CFO THOUGHT LEADER

When CFO Scott Walker has considered new career opportunities in the past, only a small subset of growth businesses have been able to meet all of his desired criteria.

Very often the firms had achieved product market fit and successfully raised a number of rounds of funding, but to Walker they were just still too young. Perhaps the management was being reshuffled or the operations were too fragmented, and it would become clear to Walker that the company was not yet ready to find its “cadence.”

This would be of no little import, as helping companies to find their cadence is what Scott Walker does best, or so he explains as he reflects back on the different career choices on his path to becoming an “operational CFO.”     

Says Walker: “My sweet spot is stepping into a business that’s doing well but has to professionalize. It has to grow up. It has to mature. It has to add discipline and build rigor in how it gets things done. This ultimately focuses on execution through decision-making on logic and data and facts.”

According to Walker, a business might be able to swiftly close its books and review its balance sheet with regularity, but very often the firm is not yet advancing “in step” as one organization.

“I put a healthy tension on the business to make sure that people are showing up every month, and there is a monthly operating review at which people talk about the fundamental underlying performance of the business,” explains Walker, who believes that the regularity with which people talk about performance helps to inform how decisions are made across an organization and how things ultimately get done in a business.

Last May, when Walker stepped into the CFO office of Clarity Software Solutions, Inc., he was confident that he had found an excellent match for what he does best. Still, his first 100 days were not without a few challenges.

“I couldn’t find the cadence in my first couple of months, so the CEO and I sat down and I told him, ‘I need to build a cadence here,'” remarks Walker, who adds that his arrival at the software developer occurred at a unique place in time on the company’s path to maturity.

Says Clarity’s CFO: “This is a very important time for me as an operational CFO—it’s when I can really help a company.” –Jack Sweeney

Brett and Jack weigh-in on Zoom firing squads, the move to hybrid workplaces and hiring’s enormous impact on your company’s funnel. Featuring the commentary and insights of workplace champions CFO Jim Morgan of CallRail, CFO Amol Chaubal of Waters Corporation and CFO Justin Judd of BanbooHR.

When it comes to FP&A data, WP Engine CFO David Brolsma is an open book. “We make a data visualization tool called ‘Looker’ available to all of our employees,” reports the veteran tech executive. “We’re an open book company, so all employees can see almost all of the same performance data points that I see.”

At the Austin-based start-up that provides developer-centric WordPress products for companies and agencies of all sizes, Brolsma and his extended team keep their eyes on the crucial metric of market share growth, as well as on customer retention, churn, daily active users, and other software-as-a service (SaaS) measures.

Brolsma helped used a Dutch auction to take Rackspace public in 2008, just before the global economic crisis hit. The fanatical customer support he learned at that cloud computing pioneer proved valuable in helping WP Engine’s customers to navigate the extreme uncertainty brought about by the global pandemic throughout 2020. “COVID was impacting a lot of our customers, especially in industries like travel and hospitality,” Brolsma confides, “so we decided to talk to them to figure out how we could best be of help.”

Despite WP Engine’s own COVID-related budget cuts and spending constraints, the company eventually offered credits to distressed customers. “It’s difficult to make this kind of decision,” Brolsma adds, “but now our customer retention is off the charts—like nothing we’ve ever seen before.” –Eric Krell

How should a textbook rental company respond when it discovers that Amazon has just introduced offerings that will make the giant retailer its newest and biggest competitor?  

If it’s 2013 and the company is Chegg, Inc., management found a conference room and locked itself inside not for hours but for days and weeks, according to Dave Bernhardt, who sat alongside the company’s CFO and other operations leaders as they together considered some of the grim realities of having Amazon as a competitor.

“When Amazon entered the market, pricing on textbooks fell about 40%, so the profit in the business disappeared immediately,” explains Bernhardt, who first joined Chegg as a corporate controller and soon advanced into the vice president of finance role as Chegg tapped into more of Bernhardt’s FP&A acumen.

“We needed to find a way to make our business ‘capital light,’ and the question became: ‘How do we get out of where we are and take our money and put it back into something that will basically give it back to us?,’” recalls Bernhardt, who notes that Chegg’s management quickly zeroed in on partners and competitors facing a similar Amazon threat.

“We partnered with the logistics company Ingram, which did fulfillment for us. Later, we partnered with the publishers themselves when we moved to a consignment model. This meant that we weren’t buying any of these books and thus had that cash available to us,” remarks Bernhardt.

