SoundCloud CFO Dan Bettes on Marketplace Liquidity, Music, and Forecasting

**CJ Gustafson** (0:00)
Daily active users vs. monthly active users. Which one is more important to you?

**Dan Bettes** (0:05)
I think of it as a funnel. Semi-annual active users, quarterly active users, monthly active users, weekly active users, daily active users. We're not picking necessarily one to optimize for, but we do look closely at the ratios.

**CJ Gustafson** (0:19)
How do you handle situations where performance may deviate from these normalized trends?

**Dan Bettes** (0:24)
Not having as much of a kind of rigid structure where you have finance people and product people. We still have those disciplines at more of a networked structure with a GM kind of at the helm.

**CJ Gustafson** (0:37)
You threw this term at me, the final boss.

**Dan Bettes** (0:39)
It is the indirect cash flow statement. And the way it was set up is almost like a matrix. There's rows and there's columns. It was really hard, but there was an incredible amount of pride and satisfaction that came with solving the puzzle.

**CJ Gustafson** (0:57)
Is this thing on?

**Dan Bettes** (1:00)
Yesterday's price is not today's price.

**CJ Gustafson** (1:11)
Welcome back to Run the Numbers, a very special episode of Run the Numbers. We recorded at none other than the New York Stock Exchange. Yes, they let me in.
I interviewed Dan Betts, CFO of SoundCloud, on the evolution of the music industry. SoundCloud sits in the middle of one million fans and nine million creators. It's essentially a marketplace business that's monetized through subscriptions. So Dan takes us into the mind of a CFO who's trying to balance liquidity on both sides. The metrics he looks at on a daily basis to keep the trains running on time, and how often he re-forecasts the business. Dan is also super passionate about the intersection of tops down and bottoms up forecasting and driving to an answer that department leaders feel like they own, it's not just being pushed onto them.
He's a master communicator. I think this is an underrated skill for a lot of finance people. He emphasizes you have to cater towards the audience you're presenting to, know your customer, and also just explain stuff to people in plain English. Nobody likes something who's going to church it up as they say in Joe Dirt.

**Dan Bettes** (2:12)
Don't try and church it up, son.

**CJ Gustafson** (2:14)
Don't you mean Joe Dirt? Oh, this is much, much more. Dan, thank you for joining me on the Run the Numbers podcast at the New York Stock Exchange. Pretty cool, huh?

**Dan Bettes** (2:22)
Yeah, never been here first time. It's quite the view for an office. I'm thinking about like they can make this box into a WeWork or something. It's like a nice little aquarium.

**CJ Gustafson** (2:30)
I want to do some quick hitters because this is a historical place. Me and you, we've had dinner together and I think we found out pretty quickly that we're both business nerds. Do you remember the first stock you ever bought?

**Dan Bettes** (2:40)
I remember as a little kid looking through my dad would get the USA Today and I would go to the finance section and like, companies I knew, I would like look at the stock ticker. But I was probably in my mid-20s when I had paid off some debt, it had a little bit of money to invest.
I had read Ramit Sethi's, The Financial Guru, his book, and I just followed his super boring advice and bought a Vanguard index fund. The cheapest thing I could buy that was balanced, so it's not like no flyer.

**CJ Gustafson** (3:10)
You were diversified from the beginning, my friend.

**Dan Bettes** (3:12)
Yeah.

**CJ Gustafson** (3:13)
When you think back on IPOs, I think a lot of us have this picture of a company ringing the bell, you get the picture of the founder, the CFO on stage. Is there one company or one moment that comes to mind like, oh, I remember that IPO?

**Dan Bettes** (3:26)
I lived in Chicago from 2007 to 2014 And from like, maybe like 2008 to 2010, the darling startup of Chicago that everyone wanted to work for was Groupon.

**CJ Gustafson** (3:40)
I knew you were going to say Groupon. Yes.

**Dan Bettes** (3:42)
I had an interview there to be the assistant to the controller. I didn't interview the CFO, but I interviewed with the controller, the technical controller because they were doing so many acquisitions and the purchase accounting was crazy. I thought I did really well in the interview. I thought I absolutely crushed it.
I didn't get rejected. I got ghosted. I emailed, I called the recruiter. I never heard from them. Then I found out later on that a lot of people had gotten ghosted. They grew so fast.