Why It’s So Difficult For Companies to Go Public: A CFO Explains the Process | The Real Eisman Playbook Episode 35

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while also staying in control. Enjoy the drive in Blue Cruise-enabled vehicles like the F-150, Explorer, and Mustang Mach-E. Available feature on equipped vehicles. Terms apply. Does not replace safe driving. See Ford.com slash Blue Cruise for more details. Let's talk about how you became CFO of New York Stock Exchange, which in its day was an iconic IPO. What did it take to take this company public and what was that like?

Today, we're going to explore something that very few people on planet Earth actually know, which is what does it take to take a company that's private and make it ready to go public. So the first thing that we had to do is we had to ask ourselves what would the company look like?

if it was a for-profit entity. If we were going to take it public, how do we change it? Really critical to being able to do all of these things is to have the right people that help you proselytize through the company why these changes are important. go on the road and meet investors. What is that like? They're trying to understand

What is the business? What makes it different versus what's already in the portfolio? Let's move forward to today. You are the chief financial officer of a new company called Navon. It's a 10-year-old company, but it just went public only a few weeks ago. You now have more experience with AI.

and the impact on a business and just about anybody. What would you tell kids to do? Where would you tell them to go? A great place to look is wealth management for young people and accounting. First and foremost, you have to find the culture that's right for you. Elaborate on that.

Hi, this is Steve Eisman, and welcome to another episode of The Real Eisman Playbook. So before we get started, I have a small announcement to make. I've been getting a lot of comments from viewers about the change in my appearance and my thinning hairline. Now, many of you know this because you've been viewers for a long time, but for you more recent viewers, I was diagnosed with breast cancer in June of this year. Don't worry, I'm going to be fine.

But I'm in chemotherapy right now, and that's why my hair has been thinning. And it's thin enough now that from now, for the duration of the therapy, I'll be wearing this really cool hat that I found in California. So that's my announcement. And let's get on to our episode. Today, we're going to explore something that very few people on planet Earth actually know, which is what does it take to take a company that's private?

and make it ready to go public. And luckily, I got a friend who I've known for a very long time, Amy Butte. Good to be here. Who was a competitor of mine in the 90s as a cell site analyst. And Amy is a CFO, amongst other things. And has had, I don't know if it's the pleasure or the travail to have brought a bunch of companies public as CFO. And we're going to talk about two of them. One old and one...

New. The old is the New York Stock Exchange, which in its day was an iconic IPO and very complicated. And you were the chief financial officer. And a very, very new IPO called... Navon, which is a travel company, which we'll explore the details with later. So let's just start. We've known each other a long time. Give us a little bit of your history. And then let's talk about how you became CFO of New York Stock Exchange.

What did you find when you became new CFO? What did it take to take this company public and what was that like? Well, I have a history of helping to take companies public. I've done it as a banker. I've done it as an equity research analyst. Remember those days.

done it as a CFO, and I've also done it as a director. And clearly, I'm a big believer in the public capital markets and believer in the process. And you're right. It's a little bit of pleasure and it's a lot of pain. So let's just start with... How did you become the chief financial officer of the New York Stock Exchange? And when you became chief financial officer,

What was the structure of the company? I mean, this was a lot of work. So let's lay the groundwork because I think most people just think you're a company, you're private. You hire some bankers, you go public, bing, bang, boom. That's it. And that is not what happened. That is not what happened. I remember I had...

was briefly at Credit Suisse First Boston with John Mack and Jeff Peake. That didn't work so well. We wound up selling the business rather than building the business. And I didn't know what I was going to do next. And at one point I was introduced. I knew John Thane, but I was asked to go and meet John Thane. And John Thane at this time was head of the New York Stock Exchange. He had just taken over. Just taken over. Yeah.

And I walked in and the first thing he said to me was, how would you like to be the CFO of the New York Stock Exchange? And I said, well. What does it mean to be the CFO of the New York Sacrifice? You'd never been a CFO before. I'd never been a CFO. I'd been CFO of a division. I was an equity research analyst. Which division were you a CFO? It was the financial services division. Within? Within credit. Within credit. So it was...

