Startup CFOs - The Renaissance men

In the past, a CFO was known to be very conservative and somewhat non-aggressive in his nature. However, there's been a major revolution of sorts as a young generation of startup CFOs have taken over and brought back a much more creative and forward-thinking set of skills to the table. Having a startup CFO (SFCFO) is not just a necessity any longer, it's becoming more and more the exception as these young CFOs are finding themselves as more leaders than followers. Here's a quick list of traits and skillsets we are seeing across the entire spectrum of the startup CFO. As you start reading on, if you could quickly describe our current 'CFO landscape' using the following four traits, what would it appear to be?

A. 'Mature for his age'

B. 'Daring and adventurous'

C. 'Extremely well-versed in accounting/finance

D. 'Always up for the adventure and willing to try anything once'

It would probably appear to an average observer that most CFOs will have the traits A or B; the more senior of the bunch having the A and the younger having the B. At some point, it's likely a CFO will have reached 'the level of experience and sophistication in his/her field that could easily be mistaken for trait D in 'adventurer' or trait C in accounting. As a startup, we need to keep a close eye out for when the CFO stops being a young entrepreneur and takes on the role of an 'Accounting Legend' on our CXO team... if you were the CEO, what would that be like?

I personally grew up thinking the CFO is the "old guy" of the business until I began working.

As it turns out, CFOs are some of the most creative creatures when it comes to the business side of things, and often the most willing to adapt to the changing environment around them. There is little doubt that as more and more CFOs reach this level, they have a responsibility to teach the rest of the team and to 'get the vision right' when it comes to innovation and growth. In the next paragraph, what do you think the roles of the CFO and CXO should be? Have they evolved to this point, or is it always going to be the same?

What the role of the CFO looks like in my mind, is it's constantly evolving as a team grows.

To me, it always will be a team effort. In a good case - one with a CXO that is not constantly changing focus, there's little reason why CFOs should be expected to go beyond their current responsibility as Accounting Guru. They will probably play very close to home when it comes to the basics of the 'basics' of the business - finance, operations, marketing, sales, etc... But, as your team gets larger, the need to 'get to the vision' of the business should be a part of a CFOs portfolio when thinking about what 'growth' requires. The CFO is in a prime position to see the vision of growth, and it's their job to 'put together the best team' to follow up on that vision.

So - what does the future CFO vision look like to you? What should he/she be looking for and how should they adapt as a CFO to these new expectations?

A lot closer to the startup world, and being more creative.

More focused on strategy and the long term.

A CFO should start to see the vision before ever getting into the 'nuts & bolts' of doing it.

Adapting to the change around them as both a player and a leader within the business.

How much 'wisdom' or 'vision' do you think each of the following is going to ask of a CXO?

CXO #1: The CFO has a pretty good sense of how we'll need to adjust to achieve our company vision.

CXO #2: The CFO has a pretty good idea of what we're trying to do... and wants to help make it happen.

CXO #3: I can see that there's a vision, but I don't know what it is...

CXO #4: I have a vision, and I have a pretty good idea where we are going, but I have a lot of unanswered questions as we go forward.

I would say 2 is probably about right, with one being somewhat of an 'average case'. Let me try to take a step back and offer some historical perspective in reference to CFO responsibilities. I think that the current expectations of today's CFO are a reinvention/adaptation' of the CFO of yesteryear, as we now have a much larger view of the entire business, and must begin to think more strategically than previously. The CFO of today needs much more 'integrative thinking' than just the financial statements of your organization and the ability to forecast future income.

In the old days, CFOs used to be strictly responsible for financial statements. There were some who would take a holistic look at the organization for what it was, which would be its ability to make a profit and grow the numbers. Today, CFOs must take part in the strategic planning process of the organization, and not just the planning process, but also the execution of it.

As a startup, if you want to take on an SFCFO, and want that individual to be 'the one and only responsible for 'all things' involving finances, it will be very difficult to pull off. We are not all CFOs of companies this large and/or complex. There are many reasons for this - but in my opinion, it's because CFOs just aren't 'old guys' anymore. While they still have a lot of 'traditional' finance-mindedness and accounting knowledge, it's a new world out there. Our role and responsibility as a CFO, is evolving at a much faster rate than any other area of the organization, and we, therefore, need a better and more integrated 'portfolio' of skills to pull it off.

