This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Josh Aharonoff, CEO of Mighty Digits and Your CFO Guy, and the Founder of Modelwiz. With a diverse background that includes a start at the Big Four accounting firm KPMG, experience as a startup founder, and strategic finance roles, Josh has carved out a niche as a fractional CFO. Josh emphasizes the importance of having a robust financial model, detailing the four stages of building one. He also highlights the critical differences between traditional accounting roles and the value-add of a fractional CFO, especially for seed and Series A companies. Randy and Josh discuss actionable takeaways that underscore the essence of financial rigor and strategic planning for burgeoning SaaS companies.

Quotes

• “I think the key to having a month-end close completed in a short timeframe is first, real-time classification, categorization, reconciliations, not waiting until the next month when all the data is available to be able to do all of that.” -Josh Aharonoff [14:13]

• “The financial model should serve as a centralized hub for all the information related to what's happening in the business historically, as well as what you think is going to happen in the future.” -Josh Aharonoff [19:27]

Expert Takeaways 

• The Importance of a Robust Financial Model: The four stages of creating a vital financial model, including revenue build, P&L layering, balance sheet integration, and the final stage connecting the chart of accounts to accounting software.
• Differentiating a Fractional CFO: Unlike traditional accountants, a fractional CFO offers nuanced, strategic financial guidance tailored to the specific growth needs of startups.
• Financial Operations and Month-End Close: Critical best practices for financial operations, emphasizing real-time classification, standard operating procedures, and efficient month-end close activities.
• Leveraging Excel for Financial Planning: Modelwiz, an Excel plugin that automates complex financial modeling processes, highlighting the ongoing relevance and power of Excel in financial operations.
• Engaging Content for Finance Professionals: With Your CFO Guy, Josh has built a significant following by providing daily newsletters on various finance topics, showcasing the value of consistency and engaging content.

Timestamps

(00:40) From Big Four Accounting to Startup Founder

(04:14) Lessons Learned from Entrepreneurial Failures and Consulting Success

(13:30) Automating Financial Forecasting with Model Wiz and Excel Integration

(23:19) Four Stages of Building a Financial Model

(32:44) The Importance of Budget Versus Actuals in Financial Reporting

(44:25) The Importance of Gross Margin in SaaS Companies

(45:40) Negotiation Strategies and Influencer Insights in SaaS Tech

Links

Maxio

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Randy Wootton LinkedIn 

Josh Aharonoff LinkedIn

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Jon Cochrane, Director of the Maxio Institute, to discuss the latest insights from their SaaS Growth Trends report. Randy and Jon delve into the significant findings of the Q1 2024 report, discussing the differences in growth patterns between subscription-based and consumption-based pricing models, as well as the dynamics between companies below and above one million dollars in revenue. Jon also shares a detailed analysis of the strongest and weakest sectors, with notable mentions of the developer and engineering tech space and the transportation and logistics sector. 

Quotes

• “There are unique challenges that private markets face. And you typically don't know if things are kind of trending in the right direction or companies are struggling until you kind of get that press release that comes out and takes everybody by surprise.” -Jon Cochrane [02:42]

• “People who know how to leverage AI are going to outperform people who don't know how to leverage it.” -Jon Cochrane [23:24]

Expert Takeaways 

• Growth Uptick: SaaS companies are beginning to see a rebound in growth, with a noticeable improvement from previous quarters, particularly in usage and consumption-driven models.
• Pricing Models: Companies utilizing consumption-based pricing models are currently outperforming those with annual subscription renewals.
• Revenue Tiers: A distinct difference in performance exists between companies under and over one million dollars in revenue, with smaller companies experiencing a significant growth spike.
• Vertical Performance: Developer and engineering tech, and the transportation and logistics sectors have shown substantial growth, while e-commerce and retail lag behind.
• Market Dynamics: Insights into the dynamics between public and private market trends, indicating a cautious optimism in the industry.

