CFO THOUGHT LEADER

Among the growing number of finance leaders who can be classified as cloud computing CFOs, few have arguably stayed in step with the parade of cloud opportunities longer and with more brand muscle behind them than CFO Todd McElhatton of Zuora.

For the past two decades, McElhatton has been finance’s cloud point man for some of the biggest names in tech as the technology developers have shifted their offerings from on-premise to in-the-cloud solutions.

Turn back the clock to 2001, and McElhatton is joining Hewlett-Packard’s finance team, where he serves as a vice president of finance while advancing into the realm of managed services for the first time. Fast-forward to 2007, and he’s joining Oracle, where he invests 7 years and oversees business operations for the developer’s pioneering cloud business. Next, he’s jumping to VMware, where he’s named CFO of the developer’s Hybrid Cloud Business before moving onward to SAP as SVP and CFO of their Cloud Business Group.

Today, as CFO of Zuora, McElhatton is tasked with opening a new chapter of growth for a developer whose offerings are designed to help companies manage and grow their subscription businesses. It’s perhaps the obvious next chapter for a finance leader who built his career inside companies set on harnessing the awesome power of subscription businesses.

CFOTL: Tell us about Zuora. What does this company do, and what are its offerings?

McElhatton: First of all, Zuora is a subscription management platform company. We help companies to launch and manage their subscription services. A lot of high tech companies operate on us. Companies like DocuSign and Zoom are our clients. We power all of their billing, and we do a lot of their revenue accounting for them. We help them to collect revenue from their customers. We really are helping clients as they’re transforming from a product sale to an ongoing subscription sale. This is really huge change for companies because when you think about a product sale, it’s a one-and-done, but a subscription sale is an ongoing, circular relationship that you constantly have with that customer. The customer signs up, and then you’ve got to make sure that you collect the revenue. You’ve got to make sure that you recognize the revenue correctly, make sure that you fulfill it, make sure that you renew it. Every time you do these different tasks, you might impact 15 or 16 different business processes. Using Zuora as a platform allows companies to do this really seamlessly.

The other thing that we know about really good subscription companies is that they’re constantly iterating. Their customers might have some sort of change up to four times a year, so if you have a good subscription business, you’re going to have all of these changes going on. For the most part, homegrown systems and ERP and CRM systems don’t do a good job of helping companies to manage these businesses, and this is where Zuora comes in. We’re really helping to transform a lot of what’s happening in the New Economy. I recently saw that IDC projects that in the future, more than 50% of GDP will be in the form of a subscription. Zuora is absolutely out front-and-center on this and is a recognized leader in helping customers through this transformation. We want to make sure that we’re helping people as they’re engaging in the subscription economy and as they really transform. Our employees want to make sure that we’re building the best products that we can to help our clients accomplish this.

We’re also really focused on making sure that our technology and platform are world-leading and that we execute our strategy in a way that makes sense. In some ways, Zuora is where ERP was in the 1990s. We’re really on the cusp of this, and it’s really changing how people operate. Think about yourself. When was the last time that you bought music? And cars … kids don’t have an interest in buying a car. It’s like, there’s Uber, there’s a subscription, or there’s a way that they can buy something as a service-on-demand—and this is really changing how things are working.

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In March of 2009, when the economy was still in the clutches of the global financial crisis, Time Warner spun out its subsidiary Time Warner Cable into an independent company.

“As we spun off, we paid a massive dividend to the parent of $18 billion, and our central thought became: ‘How do we survive? How do we survive as a newly public company with lots of debt?’” recalls Christian Lee, who at the time was a Time Warner Cable senior vice president and head of the company’s M&A strategy.

Over the next several years, Lee says, he experienced a fast ride of ups and downs that provided a string of lessons when it came to speaking to debt holders and investors inside ever-changing market conditions.

Fast-forward to 2014, and Lee and Time Warner Cable (TWC) CFO Artie Minson receive a hostile takeover letter from competitor Charter Communications, which made no secret of its intent to replace TWC’s board of directors with its own selections. 

