CFO THOUGHT LEADER

mong the different experiences that Alan George credits with having prepared him for a CFO role, one office meeting looms large. After he had spent days and nights preparing his first presentation for the president of a portfolio company, George recalls, the meeting came to an abrupt end when the executive reached across the table and shut George’s laptop. “Come with me!” was the curt command he recalls being issued as he followed the executive out of the office. Over the next few days, George says, he toured the company’s manufacturing facility alongside the executive and went on visits to different suppliers. “We were literally riding on delivery trucks and talking to retailers, and he took me through the entire life cycle of the product,” says George, who credits the excursions with illuminating the realities of the business and delivering a lesson that to this day informs his decision-making. Of course, the experience that truly sets George apart from those of most of our CFO guests is one that happened at midstream in his career, when—after having spent a number of years at JP Morgan as an investment analyst and ridden inside delivery trucks as a private equity executive—he exited the business world and joined the U.S. military. “I usually tell people that I took a five-year sabbatical,” says George, who, after completing basic and airborne training, was selected as a Green Beret and assigned to a team within U.S. special forces with which he remained engaged for three years. “I was obviously older than most people, and I think that if I had waited three more months, I would have been over the age limit,” explains George, who adds that a desire to serve in the military first took root while he was working at JP Morgan in New York in the months after 9/11. Six years later, his plans took flight. –Jack Sweeney   CFOTL: What are some of your top of mind numbers? George: The first thing that I look at is daily sales. I get a report that comes out in the middle of the night. I know what we did in sales the day before, and then I can drill down into it and say, OK, since I'm primarily a direct-to-consumer business, I want to see my traffic conversion and AOV. I want to see how we're doing relative to our forecast. I want to see how any specific programs are driving those key metrics. For us, specifically, traffic is a huge driver. We have really strong conversion and AOV. Traffic-driving awareness programs have a huge impact for our business. When we're looking at where we're spending marginal dollars, the ROI of driving traffic to our site today is really high, so the couple of betas that we've done to drive traffic have been really, really meaningful for us. The other thing that I look at is repeat purchase rate. I think that this is an indicator of the health of your product portfolio and the quality of the products that you're delivering. I tell everybody that it's easy to get that first sale. It's really hard to get that second and almost impossible to get the third. So, how do we be the best at this? By getting our consumers to buy into what we're doing and continue to purchase. These are the major things that we look at today. When I came in, I revamped the forecasting model. The team had done a good job with the limited resources that they had in putting together a forecast to try to stay ahead of growth and be able to manage inventory and cash properly. When I came in, I tweaked the process. The biggest thing was instituting a weekly direct cash flow model. As an early-stage company, cash is the most important thing for us. We're in the middle of a fund-raising round, so being able to manage my cash flow on a weekly basis until we get that round closed is critically important. This is something that I do and look at every day—tweaking the forecast based on what I'm seeing and being able to make sure that I have visibility into what the cash flow will be for the next 13 to 26 weeks.

