Like many finance chiefs who work for startups, Lukas Wickart, the CFO of AutoGravity, a fintech firm launched in 2015, must improvise his role, rather than fit himself into some preconceived set of functions.

Lukas Wickart

“There is no handbook or training on [the job] out there. As a startup, we are writing the book as we go along,” he told CFO recently. “We make our mistakes and we learn. For example, with us having this interview here today, I’m talking off the cuff about what I’m experiencing.”

To try to make sense of his role at AutoGravity, which features mobile and web applications that offer consumers up to four personalized financing offers on cars they choose, Wickart uses key airline-industry concepts he picked up in his prior job as vice president of corporate strategy and finance at Surf Airlines.

One concept is that the finance chief is really the “chief commercial officer” of the company. That function involves analyzing huge amounts of data to understand “how the consumer interacts with our products down to the most granular level,” he says. “Or even before they start using our product.”

A related idea that he’s held onto through his job change is “revenue-yield management.” Rather than managing finance from a broad perspective, Wickart aspires “to understand the unit economics of each and every product down to the last level. In the airlines’ situation, it’s the seat.” In AutoGravity’s situation, it’s customer engagement with the firm’s applications. An edited version of the interview follows.

What’s the nature of AutoGravity’s business?
We are a pure financing source, but actually we’re more of a partner with dealers. For example, here in the United States we work with four out of the top five largest dealership groups. They don’t see us as a competitor or as somebody who eats their lunch. They actually see us as a partner who helps them generate demand from millennials and other new customer groups and lower their acquisition cost.

So a customer would go to your site, find a car, and then find financing for it?
Correct. We’re nearing about half a million users. What happens is we have apps employing IOS for Apple and Android, as well as a web application. Consumers can use these to select the vehicle that they would like to finance. They get up to four binding offers, which aren’t just comparisons. They get loaded into the dealer management system and can be retrieved at the dealer. You can go to the dealer and your financing is already set. Because you have these four offers, you can choose one, and then it’s binding. You can go pick up your car and drive it right then.  

What are the company’s prime sources of capital?
The car companies, specifically their captive financing groups, are very important partners for us. We can offer leasing on these different vehicles, because Mercedes, for example, is willing to pay for the residual value risk on their own cars. [On July 6, the company announced that VW Credit, the captive financial services arm of Volkswagen, committed to make an equity investment in AutoGravity, pending regulatory approvals. Besides the investment, VW Credit has worked with AutoGravity to bring Volkswagen and Audi financing to U.S. car buyers.]

Is an IPO in your future?
We’re very far out in that respect. I don’t want to make any predictions, but I believe this business certainly has the potential to grow to a stage where an IPO could be possible. Or it could become a jointly owned strategic management venture of a few of the large industry players. I think both are actually in the cards.

What do you see as your role as finance chief?
Ultimately, in a startup company, you are really responsible for the commercialization of this business. You are what I like to call the “chief commercial officer.” And what that means is that, together with the board of directors, you have to be able to crystallize your strategy and your business model. You have to translate it into measurable targets, track the fees you’re paid and report them back, and keep investors updated on what you’re doing.

What are your specific tasks as the chief commercial officer?
At AutoGravity we collect huge amounts of data that allow us to very quickly see where we need to improve our product, where the consumer expects something different, and where engagement falls off. That’s where the role of a more modernized CFO very much comes in, working very closely with the chief technology officer to build out the artificial intelligence or machine learning capabilities. Eventually you want your system to learn how people engage and automatically generate a customized process for each consumer, depending on what their needs are.

What data does your company look at most closely and what do you look at specifically as the CFO?
As a broader company, one thing we look at closely is how do people engage with the marketing efforts that we put out there. What is the customer acquisition cost? How efficient are we in our marketing? How do the customers engage with our product?