Credit Suisse Asset Management. It was the high net worth brokerage piece. And it was Pershing, which was the correspondent clearing piece. And I knew all about Wall Street because we covered Wall Street. And I knew about trading. I was one of the first people to start.

talking about trading dynamics and high-frequency traders. So I had a lot of credibility, knew a lot of people, and knew that I really wanted to be a part of something that could be impactful at the New York Stock Exchange. So when we were introduced and I walked in and he said, like to do this? And I said, what does it mean to do this? He said, well, it's a really simple business. It'll take us five years to go public. Five years. Five years. And I'm going to change all of the people.

I said, great. All the people. All the people. I'm going to change all the people. So he told us it was going to take five years to go public and all the personnel were going to change. And you said, sounds simple. Sounds great. So turns out it wasn't such a simple business. Turns out we didn't have five years to do this because the world around us was moving so quickly. We were sitting there with a billion dollars in cash on the balance sheet.

cash on the balance sheet at the New York Stock Exchange. And all of these other competitors were going public and had $20, $30, $40 billion of market cap. And you couldn't compete that way. Like CME was going public. I remember CME was going public. And ICE at the time was going public. All of these firms were going public. And, you know, the European exchanges, everybody was a public entity and they had a currency and you were in a...

a field of consolidation, a period of consolidation. And so we weren't going to be able to continue to compete unless we got public faster. And so explain that to me. Sorry to interrupt. Yeah. By going public, what did that give you that you didn't have by being private in the dynamics of the industry at the time? So I talk about in general, going public can give you four things primarily. One, it can give you a branding event.

The New York Stock Exchange did not need a branding event. Did not need a branding event. Right. It can give you an acceleration of a maturation process. How do you become more mature so that you can move faster or longer term? That we needed. Three, it can give you easier access to capital or preferred access to capital. And four, it can give you an acquisition currency. So you don't need cash in the bank to acquire somebody else.

And in public market terms, the more acquisition currency you have, the more power you have. OK. So the industry was consolidating. And by being private, you had no currency. So you basically needed to go public so you could. play. We needed to be able to play. It's kind of like poker. You need to be able to have a few chips. We had no cards. We had no chips and we had no cards. Other than the billion dollars in cash, which obviously was not enough. Correct. And a great name.

Okay. So it wasn't five years. It wasn't five years because we had to go faster, and he didn't really change any of the people. John Thang. He didn't change the people. No, he changed me. He changed you? He brought me in. That was it. And most of the other people really came from that same environment or government.

for-profit mindset is very, very different. So wait a second. The New York Stock Exchange, when you showed up, was a private company, but it was not a for-profit company? Or was it for-profit or was it not for-profit? It was a not-for-profit. And it always had been. And it always had been. But it had a billion dollars in the balance sheet. Correct. Okay. And really, it was a membership organization that was stood up to benefit its members, which were the broker-dealers. Right.

Dick Grasso did do, but that didn't help it grow into a competitor in a consolidating space. Okay. So you had basically a mindset problem in the company. You had the fact that you were not for profit. You were not public, so you had no currency. It didn't change the personnel. And we had to do it faster than we thought. And you had to do it fast. Yeah. Okay.

This doesn't sound like a great play so far, but go ahead. Give me that too. So the first thing that we had to do is we had to ask ourselves, what would the company look like if it was a for-profit entity, if we were going to take it? Right. How do we change it? And how do we change that mindset? And so we literally went through all of the revenue sources of revenue.

And said, could we change pricing? What's sustainable? What's not? We went through our entire expense base and said, what makes sense? What doesn't? But at the core of it, we had to change a mindset, which is to start of the people to start acting. you know, more for-profit-like and more public company-like. And it's ironic because you're at the New York Stock Exchange. And I always said, even if we're not public or for-profit, we should act that way.

be a good role model for all the public companies that are listed there. So my favorite story of how different that this is and how the people matter, I remember when I first arrived, I kept asking for a budget. I said, can you show me a budget? For the company. For the company. Right. And the numbers didn't make sense. I was like, can I see an Excel spreadsheet?

Nobody wanted to give me Excel spreadsheet because you and I, we can read an Excel spreadsheet and go right there. We would make them. We're like, there, that's what's wrong with it. And so I hired someone and I said to that person, I said, your number one job is to figure out this budget. Figure out the plan because it's not making sense to me. Who gave you the budget? The head of FP&A.

What's FP&A? Financial planning and analysis. Okay. So that'd be like treasury in most companies. Well, treasury. No, FP&A is a normal function. Okay. The budget guy. The budget guy. His name was Mitch. He'd been there for about 30 years. Mitch the budget guy gave you the budget. And when you say it didn't make any sense, what didn't make sense about it? I was like, it doesn't add up.

