The Job of a CFO at a Scaling Company

Best Financial Practices from the CFOs at Square and Opendoor

The CFO role has evolved from being strictly an accounting expert to an important strategic partner to the CEO. Today’s leading companies look for CFOs with differing perspectives and skill sets that translate across operational teams. As a company scales, the CEO and CFO need to have a strong relationship built on trust to manage challenging financial decisions ahead.

Square CFO Sarah Friar and Opendoor CFO Jason Child joined us at The Scaleup Offsite to share their experience helping startups scale from the finance side. They talk about the best time to hire a CFO, how to instill financial discipline in the company, and the right times for a company to fundraise and go public. Here are some key points from the panel:

• When to Hire a CFO: The CFO’s job is to constantly consider what can go wrong — the opposite of breaking glass — so Jason suggests hiring a CFO once the company has determined product-market fit. Sarah says there may not be an “ideal” time but founders in general should always be thinking about what the leadership team is missing and hire ahead, not hire for need.
• Using the Right Numbers: Prior to Opendoor and Groupon, Jason worked as CFO of Amazon International. He credits much of the company’s success to Jeff Bezos’ discipline for “seeking truth” in the numbers, ensuring that the finance team took a very unbiased approach to analyzing the economics of the business. Similarly, Sarah suggests really understanding what the drivers of the business are and set monthly goals to ensure the company is holding itself accountable to the right metrics.
• When to Fundraise: Sarah describes the two sides to thinking about fundraising — supply and demand. From the supply side, companies need to be sensitive to the macro funding landscape. She jokes that rule #1 in the “CFO handbook”is to raise money when you can. On the demand side, companies should learn how to forecast as accurately as possible. Then they should put together forward projections and know where the financial crisis point for your company is, and work backwards from that timeline.
• Going Public: Jason explains that accurate forecasting is a big indicator if a company is ready to go public. He suggests researching case studies of positive and negative IPOs and determine if your company is prepared for both examples. Maintain total transparency with your employees early on to prevent “stock watching” and be honest about the difficult road ahead to IPO.

This presentation was recorded at The Scaleup Offsite, an event focused on scaling companies co-hosted by Greylock Partners and YC Continuity. Talks will be available on video on Greylock’s YouTube channel and on our podcast channels.

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