CFO 2.0: The Role of the Modern Finance Leader
Great finance leaders may be more in-demand than ever before. With new startups launching everyday - especially in SaaS and financial technology - companies need CFOs to supply subject matter knowledge and build strong businesses.
And as we’ll see, that means more than just understanding cash flow and keeping clean books.
To explore the idea of the modern CFO, we asked Carta CFO Charly Kevers and Spendesk CEO Rodolphe Ardant what makes a successful finance leader in 2020.
In a live CFO Connect meetup - our first in San Francisco - they explained CFO success both from the position of someone in the role, and someone who works closely alongside one.
About our speakers
Charly Kevers is the CFO of Carta, having spent his career in a variety of different roles including finance, investor relations, corporate development, and strategy. He’s held positions in the United States, Europe, and Asia, and served as VP Finance at Lending Club, and Director of Corporate Development at Salesforce.
Rodolphe Ardant is the CEO and Co-founder of Spendesk. He created his first company Woziak right after graduating from university. He sold Woziak and later became COO of Drivy - now known as GetAround, before founding Spendesk in 2015.
Let’s explore some of the key themes and characteristics that our experts identified for modern, successful CFOs.
1. The CFO needs to be a strong communicator
CFOs are more than just senior members of the finance teams. Yes, they need strong financial knowledge and interesting experience, but it’s how they share their knowledge that matters.
For Charly, communication is crucial. “It’s one thing to understand the numbers. But if you can’t communicate these to employees, executives, and the board, you’re not very good at your job. The only reason I still have a job is that the board feels that I’m relaying information effectively. That’s the biggest difference between a good finance person and a good CFO. It’s that ability to translate the numbers effectively for everyone, to be able to adapt your language depending on who you’re talking to.”
Rodolphe agrees. “One of the expectations I had for our CFO was to be someone who could teach our whole company to think like a finance leader or CFO - to make them understand what the daily job involves.”
But the level and style of communication needs to suit the company. As Charly explains, “We’re super transparent as a company. We operate in separate business units, and every employee in each business unit knows exactly what the budget is for that unit. If they generate less, they have less to spend. This really engages everybody on the team to figure out how they’re going to make it work.”
“At Spendesk we are totally transparent with our metrics,” adds Rodolphe. “So teams can think about how to optimize their budgets and also deliver great projects. We deliver metrics from a quarterly perspective, but share these with everyone on a monthly basis.”
2. The finance team is a key business partner
Another clear message from our speakers was that finance should do more than just crunch numbers. As Charly explains, “whatever the role of the finance team member - accounting, treasury, FP&A - they need to deeply understand the problems we’re trying to solve in order to be the best business partners they can be.
“We’re not just trying to follow process, close the books, and do a forecast. Is what we’re doing serving the business and moving the business forward? Do we understand what our company is solving and how we can help? We only have a role if there’s a business to serve.”
And Rodolphe shares this point of view. In the two companies I worked in before Spendesk, the finance team was really there to be the bad cop, to set up processes everywhere. Playtime is over - it’s time to get serious.”
“But I’ve seen a change in this. Now they’re a real part of the business, working with marketing and sales and helping them to see the financial perspective of their plans and projects. Finance teams have analytical skills and knowledge that are valuable and need to be shared.”
3. CFOs and CEOs should complement one other
“I really see our CFO as my business partner,” says Rodolphe. “They’re there to challenge me on decisions and make sure we’re making choices that make sense. I always want to address new markets and analyze potential business opportunities. The CFO is there to point out that there are costs to these decisions, and we need to make sure that it’s really worth it.”
“And when I hired our CFO, one key goal was to hand them large parts of the business management, to move these outside my own scope. That includes things like setting up new offices, and making sure that the business runs smoothly from a financial perspective.”
For Charly as CFO, he sees the exact same dynamic. “I’ve been CFO at Carta for three years. One reason I’m happily still here is the relationship I have with our CEO.”
“He trusts me to take care of a lot of financial aspects and business operations, and to take a day-to-day view so that he can look forward to the next year and beyond. He can challenge me and I can challenge him. We think very differently which is why it works.”
“So we end up making better decisions together. But it only works because I can stop him and say ‘I don’t understand why we’re doing this now. There’s too much risk. Is this a priority?’ He accepts it and is willing to discuss it with me.”
“And similarly he’ll tell me that I’m being way too conservative and focusing on the wrong things.”
Which brought the conversation to the topic of risk.
4. Finance leaders need to manage risk well
This relationship between CEO and CFO often revolves around this trade-off between risks and growth. ”This is one of the main arguments I have between myself and our CFO, begins Rodolphe. ‘As a founder, you can’t be risk-averse. Starting a company is always risky. You’re bold, pushing things forward, and taking new risks. Sometimes it’s too much.
“So that’s what I expect from our CFO - to push and ask ‘are you sure?’ about the directions we’re moving in.”
As Charly continues, “there are more opportunities for risk now that the business has grown, so I have to spend more time as CFO on information security, legal risks, and compliance than I’d personally like to.”
“The process works by defining key goals within the business units. We actually create specific units for new initiatives. And we’re clear from the beginning of the year about how much money we’re willing to burn on each specific opportunity. In other words, how much risk we’re willing to take for a specific opportunity.”
“This makes the conversation a lot more productive. We do this up front, based on the information we have, as opposed to figuring it out gradually over time. And we have enough confidence in ourselves to be able to execute.”
“Teams know from the start the constraints they’re working under. And of course, if something works way better than we thought, we might potentially up the investment.”
5. There’s no ‘right way’ to become a CFO
For those hoping to become a CFO in the future, is there a playbook to follow or a set of rules? Not according to Charly. “I’m not sure that there is a standard path at all. I knew pretty early on that I wanted to be a CFO. I started in Paris as a consultant, then became an investment banker, and then did M&A and investor relations for large companies. At this point I was strongly advised to look into becoming a CFO.”
“I talked earlier about the importance of communication in this position, and I got to work on this in my investor relations role at HP. We were going through a rough period and I got to meet a lot of really angry investors. So I learned how to communicate in a complex environment. So two or three years in this role helped me develop skills that I otherwise never would have built.”
“I come from the more strategic side of things, but I don’t think there’s one path. I have a more strategic mindset, and my Controller is amazing at accounting and loves it. So it’s also important to put those people around me in areas where I’m not an expert. And as long as I ask the right questions, so far it works.”
“The first thing is you want someone who’s curious. You can’t have a CFO who just scans the surface and isn’t interested in learning more. Digging is the most fun part of the job. That’s how you get better, and how you help the rest of the executive team.”
“These days CFOs are involved in a lot of strategic decisions, and if you’re not curious, you’re not bringing much to the table.”
Both in this meetup and in our Mastering Scale series, our experts have emphasized the fact that finance leaders need to be entrepreneurs, too. It’s clear that to be a successful CFO, you need to care deeply about the business model, sales strategies and customer lifecycle, just as much as having accurate books and up-to-date forecasts.
The best finance leaders empower the rest of the company to produce great work. They lend their analytical skills to help managers handle budgets, and they push back when the company roadmap isn’t sound.
The modern CFO is a listener, communicator, and strategist. They push, they mould, and they guide.
In short, they lead.