I don't understand. How'd you get to this number? And he was like, oh, it's fine. It's fine. So two weeks later, after my person starts, Mitch... walks into my office. What was his first name? Andrew. So Andrew is interacting with Mitch. I'm like, yeah, figure Mitch out. Okay. Mitch and Andrew walk into my office and Andrew says, Mitch has something to tell you. I said.

Oh, Mitch, what do you have to tell me? And I look at Mitch and Mitch is like standing there kind of like he's defending a direct kick in soccer. He's kind of like this. He's kind of hunched over. And I said, what do you have? He's like, it's a plug. I said, what? It's a plug. What's a plug? It was a plug. The reason why it didn't make sense is they put a plug into the budget. He said, we know that they're not going to spend all of that money.

And so in order to get it through the board, we put in a plug into the numbers. So it shows us being profitable, even though if you add all the numbers up, it doesn't. Let's pause for a second. So in other words, the numbers that Mitch, the budget guy, submitted to the board showed a budget that the New York Stock Exchange was profitable.

But in reality, the New York Stock Exchange, if there had been a real budget, it would have shown that the New York Stock Exchange was losing money. Correct. Okay. Okay, but you know what we did? What did you do? Like any good CFO did, we initiated Project Mulligan, Project Do-Over. Okay. Where we then kind of initiated a new plan to really understand.

What was it that each group within the organization thought that they needed to meet their obligations? And that's kind of a good example of when you're getting a company ready, you really need to think through. your processes, your controls, and who are the people that are really going to be able to produce these results.

in a reliable manner so that you can do it over and over again without mistakes. Well, that's what you have to show your auditors. That's all they really care about. Do you have a process? Correct. So clearly, the New York Stock Exchange really didn't have a process. Well, it wasn't a good process. It wasn't a good process. It was a plug. It was a plug. Okay. So how long did it take to do that? By the way, what year did you start as CFO? Day one, what was that?

It was January 2004. Okay. So you became CFO of the New York Stock Exchange January 2004. What was the date of the IPO? The actual date of the IPO, I think, was March of 2006. Oh, so just a little over two years, not five. Not five. Okay. So let's go through what happened during those two years other than you made a budget process. We made a bunch of systems, process, and controls changes. And that was everything from...

How do you run this company? How do you review every revenue stream? How do you assess every expense? What could we really look like if we approached it like a for-profit business? We had to go through all of our financial accounting. Right. We had to change a lot of our systems. They were still using paper on the floor and we changed our procurement system. We changed our T&E system. You know what the old T&E system was? Here, have a card. We'll repay it. That's not a lot.

Yeah. And you submit a bill and we would pay. Yeah. That's it. That's it. You don't even have to do a team name. No controls. No controls. So I could have gone to Dubai. No, don't go to Dubai. But anyway, we really were kind of starting at, you know. Ground zero to try to introduce appropriate controls and systems and people into the organization.

be able to know, because regardless of whether we were combining with ARCA, we wound up doing a reverse merger with Archipelago. They were public, but we had the majority of the ownership. at the end of the day. That was the IPO you reverse merged into Archipelago, which was a...

ECN. Electronic trading system. Correct. I remember that. Yeah, it was our way of kind of getting modern. I was short acapella go. You ruined my vacation. I'm so sorry. I made a lot of other people a lot of money, particularly the members. I was surprised. But it was a good move. It was a good move. And it was interesting, too, what was different about—

New York was that it was a membership organization. So normally you go to shareholders to get votes, right? Within this membership organization, we needed to go to the members and get their authorization. to become for-profit. And then we needed to get their authorization to complete the sale. So you basically went IPO'd through a reverse merger, not through a formal IPO process. And when the combined companies merged.

Were you still CFO or was that the end? I was not. That was the end of your role? That was the end of my role. I called my time at the New York Stock Exchange, my community service. But you had stock. I had some. Well, so I took a pay cut to go. Right. And two, in order to get the membership vote. John Thain made a deal that nobody at the exchange would make more than $500,000 in stock. So we created tens of billions of dollars of value.

For the members and the shareholders. And not for yourselves. And not for ourselves. Wow. And so that was part of the reason that the work had been done. Right. The money had been made. And that was kind of the reason for moving forward. Okay. This episode is brought to you by State Farm. Listening to this podcast? Smart move. Being financially savvy? Smart move. Another smart move? Having State Farm help you create a competitive price when you choose to bundle home and auto.

