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- [00:00]
A
You don't have subscription contracts with these customers, but they do come back and buy multiple times from you. How would you think about seasonality?
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B
This North Face CFO in November, December. You wish for snow, but not so much snow that people can go outside and shop.
- [00:15]
A
Not too hot, not too cold.
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B
The Goldilocks of a cold winter.
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A
Taco Bell what does a 39 cent taco teach you about margins?
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B
The restaurant business is probably the hardest business in the world. To make money, you got to squeeze blood from a rock.
- [00:31]
A
If you heard a CEO say well, that's nice, but we can't afford to invest in purpose, what are they missing?
- [00:36]
B
Business has a purpose. If you don't believe you should invest in that purpose, that calls in the question, do you believe in what your business stands for?
- [00:44]
A
How does the pace that CFOs drive impact the rest of the org?
- [00:48]
B
Think of a gas gauge. I'm not looking at the gas cage every quarter or every period. If I'm six months in, have I actually completed 50% of what I think I'm going to hit?
- [01:00]
A
Is this thing on?
- [01:03]
B
Yesterday's price is not today's price.
- [01:14]
A
Welcome back to Run the Numbers, the show where we talk with the world's top CFOs and finance leaders. I'm CJ Tech CFO and my goal is to unpack the frameworks and operating principles that make you the better at allocating capital and leading teams. On today's show I'm joined by Angela Chen. Angela is the former CFO of the North Face and Mars Veterinary Health. Saying veterinary I had to say that like 17 times. Mistake. And she has held leadership roles at PepsiCo. That's an easy one. And General Mills. These roles have given her a front row seat to how some of the world's most iconic consumer brands are built and scaled. I have a North Face jacket. In this episode we go deep on how you measure something like brand equity. The CFO as an architect of growth. I love that term. How Angela thinks about connecting capital, talent and strategy to scale a business without losing what made it work in the first place and humanistic leadership in finance, why empathy and performance go hand in hand and how investing in people shows up in real business outcomes. We also get into Angela's frameworks for how to allocate capital in a consumer business and what something like a 39 cent taco at Taco Bell can teach you about margins.
- [02:21]
B
Woo.
- [02:21]
A
If you like this show, please remember to like and subscribe. It helps us with the algorithmic overlords and if you're looking to hire the best finance and accounting talent, I would love to help. I run a recruiting service that pairs you with thoughtful qualified candidates from our community of finance leaders, people who, for better or worse, voluntarily research renewal rate calcs on weekends. If that's of interest, shoot me an email@talentostlymetrics.com and we can talk onto today's show with Angela. Angela, thank you so much for joining me on Run the Numbers.
- [02:48]
B
Great to be here, C.J.
- [02:49]
A
i've been looking forward to this conversation for quite a while now because you've worked at some of the most interesting companies that I think one person could list on, on, on a LinkedIn profile or a piece of paper.
- [03:00]
B
Yeah, no, I've had a pretty fun and wild ride working for Taco Bell and Pepsi to the North Face, to General Mills and Mars. So it's been super fun.
- [03:10]
A
I'm not even going to know what, what title to put on this episode because you've got so many great brand names. Angela, I think we'll figure it out to him, we'll stretch it out. But like you said, PepsiCo, General Mills, North Face, even Mars, Veterinary. Like as a cfo, these are, these are names that people who are outside of the finance world, outside of the tech world, they understand what they are. How do you measure something you can't see or touch? And what I mean by that is the brand equity.
- [03:36]
B
I would say that the geek explanation would be, one is like, how visible is your brand, two is how your brands perceive, and three is, you know, retention of the business. Brand equity is the love and trust and emotional connection that you establish with your consumers and with your stakeholder ecosystem, be it your associates, your retail partners, you know, your suppliers, the broader industry. That's what brand equity is.
- [04:04]
A
And if it doesn't show up cleanly on the balance sheet, how do you know if it's growing or eroding?
- [04:09]
B
Actually, it does show up on your balance sheet and typically P and L, it ultimately translates to high quality revenue in margins, which we could discuss a little bit later. But you know you can measure brand equity in the form of consumer surveys, right? NPS scores, we all know about that. So it measures awareness, perception, you know, loyalty, financial metrics like do you command a price premium over your competitors? Right. What kind of market share do you have versus your competitors? So that's a, you know, highly correlated to your brand equity. Qualitative feedback like social media, you know, customer reviews, online reviews, those are all things that is highly correlated to your brand Equity. But ultimately, like I said, it translates to revenue and margin expansion.
- [04:57]
A
Revenue and margin expansion. I love that it's something that you can't immediately wrap your hands around to say, well, that was because of the brand, but over time it serves as a moat and that ends up in margin expansion and eventually free cash flow.
- [05:10]
B
Absolutely.
- [05:10]
A
Andrew, you've said that the CFO is the architect of growth. What does that mean beyond just protecting the downside? And by the way, I love the phrase the architect of growth.
