them. so Thank you. I really appreciate that. I'm lucky to like you'd have gotten to know you and so many of the other guests on this podcast too. and and To all of our listeners, thanks so much for tuning in to this episode of The Abstract and we hope to see you next time.