CFO THOUGHT LEADER

Filter: When we were talking at the executive staff level, it's from a mindset of accelerating around the curve. And so I think our CEO has really coined that phrase, but that's the lens that we're looking through and the question we're asking is what investments can we make now that will allow us not only to come out of this better, but accelerate around the curve. And allow us when we have changes in the macro environment to be tremendously successful.

When Envoy CFO Sinohe Terrero is asked about his career chapter at Etsy, the online marketplace founded in 2005 and headquartered in Brooklyn, New York, he begins by explaining how back in 2008 Etsy’s finance function was really just a loose grouping of tools and people.

“I'll never forget that I once had to go meet the bookkeeper, and he was like in Coney Island,” explains Terrero, who says that the financial mind-set at Etsy during its early days was that data trumps accounting—or, to put it another way, that data was strategic to the business and therefore should be kept in-house, whereas accounting could be outsourced to Coney Island or wherever.

“Etsy was a marketplace, so the transactions occurred in big volumes, but we didn't send invoices. We didn't really have AR. Everything is paid by credit card on the Web,” points out Terrero, who quickly became tasked with establishing more traditional processes in preparation for bringing the accounting function back in-house.

“Because of the nature of Etsy’s business, the accounting function initially really didn't have to grow as much as the data function,” says Terrero, who notes that even as Etsy’s finance department evolved into a full-capacity function, the data mind-set still loomed large.

Says Terrero: “Understanding the transactions of the business on the data side was the primary responsibility.”

Later, Terrero recalls, it was his focus on data and the growing volume of Etsy transactions that led him to back a strategy that not everyone was convinced was a good idea.

According to Terrero, there was debate inside Etsy over whether the company should be charging fees on payments received by sellers inside the marketplace. At the time, certain Etsy executives believed that the firm’s mission should simply be to enable the sellers to sell more, which would then result in more transactions.

“We argued that the fees could be a revenue source and that, given the volumes we were seeing, the strategy could be game-changing for the company over the long term,” remarks Terrero, who says that he was joined by a number of influential Etsy executives on the winning side of this debate.

Says Terrero: “When you look at the percentage of revenue that these fees now represent for Etsy, you see that they’re actually pretty sizable.” - Jack Sweeney  Sign Up for our Newsletter

CFOTL: Having only stepped in to the CFO office in April, what is the vision you have for the role of CFO? 

Hansen: I’m really keen on having Planful be a world class FP&A organization and definitely be one of the best users of the Planful platform. I think that’s important for us as an organization to eat our own cooking so to speak. On the second initiative of covering the basics, particularly in times like these where there’s high level of uncertainty, we need to be able to iterate on company plans and department plans. We need to be able to adjust budgets and investments and offer forecasts that illuminate some of the potential paths forward. So I’m talking about basic competencies here like a direct method cashflow forecast that we really don’t want to mess up. So that’s what I meant by make sure we’re proficient in covering the basics.

And then finally accelerating growth. I really want to begin with our end in mind and work backwards from there to uncover the activities that are critical for us to do over the next couple quarters. And maybe if I gave an example there, what actions would we need to consider to improve our customer life cycle or our customer experience that will ensure our customers are getting the optimal value from our platform so that we have low customer churn and a very strong platform to grow from.

…I believe part of the job of being a finance leader is to elevate the financial IQ of the entire organization. And I think we’re seeing the role of the CFO in particular and the finance organization at large expand and change to meet that challenge. And I think that the old style perception of finance as a service desk is going away and transitioning more towards a strategic advisor role for the entire organization. And so the ability to have business users in marketing, and in all corners of the business have access to their budgets, to their plans, to the information they need to make their decisions and be a part of the elevation, we’ve seen that pay dividends.

When veteran CFO Ivor Macleod first contemplated joining an early-stage pharma company, the condition  known as acute respiratory distress syndrome (ARDS) was not appearing in nightly news headlines and was yet to be ranked as the  number one cause of death among COVID-19 patients. Nevertheless, ARDS captured his attention—or rather, Athersys did. 

The Cleveland, Ohio–based company, with fewer than 100 employees, met one of Macleod’s foremost criteria in that the company was  focused on the area of medicine known as “critical care”—a space that Macleod characterizes as having  “high unmet medical needs.”

“It was the science that attracted me and not necessarily the capital structure,” explains Macleod, when asked whether he may have preferred to join a privately held firm instead of a public one.

As the former CFO of F. Hoffmann–La Roche, Inc., North America, and vice president of finance for Merck Research Labs, Macleod knows better than most the risks being taken and the high rate of failure when it comes to introducing new medications.

“You take big swings at big diseases, and you are not always going to be successful. So you have to be prepared for failure,” explains Macleod, who says that he came to view “the job” of finance leadership in pharma as being one of enablement.

Says Macleod: “I didn’t want scientists to be worrying about resources. I would take care of that. I had to make certain that they had all of what they needed to continue on their path.”