- [05:20]
B
I've been privileged to be part of some really great growth stories, which some stories I'd love to share in this episode. Right. But you know, first and foremost, a CFO obviously is a fiduciary. That for me is table stakes. That is being is risk management, it's controls, protecting the downside. But for me, ultimately the CEO, when he or she, hopefully she most likely he, you know, looks for a cfo, he's looking for a strategic partner, you know, who could help identify unique value creation opportunities. Right. Through a deep understanding of the brand, through a deep understanding of the community it serves, be it a consumer, like I said, the supplier, the retail partners, associates, the broader, you know, industry. It's also a deep understanding of what kind of capabilities are needed to grow the business. So that's what a growth architect intuitively understands and will win investments to grow the business. That's what an architect of growth does. So you develop the strategies to develop the strap plan, you write the investment thesis, you secure and deploy investments to help grow the business. That's what a growth architect does.
- [06:30]
A
It's fascinating because just reflecting back on it live, it sounds like you're identifying the levers within the business that you can pull.
- [06:38]
B
Correct. And seeing around the corner. So there are, you know, levers that is appropriate for given the current context. But a cfo, a good one, I think, could help the business together, look around the corner, say, what is the future opportunity we could win in? What are some of the future capabilities that we will need to build now to drive a sustainable business that hopefully is generational. So that's what a CFO does. I've learned at the feet of some really great CFOs and been given opportunities to grow consumer brands in, you know, great marketplaces. That's sort of my journey as a cfo.
- [07:14]
A
And you connect money, ideas and talent. Which of those do you think companies consistently underinvest in?
- [07:21]
B
First, I like to say that the CFO obviously sits in a very unique chair, looks across enterprise and, you know, have the unique opportunity to say, how do we connect dots? You know, money, obviously, as a cfo, right? Finance, ideas, you know, value creation ideas, and talent. You need people, you need talent to bring those, granted those to fruition. It's hard to generalize about, you know, whether or not companies under or over invest. It depends on the company. So for a business like the North Face, which I was a CFO for over a decade, and help grow that business, it's a product company. So we work really hard on in product innovation. So those are ideas that we reinvested behind for Mars Veterinary Health, which is the world's largest veterinary company. So think animal hospitals. There's no animal hospital without vets. So we invest really heavily on veterinary professionals. So I would say that it depends on the context and the business you're in. So some businesses need to work hard on ideas, some businesses need to work harder on talent.
- [08:26]
A
You need great talent to run any sort of generational company. It's interesting though, how talent can be the product in and of itself. In many ways, you think like veterinary
- [08:35]
B
business, obviously it's about the pet. The business exists to serve the pet, to, you know, provide the best access, to provide the best medicine. But you don't have a business without veterinarians. So in the veteran business, the most valuable thing, you know, it's kind of contrarian, isn't on the balance sheet. You're like, okay, I have this much, you know, assets in hospitals, all right. But the most valuable thing that you don't capture on balance sheet is the talent that you have to deliver the best in class medicine to earn the trust of pet parents like myself. And I think you have a pet too, right? Yeah, those things don't, you know, show up on the balance sheet. But the reason why the business, the people come to you is I trust my vet with my pet's life. My pet is my child. So to invest in the talent in the hospital is actually probably the most important first thing that we needed to do.
- [09:26]
A
I remember speaking to someone who was a partner at a management consulting firm, and he said, CJ, it's a beautiful business in some respects because my assets that I run the company on, they enter and leave the building each day in the elevator. He said, but from another sense, it's a scary business to run because my assets enter and leave the building every day in the elevator.
- [09:47]
B
Yeah, I mean, you think about it, our doctors and the nurses that support the doctors that exists in human healthcare as well as animal healthcare. What's unique about animal Health is. It's got a very different revenue model. It's all a fee for service. There's no insurance. Veterinarians enter the business because they love pets. They're not really in it to make money. Most of them they, you know, grow up dreaming to be as a kid, dreaming of, you know, to be a veteran when they grow up. So for me as a cfo, I have to learn the business emotionally in addition to understanding the business intellectually, because the magic in that business is really the veterinarians that earned the trust of the pet parent and obviously earned the trust of my dog. So the first thing that my dog does is run to his vet and plops down on his back and asks for a belly rub and they indulge and they love it. That's not something that you see in human healthcare. I would say maybe in pediatrician, but but again, just to speak to, you know, what is immeasurable in the balance sheet is that trust and that love and that compassion.
