FiscalNote’s CEO on DE&I, IPOs, and what he learned from political campaigns

In this podcast, Heidrick & Struggles’ Julian Ha speaks to Tim Hwang, the founder, chairman, and CEO of FiscalNote, an information services company focused on reshaping how companies understand global policy and market intelligence by combining AI technology, expert analysis and legislative regulatory and geopolitical data. Disclosure: Julian Ha has been an adviser to and is a shareholder in FiscalNote. Hwang shares his journey from politics to founding FiscalNote out of a Motel 6 room to taking it public in August 2022. He discusses some of the skills he gained from working on campaigns as well as why collaborating with stakeholders is critical and what it takes to drive that collaboration within the C-suite and with other stakeholders such as employees, shareholders, and regulators. Finally, he talks about how he links DE&I goals to FiscalNote's strategy and operations.

Some key questions answered in this podcast include:

• (5:26) What helped you as a leader through the process of building your company and then taking it public? 
• (8:47) You worked on the 2008 Obama campaign and were elected to the Board of Education in Montgomery County, Maryland. What were some of the lessons and maybe skill sets and experiences you drew from those experiences that have helped you succeed as a public-company CEO?
• (11:21) Can you share some of your leadership philosophies and perspectives on leading through uncertain times?
• (13:19) How do you link your DE&I goals to FiscalNote's strategy and operations? And how do you see that improving the company's performance and goals? 
• (15:12) In your role as CEO, collaborating with stakeholders is critical. What are some of the leadership skills it takes to drive that collaboration within the C-suite and with other stakeholders such as employees, shareholders, and regulators?

Below is a full transcript of the episode, which has been edited for clarity.

Welcome to the Heidrick & Struggles Leadership Podcast. Heidrick is the premier global provider of senior-level executive search and leadership consulting services. Diversity and inclusion, leading through tumultuous times, and building thriving teams and organizations are among the core issues we talk with leaders about every day, including in our podcasts. Thank you for joining the conversation.

Julian Ha: Hi, I'm Julian Ha, a partner in Heidrick & Struggles Washington, DC, office and the leader of the global Government & Policy practice. In today's podcast, I'm talking to Tim Hwang. Tim is the founder, chairman, and CEO of FiscalNote. FiscalNote, which went public in August 2022, is the premier information services company focused on reshaping how companies understand global policy and market intelligence by combining AI technology, expert analysis, and legislative regulatory and geopolitical data. 

In full disclosure, I've known Tim for many years and have been an advisor to FiscalNote. Tim, thank you for joining us today. 

Disclosure: Julian Ha has been an adviser to and is a shareholder in FiscalNote.

Tim Hwang: Yeah, great to be on. 

Julian Ha: So, what led you to found FiscalNote? Please share with us the origin story of how you received your first seed money and from whom, if you can.

Tim Hwang: Sure, absolutely. I've always been interested in politics, even at a really young age. When I first started off in my career, I thought that I was going to be a politician, believe it or not. I was involved in a bunch of different political campaigns. I joined the Obama campaign early on in 2007 and really got a taste for campaigns and elections and the political process. I ended up running for a small political office myself, in Maryland, at the age of 17, and I was elected to the Board of Education. I was really, really interested in policy and politics. 

And 2010, when I had just started at Princeton University, I was trying to merge my two interests in technology and politics. And so, I was mulling over different ideas, you know, about how to use an engineering background or computer science background to help out with policy, maybe something like data privacy or the FTC or the like. I was reading the news—if you can recall, back in the early 2010s, there was an onslaught of regulatory activity. Uber was coming out to market and their executives were getting dragged in front of regulators, and prosecutors were chasing them up and down the country or around the world. Airbnb was getting investigated by the Attorney General over New York benefits, and Theranos and a bunch of other companies were just going through significant regulatory challenges.

The thought that I had at the time was that, “Man, these companies really don't understand regulations and regulators.” And I saw that there was this wide gap between policy, politics, and business in general, exacerbated by the almost antagonistic nature between regulatory agencies and the private sector that more or less came out of financial crisis.