Timestamps

(04:29) Economic Growth Uptick Amidst Recession Uncertainty

(10:00) Revenue Growth Dynamics for Early Stage vs. Established Companies

(20:10) Navigating Layoffs and Efficiency in the Tech Sector

(22:33) AI Augmentation's Impact on Efficiency and Investment in Marketing

(25:03) E-Commerce and Retail Struggle Amid Consumer Price Sensitivity

(27:06) Unpacking What Makes Top 10% Companies Stand Out

Links

Maxio

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn 

Jon Cochrane LinkedIn

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Nathan Latka, CEO of Founderpath. Known for his entrepreneurial spirit, data-driven approach, and thought-provoking insights, Nathan shares his three-phase entrepreneurial journey, starting with his initial foray into the booming social media world and progressing into the creation of the Latka Agency, and then Founderpath. Randy and Nathan discuss the changing landscape of the startup market, the importance of media-led growth, and the role of debt financing in funding software companies. Nathan shares insights from his extensive experience interviewing SaaS CEOs and highlights the need for founders to have a clear vision, build their tribe, and understand the value of inorganic growth. 

Quotes

• “You cannot buy attention anymore. Doesn't matter how much money you have. If you are a bootstrapped founder competing against a VC-backed competitor, and they're trying to buy attention, but you're more creative and you have figured out to get the attention of your customers in a creative way, you will win long term.” -Nathan Latka [11:35]

• “I think there are two kinds of founders. There are founders that sort of read and are consumers of intellect all day long and they're terrible at taking action. I would much rather go for the founder that takes action quickly and learns from a person versus the one that just reads all day.” -Nathan Latka [28:50]

Expert Takeaways 

• Successful entrepreneurs often have a deep grasp of industry pain points and innovate based on their experiences, leading to founder-market fit.
• Debt financing can be a strategic alternative to VC funding for SaaS startups, offering non-dilutive capital that aligns with an entrepreneur's vision for growth.
• In the current digital landscape, companies must earn attention through creativity and engaging content, rather than solely relying on paid advertising.
• Savvy founders are turning to inorganic growth and financial engineering, including M&A activities, to scale their businesses and achieve arbitrage opportunities.
• The role of the CFO in a SaaS company has evolved from purely managing finances to being strategically involved in driving growth and operational efficiency.

Timestamps

(02:20) Aspiring for Financial Freedom Through Entrepreneurship

(06:41) Podcasting as a Long-Term Investment in SaaS Marketing

(10:06) Venture Debt and Revenue-Based Financing in Software Deals

(15:44) Evolving Strategies for Startup Success and Market Attention

(24:09) Distinguishing Founder and CEO Roles in Company Growth

(30:42) VC Involvement and Board Dynamics in Startups

(38:42) Transitioning CFO Roles and Optimal Hiring Timelines

(43:13) Insights on Influencers and Intelligent Investment Analysis

Links

Maxio

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn 

Nathan Latka LinkedIn

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Joelle Kaufman, a seasoned B2B SaaS expert. Together, they delve into the intricacies of what makes CEOs successful, the importance of executive team dynamics, and strategies for driving company growth in challenging markets. Joelle Kaufman shares her five foundational components for CEO success, exploring themes like organizational focus, effective communication, driving team motivation, empowering teams through growth opportunities, and the embodiment of company values by leaders. Randy and Joelle also discuss the essential aspects of creating a high-functioning revenue engine and the nuances of handling business curveballs, providing actionable insights into executive decision-making and strategic alignment.

Quotes

• “You must focus the organization with clarity, clarity of vision, of purpose. That will lead to clear missions that support that vision, it will lead to prioritization and most importantly, exclusion of what you are not going to do.” -Joelle Kaufman [02:52]

• “We're always getting better. We are improving because we're making mistakes and we're learning. That becomes invigorating.” -Joelle Kaufman [44:33]

Expert Takeaways 

• CEOs must establish organizational focus, excluding less critical activities to conserve valuable company resources.
• Communication effectiveness is measured by what listeners understand and how they act on the message.
• Autonomy is the key motivator for employees, but it requires balance with transparency to avoid surprises.
• Investing in current team members to improve their skills can be more beneficial than frequently replacing personnel.
• Effective executive teams recognize curveballs and utilize their collective strengths to make strategic adjustments.

