What’s it like to be the chief financial officer at a fast-growing, industry-disrupting startup? How does a CFO deal with the startup mindset?
If Brad Dickerson, CFO at the meal-kit delivery startup Blue Apron, and Chris Nielsen, CFO at Redfin, a web-based residential real estate brokerage, are examples, the experience is exhilarating. But it’s also like walking on eggshells.
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“A lot of my job is about how do we keep the great things that made the business what it is today and continue to make processes and tools better and more scalable for the future. And it is an incredibly fine line to walk,” said Nielsen, who before joining Redfin in 2013 was at Amazon for seven years, most recently as CFO of Zappos.com.
“The seemingly simplest change can set off a cultural reaction that is unexpected,” he added.
Dickerson of Blue Apron also zeroed in on the CFO’s responsibility to “architect the processes, reporting structures and teams” that help put a fast-growth startup on sound financial footing. In early stage companies, that job is “a lot of fun and energizing,” said Dickerson, who was CFO and COO at sports apparel maker Under Armour, before jumping to Blue Apron 10 months ago. As the No. 2 executive at Under Armour, Dickerson helped guide the fast-growing startup through a successful IPO.
Blue Apron, founded just four years ago, now ships over 8 million meals a month in the U.S., has 5,000 employees and is still in high-growth mode. Employment “literally changes very day,” Dickerson said.
“The value you can add at that [early] stage is exponential month to month,” he said. “At a certain point, when the organization has more people, it is a little tougher for the CFO to add that kind of value. You go from architect-and-building mode to maintenance mode.”
Learning the startup mindset
Dickerson and Nielsen were featured speakers at the recent 14th annual MIT Sloan CFO Summit in Newton, Mass. This year’s event, “Always on: The Digital CFO,” focused on what CFOs must do to speed up and safeguard their companies’ transition to digital businesses.
Conference speakers discussed how siloed processes, legacy technology systems, outdated compensation structures, change-averse employees and corner-office isolation can conspire against making the leap to digital CFO. Indeed, CIOs would have felt right at home.
In the event’s closing interview with Dickerson and Nielsen, the audience got to hear from two CFOs at startups that were born-digital. Here are two key observations about life in the digital fast lane:
- CFO as data point connector
As an e-commerce, subscription-based business, Blue Apron is in “constant contact with customers,” Dickerson said. Customers not only visit the website to choose their meals but also to notify the service of any changes, such as travel plans that would change delivery. “We are literally interacting with subscribers every single week,” he said.
In its four-year lifespan, the company already has 200 weeks of information on subscribers. All that information, combined with data on customer satisfaction, customer loyalty, and operations is fed into the company’s forecasting. “The interesting thing is that in some way, shape or form all these data points connect. Sometimes the connections “happen naturally” and when they don’t, Dickerson said it is his job to connect the data points.
Redfin’s Nielsen agreed. “I do think the role of the CFO increasingly is to provide that kind of connective tissue for all the data. It is difficult to succeed today as a CFO, if you don’t understand the broader metrics and how they could be better.”
- CFO relationship with CEO
Nielsen, who has an undergraduate degree in industrial engineering from Stanford and an MBA from the MIT Sloan School of Management, said one of his top priorities upon joining Redfin was to figure out the rhythm of the business, and in particular, of his CEO boss:
“It’s important to know what they are interested in, what they are not interested in, what are the pieces they like to do and what are the pieces I am going have to do,” he said. “These are important things to do in any job but are particularly important at founder-led businesses, which tend to have a very strong cultures and viewpoints.”
Blue Apron’s Dickerson said the CFO “balances out the energy and passion” typical of the leadership at fast-growing startups:
“Sometimes in founder-led organizations, people tend to see things in a certain way because of that energy and passion; they are often very optimistic about the business, but there is also paranoia — which I see as a good thing — and hyper awareness of the competition. The CFO has to balance out that energy and make sure we are looking at things that they might be missing.”
Indeed, providing that balance is intrinsic to the CFO role, Dickerson said, whether one is tempering the startup mindset or providing guidance to established companies. “We joke about this sometimes, but the CFO has be the adult in the room.”