Ross Tennenbaum remembers that back in 2018, when he was a managing director at Goldman Sachs, he had conversations with a number of senior executives from Slack Technologies, Inc.
At the time, the fast-growing workplace messaging and communication platform was preparing to go public, and the company was making a special effort to educate bankers and analysts alike about the firm’s business. As his questions became more pointed, Tennenbaum says, he noticed that members of Slack’s senior management team would frequently permit other executives stationed along the conversation’s periphery to supply the answers.Read More
“At first, I thought that they served sort of a chief-of-staff type of role, but what I realized was that when the executive was pressed with a question, one of the sidekicks would always be turned to for the answer,” explains Tennenbaum, who found his conversations with Slack to be highly informative.
Later, Tennenbaum learned that the sidekicks were members of Slack’s business operations team, a cluster of analysts that he describes as being “cousins” to Slack’s finance and FP&A teams.
“This team was incredible: They were so dialed in to the business, and they were partnered with Slack’s executives, which allowed the latter to quickly make data-driven decisions,” says Tennenbaum, who today, as CFO of software developer Avalara, is seeking to borrow a page from Slack and populate his own business operations and FP&A functions with teams of analysts on the ready to inform and supply answers to questions.
“This is about creating not just budgets but also operational plans that tie strategy and tactics to key metrics so that we can see when things are trending up or trending down and be able to more quickly take action,” adds Tennenbaum, who believes that many businesses struggle due to a disconnect between what he calls “top-level metrics” that are being widely shared and reported by the company and decision-making by “everyday operators” often situated deep inside a company.
“How do we make these people feel a sense of ownership of the measure and feel more accountable when it comes to driving outcomes?” asks Tennenbaum, who notes that a disconnect can occur even after a company has made an effort to push a metric deeper into the organization.
“What happens is that they don’t do a good job of updating the metrics every month, reviewing them and quickly assessing where they’re on and off track, and course-correcting,” comments Tennenbaum.
At Avalara, remedying the metrics disconnect is now a top priority for finance.
Says Tennenbaum: “To me, that’s the impactful part of the CFO job.” –Jack Sweeney
CFOTL: What are your priorities as a finance leader over the next 12 months?
Tennenbaum: The background here is that Avalara is going from being a dual-product, U.S.-centric company to being a multiproduct global firm. There are a number of products and businesses that we have to support and direct in tax compliance, and we’re growing rapidly. Then we take our customers: They’re moving to e-commerce, and their tax solutions are only getting more complex and costly. So, at this time when we’re a leader in the space, we’re rapidly growing a large market and we’re trying to support this business that is moving really fast and trying to do different things globally.Read More
I can give you three priorities related to that. One is building out our finance and accounting talent to take us to a billion dollars’ worth of revenue and beyond. We’re at close to half a billion of revenue, and we’re looking to go well beyond that. You really need the talent that has experienced a larger scale, knows how to achieve it, and can take you there. So, talent becomes really important, and you have to remain constantly focused on it—today, I spend around 20% of my time on it.
Second is really upgrading our financial systems, processes, and controls to—again—support scale. What we’ve built to take us to a half a billion of revenue will not be the same as what we need to take us to a billion and beyond. We’re really focused on upgrading all of this and taking it to the next level—not just to support what we’re doing today or next year, but to support the next 5 years.
Third is really building out FP&A to take us from reporting on the business to really driving the business and enabling us to make real-time, data-driven decisions.
We have this 5-year manifesto. It’s like our North star of where we want to go over 5 years. It includes the 5-year financial plan. It’s a 5-year view. And then, every year, we do our business priorities. Right now, we’re working on our 2021 business priorities. Then, as part of the budgeting process, we have our bookings forecast for each product and business line, and then every function’s got a plan. So, the product team knows what they’re going to deliver in 2021, engineering’s part of that, the marketing team has certain initiatives, everyone’s got initiatives and plans.
So, it’s less about any individual metric. It’s more about how you marry together these discrete plans into a cohesive business strategy.
Value Quote: We’re close to half a billion dollars’ worth of revenue and we’re looking to go well beyond that. … So, talent becomes really important, and you have to remain constantly focused on it—today, I spend around 20% of my time on it. jb
Avalara | www.avalara.com | Seattle, WA