According to a report from Harvard Business School, as many as three out of four startups fail to succeed in the long term. To hold their own amongst established competitors, startups need strong leadership teams and effective business strategy. I recently spoke with Tridivesh Kidambi, newly appointed CFO of CallFire, a technology company that provides voice and text connectivity to businesses, to learn more about how a company determines it needs a CFO and what it takes to be the CFO of a startup.
Jeff Thomson: What has been your biggest challenge since joining CallFire?
Tridivesh Kidambi: Ironically, the fact that the company has so many different opportunities for growth is actually one of my biggest challenges. The team here has built such a versatile product. The most pressing task on my plate is helping to guide our decisions about which opportunities to attack and how to deploy our capital and resources to maximize our probability of success. Focus will be a very big part of my role and my contribution to the team.
JT: What is the biggest difference you’ve encountered between an established organization and a startup?
TK: A key role of the CFO at a startup is to build an infrastructure from the ground up. I’m fortunate that CallFire has operated extremely responsibly from a fiscal responsibility standpoint, but there is work to be done in terms of systems and processes to take us to the next level.
At an established company, the back-end corporate infrastructure is in place. You assume that when you need HR, IT, Purchasing, Facilities systems and processes, they are available and ready to go. Startups require more of a roll up your sleeves, put your ego aside approach where your time is split between the strategic direction of the business and helping it scale in a meaningful way for growth, and building out processes and systems to support that future growth.
JT: As you’ve transitioned into the role of CFO, what skills have you found to be most important?
TK: The ability to communicate your thinking and decision-making rationale is absolutely critical to success in any finance role. It is not just about building a fully integrated financial model and making a financial decision based on whether or not the output cell is green or red. You have to be able to explain why you are making the decision you are making, and more importantly, what the specific implications are to each individual stakeholder who is impacted. The only way to earn and keep the trust of the organization you work for is to be transparent and honest about the how and why of the actions you are taking and to focus on collaboratively helping each stakeholder reach their area’s goals in light of the financial model.
JT: CallFire’s founding team remains active in the company. How have you developed your relationship with them and provided strategic direction?
TK: It all starts with communication and transparency. Starting with the interview process, I have always been completely open with CallFire’s executive team and founders about thoughts and views, and most importantly, I have been very open about what I do not know. Our founders have lived and breathed this space for almost a decade, and their experience is invaluable. I view my job as helping to develop a process and framework to help rationalize and communicate what they already know in their gut. I have been committed to learning as much as possible about the business logistics, current opportunities, challenges and needs before offering financial insight.
JT: How can companies determine the right time to hire a CFO? How did CallFire come to that decision?
TK: Not every company needs a CFO, and prior to my joining, typical CFO responsibilities at CallFire were split across several members of the executive and finance teams. However, CallFire has reached a level of scale where not only did functions such as FP&A, accounting, treasury, etc. require a deeper level of senior management focus, it also became imperative for the executive team to maximize the amount of time focused on revenue and value creating activities. That was the tipping point when they decided to launch a search for a CFO. I also think that the decision to bring on a CFO speaks to the future. A dedicated finance executive with experience taking a startup to future success makes a statement to the community about how we view ourselves.
JT: You compare the role of the CFO to that of a personal trainer. Tell us more about that.
TK: CallFire is a special situation in that it is still a closely held company with its founders still present and very active in key roles throughout the company. The decision to hire a CFO was one that the full executive team was supportive of, and I liken that to the decision to hire a personal trainer. The founders knew that bringing on a CFO would require a change in the way they have historically run the company (where the underlying business is already healthy and profitable), and that there would be a certain amount of “pain” in introducing a new regime of “training.” Despite that, they signed up for the challenge and have been amazing partners in helping to educate me on our business while also allowing me to effect change.
JT: In today’s changing economy, CFOs are taking on greater strategic roles within their organizations. As I’ve said in the past, CFO teams are now considered “bean sprouters,” as opposed to “bean counters.” How have you experienced this in your career?
TK: When a finance team is working effectively as a business partner, they are brought in early on in the process of evaluating and determining key business decisions and initiatives. As a result, the finance team, and by proxy the CFO, have a unique 360-degree vantage point of everything that’s going on throughout the organization, and it lends itself to being able to draw connections between disparate parts of the businesses, and to come up with creative ideas and solutions, sometimes to challenges that the company was not even aware it was facing.
It is definitely true, and I attribute it to a gradual shift in how finance is viewed within companies. Ten years ago, at most companies, finance was seen as a roadblock, a department that was included in decisions only after the fact, simply to check the box. Today, and in my experience, I feel like a full part of a team where my financial views are weighed, as well as my business and strategic input. I’m not included in the end to say yes or no to a business allocation, but at the beginning of the process.
You have to be willing to put in the time to learn the business, and specifically, to understand the viewpoint of the business operators. Once you understand how they see the world, you can prove to them that finance can have a positive impact on their business. It can be as simple as finding a way to cut expenses on their P&L, or helping them gather and present data in support of a proposal in which they are trying to get approval. In either case, you cannot be successful as a CFO without having the trust and respect of the business operators and your peers on the executive team.
JT: What advice do you have for young professionals who wish to become CFO one day?
TK: To the extent you can, always say yes. Even if the request is for something completely unrelated to the task at hand, or finance in general, you never know whether it will turn into an opportunity to gain the trust of someone in the organization, or will clue you in on a data point that allows you draw a meaningful connection elsewhere. Learn the business, not just the numbers. If you are seen as a collaborative, trusted voice, your input will be sought out for more than just financial participation. You have the power to help shape, guide and mold the business, and that contribution goes far beyond a balance sheet.