Build to Prove

I call myself a build-stage CFO, meaning that I tend to work with companies that have found product-market fit.  They’ve passed the “prove” stage.  My goal is to get them to the “scale” stage, where the foundation of the house is sturdy and they can start to build more stories onto the building.  I’ve succeeded at this a few times and yielded to a full-time CFO after a significant fundraising round.

Startups being what they are, sometimes this goes the other way.  That is, a company hits build stage and either the world changes, or the niche they thought they’d found isn’t so attractive after all.  Then they have to pivot, and sometimes, that means moving back to prove mode.

Moving back to prove mode is hard.  You have people on payroll who no longer match the direction you are going.  You’ve built processes and reporting that may not be relevant anymore.  The cap table likely has people who invested in one vision who need to be brought along to the new one.  The sooner you do this though, the better.

For a CFO, it means a few things.  Likely you need to skinny down the infrastructure you built.  Almost certainly you will have a re-forecasting exercise that will involve a new way of showing KPIs and financials to the Board and other stakeholders.  Probably you will be part of letting people go and opening up hiring in a different part of the business.  It is also possible that one of the people you will need to let go is yourself.  Because I am “on demand”, I can scale myself and my team down (another reason to hire a fractional person).

The bottom line is that startups that hit the build stage have not hit escape velocity.  Far from it.  Sometimes they start to fall back to earth and as a CFO, I’ve had to develop tools in my toolkit for when this happens.

Leave a Reply