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Season 02, Episode 07

Drew Romney at Trainual And Chris Horne At Virtuous CRM, Heads Of Finance

with Sasha and Jake

About the Episode

In this interview with two Startup Heads of Finance, Chris Horne at Virtuous CRM and Drew Romney here at Trainual, we’re talking about how to scale your startup…

Drew Romney is the Director of Finance at Trainual (raised $7M Series A) and former Director of Finance at eVisit (raised $12M in VC).

Chris Horne is the Director of Finance at Virtuous CRM (raised $3M Series A) and former Director of Finance at CampusLogic (raised $73M in VC).

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Full Transcript

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Hi, welcome to Venture Scaler. I’m Sasha three-time head of people at venture-backed startups and I’m Jake three times ops and growth leader from the venture-backed startup circuit as well. And we’re here dropping all of our best tips on how to scale your startup. Hi everyone. Thanks so much for joining us today. Um, I appreciate you guys taking the time we Jake and I have been chatting a little bit about how to help startups grow through any times, but most recently, through a pandemic and a recession. And I thought, why not bring in my two favorite operational finance people and get their opinion on startups and growing and cash and how to manage everything through a recession. So, um, for everyone watching, I’ll give a quick little, um, blurb on who you guys are and then you guys can fill in any gaps that I missed because I probably leave out all the cool stuff.

Um, but we have Drew. Drew’s the director of finance and operations at Trainual. Trainual is a business playbook software company here in Scottsdale. Um, they disclosed $7 million in their series A late last year. So 2019, um, previously Drew was the director of finance at Evisit. Evisit another local company and the software company in the telemedicine space. Um, he’s just finished up his MBA and trying to think of other really cool things about you. You’re just a really cool person. We love Drew. And then we have Chris. Um, I worked with Chris way back when at Campus Logic, but, um, he’s currently the director of finance at Virtuous, which is a non-profit CRM software company. They raised their $3 million series A round last year. Prior to that, he was the director of finance at evisit. And prior to that, he was the director of finance at campus logic, which is a student financial services software company that raised $73 million in VC and PE funding to date. Um, you may be noticing some overlap Drew and Chris both worked at Evisit. Chris and I both worked at Campus Logic. Drew, and I now work together at Trainual. There’s a lot of love happening in the Phoenix ecosystem, but thank you both for being here. Um, let’s start with you Chris, because I probably didn’t give you enough praise, but anything else we should know about you and your fabulous background,

Thanks for the kind words. Thanks for having me today. And no, you pretty much nailed everything. I mean, in, through my journey of how, um, I arrived at being the director of finance and accounting at a few different companies, I started my career at Deloitte and Touche, um, in audit assurance, mostly doing, uh, revenue recognition testing and software companies. Um, and it was a great start to my career, but I quickly found out that I was a little bit more entrepreneurial, not necessarily a big risk-taker, but I definitely wanted more involvement, in operations. And I, uh, an opportunity to go work with the local CEO, Greg Scoresby, who, uh, at the time and still is the CEO of campus logic. And so I, I went over and worked with him as their, their controller. And at the time we were just a services company providing outside outsource services to financial aid offices.

And, uh, in that time I started working with a couple of other is other companies that are less interesting, but, um, from 2014 to 2018, I was in at campus logic. And that was, I really loved growing through those stages of, you know, convertible notes series, a series B series C. We acquired a company during that time, went from four customers to 450 customers. Uh, and I liked everything, uh, in between those stages. So I was excited when I, when I left Campus logic to go to visit a similar company, uh, actually taking place as he went off to take two finishes or start and finishes MBA. Um, and I was there for a year and then had an opportunity that came to me with virtuous and excited to be at that same stage, just raising our series a, um, 300 customers. And, and hopefully, we’ll, we’ll get to thousands of customers and get through the series BNC if needed, but that is, uh, how I arrived here. Awesome.

That’s fantastic. Thank you. Drew, let’s hear from you, uh, you know, what else have you, like, what did Sasha, you know, forget to fill-in? What are some of the things in your journey to get to where you are?