“We spent the next two and half years of our collective lives working through our hostile takeover defense—a merger with Comcast,” explains Lee, who adds that ultimately Charter and TWC were able to put together another deal that would secure the sale of TWC.

“In the background of all of this, Artie had gotten introduced to Adam Neuman [WeWork founder], and he said to me, ‘Hey, I’m thinking of going over as COO—you should think about the CFO role,” recalls Lee, who would step into WeWork’s CFO office in 2015.

“I had done a lot of deal work and capital-raising in my career, but my first year as CFO of WeWork was really about building out systems—we didn’t have an accounts receivable or accounts payable system, so I was leaning into things that I had never done before,” reports Lee. He exited that role in 2017 in order to move to Asia, where he would help to launch and manage WeWork’s Asia business, an appointment that helped in part to satisfy his long-term career goal of serving in an executive business development capacity overseas.

In the late 1990s, when Stuart Henrickson was CFO for Koch Industries’ Canadian operations, Chase Manhattan made him a job offer unlike any that he had received before.

“It was a fork in the road for me. Koch had been consolidating and bringing many of its operations back to their head office in the U.S., and it happened to be at that point in time that Chase brought me the opportunity,” explains Henrickson, who reports that he was asked to spearhead a development bank for Chase in the Middle East.

“So, within the course of a week, I had to make a decision regarding whether I went down to the U.S. to be part of a Koch team that was already built or instead started to do something new with a blank sheet of paper,” recalls Henrickson.

After 4 years with Chase, he would join the National Bank of Abu Dhabi, where he led investment banking for nearly 5 years before accepting a CEO position with Standard Bank MENA.   

In all, Henrickson’s Middle East career chapter would extend across 11 years, a span of time during which the Middle East’s appetite for financial services escalated along with the price of oil, which grew from roughly $9 a barrel at about the time of his arrival to a high of $149 per barrel, according to Henrickson.

He recalls: “The Dubai International Financial Centre (DIFC) went from having a handful of Western-based financial institutions consisting of rep offices of between 2 and 10 people to growing overnight to eventually number some 1,500 employees. Dubai became the hub for the whole region.”   

Asked for some pointers when it comes to doing business in the Middle East, Henrickson says that board members and company management need to be treated differently.

He remarks: “I remember that one board member from a large local investment house told me, ‘The biggest difference between a European investment banker and an American investment banker is that the European knows full well that he needs to come back every 3 months for a year or two before he would get a deal, while the American comes over, doesn’t get a deal, and leaves in frustration—for good.’”

 Still, the biggest differences in business are in the thought processes, he explains.  

“Leave your logic at the door—so much of it is knowing what makes the other person tick,” says Henrickson. –Jack Sweeney

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When Maria Manrique stepped into her first role as a CFO, she did so knowing that her finance leader mentor was still in the building—in fact, he was occupying the CEO office.

“It would be unfair of me to not say that this was critical—being able to step into the role and have someone there who could help me to bridge the gaps,” recalls Manrique, who prior to entering the CFO office at the start-up had served as vice president of FP&A.

Manrique had already occupied similar senior planning roles at multiple companies, having previously worked for Fidelity Investments, where she had lent her FP&A acumen to the financial services firm’s portfolio of venture-backed companies.

Still, at the start-up, she found herself along the front lines at the company’s board meetings—an opportunity that she had seldom been afforded at Fidelity. But along with her increased visibility came responsibility, she points out.

“I had been supporting venture capital–backed companies for a long time with strategic planning, but I had never had to make the hard decisions,” comments Manrique, who says that more challenging decisions concerning the company’s ultimate valuation and with which investors to partner suddenly became front-and-center.

Fast-forward to 2021, and Manrique is today CFO of O’Reilly Media, a 43-year-old midsize firm where as finance leader she has sought to open doors for her finance team members by exposing each member to the broader planning process and allowing them to acquire a deeper understanding of the firm’s strategy.

Notes Manrique: “I have a really hard time telling you who on my team is accounting only or controllership only or FP&A only. Everyone has a chain of activity that goes from the general ledger to our monthly operating report to our board report.”

