Hire a VP Finance Sooner Rather Than Later

The post is aimed at CEOs of startups who have at least 15 employees. If you don’t have a VP Finance on your team reporting to you, do yourself, your team, and your investors a favor and go hire one right now.

While it’s trendy to outsource your accounting to a third party, once you hit a certain size it’s dangerous. I know there is a lot of advice going around right now – especially in the bay area – that you should focus on your product, start getting customers (or users), make them deliriously happy, and not worry about the rest of stuff for a while. The tone of the advice is fine, but it creates a total mess if you follow it without pondering the implications as you actually start to scale up revenue and expenses.

When I say things like this, I feel old. At Feld Technologies, our fourth employee (hired in 1989) did all of our accounting. You’ll recognize her name (Amy Batchelor) and she joined us to answer the phones and do all the random shit that my partner Dave and I didn’t have time for. Dave taught her accounting in about a week and Amy kept doing that, along with a bunch of other things, until we got to about 10 people. At that point, we hired a woman named Stephanie Wallace to be our Controller. I can’t remember what title she ultimately had, but she continued the awesomeness that Amy started.

I don’t care whether you call the person a VP Finance or VP Accounting. If you want, you can also call this person a Controller, although my general experience is that in this era of title inflation you won’t be hiring an experienced enough person if they take a Controller title.

This is not a CFO. At 15 people, you want someone who will do all the work, but also has the ability to scale up and manage a small team. You want someone who reports directly to you (the CEO) and is able to handle a wide range of administrative stuff beyond the accounting, but doesn’t need to hire a bunch of direct reports to manage the people who do the actual work. At some point you’ll want a CFO, but this is way too early in your life cycle for that kind of a person. You want a doer who can manage, not a manager who will reluctantly do.

This should be someone who has been in at least two startups prior to joining yours. They can have had a controller title in their last role, or a VP title, but they need to have been through the startup drill multiple times. You don’t want someone who has recently come from a big company, unless it’s a startup that has scaled up and they joined early (around 15 people). You especially don’t want someone who is trying to break into the startup game. Instead of hiring this person, you should encourage them to go get a job at a scaled-up startup and learn the ropes there, rather than with you.

This person should be on your leadership team. They should sit near you. They should take stuff off your plate every day. You should trust them with every login and password to every system in your company. You should let them interact directly with your investors. You should interact with them regularly, listen to them, but also manage them so they don’t end up being the person that says no to everything. They should give you significant leverage in all aspects of your job, so you can spend more of your time focusing on your product, getting customers (or users), making them deliriously happy, and not worrying about the rest of stuff.

Every time I’ve seen a company delay adding this kind of person when they hit 15 people, there’s always been excessive pain at about 30 people. I let companies make this mistake – suggesting strongly that the add this person, but never insisting on it, since I rarely demand a CEO do something (I don’t think that’s my role, nor do I think it’s healthy.) But, as I’ve seen this mistake made over and over and over again, I’ve gotten more forceful with my suggestion.

Also published on Medium.

  • As one of these fine people, I obviously agree (and am biased!). Curious how you would rank the parts of the job in terms of most critical – keeping the books clean, building up the budgeting/planning muscles, or keeping general ops in order?

    • Rough to equal although keeping books clean is the price of admission.

      • James Smith

        Great post Brad, Tell me if its 15 people for a VP of finance and I know it depends on how strong they are but you mention hiring a CFO later? What range of Revenue, Headcount etc before you’d think about hiring a CFO.

        • 75-100 people. $10m+ annual revenue.

          • James Smith

            Great thanks!

  • In my second startup, we started with a Controller who then moved to VP Finance. The problem we ran into was that this person who fit at those lower levels just didn’t have what it took to be CFO so she plateaued and we eventually hired a proper CFO. The big differentiation was the CFO type needed to be “connected” (whatever that meant at the time) to potential additional financing. To me this seemed like the bugaboo on this position. Ideally you’d like someone to come in for peanuts when your starting but somebody who has the wherewithal to take you public if you make it that far. However, somebody like that probably won’t work for peanuts at the beginning unless they’re part of the founding team. Toughy.

    • How much money is “peanuts” in your opinion? What’s the yearly range?

