EP070 - Why startups need a CFO with Andrea Sasso at Augheo
About the episode
This episode focuses on why startups and growing companies need to get their finances in order and how a dedicated CFO can help. Andrea Sasso is working with companies, providing fractional CFO services, helping them to raise funds, manage their cashflow, and provide support for their leadership.
About the guest
Andrea Sasso serves as a Fractional CFO, specializing in assisting early-stage startups. Her expertise lies in developing fundable financial models, preparing startups for fundraising, defending assumptions during due diligence, and building a scalable finance team.
Andrea enables founders to make informed decisions driven by data and ensures they always retain a clear view of their runway. Essentially, she is the right-hand and sounding board of the CEO.
Andrea is also an entrepreneur-in-residence at Techstars and formerly led corporate development for the Americas at Guardian Industries, one of the world's foremost glass manufacturers.
About the host
My name is Peter Benei, founder of Anywhere Consulting. My mission is to help and inspire a community of remote leaders who can bring more autonomy, transparency, and leverage to their businesses, ultimately empowering their colleagues to be happier, more independent, and more self-conscious.
Connect with me on LinkedIn.
Want to become a guest on the show? Contact me here.
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Welcome everyone. Welcome on the Leadership Anywhere podcast. Today, we will discuss a topic that is often neglected by founders but it is equally important as does working online marketing or growth. It's finance. So a lot of companies don't really invest in having a fractional or any kind of CFO help during their startup phase, but getting your finances in order, it really makes a difference when it comes to growth. To discuss this topic, I have Andrea Sasso with me, who is a fractional CFO providing services for startup and growing companies in Europe and also in Italy and across the globe. Hi, Andrea.
Hello, Peter. It's great to be here.
Appreciate your time for coming here. Please introduce yourself. What are you doing right now? How did you end up working remotely and how did you end up working in a CFO position?
Okay. That's a lot of questions.
We have a lot of time. We have a lot of time.
I take 30 minutes to answer that first one. Yeah. So as you said, I'm a fractional CFO. What does that mean? Fractional is a fancy way of saying part-time. So I basically, for several companies they're all early stage startups, mostly in the seed series A stage. I work a couple of days per month for each of the companies. Of course, that doesn't mean that I work the first, the second and the third for one company and then they'll say goodbye, speak to you next month, effectively. I work for nearly every day for nearly everyone. Not quite, but nearly. But yeah the key is that I'm part of the team. That's really important. Maybe we can dig into that later on. I'm really part of the, I'm external to the company and I send invoices at the end of the month. Yes. But I'm really like an early hire, I'm really part of the team, part of the leadership team. That's really important also for the whole thing to work. But now we're already way into the topic. So maybe I take a step back.
No, these are great to tease by the way, because I think being part of the team internally what makes the difference between a accountant or bookkeeper and a fractional CFO, but we can dive into that later.
Yes. Absolutely. Absolutely. Yeah, so how did I get here? I started my career in corporate, right? I studied business like traditionally I'm German by, by origin and studied in Vienna. And then I got hired by an American company in Luxembourg that produces glass, one of the largest glass manufacturer in the world.
In Luxembourg.
Yeah, they have two plants. At the time they had three plants in Luxembourg.
Wow.
One of the biggest industrial employers in Luxembourg. And yeah, it's not extremely labor intensive glass. So it's extremely capital intensive because glass basically is made in big furnaces, but like steel. So you need big furnaces and a lot of heat and energy and a lot of materials. But it's not very labor intensive. There's only a few hundred people for each plant.
I don't know.
There we go.
Thank you.
