Live, in-person conferences are again upon us, and I recommend attending one or more this year. The CFO Leadership Council spring conference, May 19-20, in collaboration with MIT Sloan, was the perfect reentry — vibrant, topical, mostly sales-free, and highly accommodative to networking. (Anyone who’s attended a virtual conference knows the real networking opportunities are very limited.)
Importantly, I came away from the conference with tons of insights at a critical time for CFOs battling inflation, the talent shortage, higher interest rates, and who knows what to come. Despite the pressures, the mood among speakers and attendees was upbeat.
Here are three nuggets I wanted to share with CFO readers post-conference.
According to Bloomberg, Sequoia Capital told its portfolio companies early this month to be ready to conserve cash by scaling back R&D, marketing, and other projects. From near the moment the CFO Leadership conference began, the speakers advised a cash-focused mindset.
Opening keynoter Ram Charan, a legendary adviser to companies like Toyota, Bank of America, and Novartis, gave a well-received combination pep talk and primer on managing a business for cash (“not based on accounting”). It’s a time for CFOs to use muscles they may not have flexed in a while, Charan said.
Some finance leaders lament that investors and capital providers are now more concerned about profitability instead of hockey-stick revenue growth. But panelist Hope Cochran, a former CFO and now managing director of Madrona Venture Group, said she enjoys the switch. “I think about moments when the markets have shut down and things I’ve had to do. And I relish them,” she told the audience, “because it makes you look at things differently … because it makes us take a critical eye to everything happening in the business.”
Cash forecasting and the cash conversion cycle will be the focus of many finance departments in 2022, and beyond, speakers agreed. So, where to look for excess cash? Accounts receivables and inventories, Charan suggested, are two potential hiding places. In addition, consider killing the products “no longer profitable on a cash basis,” Charan said.
Cochran counseled: “I always say, ‘take cash when you can and then spend a lot of time planning how to spend it.’”
The change from the “growth at any cost” modus operandi to “cash is king” (again) felt like a fast pivot, at least to me. But, of course, great finance leaders excel at turning on a dime.
We probably all remember a job, probably in a small business, where “pitching in” on tasks outside the job description — to help colleagues meet a deadline or handle a crisis, for example — was a regular occurrence. Are employees willing to “roll up their sleeves” like that now, especially given that loyalty to employers is at an ebb?
On a panel, Scott Torrey, executive chairman of Tesorio, told the story of a company he worked with during the heights of the pandemic. The company was having some “gut check” moments, as bankers discussed loan covenants and the terms of its revolver. What to do to get more cash in the door? How about turning job recruiters into collections staff temporarily? (I couldn’t think of a job I’d be worse at than collecting money.)
It worked, said Tesorio. The company had record collections from overdue accounts receivable.
A couple of lessons from Tesorio: First, “leaders lead,” he said. Once recruitment managers knew how important corralling cash was to the company’s survival, they stepped up and pushed the recruiters-turned-collectors to overachieve. The move “preserved almost three to four months of [cash] burn that we no longer had to worry about,” said Tesorio.
Second, the recruiters thought it was a great experience because they got to understand another side of the business.
As more venture-backed tech companies trim headcount and freeze hiring, will we see more of this? After all, the recruiting team seems to be a popular place to reduce staff in first round of job cuts.
When Mike Ellis hovered near the podium as a session about “Preparing for an IPO and Life as a Public Company” was about to start, I thought he was a conference “roadie”: the guy in a baseball cap, jeans, and beard doing the sound check.
Turns out I’m a poor judge of appearances. Ellis is the CFO of payments technology company Flywire, and he was prepping for his presentation. (See my story on his excellent talk, 7 CFO Tips for Taking Your Company Public.)
I have a feeling I would like Mike Ellis. He’s someone you have a beer with in a dive bar who later agrees to help you shingle your roof — a regular guy, and probably very generous. But he’s also a top-notch finance chief.
“Operationally, he knew the details of multiple business lines, helped lead and set clear strategic priorities for the senior management team, and engaged the board and investors directly and with confidence as they continued funding the company,” wrote one CEO on Mike’s LinkedIn profile. The CEO also called him “an outstanding member of any management team.” What makes Mike unique is that despite all of that, he’s genuinely humble.
Not surprisingly, his presentation cut through all the trite advice about steering an organization through an IPO. When you’re ready to take a company public, I couldn’t think of a better person to ask for advice. So, I wasn’t surprised later that evening to learn that the Boston Business Journal had named Mike Ellis one of its CFOs of the year for 2022.