Nevertheless, Chegg’s profits from book rentals were being put on life support.

“We essentially gave to our partners whatever profits existed in the rental business. We had to tell Wall Street, “Hey, ignore this side of the business because all we’re viewing it as now is as a low-cost customer acquisition vehicle,” remembers Bernhardt, who adds that the company then began to aggressively upsell customers to Chegg services consisting of more high-margin products.

“I want to say that at the time Chegg services might have been 5% to 10% of the business, and now it’s probably 95%,” reports Bernhardt, who estimates that the education company’s profit margins today run higher than 80%, on average.

Reflecting on Chegg’s response, Bernhardt doesn’t hesitate to characterize fear as being an effective catalyst: “I don’t know that Chegg would be where it is today if Amazon hadn’t entered the market—or at least its transformation never would have happened as quickly or as successfully.” –Jack Sweeney

Waters Corporation CFO Amol Chaubal has cracked the code on the strategic CFO role, and he’s willing to share a snapshot of his formula for success.

“A lot of companies focus on data and the insights coming out of that data,” reveals Chaubal, who amassed finance leadership experience in consumer products, pharma, and energy before joining Waters Corporation—a publicly listed analytical Laboratory instrument and software company—earlier this year. “Our focus is a few steps ahead. We say that data and insights are table stakes. You have to go one step further to take these insights and create action options for the business leaders. And you have to then use these options to come up with decision support and recommendations on what actions to pursue.”

After helping to execute a tricky COVID pivot at his previous company, Chaubal now tries to apply his laserlike focus to commercial operations at Waters in order to drive recurring revenue gains and help to enhance the vitality of the company’s product portfolio. On a daily basis, he and his finance team monitor the opportunities pipeline by tracking incoming orders (by instrument category, business area, geography, customer type), order–sales conversions, supply chain and inventory health, operations productivity, and product portfolio vitality.

Chaubal’s secret for optimizing his own levels involves taking a series of 5- to 7-minute breaks throughout the day to relax, refocus, and reinvigorate. He channels this vigor into expanding his relationships with business leaders throughout the organization: “I strongly feel that the most successful CFO is a social CFO. One who connects with the deepest deep corners of the organization. One who is able to pull information out, connect the dots, and come up with: What does this mean?” –Jack Sweeney 

Ten years ago, when Adobe management finally made up its mind to enter the software-as-a-service (SaaS) realm and become part of the mass migration from selling boxed software to selling its software offerings via subscription, Adobe’s migratory undertaking might well have been compared to that of the arctic tern.

With by far the longest such treks known in the animal kingdom, the arctic tern has one of the most widely followed migrations on the planet—and such would be the case for Adobe, whose most dedicated observers were unquestionably its investors.

“How do we tell investors that this is a great thing for them, that the metrics on which they’re most reliant actually won’t have any validity for 2 or 3 years, and that they should look at other numbers instead?,” asks Justin Judd, who at the time—as a vice president in Adobe’s corporate legal group—became involved in the massive migration as the company’s finance and legal worlds converged to better address the transformation’s communication challenges.

To Judd, Adobe’s migration to SaaS was an inflection point not only for the company but also for his career, which—considering the legal complexities of the migration—would benefit from having direct involvement with Adobe’s executive team and board. What’s more, Judd found himself increasingly intertwined with the company’s finance teams and leaders.

“In communicating and developing the strategy and running through this process, I learned the value that finance can have in framing hard decisions for companies and the importance of business context because Adobe invested deeply in understanding what our customers needed,” explains Judd, who—although initially summoned for his legal guidance—seems to have savored the broader communications challenge that was being addressed by Adobe’s finance teams.

“’Here’s how our product offerings work. Here are the implications of decisions that we make.’ Let me bring this information back and present it in a way that can be influential and powerful in helping our decision-making to be successful,” remarks Judd, who would trade in his legal moniker in 2018 when he was named CFO of Adobe’s digital experience business—perhaps a less-than-surprise outcome in light of his previous multiyear entrenchment within the company’s finance leadership.

However, unlike with the arctic tern, for Judd there would be no turning back. –Jack Sweeney 

Start early, stay late, be prepared, and don’t shy away from the street-fight environments surrounding start-up companies. These methods have helped Michael Levine to bound up an unconventional leadership ladder en route to the CFO office of Payoneer, the global B2B digital commerce company that he helped to take public in June of this year via a special purpose acquisition company (SPAC). According to Levine, Payoneer’s decision to go with a SPAC rather than a traditional IPO was influenced by his ability to share forecasts with prospective investors amid the pandemic’s digital commerce boom.