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Well, that was a lot of hard work for not that much money on your part. It was, yeah. Wow, okay. It was my community service. It was community service, it really was. Yeah. All right, so let's move forward to today. You are the chief financial officer of a new company called Navon, which is a... It's a 10-year-old company. It's a 10-year-old company, but it just went public only a few weeks ago. And it is a travel company for businesses.

Right. Modern travel and expense. So before we even go through the whole IPO, when did you become CFO? I became CFO June of 2024. So about a year and a half ago. Okay. I originally joined the board in March of 24. I was audit chair, was there to help the CEO and the board take the company public from a director's view. I was helping the CEO find a CFO to take him through that process. And about four weeks into the search, I said, Ariel, I have a great...

CFO candidate idea for you. No. He said, I have a great candidate idea for you. And they were not the same. Because you really have to think about whether you want to do this again. And so I had to ask myself, One, did I have one more in me? Right. We ask ourselves that question all the time. You know, two, could I make it work? Personally, I have a 15 year old son who is just entering high school.

And three, what I regret saying no, because it's such an amazing company. We're going to come to the actual company in a bit. Let's walk through the process again. So you started as CFO June of 2024. The company went public like a month ago. Two weeks ago. Two weeks ago. So less than a month ago. What did you need to do? to get this company ready to go public. I mean, it's a 10-year company, so it's not like it's a new company, but it's a private company, you know.

Let's go through the same process again. What did you need to do to get this company ready to go public? So in this scenario... First thing I needed to do is understand what were the long poles that would keep us from going. So if you ask me, how long is it going to take you to go public?

Is it a year? Is it a year and a half? Is it two years or three years? You need to figure out the long poles that you need to fix. What do you mean the long poles? I mean, what are the things that are going to be blockers or either? Get you in trouble if you go public. If you go public. Yeah. Okay. So like, what were those? First thing we looked at was tax. Was there anything wrong in tax? Tax is always that thing. Tax? Taxes. I mean...

Well, you're supposed to pay your taxes. I know, but you got to make sure you were paying them right and you're set up to do that. You better make sure you were paying. Somebody was paying taxes. Correct. You know, I call my tax guy. Yeah. You don't play golf, do you? I do. You do. Okay. So, you know, like you go to the range and you.

All you do is you want to hit your driver. Right. And it's so dumb because you hit your driver maybe 13, 14 times during the whole round. Right. And you never go and practice your putting. Right. Right. Which is really kind of everybody does that. Everybody does that. That could be a third or more of your score. Right. Because we don't one pot all the time. Right. So to me, taxes is like putting because you never really pay attention to it.

you're at the end and it's 30% of your final score. Right, exactly. And here it's a 30% deduction. Correct. So you kind of have to pay attention to taxes. The second thing I needed to understand was... How do we make our financials correct so that we don't run into problems in the future? What do you mean financials correct? The audited financials. They're supposed to be correct. They're supposed to. Now, when you're a private company and you find a mistake.

You go, oops, let's fix it. Oops. Oops, let's fix it. Sorry, we'll just fix it. That's all. No problem. It's okay. Are you sure it's fixed? Right. When you're a public company and you're making oops, it's slightly different. Oh, my God. It's hysteria. It's hysteria. Hysteria. Now, I did get a... By the way, that was Supermicro. Correct. Last year, Supermicro had these enormous accounting problems. And...

Literally, the stock got cut in half like in two days. Correct. So like you said, in the public world, when you show up and you say, oops, we got an accounting problem, people literally get hysterical. Correct. But you're right. In the private world. So we'll fix it. We'll fix it. But you have to be able to describe that difference to a management team that is more private than public in its experience. So just to pause. The first time you told management, this cannot happen. Right.

Did they look at you like you were like a lunatic? Well, yeah, because you use accounting terms, like if you have a significant deficiency, if you have a material weakness, you have a restatement, and they look at you like you're talking gobbledygook. I don't know what you're talking about.

idea. That's not important. You know, there are other things that are more important, like we're going to generate revenue. Exactly. Okay. So I had to put it in terms of the company. So what term did you put it in? So in their terms, I said, Significant deficiency is like, fuck. A material weakness is like, oh, fuck. And a restatement is what the fuck. And all of a sudden they kind of got it. Wow. Okay.