It’s an approach to talent development, Manrique says, that is helping O’Reilly to retain talent in an highly competitive market.

“This is about giving people meaningful roles that impact the organization,” comments Manrique, who at O’Reilly also wears the hat of Chief People Officer.  - Jack Sweeney

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"It’s a very lonely, scary moment,” comments Anasenes, as she considers her early days at technology company Infor—a CFO appointment that preceded more recent CFO engagements at Squarespace and now technology firm Ansys.

“If only someone would have told me how lonely it feels to make certain decisions—you can bounce ideas off people, but you are the ultimate decision-maker,” continues Anasenes, who says that, looking  back, she may have been able to ease some of the decision-making concerns if she had had a broader professional network to which to turn.

“I happened to have been lucky that Charles Philips, the CEO of Infor, was a financially savvy person, but since then, I’ve built a much broader network of people and a framework for how to have these type of conversations in which you don’t divulge the specifics concerning your company but get the mentoring and support that you need,” remarks Anasenes, who prior to entering the CFO office at Infor spent more 14 years at IBM Corp., where she last served as CFO of the tech giant’s middleware group.

“I learned very quickly after leaving IBM that you need to be open to networks and different types of networks,” explains Anasenes, who adds that her appetite for networking has grown along with her CFO talent development responsibilities.

“You are only good as the talent you attract, retain, and are able to keep engaged, so my relationship with the executive search community is quite broad,” she notes.  –Jack Sweeney

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It was nightly business conversations at his parents’ dinner table that first led Prashanth Mahendra-Rajah to consider alternatives to business when it came to building a career.

“As most small business owners do, my parents worked all the time—and as with most small businesses, things could at times be financially challenging,” explains Mahendra-Rajah, who vividly recalls business rent increases, outstanding receivables, and the dynamics behind supply and demand that pervaded his parents’ dinner conversations.

Nevertheless, it was this same scrutiny of supply-and-demand dynamics that Mahendra-Rajah credits with helping him to “come full circle” and ultimately led him to business school.

At the time, Mahendra-Rajah was working full-time as a senior process engineer for chemical giant FMC Corp., a career-building stint that afforded him the real-world insights required to enrich a master’s thesis that he needed in order to complete a chemical engineering degree from Johns Hopkins.

“It was my first job out of college, and the plant manager’s M.O. was to always beat me up and demand more cost reductions and better process yields,” recalls Mahendra-Rajah, who notes that his immersion into the business side of manufacturing quickly escalated when FMC received a large order for a synthetic that the company no longer manufactured.

“I was given the task of refurbishing an old factory and getting it up and running in a matter of weeks,” remembers Mahendra-Rajah, who adds that the production of the once-discontinued synthetic led the plant manager’s mind-set to suddenly pivot.

“He was pushing me to spend as fast as I could. I was told not to negotiate with suppliers, and if I needed overtime for the maintenance workers, to ‘go for it’—schedule was paramount, cost was secondary,” explains the career finance leader, who credits the experience with helping him to open a door that he had once shut.

Says Mahendra-Rajah: “It kind of brought me back to the table with Mom and Dad and made me realize how so much of our world is really driven by supply and demand and how finance is the oil in the gears." –Jack Sweeney

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Billtrust CFO Mark Shifke likes to label himself an “accidental CFO”—a tag that a number of our guests have appropriated from time to time when faced with explaining a past filled with less-than-traditional career experience.

However, in the case of Shifke, the term arguably has little to do with career experience, for Billtrust’s CFO spent nearly a decade on Wall Street before entering the C-suite. Instead, Shifke uses the appellation to help to reveal the pivotal role that a single phone call came to play in his finance career.

Back in 2000—near the beginning of Shifke’s Wall Street career and the end of the market frenzy known as the dotcom bubble—Shifke took a phone call from a CEO founder whom he had met through a personal acquaintance. Just as the CEO didn’t hesitate to ask Shifke to invest in his struggling company, Shifke didn’t dither when it came to coming up with some figurative cash.

“I made a handshake agreement with him over the phone,” explains Shifke, who notes that the investment did require some visibility into the company’s sales pipeline.  