One last anecdote I’ll put out there: when I was sitting in politics and in government, one of the things I realized is that it's very difficult for people in politics to actually understand what other people are doing. The White House is absolutely obsessed with what Congress is working on or what their regulatory agencies are working on. At the state level, they're constantly trying to triage between federal mandates and incentives and what each of their local jurisdictions are working on at any given time. There's a lot of autonomy in this federal government structure. And I just felt like there was all this information that was out there that wasn't getting organized and that people were just scrambling to figure out what any part of the government was working on.

And so, in a nutshell, we decided to move to Silicon Valley. I bought a one-way ticket along with a bunch of my high school friends. We had this idea to basically aggregate large amounts of government information and build [something like] a Bloomberg terminal for law, effectively. So, creating this subscription product to which people can log on, pay a monthly subscription, and then can effectively get access to legislation, regulations, government information, and the like in order to understand potential regulations or public policies or legislation or changes in laws that might potentially impact their business, their industry, their constituency, or whatever the case may be.

So, you know, we were probably 21 years old at the time we moved out to Silicon Valley and bootstrapped a couple thousand dollars from summer savings and internships, and we were pretty much straight out of college. And, in true Silicon Valley fashion, we were kind of looking around for apartments in South Bay and realized that we couldn't afford anything, so we moved into a Motel 6 room for a couple of months, and that's actually where we started our company: two guys on each bed and one person sleeping on the floor just trying to get this company off the ground. Probably working 16-hour days, seven days a week, coding, calling customers, pitching investors. And then, as you mentioned, Julian, we started to build up the company and realized that we needed to raise capital. 

I remember: one night, after working an 18-hour day or something, we were watching Shark Tank and I just thought, “Hey, it'd be really cool if Mark Cuban invested in the company.” I went on Google, literally typed in “Mark Cuban email address,” went to the contact page of one of his companies, and then shot him a cold email. Forty-five minutes later, Mark responded, and a couple days later he said, “I'm in.” And he was the first check into the company. From there, it was Jerry Yang, the founder of Yahoo and NEA, which is a large venture capital firm. And collectively, they put us on this initial pathway after we raised our first $1.3 million and got the company off the ground.

Julian Ha: That’s an amazing story. So that really worked, and I hope you've decided to buy that Motel six, or at least make it part of the FiscalNote museum someday. 

Tim Hwang: Yeah, absolutely. 

Julian Ha: So, let me ask you, a couple things. First of all, what helped you as a leader through that process? I mean, that was tough, right? To make that decision to move out on a one-way ticket. And also, why did you decide to go public? And what was leading a company through that process like? 

Tim Hwang: Well, I think that a start-up founder faces various stages of maturity at various points of the company's history. So, at zero to 10 people, there are certain challenges that you have and they're almost existential. You have to build a product and you have to get that product validated by customers. Customers have to respond to it. At 10 to 20 people, you have to start building a more diverse team in terms of making sure that you have all the different components around operations and sales and marketing and product and engineer. And you might still be trying to make sure that the business model is refined or that the unit economics are working. There's a lot of risk in that first phase. Let's say you have your first couple customers off a product people are buying. Then you have to start scaling the business, and somewhere around 20 to 50 people, your job is to effectively start recruiting at scale and building a management team who can effectively operate a real company. And all along the way, you're trying to raise capital and minimize dilution and make sure that you have enough runway to keep building the business. 

Let's say you have a product, you have a customer base, you have a small but mighty management team: you have to start building a business, especially one that takes in venture capital. You're sort of on the shot clock to building a very large business. And so, from $1 to $10 to $20 to $50 million in revenues, you have to basically start pressing on the gas pedal and building sustainable sales and marketing strategies to attract new customers and retain the existing ones that you have.

And then, somewhere along the line, companies sort of get to the stage when they start amassing hundreds of employees and expanding to new geographies and adding a couple of new product lines. You're basically ripping out the playbook every six months and building the company. You are evaluating your management team constantly. You are looking at the market and evaluating competitors and the like. 

