CFO THOUGHT LEADER

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653: From Real Estate to the Immune System | Chad Cohen, CFO, Adaptive Biotechnologies Nov 22, 2020

Show notes

Of all of the business discussions that Chad Cohen has had over the years, few are likely as memorable as the 20-second conversation he had with Zillow CEO Spencer Rascoff about midway into his 9-year career stint with the online real estate company.

Cohen joined Zillow back in 2006 as corporate controller, a position that he says also had the added distinction of being the company’s first full-time finance role. Over the next 4 years, as Zillow’s back-office finance and accounting team took shape, Cohen’s responsibilities grew, allowing him to step into the role of vice president of finance.

“I had been moving up the ladder, and it was right before we made the decision to go public—I remember Spencer coming into my office and saying, ‘You’re going to be CFO,’” says Cohen, who recalls Zillow’s CEO saying little more before exiting. For Cohen, the exchange signaled a 6- to 12-month transition that would enlarge his focus from being largely back-office to being both back- and front-office.

“I had built an accounting and finance department, but this was a big step that required coaching from mentors and formal media training and IR experience,” says Cohen, who today views the Zillow IPO as only one of several Zillow milestones during his CFO tenure with the firm.

Says Cohen: “I spent 4 years—or 16 earnings calls—as CFO, acquired about 10 companies, and raised somewhere between a half-billion and a billion dollars in capital from the public markets for Zillow Group.”

Asked to recall a learning moment from his CFO years, Cohen says that he recalls waking up in a cold sweat during the 20- to 30-day period that immediately followed Zillow’s 2015 acquisition of Trulia. Having carefully crafted a 90- to 120-day postmerger integration plan, Cohen says, he realized that as the number of Trulia employee departures began to quickly escalate, “speed of integration” was going to play a plus-size role in the merger’s success.

“Our retention bonuses—albeit very healthy and robust—were being offset by a very frothy employment market in San Francisco and even larger sign-on bonuses that we were having trouble competing with,” recalls Cohen.

“I called my controller in a panic and said: ‘Hey, we have to do this faster because I think I see how the scenario is playing out—and it ain’t going to be pretty,’” remarks Cohen, who then instructed his team to “rip up” the 90-to 120-day plan, while accenting his new mandate for speed with the words “We’re going to do this now!” –Jack Sweeney

652: Exposing Gross Margin’s Hidden Levers | Jeff Nichols, CFO, UJET Nov 18, 2020

Show notes

In 2016, when Jeff Nichols had been a senior member of Glassdoor’s FP&A team for 2 years, he and other members of the finance team were confronting the nagging truth that the firm’s path to going public wasn’t getting any shorter.

The online job recruitment firm’s efforts to grow its profit margins had met only mild success, while its cash burn rate was inching upward.

According to Nichols, Glassdoor’s path to going public was further complicated due to the unique characteristics of its business model. Points of comparison between Glassdoor and top recruitment rivals such as LinkedIn and Indeed offered few insights due to the firm’s unique approach, making Glassdoor’s story more challenging for management to tell.

To help remove the firm’s storytelling obstacles and address its meager margin growth, Nichols says, the firm’s finance team began asking, “How do we get the business to perform over the long term in a way that would actually make for a compelling story?”

To help answer this question, Nichols reports, Glassdoor first had to widen its lens and search for points of comparison with SaaS companies, ad tech firms, and other companies beyond the traditional recruitment realm in order to identify competitive attributes that aligned with those offered by Glassdoor.

At the same time, this broader comparison helped to magnify certain weaknesses in Glassdoor’s model.

“What we were lacking was retention. Most SaaS companies are focused on net dollar expansion or gross dollar expansion, and we just didn’t have it,” explains Nichols, who says that another challenge that quickly came into view involved small and medium-size businesses. “The way in which we went about SMB sales was just not efficient—it was very labor- and cost-intensive,” comments Nichols, who—having played a central role in helping to broaden the company’s strategic view—was soon helping to put a restructuring in motion.

Says Nichols: “We reprioritized. We made some new investments that we had not made before, but at the same time we curtailed some costs and refocused what we were actually doing.”