Yeah, it started off in, uh, started off in banking at JP Morgan in downtown. Phoenix spent a couple of years doing that and quickly learned that the people that were having the most fun were the ones operating and running the companies. So I jumped ship from a big corporate banking lifestyle to a 15 person startup, but he visits, uh, they raised a little bit of money and we’re just trying to get some traction at that point. And it was a lot of fun. I actually started out in a customer-centric role when I was there doing sort of enterprise customer management and spent a year doing that before, moving over to finance, um, and then decided it’d be a good time to go back to school, spend two years, uh, getting an MBA for some reason.

Uh, I’m really grateful that I did. And I think it was a really good opportunity. And during the two years of my MBA, I spent a lot of time in venture capital working with, uh, local VCs, also running a small, uh, VC that was part of the school, um and had this opportunity to come back to Arizona and, uh, worked for Trainual. So, really excited to be here. I’ve worked mostly with, uh, earlier stage companies, uh, both pre-seed seed and now series a stage company and Daniel, but, uh, excited too, to build this thing that we can, uh, so we can get to those bigger stages, um, and set us up for success. So nice.

All right. Let’s dive into some questions. So, uh, drew, let’s actually start with you. Let’s keep it here. Uh, and it’s going to be for both, but what lessons for success have you carried with you in your career? And like, what’s like something that you like to think about that you carried forward from company to company, from experience to experience throughout your, throughout your career? Yeah.

Uh, I dunno if this is too broad or too vague, but I would say always be thinking about the bigger picture. I think a lot of times, especially in finance, when you’re focused on budgets and expenses, and you’re looking at metrics, you’re like, you’re getting really granular and you’re trying to solve for this week or this month cashflow problems. Uh, instead of thinking about the bigger picture and understanding what’s going on at the company. Um, and so one thing that I try to do in each of my roles in different companies is understanding the strategic side of things and what the company is trying to accomplish, um, on the bigger picture. So that would be the main thing that I try to take from company to company. Chris question,

Let’s see if my, my internet is going to work. It’s giving me a message. Sorry about that. Um, yeah. So there is there kind of some qualitative lessons that I’ve learned, which one is nice? Um, we had, we had a value of campus logic that was, it’d be nice to take care of, take care of each other, and that can be hard because at the same time you want to be able to have difficult conversations, but, but at the end of the day, I’ve learned that just caring about each other and, and being nice, goes a lot further than the alternative, but aside from that, for me, it depends on what the goals of the company are, but my focus and the lesson I’ve learned is to always look at, um, be curious to be analytical, to be strategic, all of those things, but how can you impact enterprise value of the company? What’s the ROI of every decision? Um, at least in the last few companies, I found it very valuable to not be afraid to challenge the status quo and question, you know, why have we been doing it this way or that way. And, and also being open to accepting that we, the way they’re doing it, maybe the best way to do it and respect, you know, how, how they got there.

That’s great.

Um, let’s go with like what’s thinking back. It’s gonna be from like any past, but like top like one or two biggest challenges you faced, um, the scaling of a startup. Let me start. I can, uh, I honestly,

I think it’s finding the right people, that there are a lot of good people out there that just may not be good for a role or good for a specific company, but, but over and over, I found that it’s really hard to, to find the right people that that can help, help achieve the company’s goals. Um, I think that it’s important for everybody to have shared values, even if they come from a variety of different backgrounds, but finding the person who fits well in your organization and into the company’s style, um, is, has been the biggest challenge in every company.

I’d be curious as a follow-up, how have you done that? Have you tried and successfully, or unsuccessfully, unsuccessfully attracted and retained talent that you, that that’s a fit for the org, because it’s probably different at campus logic and you visit and virtuous different types of people needed to solve the challenges that you’re trying to solve. That was more of me answering my own question and that it’s impossible,

But what have you, she probably knew where,

Yeah, well, when, when Sasha and I worked together at Campus Logic, I saw a drastic difference once we began, um, hiring based on, on the company set of values. And again, I’m, I’m very careful when it comes to talking about culture versus values and people being the same person. You don’t want a company full of people who are, who are the same, but you do want people with shared values. And I think that the most critical thing was that we put processes in place that allowed us to hire an interview against those values. And part of that was also having a diverse pipeline of candidates, um, that seemed to make a big impact. So it’s fun to be able to get referrals, from employees. But I feel like sometimes when you get too many referrals from employees, you end up with a homogeneous population and you don’t always get the best outcome.

