How to Start a New Role as a Seasoned CFO, with Niels Boon from GOODIEBOX
I think that it’s quite important in general to have a real financial mindset or a financial consciousness in the company. This is what I try to do as a CFO, so that people start thinking in numbers and business cases.
With an extensive background in investment banking, strategic consulting, and tech, GOODIEBOX CFO Niels Boon is well-versed in making financial decisions across diverse sectors. His passion for finance had an early start - at just 13 years old, he called up local banks to make investments over the phone, and researched investment options and strategies at the local library.
He began his career as a strategy consultant at McKinsey, then later pivoted to tech companies, starting with Zalando in Berlin in 2012. Niels says that when he’s looking for a CFO role, he’s always picked products that he can “stand behind,” which “really make a difference in people's lives”.
He’s now been at direct-to-consumer subscription-based e-commerce company GOODIEBOX since September 2020, and we had the chance to chat with him about his past experiences and latest endeavors as CFO at the e-commerce lifestyle company.
Below are our highlights from this episode. Let’s dig in.
Choosing the right company to work for
“I'm mainly looking for products that I can relate to, which I think really make a difference to people's lives - ideally something positive. Some product that you can stand behind, and of course the business model matters as well. As CFO, a big chunk of work is typically either to defend numbers to investors or to convince investors to invest in your business.”
“So the first important step is to convince yourself, of course. That also comes with having a good connection with the founders and determining whether you feel that the things you come up with are going to be accepted and appreciated by the rest of the management team. This is especially the case with founders, who are often also board members and shareholders at the same time in the startup world.”
Optimizing a new system for financial data
“In the beginning, you don't want to come into a company and say ‘Okay, everything is wrong and now we have to do it totally differently’. I assume that things are there and done in a certain way for a reason. The first thing I always do is just observe and learn how things are going, but also ask questions all the time.”
“Typically the issues with financial data are: 1) the existing data comes from different sources, and 2) it all needs to speak the same language. Often the data comes from different tech platforms, different payment providers, or is delayed from other sources. This takes a bit longer to tackle, but in the end it just needs to come together into one number.”
“That process has to be automated, as you want these numbers fast. So, it’s quality on the one hand and on the other hand, you need quick accuracy to be able to make financial decisions faster. This is a process that has been going on for the last couple of months at GOODIEBOX and we're close to finishing it. From then onwards, we can improve things.”
Subscription-based vs other e-commerce business models
“The difference with Zalando or any other e-commerce player that isn’t subscription-based is that you don't necessarily know when people are going to buy products because it’s the customer that decides.”
“Whereas with the subscription model, you already know exactly which date they're going to buy something, because you decide when you ship the product and you decide which products you're going to ship.”
“So we have kind of a captured audience of people who already paid or will pay every month for the next 12 months and we can decide what we put in that box every month.”
“When it's a recurring subscription, you can make stable predictions by viewing cohort analyses, how many people have subscribed every month, and then do an estimation. You could more or less look into the future and say that in five months from now, we should have roughly so many new members in this country--therefore we need so many boxes produced, etc.”
The two extremes of fundraising
“I think there are two sides to every coin, right? Fundraising is always exciting to do, and I've done it for the last seven years - I haven't not been in a round. I've done so many rounds and I’m always in some kind of process, but I think the main differentiator for me is whether you’re choosing to do a round or if you have to do a round of fundraising.”
“For example, you probably need to do a round if your burn is too high and you're running out of cash with only six weeks of runway left. However, if like GOODIEBOX you have your finances under control, the situation is in your own hands as you’re profitable already. Given the cash situation, you then can decide to reinvest all the money that comes out directly back into the business for maximum growth.”
“Ideally of course, we raise money to grow even faster and accelerate the roadmap of whatever we are planning to do in the future. By raising money now for the next couple of years, we can hire people in advance before the wave or put more into the marketing machine to grow. So these are the two extremes, and a voluntary round is always better than a ‘we’re running out of money, please fund us’ scenario.”
The most successful element to fundraising
“It’s one thing: preparation. From a strategy perspective, it’s explaining the equity story and why you would need to do fundraising. Many companies typically answer, ‘Okay, we need this because we want to grow.’ But investors will also ask specific questions like: ‘Do you have an investable case with your company?” and ‘Is this a VC case or a PE case, depending on your size?’”
“There’s also the story perspective, where the financials need to be super strict, clean, and consistent--they cannot be changed after the fact, and should ideally be audited.”
“If you have different entities, legally you need to have everything prepared as well, because getting signatures from your shareholders always takes a lot of time. This sounds super simple, but it always happens that just before closing that you need to call 30 people. Three of them are living on an island and you cannot reach them on time and therefore you cannot close the round.”
“Do all these things in advance. Have your data well-prepared, check that your tech is working, and confirm things like GDPR data protection are taken care of.”
“If you don't do this, it takes forever. So the best is to prepare everything and only go out for fundraising once you're ready.”
How finance adds value to other teams
“It's all about being like a close business partner to all the other teams. I avoid having a finance team that's sitting somewhere in a basement or in the corner of the office and just making numbers without speaking with people.”
“The numbers only mean something if you really understand the business well, and therefore you need to understand what the other teams are doing and where the numbers actually come from.”
“I think that it’s also quite important in general to have a real kind of financial mindset or a financial consciousness in the company. This is what I try to do as a CFO so that people start thinking in numbers and business cases.”
“For example, we could hire five people in the logistics team, or we could hire five people in the tech team. Of course both teams have good reasons for hiring, but at a company level these decisions are not easy and we provide financial numbers so we can make better decisions.”
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