Levine followed an untraditional path to the CFO office, from his start as an investment banker to his swift rise up through the ranks in the commercial banking, telecommunications, and healthcare software sectors. Fresh from Wharton, Levine recalls, he would wait at the end of the line queued up outside the vice chairman’s office each evening in hope of a brief audience. On occasion, he might eventually snag a precious few minutes after 8:00 p.m. to chat with the senior leader about his day and the investment bank itself.

Now, a decade after joining Payoneer, Levine starts his work at [5:30] each morning with a breakfast of payments volumes, fee revenue, take rates, customer acquisition costs, and other KPIs. Thanks in part to his long days, rigorous preparation, and “beyond what?” focus on why the numbers are what they are, Payoneer has grown from 100 employees and $13 million in revenue in 2011 to approximately 2,600 employees and revenue north of $345 million today.

Before each board meeting, Levine preps by asking and answering every question that the board might ask. His hard work lets him skate to where the puck is going to be, which his board appreciates: At times, they’ve asked Levine to help CFOs at their other companies to sharpen their board communications skills.

During 2018, the very year Craig Foster joined Bright Machines, the San Francisco–based company was spun out from contract manufacturing firm Flex, raised a headline-grabbing $179 million in Series A funding, and shed its original moniker, AutoLab AI.

By all accounts, the manufacturing start-up, which promised to use a combination of robots and new software to perform manual labor, was open for business. However, like many start-ups, Bright Machines had yet to add some basic business functions.

“We had a sense of product, but we didn’t have any infrastructure whatsoever,” comments Foster, who notes that among the company’s most immediate needs was an HR executive hire—someone capable of populating the company with experienced managers.

Still, arguably more critical to future of the business were the remedies for certain flaws that had begun to become visible in the company’s maturing business model.

“I had been working there only a few months before I realized that the business model was simply not going to work,” explains Foster.

“Basically, we had a blueprint for how things were actually supposed to come together but only a semblance of one for what the business model was supposed to look like going forward,” continues Foster, who adds that over a period of months he worked with the CEO and the company’s board to “retool” the model to better facilitate customer recurring revenues and place less emphasis on the services aspect of the company’s offerings.

“We needed not a reset of the model but just a retooling in terms of how we thought about pricing, product, and development, and we needed to retool these things in concert,” observes Foster, who notes that the new mind-set kept the distinct value that Bright Machines offers its customers in sharper focus.  

Says Foster: “It was a tough bandage to rip off, but I had great support from the board and everyone else at the time.” –Jack Sweeney 

Steve and Jack discuss FP&A's 100-year march. Featuring commentary and FP&A insights from Planning Aces: CFO Kurt Shintaffer of Apptio CFO Jim Morgan of CallRail & CFO Daniel O'Shaughnessy of FormLabs.

Inder Singh started off his professional life as an engineer, only to learn that the large engineering projects that he aspired to someday lead often faced as many financial obstacles as they did engineering challenges.

So, Singh says, he went back to school and earned an MBA in finance, allowing him to redirect his career down a path populated with unique and imaginative financing deals to support engineering feats as well as business transformations.

One of the more innovative financing projects that Singh has helped to champion came along in the 1990s, when he was working as a business development executive for AT&T Corp. It seems that the Kingdom of Saudi Arabia was looking to upgrade its telecommunications infrastructure—to the tune of $4 billion.

“Other companies were just offering typical bank financing. In our case, we said, ‘Let’s do an oil barter agreement,’” explains Singh, who says that the proposal involved having Saudi Arabia supply $4 billion of oil to Chevron Corp., which then would pay $4 billion in cash to AT&T, which then would build Saudi Arabia a $4 billion telecommunications network.

“If you just think outside the box a little bit, bring your engineering skills, and bring some financial skills and common sense, you’ll see what makes sense for three different parties. And guess what? We actually won the deal,” comments Singh, who notes that the fact that Saudi Arabia may not have demanded such an imaginative financing solution is not important.

Says Singh: “The fact that we put it on the table made us stand apart.” And so it goes for Inder Singh, whose imaginative approach to financing deals over the years has routinely set him apart from his finance leadership peers. –Jack Sweeney