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In the midst of a crisis, it is common to see companies take drastic measures to save their businesses. However, there are many approaches to keeping a business afloat when market conditions are volatile.
Jorge Lluch, Abacum’s COO, sat down with David Wieseneck, VP of Finance at Demostack, to discuss how finance teams can be a pivotal player to surface insights and drive decisions towards growth, without compromising on capital efficiency.
As a seasoned finance professional, Dave shares his secrets on how to help finance leaders drive priorities, avoid roadblocks, and make a real impact on overall business growth.
Macroeconomic factors have changed the way companies fund, measure success, and decide which markets they want to invest in. Although the current economic environment is a big player in the performance of a company, it is not all doom and gloom; there are ways to navigate this period and still achieve your goals.
Jorge: Let’s start by discussing your personal work experience. How did you become a seasoned VP of Finance?
David: I started out my career as an auditor. I worked for Price Waterhouse Coopers for two years, got my CPA, and then realized that auditing was not true to my heart. After that, I joined OLX at an early stage, where the CFO was looking for a jack of all trades, and there I learned FP&A, controllership, and several other functions that gave me the skills I needed to be a VP of Finance.
As an auditor, you know how to audit financials, but you don’t know how to actually do the real work and grow a business. I had to learn everything on the job. Over time, I had to wear many hats, but I also took off a lot of them as we grew and hired more people.
After OLX, I joined Letgo early on as a VP of Finance. It was back then when I learned how to lead and build a finance team from scratch. There is no playbook, as it is all about listening to the business, doing what needs to be done, and taking ownership of the finance function.
Jorge: How have you seen the role of finance shift over the years?
David: As an advisor to the CEO, you must oversee your finances and make sure that your numbers are flowing, while also ensuring that you are influencing strategic decisions for the business. I think the function is starting to evolve towards a more strategy position, rather than a day-to-day operational one.
You still have to do the operational part, but today, you can do that a lot faster by using automation and integration. If you are able to reduce labor-intensive tasks, you will have more time in your day, which means you’ll have more time in your month to work on the strategic side of business operations. That is where a VP of Finance can really add a ton of value.
Jorge: I fully agree. So what are the skills you think make a great finance leader?
David: You need to know how to use Excel and crunch some numbers. I think having some sort of finance background helps, as well as having an understanding of the financial infrastructure of a business. However, I’ve seen people that were successful in this role that didn’t come from traditional routes.
I think it is all about being able to analyze risk and opportunities, and then presenting that in a way that helps the organization make strategic decisions.
The strategic thinking skill needs to be exercised over and over again, and honed as you move up the ladder.
Jorge: How can finance teams operationally prepare for the worst, and react to changes in market conditions?
David: I have been in this role at multiple companies over the past ten years. We have been in moments where cash was cheap, so we could allocate capital to many projects and didn’t have to be strategic nor efficient, as we knew that we would have the necessary resources.
Now, we are going through a moment where there is a capital constraint. Cash is not cheap and if we want to extend our runway and become more efficient, we have to pick our battles and think about what our goals are.
Hopefully any sort of downturn that we are in is short. But if it is not, you want to make sure you are positioning your business in the best way possible.
Jorge: Despite the round of funding you recently raised, is your team preparing and adapting to these uncertain market conditions?
David: Yes, for sure. We definitely have reallocated funds and changed our strategy based on both internal and external courses, to make sure that we come out of the downturn in a stronger position. Every company is going to be different, but you should take this time to take stock of your position and not expect that revenue will be there.
My advice would be: make hard decisions today so you don’t have to make harder decisions tomorrow.
Jorge: Great piece of advice. You have often used the term “Revenue Enabler” when describing the relationship the finance function has with the rest of the organization. What does this mean, and what does it look like in practice?
David: We are never going to be bringing in revenue, but I believe that we can enable our teams for greater revenue by building processes to help them be more efficient.
I think finance and legal get viewed as the place where questions or requests go to die. We are always the team that says no, but I actually really want to say yes. The thing is that everytime someone comes to the leadership team with an idea, we have to take into account the risks, the opportunities, and how it fits into our strategy.