Years from now, when finance leader David Burt is reminiscing about his varied career chapters, you might imagine a captivated listener politely interrupting the veteran CFO with the question, “Excuse me, but what exactly was your profession?” This is a query perhaps more likely to be asked of veteran CFOs than other seasoned business leaders, in light of how finance leaders are less tethered than others to any one industry or opportunity throughout their careers. Such is the case with Burt, who, as CFO of ServiceTitan, is busily applying his patchwork of business and industry experiences to the multibillion-dollar residential home services industry. Turn back the clock 20 years, and you’d find Burt helping companies expand into China as a Bain & Company consultant based in Sydney, Australia, his original home. Ten years later, you’d find him evaluating digital media acquisition targets as an investment banker with JP Morgan. Only 8 years after that, you’d see him roaming the frontlines of the streaming wars while serving as co-head of corporate development for Netflix. Today, Burt views his finance leadership role as being not unlike that in an earlier chapter as a strategic advisor, when he sought to help empower management to be more outward-looking. He says that finance executives “oftentimes get boxed into just looking at the internal aspects of the company.” To highlight his point, Burt recalls that back in 2012, Netflix realized that three companies—Disney, Nickelodeon, and the Cartoon Network—would someday soon wield a powerful advantage inside the realm of children’s content as more consumers turned to streaming. “I asked myself, ‘If I were sitting in the FP&A teams for those companies, what would things look like?’ I realized pretty quickly that this meant that we as a company would need to begin investing in original content much sooner,” explains Burt, who says that up until that time, Netflix had been focused on developing content mostly for more mature audiences, with shows like the “Orange Is the New Black.” – Jack Sweeney   CFOTL: What are your top of mind numbers?  Burt: The first things that I look at on a weekly and monthly basis tend to center on the fundamentals. Once we're in the door with a customer, there's an opportunity for us to provide additional services that might add additional recurring revenue. This growth is really important because it allows us to forward-invest into areas of R&D, sales and marketing, and so forth. We are of a certain size today, but we have aspirations to be much, much bigger, and as we grow, we are enabled to do more and more for our customers more efficiently because we can scale our investments in R&D across a larger base. The second big area that I like to focus on is our unit economics. In particular, one of the key metrics within the unit economics would be how efficient we are in delivering the service. The financial measure that we look at there would be ongoing gross margin. Then there's how efficient we are at actually acquiring a customer, so we have a set of measures around customer acquisition costs. There's also how good we are at satisfying the customer, which manifests itself in churn. You can get pretty misled by churn, particularly in a B2B software company where your software is so critical to a company. It's important to look at not just the numbers and the financials, but also what might be underlying indicators of key metrics in this third area. Our measures of customer satisfaction are important here, and in particular we spend a lot of time looking at net promoter score, NPS, among a few other C-SAT types of metrics.

Inside the world of retail businesses, Greg Wookey’s CFO career has advanced down a path that parallels the sector’s growing appetite for more sophisticated software. Such was the case roughly 10 years ago, when he stepped into the CFO office at Mindbody—a firm whose well-known software helped fitness centers across the country to manage the demands of their clientele—and such is the case today, as Wookey serves as CFO of Boulevard, a SaaS developer whose offerings are specially tailored to high-end salons and spas. This arena—in what Boulevard and other software developers commonly refer to as “appointment-based retail”—is where Boulevard now hopes to help salon and spa owners to achieve a more sophisticated and aesthetically pleasing customer booking experience. “We saw that there was an inability of salon owners to connect effectively with their clientele, so this was about making booking appointments and integrating payments easier so that salon owners could accept payments more easily,” says Wookey. Meanwhile, Wookey is keeping a close eye on Boulevard’s own customer engagement activities. “We actually have very good metrics in terms of the size of our pipeline, the pipeline velocity, and how fast the opportunities are moving through that pipeline. Then we measure the direct marketing spend that we have and how that relates to new business,” the finance leader explains. –Jack Sweeney CFOTL: Tell us about a finance strategic moment. Wookey: One that comes to mind was back in 2009, when I started at a company called Mindbody. We were a little bit bigger than Boulevard is now and we were a few rounds of investing ahead of where we are at Boulevard, but it was very clear that the business was growing extremely fast and that there was the potential that at some point in the future we might be able to become a public company. With this in mind, I knew that there were certain things that we needed to do at Mindbody to prepare for that moment--which didn't come until six years later. But in the time that I was heading finance there, what I tried to do was lay the foundation for what would be the ability to go public at some point in the future. This really involved several things. One was to build out a more robust internal team in terms of accounting and finances and FP&A. Another was to create the ability to use tools that would be more supportive of a public company--for example, moving off of QuickBooks and onto NetSuite so that our reporting would be stronger. We also changed relationships in terms of our audit, banking, and legal. These were all things that I set in motion very early on in my career there. This eventually proved to be something that was important for the ability of the company to go public, which we did in 2015. This was a moment when I looked at the finance operation, looked at what the state of it was at the time, and then thought about where it needed to be several years down the road. You have to start these processes in motion and not wait too long, or suddenly you're up against it in terms of timing. This was a very strategic thing that I did in terms of trying to make sure that the company was prepared in case this happened, which it eventually did, and it goes well beyond finance. It touches the entire company in terms of how we operate, what processes we put in place, how we access data, things of that nature. For me, this was probably the most significant strategic initiative that I embarked on that started from finance and really ended up impacting the entire company.