See, my attitude about it is a little bit different, that I so don't trust auditors to begin with, that if the auditors say there's a problem, you know it's a terrible problem. Okay, so you had to do that. What else did you have to do? We really also had to make sure that we had KPIs that were the key indicators, right? Key performance indicators. Key indicators. So we had to make sure that they were the right ones and that they were auditable.

and that they were the right definition. Because when you go out as a public company, you can't say, oh, I like that metric better. I'm going to change it to this. I'm going to change the definition all the time. Public investors. like consistency. When they see change... That's when like red flags. Yeah, exactly. So you have to make sure that you can produce something in the same way over and over again. And you also have to make sure that these KPIs help you tell the story you want to tell.

Key performance indicators. Key performance indicators. Like how many customers do we have? How many customers? How do you define an active customer? What's your net revenue retention? Navon is this incredible global company. They've had acquisitions in the past. They fully integrated the product. but they didn't always integrate the backend, whether that's the accounting systems or the KPIs. And so we had to go forward and understand what are our KPIs.

How are we benchmarking those KPIs versus comparables, which is important, which goes to valuation? And then third, we had to make sure that we could produce it systematically. So how long did this whole process take? It's interesting. So you showed up in June 2024, CFO, day one. In September of 2024, we put a date to the board. We said we will be ready to go in October, mid-October 2025.

And that meant if you worked backwards, we were going to be ready to file our confidential S-1, which, by the way, never stays confidential. For about a minute. Here's a press release. We filed a confidential S-1 in June.

And we knew that we had to get everything ready in time to do our full audit. We had to audit both our fiscal year 24 and fiscal year 25. We're a little bit strange. You're a January year. Okay. So we had to basically do our calendar 22 and our calendar 23. sorry, our 23 and 24 numbers, and had to have them audited so that they could go into the S1. We had to have the KPIs ready. We set a date to have those ready in April.

Um, we had to make sure everything was set and we hit our, we hit our date. Okay. Yeah. All right. Now let's talk about what this company, we've been speaking up that this company, like it's, uh, it could be doing anything. So why don't you describe what your, what Navon does? Sure. Before I do that, can we go back a second? Sure. Because what's really key to doing this is the people. Okay. And the team is really critical. I have nine direct reports. Okay. One person was a boomerang.

What's a boomerang? He had left and then came back. Okay. One person was internally promoted. Okay. One person was there and everybody else is new. And so your team... is really critical to being able to have success so i always talk about team sport, and I talk about that importance. So really critical to being able to do all of these things is to have the right people that help you proselytize through the company why these changes are important and can actually get shit done. Okay.

All right, Nivan. Yes. What does it do? And we're going to talk a lot of AI here because you're big users. Big users. We're going to talk about that. So it is a global travel and expense platform. a company, and I want to hire a company to manage my entire travel process, I could hire Nivan.

You can hire, you can use us, you can use the app, you can hire us, right? Most people, when you think about travel and expense and you think about all the receipts and you think about you pick up the phone and you have to call somebody. Most people don't smile when you talk about T&E, particularly in business. It's miserable. And basically, we are changing the game from picking up the phone.

to using modern technology, including AI, and you can do it yourself. And our mission is to make every frequent traveler have a positive experience and get not just to be able to... talk to people, but be able to be with people in person. So if I'm a business and I'm mid-level executive and I have a trip that I got to go to some conference in, I don't know, Vegas or L.A. I could get on your app and I could book the flight, the hotel, everything. And how long would that take?

About seven minutes. Seven minutes. And normally it takes about 45 minutes. At least. At least we think that's actually nice. Your system would allow me to book a good flight and a hotel. And if I have to rent a car, rent the car. Bada bing, bada boom on your system. Seven minutes. We save the company about 15% on their overall travel budget because it's less expensive.

because we have access to every piece of content and we're not marking prices up. And we also so we make it more efficient. We have a huge. CSAT of about 96, which means people like using it. And we save companies money. Wow. AI is basically the engine that backs the whole system. Am I ever speaking to a human being through your app? Yes. If you want to, you can. You can always get to a human being. Okay. But what the founders realized is that you're just going to be a traditional...

travel company as it relates to the financials, which is about a 50% gross margin business, unless you found some way to reduce the cost of goods sold. And in travel, the biggest cost of goods sold is support. Support. Support. So about three and a half years ago, the CTO and co-founder started... Chief technology officer. Yep. Started creating... um what we call nivant cognition which is our proprietary ai framework okay that um

basically make sure that we don't have any critical hallucinations. That was going to be my next question. It's a great question. How do I know that the AI is not hallucinating and sending me to Kenya? Well, actually, very interesting that you asked that. We had to do a meeting with insurers through this process. Okay. Because we need different types of insurance as a public company.