Learned something new. Yes. And so I started very classic in controlling in the plant, really on the shop floor. That was really interesting. I really like it if I'm close to the business and to what's actually being made. It doesn't matter if it's a physical product or a software product. And so I went through all sorts of finance roles. So I did controlling, then accounting, then treasury, then got my first leadership assignment and so on. And then I switched a little bit to the corporate development side, which is still very numbers heavy, right? I wasn't an analyst at first. But it's really so corporate development is all about large capital investments and M& A and in my case, it's included M& A and my last role in corporate I was responsible for corporate development for North and South America living in Detroit at the time. And until then, there was nothing remote, right? I remember flying once, we had a discussion on a new plant in Europe. And I flew to Europe for a three hour meeting. That was the good old times where we did crazy things like this. I liked it because it was on a Friday so I could visit my family on the weekend. But insane really. So yeah, nothing remote. A lot of traveling, corporate development in general is pretty travel intense. And yeah, and then I wanted to move back to Europe, move to Italy. At the time, the company had nothing in Italy. It was pre COVID. It was pre, it was talking end of 2017 here. There was the only option was to quit or you move back to Luxembourg or you quit. So I quit. And then so then I didn't think I could do so much remotely. So I decided to start my own business. I live in Turin and Northern Italy. And so Turin is really close to Milan. So I thought, okay, my target market is Northern Italy. But the focus on Turin and Milan is 45 minutes by train, totally feasible. And then the pandemic happened. And for me, while it wasn't very nice, while it happened, it was professionally, it was really good. Because now I work I currently am the CFO of five companies. One is in Italy two are in Germany and two are in the UK. I've worked with companies in France and the Netherlands in the U. S. So that has really Everywhere. Everywhere.
And they're also either startups or scale ups.
Yes. Yeah, I would say most in the moment. They're all startups. I worked with scale apps in the past, but in the moment, they're all pretty much in the startup phase.
So that you do most of your work online, right? So exactly.
So I do know all the founders I work with are all do know them all personally. And we've all met in person, at least at some time, in most cases, before we started working together, but in some cases, even like When we decided we would work together, we decided to meet and do a couple of like longer, more intense sort of workshop style meetings online in person. But yeah, the rest of it is all, all online. And I do have, right now I'm sitting in my home office, like many other people do these days all day long. I still enjoy going to a co working space. I have a co working space where I go twice a week maybe. So I still enjoy that. I need that. I can for weeks only in my, by myself, I don't, I'm missing that physical interaction, or that face to face, but yeah, my work is 95 percent online.
And how do you so I think we should start with the fact that you are part of those teams internally as well. So I think there is this is applies not just to fractional CFOs, but for any kind of fractional work, by the way which we discussed many times on this show. That the fundamental difference between a fractional person or a service provider is that if you are a service provider in terms of a consultant or someone or an agency or or I don't know, in your case, an accounting or a bookkeeping service, it's fundamentally different compared to a fractional person because you're not part of the team, a, B, your work is limited to a certain period of time. So you do something within period of time, then the service stops or, you do something else. If you're a fractional person, you are sitting inside of those teams being part most of the conversations that happens anyway and you provide your fractional services in an indefinite time. So it's not stopping. There is no limit on that. So I guess my question is that why do you think startups or even scale ups do need an in house CFO, whether it's a fractional or a non fractional. I don't think that's should be a point of discussion because you do a fractional CFO if you want to be concise with your budget and some stuff, so that's fair, but why do they need someone dedicated to finance?
Yeah, I think you're making a really good point, right? I get that a lot. People tell me, ah, so you're an interim CFO. No, I'm not interim is still fine. It's usually full time for x time, right? Yes, time long term. That's how I work. And yes, it's absolutely true what you're saying. I think when it comes to specifically the CFO role is finance is really involved in every, is everywhere in the company, right? Everything gets measured. It touches everything. It touches sales. It touches marketing budgets, production, acquisition, supply, everything. It's everywhere. That's one thing. There is transactional components in finance, right? So we can talk about the accountant's role specifically. But there are certain things that just have to happen every month. There's certain things that have to happen every quarter. And there's a lot, ideally we want consistency and also ideally, of course, we're being startups, we're talking startups. So we want to see growth. We want to see consistent growth. We want to make sure that consistent growth that when we're successful, and we see that consistent growth we want to be make sure that this is reflected in our financial statements. Because guess what? When you're out in your next fundraising round, investors are going to ask you about financial statements. And even those financial statements, if you just get them from your account, and then you just never I'm not saying you never look at them, I think most founders do look at them, don't look at them with a strategic eye then it's highly likely that those financial statements will not reflect that growth that you're actually achieving, right?
Sure.
And I think to make it really brief and that's true for a startup as it is for a large corporate. A good CFO is the right hand of the CEO. That's the role of the CFO. It's yes, the CFO takes care of the financial model and make sure the accounting is correct and the controlling processes function, but it's really that sounding board, that thought partner, but that person that gives you honest feedback, that helps you think through you as a founder that helps you think through your options and your decisions and what are the consequences of your decisions. And the CFO or the finance team in general, they can do that because they have the data. So I think that's really why and maybe to add one last thing to that a huge, so the CFO knows everything, right? Some CFOs know the company better than the CEO because they have all the numbers.