But as we were evaluating the process to going public, I actually don't think that the company dramatically changed its business strategy or its day-to-day operations. I mean, we're still servicing thousands of customers off the dozens of products that we have and pushing our growth into new geographies and new strategies. It's just that, you know, somewhere along the way, you have to start thinking about capital a lot. And capital has to fuel for continuous growth into the future. For us, the decision to go public was driven by our desire to continue to drive an M&A strategy that effectively enables us to continue to grow and add new product lines. But [the decision was also driven by] the idea of accessing the public capital markets for ease of capital-raising. 

And, as some people may know, raising venture capital is a very arduous and long process. It usually takes several months of pitching and negotiating and the like, which does make sense—it's in the private markets and there are fewer disclosures, and so on and so forth. But, in the public markets, certainly, the transparency and the participation of a large-scale number of investors means that we can move very quickly to raise capital. And so, I think that we're still in the early stages of our growth, and the idea of going public helped us in that regard. 

But, to answer your question around leadership, it does take a lot of flexibility, and I think the requirements around founders to consistently reinvent their playbooks and then reevaluate what their roles are every three, six, and 12 months, means that the job that you have wasn't the job that you had six months ago and it will not be the job that you have six months into the future. 

Julian Ha: I’d like to just double-click on your development as a public-company CEO. As you touched on, prior to FiscalNote, you worked on the 2008 Obama campaign. You were also elected to the Board of Education in Montgomery County, Maryland. What were some of the lessons and maybe skill sets and experiences you drew from those experiences that have helped you succeed as a public-company CEO? 

Tim Hwang: Well, I think there are two things. The first thing is that the campaign world, I would say, is a start-up. The feel, honestly, of operations is probably more like a start-up than most start-ups. I mean, you're working off pizza boxes late into the night. You have this singular mission that you're trying to accomplish. You're maniacally focused on the things that drive particular outcomes. You're extremely KPI-focused and metrics-focused down to the line of, like, individual customers. You're constantly doing segmentation of your users. So, I actually think transitioning from the campaign world into start-ups is actually very natural for a lot of people. I think that it also gives you a sense of what kind of work ethic and drive is required to get to a certain outcome, and so I think that that was actually a very transferable skill.

As far as being a publicly traded CEO, the focus of publicly traded CEOs, I would say, is a lot on communications. And it's not just the broad-based communications, in the traditional sense. You have a lot of stakeholders that are constantly thinking about what the company and the CEO are saying. You have institutional and retail investors, the analyst community, customers, employees, partners, and vendors that are really, really dependent on the individual words that you say, the tone of it, the strategies around when you say certain things and how you segment different messages to different people, and the audience and the individual message you're trying to get out there. And from a political perspective, it's also all about communication, because communication drives policy and policy drives outcomes. And, in the case of public CEOs, it's effectively the same thing, right? You're communicating a certain strategy that you're trying to execute on. You're trying to win over supporters to your particular strategy.

If we articulate a growth strategy, we need to articulate it to our investor base—who basically vote with their dollars every day, right? Whether they're buying or selling their shares—and to the employee base who are voting with their feet on whether or not they believe in the mission and the growth strategy of the business. And it is, I would say, an everyday election, because you're trying to constantly convince people that this is the stock, this is the company that they want to hitch their ride to. And a lot of that is dependent on strong leaders who have good communication skills.

Julian Ha: So, maybe sticking with the theme of leadership, FiscalNote is one of the largest employers in Washington, DC, and you have offices all over the world now. When it comes to your employees and navigating the complexity of the past two-plus years—a global pandemic, social justice movements, shifting work environments, balancing the need to keep the pace of growth toward that IPO—can you share some of your leadership philosophies and perspectives on leading through such uncertain times? 