Ultimately, Glassdoor’s path led not to an IPO but to a sale, when in 2018 Recruit Holdings, a large Japanese human resources company, paid $1.2 billion for the company. Having been valued by investors only 2 years previously at around $860 million, Glassdoor had a story that had no doubt become more compelling.

Looking back, Nichols’ cites his part in helping the company to widen its lens:

“All of this was a directional change for the company. I feel that I brought something to the organization that it really needed, which was an honest, objective look at ‘here’s what’s going on in the business, and here’s how it appears to its peers.’” –Jack Sweeney

651: Remedying Your Metrics Disconnect | Ross Tennenbaum, CFO, Avalara Nov 15, 2020

Show notes

Ross Tennenbaum remembers that back in 2018, when he was a managing director at Goldman Sachs, he had conversations with a number of senior executives from Slack Technologies, Inc.

At the time, the fast-growing workplace messaging and communication platform was preparing to go public, and the company was making a special effort to educate bankers and analysts alike about the firm’s business. As his questions became more pointed, Tennenbaum says, he noticed that members of Slack’s senior management team would frequently permit other executives stationed along the conversation’s periphery to supply the answers.

“At first, I thought that they served sort of a chief-of-staff type of role, but what I realized was that when the executive was pressed with a question, one of the sidekicks would always be turned to for the answer,” explains Tennenbaum, who found his conversations with Slack to be highly informative.

Later, Tennenbaum learned that the sidekicks were members of Slack’s business operations team, a cluster of analysts that he describes as being “cousins” to Slack’s finance and FP&A teams.

“This team was incredible: They were so dialed in to the business, and they were partnered with Slack’s executives, which allowed the latter to quickly make data-driven decisions,” says Tennenbaum, who today, as CFO of software developer Avalara, is seeking to borrow a page from Slack and populate his own business operations and FP&A functions with teams of analysts on the ready to inform and supply answers to questions.

“This is about creating not just budgets but also operational plans that tie strategy and tactics to key metrics so that we can see when things are trending up or trending down and be able to more quickly take action,” adds Tennenbaum, who believes that many businesses struggle due to a disconnect between what he calls “top-level metrics” that are being widely shared and reported by the company and decision-making by “everyday operators” often situated deep inside a company.

“How do we make these people feel a sense of ownership of the measure and feel more accountable when it comes to driving outcomes?” asks Tennenbaum, who notes that a disconnect can occur even after a company has made an effort to push a metric deeper into the organization.

“What happens is that they don’t do a good job of updating the metrics every month, reviewing them and quickly assessing where they’re on and off track, and course-correcting,” comments Tennenbaum.

At Avalara, remedying the metrics disconnect is now a top priority for finance.

Says Tennenbaum: “To me, that’s the impactful part of the CFO job.” –Jack Sweeney Subscribe to our Newsletter

650: When Opportunity Comes Your Way | Kieran McGrath, CFO, Avaya Nov 11, 2020

Show notes

In 2008, as the economic downturn threatened to upend IBM Corp.’s financial well-being, the company’s leadership was considering different candidates to lead a corporatewide restructuring when Kieran McGrath’s name surfaced.

McGrath was known as a troubleshooter inside the ranks of IBMers, a seasoned finance executive whose 27 years with the company had produced a zigzag career trajectory tracing a jagged path that signaled to IBM insiders both a breadth of experience and company loyalty.

“Early in my career, I got a reputation as a workhorse and a bit of a problem fixer, and while this was positive in the long haul, it did not always seem that way at the time,” explains McGrath, who says that he was 10 years into his career with IBM when “special assignments” began regularly populating the path before him.

“I was constantly getting pushed out of my comfort zone because I was never able to stay in any one space too long,” says McGrath, whose IBM resume included tours of duty inside the technology realms of storage technologies, semiconductors, and global technology services.

McGrath was offered the restructuring assignment, and, as usual, he accepted the invitation.

“This was really tough work because you’re really forcing decisions as you try to push along a restructuring in response to economic realities,” recalls McGrath, who—while in midstream of a restructuring gig that he hoped would last only 6 months—suddenly found himself being approached by IBM’s leadership with yet another opportunity.