In the past, Sue Vestri has told friends that she has achieved CFO success by routinely working herself out of jobs. Vestri is not alone. Certainly, many of her finance leader peers have helped to create some exciting M&A deal-making chapters only to be “written out” of the newly merged business’s future script. “Being put out of a job isn’t necessarily a bad thing, as one opportunity can open the door to the next—or at least it has for me,” says Vestri, whose latest career post as CFO of Greenphire opened up just as her previous role as CFO of Artisan Mobile of Philadelphia was closing down with the sale of the company in 2015. “I was thinking that I’d actually take the summer off, but that didn’t happen,” says Vestri, who remembers being contacted by a recruiter about Greenphire, which was yet another Philadelphia-area company that had recently been acquired and was looking for some local C-suite talent to beef up its management ranks. Along the way, some of the local deal-making impacting her career has involved out-of-town acquirers. Such was the case back in 2010, when Dell acquired Boomi, a Philadelphia-area technology developer specializing in integration technologies. At Boomi, Vestri had advanced into a finance leadership role just as the giant technology provider from Round Rock, Texas, came knocking. Says Vestri: “With Dell being public at the time, the whole process and early discussions had to be kept very confidential.” In light of Dell’s concerns, Vestri says, Boomi looked for space off-site and ended up renting a hotel meeting room for a period of months. “The process involved maybe a half dozen people from our side, but there was literally an army of executives from Dell,” she recalls. –Jack Sweeney   CFOTL When it comes to customer measurement whatare you focused on? Vestri: I think that everyone tries to measure customer service and customer support in some way. In the past, we historically have done customer surveys and implementation after implementation periodically throughout the year. It's always challenging as to who actually responds and how you disseminate the information and make any use of it. We still do these types of things, but recently we've actually gone out and done some user forums where we've sat in the room with some of our users. To be honest, not all of the feedback was good. There were some pretty harsh critics in the room at some of these forums that we did. It was really actually good for us to hear this, and it's driving a different strategy for us going into 2020. We're going to literally have a team dedicated to site satisfaction and getting training to our sites. In the clinical trial world, there are certainly a lot of sites in the U.S. and they're easier to touch, but ours are worldwide. They're all over the world. You have language barriers that you're dealing with. We rely on our partners to do a lot of the training on how to utilize our software, and we're finding that this may not be the most successful way to get people up and using it. For us, a big driver of revenue is getting clients worldwide to use the software in the way that it was intended. We are spending a tremendous amount of energy on understanding our clients and what it's going to take to make them happy and be advocates of using our products in our industry. We're very focused on and paying attention to a number of key strategic initiatives. There's an innovation one and a process optimization one. Things around site adoption and client experience. Everything that we're going to do in 2020 is going to focus on these key initiatives.