Did you see more success in pulling talent from other SAS companies, or are you looking at a broader background and kind of leveling them up and teaching them the things they needed to know about operating a SaaS business?

I think it’s, for me, I think it’s both, um, the nice thing about hiring people with experience in, in SaaS or at that stage of the company, is that they’re familiar with the challenges. Um, they’re familiar with the challenges that you face, and that can be the most difficult thing about joining a startup is, is you’re not anticipating the challenges that lie ahead, whether it is you end up having to take on a broad array of responsibility that you didn’t expect to take on, um, or whether it’s tightening cash and budget and not being able to spend the way that you want to be able to spend. But on the other hand, I love when we’re able to find somebody who may be just graduated or who is early in their career and is aspirational and, wants to get their hands dirty and have the chance of working in all sorts of areas of the business, because usually, they’re hungry to learn and grow

Nice.

Um, I want to get into something a little bit more tactical, um, maybe strategic, but I love like trying to understand how different people think about this at different companies. And you can pull from, you know, any of these past experiences, but in thinking about like a company that goes through, like this growth phase, uh, going through scale, how do you think about balancing growth and profitability, uh, as you’re going through that, that journey. And that’s what I’m excited to hear about from the finance side of the house. I know like I have my own opinions, but how do you think about that balancing those two things. They feel like they’re usually at odds as you’re going through this phase.

Sorry, just real quick. I almost think like sharing any insights you have from talking with your CEOs, respectively, like how do you navigate that conversation and what are the things that you’re considering, or the levers that you’re willing to pull through this decision making process?

Yeah. I think I think that this, this is like a classic, a classic issue that startup spaces, we don’t have much money, but we need to spend money to grow. How much should we spend and how fast should we be growing? Right. It’s, it’s what, uh, this is the hard part about startups. And I don’t want to give like a classic finance answer of like, just look at the numbers. That’ll be, that’s all you have to do, but that’s, in my opinion, that’s kind of the answer here is you have to make sure that you are growing, but that is efficient growth. So there are a number of metrics you can look at CAC LTV to CAC churn, uh, some sales efficiency metrics of how much are you spending in sales and marketing versus what are you bringing in in terms of new ARR? Um, and so as long as you are efficiently growing, um, that’s what you should be measuring against. As soon as that gets out of hand and you’re spending too much money to acquire customers, or you’re unable to retain them because of churn spikes because you don’t have the infrastructure in place to support those new customers. Um, then all of that spending and burn to grow is, is worthless because the whole point is to add value to the future. And if you

Can’t do that with good, um, quality customers that are going to stick around for a long time, then you might not, you, you may, as well as not have spent the money to acquire them in the first place. So make sure that you’re in line with your CEO about which metrics you’re going to be, checking and levers that you can pull, whether that is, uh, hiring new salespeople, holding off for a while, or, um, pulling back on marketing spend while you make sure that different cohorts are progressing the way that you want. That’s. Those are the things that I would look out for

Follow up question. Like you’re talking about CAC and churn, which are probably ultimately owned by the head of marketing or the head of CS. So what role do you play in their spending or how they think about adding new members to their team? Like adding another CS team member or like spending on admins? What is your role in that? Is there is, do you, are you in those conversations? Apparently, I can’t talk today. Um, like I guess I just think, like how do you navigate those conversations, especially in a market like right now where people aren’t willing to just like spend cash on anything?

Yeah. I think, I think one thing you have to do is, and it depends on the organization and how big they are and mature and how many people are involved. But I see as I see finance and operations sort of as the glue that holds the different departments together. So knowing that um, knowing that a decision that’s made in marketing to increase or decrease spend that will affect the sales team and the sales team will affect the customer success team. And that might affect what the product team is building in the future. Um, and so being sort of the glue to make sure that the organization understands how one decision in one department affects the rest and measuring metrics in this department that will affect things that go on and the other departments. And that’s how I see finance operations, helping with those decisions.

Nice.

