Lola.com's Weekly Financial DigestBy Rebecca Morrison, published on May 6, 2019
Our curated list of the week's top articles for finance & operations professionals
So, what happened in the world of corporate finance this week?
That’s the question we’re answering each and every week in this new recurring column from the Lola team.
We scour the internet looking for the most relevant, helpful articles on corporate finance. Sometimes, those articles will be about new tactics that will immediately make a difference for your organization. Other times, those articles will focus on developing your leadership skills as a finance pro. And sometimes, we’ll feature off-the-wall content that we just think you’ll find interesting.
From there, we’ll summarize what we’ve learned in this column, and of course, include a link to the full piece if you want to read it.
Ready to get started?
Do SaaS Startups Still Require Less Capital than 10 Years Ago?
This piece technically isn’t from the past week (we won’t tell anyone if you don’t). It’s from early April, but it’s so interesting that we couldn’t pass it up.
In 2014, the author of this piece, Tom Tunguz, wanted to find out if startups needed more or less capital than they needed in 2004 to be successful. Back then, he found that SaaS startups were significantly more efficient than they were in 2004. Meaning that they required less capital before an IPO than they did in 2004.
It’s been 5 years since he made that discovery so he revisited the topic. The picture isn’t quite as rosy now. He found that SaaS startups are becoming less efficient, meaning they require more capital than they did in 2014. Two reasons for this: 1) there is more capital available. 2) Companies are going to IPO much later.
You should read Tom’s full piece.
A Reading List for the Modern CFO
Reading can make you better at your job. It doesn’t matter if you’re a CFO with 20 years of experience, or you’re just starting your career, the right book can help you.
That’s why the crew over at Teampay put together an awesome list of books, blogs, and news sites that all CFO’s should read. Here are a few of our favorites from their list:
- Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs. Those are some big names, right there. The authors of this book spent years learning about the successes (and failures) of those entrepreneurs and packed it into one book.
- The Hard Thing About Hard Things. This one is all about disasters and how you can position your company to avoid them. Probably a good idea to keep this one on hand.
- CFO Thought Leader. This one is mostly a podcast, but it’s a good one. The title really sums it up, but this podcast features CFO’s talking about different aspects of their company finances, their careers, and really any number of other things.
Hard Evidence the CFO Role Is Getting Tougher?
Ask any CFO and they’ll tell you that the job is harder now than it used to be. But, that statement is kind of anecdotal. Until now. CFO.com compared a number of CFO’s to their predecessors to find out if the role is getting tougher. Here are the takeaways from what they found:
- 79% of the sitting CFOs were external hires, compared to only 58% of the prior ones.
- 40% of the current CFOs have “strategy experience” prior to taking the job. Only 24% of the former ones had strategy experience.
- 55% of today’s CFOs have MBAs. That’s 11% higher than their predecessors.
Don’t stop reading here. The full article also includes seven questions that all CFOs should be able to answer in order to position themselves for success.
Diversity Is Important For Businesses' Bottom Line And America's Competitiveness
There’s a new House subcommittee of Diversity and Inclusion. They held a hearing earlier this week to look at the social and economic benefits that organizations see when they implement diversity and inclusion strategies.
According to the summary of the hearing from Forbes, diversity isn’t just about race/ethnicity, it’s also about diversity of experience. The subcommittee did uncover something interesting: revenue growth happens at a much higher rate for organizations who prioritize diversity and inclusion.
Basically, if you want to improve your organization’s performance, look at your diversity and inclusion practices.
WeWork Files For IPO...Which Is Funny All By Itself
By now, you’ve probably heard that WeWork filed for an IPO. The team at Dealbreaker thinks this is going to end poorly for “the We Company” because they’re horribly overvalued.
Dealbreaker thinks this is actually good news for Uber because “the only thing that could possibly make Uber look anywhere close to profitable in the next three decades is a comparative look at WeWorks' bottom line.”
If you need a laugh, this piece from Dealbreaker should do it.
5 Learnings From Slack as It Gets Ready to IPO
Speaking of IPOs, Slack is gearing up for theirs. SaaStr took a look at Slack’s filing data and found some interesting tidbits:
- The freemium model continues to scale. Lots of people think freemium has a ceiling, but Slack doesn’t seem to be hitting this yet, even with 600,000+ organizations using the service.
- Slack still has a long sales cycle. Sales is still sales, especially when it comes to enterprise companies. Even if the CEO of that enterprise company wants to use your service ASAP, the sales process still takes a while.
- Slack actually isn’t burning that much cash. They’ve got $840m in the bank, have $600m in ARR, but are only burning $97m per year. Slack basically has an infinite runway.
If IPOs are your thing, don’t miss this article.
Podcast You Should Listen To: Preparing for and managing through a downturn
An economic downturn is likely coming. That’s not being pessimistic, that’s just reality. So, what can you do to prepare your company? This podcast from McKinsey has the answers for you. It’s only 18-minutes long, but there’s plenty of advice packed in.
What have you been reading this week? Find us on Twitter and let us know!