What Start-Ups & Scale-Ups are Looking for in a CFO – Dr. Chris Sier, Chairman of ClearGlass

In CFO by Sophie Galtress

Reading Time: 39 minutes

 

CFO Introduction: 

Welcome to CFO 4.0, the future of finance, the CFO role is changing rapidly, moving from cost controller to strategic visionary. And with every change comes opportunity. We are here to help you take advantage of this transition to win at work. Drive your career forwards and lead with confidence. Join Hannah Munro, managing director of itas, a financial transformation consultancy as she interviews key experts to give you real world advice and guidance on how to transform your processes, people and data. Welcome to CFO 4.0 the future of finance.

Hannah Munro: 

So hello everybody. And welcome to this episode of CFO 4.0, my name is Hannah Munro, your host and with me today is Dr. Christopher Sier . So, he has a long list of accomplishments, but he is the FinTech Envoy for England, visiting professor of financial technology at the University of Leeds, Professor of Practice at Newcastle University, Chairman of Big Tech North, the innovation community, and also Chairman of ClearGlass. And it’s the Chairmanship of ClearGlass that we’re going to talk about today. So, welcome Chris. Lovely to have you on the show and nice to meet you.

Dr. Chris Sier:

Nice to meet you, how are you doing?

Hannah Munro:

Yeah, not bad, thank you. So today, obviously that is an incredible bio, an incredible introduction to how, from what I hear you actually started off or worked as a policeman as well. So tell me about your journey.

Dr. Chris Sier: 

Oh , history . Oh no, no, I just it’s it’s, it’s the usual thing, you know, the go to university , uh, start the university and realized the thing you started studying is not the thing you really want to do and flip. And of course, once you’re at a sort of an institution like a university and you, you get up the courage to change your course, it becomes a model for everything you do in life, which is actually there is a risk in change, but actually sometimes the change is tolerable. Uh, if you’re willing to take that chance. And so, so generally what I’ve done is I’ve followed my nose.

When I’ve not been happy about something, then I don’t accept it. I change it. And that includes my personal circumstances. So , um, you know , university , uh, I ended up doing Marine ecology , um, got a good degree , um, Marine environmental biology, actually, I should describe it and then did a PhD because someone offered me one and it didn’t have any plans at the time and, you know, fine I’m flattered. Right? So it was based in the Maldives, in the Indian ocean, working with the United nations, looking at climate change. Right? So, so I, I have a , I’m a firm believer in climate change with your El Nino and El Nino related climate change impacts , uh, severe weather systems and its impact on reef ecology in the Indian ocean.

Having done all that, I decided that I wanted to be a policeman because things are great, but people are more interesting. Um, and that’s purely is it’s purely as simple as that, right? You got a, it’s fine. It’s a great qualification. You put it in your back pocket. Maybe you use it or maybe you weren’t, but actually what have you learnt? And what I hadn’t learned was how people behave and actually people are fascinating. So the police seem to very hardcore way of learning about people and about life.

So, I did that seven years of that , um, learned a lot of stuff. I didn’t really enjoy much or people can be horrible. Um, and, and at the time, the seven years into the police, I met my now wife and , uh, and she was, you know, I’m sorry, but I worked for McKinsey in London and you work for the police in Edinburgh. And if we’re going to afford a family, then really it’s going to come off the back of what I earn . So, and I don’t want to move to Edinburgh . I want to live in London. That’s where I’m working. So, I had to move. And the obvious thing was not to shift, um , police forces because it’s very hard to ship it in Scottish or an English law , but to find a new career. So again, this paradigm of being happy and flexible with changing the working environment came to the fore.

I ended up working for an investment bank , um, in London and as a diverse analyst. And then everything beyond that is just learning about financial markets, learning about business, learning about , um, uh, companies , um, and how they operate , uh, the wider economy , uh , a markets . And , and, and here I am, Crikey, what, 22 years later now , um , having tried lots of different things within the financial world. Um, so yeah, that, that paradigm of being willing to change and try new things and is, is a very important one. Um, I’ve never wanted to have a handle turning career .

Hannah Munro: 

No, and I think that’s, what’s interesting about what’s happening at the moment in the world is that actually people are considering new opportunities, new directives. And I think it’s an, it’s an interesting shift. Isn’t it?

Dr. Chris Sier: 

Very scary, right? I’m not gonna, I’m not gonna deny the fact that, you know, every time you have to try something new, you’ve got to take your courage in your hands. It helps if you’ve got stability and finance somewhere, and I’ve been enabled certainly in the past 20 years by my wife who is just the most steady earner you could possibly manage. She likes the corporate environment. I , I tend my corporate environments and must a big corporate environment personally , around talking on a bot about CFOs. And the CFO is kind of the ultimate kind of corporate role that you can have.

It’s a C-suite person, but I’m not a big fan of them, but actually she, she likes that she likes to solve problems in a corporate environment. I don’t, I want to solve different sorts of problems. There is a mentality that you have to have, which is you have to accept that you will live always at the bottom of the learning curve. And the bottom of the learning curve is the steepest part of the learning curve. And in fact, what you learn is that you enjoy that part of the learning curve best as the most opportunity. Um, it’s the most varied. It’s the most fun , um, sitting on a plateau , doing the same thing every day to me is just an asthma. Um, actually some people that they absolutely like that, and they’re going to be forced to get back onto that learning curve and learn something new. But what I would say is this, that if you’re the boss of the learning curve, it can be a lonely place, but it’s a lonely place because the thing you’re doing is hard. And if it’s hard, there’s probably value in it because it means it’s something that people haven’t done before.

So actually one of the things you learn is to say to yourself, I’m going to look around the market and look at the things that people aren’t doing, because they’re hard. And then I’m going to attack that problem. And the chances are, if you can solve it, there’s huge value in it. You’ll become unique, you’ll become important. Um, you’ll be able to solving a big problem. Um, and there are some very subtle problems out there that people just assume and not a problem, but actually are that if you solve them, have huge value and one of them is pension funds, right. Um, so, you know, that’s my, one of my , um , big roles at the moment. It’s the CFO of a company that looks at the pension fund market.