Chris, let’s go back to the, how do you think about balancing profitability and gross? How do you think? Well, I’ve yet to be at a profitable company. Uh, but, but I, I think I understand balancing growth and value right. Enterprise value. And it depends on the company too. You may, you may be at a company at this stage, especially in the current condition that where you do want to drive to profitability. But going back to the original question, for me, it does go back to starting with the basics and that is building a financial plan that gives you enough levers and enough detail that you can see that when you change, uh, let’s say your cost to paid leads, what impact that’s going to have down the line revenue. And as that revenue and customer up,

Then we need to look like, okay, well we have all these new customers onboarding. How many, how many customers, uh, can a single, you know, in our case integration specialists, can they handle at one time? And each of these things is you’ve changed the number of leads. How does it ultimately change how many CS reps you need, for example, or whatever those hires are. And then in the case wherein our case, so looking at 2020, we built a plan in Q4 of 2019 with the limited information, uh, and a lot of guessing, but we involved each department head and said, you know, what, what are you currently spending or telling them what they’re currently spending and then helping them identify, okay, what do you think you’ll need to spend money on? Or who do you need to hire, um, in the coming year?

And we built it out for at least those next 12 months, but in, January, February, we all know that that COVID-19 hit, and things dramatically changed. And whether they dramatically changed or not, I still think it’s a good practice that at least every quarter you go back and look and say, what have we learned and what do we need to change in this plan? How do our leverage, how did our leverage change? How did our conversion, like maybe we were way off on how many leads we would convert to, to demos and demos to customers and so and so forth? And so we went through an exercise in, um, actually at the very beginning of April for the, for the rest of the year and said, okay, well, we, we changed how we measure leads. And, uh, and, and we expect to get fewer leads from events and conferences.

Um, and, and so we modified everything and looked and said, okay, well, here’s our new revenue goal. And here’s how it impacts our, our cashflow. And we’re going to have to slow hiring how’s that going to impact sales. So for me, it starts at building a really good financial plan that has enough leverage that you can test it on an ongoing basis, and then you can make better decisions about how you’re going to drive your growth and you’ll get better and better and more accurate over time because you’re changing periodically to get closer to, to reality. So I think that answers your question.

Yeah, no, I love that answer. That was great. Um, I actually, like I had like another question I wanted to ask and then it’s like, uh, I think a good opportunity right here. So as we’re going through like an obvious, like the obvious examples COVID, but there’s like other examples where like, you know, the business, like the business, it’s a downturn or the economy hits a downturn. Um, I know like the company I worked at previously like we had a whole plan around if, and when a recession happened, how are we going to deal with that? Because as we were working in real estate. So I’d like to just like ask, like, when you think about those kinds of levers in the financial plan, and as you’re working with other teams, um, like Drew, you’re talking about like, you know, like working with like operations and other teams as well, what are those levers that you’re thinking about? What do you have at your disposal, to pull to conserve cash, to minimize burn rate, to get through those tougher times?

Yeah. So there’s, um, we’re doing a number of things right now, uh, that is kind of obvious, right? Like you’re checking your spending, you’re canceling any sort of travel you’re looking at like office space and like little things that you can adjust to, to save a little bit of money. Um, I think finance can have a much bigger impact by, uh, providing insights and value, um, top-line growth, and also insurance. So I think when you look at, uh, like when you look at our business, we’re able to save a lot more money by reducing churn by one percentage point, rather than like doing an entire audit of every software that we use and trying to save 10% on software, we would, we, uh, we would save so much more cash if we could just affect turn a little bit, or if we could increase revenue a little bit. So being the, um, helping out the organization with top-line growth and churn and things like that, I think are much more valuable than finding little places to save money. It doesn’t mean that you shouldn’t do it. You should definitely try to cut back where you can, uh, maybe push some headcount planning, but maybe pushing your headcount back and things like that. But, uh, more than anything, um, top-line and churn are what affect our business the most in cash. And so that’s, that’s where I’ve tried to spend my time during this.

Um, I want to dig in there just a little bit, ’cause that’s really interesting, the idea of, uh, really trying to tackle churn as a, as a problem, as like a lever to conserve cash to, uh, I really love that, but like how, how have you been, how have you been working with other teams to address that? Like what kind of like planning or recommendations or like, you know, how are you actually starting to take action on that idea?

