Checkr and Rubrik on Strategic Planning

A. Speaker Overview

• Naeem Ishaq
  • CFO at Checkr. Prior to Checkr, he held CFO roles at Circle (pending IPO) and Boxed Wholesale (pending IPO)
  • He started his career in Finance at Intel and later joined Salesforce and Square where he wore many hats
• Kiran Choudary
  • CFO at Rubrik. He joined post Series C at ~$50M ARR and scaled through the company’s recent IPO
  • Prior to Rubrik, he scaled the Finance team at Atlassian. Joined at ~$100M ARR and stayed for 5 years

B. Scaling Financial Planning

Planning requires more coordination as you scale, but don’t overengineer plans too early

• As your team grows, planning will become more complex and will require more team input
• Naeem compares this shift to the transition from playing solo to performing as part of a symphony
  • In the early stage, planning resembles a solo performer, similar to a street saxophone player: highly independent with no need for coordination
  • In the growth stage, planning resembles a jazz band: There’s a guiding score, but team members riff dynamically and play off each other
  • In a late-stage private or public company, planning resembles orchestrating a symphony: everything must be precisely coordinated, with each person knowing exactly what to do
• As a company moves into later-stage planning, the tolerance for missing targets decreases significantly. It’s crucial to invest in effective planning structures over time to build precision. When you go public, the expectation is to forecast with over 99% accuracy

Most common mistakes in the transition from solo planning to growth stage planning

1. Moving from no planning to overly complex planning 

• Most common mistake is going from no structure to an overly burdensome planning structure
• This will slow teams down and will create negative sentiment towards planning across your teams
• At the early growth stage, optimize for flexibility over perfection - try to plan in 2-4 weeks at most

2. Founder optimism is important, but needs to be complemented by reasonable planning

• Founders are optimistic and often have significant influence over forecasts and inputs
• This optimism is essential in the early, seed, or Series A stages, where ambition fuels growth
• As a company progresses to the growth stage – stakeholders start to ask, “Did you hit the plan?”
• Optimism can sometimes be dangerous and lead the team to commit to plans that are unachievable and erode stakeholder trust
• Recognizing where you fall on the optimism spectrum is important as it will help you balance pushing the team with creating realistic and achievable projections 

Purposes of Planning

1. Alignment

• Planning drives alignment by ensuring everyone works toward the same strategic goals and priorities

2. Ties investments to outcomes and drives accountability

• A model is a reflection of your strategy - it helps you tell a story about why you make investments
• If you create a plan and have good goals, you can use goals to hold team members accountable

3. Establishes guardrails

• It helps you establish guardrails to understand if the business is on or off track
• These guardrails can help you determine whether you can increase or decrease investments throughout the year

4. Foundation for operating rhythm and communication

• Strategic planning establishes the operating rhythm, supporting processes like QBRs (Quarterly Business Reviews), OKRs (Objectives and Key Results), and regular performance measurement
• Serves as a basis to communicate the company’s goals, roadmap, and priorities across stakeholders

How Checkr approaches planning

• Checkr’s planning process starts on a 10-year horizon and cascades to a quarterly cadence

Case Study: Checkr’s planning process (late-stage company)

Process

1. Model P&L (Long-Term Scale)

• Planning starts with a 10-year P&L. Finance creates a 10-year forecast down to free cash flow
• The team projects metrics like growth, customer scale, margins, and Free Cash Flow
• This helps the team understand what the business will look like at scale and guides short-term planning

2. 3 Year Strategic Plan

• Developed annually in August to outline mid-term goals for the company
• Bridges the 10-year vision with near-term strategy and resource alignment in the mid-term

3. Annual Goals and Operating Planning

• After developing the 3-year plan, Checkr aligns annual priorities to the 3 year plan via company goals
• Once goals are established, Checkr creates an annual budget, which allocates resources vs. the 3YP

4. Quarterly Update

• Update to plan based on quarterly performance. Intended to adapt as progress and market changes
• Checkr typically maintains the original plan, but updates expected performance on a quarterly basis 

5. Mid-Quarter Review

• Mid-quarter review is intended to assess whether Checkr will hit their quarterly targets

Note: A mid-quarter update and a 10-year P&L are overkill in early growth. At the Series B - D stage, Naeem recommends a company goals/annual operating plan and quarterly updates. Start with informal strategic planning and progress to a formal 3-year plan process like Checkr runs when you are $100M+in revenue. Prior to that, you can get away with founder-led strategic / LTplanning. More on this below in the section on strategic planning.

