Ditch the office lease and scrap the billboard: Here's the financial checklist Brex and Rippling just published for other startups reopening after a shutdown

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michael tannenbaum brex cfo

  • On June 9, Brex and Rippling shared a broad financial checklist that startups can use when evaluating how to best reopen following statewide shelter-in-place orders and widespread remote work.
  • Some of the lessons of the last few months could be used in the long run, such as maintaining remote work, to help cut costs while balance sheets are tight, Rippling CFO Adil Syed said.
  • In the coming months, office space could be seen as a perk that startups offer employees as part of a comprehensive benefits package instead of traditional work conditions, Brex CFO Michael Tannenbaum said.
  • Another area that could be trimmed down is marketing costs, Syed explained. If startups are unable to renegotiate existing contracts on something like billboards, he suggested revamping the advertising message to make sure it is in line with public sentiment and avoid coming off as tone-deaf.
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Startups about to reopen for business are grappling with inconsistent rules between California’s phased reopening and the Bay Area’s more stringent requirements, leaving young companies flying blind when it comes to longer-term planning.

Of particular concern to startup founders is runway, or how long they can keep going on the cash they have in the bank if they don’t change their average cost to run the business. With many VCs pulling back from new investments given the uncertainty in the market, founders are coming to terms with what their runway has to be just to survive. Belt-tightening is the biggest Silicon Valley trend of 2020.

So on June 9, credit card startup Brex and HR startup Rippling unveiled a financial checklist they developed to help startups evaluate what’s next, and modify their operating plans if necessary. In the absence of clear federal or state guidelines or best practices from investors, startups like Brex have sought to fulfill the role of educator for their peers. The CFOs for the two companies unveiled the checklist as part of an ongoing series of online presentations for founders.

“Today’s conversation was really born out of me and Michael kind of having a chat about our own journeys and navigating financial planning during COVID,” Rippling CFO Adil Syed told attendees. “There are a lot of things that we don’t have obvious answers for, but we figured there are folks out there that are feeling the same and wanted to have this chat with everyone.”

The checklist covers various items that could be dialed back or cut altogether, Syed and Brex CFO Michael Tannenbaum said during the presentation. Given the restrictions in Silicon Valley in particular, Tannenbaum recommended cutting back on pricey office leases, and even going forward, redefining an office-based workspace as more like a shiny perk instead of a standard expectation.

“It used to be sort of like, the 11th Commandment was ‘thou shalt be in an office’ and I think now, this idea is that office space and the ability to interact with people is more of a perk,” Tannenbaum said. “It can be a great thing that a company can offer, but when you start to think about it in that way, particularly in the context of financial planning, I think that’s a really valuable framework because you can start to say, ‘are we getting this value out of this office relative to other things we could be offering?'”

Another expense that both Rippling and Brex have dialed back on themselves is advertising on billboards and bus stops around the Bay Area. With fewer people commuting to those office jobs, the return on those  historically costly ads continued to shrink.

But when Syed attempted to get out of a previously agreed upon contract for a billboard in San Francisco, he realized that it was less flexible than he had hoped. So he asked his marketing team for a replacement advertising campaign, one that celebrated healthcare and frontline workers, because he was concerned about the original ad coming across as tone deaf given the circumstances.

“It was a series of billboards that we put up in San Francisco right as a city was going into shelter-in-place, and the reality is we did it because we had no choice,” Syed said. “There was no way for us to get out of the out-of-home contracts that we’d signed up for, but we use that opportunity to sort of flip the narrative into less about Rippling and more about all the, you know, really hard workers out there that were allowing us to stay safe at home.”

Here is the financial checklist that Rippling and Brex shared with other founders and CFOs.

SEE ALSO: Here’s a survivor’s guide for startups weathering their first major recession, according to an expert who’s been counseling young companies since the COVID-19 crisis erupted in March



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