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July 27 2020 - New York, NY

Should your Finance department get along with the rest of the company?: Michael Tannenbaum

Thomas:
In this episode of Brex in the Black, we're going to talk about finance department and the relationship with the rest of the organization. In particular, if they should get along or not. So we have Michael Brex's CFO here to sort of guide us on the relationship and the structure of finance and the role it has to get Brex to where it is right now and where it's going in the future, Michael.
Michael:
Thank you. Yes, so this is a fun topic because it's always fun to talk about people not getting along. I think in general, people should get along, but there needs to be a healthy tension between finance and the rest of the company. If everybody is praising how much they love finance, they've never been at a place where finance has just been so pleasant and pleasing, then I think you may have a problem.
Thomas:
And that's also the stereotype of the finance department that shuts down all the budget and all of the classic stereotypical things that you have to go and request everything from them to get anything approved or out the door. So how have you handled that at Brex and other places you've worked at?
Michael:
Yeah, so I think that, look I think a lot of people do ask Brex about the finance team, they'd say they're very effective, right? And I think being effective is different than being loved. I'm not trying to invoke Machiavelli and so you have to be feared. I'm just saying you have to be effective, and being effective is more important than being loved. And it's hard to be affective and loved in finance, I think because ultimately people, at least initially they will stop loving you if they don't have clear boundaries. I think what I found at Brex is most people want to understand what the boundaries are. Is it okay to take somebody out for a coffee? Do we have a SAS budget? Can I buy this? Can I not do this? So I think you need to set appropriate boundaries. Otherwise, the ambiguity actually is worse for people than a clear, although, perhaps imperfect policy. So we have this expression at Brex that says, Clarity over accuracy. Which is sort of a stupid expression because the actual accuracy and precision are typically compared at least in statistics, not clarity and accuracy, but the point is, is that it's better that we give people a clear answer and guideline than just sort of try to please everybody. So I think that, and the reason I talk a little bit about this in general is that in my experience, I've had numerous instances where board of director members have directly gone to me and said, I don't care what people say, you control that budget. And so ultimately the success of a CFO, how does a CFO lose his or her job? He or she runs out of money, can't strategically raise capital or deliver on financial goals. They don't lose their job because finance and product have some tension. So it's really important that you make sure you're clear what your mission is, but you also of course, want to do that in a respectful way.
Thomas:
And do you think that is born sort of at the start? I know at the beginning of Brex a lot of the go to market teams were rolled into finance in particular, you as the CFO and everything was sort of based on very clear target and metrics, which is something I wasn't really familiar with in the past. But I think that's built a very healthy relationship to have these tensions of aggressive targets to not only reach our numbers, but whatever has to happen for those numbers to be hit.
Michael:
Yeah. I think that sort of speaks to the expanding role of the CFO and why maintaining this respect is important because as a CFO, you can't succeed if you're on an island that everybody has to get through and sort of fears going to you, right? And so I think if you can become more strategic and you can become more aligned with business priorities and you still maintain that healthy tension, right? I'm not saying you become soft and a pushover, but if you can do that, then I think you can really add a lot of organizational value. And that's really the shifting role of the CFO to be somebody who helps deliver metrics. And even today, as the CFO, I would say my primary job is partnering with product now at Brex, which is to make sure that the timeframes and the deliverables that we have are reasonable and that what we're building results in something that's financially attractive to our investors. And I think that part of the job shows you that there's that tension between being a partner, but also having to make the tough calls and tell people that the roadmap that we have may not result in something that is financially feasible and or attractive.
Thomas:
And when you're talking about creating this tension, how do you go about creating or maintaining these relationships in the most respectful way possible?
Michael:
Yeah, I think it's a couple of things on the business. So if you frame everything as what is right for the business, you don't get into what other groups can or cannot do, or who's good, or who's not, I think that one of the things that I'm certainly not exempt from this is that finance naturally has this superiority complex. I think the teams typically think that they work harder, they do real work, they deliver, and other groups don't, that's been true everywhere I've worked and it could just be me that sort of thinks that, and then I promote it, but I think it's kind of a common thing within finance. And I think the reason is actually that a lot of investors have a finance background, and so sort of at the top BOD, the Board of Directors sort of frames things in a financial framework, right? The kind of the way that you report to the board, which is ultimately the boss of many companies. It's very financial and so because of that, it's not like people are saying, report to me on culture, report to me on personnel, report to me on design or I'm product. And so finance sort of takes on this kind of important role in the way that the board is sort of looking for what finance offers. And I think that is one of the reasons you have this complex. And so what I've tried to do, which is really hard, is you have to basically force your finance team to not talk bad about other teams. And that's very hard, especially because finance always knows all the salaries and who's spending on what and they look up and these people went to this dinner and that's always a big source of bonding and sort of amusement for a finance team, but you have to just combat that stuff. And I just, I have no interest in sort of that kind of talk and I don't allow it. So I think that's one of the biggest ways to sort of tamper that down.
Thomas:
And does finance too, to make sure everything's on target, have really good access into the product metrics, how are those dynamics between the teams to make sure we're at either parody with where we need to be to hit those targets?
Michael:
So, I think that yes, finance. So that's where BizOps analytics, et cetera. So at have Brex the finance team along with the product teams sort of jointly own the metrics that everybody looks at and they jointly own the OKRs. And so that's that partnership point, which is the OKR process, if it's just set by finance, it may not actually be what people want to build and what's happening. It may not reflect reality, it could just be numbers in a sheet that are never going to get hit. And if you don't have finance, you may find yourself with not a very valuable company and so I think you need to have that strong partnership.
Thomas:
All right. Thank you, Michael, for sharing your thoughts on building healthy tension between finance and the rest of the organization.
Michael:
No problem, thank you.
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