Yes.
And it's really important that this is a completely open relationship that's really founded in really deep trust. And build that relationship, it takes time, right? And you want to make sure that sort of person is by your side for the long run. You don't want to rely for that level of critical decisions. You don't want to rely on an accountant or an outside firm.
That's totally true. Let's discuss how one a startup company or a funder or co founders can make space for a CFO, because I think it's important to talk about that because yes, we all know the benefits. Yes, we all know that we need someone like that internally, but not everyone is capable or have the systems in place to measure everything properly to have analytics installed in every spending decisions. And so on and so on. So what would you advise to a founder or CEO, how to make some space internally so they would be ready to get a CFO inside. Because most people think and just FYI, I think most people think that, oh, it's, it's easy. We just install Xero or whatever accounting software and that's it, right? It's much more subtle and complex than that.
Yeah. Yeah. I think there's two, two elements you mentioned. One is making space. I like the way you say it makes space. So one is you need to make space in your team, right? So probably many companies, there's not even only one founder, right? So for instance, in my case, when I come in, there are already some employees there. In some cases, I am the first hire though, to say outside of the founding team, but oftentimes there is already somebody on product maybe, or somebody on sales and marketing or developers. So oftentimes I'm not the first first hire. I think for that it's really important that you find a person, some of my role is a bit, there's a diplomatic part to it as well, right? So it's very important, I think, that you find a person that is able to communicate with all parts of the organization. Okay that's the same again. Back in corporate it was the same thing. I worked with production, with sales, with development, like with all the parts. So you want a person that really functions as even sometimes like even it can even help as a sort of a mediator, right? If there is disagreement between two founders and there's two different opinions, oftentimes I can help make that decision because I can take out the opinions and the feelings and say, okay, the numbers say this, let's discuss the numbers. Okay. And then from there we see, okay what is the best decision for the company? So one is you want the sort of person that, that will work well with the entire team. Of course you need, it doesn't work. Like for instance, sometimes people tell me, Oh, but to scale your business, just go to an investor and then get the investor to propose you to all your portfolio companies. I'm like, I'm not saying that they can't work well but if the company perceive or the founders perceive me as this sort of controller that's put in there by the investor, it can like as long as the relationship with the investor is good, it can and I have a really clear commitment. My commitment is to the founder and that's it.
But if It's different if you're coming from the investor.
Yes.
Then compared to if you're coming through the founder, the trust is much more deeper. If you have that.
Yeah, absolutely. And then you mentioned the system. So honestly, in some, you mentioned Xero and Any country that has Xero because I've seen that there's a massive lack of systems in Europe. In US, it's a bit better. And it's all about like, how do you build your finance stack in Europe? It's what is the finance stack? So oftentimes we don't even have systems, but honestly, I think there again, we like with everything in a startup, do the same thing when it comes to your finance topics, right? Start easy, start simple and start. There's a tool. Everybody knows how to use it. It's called Excel. It can do a lot of things and it will like for a long time. I really had a conversation with the CFO of a company that was at that point valued at a billion and a half. He was still doing his monthly reporting in Excel. Billion and a half valuation.
I am so sorry, but this is the point where I have to make the statement that Oh, yeah, sorry. I am a big proponent of doing anything in a spreadsheet. I wholeheartedly believe that you can manage the entire moon landing in a spreadsheet and everything . So yes, it's that complex. And if it, and it is simple, it's available for everyone. Yes. So fully support on that.
Yeah. Yeah. And there's other spreadsheet companies that you can use. Yes, of course. Sorry. Some of these brands that get so strong that we use their brand name. No, but seriously, start simple start. And then again, also, this is why it's really important, I think, to find a person that has hands on experience, right? One big risk for startups, and it's a bit later on, maybe it's more on a Series B, Series C, but you start bringing on executives and executives, other than having big salaries, okay, that maybe you can still handle because you just raised a nice big round, like they expect to come with a whole team. And so you hire, I don't know, a head of product and all of a sudden you have a million on your payroll. Not because you're paying that guy a million or that person a million, but because they want all this team. And so I think it's really important that you find a person who's hands on, who's not immediately going to tell you the first thing is I'm going to hire an accountant, a controller and an analyst. Okay. Yeah, you want to be really hands on, really keep it really simple at the beginning and then scale. As you go along, right? So Sure. And then, yeah, spreadsheets. Yeah. I'm not sure about the moon landing, but you can in theory do everything that spreadsheets, I'm sure. Yeah. But of course there is the moment where you want to pass from the spreadsheet to a more Yes scalable solution. And that again, you want a person that has experience with that and that knows okay, that can both do the hands-on job and is not too precious to do it right? You need somebody who enjoys building spreadsheets. But who then has the experience and the tier here is able to say, okay, now is the time that we'd stop invoicing in Excel with using a platform or using a software for that.