Back in the early 1990s, with both feet firmly planted on an auditing career path inside Price Waterhouse’s Tampa, Florida, office, Raj Dani decided to take a detour into the accounting house’s M&A advisory practice. Over the next few years, the one-time auditor began providing deal-makers with financial and operational due diligence on their future mergers and acquisitions. “I became focused on cash and EBITDA generation, the strategic value of two enterprises coming together, and how you drive synergies and value for shareholders,” explains Dani, who says that his segue into M&A opened the door to experiences that have never for a minute led him to reconsider the auditor’s path. Dani’s jump into Price Waterhouse’s M&A advisory services also allowed the former auditor to gain international experience when the M&A practice shortly thereafter transferred him to Zurich, Switzerland. It is perhaps little surprise that Dani’s post-PW career has also involved both M&A and Europe. Looking to enhance its European operations as well as its new ventures portfolio, Jabil Circuit enlisted Dani to help lead its corporate development efforts from its Milan, Italy, office. Reflecting on his different M&A roles overseas, Dani says that “it was just a major life lesson on how to treat people when you’re integrating two cultures and how to be respectful of people and their differences.” Today, as CFO of Ping Identity, of Denver, Colorado, Dani credits his early-career “M&A detour” along with his budding relationships inside the private equity realm for having helped advance him into the CFO office.  CFOTL: What are your priorities as a finance leader over the next six months? Dani: In terms of our priorities at Ping Identity and my own as a finance leader overall, my first priority is making sure that I continue to work from a team perspective, to work on progressing my team's knowledge base and experience, and to thus give them greater career path opportunities. If you don't think long-term about your people, they're thinking long-term about themselves, and they want to make sure that they're partnered with a company and leader who have their best interests in mind. This is not something that most leaders think of just off the top of their head as their number one priority, but It is absolutely all about the people for me because without these people, we would get bogged down very quickly. We hire well, we train well, and we make sure that they're getting out of the company just as much as the company is getting out of them. You cannot have this equation be out of balance. So, I really do prioritize the people-centric initiatives from a business perspective. We're doing several things in terms of new products that we've introduced in the past few quarters. As we mentioned on our last quarterly call, we're now really leaning into designing sales and marketing investments to monetize some of these product investments. A lot of my focus will be on the operations of the business and making sure that our new CMO is successful and getting what he needs to continue to elevate our brand such that Ping Identity is top-of-mind in any cybersecurity discussion with global systems integrators, with board-level folks, with C-suites, and so on. I'll also be making sure that our execution, from marketing to product to sales, is just a smooth supply chain, if I can use that analogy. There are investments that we need to make in each, so just making sure that we're making the right investments at the right time and really enabling our teams to be successful is top-of-mind for me.

CFOTL: What are your priorities as finance leader over the next 12 months?  CFOT:" Here at Eventbrite, my priorities are to bring focus and simplicity. We just went through our planning experience for 2020. We started with 12 different strategic initiatives, and I'm happy to say that eight of them wound up on the cutting room floor. We've got four that everybody is really focused on. These four initiatives had 20 subprojects, and these, too, have been dialed down to four. We're just bringing focus and clarity and simplicity. I teased the team in our flash report. On the 57th page, we put a little note which said that the first person to read the page and call Lanny Baker would get dinner at the restaurant of their choice. That was three months ago, and the phone still hasn't rung. This was just my way of showing the team that some of the complicated reporting that we were doing just wasn't making a difference. Nobody's looking at it, and that's why I'm trying to bring some simplicity and focus. All of this is in support of allowing the company to drive long-term growth. One of our priorities on the finance team is helping the company to accelerate growth, make the right decisions, pick the right priorities, make the right investments, track these, manage these, and get the payoff, which will be acceleration and sustainable long-term growth for the company. The other thing that I'm trying to do at this particular organization is to always put creators first. As we're developing metrics, as we're developing our financial measures, as we're thinking about our messaging to employees, to customers, to shareholders, and even to the board of directors, we want to make sure that everybody sees that this is a company with creators first. The metrics that we talk about start with creators, and that's helping us to focus. And this focus, I think, helps us to drive growth.

Step inside CFO Kevin Jacobson’s office at LogicGate, and there’s little question that you’ll think you’ve entered a realm where growth and risk are often two sides of the same coin. In fact, LogicGate’s fast path to achieving “product market fit” was no doubt shortened by early customers who today wield a similar growth/risk mind-set. Four-year-old LogicGate, a provider of governance, risk, and compliance (GRC) software, now expects its workforce to expand to 170 employees before 2021. Says Jacobson: “I tell our team that going forward, we are going to be breaking records across every metric in every quarter.” With yet another year of impressive growth behind LogicGate, Jacobson says that the company’s foundation has been firmly laid for a new growth chapter to be built. “We’ve grown significantly since last year, and my role is now about keeping a vigilant eye on what matters in this new context, this next stage of growth,” he explains.