I can list the companies that work as start-ups in that  pension fund space on the fingers of one hand. I mean, it would take me an hour to stop listing the companies that work in payments. Yeah. You know, all crowdfunding or peer-to-peer finance or any of these other things. How many people are looking at this peculiarly complicated and difficult space of long-term savings. Very, very, very few. And therefore there’s merit in doing it because, Oh, sorry. God, no . And so there’s , there’s married marriage and doing it because it’s hard because there’s value. You just got to figure out the space and there’s a lot of learning to get in that space, but it’s , it’s definitely valuable.

Hannah Munro: 

And I think that’s an interesting piece because that sort of leads us on to the topic for today, which is about becoming a CFO for a start-up company. Because, from my perspective, everything you’re saying there is, is a complete shift to where a lot of CFOs are comfortable. So, there’s not a lot of certainty. There’s, you know, you’re having to really get involved with the growth of the company and drive it forward. Tell us a little bit about ClearGlass. Let’s give every our audience a little bit of perspective.

Dr. Chris Sier: 

I’m going to ask you a question. Do you have a pension fund?

Hannah Munro: 

No, well, I, assume I do cause we’ve got all of this also enrolment, but I’m not a big-

Dr. Chris Sier: 

So there in lies the problem, you know, you don’t even know if you’ve got one. Yeah . So-so of corporate pension fund is you , you definitely do have a pension fund because you have a state pension fund. Yeah . 100%. If you’re contributing to national insurance, you have a statement. So you have one pension fund, right. So you have a job. How many corporate jobs have you had since you left university?

Hannah Munro: 

See, I’ve always been an independent and built businesses. So I haven’t been-

Dr. Chris Sier: 

But you’re working for a company now, right? Yes . And it’s your own company? Yes. And you have an accountant, you have a payroll. Yes, exactly . Yeah. You’ll have a pension fund. Right. You have a default pension fund. Have you had that environment before? Have you ever created the same sort of structure doing something else previous? Like, no-

Hannah Munro: 

We’ve very much gone with Itas. I’ve been working with Itas for about 10 years.

Dr. Chris Sier: 

You have two pension funds. I’ve got six. Every time I’ve changed job . I’ve had a new pension fund , six, seven, right. And I’m by no means unique in, in, in finance, at least the way you get promoted is by flipping from company to company. And you generally don’t take those pension funds with you and you’ve got no idea what they’re worth and you have no idea how they’re performing.

So, it’s that the size of the pension market in the UK is 2.3 trillion pounds. And that’s a portion of a wider asset management market that serves what I would call institutional investors like sovereign wealth funds, charities, pension funds, insurance funds, which is 7 trillion plus in size 7 trillion. It’s a mind boggling number. And that marketplace does not communicate effectively with itself. It doesn’t data doesn’t transfer. It’s all highly intermediated , manual processing complicated. And the people who make decisions about buying or selling the services of asset management. So in your world, you’re , you’ve outsourced pension funds to a pension fund provider. They buy sh*t on your behalf. Am I allowed to swear?

Hannah Munro: 

Yeah, sure . Hey , I’m pretty sure everyone listens to this is over eighteen. So you’re absolutely fine!

Dr. Chris Sier: 

They buy sh*t on your behalf. Supplied properly with the information on how well it’s doing. So, so my job in clear glass is to help that process through a series of standards that we’ve defined and the other kind of technology process that helps take data from asset managers who look after this 7 trillion pounds and do stuff with it. They buy and sell companies. They buy and sell shares. They buy and sell, fixed income products. They buy say a whole range of different asset classes to match the investment objectives of the people who want that done for them, which in one version of the world is a pension fund.

Now, underneath that, you’ve got consumers. I don’t look at consumers. I’m not there to help the consumer to understand their data cause it’s really complicated. And also there are all kinds of unintended behavioural consequences that come with giving information to a consumer. I work with the sophisticated investor who is their representative. So, I work on the basis that if I give them better information, the markets for the individual improve people will save more. They’ll have more money. The performance will go up because the people who are representing them are having better information. So I intermediate that market. Um, and there is a very strong precedent. There is a very strong , uh, there’s a high degree of certainty that people are heavily under saved. The heavily under saved their money is underperforming. And the objective ultimately is to make sure that people have more money in old age dignity in old age, frankly, let’s give you one other example.

I hear a lot of talk. There’s a lot of , um , action in the health tech space. People are producing apps, they’re producing a technology. They’re producing drugs that improve longevity. Then they allow people to live longer. Now that’s nice. That’s great. But if you’re living in poverty, whilst you do it, it’s not good. So, so the question is, as you get older, your money starts to deplete. Your pension fund goes down. Maybe, maybe even at the point of retirement, you haven’t got enough money really to live comfortably. And your quality of life dies . Well. How long do you want to survive? Living in that kind of lack of dignity and poverty? So my ultimate objective is to make sure that people have some form of dignity and wealth in old age. And I do it by working for the people who make the decisions, who make the decisions about what to buy and what to sell on your behalf. Um, and it’s, it’s a financial thing, right? So it slots right into the interest zone of a CFO.

So, a CFO that, Oh , is there in my mind to help me understand what my company is doing and where it’s going and how the money is being spent. And to help me plan around the expenditure of that money to give me that predictive mechanism that says do this and don’t do that. But actually the difference and in , in a , in a big company, that’s kind of CFO’s role is to manage the finances of the company and above all to make sure the company doesn’t go bust, doesn’t go bust by inadvertently not paying taxes or not paying sufficient taxes and doesn’t breach the law, but also manages its money better. And in a complex , um , multidimensional corporate environment, that’s a really big job.

The truth about a CFO for a start-up is , um, do they have a title of CFO? Probably not. They’d probably be called chief administration officer or something like this, which is a sort of a , uh , a role which is multidimensional . It has some, some HR function in there maybe has some payroll function in there. Um, you know, there’ll be an accountant to back them up maybe, but, but at the end of the day, they’re doing a lot of modelling. They’re doing it in and with a high degree of uncertainty because the products that I developed, certainly I, because it’s all brand new and I’m in a new space, I’m not entirely certain, I can predict where the market is going to go. Or if indeed the thing that I want to build is going to be profitable.

