Mergers and Acquisition analyst to FP&A professional to SaaS CFO. This is the path that CJ Gustafson took on his journey to becoming the CFO at Parts Tech.
The common thread across each step of his journey was metrics, a perfect subject for CJ's appearance on the show. CJ developed his excel and financial chops during his first role as an M&A analyst, which served as the foundation for his success in modeling financial plans and budgets.
What are the critical experiences and learnings CJ learned in his FP&A role that prepared him for being a SaaS CFO. A unique opportunity in FP&A is being in the room with senior executives, and learning how successful leaders organize their resources for success. Building upon that, being able to ask questions of the senior leadership team provided him access and insights that most roles do not afford.
Having cross-functional insight across Marketing, Sales, Products, and Operations provided a holistic view of how businesses plan, make decisions and manage. When asked what the most surprising part of being a CFO, was the sheer number of vendor agreements that required review and approval, and the associated skills required to negotiate strategic agreements that directly impact the operational and financial performance of the company.
Mostly Metrics is the newsletter CJ launched about 2 years ago. What was the motivation to create a newsletter focused on metrics? First, being able to document and reference his learnings in previous roles. Secondly, the newsletter provided CJ the opportunity to ask thought leaders and successful executives, and investors about topics directly related to his newsletter. Third, CJ finds writing things down is key to him remembering and thus being able to recall previous learnings when required in the current working environment.
Heading into 2023, many CFOs are scrutinizing revenue and expense budgets at another level of granularity. So I asked CJ for his advice to other first-time CFOs as they prepare their first annual budget. First, CJ recommended the value of experiments before committing the annual budget to new ideas and investment areas. Secondly, make sure the headcount plan is very detailed by month, and use a "max" headcount model versus incremental headcount centric, as attrition is hard to forecast. Finally, CJ recommended no more than one new software platform be implemented per quarter. Limiting new software implementations is as much about the organization's ability to implement, train users and ensure effective utilization of the new software to gain the benefits, as it is to control the expenses.
What are the "metrics" that CJ is focusing on heading into 2023? CJ highlighted the need for a CFO to understand the metrics that departmental leaders use to inform their decisions. An example is going beyond CAC Payback Period to learn something like the importance of "activation rate" in a PLG motion and how that ultimately impacts the company-level financial metrics. Understanding the departmental top priority metrics also informs CJ's understanding of the budget requests the department executives are making, and how they will measure the ROI.
We also went into those "metrics" that are specific to a company, maybe even a North Star metric. CJ highlighted the shopping cart abandonment rate as key to understanding the PartsTech user, and how that one metric provides both product priority, and also a key performance metric to improve that has a direct impact on revenue growth. A North Star metric that CJ now uses is Gross Merchandise Value which is critical to understand, as it's at the center of forecasting.
If you are interested in the path to becoming a CFO, this episode with CJ is a great listen.