- [10:53]
A
Hey, thanks for listening. We'll be right back after a word from our sponsors. I've seen a lot of FPA tools and a laugh is one of the few that gave me that aha moment. Within minutes I remember watching their founder shout out to Albert, connect my netsuite data and build me a full P and L live in minutes. Aleph is now trusted by hundreds of leading companies. I've had the CFOs from Turo, Eight, Sleep, Zapier and more on the pod and every one of them is a huge advocate. I also just published my second annual CFO Tech Stack Report and Aleph has been on the podium both years including a number one finish in the 50 to $100 million segment. This year, instead of being just another planning tool, they built a real enterprise grade data foundation for finance implemented at startup speed with AI native work workflows woven into its DNA. All your systems erp, CRM, hrs, ats, product usage and more. Powering one clean governed data layer that finance can actually trust. With AI moving as fast as it is, they're pushing even further. Mcp, custom AI chatbots, AI powered variance analysis and the list keeps growing. Try it with your own data at get a left.com run that is G E T A L E P H.com run tell him CJ sent you. So here's a pattern I keep running into when I talk to finance leaders at fast growing companies. You've outgrown the spreadsheets. You've probably outgrown your billing tools. Built in revrec. But you're not quite at the point where you can throw a 20 person team at the problem either. That's exactly the danger zone, right? Rev owns right. Rev is revenue recognition done right. It handles the messy stuff like high volume subscriptions, usage based contracts and mid contract upgrades. The things that break your ERP and the billing platform. Boltons. Here's the thing though. Your sales team isn't slowing down for you. They're closing ramp deals, usage commitments and mid quarter upgrades. And the longer you wait to fix the engine, the further behind you fall. So stop scrambling at month end and stitching together allocations across 3, 4, 5 spreadsheets to just have the numbers read. Well, that's it. That's the whole pitch. CFO's telling me it's like a glow up for the revenue books. If that sounds like where you are right now, right rev is worth the look. Head to rightrev.com cj that's rytrev.com cj check them out. Being a CFO, you know how much I love tools that actually make the lives of accounting and finance folks easier. One of my favorite tools right now is Rillet, the AI native erp. Going head to head with netsuite. Yes, someone is finally doing it. I met Rillet two years ago when they were still in stealth. Since then they've added absolutely taken the finance world by storm. Their mission is to make the zero day close a reality and they're actually doing it. Customers are literally closing their books at 1:35pm on the first day of the month. They've got everything you need to scale your business. Complex revenue recognition, native integrations, custom reporting, multi entity close management and much more. They're only a few years in and are already supporting nasdaq. Publicly listed companies. Yes. Seriously, if you want to scale your business on an ERP that wasn't built in the 90s, you need to check out R. Book a demo@rillit.com CJ oh cool, that's me. That's R I L L.com CJ R I L L.com CJ Tell him I sent you there. I want to talk about trust and love and passion in surrounding a brand like that. That vet example like hit the nail on the head. I think a place that may need a bit more explanation is you think about a retail brand like the North Face people are super passionate about that brand. Like they wear it proudly, they love the logo, they like what it stands for. It's an identity thing to them. What was the hardest part of scaling the North Face without diluting the brand, because if I have it right, I think you grew the company 5x organically in the time you were there.
- [14:45]
B
So, first of all, I was part of a management team. Certainly didn't do a loan, but. But the CFO obviously have a really unique and instrumental role. But you're right, you know, the north face grew 5x organically in a. In a decade, from a $500 million wholesale centric business that thought of itself as a supplier of technical gear to a $2.5 billion lifestyle brand that plays in different categories. So the hardest part of scaling, to answer your question, was ubiquity, without losing sight of the brand's purpose and values, which is at the center of what we do. So you're right. The North Face stands for certain values. Conservation, sustainability, love of nature, community. Because the outdoor participation is a communal activity. Unlike athletics, which, you know, sometimes could be a solidary pursuit. It's about winning and losing. The outdoors is about inviting everybody in. So for us, you know, to be ubiquitous without losing sight of the fact that we're help, we're here to enable outdoor exploration. We're here to provide access to underserved communities because unfortunately, it's still mostly affluent and white. That is, you know, what help us stay true to the brand and without diluting what makes the brand special. Again, I left the north face about 10 years ago. It's really leaned heavily into more fashion. So there are certain role to play in that. But never losing sight of the fact we're here to make gear that's athlete tested, expedition proven. That's at the core of the business. And that's what made people, I think, loyal to the business.
- [16:14]
A
Angela, can you elaborate on that shift from being a technical brand for people actually climbing the mountains day to day, they use this stuff to survive out in the wilderness, to a lifestyle brand. I just think that's so fascinating that you were able to broaden kind of the total addressable market.
- [16:30]
B
A transformational moment or inflection point, I would say happened in 2009. So, five years into my 10 years as a CFO, part of a very long serving management team, we said, you know what, this brand needs to think bigger. Right? We are not a supplier. Yes, we certainly are, but that's not why we're here. We're here to enable exploration. And that just opened up the brand aperture so much broader and allow us to play in different areas. We're just not here to make tents and bags. You Know for diverse expedition for that elite mountaineer. I'm here to bring the outdoors to everyone. So to make outdoors accessible. So we started making gear that would outfit you in the harshest New York winters.