So, I would say that it is useful to give that information to the team, as enablers of the business, so we can make smart decisions that are in line with our strategic goals.
Jorge: You have had the amazing opportunity to build finance functions from scratch. What are the key components to consider when building an entire finance function?
David: There are three things that I do on day one: open up a bank account, open up a general ledger, and payroll. It is essential to integrate all those three things and make sure we have the minimal set of functions that we need to run the accounting for the business. Those are the three critical layers you need.
Besides, I’m always looking for the most modern tools and best integrations. We are a growing business and we want to partner with companies that are also investing in their product.
Jorge: What do you look for in the candidates you want to bring on board at an early stage startup?
David: I am always looking for a jack of all trades, or someone that can play different positions. As we don’t know where the business is going to be in a year, we want to make sure we have people that can work with uncertainty. I look for candidates that are curious and interested in topics beyond their position.
Jorge: What are the key questions you ask your candidates in an interview?
David: I like to ask candidates about what they are reading or what they are listening to. This is something that tells me a lot about what they do in their spare time.
I’m interested in what they are listening to, and I think that this is super indicative of how they are going to work in their position.
Jorge: As the organization starts shifting, how do you know when it is time to start looking for the next stage?
David: I have seen businesses grow at various stages. For me, knowing when it is time to start looking for the next stage is a lot about thinking where we want to be in two years from now, or even in twelve months from now. It is all about starting to come up with a strategic plan that you can execute and project when you want to make the investments.
Also, if you have not been to that next level before, I would recommend talking to your friends, your advisors, your mentors, and to other people who are one level ahead of you in their business to learn from their experiences and start building your strategy.
Jorge: What are the key KPIs that you are currently looking at?
David: I definitely look at burn rate and burn multiple. Also average contract value, net dollar retention, gross dollar retention, churn rate, and those KPIs going into the marketing and sales efficiency. I would say those are the ones driving our long term business, and then there are more short term items that you can look at, like coverage for your sales team or product velocity for your product and engineering teams.
Rule of 40 is great as you get a little bit bigger, and the magic number is more aspirational, but it is not going to tell you the best story at an early stage.
In addition, I usually ask our board members and investors as they help us guide the business.
David: Let me ask you a question, as a finance professional and entrepreneur, what do you want out of your finance team?
Jorge: I love the question because that is actually our mission and our vision. We want to make finance teams superheroes, and we want to empower them to help businesses with better insights to make faster decisions. That is exactly what I expect from the finance function: I want them to give me the right information to make the right decisions.
Maybe in the past finance teams did not have the right set of tools to become that business partner, but now they do and they are the ones with the whole picture of the business.
Apart from the operational tasks, I expect my finance team to understand where we need to go and what we need to do to get there.
David: You asked me a question about what skill sets make a good finance leader. My question back to you is: what skill sets do you find have helped you the most as a co-founder and executive in your business?
Jorge: I think it is essential to be able to understand the business, and therefore understand what the financials are saying and the impact of your decisions on a P&L.
Also it is important to play an enabling role and be capable of translating this financial data into the different departments’ languages for all to be aligned.
I have been lucky to be a part of amazing companies and learn from incredible founders, just like my co-founder Julio, to make things better and better every day.
Jorge: One last question before leaving. What are you currently reading or listening to?
David: One of my favorite podcasts is Planet Money, a 30 minutes podcast in which they talk about economic indicators.
I also like to listen to weekly podcasts talking about what is going on in the market, and I follow two bloggers I like to read named Jason Lincoln and David Kellogg with Kellblog.
Today, the finance function needs to stay on top of changing trends to evolve towards a strategic position. More and more, especially at an early stage of growth, managing leaders seek to build versatile finance teams, capable of working with uncertainty while still delivering results.
Curiosity and the ability to enable revenue through collaboration are some of the key skill sets all finance leaders are looking for when building out their Finance team.
Abacum’s financial planning and analysis platform empowers Finance teams to become strategic partners in their organizations. Book a demo today and discover how your Finance team can enable growth through valuable business insights in real-time.
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