I can give forecasts, but I need people to help me forecast that. And then I need to wrap that up into a financial model that helps me manage the cash both on an income and expenditure basis. So it’s a, it’s a highly, very job and would work very closely with me. But it’s not the same shape of a person, I think, as the CFO in a big company.

Hannah Munro: 

Yeah. And I think that’s, that’s a really important point. And I think there’s, a lot of either experienced CFOs or experienced FDS that are looking for something a bit more entrepreneurial. So we talk a lot about entrepreneurial thinking and that they , they, they want to get involved, but they know their skillset is very much around the financial, like you say , the financial modelling, it’s about keeping the business going, but being able to help develop those, you know, those pricing models and that strategic. So in terms of your perspective, what , what are you looking for in let’s call it a finance leader?

Dr. Chris Sier: 

Okay. Yeah. It is fun as there . So, so, so I think, I think to my mind, the CFO has always been somewhat a bit of a gun for hire. They have a transferable skill sets and whether they’re a CFO for a retail company or a financial services company at the end of the day, it’s the same sort of job, which is with slightly different numbers in a start-up.

There’s a couple of things that you have to have on top of that. One is , um, I would like to hire somebody who has some industry knowledge because it has to supplement my own because it’s a new space and I’m not , uh , I’m , you know, I’m pretty good at this space, but I’m by no means, you know , um, uh, there’s a whole bunch of things that I’d like to do that I don’t know that much about. So having somebody who can be a bit of a wise head around parts of the industry that I haven’t looked at, so new businesses that I want to build or new products that I want to build a new market spaces, that would be very useful. Um, but it has to be somebody that’s got some gravitas because at the end of the day, I think one of the most fundamental things about being a CFO is the ability to tell me the founder, no, right . It can’t do it because I’ll spin off all kinds of mad ideas because that’s the natural leaning of a founder, right?

The founders they’re , they’re the ones who come in right at the beginning to , to they’ve got vision, they’ve got the kind of, they’ve got this passion in them. They want to solve the problem. And they’re constantly thinking about new ways to solve the problem, but they , they kind of almost, they need to be managed or need to be brought back in line with managing the thing they’ve got as opposed to growing into something that they haven’t got yet, the constantly inventing new things. And it takes them away from the focus of delivering on this one thing. So the CFO has to have the gravis . SAS has to have the gravitas to look me in the eye and say, no, Chris, we can’t afford it now. That’s not an easy thing. Cause I’m , I’m , I’m a pretty strong personality. And I think I’m pretty smart. And I think I’m pretty good with numbers. Uh, the truth is probably neither of those things apply. So the person has to overcome my, you know , arrogance about the whole subject. So it’s gotta be somebody I respect.

Hannah Munro: 

And another thing that’s really interesting it’s that, that balance between enabling you to achieve what you need to , but also making sure that you’re still going in the direction that you need to-

Dr. Chris Sier: 

Could it be? And that, that I’ve got to have, they’ve got to command my respect. They’ve got to because I’m ultimately, I’m the boss of the company, myself and my co-founder, we, we make decisions bilaterally, right. And then sometimes unilaterally just because we don’t have time to talk to one another, but the point is w we have to have, we have to respect the person that’s saying no to us. Um, and they’ve got to have a logical reason for it, but above all, I’ve got to respect that .

Now that respect doesn’t come with age, certainly not. It’s not about an age thing. It’s not even an experience thing. It’s is a quality that is almost undefinable. And for me, it , it , it revolves around being really smart, being really creative , uh, being really curious, curiosity wins massively in my book, personal attributes. I want somebody that really wants to learn new things because I’ll have huge respect if they bring me new ideas and, and, and then I’ll listen to them, I’ll say, yeah, absolutely. I agree. We can’t do that. Thank you for bringing this to my attention. That’s great. Um, I’m , I’m relatively pragmatic, but I am an entrepreneur.

Ever since that first time, when I got to university and decided that chemistry was not the thing for me, but Marine ecology was, you know , I didn’t even have bothers you when I went to university as a, as an a level ever since that moment, when I took that decision to do something new, it’s always been a chain of, yeah , let’s make that . Let’s figuring out what the next decision is. What’s the next decision and somebody who can come back and divert me for what may be a disastrous decision through a mixture of logic and respect and , and financial modelling. Um, yeah, that that’s really important.

You know, somebody can come to me with all the skills of a CFO in the world. We’ve decided that, you know, we’ve worked as a CFO for a huge organization. And now we want to try something a little bit more entrepreneurial. If I don’t respect them, it doesn’t matter what their skill set is. I need to have that respect. And that respect is grounded in something wider than just skills as personal attributes. And I think that probably applies for most start-ups and most entrepreneurs. It because you don’t become an entrepreneur, unless you are determined to solve a problem. And that becomes your sole focus, I’m going to solve the problem, whatever it takes. And sometimes you have to have somebody say, no, you can’t do it that way because we can’t afford it.

Hannah Munro: 

You need your balance. And that’s one thing I’ve learned where obviously running companies is that your team, your especially your immediate team are the people that balance you. And if you don’t have the right balance, if I hire people that are way too similar to you, actually, that’s one of the most dangerous things you can do.

Dr. Chris Sier: 

I see. So, so here’s a great, a great comment. There’s a, there’s a friend of mine , um, Kerala Hendrix . Um, so she runs a startup in Estonia called sabbatical. And this is just one of the most diverse companies I’ve ever seen. And she hires on one philosophy, which is, I don’t hire for culture fit or half a culture value add. So if she has two people who have similar attributes to the functional attributes you need, she’ll pick the one that’s most different to her on principle or most different to the people within the company. And it hasn’t, hasn’t done her any harm whatsoever. So she’s, she picks if someone’s just weirder and more wonderful than every single way. But you know, you have a doubt because they’re just so against it she’d have hired that person while you’re still thinking about whether or not they’re too weird for you. She just because she believes in that. Um, yeah. And , and, and higher .