Sure, sure. And by the way, I also serve as a fractional CMO and COO for these types of companies. So I totally get what you're saying that 50 percent of your work is pretty much managing a diplomatic relationship with every kind of teams internally, because your job is involved in marketing and sales in HR, a lot, by the way, tools, sourcing, so operations as well, and so on and so on. But the other half is pretty much, you are a I don't say, I would say whisper right to the CEO to make the right decision. So it's like decision support on how to make better decisions or grow the company further. Plus I think your job is a little bit different from the CMOs and CEOs because you are also on insurance I think because by acting as a CFO, meaning that your finances are in order meaning when you either face a merge acquisition or an investment for fundraising, whatever or you just need to make a very big finance decision, like bringing in executives and stuff, you're insured because you will know what to do and you're in a safe space to actually make that decision because everything is clear and set and numbers driven at the end.
I would add to that, actually, it's not, it's you've made some really good examples, right? M& A, fundraising, big decision, but it's even more than that. I think it's even on a day to day. CFOs always have the reputation to keep the wallet really closed, and be the one that says no to every spending, but I really have both situations, right? I have founders who, I need to caution be like, okay, look, if we make this decision, this will mean three months of runway. Are we sure how we're doing on fundraising? Are we ready to go into fundraising earlier? I have other CEOs that it's not that I'm pushing them, but it's really they're very hesitant on spending because they're so afraid, one said it even we're really stingy. We're not paying, we're not spending anything because we never know what's going to happen and what next tax bill is coming next month. And this is stuff like a lot of this, I'm not saying everything is predictable, but a lot of things are way more predictable than you thought. And so that actually gives you that confidence that if you know that what's, if there's things that are knowable and if you know the knowable stuff, then you can be way more confident on spending the money and spending it where it makes sense to spend it can be marketing, can be hiring that developer, and you're more confident in actually doing that, making those investments.
I've seen most of the cases are like black or white. So I've seen either the frugal version I'm not ready to spend 500 on this tool or whatever it is. But I already secured 500 million of investment or whatever, but, 500 is too much for me now. So that's one of the sides for most of the CEOs, but the others are just like jumping on the new shiny stuff and spending money on pretty much nonsense stuff or they don't really follow through what they were already spent on. And that leads to when you do the audit obviously it's not a financial audit, but when Just an example, when I go into to any kind of engagement in, for example, marketing okay, what kind of tools do you use? And it turns out that they have 10 different tools for one single need. Because yeah, previous CMO, a previous marketing manager, or just the founder or whoever ordered that tool and forgot to cancel it. I know. It's just five 50 or 100 dollars per month. But it's still on rolling and you're not using it's a waste of money, right? But I even seen unused Salesforce subscriptions for thousands of dollars as well. So again and on the other hand, these are the same people who are making very frugal conscious decisions on hiring people for one or 2, 000 a month of freelance fee. And meanwhile, they are wasting money on tools. So let's talk about a little bit more about waste. I think it's important, right? Just FYI, we are addressing in most cases, I think, because you are working on the same space as well. Startup companies who already have a product market fit, already have either a seed round seed funding or some capital or revenue or whatever money going on. But they are either close or already did some rounds series A maybe, or that's it. They are around 50 to 100 people, maybe less, maybe a little bit more, some bandwidth. And they are eager to grow and operate in a I wouldn't say a limited resources, but certainly not an unlimited runway. Where do they can and what did you see as an examples, where do they waste their not just money, but their entire runway.
