CFO THOUGHT LEADER

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549: Stay the Course | Cort Townsend, CFO, Kofax Software Nov 17, 2019

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As is the case with many finance leader resumes, Cort Townsend’s reveals a repetition of professional advancement and achievement that allows casual readers to quickly validate his CFO credentials. However, like those of many, Townsend self-tale is only a shorthand rendering of a career path filled with twists, turns, and high-stakes industry drama.

Such was the case in 2015 and 2016, a period in Townsend’s career annals with enough M&A high jinks and boardroom intrigue to fill an entire volume. Subsequently, though, in July 2017, Townsend landed neatly inside the CFO office of Kofax via an appointment that casual readers of his resume might have assumed was the natural next step for a dedicated senior executive who had already served as the firm’s controller and vice president of finance. So, where was all the drama?

Lost between the lines of Townsend’s resume was the acquisition of Kofax by Lexmark International in 2015 and the subsequent acquisition of Lexmark by Apex Technology in 2016. Along the way, Townsend was named finance chief of Lexmark’s enterprise software group, which turned out to be an abbreviated tour of duty that made him the obvious choice for a C-suite posting when Lexmark opted to spin off the software group in late 2016 and later sell it to private equity firm Thoma Bravo. The sale of the group would be completed in July 2017, the very month in which Townsend was appointed CFO of newly branded Kofax.

Witness just the type of swift-moving, complex narrative that allows even detail-oriented leaders like Townsend to much appreciate the virtues of a shorthand bio. –Jack Sweeney

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548: Raising Your Finance Voice | Mahesh Patel, CFO, Druva Nov 13, 2019

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A brief summary of this episode

547: Enters the Change Agent | John Karnes, CFO, Vertafore Nov 10, 2019

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CFOTL: What are your top of mind metrics?

Karnes: I think about metrics sort of under three rubrics. The first is what I would think of as a customer-centric layer. Then there's the financial performance one that we all think about as CFOs, and then there's a very distinct operational layer. On the customer-centric layer, we think about things like SLAs, our service-level agreements with our customers, uptime, system availability. These are the things--before we get to gross margin--that really impact our success as a business and what our next quarter is going to be like. There are things like customer health scoring in your customer success organization. Happy customers don't leave. Keeping your revenue is much cheaper than trying to go acquire new revenue. Things like NPS, net promoter score. Things that I watch very, very carefully are very customer-centric, as opposed to what's next, which is more pure financial performance. At the end of the day, your economics are based on your base business, your new business, and the investments that you make going forward. That's what drives economic performance. The first thing that I look at in the morning is churn and retention. "Churn," for those who aren't SaaS experts, is simply our subscriptions that are terminating and my customers that are leaving me or deciding to subscribe to me in a lesser amount. So, it's lost revenue. After that, it's gross margin. Obviously revenue is tops. Churn is my top line. Gross margin is after my cost of goods sold and tells me how efficiently I'm delivering my product. All of these businesses are built on free cash flow. After I pay my G&A, after I pay the capex that I've got, how much cash am I making and am I self-sufficient or dependent on the equity markets to grow my business? That's a really important part of the business, from a baseline. New business cost is very important. These are things like customer acquisition costs. I'm making an investment for every customer. How quickly do I get that investment back? How many months? Is it six, 12, 18 months before I recoup that investment? And, like all good SaaSware companies, we invest a tremendous amount of money in our future through research and development. The question is, What is the rate of return that we're engineering to for that research and development? How does this correlate with other opportunities that we may have, like acquisitions or debt repayment?

546: When Speed to Market Matters Most | Richard Steinhart, CFO, Bioxcel Therapeutics Nov 06, 2019

Show notes

When asked what sets BioXcel Therapeutics apart from other clinical-stage biopharmaceutical companies, CFO Richard Steinhart doesn’t mention a specific drug or therapy. Instead, he describes a system that the company developed to advance the speed with which drugs are commercialized.

According to Steinhart, the biotech company’s system uses artificial intelligence to reveal “hidden connections” that, once exposed, can multiply opportunities for the application of certain drugs.

“Good drug developers can see first connections between drugs and diseases and they are pretty apparent to everyone out there, but second- and third-degree connections are not apparent,” explains Steinhart, who says that such connections have been too time-consuming and expensive to expose in the past.