But for me as a CFO, what’s very important is to understand where we should focus our investment activities as a company. If we want to build out new product features or change our marketing approach, I want to track that financially and understand where the efficiencies are, what the unit economics of our product are, and who the users who come to our product are.

It sounds like there are two skills in there. One is analyzing the data and the other is turning that into a strategy. Does that sound right?
Absolutely right. That’s why I feel data analytics at AutoGravity or at any fintech or technology-enabled company is very much a cross-functional discipline. You need to work very closely with your technology counterparts to build this capability to analyze large volumes of data. This is not your average Excel spreadsheet or Microsoft Access database anymore. This is real artificial intelligence to spot trends and user behavior early on and really analyze the ROI on the investments that you’re making.

What metrics drive you as the CFO?
As a young, consumer-facing business, we see marketing as a very high spend. You need to make sure you get the word out there. As a result, we allocate a significant budget to it. For me as a CFO in a startup, that’s actually a pretty unique challenge because you don’t generate the revenue or cash flows and reinvest them back into your business early on.

What you do is raise the money and invest it into making your product or your business model better. The investors’ money comes in in big chunks, so suddenly you have a relatively large amount in your bank account. That awakens all sorts of desires, as every CFO knows. It’s your task to keep this resource very scarce and make sure it’s invested in the best possible way, so you can then show the investors results for the money they put in.

The first major metric is the marketing component. The second is the allocation-of-capital component, so I’m very much an investment manager. And the third component is user engagement with the products, because I want to understand  what we are building and what the consumer wants. It’s very tempting to just build in the dark chamber for two years and come up with the great product and then learn that nobody wants it.

What’s the nature of your “investment manager” role?
It’s not the traditional investment management role of investing money in soft markets and so forth. That’s usually not what investors want you to do. It’s investing very selectively in the growth of your company, considering your product sets and your business model. It’s understanding, for example, if we spend a million dollars on engineering capability to build out feature X, how will that affect our spending for our consumer engagement or for our platform? That’s the kind of investment management that a technology CFO is deeply engaged in.

One of your big concerns, you’ve said, is “revenue yield management.” What do you mean by that?
That’s one of my personal favorite topics. In the 1980s, yield management became a popular concept in the airlines industry. It enabled companies to understand the unit economics of each and every product down to the last level. In their situation, it’s the seat. In our situation it’s a very similar thing. We need to understand the unit economics down to every user. For example, it costs me X to get that consumer to engage with our platform. But then I want to understand where I need to spend the money most efficiently to get that engagement. How does that user engage? Does he then actually buy a car? Does he take out the loan? What kind of car? What kind of loan?

If I as a CFO can understand what targets I should set, I can help my organization grow in the most scalable and profitable way. That’s how you can really understand what the true cost or the true revenue of each transaction is. Twenty years ago, we just didn’t have the computational power to really understand this.

Let’s say you have a million customers. Analyzing each and every one would have just been an impossible task. Nowadays, with artificial intelligence and machine learning, the machine can do that for you within seconds and tell you exactly which marketing channels, which consumer types, and which end product exists for each transaction, and henceforth what kind of profitability it has.

Are you in charge of the traditional CFO functions, such as accounting, benefits, and cash flow?
Yes, yes, of course. Handling these traditional tasks make CFOs the unsung heroes in the business, but those tasks are not the sexy ones that people like to talk about. They are table stakes, and you as the CFO you are responsible for making them run and work well. Nobody will tap you on the back if you do them right, but if they go wrong you’ll hear about it.

So despite all of the interesting technology aspects, you should never lose track of these. What AutoGravity and many other firms do is to use a lot of outsourced power to support these functions so that you don’t have to build huge staff levels in-house. It’s just not necessary anymore. The efficiency of shared workspaces and shared services has become so high that your threshold to actually build your own benefits team becomes a big question, for example.

We outsource benefits to a third-party provider who administers everything for us, and we have just a relationship manager who takes care of that. And we partially outsource our bookkeeping and accounting for efficiency purposes.