That's a very good question. I'm not sure I can give an answer that's generally valid. I would say maybe to try to give an answer that's maybe helps generally. I think it's one thing and where you're wasting. So for sure, again, this is, and I'm not telling anyone any news, but make trying to scale before you have product market fit. It's most likely a list of waste of money. On the other hand, you do have to spend a bit to make sure that the attraction is actually there. And getting paid traction is massively irrelevant. Maybe one thing that's really important at a lot of founders. And it's really it's interesting to me like product market fit is one thing, but positive unit economics is another one, right? So positive unit economics in the sense like, okay, the lifetime value of my customer is significantly higher than my cost of acquisition. LTV over CAC, right? It's something that a lot of founders I asked them and they don't even know what unit economics are, right? So this is one of these things. It's quite unbelievable to me that this there's in.
This is a really good example. Sorry, sorry to jump in. This is a really good example because I've so many times that sorry to jump in, but just like we have 10, 000 new users. Hooray, we can go to an investor now but we spent 1, 000 per users and we are in a net negative balance at the end of the day. And if we continue to that rate, we will burn that runway anyway even if we got an investment anyway. So our job is not to get more money, but to lower that. Yeah. Anyway, sorry, you got a picture.
No, I think absolutely. And you're probably much closer even because you're much more familiar on where this cost of acquisition is coming from, right?
I'm the big, I'm the big spender, right? So marketing is pretty much at all the time after an investment, or once you hit a certain revenue, marketing is pretty much at least 50 percent of the spending.
Absolutely.
After hiring and HR and product system.
Yeah, and I think this brings us back to your question of waste, right? Spending before you have good unit economics is a really bad idea, right? And then, because, and why investors ask anybody for unit economics. Most founders, they, a lot of founders, they come to me when they've raised funds and all of a sudden they're being asked questions that they don't know the answer to. And because then again, I'm not here to make, to advertise unit economics, but please. Everybody know your unit economics. Because it also tells you two things. One had to tell you how good you are at acquisition, but especially it tells you how good you are on retention. I've seen startups do really well and then turn bad within six months because they were overly focused on acquisition. They got good cost of acquisition, but then they were not focused on retaining their customers. They were not really truly focused on what the customer actually wants and how you, the customer wants to be treated. And so the lifetime value was really bad. Although they got, they got good cost of acquisition. They got the AOV up but they didn't manage to get the customer to return. And that will immediately show like this will show within a couple of months in your unit economics, most likely. And and that's really another way to, oh yeah. Talking about waste. spending more money on acquisition and not enough on retention. That's a big waste as well. Really focus on those customers.
Growth at all costs. So usually and it's really, by the way I also see your role, specifically your role, but I think If you hire a good marketing guy, so like a CMO person that also the can be the case but your case is especially the one who is the one who is holding you back and going against all the discussions that VCs tell you to do. So growth at all costs, get your customers again again and again and grow beyond your limits. And it tells you indirectly that you don't need to focus too much on the retention because all you need is growth. But if you do, you have a good CFO. It tells you that, yes, you need to grow, of course, you need to spend a little bit more about retention. It's sustainable.
Yes absolutely. And I think talking about holding people, it's also about holding people accountable. And I think that's also a key thing. And it's not at all about a blame game or who did it and who spent. No, it's just okay we decide and we decide together. We, as founders together, we, as a leadership, we decide how to allocate the resources that we have right now over the next three months, and then we look into how what came out of this. So this holding ourselves, holding people and ourselves accountable I think that's another key role. Of of the CFO with the entire, at least the entire leadership to some extent, the entire company.
And how did you see when, so there is a point and I'm trying to get to the, when you are ready, how do you know if you're ready? There is a point for many startups or hopefully all startups, when they arrive to the point when they need to scale up. Either through fundraising or bootstrapped growth, whatever it is that their way. And my personal experience is that when it comes to funding, I don't want to oversimplify this, but in almost all cases is the CFO who supports all funding and investment, because at the end of the day, the VCs if they are investing in a series A or even beyond that, they really don't really care about your sales pitch and whatever, and your shiny deck. They only care about that specific Excel spreadsheet that you have, and it's all usually prepared by the CFO. So if they know their numbers really well, then you probably can secure an investment. But I think it's also the same for bootstrap companies as well. But it's the question then, from a financial point of view, what do you think? When do these companies know for sure that they are ready to scale and what scale really means in terms of financial standpoint?
Let me try to answer this with two things, right?
Sure.
