Some years ago I had the opportunity to sit down one-on-one
with a well-known CFO in the Valley who was with his firm from a run from like
employee #5 as a start-up to the time when the company became one of most
recognized software infrastructure firms in the world. The company is public
and in largest 200 of all software firms in the world.
It is pretty rare that someone can be with a firm from early
start-up through IPO and multiple capital market transactions. The different
phases of a company often require very different skills of its executives at
each point in the game.
While the original, more general introduction to the CFO was
made through a board director, it was the CFO that reached out to me to offer a
more personal one-on-one advisory meeting. A true statement of character. When
we finally had a chance to arrange our meeting, what struck me was that this
CFO (very senior to me by a number of years) covered a spectrum of mentoring-like
questions and perspectives. The areas started off broad but became very
concrete to the software space. Some topics covered:
- He asked me what I wanted to do professionally? Did I aspire
to become a CFO of a large company? I
recall telling him something to the effect that it might be difficult for me to
pursue this as I have not spent significant time in large company finance (mostly
entrepreneurial and project finance) nor did I have a CPA. He told me that prior
to becoming CFO he didn’t have much of that experience either. As for my latter
concern, he mentioned that he has had to manage accountants and the like with straight-up
MBA training as well. He obviously has both been very successful and lived an
unlikely path through multiple growth phases of a company. In any case, a key
thing I took away from our meeting was that one should step back from
time-to-time. It is sometimes very easy for one to get caught up in the
day-to-day hustle, and prospects of a capital raise are a good time to reflect
further on how the organization will shift around and where one wants to be
professionally. - He told me that as a start-up through growth-phase CFO,
he got involved in all the operations like I did ranging from pricing strategy,
legal contract negotiation, to sales force training. Not something you’ll find in most finance books on
the formal division of labor in the finance and accounting area. He told me how
as CFO he had to train salespeople how to represent the company’s product. Efforts
not only included interpersonal stuff like handling sales meetings but also
included implementing some nitty-gritty details like creating product value
propositions cheat sheets for the backs of the badges of salespeople. We also compared notes about how legal IP terms could be negotiated for a software company,
and how market terms for structuring international partnership deals. The CFO and I also batted
around a few points like CPU-based pricing norms in the industry versus
emerging pricing schemes. Nevertheless, my discussion with this CFO helped to
reinforce a concept in my mind about CXO positions. Whether the positions are “gearhead”
(e.g., CFO) positions or other (e.g., CEO), the style of management that
resonates with me is grounded in leadership and general business skills. - We compared notes on more detailed finance concerns like the need to
report both natural P&L and functional P&Ls. Unfortunately, many accounting packages don’t
necessarily make it easy for early-stage ventures to do everything they want to
do (although they do frequently do things better than Tier 1 accounting
packages). One area for me in the past has been reporting natural profit and
loss (P&L) data (e.g., which rolls up things like travel & living
expenses across all departments) versus functional P&L data (e.g., which rolls
up data into the functional groups like sales & marketing so that one can
compare information to competitive data from the 10-Ks of public companies).
I’ve always hacked these different views together using Excel because it seems
there are only so many ways to tag data in certain accounting packages. In any
case, my discussion with this CFO helped to give me some other “hack” ideas as
leveraged from large company finance (such as using formal account codes in the
unstructured text fields [yikes!]).
In any case, although I have always looked to permanent
mentors at different phases of my career, I find it is also useful to gain
mentoring and peer input wherever you can get it. Variety is good, and there is
a lot to learn out there. No need to limit yourself to one or two people when
it comes to getting mentoring.
I thank both the board director and CFO for the mentoring
opportunity.