Continuing on with our CFO series, this week I was fortunate to catch up with Guy Hutchinson. Let’s hear his thoughts…
What do you make of the current UK startup market?
As far as I’m concerned, it’s looking pretty healthy. There’s a lot more seed funds doing decent sized seed rounds (£1-2m which gives you a chance to be in better shape for you to raise A). There’s lots of talent and people coming out of corporates with 3-5 years’ experience. It looks super healthy. However, we’ve got to get over the Brexit bump (if it ever happens) because economic uncertainty is not your friend.
Why did you move from corporate to startup?
I was part of Deutsche Telekom back in the noughties, in part of T-Mobile that was doing some “startup type things”. Our CEO was startup driven, very intelligent and everything that a founder typically is. We built a division that consisted of tech, product and finance people such as myself to build a bunch of mobile and data products. Really, that was a startup, albeit it trapped inside a massive corporate. This was my bridge between corporate and startup world. In this role, I was still getting some corporate experience to see how big companies do things but I was also involved in building businesses cases from scratch and seeing how teams build products. This was how my move came about and I took my first startup FD role around a year after leaving T-Mobile.
What advice would you give to people looking to make the jump into a startup?
I think you’ve got to be in the right type of corporate to get the right sort of experience to set you up for life in a startup. You’ve got to have an awareness of what sort of experience you think you ought to be getting, rather than just what they’ll give you.
You also need to be prepared to look for some outside interests. For example, you should go and network with some startup people doing something very early stage and offer to help them on the side. This sort of experience is invaluable and not something that you can learn from a corporate, as these startup guys are behaving differently to what you’re used to. It’s worth getting this experience early on because a) can you work with these sorts of people, b) do they value your skills and c) do you enjoy it?
How do you view the role of a startup CFO currently? And in the future?
In my view, it’s a role that has quite a gradual transition. CFO roles are not being revolutionised, they are evolving. At its’ heart, it has three components; accounting/reporting, controls and commercial/strategic support.
Accounting and controls are areas which are not evolving very quickly, however there are some interesting tools coming out that make things more efficient.
The commercial piece is where people can really distinguish themselves. If you look at a really strong CFO, it’ll be the commercial skills that demonstrate they’re a good counter-balance for the Chief Exec with a more strategic viewpoint on a plan. To carry the CFO badge, you’ve got to be commercial and able take on wider responsibilities, such as stakeholder communications, BI, legal etc.
What’s the best part about your role?
I think the need to have a complete understanding of the whole business. Where you’re doing all of the planning, strategising and managing stakeholder relationships, you need to be able to have a view on everything. That can be very challenging and involves constant learning.
Can you tell me about a time in your startup career where you learnt the hard way, even though it was a great learning experience?
It was around 10 years ago in a Series A Company. We had two fairly extreme challenges occurring in parallel; our unit economics after variable costs were negative (the cost of delivering the transaction was more than what we were making from it), and we had a big cultural change owing to a change of CEO triggered by the investors. My major learning here was that you are unlikely to solve two big problems at the same time, never underestimate the power of being focused. Essentially we had a startup problem that required all of our focus and the cultural change was an unnecessary distraction.
How crucial is it for you to have a great team around you, both finance & SLT?
It’s absolutely crucial to be working with the best people that you can work with. It doesn’t matter if it’s the person helping you with your office management or payables or whether it’s your CMO or COO, you want to work with the best people that you can.
In terms of talent, it’s a very demanding market out there. There are a lot more interesting startup companies than we had years ago, so the competition for talent is really intense. If you’ve got a strong company culture and you hire people that match this, the team work tends to spin off of that.
What is it that you look for when hiring a #2 & subsequent team?
On hiring a #2 and subsequent team, more often than not, you’re looking for people who are strongest in areas that you perhaps are not. It’s also crucial to match them with the company culture, ensure you have good rapport with them and can work together even under stress.
If you were to recommend a work related book, what would it be and why?
Thinking, Fast and Slow by Daniel Kahneman. It’s not really a business book, however it is a brilliant summary of a life’s work in behavioural science. The reason I consider this a brilliant business book is that it really delves under the hood of human thought processes both in how a customer accesses your product or service and how management decisions are made. The biggest variable in businesses is people, and it’s going to remain that way for some time to come. So, if you haven’t invested time in understanding how people work then you’re unlikely to exploit the potential of your business.
Guy Hutchinson is the founder of Finance Foundry (www.thefinancefoundry.com), a consultancy providing part-time CFO and FD services to startup companies. He has over a decade’s experience in startup companies as full-time CFO, consultant and board advisor with a focus on online marketplaces, PropTech and SaaS businesses.