Plan Types

• Checkr creates 4 variations of their plan each year to serve different stakeholders

1. Field Plan

• Stretch goal for the company and used for company bonus awards
• Stakeholder is internal - this is the plan communicated to the company and what employees work against every day

2. Closest to the Pin (CTP)

• Best estimate of where Checkr will finish the year
• Stakeholder is the finance team - this is where the Finance team thinks the company will end the year. This is not broadly shared out with the company

3. AOP/Outlook (BOD Plan)

• 70% confidence plan and becomes the basis for allocating resources
• Stakeholder is the board of directors - this is the plan ratified at the beginning of the year
• Protects against getting ahead of your skis from a capital investment perspective. In short, it matches resources against a higher confidence plan

4. Street Plan

• Basis for guidance to Wall St - sets up cadence for beat and raise process
• Only relevant in late stage growth companies and as you prepare for public quarterly earnings

How Rubrik approaches planning

• Rubrik’s planning process starts on a 3-year horizon and cascades to a monthly/weekly cadence

Case Study: Rubrik’s planning process (Public Company)

Process

1. 3 Year Strategic Plan (Oct-Jan)

• Multi-year view of the opportunity and the business
• Opportunity to reaffirm your mission, strategic priorities, and long-term goals
• In this process, the Rubrik team articulates the product and GTM strategy as well as builds a 3-year financial model

2. Annual Operating Plan (Nov-Jan)

• Represents the 1st year of execution of the 3-year strategic plan. The annual operating plan becomes the company and functional OKRs for the year

3. Annual Financial Plan (Nov-Feb)

• P&L / budget representation of the Annual Operating Plan
• This plan drives sales incentives and bonus plans for the company as well as determines resource allocation

4. Quarterly reviews and Forecasts

• Rubrik runs a Quarterly Business Reviews to review performance as well as a Quarterly Update process to update the model based on the past quarter's performance

5. Weekly/Monthly Metrics Reviews

• Metrics, depending on team, are tracked and reviewed on a weekly/monthly basis

Plan Types

• Rubrik creates 2 variations of their plan each year

1. Stretch Plan

• Stretch plan for the company. These are the targets communicated to teams and what everyone is driving towards
• Unlike Checkr, this plan is communicated to both the board and to employees. This works because the CEO sets the expectation with the board that the plan is aggressive and they may miss

2. Finance Plan

• Kiran can’t allocate resources based on the stretch plan. The finance team creates a separate plan for determining OpEx investments
• This allows the company to continually increase investments as the business continues to scale versus scaling up and down as the company hits/misses the stretch goals

Example Outputs‍

• Each year, Rubrik comes up with goals/objectives. KPIs, and outcomes. These are communicated to the company regularly in an artifact similar to the below image.

• Rubrik ties product releases to themes highlighted in their 3-year strategic plan. The team creates summarized artifacts like the below to align the product goals to the longer term vision

• Strategic planning led to a shift in Rubrik's demand generation format. In the past, the company had a siloed demand generation strategy where each pipeline channel owned a portion of the pipeline goal. They shifted to a model where Marketing owns the entire demand generation target across all different channels. The new model created a more collaborative environment and a single accountable DRI. The below image communicates the change in strategy.

• Strategic planning helped Rubrik define their multi-product GTM strategy. Resources are allocated based on product maturity levels. GTM teams are broken into three categories at Rubrik:some text
  • Core: Focuses on mature products with stable market fit; represents over 80% of investment
  • Product-Led Sales: Focuses on products with established PMF but less than $30M ARR. These team members work with the core sales team to drive adoption of new products
  • RubrikX: Small team that tests very early products to try and figure out packaging/pricing
• The below image outlines the goals and product focus areas of for each of Rubrik's 3 GTM motions

• Rubrik is multi-product and measures pipeline and ACV by product to understand demand. The below image is a summarized artifact that gives a snapshot of demand health by product

