The mistake most CFOs make scaling FP&A

In his eight years as CFO, Bill Losch took Okta to through multi-billion dollar IPO and left it at a valuation of over $30 billion. He’s an expert in building finance teams from the ground up, and today he shared some key insights and tough lessons he learned along the way.

Early On, Look Within

Bill’s major advice in this talk is that CFOs tend to overemphasis corporate finance.

“You have external constituencies to answer to. You’re going to have a board of directors, you’re gonna have investors, and as you get to be public, you’re gonna have Wall Street. There’s a tendency to focus on that complete corporate look.”

Not to mention, most finance folks see strategic finance as the more appealing side of the job. That corporate emphasis is important, but it can happen in a vacuum if you lose connection with the core business itself.

This over-focus on the corporate side of the role, particularly early in the company’s journey,  comes at the expense of embedded partnerships, where finance teams can add the most value. Finance departments that simply try to hit board-driven KPI’s, or base decisions around a future IPO, miss crucial feedback from the teams they’re supposed to support.

When Bill joined Octa, it was obvious that a “Here’s your budget and KPI targets, see you next quarter” approach simply wasn’t gonna work. The company required more agility and a better feedback loop, especially in those early days.

He transformed the hiring mix toward embedded partnerships, arming finance with the information necessary to better allocate resources and to understand what the company really needed, rather than what would make stakeholders happy. It also enabled finance to give all teams a better understanding the company’s broader vision, and where their efforts fit into it.

To no surprise, this eventually led to much happier stakeholders.

The Unique Opportunity of Finance

Bill touched on an important point:

“In finance, you really do get a picture of the whole company, more so than any other group does”.

We keep hearing this wisdom. It rings true from my own experience at Intercom and in talks with other Silicon Valley leaders like Ed Park : finance has the opportunity to drive core strategy, but only if the team cultivates a deep understanding of the business. In my experience, this mindset is the single biggest predictor of an exceptional finance team.

This knowledge doesn’t come automatically. It requires a two-way flow of information and input between finance and all areas of the business, from the marketing team to engineers. Everyone needs to be on the same page and working together toward tangible targets. Embedded partnerships are necessary for creating better decisions, a more collaborative culture, and over time, a happier boardroom.

When to Shift Focus

From startup to IPO and beyond, embedded partnerships will always be a crucial part of your team. However, this mix between corporate and internal relationships will evolve throughout your growth journey.

Early on, avoid the mistake most CFOs make; focus most of your staffing on embedded partnerships, rather than strategic finance. Create a culture of collaboration between finance and the rest of the organization, with finance driving company vision and decision-making.

While these embedded partnerships will always be a pivotal part of the team, Bill says that as the company grows and matures, it’s necessary to shift more resources toward strategic finance. As you’d expect, he says that the closer the company is to an IPO, the more resources you need on the corporate side.

First, Take Care of Your Own

Bill broke down a crucial idea for any early stage company: focus your finance team on building a deep neural network with the rest of the company through embedded partnerships.

Strategic finance is an important part of the mix, but (particularly early on in the company’s journey) it should take a back seat to creating a powerful flow of information throughout the company, with finance at the nexus.  

The core idea behind Bill’s advice is one that I believe deeply and hear often from the industry greats: finance is so much more than KPIs, reports and budgeting. Truly great companies leverage finance’s presence throughout the business, allowing the team to drive broader strategy. Such a central role requires solid data, and healthy communication throughout the org chart.  

Bobby Pinero

Bobby Pinero

CEO and Co-Founder of Equals. Previously built and led Finance and Analytics at Intercom, from <$1M ARR to $150M+ (20 employees to 600+).
San Francisco