Timestamps

(02:52) Essential Strategies for Effective CEO Leadership

(08:23) Cultivating Leadership and Embracing Failure in Organizations

(15:43) Discovering Process Communication Model's Impact on Interactions

(23:11) Identifying and Engaging Your Ideal Customer Profile

(29:57) Differentiating Your Product in a Competitive Market

(36:46) Mastering the Curveball Method in Leadership and Life

(43:58) Embracing Mistakes for Continuous Improvement in Leadership

Links

Maxio

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn  

Joelle Kaufman LinkedIn

Process Communication

GTM Flow

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Alex Diaz-Asper, Principal & Founder of Tarsus, and an experienced figure in the financial dimension of SaaS businesses. With an extensive background in private equity and M&A, Alex shares key financial concepts and strategies within the SaaS landscape. Randy and Alex explore the importance of clean financials, the impact of accounting errors on M&A, and navigate through the potential risks and rewards of dealing with client concentration. Delving into the transition from PE to an operational role, Alex also shares insights from the strategic partnership between finance and sales divisions in scaling SaaS businesses. 

Quotes

• “If you have large annual upfront invoices you can't assume cash comes in evenly over the twelve months. So if you signed everybody in Q4, you had a great Q4 and Q3, and you're starting to run out of cash and you know, you got it. You see down the horizon. Okay, here comes all the renewals and new cash is coming in. So that's super important from the cash flow models to be able to see those kinds of ebbs and flows of cash flow and having a tool to help you track the renewals.” -Alex Diaz-Asper [23:51]

• “One thing that has changed a lot is how the CFO is a big part of the collaboration, especially with the sales team, early stage. It is super important that we are partners with each other, the salespeople and the CFO, because we need to know how to manage cash and we need to know new sales as well.” -Alex Diaz-Asper [35:00]

Expert Takeaways 

• Clean books and accurate revenue recognition inform go-to-market strategies for SaaS businesses.
• Managing client concentration: advocating for no more than 20% revenue dependence on a single client.
• Alex’s transition from a PE background to an operational role underscores the importance of building a strong finance team around you.
• Understanding revenue definitions: the distinction between GAAP revenue and analytical revenue (ARR), both crucial for different stakeholders.
• Staying on top of technology tools and adopting efficient RevOps strategies for SaaS growth.

Timestamps

(02:51) Accounting Errors as Deal Breakers in M&A

(06:02) Mitigating Risks of Client Concentration in Business

(10:03) Evolving Financial Roles in Early Stage Companies

(15:41) Decoding Financial Operations and Revenue Recognition

(26:30) Efficiency in Finance Through Technology Adoption

(32:10) Evolving Roles and Tools for Today's CFOs in B2B SaaS

(40:46) Speed Round: Favorite Metrics and Influencers

Links

MAXIO

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn  

Alex Diaz-Asper LinkedIn

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Rob Brown, Co-Founder of Accounting Influencers Roundtable (AIR), and author of the book “Build Your Reputation.” Rob and Randy delves explore the evolving responsibilities of accountants and accounting firms as they navigate an industry that demands a shift from traditional compliance to more strategic advisory roles. Rob touches upon the challenges faced due to an aging profession, technological advancements, and the shift towards value-added services. Listen this week as Rob shares effective strategies for making an impact and selling to accountants, highlighting the significance of establishing authentic partnerships and providing impactful solutions. 