The other thing about hiring as well is always hype , always hire people who are better than you. Yeah. Every time I want to surround myself with people who are just much, much smarter, much more agile, much more , um, wasted in embedded in industry than I am, because frankly, it’s the only way I’m going to succeed. My vision is what’s got me to where I am me spotting an opportunity has gotten to where I am, but that doesn’t mean I’m the right person to solve it. At the end of the day, it’s a collective activity. And the way to solve it is to have people who are going to be much better than you every single time hire . If you come across it sometimes like , maybe I disagree with my co-founder on. This is if I find someone who’s just brilliant, I’ll want to hire them on principle and then find a job for them today.

Hannah Munro: 

I find for me it’s potential. So can I see them how them developing and, you know , it’s that balance, isn’t it? Do you , you know, do you hire , do you find a role for the person or do you find the person for the role and-

Dr. Chris Sier: 

Exactly. Exactly. There’s, there’s an issue here as well, which is sometimes them getting up to speed with the role you’ve decided that you wanted to do, you don’t have time to do that. And he’s of the opinion, like, no, we need this person right now who does this one thing. And I’m like, Oh, that person’s really brilliant. You can see them being fantastic in six months, time is like , we don’t have six months. We need this person now. And so we have this debate. It’s like, I’m sure we could get it up to speed. I’m sure we could get up to speed. And the truth is that you end up on a compromise and that’s, I need that person as a CFO to do exactly the same thing around this kind of functional role of CFO, but to still have the interests that wants to grow into other bits and pieces.

There’s one other thing, as well as a start-up, you’re usually cash staffed . So you have to have somebody that is willing to believe in you enough that they’re willing to take equity in view of a high salary. A CFO is a C-level role. Now I don’t pay myself anything at all, really. Um, you know, I have one of the lowest salaries in the company cause I’m the founder and the major shareholder and the same with my co-founder. We pay other people higher salaries, but you know, we’re not in the market to give people 150 K salaries. No, you’re a start-up . Everything is well below six figures and by default has to be. And so therefore, if you want a high , a high, especially a senior person, who’s got some gravitas, perhaps that senior person who’s got some experience. And this is why I’m saying that actually it’s quite good sometimes to hire more junior people. Not because they’ll they’ll, you can pay them less, but because they have more room to grow into new things. But if you do end up facing off against somebody who you really want, who is expecting a six-figure salary, you just have to say, no, I can give you half that, but I can give you some equity as well. And that requires them to want to be in a financial , stable, financial position.

So that actually the loss of cash is not a problem for them. It , it, it requires them to , to believe that the company is going to be successful and actually it’s more likely to be successful with them in it. And it means they also have to believe the vision of what we’re doing. So, we have a responsibility to sell them a vision, but if they don’t believe it, they bother coming.

Hannah Munro: 

And I think that’s a really important point because I think, you know, everyone loves work, you know, well, a lot of people love the idea of working a start-up, but actually when it comes to the reality, because it is long hours, it is, it is an impersonal investment when you’re at that beginning stage. And so that’s, that’s I guess, a shout out to those that are considering, you know, working in that finance leadership role with a start-up is actually you are going to have to not only get your hands dirty, but you need to, you need to accept that, that, that remuneration is not going to be what you’re used to in a big global corporate-

Dr. Chris Sier: 

One thing that you said, there , there is no job now that is not long hours, but in particularly in the current environment where people, where people are cutting back on , on resource, you know , people losing their jobs, furlough, whatever it may be, everybody’s going to find themselves working harder. Cause the same amount of work needs to be done just with less people. Um, and it goes without saying that, that anybody that wants to apply for a role with us is going to be working very, very hard, very smart with uncertainty. I know I have no expectation of FaceTime whatsoever.

If I work 11 o’clock at night and then get up at five the next morning as my business is not anybody else’s business. And I would never expect anybody to do the same thing. But what happens when you, you recruit with people with the same vision and the same passion for solving the problem is that if I do drop them mail to somebody and we use Slack a loss and , and uh, and I communicate with , with team members on, on Slack and I’ll be sitting there 11, o’clock working through some bits and pieces and our Sunday we’ll have a question and Slack is great because it allows me to not have to write the email or put a note down that I have to ask this person the next, the question, I don’t know if the morning I just Slack them. I have no expectation of response. 50 to 60. The people fits under the people will , will answer immediately because there , aren’t thinking about the same problems at the same time. And it’s just, I’m I’m , I’m like, I didn’t expect this answer.

Yeah, I know, but I run the company. I mean, what I would expect you to be up and it’s because you’ve got the right people in the company, and then you want to incentivize them with equity. You want to make them cause you , you recognize that they are, they are wanting the same successes you are, which is to solve the problem and be financially stable to sell the company or to , to spin off the company. This is, this is their dream as well. And it kind of makes you feel quite humble to be honest, that you’ve got these people who’ve bought into your vision , um, and have the same desire to solve the same problems . So, so that common shared vision , uh , tends to be, I don’t require it. It tends to be the same thing that everybody has. So it genuinely, you say working hard. I think everybody works hard. I can’t, I can’t differentiate the life of a start-up from the life of a corporate these days. Everybody works hard, long hours.

Hannah Munro: 

So I, I would S I , I think that’s an interesting point because I’ve , I’ve seen a real shift with the piece around COVID particular with people having more flexibility around their working hours. I think some people go one way, which is they end up working more hours. But actually, I think one of the things that’s been really interesting about cave is that it’s open people’s eyes to the piece about work-life balance. Yeah . Wanting more time, you know, they’ve enjoyed the time with their children. You know, some of them have actually enjoyed furlough and, and , uh, you know , I, you know, there’s conversations around , uh, the four day working week and all of these things. Um, and with the new technology that’s coming through, I think that’s for me, that’s my , my , I see technology as a work enabler for that.