And they were asking the same question, like, how do you know your AI? Which, by the way, right now covers about 50% of all our customer support interactions. Leverage our AI support tool, Ava. And we've been able to see our gross margin. And the remaining 50% is talking to a person. Can be a person, yeah. Okay. And that's what's helped our gross margins expand so materially. So we're sitting there with all of these insurance companies and Alon are.

co-founder and chief technology officer, is explaining his methodology. And basically, he has LLM supervisors over the LLMs that are making decisions, or not making decisions, but acting. on the requests so you have an llm Before the LLM can do anything, they have to go to the LLM supervisor. Is that a human being supervisor or that's another LLM? It's another LLM. It's like a web of LLM supervisors. So Terminator A is reporting to Terminator B. 120%. Okay.

And we've proven there are no critical hallucinations. So he's explaining this to the insurance people. And he said, you know, LLMs can be manipulated. And I had to make sure that we created a framework that made sure they weren't manipulated. Okay. So let's talk about the roadshow. Sure. Because that's tiring. Yes. Tell people, first of all, what is a roadshow?

Because most people don't even know. You go in public, you file an S, what's called an S1, which is this enormous document where basically you spill your guts. It's got all your financials. All exposed. You're all creamed out for class. All your story, your numbers, you know. takes three hours to read the thing you'll probably fall asleep at least 10 times and so

Well, by the way, since when we did it the first time, they now do these videos. So there's like a 30-minute video that summarizes the S-1 so people don't fall asleep. Okay, so now you've hired investment bankers, and now you've got to go on the road. meet investors. So tell people what that what that what is that like? For a limited time, take an extra 40% off Red Tag Clearance for a total savings up to 75% off.

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We could lose everything. Or let's do a little research. Get your head in the trade and make the investment decision that's right for you. Learn more at finra.org slash trade smart. So first of all, when you walk into a room in the middle of a roadshow, ideally it's not the first time you're meeting someone.

Right. It's kind of like you don't really want it to be a blind date when you introduce yourself, when you're completely exposed, you're introducing yourself and you're asking for money. It's a bad idea if it's a blind date. So in some respects. That roadshow starts months, if not a year before, where you start, you're able now to have meetings called non-deal roadshows, non-deal roadshows.

where you're meeting some of these potential institutional investors. Telling your story. Telling your story, getting to know them so they don't feel like they don't know you when you walk into that room. Okay, so you've been there before. Been there before. Made our rounds. Nobody's a stranger. Okay. And so we had about 36 meetings. We started on a Tuesday morning. When?

You're asking me the date? September? No, in October. October. In October. Of this year or last year? Just this past year. Just this past year. So we had the roadshow. October 2025. Yeah, we kicked off the roadshow on a Tuesday. Right. And off you go. And off we go. We had meetings Tuesday, Wednesday, Thursday, Friday, Monday, Tuesday. And we did 36 meetings. Okay. We went from- Big institutional investors. Big institutional. And some hedge funds, some smart money too. Okay.

We went from New York to Baltimore to Boston, back to New York to San Francisco. all in the first four days and back to New York all in the first four days. It's tiring. And so when you're going in and you're talking to these investors, they're trying to understand what is the business, what makes it different versus what's already in the portfolio. What's the growth algorithm? How do I know it's going to be successful in the future? What's my confidence in that? What are the risks?

And then most important, what are the numbers and how do they translate those numbers into their own investment thesis? As you know, and I think you've talked about, different portfolio managers have different investment theses, right? That could be... growth, it could be AI, it could be small cap, it could be large cap. Everybody has a different approach and they're trying to figure out how does Navon or how does any company going on the road fit into that investment thesis.