Quotes

• “Accountants have to be able to sell an argument, an opinion, an excuse, a statement, a fact. They have to be able to get behind the stats. You're asking much more of an accounting and finance professional now than you ever were. That is why it's rarefied air to get somebody that can do all of those things and this is why we've got a problem.” -Rob Brown [18:54]

• “There's so many different ways to define an influencer. There's a lot of people that make a lot of noise on social media and they look popular and they have thousands of followers, but their content is lousy. It's lame. It's unoriginal. It's not innovative. They've regurgitated it from other people or they've said the same thing for years. You would look at them and think they're influencers. But I measure influence by relationships rather than noise and social media metrics.” - Rob Brown[48:27]

Expert Takeaways 

• The transition from traditional teaching to influencing the accounting industry is underscoring the need for education systems to instill real-life applicable skills.
• Accounting is an aging profession facing a talent shortage, prompting a shift from compliance-centric roles to advisory and consultative engagements.
• Technological savviness, commercial acumen, people skills, and selling abilities are identified as key skills for modern accounting professionals to remain relevant.
• Private equity firms are increasingly investing in accounting firms, seeing potential in streamlining operations and capitalizing on technological efficiencies.
• Selling to accountants is challenging due to their risk-averse nature; building strategic partnerships and establishing credibility is crucial for success in this market.

Timestamps

(00:02) Rob Brown intro

(06:23) The evolving relationship between accounting firms and startups

(11:33) Accountants are reinventing themselves as consultants, coaches, and mentors

(19:18) The need for additional certifications to develop business awareness

(25:47) AI may not have a rapid impact on the accounting industry

(34:05) Three ways to get the attention of accountants

(39:41) Understanding the target market

(45:15) Focusing on deep work

(50:37) The difference between influence and impact

Links

MAXIO

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn

Rob Brown LinkedIn

Accounting Influencers Roundtable

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Jim Delaney, CEO of Traction AI, and Kristian Marquez, President, CEO, and CFO of FinStrat Management. Randy, Jim, and Kristian discuss the significance of pairing robust revenue operations with meticulous financial strategies to foster startup growth. Jim shares his experience at Canvs AI and the intriguing role AI plays in gauging human emotions—a significant leap from traditional social media monitoring tools. He highlights the importance of unifying marketing, sales, and customer success teams with integrated systems to drive performance metrics. Kristian, with his telemedicine and financial expertise, unlocks the mystery behind early-stage fundraising and financial management, guiding founders through the journey from inception to exit by crafting solid financial foundations and leveraging key metrics to fuel growth ambitions.

Quotes

• “If your foundation is built on quicksand, what difference does it make? It's not up to us to set expectations that we're doing a lot of cleanup. We've become very adept at it. We share with our clients, our founders, and our CEOs that we don't like cleanup any more than you guys do. We like standard repeatable processes. It is essential to have a big focus on getting everything right because the old garbage in and garbage out dashboard models are meaningless if the underlying data is wrong.” -Kristian Marquez [46:19]

• “It's locking down a forecast, something as simple as that. And how well and accurate our forecast really says so much about our level of professionalism because of all the things that are incorporated in that. Especially with earlier stage ventures, where you're thinking about your cash-out date, you're thinking about your cash burn, you're thinking about your current cash position. How much cash is actually coming through business? It's absolutely imperative that it be predictable, reliable, and accurate. We're making funding decisions at board meetings about whether or not we're going to go hire those next two or three sales guys or customer success. So that's the basis of why it's so important.” -Jim Delaney [25:28]

Expert Takeaways 

• How emotions can be measured through AI
• The vital role of connecting RevOps with FinOps for streamlined operations and informed decision-making, promoting efficient revenue generation.
• Christian Mark's approach to financial management emphasizes the importance of clarity on founders' ultimate goals, which can inform actionable financial strategies.
• The significance of establishing product-market fit before scaling operations for startups in the zero to one million ARR phase.
• Practical recommendations for early-stage SaaS companies on financial operations, including the necessity of professional bookkeeping and system integrity.

