(6:55) Friar: Don’t think about hiring a CFO, but a leadership team that has the skillset you need.
(7:17) Friar: Don’t just hire for what you need today, but for what you’ll need in 2 years time. And your mind should be there too.ù
(7:55) Friar: The CEO-CFO is a partnership. Think if you could stand the other person for long periods of time, because that is what will happen. In heated moments like an IPO you must have full trust in that person. If it feels weird and you can’t have a conversion like you would with a friend, don’t hire them.
(8:37) Friar: Hire someone that is not like you, that has different skills and point of views. You don’t always have to agree, actually it’s healthy to disagree and have arguments as long as you feel comfortable doing so.
(10:00) Child: Wait until you have product market fit to hire a CFO. If you haven’t figured that out already, a CFO will only tell you how scary every option is and how you shouldn’t do it, which is the opposite of what you need.
(11:32) Friar: The CFO is responsible of figuring out what are the right metrics that show that the company is doing well and has a long runway and potential, but that must also work well internally.
(12:35) Friar: A good company is data rich, focuses on cohort analysis, and is able to identify what metrics are meaningful for the real growth of the company. Identify the drivers of your business. Looking at the metrics daily or weekly is too often, but on the other side a quarterly cadence is not enough because you wouldn’t be quick enough at reacting.
(14:40) Child: Jeff Bezos at Amazon used to say that people have a bias toward pleasing the CEO, so any metric analysis would show that they are doing a great job (it’s easy to lie with numbers). He wanted a truth seeking culture, and challenged every number that looked too good or too bad, to ensure it was correct. Amazon had a lot of data science functions under the finance team, and they job what to tell like it is, without bias.
(17:10) Friar: To decide when you need to fund raise, you must first be able to forecast your cash flow, understand for how long you’d be able to run and how long fund raising would take. On the other hand a CFO must always have a good feeling of what the VC market is like at any time.
(19:32) Friar: When raising money, don’t worry too much about dilution. If you’ll be a big company that won’t matter too much; it’s better to do the fundrasing quicker and be done with it. Have a clear idea of how much you want to raise and what investors you want though.
(20:50) Child: Staying private rather doing an IPO is just easier in terms of administrative work, and getting capital doesn’t need to go public either. For some companies going public is a branding event, because most great company eventually do it. Don’t go public if you can’t forecast the next years, because the market hates volatility. And if you are thinking of going public, be prepared to spend a lot of time dealing with all news and rumours that will be published about you; for example you’ll have to explain a lot of things to your employees every week. Nowadays many companies go public when they don’t really need the money, and actually the market doesn’t reward companies that go public for that reason.
(24:25) Friar: If you’re a public company, help your employee focus on the long run, on growing the company and having a business, rather than focusing on the noise of the market. Being public means that all financial info are also public, and the transparency help people get away from stock watching and go back to their work.
(27:00) Friar: To improve your forecasting, drill down to the variables where you’re the least accurate and understand why. People with an engineering, or private equity VC background are better suited for this sort of thinking so try to hire people like that to help on forecasting.