Dr. Chris Sier: 

I don’t, I’ve never had this attitude. You do the work that’s in front of you. You do it till it’s done. And when it’s done, you think about the next thing, maybe it’s take a break. Maybe you don’t. Um , I tend not to take holidays. Um, and when I do, I tend to work with them on holiday, just because that’s me, but flexible, flexible working , um, is, is a magnificent opportunity. And , and I’ve been flexibly working myself. I would never judge anybody for being , uh, for wanting to have flexible working at all. I think it’s a fantastic, and , you know, there was a time when I was at the, kind of the, the managing director of a bank and , and I wanted to still be flexible, flexible working.

I realized that I actually had to work office hours cause everybody else wants to work at the office hours. And it was a horrible experience. Horrible. It was my one dabble into the corporate world in the past 15 years or so. And it was an awful experience just because of that one. Really that one thing was the expectation, particularly as the managing director o f the CEO, effectively of the bank, that you had to be there at certain times, because there was an expectation that you could deal with problems that were brought within working hours. And it’s horrible.

I don’t have any expectations that everyone should have the right flexible working. Everybody. It should be part of what you do and COVID has enabled us. It’s made people realize that FaceTime is irrelevant. The job can still be done without sitting in an office. You know, you don’t need to be sitting there in front of your boss. I mean, I I’ve heard of instances. I mean, very rarely, but there was a kind of a rumour went around that people they had , um, uh , technology that allows you to assess whether someone was sitting in front of their computer, have a posture that have a posture system , get the job done, and then take a break today. I’m , I’m , I’m at my father’s house, right? So you can see the pictures of my parents and above me. And, and, and, and I can do that because simply because , um, I’m flexibly working and I would be doing this anyway.

Even if it wasn’t, COVID, it’s half term for the kids, right? So I’m working through half term I’m here, so they can go and do their wind surfing and do their training down on the beach while staying with my father and I’ll work in the car, I’ll be working on this in the car. I have my laptop in the car and I’m sitting on the beach, watching them as they train , uh, keeping an eye on them. And I’ll get as much done doing that as if I were sitting at a desk, in an office probably more. Um, my, my , my creativity is stimulated by different environments, just, you know, and then the one thing I’d say about COVID is the one shame about it is, is that genuinely flexible. Working is not flexible. It’s not, it’s flexible in the fact that allows you to work at home, but it doesn’t allow you to work in different places. And I love the idea of being able to take my laptop and sit on a park bench, because all of a sudden the creativity starts to spark and the creativity.

Sometimes isn’t just about having new thoughts. It’s about having the sudden fresh working environment, which gets you working on something that you haven’t started for ages. I do a lot of writing. I do a lot of modelling, so modelling as needed , right. Preparing financial models and preparing that mean , not that kind of modelling Jesus. Right ? So not that kind of modelling. No. So, so, but, but it , it, it stimulates that creativity and the issue with , with COVID is it was great for the first couple of months, maybe when you were working at home, but eventually you got stuck in a run . I would say, mix it up. If you’re going to embrace , um , flexible working, embrace it. Sometimes sit on the sofa, sometimes sit at a desk, sometimes go in the gardens in the chair and figure out those varied work environments. Because every time you go to a new place, it kind of resets the clock inside you. And what was dull before, perhaps isn’t quite so dull in the new place. And , and, and that’s been a fantastic, I’ve always done that, but to see other people benefit from the same thing is, is wonderful. Um,

Hannah Munro: 

I must admit I’m a massive fan. So, I’m lucky enough to have horses at home and actually going out and I just let them grab a seat.

The ability sort of sets in, so I just grab a chair and I’ll just go out and I’ll sit on my laptop and, you know , obviously, and do that. And actually the thoughts and the, like you say, the creativity that comes with that is amazing. And there was an interesting article in HBR. I think it was this , uh, last week. Was it , um, around working from anywhere? So it’s not about working from home, it’s that concept of working from anywhere and that’s, you know, that is definitely something that’s coming up. So , so let’s start this back. Cause I think we could talk about all sorts of things on this podcast. So he, we talked very much about the similarities in terms of, you know, it’s long hours, whether you work in a corporate or whether you work in a start-up, but what do you think is the difference between the, you know, the start-up to scale-up CFO versus the established , um , corporate CFO?

Dr. Chris Sier: 

Uh , it has to be , um, you know, the, the ability to work on lots of diverse problems at once. I think, you know, so, so, so I’m , you know, the corporate CFO probably has a team of people to help them underneath , um, to help them to support them in terms of the decision-making actually, I’ll be looking for the CFO to do all of that in one person. So to give you an example of things, I would expect a CFO to do, right? So, so we’ve got a business plan. I’d like to keep the business plan, it , put it into shape, right?

So, that means modelling, not just all of the, what I think of projected revenues and historic cash flows, but modelling the tax implications. And at what point we should apply for research and research tax credits, you know, at what point is the optimum time for doing that? So I want some optimization around the model, right? I want somebody to come up with something that actually is really robust, that makes , uh, my VCs . So we’re taking on board and I’ll dial back a bit, right. Start up to scale up. We’ve just gone through around the funding and we’re just going through a round of raising money. And there was a whole bunch of modelling and financial modelling that had to be done to make the VCs understand that financial model I would have loved to have a CFO could have done that for me.

I’m still running the business and winning clients and delivering for clients and then put it together, stress, strategy decks, and all that kind of thing. Actually, at the end of the day, when it comes to the data room, they just want the hard numbers. They want to see where our invoices are, what the invoicing cycle is. They want to know when invoices will be paid, what the time to pay is on average. Uh, you know, when you’re going to get the VAT rebate, all of this has to be fed into a financial model to map what you think has happened to the reality of what has happened and the reconciliation of all of that, because you put your financial model forward and immediately your cash position is going to be different from the actuality of it. And you have to explain it. So CFO should be on top of that easily, but the amount of pain I’ve had to go through and not even me, but my colleague, because he’s the one that deals with the operational aspects , uh , that he’s had to go through and then sitting down with me and explaining how he’s come up with these numbers is, is, is phenomenal. And it’s not our core expertise because we’re not tax experts. We’re not the ones who are fighting for, for reclaiming VAT.