“The last company I was with took 10 years to go from the discovery (of a drug to the licensing of the discovery to a phase two trial,” adds Steinhart, who reveals that it was BioXcel’s system for shortening the path to commercialization that first attracted him. –Jack Sweeney

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545: Get in Gear with ARR | Ken Stillwell, CFO, Pegasystems Nov 03, 2019

Show notes

The way Ken Stillwell tells it, his career as a CFO can be divided into two distinct worlds: the world before ARR and the world after ARR.

ARR, of course, is the acronymic identifier for the widely used SaaS metric known as annual recurring revenue. Stillwell prefers to put his own twist on the acronym by declaring its actual meaning to be annual recurring relationships—as in client relationships.

Says Stillwell: “Whatever metric you use to measure recurring relationships is really misunderstood in the marketplace until you start to track it.” What happens next has led many a finance leader to shout, “Where have you been all my life!”

Or so Stillwell might have us believe in light of his evident passion for the metric and the singular emphasis that he places on it when asked about the career chapter that he has opened as CFO of Pegasystems, a firm specializing in customer engagement solutions.

“Once CFOs track it and begin reporting it, its value becomes so obvious—not just the value of the metric, but also that of the relationship with the customer and of the different mind-set and shift that occurs when you are an ‘as a service’ company and of making customer success a key part of keeping that relationship,” says Stillwell, who began his finance career in Price Waterhouse’s audit advisory services practice, which he soon exited to become part of an early PW mergers and acquisitions group where he would become involved in various deal-making activities outside the US. It was this experience that Stillwell says helped to propel him into a number of consecutive CFO roles, including his latest CFO tour of duty at Pegasystems.

“The one thing that’s different about Pega from my earlier experiences as a CFO is that Pega is one of those rare examples where a company is growing both at an accelerated pace—by this, I mean that it’s growing faster than the market growth rate—and also at significant scale,” explains Stillwell, who adds that Pegasystems is quickly approaching $1 billion in annual revenue. “In my previous experience, the companies were typically slower-growing and focused more on operational excellence and how to maximize shareholder value when growing in the single digits. Pega is an interesting mix of both growth and scale.” –Jack Sweeney

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544: Tales of a Finance Journeyman | John Pokorney, CFO, LeTip International Oct 30, 2019

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Few finance leaders have boiled down the take-aways from their career journeys into as many palatable, bite-size portions as John Pokorney, CFO of LeTip International. Having found his original finance door of entry at Intel Corp. in the early 1990s, Pokorney credits the chipmaker’s collaborative culture for prodding him to speak the language of others and tap the power of narrative.

“I wasn’t there to create numbers for the engineering group that I was working with or the logistics organization that I ended up supporting, but I was there to be a business partner—and when you’re a business partner, you have to talk the language of the group you’re working with,” explains Pokorney, who would enter the ranks of entrepreneur CFOs after leaving Intel, where in a span of eight years he occupied the roles of finance analyst, finance manager, and group controller.

Reflecting on a number of different CFO tours of duty, Pokorney is able to quickly bring forth detailed memories of different places and times when business challenges were addressed and lessons learned. While certain ilks of finance leaders have reduced their career highlights to a single stock price or capital raise, Pokorney can be counted among the finance realm’s artful communicators who routinely draws people in by sharing wins, failures, and hard-earned insights. –Jack Sweeney

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543: Whetting Your Firm's FP&A Appetite | Paul Willson, CFO, Compeat Oct 27, 2019

Show notes

After years of careful finance career–building within the healthcare sector, Paul Willson came upon an opportunity inside Austin’s energetic technology start-up community that he found hard to resist.

Becoming employee number 23, he was immediately dubbed “the finance guy”—a label that he would wear for only 5 days before the ambitious start-up announced that it was being acquired by BMC Software.

At the time, Willson no doubt harbored some frustration concerning the timing of his arrival in the realm of entrepreneurial tech. However, in the weeks and months to come, the conventional wisdom that had fueled the tech community’s bravado would be stood on its head as the dot-com crash of 2000 scorched the entrepreneurial landscape and ended the life of many a start-up.

Back at BMC, Willson weathered the storm and joined their finance rank-and-file, where he grew accustomed to the ebb and flow of the technology world before jumping to Convio, a small, Austin-based, technology firm with IPO ambitions. “It was a great experience to build Convio from scratch, and this being 2005 when we started—the early days of SaaS companies—we were looking for any information that we could find on the business model,” explains Willson, who today credits Convio for allowing him to open the entrepreneurial career chapter that he had needed to put on hold a few years earlier. –Jack Sweeney

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542: Now See This: One CFO's Data Visualization Mantra | Tim Zue, CFO, Boston Red Sox Oct 23, 2019

Show notes

When it comes to guessing a person’s email address, most of us would agree that the best way to optimize your odds of success is to first assume that the person was using their actual name as part of the address. From there, your next decision arguably is whether to spell out the individual’s first name or use an initial for it.