Tim Hwang: I think that the key thing for us, that carried us through consistently, is being really true to our mission. And honestly, as wishy-washy as that sounds, when the pandemic hit, I pulled the entire company together and I said, “Look, at the end of the day, people need our information now more than ever. Our customers are navigating lockdowns, shutdowns, changes in tax policy, and stimulus [packages] on a daily basis. That's constantly changing, and we are the company providing that information to our customers. And so, when you come into work tomorrow, you need to make sure that you keep that in mind and are making sure that you understand that the work that you're doing does have an impact on people and is going to make a difference.” And I think that was really compelling for our employees, even as we were navigating a very tumultuous situation.

I think that when we have to make decisions, internally or externally, the thing that we always go back to is, “What is the purpose of our company? What is the mission of our business?” And then we ask ourselves, “Is this is a business that we want to be? What are the ethics and morals we want to operate by?” Those are very fundamental questions, but when I look at the long arc of a business career or a company's history, it’s determined by these decisions that people make on a day-to-day basis. 

Frankly, life is short, and you want to do things that are right and do things that are impactful. And short-term-ism isn't the best option for many things. And so, I think staying focused on the long term and that mission is what's really carried us into the future. 

Julian Ha: Tim, I know that diversity and inclusion are extremely important to you, personally. How do you link your DE&I goals to FiscalNote's strategy and operations? And how do you see that improving, perhaps, the company's performance and goals? 

Tim Hwang: So, you know, our senior leaders are partially incentivized by DE&I initiatives and goals, in addition to their operating metrics and the like. And it's not just because it's ethically good and morally good—I mean, it obviously is. But it’s also because I do think that in our business, diversity and inclusion drive better business outcomes. They result in a closer association with customers, particularly on a global basis. A diverse workforce effectively means that you have a diverse skill set. It means that the skill base you can draw upon enables you to be able to grow into new vectors that you may not have imagined. So, if we're trying to grow into the South American market and we need a slew of people who understand the Latin American business culture and can speak Spanish or Portuguese, for example, having a diverse workforce effectively means that we can draw from a particular skill set to be able to drive that growth into the future and also develop stronger relationships with our customers.

Of course, the other thing is the ability to create a work environment that enables you to be able to attract and retain high-quality people. And by high-quality people, I mean people who are extremely competent at their jobs, who are, frankly, nice to one another, who create a workforce and a culture where people want to be and where they want to achieve and strive. [We work to] minimize politics and corporatism and really focus on building a great business. Those are really strong fundamentals in terms of building a long-lasting company. And you can't really build a long-lasting company if you have a churn-and-burn culture or a culture that doesn't focus on customers or doesn't focus on growth. And all those things, I believe, are underpinned by some form of DE&I that really enables you to have the intangibles in building a great company. 

Julian Ha: In your role as CEO, collaborating with stakeholders is critical. What are some of the leadership skills it takes to drive that collaboration within the C-suite and with other stakeholders such as employees, shareholders, and regulators? 

Tim Hwang: So, the first thing is a lot of empathy and listening. Oftentimes when people think about negotiations or adversarial relationships—which I'm not saying that we do have, but just in general—it's typically that it's not very zero-sum. The example that I always give is that, when I was younger, I used to think if I have eight slices of pizza, there were only eight ways to divide it. You get four slices and I get four slices, and maybe I can negotiate for the fifth slice. But sometimes, people want pepperoni and they care about the pepperoni more than they care about the cheese or whatever. My point is that there are different ways of looking at the pie to be split up, and it starts with really deeply listening to how to solve problems. It obviously is exacerbated by different stakeholders who have different needs. As an example, institutional investors are tied down to their quarterly annualized returns, and so you want to talk to them about your capital allocation strategy, how you're driving the best growth, and the return on invested capital for the business. Executives and employees care a lot about career progression, about opportunity, about compensation, about all those things. And so, you want to carefully listen to what their particular needs are and the like. Regulators care about a lot of things. They care about creating fair environment. They care about disclosures and the like, and so you want to be very attuned to what their particular needs are. And so, I think that having that empathy for where people are coming from and what their incentives are effectively enables you to really hone in on what you need to do for that particular stakeholder.

