CFOs

Tech CFOs have different priorities than their traditional company counterparts

These CFOs have different sets of pressures and skills.
article cover

Teera Konakan/Getty Images

· 4 min read

Traditionally, finance departments took a more low-key, risk-averse spot on the org chart, tasked with processing and accounting for transactions. And CFOs were considered little more than bean-counting number-crunchers who said “no” to everything.

But that stereotype hasn’t been true for a while; long gone are the days of being relegated to the back office. And nowhere is that shift clearer than among tech-company CFOs, particularly newer companies and startups.

Tech-company CFOs often can take a more active, strategic role in building and guiding the business than their counterparts at more traditional companies, which should appeal to enterprising finance professionals, according to one longtime tech company CFO.

“What I found out was that I love the entrepreneurial life,” said Kristyn Reed, CFO at MarginEdge, a restaurant-management software company, and who has worked with tech companies as a CFO since the late 1990s. “I loved the chaos of building a company from almost scratch. I loved helping to make order of the chaos, and I really loved being part of a team that was building something together.”

But just as tech CFOs have distinctive roles, they also need to rely on different approaches, skill sets, and metrics than CFOs at traditional firms.

Stakes is high. This isn’t necessarily true about tech giants like Apple, Meta, Google, or Amazon, companies with hundreds of billions in annual revenue. The CFOs of those tech giants are typically bound by the size of their organizations—not to mention the SEC—to adhere to more traditional roles.

Where CFOs can have significant impact is on smaller but growing tech companies, according to Reed. These companies are likely to be lean, agile, and in a hurry to grow. The decisions a  CFO makes in this environment can have dramatic consequences.

“These are not businesses that you’re in maintenance mode,” Reed said. “You’re making decisions, maybe not [on] a daily basis...but you are making decisions frequently that can change the trajectory of the company.”

The stakes of a CFO’s decisions can also be higher at tech companies because of the speed at which they need to grow. Many have limited or zero revenue starting out, and a finite pool of capital to allocate. And there is little to no wiggle room for strategic errors.

In other words, a big tech company has the resources to make purchases, such as on office space, with little impact to the company’s bottom line. But for a company with $30 million in seed money and a new product line, every purchase has to be carefully considered; spend wisely, and the company can grow. But bad purchasing decisions for a small tech firm can potentially wipe out much-needed revenue.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.

A smaller, more agile organization also gives CFOs a holistic, deeper view of the business, rather than being siloed into a single function. This deeper understanding is a motivator for Steve Vintz, CFO at Tenable, an exposure management company.

“At a tech-growth company, what was important to me was really having a business impact,” Vintz said. “And so you have to have a seat at the table, the CEO has to recognize that the role of the CFO is important.”

Get together. That’s another significant difference between leaner tech companies and larger, more traditional companies for CFOs: Collaboration among staff becomes essential to a company’s success and growth when there are fewer people making higher-stakes decisions under more existential pressure.

“That’s why the collaboration…matters so much because not one person should be able to make that decision,” Reed said.

All functions of the business need to be in alignment and any one piece out of whack can damage the company according to Amy Wood, CFO of Intelligent Waves, a technology solutions company.

“Collaboration is key, I can’t do my job, if I’m not talking to the people who are actually making the company go,” Wood said. “I don’t think anyone in this industry could make a move or a decision without talking through and understanding the impacts throughout the corporation.”

That means that tech CFOs have to rely on communication and teamwork to move forward the strategic vision of the company. And while that’s true for other CFOs and finance professionals, at small tech firms, those skills are essential to the survival of the business.

“What people have to recognize is that growth is a team sport,” Vintz said. “It’s not about making decisions unilaterally and sitting back, monitoring things…You’re on the executive team, and you’re working closely with the other execs, and you’re working shoulder to shoulder there.”—DA

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.