- [17:16]
A
Yeah, that's cool too.
- [17:18]
B
We shouldn't just make sizes for a certain course. So there was a huge debate on, you know, expanding sizes so that everybody of all shapes and sizes could wear North Face and go outdoors.
- [17:28]
A
Oh, how fascinating.
- [17:30]
B
Yeah, I mean there were like huge debates about, oh, do we do plus sizes. We should welcome women to the outdoors. So we started making more women's gear that's tailored to the women. There are women specific needs for gear and outerwear. We invested heavily in trail running. But then trail running needs to protect you from the elements. So those are all things that we thought about. It's like, where do we have the right to play? And we said, yes, we can. We have a right to play and let's make gear for people. So yes, the logo where you talk about people are proud of that badge, I have to say, really high margin T shirts. Right. It's a fashion business. Don't lose sight of why you, you know, why you exist.
- [18:08]
A
I talk to a lot of tech CFOs about going multi product and deciding, hey, do we have the right to compete in this area and win? And I think it's very similar within, even more so within a retail company. If you look at like a lululemon that started out as, you know, you could call it semi technical gear, but for the yoga people. Right. And then it expands into running and working out and then it becomes a lifestyle brand. You have to wonder, does this alienate our core audience that we began with or does it expand it in an organic way that people will be okay with that?
- [18:39]
B
Is the tension the source of endless debates? When I was at the North Face, you know, when we couldn't topple the business because we were all very fearful that we would lose sight of what made us special and what made us core when we got comfortable with. We're here to expand the community. We're here to invite people in so that they could recreate and outdoors and invite more allies and conservation. Then we felt good about that brand evolution.
- [19:04]
A
We're going to come back to talk about humanistic leadership and some of your philosophies around running high performing teams in a human way. But I do want to pause to talk for a couple minutes about the economics of retail and consumer brands because it seems like a good transition point. I've heard you use the phrase quality of revenue before, what makes revenue high or low quality in your experience, first
- [19:28]
B
and foremost, is that revenue profitable? Very basic. You could get more revenue. But if it's really no margins, it really does the business no good long term. The quality revenue is high margin revenue number one. Another angle is, am I diversifying my revenue base so every brand has a hero product or multiple hero products. But have you become so reliant on that hero product like Nike Air Force One? It became so ubiquitous that they diluted the specialness of Air Force One as Nike reset. Right. They really cut down on the distribution of Air Force One. So do you have good revenue diversification of high margin products so that you're not over relying on, you know, like I said, the hero hero product.
- [20:14]
A
What was your hero product at the North Face?
- [20:16]
B
The Nollie jacket.
- [20:17]
A
I've had a couple of those.
- [20:18]
B
The Nuptse puffy jacket, that geometric dome that you see on top of Everest for Everest Expeditions. All these products stand for top quality, right? Products that could stand the test of time. So all these products have lifetime warranties. We stood behind that and it could go into the accounting of warranty reserves, which we won't get into. We stand behind our products at the North Face.
- [20:44]
A
Okay, so high quality revenue, that's the
- [20:46]
B
first thing I think diversify revenue base so you're not over relying on that repeat purchases of your loyal consumers. So, you know, lifetime customer value is a really important metric. The North Face consumer most likely is a lifetime consumer. So getting revenue from that lifetime consumer, but inviting more consumers in. So fortunately, from what I understand now that I've left the outdoor industry for 10 years, is that the outdoor consumer is aging. So you want to invite new consumers in. So that for me is high quality revenue. So are you getting it from certainly lifetime consumers? Are you building the next generation of, you know, outdoor consumers? Engaging her in the right platforms and venues? That's in my mind, quality of revenue as well.
- [21:32]
A
You don't have subscription contracts with these customers, but they do come back and buy multiple times from you. How would you think about seasonality? Would you hope that somebody who's loyal to the brand. I'm making this up. Buys one thing each season. Would you split it up into quarters? How would you look at it?
- [21:48]
B
The holy Grail of the North Face is we are a heavily Q4 business because it's still a winter brand. The holy Grail is how do we become an all season brand. And that was one of the reasons why we expanded into outdoor athletics. You want to recreate outdoors in the summer. But building that revenue in the summer is super hard. I mean, 80% of the revenue was done in Q4. Diversifying the seasonality is also quality revenue too. I do not want to be sweating bullets on December 31st on whether or not we made our year.
- [22:21]
A
We were speaking to Matteo Bryant and he's the CFO of Minted. They do the greeting cards, so you get Christmas cards, holiday cards, anniversary cards, and it says Minted on it. And he was saying whenever his board asks him like, are you going to hit the plan this year? He's like, I'll let you know in the last couple of days. I think he said more than 60% of his revenue comes in the last month. And then within that, like an even higher concentration within the last week.