      • Its relative. I had this experience 12-13 years ago and I’m sure everything has gone up. If we listen to Sanders the CFO compensation has gone up 10x and the controller not at all I suppose. 😉

  • jeffullrich

    Agree 100%. Here is my story as evidence: For the first 3 years of operating Earwolf/Midroll, we had a part-time bookkeeper out of Chicago using a Google spreadsheet, and I was heavily involved (30 hours/month) as the CEO making sure everything was correct and that I understood how our finances could support our growth needs. While it was a bit of a mess, I was able to instill a culture of frugality and risk management that allowed us to grow very fast without a dollar of outside capital/debt. That configuration served it’s purpose (very cost effective, sole decision-maker close to the realities of the business). Until it didn’t. We operated for an entire year with that damn spreadsheet falling down, with the bookkeeper out of his depth (I still love you Mike!) and with me spending too much time on QC. Additionally, I was doing all the other admin functions that Brad described. As Seth Godin told me around this time, “You are not an entrepreneur, but a freelancer hiring himself for $0/hour because you can do everything better and cheaper than everyone else. That’s fine, if you want to be an artisan. Go make the 10 best comedy podcasts in the world by yourself and stop there. But it’s not fine if you want to build the business you’ve described to me and have it thrive without you.” Of course, he was right, and I knew it. Within a month I had brought Andrew Walker on to clean up the books (Quickbooks!), create financial systems and also handle HR (admin) and Legal (admin, some strategy). He had been our first advertiser with his startup Prediculous. Small world: I had come to Boulder to meet Brad for the first time and decided to have a social evening with Andrew since we stayed in touch and he lived in Denver at the time. After dinner at The Kitchen and a long chat at the St. Julien – he was living in Denver at the time, I started to think “maybe Andrew is the right person to help out.” While I was probably 3-6 months late in bringing him on, the transition was fairly smooth and I was eventually provided w the leverage Brad describes. I was also able to then recruit and hire an EVP Sales and COO soon after for even more leverage so that I could in fact become the entrepreneur I thought I was instead of the freelancer that Seth saw. Of course, the real value came 18-24 months later when Andrew was essential to our process of selling the company – creating a clean data room and providing a steadying force that gave the bidders confidence that our numbers were correct, even though they were never audited. He also had become the world’s only expert in artist contracts in podcasting, which was a huge asset. Friday was the one-year anniversary of our sale and I took Andrew to lunch to celebrate. He told me that even now the culture of cost control and risk management developed in the early years impresses our corporate buyers and influences how the company is run. While I’m glad I did things my way the first 3 years, I’m even happier that I brought a pro like Andrew in when I did. He saved me from myself, even when I was too big of a pain in the ass to know it. Thanks Andrew!

  • This is an interesting post because of size of company. I assume trajectory too. VP Finance is big responsibility and costs equity. Do you think it’s possible to do this “half time” if it’s ONLY finance. In your post you reference doing “other things” besides finance. If I read between the lines on that correctly I would assume this person is a process person that could also be a COO type person if needed.

    • Often this person takes on broader responsibility than just “finance.” I’m loath to use the title COO as most companies less than 100 people have no idea how to structure themselves effectively to use a COO.

  • Shurtleff


  • Megan Matt

    While I can see how there is definitely enough “finance” work to justify the title, I think it’s also important to have someone in this role who is data agnostic and can build systems and connect the financial data to the daily decision making. In the US, accountancy training is overly focused on compliance (historical data looking back) and not enough on managerial accounting. So you need to have someone smart and analytical, but able and eager to learn. For example, everyone uses cloud accounting and APIs to connect systems, but then you start using it and you realize Stripe does connect to Xero, but it doesn’t tell you who the receipts come from (seriously). Your bank does sync, but you have to manually check the opening balances and manually fix errors. I’ve never met a CPA who wanted to learn how to do these things.

    • I agree with you comments about the role. In contrast to your experience, I’ve found many people with both this attitude and skillset in the US.

      • Megan Matt

        Definitely lots of people like this in the US. I just mean if you talk to accountants in Australia, The UK (probably other places that don’t post in English too :)), there is more of a formal training system and emphasis on managerial accounting and bookkeeping. I don’t think those skills are hard to hire, but as with most things, degree and license might not get you there.

  • I find that someone with an Accounting/Controller background has a very different mindset from someone with a FP&A background. In this first finance hire, do you recommend your CEO’s lean one way or another?