Says McGrath: “As luck would have it, the restructuring role became temporary because the CFO of IBM software at that time decided to leave the company for another opportunity.”

McGrath was shortly named finance leader for the company’s $25 billion software business, a demanding and high-profile leadership role both inside and outside the company.

“Clearly, I would never have been the CFO of CA Technologies or today the CFO of Avaya if I had not taken up many of these other experiences and gone down these side roads,” explains McGrath, who would leave IBM after nearly 33 years in 2014, when he joined CA Technologies.

He continues: “This is kind of how I was raised—to be a little accepting of things coming my way, because there would always be opportunity associated with them.” –Jack Sweeney

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649: Entering the Auction Room | Martin Nolan, CFO, Julien's Auctions Nov 08, 2020

Show notes

Had Martin Nolan studied engineering instead of accounting, his career path would likely never have entered the worlds of Marilyn Monroe, John Lennon, and Michael Jackson.

Still, Irish-born Nolan is quick to point out that it was a Green Card lottery, not his accounting degree, that facilitated his relocation to New York City, where he would meet and ultimately team up with Darren Julien of Julien’s Auctions, the world’s leading entertainment auction house.

Before the two men met, Nolan had traveled a remarkable distance from his early days in New York, where in the early 1990s—Green Card in hand—he had landed a job working at the front desk of the New York Hilton.

In the years that followed, the determined Irishman had networked his way up into a string of Wall Street jobs, where he found success as a stock broker and investment advisor at such firms as JP Morgan Chase and Merrill Lynch.

“Darren was doing a Johnny Cash auction when I met him—he was a marketing guy who needed a finance guy, so I joined him,” explains Nolan, who met Julien in 2004 and the following year signed on with the auction house as CFO. By 2010 Nolan had become an equal partner in the business.

“When I resigned from Merrill Lynch in 2005 and told my colleagues that I was joining Julien’s Auctions, there were looks of dismay—they would say: ‘Why auctions? It’s such a different business. It’s so risky …,’” says Nolan, who pointed out to his colleagues that the buying and selling on the floor of the stock exchange was no different than what takes place inside an auction hall.

Fifteen years later, he continues to wield a healthy appetite for risk, a prerequisite for any CFO daring enough to enter the ebb-and-flow of the auction business. For Nolan, the risks are best hedged by using a mix of financial best practices and good humor.

Says Nolan: “Darren wakes up in the morning and checks Google and asks: ‘Are we in the news?’ I wake up and check the bank accounts and ask: ‘Are we still in business?’”

However, there’s one risk that Nolan may fear more than any other: that a finance career hatched by a lottery win could put Wall Street in its rearview and still someday be deemed as ordinary. – Jack Sweeney

648: A Life Sciences Angler Casts a Sturdy Line | Bill Adams, CFO, NervGen Pharma Nov 04, 2020

Show notes

It’s a familiar sequence: A strong-minded investor musters the will to lead and steps into the CEO office determined to revitalize a struggling technology company and put it back on the growth track.

For Bill Adams, this swift turn of events occurred only a year into his first industry stint as a corporate controller—a career chapter, he recalls fondly, that included a devoted CFO mentor.

However, the company’s CFO and CEO had exited the firm just prior the investor’s arrival, and Adams found himself stepping into a finance leadership role. Although stressful, the circumstances swung open the door for Adams to not only oversee the finance function but also have the opportunity to play a more strategic role in the business.

In short, he would now be in lockstep with the new CEO as they together championed the latter’s strategic vision that would upend the tech company’s growing focus on software revenue and double down on hardware sales.

Or so the CEO believed.

“The challenge that I faced was that I didn’t agree with him,” explains Adams, whose in-depth knowledge of the business made him quietly question the new CEO’s big bet on hardware.

“The company was full-steam-ahead focusing on software and system development, and the hardware part had already become secondary,” adds Adams, who says that his broadened responsibilities within the company allowed him to reach out to different stakeholders and bring back “suggestions” to the CEO.

