Given the stark differences in the role of a public company CFO versus a private company CFO, it stands to reason that public company experience, even in a non-CFO role, may be viewed as more germane. CEOs in our study chose to prioritize public company SVP/VP experience over private company CFO experience more than twice as often. This raises the question: what is the next best alternative? A private company CFO? Or a public company (S)VP? Or someone with both backgrounds? Roughly one-third of late-stage CFO hires in our study did not have this qualification. Hiring a prior public company CFO will not be an option for every company. We found just one example in our study of a late-stage CFO hire from outside the technology industry, with the majority coming from SaaS.Īs an alternative to public company CFO experience, CEOs should consider candidates with public company exposure at (S)VP levels, not necessarily private company CFO experience. More specifically, we believe late-stage CEOs should look to hire a CFO from a public SaaS company-or at minimum, a technology company-given business model complexity. It may introduce significant risk to ask someone to “learn on the job” when operating in a public company environment for the first time. In contrast with other executives whose roles may not change overnight once a company goes public, CFOs will find meaningful differences in their “new” job and thus benefit from prior exposure to this environment. Being a public company CFO requires a different knowledge base (e.g., SEC disclosure requirements) and set of skills (e.g., forecasting and “beat and raise,” and the ability to build credibility with the investment community). We believe public company experience is particularly important for CFOs because-unlike other functional leadership positions-the public versus private dichotomy is not simply about scale. Sixty-five percent of those hired between $50-100M ARR, and 68% of those hired after $100M ARR, checked this box. We believe building this organizational muscle can take several quarters, which is why the CFO should have ample opportunity to “dress rehearse” prior to their public market debut.Īs a final timing consideration, don’t forget to build in at least six months, possibly longer, for the CFO search process.ĬEOs should prioritize candidates with public company CFO experience.Īmong the companies in our dataset, most entered the public markets with a CFO who had prior public company experience. As Mike said, “The street is not forgiving when you miss your numbers, so it’s important you have confidence in your to guide your business.” In a recent analysis, ICONIQ Growth found that a company’s ability to “beat and raise” revenue estimates each quarter post-IPO is strongly correlated with performance.
But even after considering those outliers, we believe a two to two-and-a-half-year pre-IPO timeframe is optimal, as it allows sufficient time for the CFO to develop the organizational discipline necessary to accurately forecast revenue and hold their peers accountable for predictability.Īs discussed during our ICONIQ Ideas online conversation with Snowflake CFO Mike Scarpelli, titled “ Building Enduring Public Companies,” forecasting is arguably the most important factor in determining public readiness. On the other end of the spectrum was a company that filed for its IPO just one week after hiring its CFO and went public one month later. It’s rare to find someone who demonstrates the versatility to lead both an early-stage startup and a public-ready enterprise. While this is clearly possible, it is uncommon as many finance executives specialize in a specific stage of company-building.
At one extreme, our dataset contained a single CFO who joined his organization as employee #14 at $300K ARR and scaled with the company for over eight years through (and long after) its IPO.
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