hi all, I was previously the deputy CFO of a US-listed Internet company. My role included IR, M&A, but not FP&A. I joined right after the IPO, and missed out on the lessons of take a company public. We grew the company's stock price by 5x in 2 years, through non-deal-roadshows (NDRs) and M&A. It was a hard slog but I've learned some great lessons on what to do and what not to do. Mostly, the company was hampered by mgmt's lack of transparency and openness. I think IR is given a bad rap, and it was a pretty fun ride. I liked that what I was doing translated to our stock price, and consequently to my own equity's value. Put on a good roadshow, and you might have made some real $ in your bank account. I think M&A at our company was more difficult given how small we were, and how we were basically buying apps to bolt-on to our platform. This seems like a decent role if you can get to a bigger company, and if you're in tech, with the high volatility and potential upside, can be super lucrative. Happy to answer any questions! -Scott
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What are you doing now and what you did before the role?
I was in investment banking before, in ECM, which has served me well.
I'm in between things now, looking to join another tech company in similar IR/corp dev capacity.
The reason is that there's not so many of those corp dev + IR jobs.
Once that last job ended (company imploded) it has kind of kicked me into standby mode.
thanks, just gave this a bump, should see more questions come in
Thanks Andy. Happy to try to help!
Hey there, I started my career in IR. As I am looking for other areas to now transition to after being in IR 3 years, what sort of experience would you recommend to eventually land some sort of CFO role like yours? B school? Aim to keep getting promoted and move to another group once that slows down?
Thanks in advance.
If you're just staring out, you'll want to master financial modeling as if you yourself were an ECM investment banker or equity researcher evaluating the company.
That way if they ask you "why are your DSOs shortening" or "tell me about your cash cycle" you won't get caught flat-footed.
You want to be able to own the interaction with smart investors/analysts. I had the advantage of being from an ECM background. The best IR/CFO people tend to have a strong finance background. Otherwise you're just glad-handling.
Also you'll want to get really good at making presentations - both written and up in front of a tough audience asking tough questions.
Once you've gotten the finance and modeling lessons down, practice publicly presenting your company in front of your friends and have them pelt you with questions.
Thank you sir that is great advice. I really think the IR skill set is necessary for an external facing CFO but that definitely goes hand-in-hand with gaining that appropriate experience technically as well. As far as an internal transfer, would you recommend FP&A or Corporate Development? External ECM opportunities I feel are more difficult to come by because I don't have that technical background quite yet.
I was hoping to transition to IB/Corp Dev soon to get more technical experience which I feel would finish my profile nicely. Worst case scenario I think I could do T7 MBA and recruit as an associate. In the meantime I'm working towards a CFA designation.
Scott,
First things first, thank you for taking the time to make this AMA.
I would love to know how you jumped in to the CFO role, what you used to fill in your knowledge gaps, and how you handled the initial transition. My friend from undergrad has started a company, and said company is suddenly getting a lot of attention. He has not previously had any internal finance support, and asked me to build him some operating models and cash flow projections. Those were apparently well received by his partners and BoD, and now he is asking if I want to come on board full time to help them raise funds and be an interim CFO, with the potential to take on the role fully after the cap raise. Im at a loss for how to even approach the opportunity and think I may be stepping in to something I am in no way prepared for.
Hi X, Sounds like an interesting opportunity.
In my case, I was deputy CFO, and was hired and brought in by the CFO.
CFOs usually get 1% of the company float, in the case of an IPO, and I joined right after the IPO, so I got about 0.5% of the company float + a base salary that was about 1/2 that of banking.
In terms of closing the gap, I still have a lot of gaps in terms of FP&A functions. Mostly I was doing IR and corp dev/M&A, which is more akin to what I did in banking.
I didn't have to touch FP&A because we had a good corporate controller and accounting back-office. I am still trying to close that gap now, using Coursera and other open resources.
S
Thanks for doing this. I'm very interested to hear your thoughts.
Do you see yourself progressing to a CFO role at some point? What are the biggest hurdles to becoming a CFO? What are the merits of the path you took vs. transitioning from IB at a lower level? Do you have an MBA? if so how has that helped your progression? If not has that held you back?
I would like to progress to CFO, but the challenge is that there's a lot of qualified candidates at the CFO level jockeying for CFO roles. That makes it difficult to move up from deputy CFO to CFO laterally. The biggest challenge in the role is not so much doing the job, but rather getting the job. Any potential IPO in a tech company has a lot of candidates swarming, wanting that sweet, sweet equity.
Yes, I have an MBA. The MBA helps to an extent for market and internal validation but I don't think it's given me an edge per se. It certainly hasn't held me back though.
In terms of transitioning, I was hired in from IB, but I was already a VP, so I can't really make an assessment about coming in from a lower level.
The bigger challenge is that the company more of less imploded, and it's been tough to find another similar role, so I'm kind of out of the loop. As a deputy CFO, no one in the industry really has me on their radar.
The CFO however has moved on to his 3rd tech company since as CFO, and is basically being brought on as an IPO CFO, and moves on after 18 or 24 months. He picks up a lot of equity that way.
Do you see automation replacing common office jobs in finance?
Do think there is a potential for automation to create new jobs in finance or do you think it will decrease the number of positions available?
Lastly, do think there will be more major tech companies that could come about that could rival with the likes of Google, Facebook, and Amazon?
Can you get my CFO to stop working me into an early grave? Thx for the help in advance.
Gosh so many ways. Push him down a flight of stairs, frame him for a crime, make any of a number of "accidents happen" happen.
A less aggressive approach might be to slowly start introducing sedatives into his coffee.
How's he working you into an early grave?