For Tim Zue, the calculation behind one guess was a bit more nuanced because although the first name of the person he was emailing was Lawrence, the man was widely known as Larry. With little to lose, Zue addressed the email to LLucchino@redsox.com.

Sixteen years later, Zue is CFO of the Boston Red Sox, and his “initial decision” sticks with him perhaps as a reminder that every carefully built career contains serendipitous moments.

Still, the email that Boston Red Sox then-CEO Larry Lucchino received from Zue did not come from a career-minded controller or accountant, and it was not a job inquiry. At the time, Zue was teaching 8th-grade math in the Boston public school system, and with a summer break quickly approaching, he had a thought: “Hey, wouldn’t it be cool to work for the Boston Red Sox as an unpaid intern?”

Such a thought is not unlike one widely shared today by Zue’s CFO peers, but in this case, there’s one necessary modification: “Hey, wouldn’t it be cool to be CFO of the Boston Red Sox?”

Meanwhile, not wanting to overstate the rewards of a correctly addressed email, it’s probably worth mentioning here that Lucchino’s unpaid intern was an MIT graduate with a prior tour of duty at Bain & Company as a management consultant. –Jack Sweeney

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541: Energizing Your Stakeholder Network | Smital Shah, CFO, ProQR Oct 20, 2019

Show notes

As an Indian citizen living in the United States and working for a Dutch company, CFO Smital Shah frequently spends her days on conference calls with investors from Asia, Israel, or Europe.

On every investor call, at every board meeting, and at every employee gathering, the same question gets asked: “How far is ProQR from serving patients?” Each time she hears this, the firm’s worldly finance leader provides a thoughtful and measured response.

This is a question that punctuates the tenure of finance chiefs inside every clinical stage start-up, and one that Shah says has led her to seek out any synergies that she can between the finance function’s accounting and compliance processes and ProQR’s greater goal of creating medicines for patients who suffer from rare diseases.

Shah asks: “How do we facilitate—within the confines of finance—what we need to do in order to achieve this?”

ProQR expects to have collected the necessary data from its ongoing clinical trials to seek out approval for its new medicine from the Food and Drug Administration by early 2021 or perhaps sooner.

As for the “confines of finance,” any functional borders within ProQR have clearly already been breached by Shah, who implores her finance team to regularly listen to those beyond the functional boundaries. “This is about understanding that you as an individual contributor cannot always affect the magnitude of change that you want. Change will depend on your team and all of the stakeholders around it. So I think that this is about stakeholder management and truly listening to all and realizing that you achieve impact as a group,” explains Shah, whose finance leadership mind-set is perhaps the offspring of a borderless career. –Jack Sweeney

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540: When the Whole is Greater | Lucy Rutishauser, CFO, Sinclair Broadcast Group Oct 16, 2019

Show notes

Like a savvy investor, Lucy Rutishauser built her early career by carefully tracking the activities of different companies. Sometimes, to glean better insights, she would actually cold-call a company and ask for the finance department. But Rutishauser wasn’t looking to invest money—instead, she was looking to invest that all-so-valuable commodity known as career-building years.

“The take-away here is that as you are growing your professional career and moving from job to job, it’s crucial that the decisions that you make be valuable to a future employer and not just great for your bank account at that moment,” says Rutishauser, who would join Sinclair Broadcast Group after placing just such a cold call back in 1998.

Providing some additional background on what led her to originally place the call, Rutishauser explains: “I had been reading about Sinclair rolling up the industry and driving industry consolidation. They were located here in Baltimore, which is where I live. I figured that they were probably going to need an assistant treasurer, so I cold-called them and created a job for myself.”

While Rutishauser had successfully identified a hiring hot spot inside Sinclair, she sensed that the growing company appreciated her willingness to open the door and take some initiative—and would perhaps be open to more job creation down the line. “I selected a job that filled gaps in my background because Sinclair, being a smaller company at the time, really let me do a lot more than what a traditional assistant treasurer would be doing,” she recalls. In 2016—nearly 18 years after she placed her cold call—Rutishauser entered Sinclair’s CFO office, where she has already helped the media company to open a new chapter of growth – one that only last month led Sinclair to triple in size. –Jack Sweeney

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