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03 Pricefx | With Tom Fencl, CFO

In late 2017, when Tom Fencl joined the Pricefx team as the CFO, the global SaaS startup had about 70 employees. Fast forward and they now have close to 400 employees stationed around the world and have raised more than $131 million in funding. It’s safe to say Tom has played a key role in this growth. In this episode of The CFO Playbook, Tom touches on the challenges he has confronted as the CFO of such a fast-growing company, including learning how to develop a team and navigate the global landscape. He also dives deep into what data he uses to track the company’s financial growth, his unique approach to the reporting process, and how he teaches his team to approach these numbers (hint: It’s with skepticism and a good old-fashioned pen and paper).

Notes

Episode Summary

When Tom Fencl joined the Pricefx team in late 2017, the global SaaS startup had about 70 employees. 

Fast forward and they now have close to 400 employees stationed all over the world and have raised more than $131 million in funding. It’s safe to say Tom has played a key role in this growth.

“As a CFO, it is your responsibility to make sure data, which is clearly one of the hidden resources of every company, is managed well, and that means centralization and consistency and some sort of hygiene around that,” he says.

In this episode of The CFO Playbook, Tom touches on the challenges he has confronted as the CFO of such a fast-growing company, including learning how to develop a team and navigate the global landscape. 

He also dives deep into what data he uses to track the company’s financials, his unique approach to the reporting process, and how he teaches his team to approach these numbers (hint: It’s with skepticism and a good old-fashioned pen and paper).

Guest Analysis

Name: Tom Fencl

What he does: Tom is the CFO of Pricefx, a fast-growing price optimization software. Since joining the team more than three years ago, he’s helped employee headcount grow 10x and has played a key role in the company raising more than $131 million in funding.

Key Quote: “I truly see the CFO role as the steward of clarity and steward of truth.”        

Where to find Tom: LinkedIn

From Tom’s Playbook

Track financial data that showcases company growth (it might not be the same metrics everyone else uses).

Through seven rounds of funding, Pricefx has raised more than $131 million. The company, in part, measures growth by tracking the ARR. Tom is also a big fan of the Rule of 40, because it’s a simple metric that’s easy to communicate. And although LTV is typically a metric companies emphasize, Tom doesn’t see much use for it in Pricefx’s case, as companies don’t frequently change up their pricing systems. 

Find a reporting cycle that works best for your operation. (Hint: There’s no one-size-fits-all answer.)

When it comes to reporting metrics, Tom’s team pulls numbers once a month,  followed by a quarterly review. To pinpoint larger underlying trends, Tom prefers to look at a longer time period, just so nothing is artificially adjusted. Determining your own reporting cycle will be based on a number of factors, including the sales cycle, enterprise segment and types of revenue (e.g. subscription vs. services revenue).

Careful — don’t get tangled in too many software systems.

It’s no secret there’s a whole lot of software out there, and it’s all pretty cool. But Tom warns CFOs to be mindful of the systems they put in place, as too many could become an obstacle to good data hygiene. This is why his recent focus is building a new software system for Pricefx — one that combines all the best elements of each one they use.

Episode Highlights

Tracking growth with practical metrics

“On a practical basis, I think the payback method, which tells you, Hey, you should watch how long it will take you to repay what you spend on getting the customer, focuses the mind and doesn't suffer from some of these more academic or theoretical parameters.”

Caution: Avoid artificial data

“Our sales cycle is … somewhere between six to nine months so … you have to also realize things take a while. [Reporting] monthly is a decent cadence. We tried to look at quarters, but quarters have, in my view, a sort of deceptive quality because something should happen in the quarter but just as easily could slip by a couple of weeks. Now it's artificial in another quarter. I'd rather look at a longer time horizon and see how things are evolving over time … I'm not a huge fan of quarterly reporting per se. I'm a huge fan of frequently reporting but also realize that you need to be looking at longer time scales.”

Balancing 2020 reflections with 2021 growth

“What we're doing now is trying to balance growth — as I said, nothing changes about the fact that we believe there is tremendous opportunity ahead — but at the same time, reflecting on the fact that the environment is still challenging, and there's a lot of uncertainty. It's not necessarily that bad things are happening. It's the uncertainty about what's going to happen next is what throws people off.”

Software is great, but so is a pen and paper

“There is something to be said for pen and paper and maybe a calculator — or maybe just do the math in your head. … I truly see the CFO role as the steward of clarity and steward of truth … You can't run a company without knowing what's actually going on, and it’s too easy for people to say, ‘Oh, it's flickering on the screen in front of me, so that must be true.’ Ultimately, you need to be able to look at any number and … independently evaluate whether it makes sense, whether it can be possibly true, and source it back to some document or some event.”

Being correct is one thing, listening is another

“As finance people, we often only pay attention to how we are right — and we often are right, and that's OK — but I think it's important to learn. And I wish I learned it earlier — to listen to other people. As I like to remind my friends and colleagues is … you need to listen to other people, even when you're right and they're wrong because you're going to understand why they are saying what they're saying and see the world from different perspectives.”

How to hire great finance professionals (it’s not only about the numbers) 

“People sometimes ask me what I'm looking for when I'm hiring people. There's really only two or three things that I look for. There is some level of sort of basic competency — I do need people who are smart and capable of dealing with unstructured problems … But besides that, curiosity is absolutely critical — the love of learning and love of inquiring about the world … I think that's a critical motivation for doing finance or really doing anything meaningful in the world. And then the third thing is …  just being good people.”

Top quotes:

“Depending where you are in your growth trajectory ... the finance function is critical in enabling [fundraising].”

“There are very few numbers that, on the growth side particularly, would make sense in a month itself … a month alone is often not telling you much because the different numbers could be quite different month to month.”

“As a CFO, it is your responsibility to make sure data, which is clearly one of the hidden resources of every company, is managed well, and that means centralization and consistency and some sort of hygiene around that.”

“I truly see the CFO role as the steward of clarity and steward of truth.”

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