A Whole New CFO Job in Startups
The Old Job Spec is Simply Outdated
Often, when a startup is positioned for a large funding round, investors recruit a seasoned professional as the finance and accounting leader. Typically this is someone the investors have worked with before and inherently trust, but this leader also needs to instill the promise of future greatness for the business.
Unfortunately, these days, the CFO job description is outdated.
The CFO still oversees the day-to-day aspects of finance, accounting, legal (including IP and taxes), HR, IT, real estate, and a wide array of operations roles. Additionally, the modern CFO often plays a large part in (or may be in charge of) significant company processes and policies.
These can include PTO (paid time off), sales commissions, travel and entertainment budgets (T&E), employee referral programs, and other related policies. Often CFOs are involved in these from the ground-up.
The CFO also drafts agendas for the meetings of the company Board of Directors (BoD) and Advisors (BoA), executive presentations and schedules, and helps with committee management—especially the audit committee. This person often sits on budget and “Deal-Desk” committees.
Finally, when it’s time, the CFO usually coordinates the company’s international expansion, including leasing office space and manufacturing plants, overseeing operations, cross-border transactions, transfer prices, customs, etc. This person’s most important role is likely overseeing the tricky process of international hiring and firing.
CFOs are generally conservative in fiscal matters and, as a rule, avoid risk, leading some to dub them the “CF-No” of the organization. This is an unfair moniker.
Enlightened, rapidly-growing companies recognize the CFO as a master deal maker more likely to be known as the “CFO-Yes.” In these companies, the CFO helps make the quarterly numbers by going out on sales calls and helping with deal structure. While most CFOs are not gifted in the art of sales or technical knowledge, they are often voices of professional and ethical leadership for the company, and their presence can positively impact a sales presentation.
One caveat: while the CFO who embodies all the traits I’ve outlined above may be ideal, they are ideal for a business world that last existed about three years ago. Today’s CFO has all those requirements, and a few more. They are:
Continuous Driver of DEI (Diversity, Equity and Inclusiveness) – Helping to realize the DEI goals on the BoD, BoA, ELT and among all employees. With all companies having the objective of building an elite team, driving DEI takes on a new meaning.
Board Facilitator. In addition to the duties outlined above, it’s critical that the CFO connects and communicates regularly with the BoD and BoA members. This role is an extension of the CFO’s strategic and tactical responsibilities. It is also a function of their partnership with the CEO and the need to be proactive on many issues – especially financial and accounting rules and practices.
Ethics Guardian. In today’s political client, being among the company’s ethical leaders is not enough; the CFO safeguards company values and culture through processes like standardizing remote work brought by the COVID pandemic, implementing diversity initiatives, etc.
New Standards Advocate. With millennials and Gen-Z demanding work-life balance and transparency in everything, today’s CFO encourages the employee community to do as they do: Maintain a healthy work-life balance.
“CF-Know” with Situational Awareness. Today’s CFO must think strategically and globally about many emerging topics, such as COVID, vaccinations, and prevailing vax-politics; the war in Ukraine; supply chain economics; labor market developments, (e.g. “the great resignation”), and macroeconomic trends like interest rates, valuation haircuts, the state of the VC and PE markets, etc. In addition, the CFO needs to be attentive to social and cultural changes and conditions which may impact sales, marketing, product acceptance, etc.
Company Culture Caretaker. In startups, in particular, the CFO in many ways take the place of company founders in articulating and maintaining the company’s culture.
The Humble CFO. Today’s CFO encourages two-way communications, is empathetic to allemployees and encourages the view that ELT is the prime structure of a company’s power and authority – not the two-headed CEO/CFO beast of yesteryear. In short, they leave their ego at the door.
Data Tsar. The CFO is both the gatekeeper and enabler of data, KPIs, and OKRs in today’s data centric startup.
Cyber-Security Enabler. The CFO has become a critical enabler of security – especially cyber-security.
Social Media Communications – Leveraging the CFO’s network – especially via LinkedIn and Twitter – can be very helpful to the company’s brand, marketing and sales teams.
Creator of New Playbooks. A cyberattack, a social media faux pas, monkey pox, cyber-currencies’ whacky valuation gyrations – our age is full of all kinds of new challenges that need a playbook to provide a range of responses. Today’s CFO develops, deploys and communicates new playbooks to meet these challenges.
MBAs, especially those from schools with strong accounting and finance programs, are increasingly valued for the CFO job he CFO with an MBA is more likely to have been exposed to these issues, and as a result be better equipped to meet the new challenges.
One telling comment on today’s CFO came from a friend, a relatively recent MBA graduate, who told me: “The CFO should be more of a playmaker – like you find in basketball or football. The best CFOs enable leaders, on ELT and Boards as well as investors, to make effective and prudent decisions. They do this by setting guidelines, establishing frameworks, and providing data, analytics, and recommendations.” The CFO, he concludes, “holds the compass or GPS for navigation; they do not drive the car – like the CEO.”