Silicon Valley often feels like it is all about the founders. What they read, what they eat, who they know. But a stream of defections from Wall Street to the Valley has brought attention to an equally important but often overlooked role: the chief financial officer. Headlining the trend is former Morgan Stanley CFO Ruth Porat, who joined Alphabet in 2015, and former Blackstone CFO Laurence Tosi, who joined Airbnb in the same year.
But those who play an even more crucial role at the start-ups that dot the Valley are the first CFOs. These executives get to define their job, often taking on unusual duties as their companies grow. They may raise money from investors and sometimes they will take their companies public — their ultimate test.
Here, three CFOs, each of whom was the first at their company, give a rare glimpse of what their work entails.
Sarah Friar — Square
As CFO at Square, the merchant payments company, Sarah Friar reaches for a sporting analogy to describe what she does. Being CFO is like rowing the seven seat in an eight, she says, which sits second from the front and helps to set the pace. “The seven seat’s job is to take what this crazy person here is doing, and make everyone else in the boat feel like they can do it,” she explains. The seven was the seat in which she rowed while studying at Oxford university. “I actually feel like it’s a great training for my seat at Square.”
In this case, the person setting the pace is Jack Dorsey, the Square founder who is now CEO of both Square and Twitter. While it is an unusual arrangement, Ms Friar says it has been working well. “What it’s done is allowed me to step up in ways that, maybe in a traditional CFO role, I wouldn’t have been able,” she says. She has taken on some non-traditional duties since joining Square as CFO in 2012, even running infrastructure (such as servers and databases) at one point. She jokes that “ran” might be too strong a word: “They ran me, would be a better way to put it.”
Ms Friar, from Northern Ireland originally, took Square public last autumn, at a time when doubts were swirling over the valuations of private tech companies. Square priced its shares below the level at which they had been valued by private investors. But in hindsight that looks smart: Square was one of the last start-ups to achieve an initial public offering before market volatility put a halt to other new tech listings.
After spending more than a decade as a banker and analyst at Goldman Sachs, Ms Friar says it was odd to be on the other side of the table during the IPO roadshow. “It’s like karma in the universe laughing at me,” she says with a smile. “No doubt I’ve seen this IPO process from a lot of different angles . . . I would probably tell my former analyst self to have a little less hubris and a little more patience.”
One of the biggest changes from being a banker is the importance of hiring and people management. Square had just 250 employees when she joined; now it has 1,500. “You just don’t hire at that sort of pace when you are at a bank,” she says. “You have to spend an inordinate amount of time on the people side,” she adds, preferring to do this in the mornings when she is freshest.
Square is unusual in the tech world because many of its senior management are women: roughly two-thirds of its employees report to a female boss. “I’ve never worked in an environment that was so balanced,” Ms Friar says. In her earlier career, she recalls being the only female software analyst around. Now she sometimes worries that the men get a bit drowned out in meetings.
Still, she is a vocal advocate for more gender diversity in tech. Even with the gradual advance of a handful of prominent women, “you can’t brush it under the carpet and pretend there is no issue, there clearly is”.
Will Gaybrick — Stripe
As a former programmer, financial analyst, lawyer and entrepreneur, Will Gaybrick has an unusual résumé for a CFO of Stripe, the payments company. His programming skills have become rusty: “I’m not sure I could still get a job at Stripe as an engineer,” he confesses. But understanding the way engineers look at the world is key to his job. “Our core constituency, developers, have a very unique perspective on how the world should work, which is around efficiency, logic, speed, clarity. These are not words that you would always ascribe to incumbent global financial infrastructure.”
Like Stripe’s founders, Irish brothers John and Patrick Collison, Mr Gaybrick has a gently cerebral air. He met Stripe as an investor in the company — his venture capital firm led a round of fundraising for Stripe in 2014. Now that he has gone in-house, he says his background as a VC was “very helpful” — not least because he already knows Stripe’s other investors.
With a valuation of $5bn, Stripe is San Francisco’s most highly valued payments start-up, and its roster of investors includes heavyweights such as Sequoia, Kleiner Perkins, and Founders Fund. He says investor relations has not been a big part of his job so far, which is unusual for a start-up CFO. “Keeping that investor base really narrow has its advantages,” he reflects. The company, which provides developers with tools to accept payments, has not raised new money since Mr Gaybrick joined.
He compares the finance team to a “translation layer between the brittle and byzantine interfaces of the global financial infrastructure” and the clean interface that Stripe presents to its customers. As for his greatest challenge in his new role, he says it is time management. “Joining an organisation that has grown this fast, it is a lot to metabolise.”
Brian Roberts — Lyft
At Lyft, the ride-sharing company that is locked in competition with Uber, CFO Brian Roberts is fairly new to start-ups. He hails from Microsoft and Walmart, and did time as a banker with Evercore and Lazard Frères. When he joined Lyft a year and a half ago, there were a lot of firsts: his first time at a start-up and Lyft’s first time having a CFO.
He seems thrilled by the pace of growth and the speed at which executive decisions are taken. “What I love about my job is that it is about so much more than just the numbers,” he says.
Beneath the feel-good vibe at Lyft headquarters (where the corporate colour is neon pink, and the company logo is a moustache), Mr Roberts has also added financial heft. When he joined in 2014, Lyft was a distant second to Uber and had raised $350m from investors. Mr Roberts helped raise a further $2bn — including from Chinese ecommerce company Alibaba, and activist investor Carl Icahn.
Many CFOs would tremble at the prospect of Mr Icahn, known for his attacks on companies. But Mr Roberts says Lyft approached Mr Icahn first, adding that the investor personally plunged into Lyft’s financial models. “He was like, cell E84, what is that.”
Lyft’s fundraising has not been without wrinkles, though, including efforts by Uber to block its access to capital. At one point Uber required that potential investors sign an agreement not to invest in other ride-hailing apps, including Lyft and Hailo, before it would allow them to see its financial figures. “I’ve never seen anything quite like it,” Mr Roberts says. “It was surprising that someone who would say ‘it is a winner-take-all market’ would literally be trying to block investors from talking to us.” Those agreements have mostly expired, though the rivalry continues.
Among the challenges that come with the start-up life is that it is more “personal” than previous jobs. “The highs are much higher and the lows are lower. When something doesn’t go your way, you take it personally.”
He highlights the age gap too: Mr Roberts, 47, says the average Lyft employee is closer to his daughter’s age than his own. But he sees a silver lining. “Until a certain age, you are able to suspend reality in terms of just being creative and brainstorming. Out of that, 80 per cent won’t work, but there are 20 per cent that are just brilliant.” His job, he says, is to take the good ideas and make sure they happen.
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