Timestamps

(00:04) Jim Delaney and Krstan Marquez intro

(12:06) CMS star ratings, the role of data, and minimizing biases

(16:29) “SaaS in a Box”

(21:00) Accurate invoicing and revenue recognition

(23:56) The challenges of data hygiene

(27:15) Identifying the best and worst performing campaigns and channels

(43:48) Focusing on customer volume with a billing module in b2b and b2c SaaS companies

(50:14) Establishing repeatability and predictability 

(53:15) CAC (Customer Acquisition Cost) efficiency for go-to-market companies

Links

MAXIO

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn

Jim Delaney LinkedIn

Kristian Marquez LinkedIn

Traction AI 

FinStrat

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Anthony Nitsos, Founder and CEO of SaaS Gurus. With a background that intriguingly intertwines medical school education and extensive expertise in finance, Anthony has over 25 years of experience building SaaS financial models. Randy and Anthony discuss principles for building and scaling backend financial systems that can transition from startup to scaleup without creating a "tech pile." By drawing parallels between human anatomy and business functionalities, Anthony emphasizes the significance of a single source of truth in accounting systems and the critical nature of precise and actionable data for organizational leadership. 

Quotes

• “If your spine and your core muscles are not strong, the rest of your body hanging off of that isn't going to be. The same thing works in the back office of finance systems. You need to have a rock-solid accounting system that ties to a rock-solid forecasting system that both feed into a KPI system. That is our three-part, financial core.” -Anthony Nitsos [17:00]

• “One big challenge is creating that one holistic view of the customer and product data that then helps inform not just the statements, but also the operating reports that you're using to run the business. Understanding what's going on with churn, understanding what's going on with retention. There are some exceptions, but you have to go and figure it out, you have to recode it. I think early-stage companies are just scrambling to get product out.” -Randy Wooton [14:39]

Expert Takeaways 

• Interconnected Thinking: Addressing root causes and systemic connections in finance and operations in SaaS companies.
• The Financial Core: A strong, streamlined accounting system tied to a precise KPI system is crucial for providing actionable intelligence to executive teams.
• Tech Stack vs. Tech Pile: Creating a proper technology stack rather than a disjointed tech pile for seamless data flow and informed decision-making.
• Cash is King: Accurate cash flow forecasting is paramount and enables CEOs to plan effectively for growth or investment.
• Building Valuation: The ultimate objective of a CFO in the venture-backed SaaS environment is to assist companies in growing their valuation and preparing for successful exits or investor rounds.

Timestamps

(01:20) Anthony Nitsos: Applying medical training to problem-solving

(08:57) Preventing, detecting, and correcting in-process optimization

(13:30) Need for a unified customer list for integrated analysis

(19:05) Providing actionable intelligence as a strategic enabler

(26:13) The significance of accurate revenue recognition for SaaS companies

(34:30) The CFO: “Cash Flow Oracle”

(41:06) Projecting cash and analyzing it

(47:05) What is the mission of the CFO?

Links

MAXIO

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn

Anthony Nitsos LinkedIn

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Jeff Epstein, Operating Partner at Bessemer Venture Partners and a distinguished figure in the business and finance sectors. Randy and Jeff discuss the rationale behind budgeting, emphasizing its role in predicting financial futures, resource allocation, motivation, and maintaining fiscal discipline with investor funds. Jeff talks about the recent introduction of the Rule of X by Bessemer Venture Partners, examining the balance between growth and profitability. Jeff also shares pragmatic wisdom from his time at Oracle about setting realistic yet ambitious targets and flourishing within set constraints.

