Keith is a finance veteran. He has over 15 years of experience working with venture-backed B2B startups, such as Host Analytics, Palo Alto Networks, Segment, Sqreen and Modern Treasury.
We interviewed Keith to learn more about the challenges and opportunities for finance leaders in rapidly growing startups. Here’s what he has to say about headcount planning, the upcoming recession, hiring the right kind of leadership, and much more….
Question: Why is headcount planning important?
Answer: In my experience, headcount planning is critical for early-stage startup success.
Headcount spend can easily be the largest item on the P&L, so we have to be diligent about managing that spend. However, it’s also something we can control, unlike revenue or revenue growth. The key is striking a balance.
For many startup leaders, our instincts are to match headcount growth to revenue growth.
But we also know that businesses generally need more headcount to increase revenue growth, through building products, generating leads, closing deals, or serving customers.
Striking the right balance can be difficult in an environment that is often chaotic and uncertain. But at the end of the day, effective headcount management can mean the difference between raising the next up-round or running out of cash.
Question: Why is headcount planning so hard?
Answer: Despite the high stakes, we still use legacy processes and systems that are not responsive to the challenges of headcount planning.
Therefore, we end up with multiple spreadsheets that need to be updated manually, data silos across multiple systems and teams, and many unnecessary meetings to try to realign with HR, Talent, and department leaders.
Even when we try to create processes for the many approvals and inevitable changes that need to happen, they’re messy and scattered across multiple communication channels.
Question: In recent times, what would you say is the one thing that has challenged you as a CFO?
Answer: In my professional lifetime, I had not seen western economies battle such a high rate of inflation. It has challenged the process of planning for CFOs across the world. The focus is on advance planning. For instance, we had begun planning for 2023 by the second quarter of 2022. Finance leaders across the globe have always prepared for brief economic turbulences. But times are different at the moment. We need to ensure that the leadership in the organization is prudent while spending each penny.
Question: Hard times demand hard calls. With the ongoing inflation and previously, during Covid, layoffs across industries have been common. As a leader, how do you take care of the morale of your employees and keep them motivated?
Answer: Layoffs are never an easy call to take but they are essential in order to cut down costs. They are one of the biggest indicators of an economic turmoil. I believe in being transparent with the employees. It’s important to let them know about the situation. They should be made aware that the situation demands them to buckle up. That the organization would need them to come together and perform better so that everybody can come out of the situation victorious. In my opinion, youngsters today are much more well-informed. They are also great at networking. I have witnessed people shift sectors once they are laid off and do even better in their new careers.
Furthermore, sometimes, layoffs are carried out to bring in new ideas in an old place. If a management is looking to clean up behavioral gaps in the system, they are bound to let some people go.
Question: What, in your opinion, is that one strategic cost-cutting measure that every company can rely on irrespective of its financial foothold?
Answer: One of the most important strategic cost-cutting measures is to look at redundant investments. If there are investments that are costing the company a steady flow of money but are not yielding significant returns, those investments should be relooked at immediately irrespective of how small or big they are. Instead, they should plan and make smaller investments that will certainly pay off in the future. For instance, for an organization in the IT sector, cloud-based skills are going to be in demand for years to come. So, investing in the right kind of manpower with an excellent cloud-based skill set will reap long-term benefits for such an organization. Now that’s something they can invest more in.
Question: In your career so far, have you ever had to make a strategic investment decision without the support of your CEOs or investors?
Answer: Fortunately, it has never come to that. Yes, I might have had to convince them because I strongly believe that CEOs and investors should reach a common ground while taking important strategic decisions. Around the year 2008, if one had to expand their company’s operations, the best move was to get into real estate. During that time, the companies I had worked with were not cash-constrained. So, they could make significant investments in India while the value of the rupee was falling. We negotiated with Indian builders and bought certain prime assets at great prices. It was a great move from the standpoint of investors also because they were able to see the financial benefits clearly.
.png)