We don’t know how many invoices, frankly, have not been paid. We don’t even know how many invoices haven’t been created because we haven’t got the invoicing cycle where we’re you couple of hundred thousand pounds worth of income that we have to invoice. It’s pending, it’s due. When is it due? Is it due this month, next month? What’s the prediction around the invoices and all of that stuff, right? Is I want that person to do that. Right. And , and I would imagine the CFO, well I’m at , and I know a CFO, a CFO will be supervising that process, but I have a hoard of people underneath them. Well , you’ve got to get your hands dirty. You got to come to us and say, right clients, how many clients, how many of you sell to a bot point is the selling process, are the invoices? When are they invoice Hubble ? Is this a VAT exempt? Are there clients that are local government clients ? And therefore doesn’t need to have VAT and so on and so on and so on. Right?

So, they’ve got to get their hands dirty and they’ve got to be at all levels. The CFO from the most junior CFO type person, the kind of global financial analyst all the way up to the senior CFO, that’s the first thing , um, what else they have to do? Yeah . In this current environment, they have to work. Um, uh , they have to work virtually obviously, which means they’re not gonna be able to sit in the office and have everything at their fingertips. They’ve got, they’ve got to be. Um, so they’ve got to have a kind of , uh , the sort of personality. That’s not afraid to just ring up on spec , right. So they’ve got to be a bit of a salesperson in a way because , um, they can’t be a shy and retiring type.

Hannah Munro: 

I don’t think you’re shy, retiring type of fits in with yourself. Chris-

Dr. Chris Sier: 

It’s a ring around the company. So yeah. So, so I think, I think there’s an expectation for a CFO that there’ll be a data room, or there’ll be some kind of, they’re getting all this stuff through their inboxes. No, it’s a lot it’s sitting in people’s heads and the problem can be solved with a phone call. So you’ve got to be able to call members of the team up clients up. You’ve got to go and say, look, I’m sorry, you haven’t paid this invoice. Or I’m just checking this invoice because I think it’s wrong. Uh, and , uh, and then I’ve got to reconcile to our tax position and all of this kind of stuff.

They’ve got to be willing to get on the phone and be proactive and get out there and talk to people because it’s through talking to people because we don’t have as a start-up, the systems and processes and structures that they would normally be expected for the CFO would normally have existing in a big company. The third thing is that in the absence of those, they have to start setting them. So they’ve got to be willing. They’ve got to start putting structure around that whole process so that they don’t have to repeat all of that ringing around and doing all this stuff in the future. So they’ve got to have this kind of planning perspective and how, how can I get from this chaos where we are now to something which is ordered and structured, you know? And so they’ve got to have this kind of idea. They’ve got to have this kind of migration plan.

I’ve got the plan of how to transition the business, to grow the business strategically, to bring it the points to bring in new VC funding and which client segments I’m going for. And that translates to product build, which is run by my, my, my co uh , co-founder and all that product builds staff . And then at the same time, this person who comes in the CFO has to have in their mind, right. We need to put some structure around this company cause it’s chaos at the moment, 17 people, and it’s going to be expanding to 35 in the next six months. I’ve got to put structure around this. And so they’ve got a full structure on us as well. Um,

Hannah Munro: 

I would actually add to that in the structured, you know , cause this is one of the interesting things. And I, I I’ve talked to a few people about this, but the concept of agile finance, because I think there’s a tendency to go at the beginning and put all of this structure in and go, right. This is the way we have to operate. But without necessarily, particularly for that start-up to scale up piece, that flexibility around those processes because you’re billing site, your , you know, how your , how your financial modelling may change, you know, how you work with that has to change as well. So

Dr. Chris Sier: 

It’s new, not markets, new demands by VCs. I mean , we don’t have any VCs yet, but when we closed the round, we’ll have two VCs who are professionals at this, what , we’ve lots of start-ups and they’re going to be scrutinizing us. So, so I also need to have that person willing to communicate effectively with, with , uh , what will be two very demanding, very sophisticated organizations that that will want to see our finances constantly.

It’s almost, they want, they will want to know it more than me. I’ll want to know the big numbers. Are we going to make a profit this month? Or do we have enough money to be able to sustain that loss, et cetera, et cetera, they they’re going to want to get into the detail. And so, so one level they need to present provide me with management summaries, but they’re going to have to get into the weeds with someone who looks and feels like them. Who’s done this with lots of other start-ups and talk them through the finances in a convincing way. Um, because , uh , you know, you’ve got to keep those people happy. You have to.

Hannah Munro: 

Yeah. And I would say that’s one of them , one of the most important attributes you talk about how important it is that they have gravitas with yourself and you have that respect. But those VCs also are going to have to respect your CFO . That’s a bad place to be in, isn’t it?

Dr. Chris Sier: 

Absolutely. No , you , you , you need somebody that can sit down with somebody who’s done this a hundred times with portfolio companies and probably is part of the financial accounting team for the whole fund and talk them through, make them feel comfortable that the finances are real and talk them through that, that we’re not out of control with the money. I mean, that’s, there’s nothing worse than a VC that sees you’re out of control with the money. They want to know that they , they expect a plan from us.

It’s not a very tight plan at the stage that we’re at, but it gets tighter and tighter. The more money they give you. And the more you grow that you are spending money, according to expectations and attaining revenue, according to expectations. And if you’re not, then they need to be told that and then need to come back with us and with the CFO to reset that budget, because that’s what they’re expecting you to deliver to . It’s not me just going. Yeah. Okay. We’ll see what we get with it .

Hannah Munro: 

We’ll make it work.

Dr. Chris Sier: 

So we make it work. But , but none of them, they they’re precise people. They’re very thorough and they have all kinds of step-in rights and all kinds of other rights that you have to ascribe them as part of the process of going through raising around that round of money and your , your lead investor will always have rights that allow them to do things to you. If you don’t meet their expectations. Um, and they certainly won’t give you any more money.