What you described is quite true, right? The VCs, they want to receive financial statements. They want to see your financial model. They want to see your plan, your forecast. They know, like everybody knows, it's not a crystal ball, right? It remains a spreadsheet. We don't know the future. Just because we put it in a spreadsheet and we make a hundred million revenue in five years doesn't mean that we will. But why do they still ask for it? I think one is that investors are really savvy finance people, right? They really understand numbers really well. So it's important for you as a founder to speak that language. Okay. It's like French or English or German or whatever language you pick. It's just accounting as a language. And this is the universally agreed way we talk about finances because that way we all understand each other. So this is also when you build your financial model, build your financial statements, and build an income statement, and a cash flow statement, and maybe a balance sheet. You don't even need that necessarily at the beginning. But build these things. Don't invent your own way of calculating revenue. Because then People won't understand and you will have to explain it. And it goes back to, in the end, they want to understand that they want to see in the end. It's still, they want to see if they can trust you as a company.
Yes. And they will invest to your company if they trust you and they trust that you get your shit together. You manage your finance properly. It means that even though if you made some mistakes or I don't know, spend some shitty tools some a little bit bigger money or made some bad hires, that's fine until your numbers.
Yeah. Yeah. No, I think that's true. And then yeah, my role really is, and it's true, right? I get, unless I introduce somebody to an VC, which I do quite a lot because I do have by now a reasonably large network. But I'm usually not in the first conversation, right? The first conversations is the founders who need to convince. Then in conversation two, three, four, depending when it happens, usually they bring me in. Because again, it's actually, I think it's even helpful. Like my role is then really make the founders look good. I want to support the founders to show the VC. Yes. I understand the economics of my business. Okay. But even the fact of hiring a CFO, part time full time, whatever already is a signal that yes, you are aware that this stuff is important and you're investing some resources into it. So that's the whole investor question. When it comes to when you're ready, I think it depends on two things. That's bandwidth and range. Okay. What I mean by that is, so range is, do you have somebody, is it a CEO or one of the founders who knows finances, who knows business, who has, and it's not even like having studied business administration doesn't necessarily equate to knowing finances, right? But sure you have. And there's really, there's engineers who are really good with their financial models, right? Despite never having studied business, but do you have a person on the team who's able to do it or who wants to do it? Okay. That's the range question. The second question is bandwidth, okay, that comes at any moment in time, we have to think about our own comparative advantage, right? So I can do A, I can do B, where am I creating the bigger difference? And that's, I think, is the second thing, where there comes a time In every founder's journey where every founder has had where several heads, right? And then maybe it's the person that knows that's also doing marketing, or maybe it's the engineer that does the development. There's a time where they have to decide, okay, I can spend time building my financial model, or I can spend time speaking with customers, developing a product, whatever it is.
Sure.
And that's the second element where at some point it will just be more resource effective that you spend your time on something else and you delegate that that finance work, even if you're potentially the best person to do it yourself. There is one thing also that another added benefit, I think, of having another person that's not the founder is that you have somewhat of an outside view, right? You have somebody who's less in it, less, I need to be really part of the team and I get enamored with every product and every company. Of course I do, but I'm still not the founders, right? I'm not that into it. So I have a bit more of an impartial impartial view. So that's an added benefit, I think, but it comes down to bandwidth and range. This is the two things that you have to decide.
Totally. Sometimes it's beneficial that it's not your baby, shall we say, so you can be impartial on the company. And I do believe that, yes some sort of business mindset, I would call it mindset, but even the skill set is very beneficial for, so again, as a CMO, COO, I usually see these because I view most of the founders that I work with as amazing genius people who create really great products but in almost all cases, they are not really good business people or they become a little bit better with business later on, but definitely creating a product focused company at first, usually doesn't really involve any kind of business. It's more like ideation and innovation which is amazing, but, growing a company is fundamentally different than growing a product. You mentioned many times, by the way. That everyone is wearing multiple hats and we already discussed the fractional relations that you manage with your clients. What I'm trying to get here and want to learn a little bit more about that is that do startup companies need a team of finance people or they are very well good with a part time CFO plus a tool stack or sometimes an external accountancy or whatever. That's like different, right? It depends. The reason why I'm asking is that again, CMO CEO stuff when I usually come in there are already a copywriter or a marketing manager or someone who is doing some sort of marketing. And they need the leadership, but I'm also delivering like hands on roll up your sleeves type of work. And I usually don't recommend others to build out the full fledged marketing team until they already hit a certain type of revenue in their business. So in your case when you're coming in do you need your junior analysts or I don't know, I don't know how you call them or you do everything.