• Having a strategic view of 3-year growth enables Rubrik to break down expected growth into levers. Example levers include new capacity (e.g., new sales people, new markets), new productivity (e.g., more productive sales, more channels, product upsells), attrition (e.g., productivity loss), and churn (e.g., renewal rates). The below image summarizes where new growth for the upcoming fiscal year will come from

Don’t introduce big company processes too early. Optimize for flexibility/speed in early growth

• A mid-quarter update and a 10-year P&L are overkill in early growth. At the Series B - D stage, Naeem recommends a company goals/annual operating plan and quarterly updates. Start with informal strategic planning and progress to a formal 3-year plan process like Checkr runs when you are $100M+in revenue. Prior to that, you can get away with founder-led strategic / LT planning. We cover this in detail in section C of the notes
• Once finalized, it’s essential to communicate the plan across the company and provide regular financial performance updates. This fosters alignment and answers employees’ common question, “How are we doing?”some text
  • At Checkr, transparency is a core value. Naeem and his team lead a Monthly Finance Review for the entire company, sharing key performance metrics and engaging in open dialogue on results
  • At Square, the process was similar until they approached IPO. As you approach an IPO, who and what you share becomes more restricted and processes will need to change

‍Best practices for planning in early growth

‍1. Be intentional about your objectives

• Be clear about what you are trying to accomplish, especially if you have more than one plan
• In the case of Checkr, the board plan is for resourcing and the field plan is to establish internal stretch goals
• In the case of Rubrik, the stretch plan is the aspirational but achievable plan and the finance plan is for resourcing

2. Align expectations with your stage and company

• At the Series B, don’t try to plan like a pre-IPO company - this will create planning fatigue
• At Series B, you just need to establish a set of guardrails and guidelines to make investments
• Your process will also depend on your company and your culture. Leaders can’t copy / paste from prior experiences and have to approach planning from first principles
  • Kiran sends a planning survey after each planning cycle to improve the process
  • This helps match the planning process to the company’s stage and overall culture

3. Optimize for flexibility and speed over precision

• Founders tend to think like engineers and try to bring that same level of precision to planning. This is a recipe for failure
• Design planning like a bamboo structure (strong and flexible), not a steel structure (strong, not flexible)
• Time box planning at the early growth stages to anywhere from a few weeks to a month

4. Do not over model the business

• There is a temptation to build complex financial models to forecast the business
• These types of models are helpful for understanding business drivers, but not as much for forecasting
• A general rule of thumb is the more input variables you have, the more inaccurate your model will be
• Why? Small errs in judgment compounded across inputs result in big and unforeseen misses 

5. Balance the tension between execution (short-term) and strategy (long-term)

• There is always a tension between short-term execution and long-term strategy. In Kiran’s experience:
  • When the business is performing well, focus shifts to strategy discussions, with little emphasis on execution. When the business is not meeting its goals, the focus turns almost exclusively to execution. 
• Recognize where your company stands in each planning cycle and adjust your communication strategy

6. Plan for contingencies. Create a CEO budget.

• You need to “holdback” budget to plan for downside protection or for additional upside/investments
  • Rubrik’s OpEx is a couple hundred million a quarter and they hold back $15M-$20M / year for this purpose
• Create a “CEO” budget that enables the CEO to make investments throughout the year as needed
  • Nobody knows about this except the CEO, the CFO, and the key people in the finance team
  • This allows the CEO (who has horizontal context) to make new bets without breaking the board approved budget
  • In one year at Atlassian, the founders spent the CEO budget within a single month of operations
  • After this, they began to introduce more process around spending it to pace out investments and to establish a higher bar for CEO investments

‍Maintaining multiple plans versus a single plan

• The advantage of one plan is simplicity. Everyone unifies around it and communication is easy
• The reality is different stakeholders have different incentives and it's hard to serve each with one plan
  • Employees should be incentivized to stretch and push the limits
  • Board of Directors are incentivized to encourage good capital allocation
• Multiple plans lets you set aggressive goals while allocating resources against a higher confidence plan
  • Checkr communicates the stretch plan with the company and the resource plan with the board
  • This also lets founders use their “optimism” effectively while resourcing behind plans with less risk
• Naeem and Kiran’s preference is for multiple plans - optimize for viability, not simplicity
  • If you decide to have one plan - make sure you are transparent with stakeholders about the purpose and expectations for the plan. For example, you can say, “we set aggressive goals and expect to miss x% of them” to establish a frame of reference for stakeholders