“Being able to talk to customers was extremely enlightening in terms of how to steer the company in the direction that it needed to go,” comments Adams, who says that at the time the company counted Boeing and General Dynamics among its largest customers.

According to Adams, the company’s strategy would continue to evolve as it lessened its hardware orientation and came to enjoy newfound success.

Even today, as Adams reflects on the circumstances that first advanced him into a CFO role, his sense of apprehension and excitement lingers:

“I was not yet 30 years old when I was thrust into the CFO role at a public company, not really knowing where I was going or what I was doing.” –Jack Sweeney

647: Accruing Your Global Acumen | Adrian Talbot, CFO, Hotwire Nov 01, 2020

Show notes

When Adrian Talbot tells us that he parachuted into Thames Television in the early 1990s, the image of the London skyline—once used to brand the popular British broadcasting company —quickly comes to mind.

Suddenly, in our mind’s eye, just to the right of St. Paul’s dome, we spy a 20-something-year-old Talbot floating confidently downward.

Along with a boatload of first-class metaphors, this is the type of instant imaging that every conversation renders—at least for those of us on the lookout for them.

But Talbot’s successful first jump—not unlike those of many future finance leaders—came about with a degree of serendipity.

“The lead auditor became sick—I was parachuted in for 2 years, and this gave me an early taste of media,” explains Talbot, who at the time was an auditor for BDO. Several internal auditing roles followed, including one with Hilton International that required a good deal of travel in order to complete audits in different parts of the world.

“When you have chased the financial controller for the Caracas Hilton around the airport with a sheet of accruals or when the general manager of the Nairobi Hilton is yelling at you for telling him that he made a mess of a capex project, it is rather character-building,” comments Talbot, who soon jumped back into the media realm with United Business Media, where he would serve as a finance director for the company’s television broadcasting properties before entering the global communications sphere as a finance director for Burson Marsteller.

Talbot reports that years later, when he was recruited to be CFO of Hotwire, a fast-growing global communications firm, he found a unique match—not because of his years inside media and communications but because of Hotwire’s global CEO, Barbara Bates.

Bates had sold a communications company that she had spent 25 years building to Hotwire in 2016 and gone on to be named Hotwire’s Global CEO.

“I was able to help her with my experience around the globe, and she was able to help me with her experience inside the USA,” says Talbot, who today credits Bates with helping him to safely land inside a finance leadership opportunity. - Jack Sweeney

Bonus Episode: The Networking Imperative | Robert Bendetti, CFO, Life Cycle Engineering Oct 30, 2020

Show notes

Bendetti: I'm trying to steal that great quote from Warren Buffet, "I'm trying to be greedy while others are fearful." And I'm trying to grow. And if you're an existing organization with a big overhead, wow, you're retreating. You are worried about how you're going to continue if you're a 501C6, you're not eligible for the PPP loans. They're in a period of retrenchment, these other professional associations. I have no costs. I'm lean by design. I have a job. This is my nights and weekend gig. So everything I do is easy and lean. And so I have no costs. And so I'm trying to grow, I'm trying to be greedy while others are fearful and expand this thing. While I can't meet anywhere physically, so I can grow virtually.

646: Making Finance a Workforce Whetstone | Michelle McComb, CFO, Bluecore Oct 28, 2020

Show notes

Just as Michelle McComb was imagining that she would shortly be joining another Silicon Valley start-up as a finance leader, the CFO of Lucent Technologies helped to upend her plans.

Back in the early 2000s, McComb’s first CFO tour of duty was coming to an end with the successful sale of her company to a larger, publicly held software firm. However, within a matter of months, the buyer was itself acquired by the giant telecommunications player, and Lucent’s CFO offered up a question to McComb: “What would it take to keep you?”

The coveted query is one that career builders long to hear but don’t always answer in rational ways.

“I packed my bags and moved to England, where I became CFO of one of Lucent’s major divisions,” she explains, leaving little doubt that her answer had landed well.

“I received tremendous international exposure as I traveled extensively and got to deal with finance people with very diverse backgrounds,” says McComb, who worked abroad 5 years before returning to the U.S., where, over time, she has occupied the CFO office for a string of technology companies. The latest is Bluecore, a marketing technology firm that she joined in May of 2020.