Yeah, no, I think it really depends on the stage, right? So if I come in the company in a very early stage I can do everything. That's there isn't that much. That's not such just so much transaction volume. It's really still very much focused on that spreadsheet. I don't know. What's our vision? How do we communicate our vision? Maybe we're still in fundraising. It's really much more on the strategic side than on the transactional side. But then with time, yes, of course, as your transactions, I really believe this is a gradual change, right? At some point you bringing an analyst I've done both, I've worked with companies where we hired a person internally within partly, maybe an entrepreneur in residence or that sort of role that took care of a lot of different things. And part of it was dealing with some of those more transactional and day to day finance things. Or I can bring in a person myself, right? So I have, I bring in an analyst that helps with as transaction volumes go up, especially in B2C. In B2B, you tend to have relatively few customers and it depends that you tend to have less customers in B2B. So it's one thing to send 10 or 20 or 50 invoices. It's a very different animal if you have thousands of B2C customers with small transactions.
Yes. That's what I wanted to do. I think we need to elaborate a little bit on that because that's what I wanted to ask anyway, that does it depend on the industry? Because I also work in B2B. I would say it's I wouldn't say less, but certainly less than B2C customers they have and obviously the invoices were not invoices, like the transactions, as you said, are are higher depends on the business, of course, but they certainly higher. But when we are talking about an e commerce company, for example they have hundreds or thousands of transactions every month. On a very small scale, right? So I don't know, 10 euros every day or whatever. And we automate that in a way that you don't need manually do it in an Excel spreadsheet.
Yeah. You shouldn't, you should never like, once you pass that very first stage, you should never do invoicing in Excel, right? There's really easy systems out there. There is even in Europe. The finance, the elements for your finance stack, they do exist. I think, yeah it's, but it's with everything. I think it's not so much on when you need to bring in an analyst, let's say whether you're in B2C or B2B, but the challenges are different, right? In, let's say B2B, as you're growing you will have to, maybe you'll start getting into trouble with collecting, right? Because your customer pays, you send an invoice with the system. Okay. That's all automated, but then maybe your customer doesn't pay. That's when you have to intervene. This is where most likely you need a person to intervene. You need to start sending emails. If we're talking B2C, you might have even factored everything, right? You have completely handed over all the invoicing. And it's maybe your people pay you by credit. You in e commerce pay, pay you by credit card. You have zero problems with collection. So it's just, the challenges are very different. And in the end, still, there is a lot of things that you can automate and that you should automate. But you will, as your business gets more complex, you need more analysis. And a lot of this like everybody else, I'm counting on AI to help. And I think there's great opportunities there. But yeah, that's where you want to bring in people when it comes to what type of person. So when we think of in your typical finance team, you have maybe a controller and analyst and an accountant. Let's say this, these are the three areas, let's call it. I would, depending on what your situation is, I would bring in the analyst or the controller first. Okay. What's the difference analysis is more kind of strategic decision making. Do we do this? Do we do that? How did it go? The controller is much more on the operations, right? Where we say, and this is an area that really I see a lot more interest in the past, I needed to push that on my so to say CEOs nowadays are being asked for it was like, okay, we thought we'd lose 50, 100, 200 K this month. We lost 30 percent more what happened, right? So this figuring that out, that is part of controlling. So I think it's one of those two roles that are the first to hire. Accounting, I would leave outsourced for a very long period of time. You can really, because why, because accounting is highly transactional, but it's also really, you really need to be an expert and the consequences of errors are potentially massive, right? If you pay the wrong taxes because you've got something wrong, that potentially has really dire consequences. Accounting is the thing that I would leave outsourced the longest. I would probably until you have a team of at least five people leave the accounting out and then slowly you can start thinking about bringing stuff in house.
Perfect. Perfect. We discussed that you are working as a distributed person for global startups. Let's address the challenges as a last, one of the last questions that startups are also distributed with a global customer base or, global reach. And since you personally worked at enterprises who are also global but they were enterprise. So it was a different animal. What do you think, what are the biggest challenges for limited resources, companies like startups acting on a global distributed market in terms of finance, of course. I guess one of, one of the things that I can guess quickly is the taxes, of course, especially in Europe. So it's it's a madness. That's why you have a tax stack in the U S it's easier. And you cannot do that in Europe because we pay different taxes.