Yeah. So for example, right now, training, you will, our product team is testing a few things in the signup flow process. So when a customer goes online to sign up for our product, they’re doing some AB testing. And so, uh, our organization is helping them analyze the results and see which flow wood is going to result in a stickier better customer. And so being able to help them analyze that, um, on a weekly basis is one way that we’re working right now. Uh, we’re working with customer success to identify what is, what makes, uh, our customers most successful so that in their first month or second month of being our customer, what can customer success do to get them to value quicker so that they’re less likely to churn and one of the first few months, so those are like two things that are going on right now that we’re trying to solve. Uh, it’s not perfect,

But, having somebody that can sort of sit in the middle and understand how each decision affects their department, I think will be valuable. And then Chris, let’s go back to you on the, uh, like the levers, like how do you think about levers that you can pull to help conserve cash to extend the runway and that sort of thing at startups?

Yeah, similar to virtuous, we recently raised, uh, sorry, similar to train you. And we recently raised money, so we feel comfortable, um, or the foreseeable future, however, we’re not comfortable. Um, we’re, we are also doing what we can to accelerate, uh, accelerate cash collection. And that, that comes from two sources. One is current customers and, and the other, which would be on, on the Richardson side and then new customers. So a couple of things that we’ve, that I’ve done is I’ve gone in, um, and made sure that I’ve looked at the upcoming renewals over the next 12 months. And I make sure that there’s nothing out there pending and make sure that we’re staying ahead of it from a timing perspective so that we don’t have a renewal pass, and we don’t get to take advantage of invoicing them in on a timely basis. The other thing that we’ve done is may seem counterintuitive, but we actually, um, and kind of threw out a promotion to prospects and say, Hey, if you sign up in the next, whatever, 30 or 60 days, we’ll delay your payments, you know, three to six months so that we don’t need cash now, but we will get lump-sum payments over in the next three to nine months.

And hopefully, we’ll be able to acquire customers at a time. That’s kind of difficult for customers to be comfortable signing, but most of them feel comfortable that they’ll have cash three to six months from now. Um, and it enables them to do that. So we also have had a major push towards customers paying us annually or semi-annually or quarterly, but in larger chunks sooner. And, um, by doing that, it significantly extends our runway. Uh, but like drew said, the majority of our cash from here on out forever will come from renewals. And, and for that reason, it’s a critical piece of our, our cash forecast is, is the renewal.

That’s awesome. Fantastic. Yeah, I like that. Like, it just like, considering like the churn piece, it doesn’t seem super obvious when you’re thinking about like the immediate reaction like the knee jerk is, can we get out of our lease? Can we get back hiring? Can we like, do these, you know, like tangible things to stop spending money, but you’re thinking about things in terms of how do we keep revenue coming in? How do we continue like that flow? Or how do we really like double down on renewals because that’s easy and low cost? That’s really interesting. I like that a lot. Yeah.

And I think that typically the expense side is the easiest thing to control. Um, it’s easy for me to be within a couple of percent of my projected expenses month after month. Uh, just because we, we have total control over that. We have a lot less control over, uh, customers and their, and their decisions. And so by doing this, we’re, we’re helping incentivize them and helping them make certain decisions. But on the cost side, marketing in a growth stage company, there’s a lot of money going out and marketing. It costs a lot of money for SEO and for acquiring leads. And so if you’re wasting money and you’re not watching your ROI on that spend, then you could end up in a bad place. Also. So like recently I sat down with ours, our director of marketing, and we mapped out exactly what, uh, the value of a sales accepted lead was for us. And then we wanted to look at what is the value by lead source because each lead source has a different value and each lead source will provide a lead that has a different conversion rate that might have a different average selling price. And by identifying some of these basic things, we’ll be able to watch this and see where we should be spending more money to get a larger return, which will in turn drive collection down the line. So we do have other smaller lever levers outside of

That’s great. Drew, are you going to say something?

Yeah, I was just going to say that, uh, Chris, Chris, and I are both working for companies that are in a unique spot where we just raised money. And so cash is not an immediate concern. It’s definitely not something that we’re like, just thrown around like crazy. But, uh, if you were to talk to finance people at other companies, they would be having a much tighter control on spend and they’d probably be trying to get out of leases and they may even have to fire some people. And so, fortunately, we haven’t been in that position at Trainual. Um, but we have the luxury of a pretty decent balance sheet where we can, we can, we can then focus on maintaining growth or decreasing churn and things like that.