Well, let me ask an uncomfortable question. You priced the deal at $25. It's $17. Why do you think the IPO in the end—I mean, this happens, but— You've had experience. What do you think happened in the IPO that caused the stock to go down? Look, the IPO is a moment in time. It is purely a moment in time. And we have the responsibility, regardless of where the stock price is. to prove our thesis and prove our value, not just to our investors, but to our customers.

every single day. And as a CFO, I also take it as my responsibility relative to employees that they feel good about this as well. So on the road show, what did you tell people about when you think you'll be profitable? Because you're not profitable right now, which is very common for a new IPO. Well, what we said... And what we've said publicly to people, I want to be very, we're in the middle of a quiet period, right? What we've said is that we as a company will constantly balance.

growth and profitability. That when we see opportunities to invest in growth, we will do that. So we didn't give any specific targets as it relates to profitability. No, we did not do that. And I also just want to set the stage, Steve. We filed and we were supposed to launch the roadshow October 6th.

The Wednesday before that, there was a little thing called a government shutdown. I heard about that. Yeah, little thing called a government shutdown. Right. And so we were sitting there exposed with a public S1 and with no clear line of sight of when we could get out. And if we didn't get out before our financials went stale, meaning investors would have wanted to see our third quarter numbers, not our second quarter numbers, we probably would have needed to wait.

until March or April of 2026 to get public. So here we are. We've cleared comments because we hit all of those milestones. The government shuts down. And the question is, how do we get out in the middle of a government shutdown? How did you get out? Do we give up? Do you think I gave up? Of course not. Of course not. You're public. How did you get public? I was private. So we actually worked with partners to find a way.

that the SEC wound up changing Rule 430A, which basically let us go public without the SEC being officially open. So this is kind of interesting. And you ask the question, what does the regulator do through this IPO process? They're constantly looking at your submissions. They're looking at that big tome, that S1.

They're looking and reading it. They're making sure that the metrics are things that people can understand and that they're consistent. They're giving feedback. And so you're constantly going back to them, asking them, are we okay? Are we okay? Every time you submit. pricing range. You get to the end and you have a final price and you need them traditionally.

to say you are effective, you are public. And the changes in Rule 430A let us go out with slightly different guardrails, but that we can be public even without the SEC being open. So let me answer a different question. You have some very interesting shareholders. You have one of your shareholders is Andreessen Horowitz. So let's just do a quick pitch. Okay. It's the IPO.

I'm the institutional investor. I've looked at your numbers. We don't have to talk about the numbers. What's the pitch? Why should I buy this company? What is your story that you're trying to tell? Nirvana is a disruptor in a space ripe for disruption. Okay. Elaborate on that. Right. It is changing the way people will do their travel and expense.

Leveraging AI, leveraging technology, moving away from old school, you know, paper, phones, things that have been around for 50 years. It's ripe for disruption. It's an exceptionally large. TAM. What is the opportunity is the TAM. We estimated with Euromonitor and $185 billion. total market opportunity, which is very large. And we broke that down. About 30 billion comes from legacy travel, the Concurs, the MXGBTs of the world.

About 54 billion are people who have no called unmanaged where they're not really using a provider. We think about be leisure when you're adding on to a business trip and we think about payments and expense. All of that makes it a very large TAM that's ripe for disruption. And so that means we believe and we express through our numbers, our past numbers.

investors are contemplating, you know, what that looks like, that there is a very high opportunity for top line growth and to capture that TAM. And it is our combination of our... Our APIs, what we call the Navon cloud, our connectivity to all the different sources of content, our use of AI so that it's easy to use and we have all of that support and a very user-friendly. consumer-grade interface that lets us have really, really big, if you will, barriers or moats.

so that we can capture that space more than anyone else. And your competitors that you mentioned, Concur and Amex, are they doing anything in response to what you guys have done? I think, look, you know this all the time. People will say we're using AI. Right. But it's not clear. What that means. What that means. For us, it's really clear what it means. We're able to have massive gross margin expansion because we've leveraged AVA.

to handle so much more of our customer support. I want to press that for a second. So let's imagine, because this is a question that I'm getting from young people, like, how do I get a job? Right. How many employees currently are there in the company? Slightly over 3,000. 3,000. And does that include the people that I might call on the phone? Correct. Okay, so you have 3,000 total employees in this company. Let's imagine.

There was no AI. And you were just what you would call a normal business travel company. To do what you currently do at the volume that you do it. How many more employees do you? Forget about margins that you would be unprofitable. I'm just talking about to actually function and do it.

