543: Whetting Your Firm’s FP&A Appetite | Paul Willson, CFO, Compeat

Listen to the Episode Below (00:29:54)

After years of careful finance career–building within the healthcare sector, Paul Willson came upon an opportunity inside Austin’s energetic technology start-up community that he found hard to resist.

Becoming employee number 23, he was immediately dubbed “the finance guy”—a label that he would wear for only 5 days before the ambitious start-up announced that it was being acquired by BMC Software.

At the time, Willson no doubt harbored some frustration concerning the timing of his arrival in the realm of entrepreneurial tech. However, in the weeks and months to come, the conventional wisdom that had fueled the tech community’s bravado would be stood on its head as the dot-com crash of 2000 scorched the entrepreneurial landscape and ended the life of many a start-up.

Back at BMC, Willson weathered the storm and joined their finance rank-and-file, where he grew accustomed to the ebb and flow of the technology world before jumping to Convio, a small, Austin-based, technology firm with IPO ambitions. “It was a great experience to build Convio from scratch, and this being 2005 when we started—the early days of SaaS companies—we were looking for any information that we could find on the business model,” explains Willson, who today credits Convio for allowing him to open the entrepreneurial career chapter that he had needed to put on hold a few years earlier. –Jack Sweeney

Subscribe to CFO Thought Leader

Guest: Paul Willson

Company: Compeat

Headquarters: Austin, TX,

Connect: www.compeat.com

CFOTL: What comes to mind when we ask for a finance strategic moment?

Willson: An example I would give as a finance strategic moment came at a prior company, a B2B company, that started by selling enterprise software to large enterprise firms. Then, as you typically do, you start moving downstream with that product and see how far down you can go. It worked kind of in the midmarket, and then, as we pushed it further down into smaller companies, we found that we could sell it, but the companies that we were selling to were not being very successful with it. This was because it was an enterprise product and they just didn’t have the sophistication to run it. We started looking at the data and financials around the (offering) and comparing the lifetime value versus the cost of acquisition, and we could see that the enterprise and midmarket firms were good customers for us and that this was a profitable business and something that we should be doing.

However, as we moved down into the set of smaller customers, the products still took about the same amount of time to implement, so our implementation costs weren’t scaling down. Also, these customers were churning at a higher rate because they weren’t as successful with it, not as able to operate the product. We would look at the lifetime value and see that we were breaking even only about three months before the customers were churning out. So, what are we doing here? We went back to the drawing board and said, first, that we just had to stop selling to this market. We were not going to sell below a certain price point. Second, we actually needed to develop a much more lightweight product to go and address this market with. The one that we had just wasn’t going to work. So, this is an example that I would give–where we started looking at something and ended up feeling like it was not a good business for us and that we needed to change the way in which we approached it.