To add to that, I, there’s a little bit of a lesson learned for us in this that I think is valuable because you don’t know when Jake, you had mentioned, you know, you had a plan, what will we do in the case of the recession? You don’t know, you don’t know when that’s going to happen. So what would you say to protect you to protect yourself against that? And we didn’t take on a word debt-averse. We don’t like debt. Um, and, and so when we, with our series, a, we decided against, um, taking on any debt, and that was kind of a hard decision at the time we looked at the cost and we looked at our runway and where we thought we’d be, and if we would need it, and at the time it didn’t make sense. It was purely an insurance policy and likely an expensive one at that.

Um, in retrospect, it wasn’t, it wouldn’t have been that expensive. And had we had that in our back pocket today, we would have probably runway to cashflow breakeven at some point if we wanted to. Um, and so luckily we have some growth and some stability, and luckily we just raised our series a so part of what I’m doing aside from being able to get the PP he loan funding, um, I’m still reaching out to the capital sources and venture debt sources and seeing what’s available because right now the insurance policy and that security for the unknown, uh, seems, it seems like a good bet. Yeah,

That’s great. I have a quick follow up question. Talking over zoom is so difficult. I feel like I keep trying to say something and I’m another thing, someone, um, I would just be curious for both Chris and or drew, have you seen your marketing spend and the growth strategy change at all with COVID specifically in either the sources that you are acquiring leads from, or your messaging, or like any sort of pivots in your business or your, your strategy over the last three months?

Y’all we, so we actually, that time we wrote a book when Amazon, we had all the books in Amazon’s warehouse that like basically the day they said, yeah, we’re not going to ship any books. Um, we’re ordered a bunch of books and had them, um, on-site. But so we had this idea that we were going to be using our book and, and Cindy now mailing it out. And luckily we have some that we have been doing that with. We expect it to be at events and conferences that were going to drive the majority of our, of our leads by far the majority. So we’ve had to be much more creative and we have done plenty of what the CEO, uh, our director of partnerships has been. They have been busy with multiple webinars. Uh, every week we hosted an industry thought leadership conference on our own.

We’ve been participating in other virtual conferences and getting as many leads from those sources, but we have had to pivot a little and, um, you know, whether that’s through Mo it’s, a lot of it has been through partnerships with we’ve had an increased focus on, um, partnerships and getting referrals from, from partners. Um, and we have shifted our SEO and kind of retargeting strategy because, you know, some of those things haven’t been working, but, um, I think one of the other interesting things we did was we launched a Slack channel, which aligned really well with this responsive fundraising focus that we’ve had. And it wasn’t just a Slack channel for our customers, but it was for, uh, anybody in our industry and what we hosted. I said Slack channel. I mean, it’s a Slack channel. Um, and it’s also for anybody in our industry. And so we’ve seen that work well quickly. We had almost 200 people join the group, the Slack group, and we are able to add value, uh, from the things that we’ve learned, excerpts from the book, we’re able to see these prospects and customers, uh, get together and brainstorm ways that they’re navigating the current situation. So that’s, we haven’t necessarily had a lot of leads come from that, but it’s been a big brand-building opportunity that we otherwise would have tried to get from conferences and trade shows. So that’s been interesting. Nice

Drew. Same question if you remember the question.

No, no, it’s interesting. Cause I actually started full-time at trivial during COVID haven’t met most of the team in person, uh, finished school. I worked for Daniel part-time, uh, during my last semester and then, uh, started full-time a few weeks ago, but, uh, so it’s been, it’s been an interesting transition, but, Trainual is a great tool for remote teams. And so our marketing team has done a really great job positioning it as such. So teams are able to document their policies and procedures and help with onboarding. And, uh, it’s a really great tool for remote teams. So we’ve been able to spin up a site, um, think it’s called remote work resources. You can edit that in there if you’d like, uh, there’s a finance guy, not a marketing guy. So I’m not prepared for all of the, uh, the brand questions, but spin up a site for people to go get information about remote work resources.