“I told him, ‘If you are successful at selling into this environment and you are able to generate revenue, then on the back of that, I will raise capital’—and I did so,” recalls Shifke, who raised a "family and friends" round of funds that allowed him to become a central angel investor in the company Green Dot Corp., a fintech start-up and pioneer of prepaid debit cards.  

Fast-forward 11 years, and Shifke is no longer just a Green Dot investor but a board member, when he opts out of a managing director role at JPMorgan Chase to join Green Dot in a senior corporate development role. 

“It’s one thing to invest in a business and it’s another to advise a business, but it’s quite another thing to go operate it—and I had never operated one,” comments Shifke, who would enter the CFO office at Green Dot a few years later in 2015.

In the end, Shifke says, the “accidental CFO” label still fits because he originally had zero aspirations to be a CFO and now-midsize fintech firm Green Dot simply became the means to scratch his operations itch.   

Says Shifke: “There was an opportunity to either enhance my position as a shareholder or materially harm it—but this tended to play out to the positive.” –Jack Sweeney 

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Several actions proved key as Waifa Chau advanced from financial planning and analysis (FP&A) roles to chief financial officer positions. Collaborating with other functions, gaining an in-depth understanding of the overall business, and helping his colleagues understand how FP&A benefits an organization have driven his success, says Chau, currently CFO with Nylas, Inc., a provider of productivity infrastructure solutions for software. 

Cross-functional collaboration helps in gaining an understanding of a company’s overall business, Chau says. While working at Gap Inc., the company behind Gap, Banana Republic, and other apparel brands, Chau focused on driving higher gross margins—key in the retail industry.

Chau’s curiosity about the business also helped him propel his career forward, he says. He spent about two years in a merchandising role at Gap, during which he gained a better understanding of the intricacies of operations.

Often, employees in other parts of an organization assume FP&A’s primary role is to tell them when they’re over or under budget, Chau says. He tried to show how a strong FP&A partner tries to understand their performance so the business can better prepare for the future.

After about seven years at Gap, Inc., Chau moved to an FP&A role at Walmart.com. In an ecommerce organization, there were “different levers to pull,” he says. For instance, along with analyzing gross margins, he reviewed margins on grocery delivery apps.

Building on his success in FP&A, Chau set a new goal: establishing a finance team from the ground up. He joined BirdEye, a marketing platform, as vice president, finance, and advanced to CFO. Among other accomplishments, he structured the accounting and FP&A functions and determined how finance would interact with other functions.

At Nylas, Chau again is leveraging his experience to propel himself forward and establish the finance function, this time for a slightly younger and small company.

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Of course, every finance leader needs to understand the mechanics of accounting and know how to identify the financial implications of management’s decisions. Their preparation should also include learning from their experiences—and this includes mistakes, says Ian Charles, chief financial officer with Flexe, an on-demand warehousing solution.

In particular, identifying the optimal candidate for a job is one of a leader’s most difficult and critical responsibilities, Charles notes. It’s also far from straightforward. It’s easy to believe that you’re hiring a star who will move the organization to the next level, only to discover that the individual isn’t as exceptional as he or she appeared as a candidate. In other situations—say, when it’s necessary to fill a role quickly—a candidate who appears less inspiring at the outset can turn out to add tremendous value to the organization.

To improve his track record when hiring for critical positions, Charles has beefed up his interview process. He begins by interviewing several dozen individuals. From this group, he chooses two or three finalists. All go through at least several rounds of interviews, with both Charles and other members of his team.

To be sure, this can mean balancing rigor with market realities. Given the tight job market at the moment, good individuals can find plenty of great opportunities, Charles adds.

Also key to hiring well is adeptly balancing the interests of multiple parties, including the board, management, and employees. Focusing too heavily in one direction can lead to unintended consequences. For example, a goal of maximizing share price will impact the board, investors, management, and employees differently. Charles notes that in the early days of his career, he would lean toward maximizing share price for the board rather than focusing on employees’ needs. “I’ve learned from that mistake as well,” he says.

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