If you get into a financial problem, then you know, I think the confidence , um, in the finances is what’s going to help you get more money from them. If they don’t think you can be trusted with the money, they’re definitely not going to give you more money. So as you say, I think that’s a really good point about making sure the person has the respect of the people who are looking over your books. They have to feel confident that someone’s in control that.

Hannah Munro: 

Yeah, but never it’s because you’re , you’re the ideas, man, right? You are the man that is driving this forwards , but you need, it’s like a , you know, you’re running at a million miles an hour and you need somebody to keep you on the tracks.

Dr. Chris Sier: 

And that’s what I’m saying. That that person needs to be strong enough to say to me, look at the numbers. When I believe numbers, I’m a big fan of numbers. I mean, I really do believe numbers. I just need someone to show them to me. So, I am that as, as demanding about the numbers as the next person. So as the, as, as the , the VCs will be, but, but you know, you’re going to present to me if you don’t want me to do something, give me a really firm logical argument, give me the , uh , financial argument. And I will believe you every time, because I recognize that numbers are important. It’s , it’s been part of everything that I do, but, but I need that person to be really good with them. And I also need to respect them as a person.

As I mentioned earlier, all the other stuff applies too , but they better be pretty good with the numbers of just excellent at the numbers because they have to come on my respect and also the VCs . And it’s very important because once you jump on this funding bandwagon, as a start-up, taking money from third parties, you’re in it for the long haul because people give you money because they’re expecting a tenfold return now to get them to a tenfold return, you’ve got to grow really rapidly. Now the problem is if they give you some money, they’re not, they’re not asking you to put it on your, in your bank account as a reserve for hard times.

No one of the biggest mistakes people make is when they take money from a VC is holding it for a rainy day. If you don’t spend it and prove that the expenditure is for the purposes of growth, then you’re in trouble. Because the only way they’re going to get their money back in the quantum that they want is by you giving them 10 times the value back. That’s what they’re after. So like , if I’ll give you just simple numbers, these aren’t my numbers. It’s just simple numbers. It means that if you sell 20% of your company for a million pounds, post-money that means you’ve got a 5 million pound company. And 20% of the shares worth 1 million pounds are owned by the VC. They want a 10 times return. So they want 10 million pounds off the back of that, right? But they own 20% of the company and 10 billion pounds, times five is 50 million pounds.

That means your company cannot be sold until you’ve reached 50 million pounds now to raise money at 5 million pounds, you have to have an annual recurring revenue of you probably got to prove something in the order of 750,000 pounds. So you’ve been going for you and a half, two years, you have no way you got it . You’re lucky if you got 750,000 pounds, you probably just only break even. But, but at some point in the next three to four years, you’re going to have to, if you’re going to sell yourself because you want to have a five-year cycle around this, they want to give you money for five years and get a 10 times return. You’ve got to generate sufficient revenue to prove that you’re worth 50 million pounds. That means you’ve got to have annual recurring revenue of seven and a half million pounds. Now that’s a lot of annual recurring revenue. So a lot of clients, but the truth is along the way, because you’ve taken that a million pounds and you’ve had to spend it on growth. Any of this 50 million pound target that you go back and get series a funding series, a funding, you’re going to get 10 million pounds. So now they’ve given you 11 million pounds. They want 110 million pounds.

Hannah Murno: 

Is that vicious cycle. Isn’t it?

Dr. Chris Sier: 

They own probably 30 to 40% of your company at that stage, maybe 30%. So 110 million pounds of value back to them means you can’t sell the company until you’ve hit 350 million pounds worth of value, which means you’ve got to have an annual recurring revenue of probably 35 to 50 million pounds. Think about how many companies reach that level. So, so all of that, all of that cycle, once you jump on that bandwagon for them to give you that money, they have to have confidence that your vision is strong. You’re going in the right direction. And it’s being appropriately managed. They’re going to look at you and go, is that money being managed properly? And so a CFO becomes absolutely fundamental. And so your point is probably one of the strongest that I didn’t make. It’s a much better point than any I’ve made. The people need to trust. The CFO is great if I trust them and like them, it’s great, but I know they have to convince third parties that we are credibly looking after their money and have at least a shout. I’m the one that provides the vision that says to me , have a shouted , achieving a company valuation of some 300 million pounds.

I’m the one that , that leads that vision. I’m the one that my colleague Ritesh is the one that leads the vision around the products that we develop around it. But the CFO is the one who proves it and who proves that the company’s being prudently run above all else. So of all the things I’ve learned today, that is the strongest that we recruiting a CFO type person. They have to look strong and robust in front of our, the people who are funding us. Otherwise they will not give us the money, even if we need it. They’re not going to throw good money after bad.

Hannah Munro: 

Okay. So, so this is an interesting point. So in your person, in your opinion for you guys, are you going to be looking for somebody that is, you mentioned, industry experience is really important to you

Dr. Chris Sier: 

Because I want him to believe, but at the end of the day, everybody has to do multiple jobs and somebody who can talk to me about a piece of portion of the market. I don’t know, I don’t know, DC pension funds, they were pushing the market or pension funds in Europe or someplace. I don’t know much about if they can bring that experience. It’s a value add fundamentally though, there is this respect thing and being able to do the fundamental parts of the job, but being to being willing to work in an environment of uncertainty, volatility, and deal with material , people like me , uh , and also be willing to take the trade off of risk, risk adjusted return, which is the share part, as opposed to, as opposed to it’s a big ask, right? How many people are willing to do all of those things?

Hannah Munro: 

Well, I don’t know. I think as people it’s , isn’t it , it’s interesting, isn’t it, as people get more financially, they’re more willing to take that risk and invest in something that they will enjoy versus something that is going to be necessary . Yeah, absolutely. So , um, and how important is it that they’ve had experience in their start-up to scale up transition? Do you, are you more interested in them as an individual with industry or that experience in that growth path?