‍Case Study: Checkr’s first planning cycle with Naeem

• During Naeem’s first week, the team planned to present their annual plan to the board to get approval. Ahead of the meeting, Naeem reviewed the plan and realized it was unreasonable. He found that each of the plan’s 40+ assumptions were overly aggressive. Compounding each of these on top of one another, meant the plan was likely 30%+ too aggressive
• Instead of locking in that plan, he told the board he would come back in four weeks with a better plan that was achievable. This was important because Checkr was loss making and the prior plan allocated resources against an unachievable plan, which would have set the company up to need more capital
• Naeem came back four weeks later with a more reasonable plan that Checkr was set up to hit. This let the company right size investments and positioned the company to make more aggressive future bets

‍How to deal with changes in the plan during the year

• Checkr does not change the field plan (internal plan) unless something drastic happens (e.g., COVID)
• That said, they will update the annual operating plan (resource plan) and adjust resourcing as needed
• If they are beating, they might deploy more resources. If they are missing, they might reduce resources
• If there are changes to the annual operating plan, this is communicated to the board explicitly
• Checkr shares the following: 1. Plan update, 2. Plan variance, 3. Reasons for variance, 4. New outlook
• Lastly, maintain your original annual operating plan as a point of reference - goals are tied to this plan and you want to understand performance versus the original target at EOY

‍Best practices for capacity planning in a sales led model

• Capacity planning (e.g., sales rep modeling) is a good place to start if your TAM is large
  • If you feel TAM constraints, start your planning process with market sizing first
• You need to marry your sales capacity planning with other business teams that will also scale. Otherwise, you risk bloated investment spend without results
  • This includes teams such as enablement, customer success, marketing, and product
  • Example. If you 3x AEs, what does this imply in terms of marketing investments needed?
  • Example. If you 5x AEs, do you have the enablement in place to transfer context?
• When planning for capacity, consider AE churn and turnover. Most businesses underestimate AE attrition’s impact on growth
• Lastly, tie back capacity planning to a lightweight P&L, balance sheet, and cash flow model
  • This will help you impute runway, investments required, and capital intensity

C. Strategic Planning

Strategic planning versus annual planning

• Annual planning and strategic planning serve different purposes. Annual planning is a resource allocation exercise while strategic planning lays out the potential of your business in the medium term

Differences between strategic planning and annual planning

‍Time Horizon

• Annual Operating Plan (AOP): One-year. Focused on allocating resources for the current year
• Long Range Plan (LRP): 3 years. Focused on laying out medium-term trajectory of business

Focus and Constraints

• AOP: Revenue and profitability targets. Focused on hitting topline goals with efficiency constraints
• LRP: TAM and investment mix. Focused on sizing markets and allocating investments
  • Critical to understand how big your markets are and room for additional growth
  • Also important to understand how this impacts where you invest (R&D, S&M, etc)

Outputs

• AOP: Revenue and Bookings targets. Departmental budgets.
• LRP: TAM analysis. Product and GTM roadmap. 3-year driver-based model

Stakeholders

• AOP: Board, executive team, senior business leaders, department budget owners
• LRP: Board, executive team, senior business leaders, 

Timing

• AOP: Post Series A with increasing sophistication and rigor as the business grows
• LRP: Formal process at $100M+ ARR. Prior to that, start doing LRP informally as founders and a small leadership group
  • Informal process can be as simple as writing down how you think the business will evolve
  • This can help clarify investments you need to make
  • E.g., To get to $50M, we need x customers. Do we have enough TAM? Product SKUs?

‍Strategic planning best practices

• Sequencing matters. Start with product and TAM before building down to a financial plan

Naeem and Kiran’s strategic planning best practices

‍1. Start with a product lens, focusing on:

• TAM (Total Addressable Market) development: Define the market potential for your products
• Differentiation: Define your unique value propositions in the marketplace
• ICP (Ideal Customer Profile): Define clearly who you are serving

2. After defining product and TAM, clarify your GTM strategy to reach these customers

• Naeem uses the four Ps - Product, Positioning, Place, and Promotion to define GTM

3. Outline if you need to make other investments to support the product and GTM plans

• For example, you might need to make customer success investments to support revenue