Last January, when he entered Athersys’s CFO office for the first time, he would have only a mere few weeks to work alongside his new colleagues before the spread of COVID-19 within the U.S. led management to encourage employees to work from home.

Suddenly, as the disease spread, ARDS began to garner headlines, and last spring, within a span of 6 weeks, Athersys was granted FDA approval for a COVID-induced ARDS study and subsequently began populating designated sites with patients.   

“There is no known treatment for ARDS,” comments Macleod, who appears to be savoring his role as an enabler of science now more than ever. –Jack Sweeney Subscribe

It was October 2019. Red Hat, Inc., was preparing to submit its latest quarterly results to its new parent, IBM Corp., and Laurie Krebs had just been named Red Hat software’s new CFO.

As a senior vice president of finance for Red Hat, Krebs had worked closely with the former CFO and more or less assumed that the acquiring company would likely prefer to fill C-suite spots from its “home team” talent bench of senior executives.

In fact, Krebs says that during the course of her career she had never truly aspired to be a CFO: “I often wondered who would want all of that responsibility, especially after Sarbanes-Oxley came in. And then, at the time, I realized that IBM had just acquired us for $34 billion and that it was going to be up to us to deliver the results that were needed.”  

Krebs says that the finance team at Red Hat, like many executive teams within newly acquired companies, had experienced some attrition and was perhaps not as highly functioning as it had been prior to its acquisition.  

As the first quarterly close for the newly acquired Red Hat approached, Krebs sought to reassure her CEO that she would continue to lead the team. “I’ll help you out until you get a legit CFO,” Krebs recalls saying—to which her CEO replied: “No, no, no—we want you to be it.”

The CEO then reassured Krebs that it had been a unanimous opinion across Red Hat’s and IBM’s leadership teams that she should become Red Hat’s next CFO.

Still, the pressure was on, and Krebs had to not only deliver the company’s first post-acquisition quarterly results but also activate the collaborative processes required to satisfy a giant parent company.  

“I did what I always do. I surrounded myself with the right talent and strong skillsets and created a team out of it,” comments Krebs, who says that her team today includes a seasoned “IBM finance partner” now tasked as sort of a go-between and translator for Red Hat and its parent.

Echoing the executive’s words, Krebs relays his guidance: “Here are the deliverables that IBM’s looking for. Here’s why they look for them. When they ask for this, this is typically what CFO’s look for.”

Krebs adds: “He has been what I call a ‘gift’ on our team." - Jack Sweeney  SUBSCRIBE

When Ray Carpenter retraces his steps to the CFO office at Xandr—an analytics and advertising company formed by AT&T’s WarnerMedia—he singles out two earlier roles as having been outside AT&T’s traditional finance track.

“I actually got kicked out of finance for one role,” says Carpenter, referring to a stint as a marketer inside a start-up launched by AT&T’s emerging business markets group. “We did things that were uniquely different from what AT&T typically does when it launches a new business,” continues Carpenter, who in addition to marketing was responsible for the start-up’s pricing strategy.   

Next, Carpenter joined AT&T’s mergers integration group, where he helped to lead integration planning efforts for different corporate functions, a role that made him keenly aware of the integration challenges such future acquisitions as DirectTV would present.

From his stint in the mergers group, Carpenter stepped back inside AT&T’s more traditional finance and accounting ranks and was soon named CFO of its Entertainment and Internet Services division.

“It wasn’t a forgone conclusion and still never is. AT&T has a habit of moving people around,” explains Carpenter, who mentions a number of different functional areas recently led by executives who in the past had held traditional finance roles.

Says Carpenter: “I always knew that I’d be close to numbers, data, and analytics, and I felt that this would typically put me in the finance camp, but I wasn’t surprised when other opportunities surfaced.” –Jack Sweeney

Not unlike the careers of his finance leader peers, the finance career of Dave Jones, CFO of online car seller Vroom, has been shaped and influenced by economic crises of the past two decades. Last month, as the initial shock of the coronavirus waned and the stock market rallied back, Vroom moved quickly to go public.

Explains Jones: “We consulted with our board and our investors and decided that the time was right.” After pricing its IPO shares at $22, Vroom saw their value more than double on their first day of trading.

This was not the first time that Jones had discovered a window of opportunity in less-than-friendly economic times. Back in 2002, he had found himself in a tight spot while serving as a senior manager for Andersen, the historic accounting house that collapsed in the wake of the Enron scandal of the early 2000s.

“The view at the beginning of crisis was that there was no way that Andersen would be taken down. For me, the lesson became to never say ‘never,’” says Jones, who adroitly stepped from the ashes of the once esteemed accounting house into a financial reporting role at Penske Automotive Group, where he entered the CFO office roughly 8 years later, in 2011.

“I think that Penske was a $2 billion or $3 billion business when I first got there, and it was an $18 billion business when I left,” recalls Jones, who prior to entering the CFO office at Penske in 2011 had served as CFO of Penske’s European operations and consequently weathered yet another economic storm. 