    • It varies and I don’t find it absolute.

  • Fantastic post Brad! There’s a startup here in Austin, Financials OnTap, that is working hard to help startups bring on financial expertise gradually by first a few hours, then part-time CFO/VP of Finance, and then hiring full-time when the business is ready. https://www.financialsontap.co/

    I like your suggestion of making the jump to a full-time VP of Finance when the company hits 15 employees. Are there any other milestones, such as funding level or revenue, that you also feel should trigger a finance hire?

    • Once you’ve raised a Series A financing (an equity round from a professional VC that is at least $5m) is another trigger.

  • Dan DeGolier

    Good post Brad. For many companies, there’s a good interim step before going to a full-time hire.
    I think you can get the benefits of a senior finance and accounting person, who takes responsibility for all the things that you want from a VP Finance but on a 1, 2 or 3 day-per-week basis. They sit near you, they attend your exec meetings, they just aren’t in the office every single day.
    With a firm like Ascent CFO, the startup gets a highly-functional integrated finance and accounting teammate. This isn’t just “outsourced accounting” rather a finance teammate that is available, affordable and has a controller and/or bookkeeper on an as-needed hourly or monthly fee basis. “I’m your CFO/VP Finance, just not full-time”. The books are right, they are timely, but also I understand your business so can be responsive to investors, run the Financial Due Diligence, manage the Cap Table and support the fundraises.
    I hope that didn’t come off as just a sales pitch….

    • Sales pitches are fine! I think this works if you only work with two – or at most three – companies at the same time. I’ve found that once one tries to scale the outsourced CFO business, the dynamics break down quickly (at least in my experience.)

  • Totally agree. I’ve been that early stage finance hire most my career and seen how much of an acceleration occurs when a company has its finances in order from the get-go. It inspired us to launch Jirav (www.jirav.com), providing a cloud FP&A tool-set for outsourced CFO/Controllers and in-house Finance teams in the small and mid-market.

    Seems like there’s a lot of CFO firms on this thread, I’d love to get your feedback as we launch our product this planning season!

    • Martin – Jirav looks great! I run http://www.FinancialsOnTap.co – a virtual workforce management platform for hiring Fractional CFOs and Finance VPs. This might be a great solution for our clients. I’d love to get my hands on the product and set up some time to discuss further.

  • Jason Pulsifer

    Great advice, Brad!

    The sooner you can get professional financial experience supporting your company, the better. I’d agree that once you hit a certain size that outsourcing your accounting function to a third party can be dangerous…that is for the traditional solution that uses nothing but outsourced labor.

    The good news is that technology has made it possible for third party solutions to enhance their delivery of finance & accounting services. Consero Global has developed a turnkey solution that includes all of the process/software/people/reporting that a company could ever need, working with tech companies that range from pre-revenue/seed stage to public with $150M+ in revenue. Once upon a time, companies used to run their own payroll. Now, you’d never even think of taking that on yourself. We’re at a point in time where we are going to start looking at the entire finance function in a business the same way. Sure, you’ll certainly want to hire that full-time CFO when you get to the right stage, but at least that role can focus on staying strategic and not have to worry about building out the systems, implementing the processes and finding the right people to do the work. Imagine a company graduating from Techstars and being able to use the same solution all the way through IPO. We’re making that happen today!!

  • Rob Rawson

    Does this apply only for companies that have raised money because in our case I see this hire as the least important hire for our company (we have way over 15 people). We have someone internal for bookkeeping, but the CFO type functions are probably 2 hours per week of my time, and reluctant to give someone the responsibility of bank accounts.

    • I’m separating between CFO and VP Finance. They are different functions. I’d have to know more about your specific situation to have a strong opinion.

    • Michael Tan

      A good operational finance person, will be able to do way more than a bookkeeper and give you peace of mind. They should be able to manage your bank accounts WITHOUT having any signing authority on them.

      Here’s another take from Mark Suster on the importance of this role

  • John Evans

    Arguably in an early stage business the right CFO is joined at the hip with the CEO. As a CFO is typically more strategic than either the VP Finance or a Controller, even on an interim basis (as full time is probably is not needed at this juncture), the experienced CFO can provide better insights to the CEO as well as help reduce the risk of the venture, and particularly if the company is going through a financing or a strategic transaction.