At your current level of business, you have 3,000 employees that are handling the business and that your business is scalable. How many more employees do you think you would need to do the same thing? We haven't said that. publicly. And so I have to be careful what I say. But if you look at like an Amex GBT, they probably have 10 to 20 times the number of customer support agents that we have.

10 to 20. How many customers? I haven't said that. I haven't said that. The company has not said how many customer agents support people. No, we haven't differentiated that, but we have said that we're probably using. a tenth to less than a tenth of what Amex GBT is using. And how many people are they using? They have different numbers that are out there. Maybe 20,000. Correct. Okay.

And we're well. And you're at most a 10th. Wow. Yeah. So let's talk about young people. Let's talk about young people. You have a young person, 15. Yeah. I'm getting a lot of questions. you know, from viewers about youth unemployment. You know, your son's only 15. He's got to go to college. But you have friends. Yeah. If you were advising young...

The problem is that all these people went to college and they took coding. And now you need fewer coders. You don't need as many coders. So if you were giving, and I actually did this a couple of weeks ago, I was speaking at... Remember Ivy Zellman? Yeah. Ivy invited me to speak at the university that she teaches at, which is Case Western Reserve in Cleveland. And about 100 kids in the room. And, you know, one of the questions I got was.

What should I do? Right. So if you were advising young people, you now have more experience with AI and the impact on a business than just about anybody. What would you tell kids to do? Where would you tell them to go? First and foremost, you have to find the culture that's right for you, right? Is it a meritocracy? Is it a wait-your-turn culture?

You know, you've got to figure out who you are. I remember my first job out of school was at consulting. It was at Anderson Consulting. First of all, I'm a terrible COBOL coder. I knew that pretty quickly. And I wasn't very good at waiting my turn. And so I knew that if I wanted to stay.

in New York City and be successful, I had to get to a meritocracy. So I think regardless of what your skill set is, it's really important to understand who you are. Are you patient? Are you impatient? Do you thrive in uncertainty? Do you thrive in certainty? I think that's really important. If you are somebody who likes process,

I actually think audit is a great place for people to go right now. Audit? Audit. Why? And accounting. Because the accounting and audit firms are constantly looking for people to support their efforts with companies. And there's kind of they're lacking young people to do that. And I think that's a great place to look. I also think a great place to look is wealth management for young people. You and I both know there is a massive.

redistribution of wealth that's coming or has already started. And 90% of the time assets change hands, they change their relationship with their financial advisor. So in other words, mom and dad die. and the kids inherit, nine times out of 10, they do not keep the current wealth manager. Correct. They move. They move. They just do. And so that's a tremendous opportunity, particularly among young people.

who talk a different language with finance, right? They don't talk the 70-year-old RIA language. They want to talk to someone who's 25 or 30. And I think those are two really interesting places to be if I was a young person. It's fascinating. We have probably our hiring has fewer traditional coders.

Right. But because of this AI framework that we use cognition, we're actually able to hire just smart people. To do what? To build on that framework and build on the AI code that we're using. Like doing what? like building the next generation of our tool, which is going to be called Edge, which is going to basically being applying AI interaction. connecting to our vertically integrated tech stack. And so we're able to actually train young people who aren't coders but are just smart people.

Right. To actually create things. Is Navon based in New York? Navon is global. We're in Palo Alto, San Francisco, Austin, New York, about to be Boston, London, Berlin. Where's corporate headquarters? Palo Alto. Palo Alto. Palo Alto. But you're here. But I'm here. Yeah. It's the best office right now. Where are your offices in New York? We're in Flatiron or Chelsea. Technically Chelsea. Yes.

Five blocks from my house. It's the best. That's nice. Rusty and I go to work every day. Who's Rusty? My dog. Oh, there you go. Okay. Got to get him in. But anyway, I think just for, I actually believe there are opportunities, but. It's not cookie cutter. You've got to really be a thinker and you've got to be motivated and you've got to connect it with the culture. We have so many young people who are really thriving at Navon. And, you know, you've got to find the place that is the fit for you.

All right. Amy, that was great. That was really fun. Thank you. I really appreciate it. That was informative. A little advice for young people at the end, which was very helpful. And best of luck to you and your company. Thank you. And best of luck to you and your health. Thank you. I appreciate it.

This podcast is for informational purposes only and does not constitute investment advice. The hosts and guests may hold positions in stocks discussed. Opinions expressed on their own and not recommendations. Please do your own due diligence and consult a licensed financial advisor. before making any investment decisions