- [22:46]
B
I actually listened to episode that was fascinating. You're right. It has really strong echoes to the north face. We do have a bit of a preview of the season when we look at the weather forecast.
- [22:57]
A
That's a really cool insight.
- [22:59]
B
In November, December, you wish for snow, but not so much snow. In cold wonder that people can get outside and shop.
- [23:06]
A
Not too hot, not too cold.
- [23:08]
B
The Goldilocks of a cold winter.
- [23:11]
A
Would your analytics team really look into what the weather patterns were going to be or was it just like cursory checking the news, I had it on Google Alert.
- [23:20]
B
If it's snowing, people feel cold, they're going to go buy a jacket, right?
- [23:23]
A
Yep.
- [23:24]
B
There were a couple of really harsh winters. Harsh from the weather standpoint with global warming, winters just are not so as cold anymore. People don't want buy down puffy jackets when it's warm outside. That's why having a more diversified seasonal business that's more heavily weighted toward spring and summer was. Was a holy grail. I think it still is.
- [23:45]
A
I was sitting next to a CFO in the aftermarket auto parts industry and he got a Google alert on his phone. Like, oh man, it's going to be an absolutely brutal snowstorm in Chicago this week. He's like, that's going to mean a lot of parts. And then he's like pauses for a second. He's like, but I hope nobody gets hurt.
- [24:00]
B
Exactly.
- [24:02]
A
Hey, thanks for listening. We'll be right back after a word from our sponsors. Scalia Tech Co. Is thrilling. It's also really, really messy. Just ask anyone who's done it or anyone who's tried. Better yet, ask ey. They've seen startups at their best and in their most fragile moments, EY knows You don't start a company to burn cycles on regulatory hoops, discounted cash flows, or the fine print of sec form S1. Although you probably do know I love myself a good s1 if you've listened to or read my stuff long enough. You can't ignore these things. That's how risk compounds kind of like negative interest. What you can do is work with EY from day one. They'll help you get it right early and often so you can stay in builder mode and keep the trains running on time. Shape the future with confidence. Learn more@ey.com tech startups that is ey.com techstartups One more thing about Spendhound Teams using Spendhound reduce software spend by up to 30%. Here's how that actually happens. First you get the data Real pricing benchmarks from over 1,000 companies across 10,000 SaaS and AI vendors. When a renewal comes up, you know what fair pricing is and what you should be be pushing for. But knowing the number and getting the number are two different things. Spendhound also includes on demand procurement specialists who help with negotiation, strategy, contract review and renewal emails. You stop overpaying for the tools you need, you cut redundant tools before they renew, and you negotiate from a position of strength now that you have both the market data and expert support behind you. Spendhound is built by the team behind Yipit Data. It's rated number one on G2 in SaaS spend management and did we mention it's free forever for SMB? When we say free we actually mean it. You can like keep all the savings. Plus it's only $10,000 per year for enterprise with $150,000 in savings guarantee. There's a reason we're growing more than 100% year over year. Do you want to stop overspending on SaaS and go to spendhound.com cj0risk guaranteed savings. That's spendhound.com cj if you're paying for A level finance talent, they shouldn't be doing B level tasks. CFO time is expensive. Senior finance hires are wicked expensive. And yet in many companies, highly paid operators still spend hours reviewing expenses, chasing receipts and reconciling systems that should already be automated. That's where Brex comes in. Brex is an intelligent finance platform that combines corporate cards with built in expense management and AI agents that automate the repetitive work finance teams usually handle manually. Transactions are categorized automatically, receipts are matched, policies are enforced in real time. Reconciliation just runs in the background. So instead of Adding admin. As you grow, you increase output per finance hire. Brex is already automating hundreds of thousands of hours of manual finance work every month across 35,000 companies, including Anthropic, Coinbase and DoorDash. If you want your finance team focus on performance instead of paperwork, check out brex.com metrics. That is brex.com metrics. Angela, you've said that retailers shouldn't own factories. Can you break that down?
- [27:19]
B
Let me qualify that a little bit. It's about allocation of capital. As of today, retailers could spend capital on many different things and it depends on your return capital requirements. Okay. I could spend North Face's money better on R and D, on consumer engagement, on data and analytic infrastructure versus factories that are capital intensive but need labor to run. Retailers have moved offshore manufacturing decades ago into Asia and other parts of the world where it's less expensive to build a factory. But honestly, it's really about the labor that you need to make those, those jackets and tents. Right. That you can't afford in North America.
- [28:10]
A
That's counterintuitive to what I would have thought because my mind just went to the factory build out in the Capex. I was joking that I built a studio for the first time. That was my first capex endeavor. But I don't have to pay for the labor. I am the labor. I think what you're saying is that like there's this ongoing cost of people have to size up as well.
- [28:28]
B
Exactly. It's the labor costs in addition to the CAPEX $20 T shirts. And have people in North America make it's too expensive. Or else we can't, we can't price the t shirt at $20.
