Monthly Archives: October 2021

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Not Music To My Ears: How Not To Recruit A CFO

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I took a call from an executive recruiter the other day.

I’ve talked to this recruiter a few times previously.  He knows my background a bit (we talk about cycling – which I prefer to talk about vs. ASC 606).  Which is more than I can say for quite a few recruiters who reach out to me.

The opportunity was not of interest – mostly due to geography.  It was in the technology space.  But located in Arkansas.  Little Rock to be exact.  Bentonville might have made me pause.  But, Little Rock.  Nope, sorry.  But I digress.

During the conversation, the recruiter said something like “the company is looking for a CFO who will work with the Head of Sales.  The last CFO saw things a little too black and white.”

That’s a statement that should never be made in public.  Certainly not within earshot of an auditor.  Even if the CFO was a total asshole.  Reading between the lines.  The company had a CFO.  The CFO and Head of Sales had a disagreement. The CFO is gone.  

Not music to my ears.

What might the CFO and Head of Sales have disagreed on?

Recurring revenue model software companies are being valued entirely on a multiple of recurring revenue.  And not a small multiple.  Very lofty multiples. Could even be double digits.  Big double digits.  Here’s some insight into my opinion on all that (the NOT talking my book edition). 

So, obviously, managers of these businesses are highly incentivized to do everything they can to grow recurring revenue in the short term.

 “Money makes people do strange things” – me  

That was maybe my best answer to an interview question ever.  I suck at interviewing.  I offer no advice there.

Based on my own experience, the Head of Sales is highly incentivized to grow revenue.  An almost singular goal.  The compensation plan for the Head of Sales is likely entirely based on revenue.  They probably have some options / MIUs too (see the valuation discussion above).

But, the last time I checked, my Head of Sales is not going to sign the audit attestation letter.  So upside based solely on revenue.  Very limited downside.  What could go wrong?

The CFO wants to ensure the company is in compliance with accounting rules – among other things.  Which could be an opposing goal to booking revenue – if you care about not manipulating revenue or committing fraud.  As an aside, the CFO likely has a lot of options / MIUs too (ruh, roh). 

If I was on the board of that company, I would be…uncomfortable.  Yeah, that’s a nice way to put it.

Gear Review: True Temper Snow Shovel

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Sometimes the right tool makes all the difference.

If you live in a snowy climate and you are looking for an upgrade to those common, cheap plastic snow shovels that last about a season, get the True Temper Industrial Grade Snow Pusher.

This is the right tool for quickly moving snow around.  Especially the wet heavy snow that the snow blower cannot handle.  Or maybe that light 1 – 2” where it might be faster than actually getting the snow blower out in the first place.

In the 30” size (it comes in 24″ and 36″ as well), the Pusher makes short work of the sidewalk and steps in one back and forth pass.

Also, as the name implies, it is not really a shovel.  I actually don’t believe in “shoveling” snow.  I am lazy.  It is way more efficient to push snow, than lift snow.  Think snow plow. So the end of this tool looks a lot more like a snow plow blade, than a shovel.

After a bit of research, I snagged mine, in store at Home Depot toward the start of the season last year.  Totally worth it.

Influential Reads – September 2021

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“A man got to have a code.”  – Omar Little

Seriously?  Look at the chart on the right.  Talk about recency bias.  

Folks are in for a rude surprise at some point in the future if they thought September was a rough stretch.  That’s not a prediction of a near term melt down.  It is simply an observation about investor behavior and memory.

Finally finished Principles by Ray Dalio.  More to come here, but in short, I tried to read this book about 24 months ago and was just not in the right headspace apparently.  This time around, I really enjoyed it.  But it took some time and effort, in a good way.

Here are my most influential reads – in no particular order:

  1. Boxes, trucks and bikes – “However, there’s also another way to split this, that I think is becoming increasingly important – instead of looking at the product category and the buying journey, look at the logistics model. “
  2. Business History with Gary Hoover – “The whole history of business and the economy is a story of one technological disruption after the other.”
  3. When Over-Ordering is More Than Hoarding – “So that customer who is ordering a lot more right now than they historically have is not doing it to “hoard.” They’re probably doing it just to manage inventory properly.”  See this as well.
  4. Put These Charts on Your Wall – “The market doesn’t have to do anything, least of all what you think it should do.”
  5. How To Escape Your Financial Cocoon – “Transient events constitute our experiences. Viewing them as permanent compounds our problems.”
  6. Worry About Yourself – “Somewhere along the way I think people forgot that we’re only in the market to make money…If others want to blow themselves up trading recklessly, let them.”
  7. 5 Ways to Build Resilience and Conquer Adversity – “Resilience is the ability to create positive adaptations to negative events.  It’s the ability to take things like anger and sadness and make them useful and productive.”
  8. The fraught future of recycling – “Despite the heavy machinery and increased automation involved, the process is still extremely dependent on humans.”
  9. Distribution and Demand – “Whereas AT&T competes for customers in a zero sum game, content is best leveraged by reaching as many customers across as many distributors as possible”
  10. The Intel Opportunity – “Massive demand, limited suppliers, huge barriers to entry. It’s a good time to be a manufacturing company. It is, potentially, a good time to be Intel.”
  11. A Tunguska sized airburst destroyed Tall el-Hammam – “We present evidence that in ~ 1650 BCE (~ 3600 years ago), a cosmic airburst destroyed Tall el-Hammam, a Middle-Bronze-Age city in the southern Jordan Valley northeast of the Dead Sea.”  SMS here: Talk about wrong place, wrong time…

One more than normal because I could not decide.  My blog, my rules…

Note: This is based on when I read the article, not necessarily when it was first published.  Unfortunately, my backlog of things I would like to read always seems to dwarf the amount of time I can devote to reading.

Top clicks across the site last month:

  1. Financial Model vs. Operating Model
  2. EBITDA Is Not A Good Proxy For Cash Flow
  3. Family Adventure: Grand Teton #3
  4. Operating Model Tips
  5. Excel Template: Football Field Chart

Updated stats through September:

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