Who Qualifies to Be CFO of a Tech Firm?

You don't necessarily need experience in the firm's specific niche. In many cases, other aspects of your background are more important.
David McCannNovember 28, 2017
Who Qualifies to Be CFO of a Tech Firm?

Many finance chiefs can ably switch industries, such as jumping from manufacturing to retail. It seems, though, that finance executives who grew up in the technology field tend to stay in it, right up through the CFO level.

CFOs Tony Callini, Kim Drapkin

CFOs Tony Callini and Kim Drapkin

Of course, “technology” is not a single industry but an umbrella covering many subsectors. And just as the CFO skillset is generally deemed fungible outside the technology sphere, within it finance executives can typically move around with a fair degree of flexibility. That was a key takeaway from a session at the recent MIT Sloan CFO Summit.

The most important determinant of who’s suitable for a position as CFO at a tech firm is the stage the company is at in its lifecycle, according to Tony Callini, finance chief at digital typesetting and typeface design firm Monotype Imaging.

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“I’ve been in fintech, media tech, and now creative tech, I guess you’d call it,” said Callini. “I think it would be hard for me to jump to the biotech space, but I believe there are some consistencies around working in a small, dynamic environment where you just have to roll your sleeves up and figure out how to get things done.”

To cite examples at the extreme ends of a spectrum, the role of the finance leader is obviously much different at Oracle than at a $10 million startup. Callini now finds himself in the middle, guiding a $200 million company that’s just starting to go international — and he’s feeling the stretch, which means hiring managers for his team that have specific capabilities rather than knowledge of fonts.

“There are many parts of my job that I’m not qualified to do,” he said. “I’m sure it’s a theme along many career paths where if you’re used to a certain company structure, shifting to [another level] could be hard. So you need to recognize your limitations and [bring in] people who have those complementary skill sets.”

Kim Drapkin, finance chief at startup biotech firm Jounce Therapeutics, agreed that such a company would pose the most difficult transition for CFOs from other technology subsectors. “When I talk to investors, I need to be able to talk about the science in a credible way,” she said. “I’m not a PhD, but the person sitting across from me might be, and they’re going to ask me about our drug’s mechanism of action.”

At the same time, Drapkin identified with Callini’s just-get-it-done approach. A small, not-yet-established biotech company like Jounce “would probably be better off hiring Tony, who has no biotech experience, than the CFO of Pfizer, who [may not] know how to roll up his sleeves,” Drapkin said.

Further, Drapkin said she’s “very comfortable” hiring a vice president of finance or controller from a different technology sector. “We’re all doing the same SEC reports and following the same revenue recognition guidance,” she said.

That perspective didn’t necessarily resonate with other Jounce leaders when Drapkin recently presented a controller candidate she’d worked with previously. “I faced a lot of resistance because he didn’t have drug experience,” she said. “I said, ‘Listen, he’s very smart and he’ll get this.’ We were trying to go public at the time, and I said I’d much rather have a strong SEC person who knows how to do an S-1 than worry about whether someone can cost out clinical trials.”

Also more important than a specific industry background is experience with a company’s business model, said Sean Quinn, CFO at Cimpress. The company makes products that can be customized and printed online, like marketing materials and invitations, as well as customized signage, embroidered apparel, and promotional products.

“For example, our business is high-volume, low-order ecommerce that has consumer-like characteristics,” Quinn said of Cimpress, a publicly held company that brought in $2.1 billion of revenue in its fiscal year ended June 30, 2017. An understanding of that model “is more important than experience in online printing, which is frankly not that relevant. You can learn that piece.”

A Cimpress business in Brazil recently hired two people away from airlines to rethink its pricing structure, given its fixed capacity and the high-volume, low-order nature of the business. “That smells like the airline industry,” said Quinn. “And the same thing applies at the CFO level — I think it can actually be a strength to not come from this very specific industry, so long as there’s experience with the characteristics of [the] particular business model.”

But while a company can likely find a CFO with any type of experience, it may not be able to locate one with all the experience on a company’s wish list.

“The reality is that candidates are going to be good in some areas and not as good as others, so the company has to pick what’s most important,” said Quinn. “Recruiters call around and say they’re looking for someone who has been a public-company CFO, also has private equity experience, has been in, say, biotech, and really understands SaaS models. I mean, who is this person they’re describing?”

Photo courtesy of MIT Sloan CFO Summit