Quotes

• “I think the Rule of X is my favorite metric because it combines revenue, growth and profitability. There is always that tension and that trade off. Should we grow faster and invest more or should we try to get more profitable sooner? And both the CEO and the CFO, that's one of the key resource allocation decisions they make. Another way to think about it is it's short term versus long term. You need to do both. You need to both achieve your goals this year and build the company for the long term. And the Rule of X captures both concepts.” -Jeff Epstein [40:21]

• “I think the way we think about that, and I'm only going to B2B SaaS guy, is what is the pipeline that has to be built to match the capacity, the sales capacity? So street quota, what is that? So for using an example, like 10 million bucks, marketing sales have to be totally aligned in terms of how many dollars need to be invested in paid surge versus events, et cetera, to create the pipeline, the days to close and the percent win rates that gets you to an 80/80 hit. So I think that's a great rule of thumb.” -Randy Wootton [25:40]

Expert Takeaways 

• Rule of X: a nuanced approach to evaluate a company's performance by combining growth with profitability.
• Budgets serve as a predictive tool, a resource allocation guide, and a motivational scorecard, and are fundamental for fiscal discipline, especially when using investors' money.
• The importance of aligning annual budgets with a company's strategic three to five-year plan and the careful management of board expectations.
• 50/50 probability when setting revenue targets should ideally lead to aggressive but achievable goals.
• Executive compensation strategies: balancing individual accountability and sharing in company-wide success.

Timestamps

(01:28) Jeff’s time at Oracle

(03:06) Building budgets

(06:37) The Rule of X

(09:09) The relationship between strategy and budget

(16:00) The need for more evidence before relying on AI efficiency improvements

(21:00) The 50-50 rule for team performance

(29:17) The three-part compensation plan and the alignment of incentives with profit goals.

(32:48) Driving incentives and motivation through MBOs and OKRs

(36:02) Addressing the tension between annual budgets and actual performance

Links

MAXIO

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn

Jeff Epstein LinkedIn

How CFOs build a Goldilocks "just-right" budget

This week on the Expert Voices podcast, Randy Wootton, CEO of Maxio, speaks with Dawoud Nasraty, Director of Consulting at Armanino. After serving as an accountant at a Big Six firm, Dawood's career trajectory includes roles for a European telecommunications company in Afghanistan and as a CFO. Dawoud and Randy talk about the intricate world of data and decision-making, the technological advancements shaping accounting practices, and lay out the essential lessons and best practices drawn from Dawood's extensive stint as both a consultant and an in-house financial controller. They also discuss the necessity of solid infrastructural investment and why startups often fail without robust financial systems. 

Quotes

• “Sound metrics built on sound data. And a lot of companies that get started, not all, but a lot of them, in the beginning, don't pay as much attention to the back office, the finance, and accounting. So it's important, like finance and accounting takes like second or third place, but it's important to establish a solid foundation in that area sooner than later, not too early, but not too late. So the CFO, the CFO needs to encourage investment in the finance function at different stages in the company's life cycle.” -Dawoud Nasraty [18:18]
• “Someone once said to me that the number one deal killer in M&A is accounting issues and that's because companies haven't done the work, hiring professional consultants, advisors, fractional CFOs to come in and help put the systems in place so the data works and so that they can represent the reports.” -Randy Wootton [11:41]

Expert Takeaways 

•  Establishing strong finance and accounting foundations early is critical for startups to manage reporting and withstand investor scrutiny effectively.
• A coordinated system of record is essential for assembling a 'single source of truth' that facilitates accurate decision-making.
• Overlooking the importance of meticulous financial management and data integrity can lead companies toward a wind-down state.
• Implementing effective technologies can change the game for SaaS companies in aligning with sales teams and managing cash flows.
• Learning from failures and 'worst practices' informs better approaches and readiness for future business challenges.

Timestamps

(00:39) Dawoud’s background

(06:10) Working with a startup company and setting up accounting systems

(12:29) Good data and its role in statistics, finance, and economics

(18:08) Sound metrics are built on sound data

(24:21) The challenge of transitioning from spreadsheets to a solid tech platform

(29:08) The impact of revenue recognition on business metrics

(31:11) The need for a thoughtful approach to data management

Links

MAXIO

Upcoming Events

Maxio Institute Report

Randy Wootton LinkedIn

Dawoud Nasraty LinkedIn