I think you're absolutely right. Taxes and to some extent, even worse because taxes, as long as you're losing money in most jurisdictions, you pay relatively little taxes, right? So yeah you have the ones on salary. So that's potentially that there's a big deciding factor. But it's for me, even more than Texas is administration. So I think as you're building a global company long term, how much you pay your lawyers won't change the needle. You're not going to be successful or not successful because you're overpaying your lawyers. Okay, short term, it is highly likely that things like lawyers and notaries and even accountants like these external costs, there will be quite a significant share of your burn rate. And so I think this is where it's really it's tricky taxation, administration and jurisdiction. Don't underestimate the complexity of going to a different country and find yourself. And it's really hard to find I speak from personal experience, like you need to find lawyers and to some extent, even accountants who are able to help you with those different jurisdictions and those different geographies. So I think this is a big risk and a big cost of going global is that, yeah, the complexity just, it doesn't double it like triples or quadruplicates every time you move. And so I think that's one of the biggest challenges to, you need to figure out a way. And unfortunately, it's, I'm sorry to come out with without a solution, but I think there isn't yet, especially in Europe, this is a big topic for me is like in Europe, it's still, it's too freaking hard. It's too complicated, right? And there is no firms. Yeah. You can go to a really big, one of the big four accounting firms, but of course you can't afford them. And by the way, they also don't know how to deal with startups because it's not their business model. And you'll be like a tiny little business when they're dealing with corporate giants. So nobody cares about you. So there isn't really good solutions unfortunately yet out there. So that's really something to be mindful of and figure out those.
From a personal experience, I can relate heavily to that, by the way. I think, anyone who's listening to this show right now and thinking about jumping out from a big four company where he or she worked as a tax consultant for enterprise companies globally. And thinking that they would start their own global startup accounting company. Please do so right now. There is a mark. There is a market for that. Yeah, we would hire you right now. And please convince your friends to do and follow suit. Because yes I mean like jokes aside it's Global businesses were always enterprise companies and they had their enterprise solutions from usually, yeah, before or any kind of like bigger accounting firms or consulting firms either. But now the startups are global as well. They don't have That service layer underneath of them because the small accounting or consult, even consulting companies they tend to be fixated into their own small market. And that's not a globally distributed company. Just FYI I'm personally heavily struggling getting a personal accountant in Italy. Just take care of my own stuff here because it's, if you're living a distributed life, it's like hard to pay the proper amounts to the proper governments that you're paying to, and also you're, you have a company that is designated to incorporate in a third country where you live or from, so it's everything is like super fuzzy and fluffy and we don't know what to do. And it's really hard to find a service provider that actually understands these kind of problems. So yeah. Cool. Again, thank you for your time. I think we can talk hours about how to help startups on finance, but if anyone has any questions where can people find you and ask those questions to you?
Yes, of course. I'm on LinkedIn. I'm reasonably active on LinkedIn. Thanks to some help I'm getting from a really good marketing person, but yeah, they can always reach out on LinkedIn. I have a website. Maybe you can put it in the show notes they can go to. And yeah, I think that the kind of the when to reach out, obviously any question you have on finance, I love speaking about finance all day long. That's what I, that's why I chose that job, but I think mostly it makes sense when or when you raise a round or you're in a round and you start getting these questions from the investors that you don't know how to answer. So that's one. Or if you've just raised. Okay, and there's really two things. Like I said, the decision part is independent of whether you're based or not. But you're making, you need to make the big decisions. Do you go into this revenue and stream or that? Do I do a subscription model or I go with a transactional model? Do I go into this industry or that industry? Do I focus on my country or do I go to the next? And so the big decisions that you need to take or really, and it's, I think, especially right now when you need to come, if you have money in a bank, whether you just raised or you just, that's what you've left, like you need good control of your runway. So really, when you're in that day to day operations where it's okay, how do I make sure that my runway is what it is, right? How do I get good control of it? How do I see early enough where I have to change something? How do I identify opportunities early enough as well? It goes by both directions. So I think those are really the moments where it makes sense to, to reach out and find support.
Andrea, thank you for your time. These were all golden nuggets for CEOs, who are running startup companies. Thank you for your time and thank you for coming here.
Great. Thank you.