- [28:40]
A
It has to be a 40, $50 t shirt.
- [28:42]
B
Correct. And you know, there are retailers that do manufacturing in North America, but it's a different consumer value proposition. Retailers moving manufacturing offshore is not just capex considerations, but also labor cost considerations. You know, terrorists have changed the equation. I'm talking about, you know, the shift that happened a generation ago. We're in a new world order. I have no idea where this is going. There are players that could do a cheaper and better than retailers. And why don't you focus on what makes your brand special, which is product innovation, customer engagement, data analytics in serving the needs of the consumer in your ecosystem better.
- [29:18]
A
I just want to double down on that because I think it's such an important point. It was a capital allocation and capital allocation priority decision that you're making.
- [29:26]
B
Absolutely. Which is what the CFO has to do you have a dollar. What's the best use for that dollar? You can spend it on Capex or Opex. You could spend it offshore or onshore. But at the end of the day it's guided by what makes your business and your brand special. Invest in what makes your brand special. Mars Veterinary Health. It's about the talent, advancing the veterinarian professional. So spend money on her. Veterinarians are 85% female. There's very unique, you know, workforce needs and challenges. So what does she need, what does she want? So invest in that. For North Face it's about product innovation. For North Face is about inviting more people to the outdoors. So spend money there. Right. Versus a factory that a OEM could operate more efficiently and more profitably than the North Face can.
- [30:12]
A
Maybe we can juxtapose these two. So how does a company like Levi's and their approach to manufacturing different than Pepsi?
- [30:19]
B
Speaking from somebody looking from the outside, Levi moved their manufacturing offshore later than other retailers. I think it's also because it's a family owned business. There are different requirements depending on, you know, how you want to run your business. I don't want to just focus on Levi's. The general trend is any business that's capital intensive in the consumer space. PepsiCo, you know, general Mills, unless it's super core to your business, you just want to have somebody else do it for you. General Mills owns Hamdas factories. But there's at the time in which I was at General Mills, there's only three Haagen Daz factories around the world and they are next to the best source of milk and cream. So it's a very strategic investment that you want to own. You can't generalize. You got to figure out what's unique and what's important for the, for the business.
- [31:07]
A
Throughout your career you've worked in multiple places with supply chains. What's something that people may underrate or not give enough credit to CFOs for who have to think about like how a product goes from point A to point Z along the way.
- [31:20]
B
I think it's just understanding the entire value chain, the knock on effects of that entire value chain and anticipating what's going to come around the corner. Not to over talk too much on North Face because that was a while ago. But North Face product development cycle is 18 months from inception of that idea to seeing that product on the retail floor or on your E commerce site. So understanding, you know, what feeds into the product, you know, needs, the consumer needs, even precedes the 18 month development cycle.
- [31:50]
A
I had no idea it was that long.
- [31:51]
B
And you have to buy inventory ahead of time. So you're making bets on inventory, what would sell, you know, so I'm going to buy a million units of that puffy jacket without knowing what the winter is going to be. That's very nerve wracking. Okay, but understanding the value chain, understanding, you know, not only the Capex and opex but working capital needs of the business up, that's, I think the CFO and the finance team are doing some heroes in that. Just managing the go to market process and making sure that we understand the, you know, that where the value is won or lost, partner to multiple business partners, R and D to sales to marketing, the D2C folks, you gotta be their friend and their partner and understand, you know, what motivates them. Understand where the value, like I said, where the value is won and loss.
- [32:38]
A
It sounds like you're identifying where the incentives are within the value chain too because depending on which partner you're dealing with, they're all trying to optimize for slightly different outcomes.
- [32:48]
B
Empathy is understanding what motivates people and what incentivizes people and what pain points are they experiencing that you could help solve? Empathy is not Bill Clinton OPA rescue. I feel your pain. It's not as simple as that. It's really about deeply understanding needs and wants in pain points. Can we pause for a second? The dog is going crazy.
- [33:08]
A
What's the dog's name?
- [33:09]
B
His name is Gulliver. Like Gulliver's Travels.
- [33:11]
A
Ah, I love it.
- [33:13]
B
He's a pandemic pup. So the name was aspirational because we couldn't travel at the time.
- [33:17]
A
Angela, something that's guided you throughout your career is your focus on the human. What does bringing a humanistic approach to finance mean?
- [33:25]
B
I like to broaden down to not just finance, but overall business and leadership. So for me and I, I've spoken about this quite a bit is a humanistic approach to business and leisure means a deep understanding of your business's purpose and values. Like why does your business exist? Who does it serve? Right. What value does it live by? Because it guides your, you know, where to play, how to win. As I said earlier, empathy is not the Bill Clinton esque I feel your pain or Oprah esque type of empathy. It's about deep understanding of what your stakeholders want and need. You know, your consumers, your employees, your retail partners, your suppliers, the broader industry. Right. Addressing their needs and wants and pain points. So through, through that deep understanding, then you could come up with the business opportunity and the solutions that help advance your business.