Our responsibilities in corporate FP&A have essentially doubled during the last year and we are actually down a headcount (requirement for detail has gone up tremendously). In the meanwhile we have also been implementing new software for our work with me taking the lead on what weve done thus far and taking 90% of the load. Meanwhile other areas of the business have gotten more resources and get to stick to a 45-50 hr week lol.
Thanks for doing AMA. Wanted to ask you a few questions:
I don't feel comfortable around FP&A responsibilities or accounting. But I feel ok communicating our story (including financial positions) to the public market and institutional investors.
Thank you. That was very helpful. Much appreciated.
Also, a lot of my time was spent explaining our technology and its industry relevance to people who were not terribly knowledgeable or tech savvy.
Plus we had an edge-tech type of product so I'd say 70% of the time was really focused on product and tech rather than our company.
What do you enjoy the most about your role?
Would you still have gone down the IB route?
How many years are you out of college?
Thanks man
I liked learning about new technologies and presenting them to intelligent thinkers, like HF managers and equity analysts. I liked having interesting conversations with others. I liked the travel for roadshows.
In hindsight, yes. But that's mostly because there's so few good roles in tech companies, and after my employer blew up, it harmed my CV, and I've not been able to find an alternative. Obviously sitting in IBD and collecting salary would be preferable to that.
I was 10+ years out of college and more than 6 years post MBA.
Would you consider jumping back to IB? Or only looking to be on the corporate side?
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It depends on the company. My employer was still a startup and was very acquisitive, so my focus was M&A rather than FP&A. So in my case, having the M&A background was a must. But in other cases - perhaps later-stage more established and largescale business - perhaps M&A would be less relevant, and FP&A would be more relevant.
Well, most traditional route would be ibanking or PE then transfer to a corp dev role. But if you hustle maybe someone will value what you're doing in advisory and give you a chance. it's a relevant skillset but just less the traditional route in.
In that case, maybe wait and see if they deliver on your preference. Don't jump ship unless you have a good offer in hand.
Hi Scott, I'm curious about your transition from ECM IB to your current role.
Is there any recruiting season for this role? Like IB -> PE? Or you just came across the opportunity and decided to pursue it.
How about the hours? I know it's probably better than IB but would you mind sharing an estimated number?
Do you think technical qualifications like CFA, CPA, ACCA would give an edge gunning for this role if the candidates don't have IB/PE background?
Hi Luke, There is no set timetable, as the role basically came about as a result of the company deciding to go public (or in my case, recruiting me to try to fix their disastrous IPO after the fact). Such jobs (including that of a CFO) come about on an adhoc basis as a result of evolving company needs, not a specific cycle.
CFA, CPA, ACCA would definitely help if one was gunning for such a role. Prior experience in M&A, ECM and /or FP&A would would be helpful. Not having FP&A experience has hindered me.
Are you interested in non-tech roles? If so, let's connect!
Thanks. i'll send you a direct message
Please don't view my questions as attacks. There are obviously a lot of tech companies that don't succeed and I'm curious what the strategy and thought process looks like on the inside.
What were the main contributors that led the company to ultimately implode? Do you think some of your M&A decisions contributed? How did you evaluate M&A targets? did you have an IRR threshold? payback requirement? or was it just technology focused? Was the company generating cash(assume not given the implosion), and if not, did you have a path to positive cash flow that you'd lay out for the street? did it change as time went by? How receptive were investors to the company spending cash on M&A? How much creative freedom did you take when telling your story to investors (i.e. how much embellishing, or leaving out certain facts/white lies are involved?)
Hi Scott
A few questions:
1) Just curious since you came from an ECM background, how did you pick up financial/M&A modeling, doing DCFs and evaluate M&A targets?
2) What courses from Coursea and other open resources have helped you so far in helping you do well in your job?
3) Why did the lack of FP&A experience hindered you? Is it because you never had experience doing a full-year budgeting exercise?
I picked up a fair bit in undergrad finance classes, my MBA, my time in banking which did have basics, and BIWS. I'm still weak, but not from lack of exposure but rather a lack of talent.
Wharton has their whole core curriculum on Coursera Because I just don't feel as confident about our numbers as I think I would if I had a better understanding of what went in to them. Remember, these are roll-ups of revenue from different lines and geographies, and then these flow into the financial statements and schedules. I have to go opine on these and pontificate about them, but I didn't put them together. THAT'S a problem.Hi Scott
Thanks for the reply!!!!
Hey Scott,
I'm a Junior trying to decide what path to take for my summer internship and my early career and would love your advice.
I currently have offers for an FP&A role at a F50 company in TX and a buy-side equity research role at a BB asset manager in NY.
The corporate role would lead into their 2 year rotational program and the ER role would lead to spending 3 years covering an assigned sector.
My goals are to work in the finance Dept in a corporation, so obviously the FP&A role would give me the more direct path to that but I'm worried about the potential to not move up very quickly. If I did the ER role I'd do an MBA after the 3 years and jump back to corporate.
There's obviously no right or wrong answer but given your experience what pros and cons can you see about either path?
Thanks!
Which do you feel more excited about? What work fills you up and brings you to life?
Where do you derive meaning?
Good questions. I'd say I'm much more excited about the FP&A opportunity since it's in tech and in a location that my wife and I could see ourselves settling down.
I guess the only real reason I'd go to the BB is even though Im not excited about the work, I'd learn a lot and it could set me up nicely for business school.
I guess the underlying thought Is I don't want to work at the bank but it seems like it'd crazy to turn down a name like that.
How important is tech/product knowledge in a CFO type position? Do you have to be pretty knowledgeable about tech trends, lingo, have industry expertise?
Sorry I know it's kinda a vague questions.
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