Of course, in light of the pandemic, it’s safe to say that Bluecore will likely be a career chapter unlike any that have preceded it, and, not unlike her CFO peers, McComb finds herself now being drawn to the mix of financial and cultural levers that influence Bluecore’s workforce.

“I think that the people strategy—especially as we come through environments like COVID—is going to be extremely important to ensuring how we retain and hire the right talent, especially when it comes to remote. What does the new office environment look like?,” comments McComb, who begins voicing a series of questions: “What is our compensation philosophy today? Are we competitive? Are we a merit-based company?”

It’s just such questions that in the wake of pandemic make McComb—perhaps more than some other CFOs—better prepared to land on the right answer. –Jack Sweeney

CFOTL: What are your priorities as a finance leader as we go forward?

McComb: I think it's super important that you have a solid foundation. So for me, I got to make sure that that foundation of my GL's accurate. I can close the books in a timely way. And make certain I have got audited financial statements. Those are super important. But as a finance leader, you're not going to get credit for them. So make them happen, get them done, and then it's important to move on to other things.

And so for me, looking over the next 12 months, especially in light of COVID, I think it's paying attention to the capital strategy. So around cash management investment, what do we need to look at? ... Should we look at acquiring a company or other companies? What do we want to do with our investments in our cash strategy?

So that's one side. I'm going to add to that because I think a lot of times CFOs do tend to look at capital as cash. I'm one of those CFOs who look at people as a huge asset. I also look after the people function at Bluecore and I think the people strategy, especially coming through environments like COVID, is going to be extremely important of ensuring to retain, hire the right talent, and especially of looking at remote. What is the new office environment look like?

And then the last thing that I would say that I'm looking at is all around the other keyword that I mentioned to you earlier, around data. I think data is going to be absolutely essential in helping the company transform strategically. The decisions it's going to make, the avenues it's going to take supporting its customers. So it's really double clicking down on the data side of things. And the analytics because it's not just about data. What is the data telling us? What changes do we need to make? What's the story being told? And I think it's just going to become increasingly important to help get the company to the next spot in its journey.

645: The Investor Came Knocking | Glenn Schiffman, CFO, IAC/InterActive Oct 25, 2020

Show notes

There’s little question that 2020 will long be remembered as a year of crisis for the casino industry.

Commercial gaming revenues in the U.S. were down 79 percent during the second quarter when compared to Q2 2019, a fact that made IAC/Interactive’s August announcement that it was purchasing 12 percent of hospitality and gambling giant MGM all the more headline-grabbing.

“We think we found a once-in-a-decade opportunity to find a meaningful position in an iconic brand,” explains IAC/InterActive CFO Glenn Schiffman, who says IAC’s balance sheet remains flush with cash (more than $3 billion) after the recent spinoff of online dating site Match.com.

“We believe that Las Vegas will come roaring back, and this comes back to how IAC likes to invest: We like massive addressable markets with tailwinds from offline to online, and that’s what we see with gaming,” says Schiffman, who is no stranger to industries in crisis.

Back in September of 2008, Schiffman was head of investment banking for Lehman Brothers’ Asia-Pacific business when the firm filed for bankruptcy due to its part in the subprime mortgage crash.

Schiffman, along with other top Lehman partners, helped to manage the sale of Lehman’s Asian business to Nomura Securities.

“In times of crisis, you have to separate the urgent from the important because in a crisis everything appears urgent but not everything is important,” explains Schiffman, who says that he learned just how important being able to separate the two was when the clock was ticking in the wake of the Lehman bankruptcy and his team was seeking a resolution that would best serve Lehman’s Asia workforce. (Episode 440)

“We saved every single job in Asia—and that was 3,000 jobs, including my own,” comments Schiffman, who adds that the Lehman bankruptcy, among other things, revealed how during a time of crisis an individual’s character becomes more evident.

“Crisis doesn’t define character, crisis reveals character,” says Schiffman, who, after joining Nomura, went on to help establish and build the bank’s North American investment banking division. –Jack Sweeney

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