- [34:21]
A
What would you say to people who think that focusing on doing good won't always result in the best economic outcome? Are the two linked?
- [34:29]
B
I believe that they're mutually reinforcing, not mutually exclusive. Perhaps it's because I have been privileged to work for strong, purpose led, mission driven companies like the North Face and Mars Ranger Health, where its purpose and values and the relationship that it's built with the ecosystem of stakeholders is so values based. Right. North Face is about enabling exploration outdoors, so investing the purpose is about investing in outdoor exploration. Mars Vineyard Health is about animal health. So the purpose is about providing the best in class medicine, the best in class client experience, the best in class access. So investing in that helps your business. So for me those are mutually reinforcing, not mutually exclusive. I think that is the myth is that you can only have one without the other. I think that's off. I think that's flawed. Especially if you're not managing a quarter or a year, you're managing for the long run. Some of the investments in them may not pay off in one year. But if you're in it for the mid to long haul, that I think is certainly the case.
- [35:38]
A
If you heard a CEO say well that's nice but we can't afford to invest in purpose, what are they missing? What are they getting wrong? Is it a timeframe issue?
- [35:46]
B
Maybe he or she doesn't understand what the business stands for. Then I'd like to have that provocation. Business has a purpose. If you don't believe that you should invest in behind that purpose, it calls in the question, do you believe in what your business stands for? I think more and more consumers are discerning. They vote with their values. I think in the, in the long term, whatever those values might be, I
- [36:11]
A
tend to agree with you. Do you think that balancing purpose and profit is harder in public companies? How do you square that?
- [36:18]
B
It might be harder in public companies because of the incentive system. It depends on whether or not the management team is incentivized on the short term or the long term. And Wall street tends to focus on the short term, right? Quarterly earnings, so it does stack it against more short term goals. In private companies you probably have more room to play in terms of time horizon. But there are examples of companies that the public companies that took the long term that have become wildly profitable and successful. Amazon for years says we're not here to make a profit, we're here to make investments in the future and look at them now. Right? Certainly harder in public companies if they are driven by the street quarterly earnings. But in private companies, if you incentivize your management team on short term results, you're going to get, you know, what you structure behavior that you encourage.
- [37:11]
A
I would say I totally dig the philosophical here and I do think that if you're trying to build an enduring brand over time, you have to be purpose driven. That's what keeps you going, that's what motivates you, and it becomes your North Star. I also want to touch on some value creation frameworks that I think stand behind this. Like we hit on before, it doesn't mean you can't have profit. In fact, you may be able to have even, even more profit because of this, because people believe in you. You said you have this value creation framework when you're deciding where to play and how to win. I'm hoping you can walk us through some of that.
- [37:43]
B
I like to think of myself as a tough minded idealist. Idealist, meaning that I believe in the purpose of values, but I'm here to make sure that our dreams could come true. The framework that I referenced, it's not something that I developed, but something that actually have been hugely influential on me as well as the management teams that I'm part of. It's a book that you might have heard of. It's called Playing to Win, written by the former chairman and CEO of P& G and a business school, professor Roger Martin. It's called Play to Win. So ask like four or five really key questions you know of the business as you develop your strategy, you know, what's your winning aspiration? Where will you play? You know, how will you win? What capabilities do you have to have in place to win? And last but not least, this is probably the most unsung part of it. What management system are required to support the choices you've made? Meaning how are you going to run the company? What is the performance culture and operating cadence that you need to make sure that the strategic choices that you've chosen goes from vision to reality? So I would say that that framework of strategy development is super, super important. But at the end of the day, strategy is about choices. Did you make the right choice to expand into xyz? Did you deviate so far from your purpose and values, or is it actually a really natural adjacency that you have every right to play it? Those are the choices that you make that the CFO could help enable. Do you have a Deep understanding of your consumer. Do you have the right go to market strategy? Have you invested in the structural economics of your business? Have you considered the macro trends of of the industry that you're in? Have you met the needs, maybe even anticipate the needs of your stakeholder ecosystem? And if you happen to be the leader in the industry, you know as north face wasn't outdoors or Mars. When you're held in the vet industry, you have a responsibility to lead and make them first move that smaller players may not have the financial worth at all or the ability to, you know, influence and shape.
- [39:44]
A
You mentioned the term operational cadence, which I think is a beautiful packet of words there. How does the pace that the CFO drive impact the rest of the org?