4. Finally, build a financial plan

• The plan pulls together everything in 1-3 to highlight how financial profile will evolve over 3 years. Counter-intuitively, the financial plan is the last step in strategic planning

Strategic planning outputs

• TAM and SAM Analysis: Comprehensive view of the size of your serviceable opportunity
• Product Roadmap: Product strategy to capture your market opportunity and ICP
• GTM Strategy: Details the what and how of your plan to reach customers
• Articulation of considerations or constraints: Details where else you need to invest to achieve the plan
• A financial plan: This is the financial output that shows growth plans and capital requirements

Strategic planning pitfalls

1. There is no plan—This is a most common mistake and drives lack of alignment at larger scales
2. Plan is just a large spreadsheet of numbers—It’s hard to take action on numbers in a spreadsheet
3. Plan is overly complex—If the plan is not clearly understood, you will lack company wide alignment
4. Lack of stakeholder alignment—If internal/external stakeholders aren’t bought in, the plan won’t work

‍Strategic planning case studies

• Naeem and Kiran shared case studies to highlight the importance of strategic planning

Case Study: Salesforce Tower and the importance of strategic planning

• Context: In 2008, Salesforce, a 10-year-old public company with a $4 billion market cap, lacked a formal strategic plan even at $500M+ in Revenue. Marc Benioff would communicate ideas and plans to executives based on napkin math and on rough capacity planning. This worked because the TAM was large enough to support billions of dollars of revenue. The rubber hit the road when Marc bought a large piece of land in China Basin for the company’s new headquarters.
• Challenge: Salesforce’s CFO, Graham, called Naeem and said that the company had acquired a large amount of land in China Basin. He asked Naeem if this would work knowing what he knew about growth plans. Looking several years out, Naeem came to the conclusion Salesforce would need 2x-3x more space than available in China Basin
• Outcome: The company shifted strategy and Salesforce pivoted to become the anchor tenant of what would be known as Salesforce Tower - a very successful outcome for the company. Because of the success of this decision, Graham asked Naeem to lead Salesforce’s new strategic planning initiative
• Lesson: Salesforce didn’t have a strategic plan for 10 years - don’t feel the need to introduce complex strategic planning processes too early. That said, Salesforce waited too long and only introduced it after a terrible capital allocation decision. Start by informally writing down your plans/strategy and evolve it into a more formal planning process over time

Case Study: Salesforce’s “one model to rule them all” 

• Context: After the Salesforce Tower pivot, Naeem was tasked with leading strategic planning at Salesforce. They created a model requirements document and asked for input from stakeholders. Teams overcorrected after the Salesforce Tower decision and asked for every possible use case in the model
• Challenge: To solve for every possible use case, Naeem and team had to build a complex model. The model enabled the team to take any multi-dimensional view of the business they wanted and required its own server to run
• Outcome: Despite serving every possible use case, the model was impossible to use. The complexity meant that nobody could understand the key drivers and it became difficult to update. Within a year, the model was scrapped and replaced by a simple 3 tab model.
• Lesson: Overly complex models can hinder rather than help strategic planning. A simpler, focused approach often provides greater value, as it’s easier for stakeholders to understand and act on

‍Case Study: Checkr’s pivot from enterprise to SMB

• Context: Checkr initially focused on large enterprises after rapid growth with gig companies like Uber and DoorDash. However, their enterprise strategy was underperforming, with misalignment between product readiness and sales goals
• Challenge: When Naeem joined, he identified a broken go-to-market strategy for the enterprise segment. Sales teams were closing deals, but customers struggled to go live due to product limitations, resulting in wasted resources and unsatisfied clients. Therefore, booked revenue was not translating into live customers happy with the product. Using strategic planning, Checkr realized the product and GTM org could serve the SMB market well. This new insight led to the acquisition of GoodHire, a $315 million deal that strengthened Checkr’s SMB foothold and supported scalable growth.
• Outcome: The refocus allowed Checkr to drive growth in SMB and to revisit the enterprise market later with better alignment between product and sales. By 2024, Checkr was successfully serving enterprise clients because the product was no longer the blocker to growth‍
• Lesson: Strategic planning allowed Checkr to reallocate focus towards productive investments. By shifting from enterprise to SMB, it gave Product room to build enterprise requirements over time. This