Dr. Chris Sier: 

I know I want them to have the core skills, right? I want them to be able to, to know the difference between, you know, I want to be able to sort of model of our finances and, and have all that. I want them to have a personal skill, which has been to be able to push back on me and be flexible and all of these things, it’s all equally balanced. I don’t mind if they wasn’t a corporate, I don’t mind if they worked at a start-up. Um, I think both are equally good if someone’s worked in a start-up, it probably means they’re comfortable with that risk. Right. So, so that doesn’t mean I, I will pick someone who’s worked in a start-up over somebody who hasn’t , uh , if I see the, the attributes and the person that’s personal attributes that I like so much , um, in , in, in somebody who’s worked in a different environment, the corporate environment , um, it’s not going to stop me from hiring them. I’m not going to say you have to have start-up experience. You’ve got to want to have start-up experience to work with me. Um , but you don’t have to have had start-up experience, but you do have to understand all that it brings with it.

Cause it’s a, it’s a funny old world, right? It’s, it’s risky, you know, one in how many start-ups fail and bear in mind, by the way. So again, the statistics , um, if you are a, if you get on this, this gravy train of, of VC funding, which is really the way you’re going to get to be a billion pound company, right? VCs funds you because they want you to be a billion pound company. That’s what they’re doing. They’re not funding you to be a 30 million pound company. That’s good on lifestyle business. Don’t take money from VCs.

If you want to be a lifestyle business where you get paid well and get dividends. Now you’re doing this because you have the massive earn-out and you’re solving a massive problem. And the VCs are backing you on that basis. But one in 10 of the companies they fund maybe even less ever get to that part. So when they give you money, what they’re not telling you is that there’s only a 10% chance you’re ever going to get there. They like to think they’re good at picking winners and some are better than others, but nevertheless, the statistics don’t lie. You have a 10% chance. So you may , as I have to have a hundred, I have to have a belief here, right. Inside me to take this, that I’m going to be the one in 10, but then every, every other nine, believe exactly the same thing. They believe that right here, but you’re not going to make it 90% of the time. That’s the simple truth. That’s the risk you take.

Hannah Munro: 

Yeah. And , and that’s the environment that you’re living in as you’re living with that knowledge and that thing that actually, you know, you got 10% chance of achieving your dreams . 10% is good. If it pays off,

Dr. Chris Sier: 

It pays off a big, big, big, big style , right? There’s there’s the, you know, and you also have, what’s really interesting what people might don’t don’t don’t realize is if you become one of those successful few, yes, you’ll get a big pay check. You know, CFO comes in and takes even a small amount of equity, a tiny piece of equity in a company that sells for a billion pounds is a lot of equity, right? A loss of money, right? How much money do you need? Um, but you also become a star, a celebrity of sorts.

So, me, I’m not interested, never have been interested in that. I just want to have the money. I can have to keep my kids fed and closed and to habit , a funnel is kind of things and above all else to solve the problem. But a CFO hasn’t gotten that vision, doesn’t have that. They’re going to come in, they’re going to take some equity. And 90% of the time is going to be worthless . And they’re going to have a salary of that’s going to be on a half of what they would expect normally in a big corporate, but they’re going to take that equity, right. And they’re going to have it. And sometimes it pays off at the end of that. They are the star CFO of a successful start-up, and they will get a job anywhere.

Hannah Munro: 

They will be-

Dr. Chris Sier: 

One of the few recycled CFOs that is able to go on the speaking circuit and work with VCs. They’ve got a job with a VC because once they worked on inside a start-up, they become eminently employable in the VC to work as the other side of the fence, checking start-ups and their finances because they know what they’re looking for.

Hannah Munro: 

Yeah, that’s it. So, you know, it can be a real win if , um, you know, if they do their job well and they , they keep you under control, correct . They get the company where it needs to be . All of us are that , just talk to me before we finish for those that want to get into this start-up world. Um, and to do this , um , to do this for a role where they look, so where are you searching for your CFO ?

Dr. Chris Sier: 

So , um, we don’t use recruiters. I get a practice that there’s a , there’s another simple rule which I work on, which is a personal recommendation, has a 30% chance of success, a proactive , uh , uh, someone you pick just randomly from the crowd or brought to you by a recruiter has a 10% chance of success, right? So by 10% chances of you , you bring them in and maybe one in 10 turns out to be the person that you really were looking for and you never have to recycle them . Right. And find someone else for the role, a personal recommendation works wonders. It is just the best way of recruiting people. I can possibly imagine. Now that’s why recruiters try and get inside your head and try because they want to be your friend because they recognize the personal recommendation thing. But the truth of the matter is that certainly the start-up level, most of it, you don’t have those personal connections with a recruiter. They tend to be people who just fire CVS at you. Cause they’ve got CVS in their bag, not interested if you’re a recruiter that works like that, don’t bother contacting me.

But if you are somebody that’s looking for a job that likes the idea of this , do contact me, do reach out to start-ups that are in my stage and say, are you looking for a CFO? So one may to think about it. If I was going to do this, if I was at CFO looking for the job, that’s probably a good way to think about it is , um, ask yourself what sector you’d like to work in. What problems would you like to solve? And then look at the list of start-ups at this stage that are in that space.

Hannah Munro: 

Yeah. Hunting-

Dr. Chris Sier: 

LinkedIn, find their contact details. Watch the presentations go and watch technicians. Um, um, startup pitching, go watch founders , factory startup , picture gun , and just go. I really liked that . That it’s really interesting. I want to work with that company and then just reach out, be proactive because I’ll tell you what anyone that’s willing to be proactive has probably got 50% of the skills I look for in an entrepreneur anyway.

Hannah Munro: 

Brilliant. Well, that is an amazing way to finish the podcast. So thank you so much, Chris . It’s been lovely having you on

Dr. Chris Sier: 

And thank you. It’s been really interesting. And by the way, you’ve, you’ve, you’ve given me one of the best selection criteria for a CFO I’ve heard, which is they have to make my funders happy above all else. Otherwise they won’t get the money next time.

Hannah Munro: 

Absolutely. No worries at all. Well, have a great day. Thanks Chris, bye.

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