And, um, just like Chris our CEO and COO have been doing a lot of webinars and virtual conferences. We’ve, we’ve shifted some money that we were going to spend on trade shows and events, um, to more to virtual events and things like that. And it’s, it’s worked out well. We’re keeping a closer eye on marketing spend. Um, but as Chris said earlier, we’re just looking at what our plan and goal were for the year and trying to make sure that we stay on track with that while still being efficient. So we’ve done some spinning and marketing too, to help during this time. But nothing drastic in terms of a pivot from our product or anything.

Let’s shift gears a little bit. Um, I like to think more just in general, about the growth stage for startups. So like looking back and maybe this is also like people in your network, uh, other companies, what’s the most common mistake you see startups make during the growth stage. And then, you know, looking at that, like those big challenges, uh, the common mistakes, how can founders best prepare to avoid those pitfalls?

Yeah, so, uh, both just based on my experience and then also sitting in seeing other companies, I think the hardest thing for companies to do during their sort of rapid growth has learned to say no. So it’s really hard for companies to say no to enterprise deals. If they’re an SMB product, it’s really hard for them to say no to partnerships. If they look bright and shiny and like they could bring in a lot of money. But, uh, so the mistake that I see it most often is that, uh, founders and early-stage companies lack focus, and they try to do too much because, uh, because the money looks good. So I would say learning, say no, focusing on what you do best. And, um, being disciplined would be one thing. It would help a lot of early-stage companies love that. Uh, Chris, the same question. What’s the most common mistake you see during the growth stage and how can founders and teams best prepare to avoid those challenges?

Yeah. I think it’s a bit of a catch 22 because I feel like most CEOs lack focus and it is part of what makes them great. There, they have ideas they’re kind of everywhere, but it is. It’s what makes them great. It’s why they’re in that position. And most of the time why they’re successful, but it’s exactly, it is exactly like you were said, you lack focus, you try to do too many things. You, you, there are so many ideas coming at you of what you should be doing. And so it’s really hard to stick, to stay focused, and actually execute on those ideas. Um, I think it, the success I’ve seen most is probably a Virtuous. I really have liked the simplicity of the goal setting. Um, I’ve used a variety of different, different, uh, goal-setting methods at one company. It was a four disciplines of execution and they all kind of align, um, at, at virtuous we use rocks and, um, it’s part of traction with traction every quarter, we set three rocks and they’re usually outside kind of your normal day to day thing.

What are the big things that you need to move during that quarter? Um, and then it allows you to focus on that. Yeah, you still have to continue to do the day-to-day, but you stay focused on that for a period of time and you end up getting those things done. You don’t try to do too much. You set just enough goals and you get it done. And then if you come up with another good idea, do it the next quarter. If there’s something you didn’t finish, finish it next quarter, but don’t overwhelm yourself with so many goals that it becomes impossible to achieve. It is probably, that’s probably how I’ve seen the most success is just setting the right number of goals and focusing on them.

I’d be interested since both of you have worked at multiple software companies and interface with the boards there and Drew, you’ve worked with venture capitalists at the firms. What are three tangible pieces of advice that you see given over and over again from investors to their portfolio companies, to both of you?

It’s hard. Cause I, I think that the most recent things that I’ve experienced, and Drew’s probably experienced them too. But as far as the question was most common kind of advice from the investors or the board members, um, you got me, sorry. So the top of my head really quickly, but, but I’ve really enjoyed differently. I’ve noticed that different board members, um, provide different value, uh, in a board meeting for example, or outside of the board meeting. And they all serve different roles and it can sometimes be overwhelming, um, interacting with them. But if you understand that, they have your best interest, the company’s best interest at heart, and that it’s an opportunity for you to learn from their experience and their knowledge. Then it makes it a bit easier. Uh, one of the board members, at Virtuous was, you know, initially, uh, come off as not intense, but just, he’s very smart, very analytical.

And I, I quickly realized that when he would, when he would make corrections to something that I delivered, it was to help me. He’ll not find the wrong thing. It pushes me in retrospect to really appreciate it. And it’s changed how I, how I look at things. So when I talked to her earlier about having kind of levers at a more detailed level on your plan, uh, it was driven by, that influence and it’s been really helpful. So they’re there to help you. Um, and sometimes it can be overwhelming, but, you know, take it with a grain of salt.

