Grammarly Selects IPO Veterans for CFO and CTO Roles

Brief description of the dive:

• Grammarly, an AI-powered software provider that helps with grammar checking and other features to improve your writing, appointed Navam Welihinda as its new chief financial officer, according to a Tuesday statement. Welihinda, who most recently served as chief financial officer of software company HashiCorp — where he led the company’s 2021 initial public offering — replaces Stu West, who currently serves as an adviser to the company, the company said.
• The San Francisco-based company also named Mark Schaaf its chief technology officer. Schaaf previously served as chief technology officer at Instacart, where he also gained IPO experience, building the grocery delivery company’s technical foundation ahead of its 2023 public offering. In his new role, Schaaf will oversee Grammarly’s global engineering organization and drive development of new AI-enabled features, the company said. He replaces former chief technology officer Joe Xavier, who also currently serves as an advisor to the company, the company said.
• The company has no “immediate plans” for an IPO, but it’s “at a size and scale that most companies rarely achieve, and we need experienced leaders who can scale an already large, rapidly growing company,” a company spokesperson told CFO Dive in an emailed response. “Both Mark and Navam have successful track records of leading companies through transformational periods.”

Diving Insight:

While the company has denied any plans for an initial public offering, the hiring of Schaaf and Welihinda, as well as Grammarly’s recent job posting, suggest the company is headed in that direction, said Shawn Cole, said the president of HR consulting firm Cowen Partners in an emailed response to questions.

“They are preparing for an IPO, but not anytime soon, in my opinion,” Cole said. One of the most telling indicators that an IPO scenario could be in Grammarly’s future is a job posting for candidates for the position Assistant Controller position in the company, Cole said.

Duties listed for the role include: creating a “roadmap for Grammarly’s IPO readiness” and helping to “implement SOX controls and procedures focused on IPOs” and leading the company through an annual external audit with a Big Four firm. The Big Four reference signals cooperation with the Securities and Exchange Commission, since “the only financial reporting you do at (the Big Four) is the SEC (reporting),” Cole said.

Grammarly was founded in 2009 by Max Lytvyn, Alex Shevchenko, and Dima Lider in Ukraine and still operates there, according to a spokesperson and the company’s website. The co-founders, who previously built anti-plagiarism product Lytvyn, the company that launched its subscription-based writing tool based on the writing of its students, focused primarily on helping people correct grammar errors, according to a 2022 blog post.

The company has expanded its offering and reach over the years to include new users and platforms like Grammarly Business, and has also provided support that goes beyond grammar to ensure consistency, readability and tone, Lytvyn wrote. It is now used by 30 million people and 70,000 teams, as well as companies like Atlassian and Zoom, the company said in its Tuesday release.

Still, it faces some setbacks. In a June blog post on Grammarly CEO Rahul Roy-Chowdhury confirmed the rumours about the perceived threats to its business in the age of artificial intelligence, saying that “recent reports of our demise have been greatly exaggerated” and that the company is thriving.

“While Google, Microsoft and recently Apple are focusing on improving their own artificial intelligence ecosystems“Grammarly will be there (as always) wherever you need to communicate,” he wrote. “Only Grammarly has the linguistic expertise, technology, and historical context to deliver the next generation of AI communication assistance. The growing number of players in this space means that the best minds in technology have turned their attention to an arena where Grammarly has long excelled.”

Asked for more information about potential long-term IPO plans, the spokesperson declined to comment further, adding that the company is “focused on delivering value to our customers by executing a robust AI-driven product roadmap and scaling our business operations.”