We are nearly at the end of our interview with Scot Parnell when we ask him to explain what led him to accept the CFO position at DailyPay, a company with a pioneering technology inside the human capital management realm. This is a question that we had asked a little earlier in the interview, but this time we want to know what other factors may have contributed to his decision. Although Parnell has already put forth a compelling explanation of DailyPay’s unique offerings, he is happy to share a bit more with us. “This role was absolutely fascinating. I was at a place in my life where I could take some risks, and I also think that I’ve got some runway here. For me, it was too important to be absolutely excited about goingto work every day. It makes me a better leader. It makes me a better husband and father when I find fulfillment in what I’m doing,” explains Parnell, whose response suddenly widens our lens to a better view of what sets apart his latest CFO career chapter from earlier ones. “As I sat back and looked at what I wanted to do next, this just felt like I could get more excited about it and put more of my soul into it, so that’s what I did,” he continues, while expressing a sentiment that many finance leaders experience but frequently resist acting upon. Having spent the past 20 years as a finance leader in large enterprise organizations, Parnell has observations about the entrepreneurial realm that undoubtedly signal a fresh enthusiasm that few CFOs can muster—and particularly those who may have built their careers as start-up CFOs and but over time have become more integrated into their surroundings. Nonetheless, when it comes to CEO–CFO relationships, Parnell’s comments are suddenly strikingly similar to those of a broad swath of his CFO peers: “The CFO and CEO have to do a Vulcan mind-meld to make sure that they’re not only of the same mind, but also able to work together as a team and provide each other balance and support.” –Jack Sweeney

Tannenbaum: At Brex, pretty early on, I was kind of familiar with the banking landscape from when I had been in investment banking. The group that I had been in actually served regional banks, so I did a lot of regional bank mergers and acquisitions. Then, at SoFi, I had built a lot of relationships with regional banks. I think that when you start in fintech, there's always this belief that you're competing with big banks. That was a lot of the marketing positioning of my former employer, SoFi, but at Brex I saw this opportunity to partner with banks because I was familiar with the card landscape. At least in the commercial card space, outside of the Big Four banks--Wells, Citi, Bank of America, Chase--there are very few financial institutions that actually issue corporate cards. I decided that even though we were a small company, subscale, no one had heard of us, and we had a stupid name like Brex (which actually wasn't as stupid as our first one), banks might want to partner with us because they themselves were fighting their own battles with the Big Four issuers, as well as American Express. So we partnered with a number of banks very early on in a way that most people would think was not possible and was unusual. Ultimately in financial services, brands, particularly with regard to trust and stability, are super important. Today, what's exciting is that technology is changing so many industries and creating lots of opportunities, as well as disruption and uncertainty. Finance is a kind of universal language. At Brex, we need to be known for the brand of our risk management because ultimately we're asking both customers and other businesses to trust us with their money--to buy loans from us, to buy deposits from us, to partner with us and give us access to payments networks. To do this, we really need to be known as a high-quality risk management brand.

CFOTL: Having splitout from GE- we would imagine there were certain business processes already in place at Synchrony, while others processes had to be reestablished or developed. Wenzel: The processes that have been developed are probably the core part of our business. We had to build everything from scratch. Even the processes for things like very mundane benefits in HR, and paying people, and for some of the regulatory reporting–we had to build all that up. But we did take a process from GE that was a very good process in the credit risk world, a very traditional process. You go out and get underwriting scores from credit bureaus, you look at your data, you kind of put a score together, and you say yes or no. We have developed this process more and invested so much in it. Now we’re taking multiple data elements into consideration, including what we get from our partners. We have a thing called “engagements” through which we know how “Jack” is engaged with our retail partners before he engages with us, so we have an idea of who you are. We look at our 80 million active cardholders. You’re probably one of our active cardholders. We look at the information there. We have a much better picture. Then we take these other sources of data from different sources so that we can get more information on you. We use technology now to authenticate you. If you’re using your cell phone, we can prepopulate applications down to two different sources. We’ve allowed these things to come in so that we know the customer better. We use the combination of data and technology and are then really able to put it into our credit operating model. This was very good under GE, but we have brought it really to a much higher-class standard. For us, the next 12 months are really about creating the 2025 vision. What are the tools and technologies that we have to begin building now to be adaptable to the business and how the business is changing? The second thing that we’re trying to do is, again, to have this maniacal focus around customers and in getting value-added jobs out. We’re moving faster when it comes to the artificial intelligence and the robotic process automation that happens more in the controllership or accounting world and driving meaningful projects that will deliver results this year.