Finance Flight School 2020: Building for Scale

More than 60 finance leaders and CEOs from High Alpha portfolio companies across the country joined us for Flight School.

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High Alpha

Last week we hosted our third annual Finance Flight School and the first ever virtual Flight School. More than 60 finance leaders and CEOs from High Alpha portfolio companies across the country joined us for Flight School. We had the pleasure of welcoming three incredible industry leaders: Kyle Poyar, VP of Growth at OpenView Venture Partners, Elena Gomez, CFO at ZenDesk and Jack Sinclair, CFO at Bolster. They shared their experiences, key takeaways from their years in tech, and actionable tips for finance leaders at startups. Maddy Cutler and Tim Page, Financial Analysts at High Alpha, sat down (at a safe distance) to discuss their key takeaways from the event below.

How to fix your SaaS Pricing - Kyle Poyar, VP of Growth at OpenView Venture Partners

Tim: When I was listening to each of the speakers during Flight School, one of the key themes that struck me was the importance of building startups to scale. What seems like the best decision now might change in the future. However, things can be done from day one at a startup to make scaling easier in the future. Did any of the speakers say something that drove this point home for you? Maddy: I absolutely agree! Building to scale was such a strong theme for all of our speakers and is so important for founders to consider when building the foundation of their business from day one. I was really struck by Kyle’s discussion about the importance of pricing. During his presentation, he explained “Pricing is never static. It should evolve as the company continues to evolve with its customers." Tim: That stuck out to me as well. One of Kyle’s interesting points is that when businesses first start, they are tempted to do so with low prices so they can get initial customers in the door. However, to scale with enterprise customers, increased pricing is often necessary to build a product that is going to be useful to a more demanding client base. He said that early adopters typically make up a very small percentage of revenue over the long term, so early pricing decisions should be made with larger customers in mind. Maddy: I was surprised by his observation about the potential negative impacts of lower pricing. It can initially seem counterintuitive when your primary focus is on getting customers and gaining traction in the market, but Kyle pointed out that B2B buyers are not price sensitive. Often buyers recognize when prices are too low and are not sustainable for a long-term profitable business. Tim: Right, he drove this point home by saying that while all businesses think about product-market fit, they should really be thinking about product-market-price fit. A one-size-fits all pricing approach doesn’t work, so startups need to figure out how users measure value and price accordingly.

Breakout Sessions: Thought Collaboration with Finance Leaders

Maddy: During the breakout session, my group had a great discussion about how a common pricing misconception is that there are only one or two standard pricing approaches a new business can use when, in reality, there are many different pricing models a business can utilize depending on its product(s), customer base, market segment, and company size. Tim: The breakout sessions were a hit for everyone attending this year. It was great that we still got to meet other finance professionals in the portfolio even though the Flight School was virtual. My breakout session centered around tactical ways that finance groups have improved through automation. One major win that members in my breakout group had this year was through the automation of the Accounts Receivable process through tools like SaaSOptics.

Leaning Into Growth - Elena Gomez, Zendesk CFO

Maddy: Elena was truly incredible as the keynote speaker for the event! It’s so inspiring to me to see female finance leaders in a predominantly male field and there were so many key takeaways from her discussion. My biggest takeaway was that profitability isn’t always king. Coming from a similar public accounting background as Elena, I always viewed profitability as the most important factor, but she explained that as a start-up, it can be even more important to lean into your growth story and articulate it to stakeholders. If you can deliver growth, you can deliver less profit. Tim: I also thought it was interesting how Elena thinks about how companies can prepare to go public and engage the team’s finance function to prepare for earnings calls. She often taps junior members of the finance team to help prepare by answering questions that may be asked in mock earnings calls. Not only does this give members of the team a great career development opportunity, it helps Elena improve her responses as well. This just goes to show that in every aspect of the organization, you need to prepare with the future in mind, not just what is going on at the time. Maddy: Her earnings call prep was so interesting to me! One of her biggest focuses is working with the team to come up with a strong narrative with three to five consistent themes to discuss on the call, which, for smaller companies, is a mindset that can also easily be translated for board meeting prep. Tim: Elena also advocates for hiring a dedicated finance person as soon as possible. This is often a delicate decision in the startup world, as many young companies are trying to make their cash last as long as possible. However, having a knowledgeable person on board that can help with scenario planning can pay dividends over the long run.

“You really want to get your organization thinking about durable growth over the next 12, 24, 36 months. Bring the management team along in that journey, not just the CFO.” @gomez3_elena #HAFlightSchool — High Alpha (@highalpha) August 20, 2020

Maddy: I really admired her team growth mindset. She emphasized how important it is to have A+ players on board, make sure everyone is clear on the company’s short-term and long-term goals and get the entire team involved in the plan to reach those goals.

Building a strong foundation for startup finance - Jack Sinclair, Bolster CFO

Maddy: I enjoyed hearing about the biggest lessons finance leaders have learned throughout their career. As the CFO for three different start-ups, Jack Sinclair shared a valuable lesson about how important it is to create a strong financial foundation from the start. At the beginning of his career, he discussed how he thought he was always saving time by being scrappy and taking shortcuts, such as not automating some of his processes, but in reality created more work for himself as the business scaled and completed fundraising rounds. Tim: All of our portfolio companies are looking to have an exit down the road, and as someone who has been involved with the associated due diligence, Jack was able to give a valuable perspective. Something as seemingly straightforward as saving all documents in shared folders can save a lot of time down the road when lawyers are asking for contracts and meeting minutes. Some additional items Jack recommended keeping handy in a dedicated space:

  • Signed closing docs
  • Leases
  • Government filings

Maddy: One of Jack’s other points that will be helpful for startups is to visually map out the process from customer interest to order and from order to cash. This can illuminate any inefficiencies in the process and drive solutions that make it easier for customers to commit to the product. Jack talked about how this helped him during his time as the CFO at ReturnPath, an email delivery and distribution service which had a very successful recent exit. This is a lesson that all startups can use in order to make the ordering process as frictionless as possible. We hope our conversation provided a glimpse into some of the valuable lessons we learned from these three incredible speakers! Thanks to Blake Koriath, our speakers, and all of our participants for a great virtual Finance Flight School. We can’t wait to see you all back here again — hopefully in-person — next year!