Back in 2008, Penske CEO Roger Penske had described the subprime mortgage crisis as “one of the most challenging periods on record in the automotive industry.” The automotive company would post its first quarterly loss in a decade and painful personnel cuts followed, but for future finance leader Jones, along with professional scar tissue would come valuable lessons for the future. - Jack Sweeney   Sign up for our newsletter

Dennis McGrath was only recently married and a new home owner when he was invited to a Phillies game by the CFO of AC Manufacturing.

At the time, McGrath was working for Andersen as an auditor of a roster of growing companies, among which AC—a maker of industrial air-conditioning units—was perhaps not the most glamorous.

“At the end of the night, the CFO told me that he wanted to hire me and would pay me a lot more than I was then making,” recalls McGrath, who doesn’t hesitate to reveal what allowed AC’s offer to trump all other opportunities.

Says McGrath: “I went for the money.”

However, what distinguished McGrath’s AC career chapter was neither compensation nor, for that matter, a lengthy tenure (McGrath was controller for 22 months).

Adds McGrath: “It was not too long before the owner decided that he was going to sell the company and had a private equity group come in.”  

Still in his mid-20s, McGrath took a seat across the table from a seasoned group of private equity executives.

“For me, my career has just kind of been perpetuated from there in terms of deal-making,” explains McGrath, who has arguably occupied “the seat” from that day forward, guaranteeing  a CFO career chock full of M&A deal-making.  –Jack Sweeney

When asked to share a few of the experiences that he feels prepared him for a CFO role, Ashim Gupta recalls what he characterizes as a significant accounting problem. However, it was not the nature of the accounting snag that Gupta wants us to know about but instead how his initial response to the problem was somewhat clumsy and ineffective.

The event occurred more than 10 years into his finance career and did not lengthen the path to his next promotion because he had only just arrived in a new role as a divisional CFO for GE Water, a General Electric Corp. operating unit specializing in water processing solutions. Gupta remembers the accounting problem as being “the first thing to pass across my desk.”

Realizing the gravity of the challenge, Gupta picked up the phone and called the more senior finance leader who was responsible for a wide swath of GE businesses, including Gupta’s group.

“I was nervous about it, and I did not articulate the issue in the way that I should have. I didn’t really treat it as a business issue. I almost treated it with some amount of fear,” explains Gupta, who says that the uncomfortable phone call later led him to reach out to a mentor.

“He said to me, ‘Your job is to help the business face reality,’” recalls Gupta, remembering the words of his mentor. In short, the mentor told him that the senior finance leader wanted facts and not fear.

“I had to learn through trial by fire, and I failed the first time,” admits Gupta, who believes that finance executives must be keenly aware of the facts when delivering bad news and seek to expose possible avenues to where a solution can potentially take root.

Says Gupta: “You have to demonstrate that you are now a partner in navigating through whatever the problem may be.”

In the mid-1990s, when Jeff Epstein was busy satisfying the M&A appetites of media clients for First Boston, one of his smaller, but more boisterous clients asked him to join the firm as its CFO.  

“It was the type of situation where if they had gone to a recruiter, I would never have made the resume cut because I had never been a CFO and I had never even worked for a CFO,” explains Epstein, who was 32 when he entered the lively entrepreneurial realm known as King World Productions. A one-time family-owned company, King World had seen its stature grow inside New York’s competitive media landscape as the firm began producing  giant hit TV shows such as Wheel of Fortune, Jeopardy and The Oprah Winfrey Show.

 “It was actually a small company with only about 300 employees, but they had three of the highest-rated, most profitable shows on television, with about $300 million of revenue and $60 million of operating income,” recalls Epstein, who would go on to add consecutive CFO career chapters at DoubleClick, Nielsen (Media Measurement), and Oracle Corp., a mix that fortified his footing in both the tech and media worlds—but also revealed little preference when it came to company size.

“King World had been a family business that had only recently become a New York Stock Exchange company when I joined them, so I had to put in place some basic procedures, but Oracle had been around for many years and already had very sophisticated processes,” notes Epstein, who today exudes as much enthusiasm for Oracle’s approach to simplifying and standardizing its internal processes as he does for the entrepreneurial instincts of King World chairman Roger King.

“Three minutes from when an idea came out of my mouth, Roger King would have picked up the phone and be pitching our largest customer, ” says Epstein, whose CFO tenure there lasted 6 years—a span of time during which King World would triple its value and ultimately end up being sold to CBS Corp.

It was following the sale of King World, that Epstein would open the career chapter that permitted his CFO career  to grow beyond a single industry.     

“DoubleClick was an early Internet advertising technology company and wanted a CFO from either media or technology, so I had the media experience part,” comments Epstein.

Today, as operating partner for Bessemer Venture Partners of Menlo Park, Calif., Epstein marvels at the continued evolution of the two industries that shaped his CFO career:

“Two years ago, global Internet advertising surpassed global television advertising revenues to become the biggest media opportunity in the world—so if you’re around long enough, you see some incredible things.”   Sign Up for our Newsletter