I think the second thing is just having a maniacal focus on a North Star or a series of North Stars that you can drive the entire stakeholder community toward. So, if I say we want to do X with the business, I have to communicate that consistently to every single stakeholder, and make sure they know where my motivations are coming from. And a lot of the decisions that are being made by the senior leadership team or by the CEO are also a reflection of a mirror—a reflection of our own incentives. And so, being able to clearly identify and then communicate that series of North Stars, I think, is critically important to an infinite number of interactions that a company may have over the course of a quarter or over the course of a year. 

Julian Ha: Tim, as we bring this conversation to a close, I wanted to ask one final question, with two parts. Looking ahead, what leadership skill sets and capabilities do you think will be most important for FiscalNote to meet its strategic goals? And where do you see the company in, let's say, five years?

Tim Hwang: Well, I think that a company goes through various stages of growth, and I would put it on two sides of the pendulum. There's one side that requires infinite levels of creativity and innovation. This is the early stage of a company when you pull out the first sheet of blank paper and you write the business plan and you think about what's possible. And then the other side of the pendulum swing is building operational processes, organizational structure, incentives, procedures and policies and compliance, and all the things that enable you to focus on building a great company and scaling it.

Typically, companies kind of pendulum back and forth. They'll pendulum in the first part when they're an early-stage company, and then they'll pendulum to the other side when they need to actually start building the company. And then they'll pendulum back when they need to build new growth engines and expand it to new geographies. And then they'll pendulum back, build new processes and those geographies and new business lines. And so I think that the key traits that we really need—I mean, you kind of need both when you're at our scale—you need people and leaders that are capable of just being wildly creative, going after new markets and geographies and saying, “If we have these 10 products, what's the art of the possible in our 11th and 12th products? How do we think about our expansion into new geographies or new areas? And what does that entail in terms of being able to take an executive, drop them into a middle of a country, and then build an entire company or a subsidiary?” That is an extremely important skill set to continue to drive long-term growth in the business.

At the same time, you need operators who are capable of driving efficiency and who can basically take existing processes and just keep turning the screw over and over and over again to just get it tighter and tighter in terms of operations. Because that's how you drive better capital efficiency, better operations, and more profitability.

I'm very, very cognizant of particular leaders and where they should be spending their time based on of their skill sets and their interests. [If I realize] “Oh, this is a widely creative person.” We need to stick them on looking at this new growth area or this new geography or drop them into an industry so they can get some level of growth in this new market or whatnot. Or [I might realize] they're a seasoned executive that's capable of taking an existing business line and driving significant levels of efficiency or profitability out of it. So, managing those types of leaders and building the right culture where people understand all different aspects of that, I think, is important.

And that, of course, leads to your second question, where we want the company to be in the future. From a mission perspective, I don't think our mission changes at all. We're very interested in continuing to aggregate legal government data and the like and building subscription businesses out of it. We are expanding into financial data. We're expanding into alternative data. We're expanding into other sources of information. And I think the business over a five- or 10-year period probably looks and feels increasingly like a Bloomberg or a Thompson Reuters or a Morningstar, [a company] that has a dominant position in a handful of key information products and is able to build a compounding recurring revenue business that effectively renews every single year and enables you to be able to have good, strong growth into the future.

And the requirements of getting to that point, of course, are highly dependent on the two types of leaders that I talked about in terms of the widely innovative ones, and then, certainly, the key efficiency operators that drive the growth into the future. 

Julian Ha: Thank you so much, Tim, for making the time to speak with us today to share your thoughts on leadership. We really appreciate it. 

Tim Hwang: Yeah, great to be on.

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About the interviewer

Julian Ha (jha@heidrick.com) is a partner in the Heidrick & Struggles’ Washington, D.C. office and leads the global Government & Policy and Association practices. He is also a member of the Diversity, Equity & Inclusion and CEO & Board of Directors practices.