I think part of the reason why Startup CFOs have begun to dominate our organization is the increasing complexity of today's businesses. I have heard this statement made by many many people. The complexity of our businesses and the volume of work that goes on in them is so far-reaching now, that it's simply out of reach to even the most senior-most CXOs.

Does all this make Startup CFOs renaissance men?

To me, as the complexity of businesses and the volume of work is growing, more and more the CFO should be in a position to be involved in all aspects of an organization.

If you were to look at an organization the day before it was sold to its VC, and ask what will the CFO be responsible for on a 'day-to-day' basis, you would probably see the following roles for that individual:

Accounting / Finance Leader

In all organizations, the Finance leader/team will be responsible for the following:

The 'accounting' of the company - managing the books and providing financial information to the sales and business teams. This will be on the most basic accounting aspects like Balance Sheet, Income Statement, Cash Flow, and the like.

A CXO will be expected to have an accountant to work under, in large part as a consultant, but this person is also responsible for getting his/her team 'up to speed' in these areas. This person is in a large part responsible for providing strategic advice to the CXO.

Market / Sales Leader

In some ways, this role can be thought of as the CFO of the company when it's "in operation". This is where all strategic discussions / planning with the team will occur.

This person is responsible for providing a vision and roadmap for your team, and ultimately it's the team who will be required to execute this vision.

Technology / Data Lead

This is a role similar to the market leader, but instead of only 'vision' where the team will go, the CFO will be responsible for the actual 'implementation'.

If the CFO sees that his/her team is going in the wrong direction, the CFO can stop the direction and help to get the right one in place.

If there is a better technology solution on the market, that would make life simpler and help the company grow, the CFO can recommend a move to said technology and then follow up when it's implemented.

This is a relatively new role in the technology side of things so it's still developing.

Many Startup CFOs are also very strong Technology / Data / Social Media / Marketing leaders, which allows them to bring their own strong point of view from these areas to the table.

Management / Leadership Lead

In larger organizations, this individual may be thought of as the 'Operations lead' or an example of the 'Vice President of People'. Regardless of how you want to think about them, this role is the 'Manager' of a group of people and will be more than a CFO of a small team.

Because the startup CFO needs to do two things, they often need to be able to lead a team and they need to be able to 'think like a leader. This combination allows the CFO to manage very large teams effectively

I think this is a combination of the previous 4 roles depending on the company, but will all function the same (though may have different names in the organization)

This individual is in the business of helping each of the organization/teams be successful, as well as being successful as the CFO.

There are some very successful CFO of Startup companies, that still maintain a strong technology direction, Marketing / Strategy focus, and so on. The more varied your background, the more flexible you will be in terms of the market and 'how' you 'do' things in an organization.

Having a 'big picture view is helpful for these, and is critical in an organization that is growing at a fast rate.

As the complexity of a company grows, the CFO needs to be able to take a large view of the organization and take actions to meet the goals of the sales, business, team, shareholders, etc.

Final Thoughts

As CFOs become more adept at the operations side of the organization, they are increasingly becoming more strategic leaders.

So the future?'role' of the startup CFO will be a combination between:

Managing the operations in a large scale startup

Being in the 'front office' helping to create and drive the strategies of the Sales team

Being in the 'back office' ensures the success of the organization and the strategy

Being involved in the technology and data

Having a 'big picture' strategic view

Ultimately, I have seen some CFOs who started at the bottom performing well while working their way up. As I've mentioned, the more varied the background of a CFO, the more flexible he will be for the particular organization he works within.

Regardless of the way that the new generation of CFOs is being utilized, it's clear that these individuals have a unique position in the modern-day business environment.

As the 'operations' of the organizations grow alongside the strategic side, CFOs will have to continue to be more versatile in their management of operations and strategic direction. The CFO will be responsible for managing the people and teams, the sales and growth strategy, and the company budget. This makes the CFO a renaissance man' at all levels of management.

Can be reached via email - [email protected] or a private message on LinkedIn if you would like to discuss this topic further.

You can also visit my blog at www.financepsyche.com