The importance of finance teams is at a peak. The business landscape is turbulent, and the best finance teams will step up to lead. David Sacks described it best on last week’s all-in podcast [1]:

In an upmarket 📈 3 things matter: 

  1. Growth
  2. Growth
  3. Growth

In a down market 📉 3 things matter:

  1. Growth
  2. Burn
  3. Margins

The best CEOs, like Frank Slootman, will argue that growth, burn, and margins always matter. 

The implications of executing against growth, burn, and margin plans are immense. Startups are racing against their runway. Growth stage businesses are growing into lofty valuations. Public companies are trading down as much as 50%. At all stages, investors are fleeing to high-quality companies and heavily discounting businesses with questionable performance. 

In these situations, businesses that have a firm handle on their operations and can pull the levers to generate the results needed to survive or capitalize on opportunities will separate themselves. As Chamath put it [2]: 

“We’re going to see a divergence of companies. There will be a handful of companies who have a handle on their business –– I know what I’m doing, I’m know how I’m going to perform, the levers are in my control, I’m going to invest in the future. Anyone else with a whiff of indecision will get completely whacked.”

He added:

“It’s up to the CEOs and their boards to be very precise. Those who have a handle on their business will be rewarded. Those that don’t need to blame it on macro.”

Seasoned operators like Frank Slootman were well prepared, but it’s not too late for finance teams to lead their businesses in a similar direction. 

“I came into Snowflake when it was growing 300% and reconstituted the culture to prepare for wartime. When wartime comes, I want to run the field. I don’t want to be laying off employees, that’s the time to hire. That’s the time to press the advantage. That’s the time to invest in new product.”

So for Finance teams, there are a few action items:

  1. Demand higher levels of financial performance. Raise your standards, speed up timelines, and be relentless in executing to plan. 
  2. Beat the drum of focus and priority (ROI). It’s never a bad idea to sharpen focus. Prioritize more and work to cut lower ROI investments. 
  3. Empower your people with the right tools and make them accountable for their financial decisions. Dial-in process and controls. There should be 0 surprises. 
  4. Forecast with more frequency and demand a higher level of accuracy. Stay informed, be agile, and prove you have a firm grasp of your business and your levers.

I’ll share more tomorrow about what I’m hearing from top CFOs about how frequent they’re forecasting in today's environment and the impact on their business.