I would say, uh, don’t wait for the quarterly board meeting to deliver important news, both good news and bad news, right? Like, I think the last thing investors want is to show up to a board meeting and find out something that they had no idea about that they could have helped with. And that at least from the, from the VC side, I have seen that, yes, investors are busy and they’re doing a lot of stuff, but, uh, a lot of times they just want to know how they can help. And, uh, they have, uh, they have Rolodexes where they, if you need a VP of sales like you, should talk to them. Cause they know a bunch of people that could help with that. So going into your board members early and often about issues, good news, questions that you have would be like a, a main piece of advice is to get to them early and often be transparent with them. Like send the board deck a few days early and like, see if they have questions about it and make sure that you’re calculating things the way that, uh, that they would expect so that you don’t get yelled at. Like apparently Chris has in the past. Uh, but, but yeah, be transparent and, uh, talk early and often with them.

Yeah. And adding to that, there’ve been, um, multiple times recently where a board member has commented, uh, commended us for being quick to take action. So one of the things that we, that we do is we always take notes, of the action items. And then we report back on those. Um, even if there’s a delay from our initial deadline, we’ll say, Hey, this is where we’re at. And we take action on it. Not that you have to do everything that they, that they suggest, but, um, they really appreciate the transparency and being quick to take action on, on their requests and, and why it will benefit you down, down the road. Again, in the current situation, I don’t know where fundraising is going to go. I hope that we face zero cash problems in the future, but if we do, I want to be one of our investor’s favorite companies where it will reinvest if needed.

I see. Yeah. That’s a, yeah. Good to be the favorite, in that case, let’s closeout. Let’s close out on this question. Um, what is this like for both of you, what’s like the one main piece of advice that you would give to a founder, or maybe like another head of finance that’s looking to grow and scale a tech startup. So like your one key piece of advice?

Yeah. Anytime there’s a one piece of advice. I mean, there’s so much advice to give it’s all bad, but there is, there’s a lot of advice. It’s the thing is what’s interesting is what you expect from an operational finance, um, the leader is for that answer to be around metrics. And it should be. There’s often so much going on, but for every CEO that I’ve worked for, their focus is on metrics. They want you there because they want to be able to make decisions based on data. So the one piece of advice I would probably get give is, let’s say you’re brought in, uh, as the first finance leader, get your data clean, and something that you can rely on across the board and across the organization and the value that will come from that. Not everybody will understand the value of it immediately, but, um, make that your goal to be able to measure, um, to be able to provide accurate metrics.

And that, that goes from making sure that sales reps are properly entering data into details in your CRM. And when you close a deal, making sure that data is accurate. And if you have to keep a separate spreadsheet to be, uh, measuring your increases and decreases in, in your ARR, by the customer, by product and do that until you can afford a system to do it for you, but also go in and clean and clean that data right away and create a new baseline for yourself. And it will provide value. It will provide value for a long time and, um, where you don’t expect it at times too, it will increase your company’s enterprise value your valuation. When you go to raise capital when the investors can trust your numbers.

Chris says that about cleaning data and keeping separate spreadsheets because he inherited a bunch of really crappy spreadsheets for me at everything we were manually tracked because I didn’t trust anything. You track everything.

The one piece of advice, I’ll, I’ll say that this is a piece of advice for a finance leader at a start-up, right? Sasha knows that I’m obsessed with anything that is written by Ben Horowitz from Andreessen Horowitz and that he, uh, I sort of like live and die by the things that he says. But one of the things that I really like that he talks about is, uh, the three most important things are the people, the product, and the profits in that order. And I think sometimes as a finance leader, you’re so focused on the profits side of things that you can forget about the other two. But I think even as a finance leader, uh, the order doesn’t change that you are, you got to make sure that the people than the product, then the profits are the most important things. And while the realm of your sphere of influence is mostly on the profit side. Um, as long as you keep those things in the right order, that you’ll be able to effect change at the organization. So that’s yeah.

Thank you both for spending time with us this evening, this has been a delight. Thank you. Appreciate you sharing all of your wonderful insights with the world.

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