- [39:53]
B
We all love and believe deeply in process. So technology enables processes that you need to run the business. So in terms of driving strategy from vision to action, in reality is you need to clear define what your strategy choices are. How do you know that you've succeeded? So what are the KPIs and milestones that you need to hit? So the strategic choices need to translate into very concrete action plans with measurable results that will tell you you want. That's the performance culture and operating cadence for people outside of finance. Think, oh, you know, you do the budget once a year, right? And you're done. And you know, maybe you do a quarterly business review every quarter, you're done. I would say that the right operating cadence is that you have a continuous process loop. If I have a strategy of choice with these five tactics, how are these five tactics progressing in a concrete way with the metrics that I've defined for those five tactics? And you know, what percentage of completion have I seen in year? Right. So think of a gas gauge. I'm not looking at the gas gauge every quarter or every period. If I'm six months in, have I actually completed 50% of what I think I'm going to hit or am I going to buy some miracle hit 80% of my metrics in December 31st.
- [41:12]
A
What's fascinating is you described it as a continuous loop. You didn't break it up into this one's annual, this one's quarterly, this one's monthly, this one's weekly.
- [41:20]
B
Correct. So your strip plan is typically five, three to five year horizon.
- [41:24]
A
Right.
- [41:25]
B
It's your aspiration with some concrete steps for your annual operating plan. Right. It's an operating plan by definition. It tells you what your annual goal is, may be broken down by month. But what is important is you have to have constant visibility, especially in this world today, it's constantly changing. You can't even afford to just say, I'm going to review my results once a period. You got to say, you know, do I need to actually recalibrate mid flight? And how do I know that I'm, you know, flashing red, yellow or green? So that's the continuous process loop that I'm talking about. So again, you got to measure what matters, because if you measure too many things, it means nothing, right? You're just busy. Activity without impact is just busy work. In my personal opinion, the key to instilling the right performance culture in the right operating cadence is defining the right milestones and metrics that you need to hit. Having the ability to have real time visibility and recalibrate and say, you know what, this is going great. Let's allocate more capital, more opex to this particular tactic or, you know, mid flight, saying, you know what, it's not working. Let's just cut off funding, which is the hardest thing to do. Prime my, you know, budget for my cold, dead hands. Right? All CFOs know this. And it's really challenging. Understanding in flight how you need to recalibrate is the operating cadence that I think we all strive to hit.
- [42:46]
A
Can you speak to the the hardest of decisions there? Can you think back to a time where you have had to, mid flight, pull back on budget and how you went about that situation?
- [42:56]
B
I could tell you about an early lesson, a very expensive, painful lesson I've learned as this North Face CFO on a project that I should have killed. It deviated so far from our core, but it sounded sexy and fun. And I was too early in my tenure because I was first year as a North Face CFO that I didn't have enough, I think, confidence and probably courage to say, timeout, this is wasted money. It is to build a battery powered jacket.
- [43:22]
A
Oh, really?
- [43:23]
B
That would warm you up and cool you down.
- [43:25]
A
Cool you down. Take off the jacket.
- [43:28]
B
In retrospect, we're not a hardware company, we're not a battery company. So we outsourced it and spent millions of dollars in consulting fees to try to bring a product to market that will have to retail at $1,200 to make any kind of margin. Like I said, it was just the wrong product. Pursuing a consumer property that doesn't exist.
- [43:49]
A
Looking back at it, you're like, okay, the signals were there. Maybe I just didn't want to have to have that hard conversation.
- [43:55]
B
And I didn't have the confidence because I'm not from the outdoor industry. I was actually the only person from outside the outdoor industry. To compliment the team, you need a mix of, you know, experiences and talents. I didn't have enough confidence in the outdoor industry yet one year in to say that's a terrible idea challenge, you know, the head of product, Angela, take
- [44:15]
A
us back to Taco Bell. What does a 39 cent taco teach you about margins?
- [44:20]
B
You got to squeeze blood from a rock. The restaurant business is probably the hardest business in the world to make money, especially in fast food. In order to make money in fast food, you have to deeply understand your consumer. You have to be technology enabled. You have to basically flip the whole restaurant operating model on his head. So I was a financial analyst at Taco Bell in the early 90s. I'm dating myself. That was my first job out of, out of school. Taco Bell was actually at the forefront of the fast food revolution, which is hard to think imagine now, but this is a generation ago. John Martins is a name. There were Harvard Business school business cases written about him and what he did at Taco Bell. He says Taco Bell is not a restaurant. I'm going to change Taco Bell from a restaurant where most of the capital on the floor space is devoted to the kitchen to a assembly line. So he turned the whole supply chain on its head. So all food has been diced and prepped off site. So you are there to assemble the tacos, you're not there to make the tacos, like cook it. Okay, so he changed the whole operating model. So he converted a restaurant. He invested heavily in technology drive thru. So that Taco Bell consumer is the 18 to 24 year old male who wants to put that taco in his mouth in 30 seconds.
- [45:47]
A
I've been that ICP.
- [45:49]
B
There you go. So you understand what I'm talking about. It's about speed of service, it's about fast cheap food. So I'm going to invest in point of sales technology, I'm going to invest in speed of service and we're going to invest in RD on things like tacos with a Dorito shell. Sounds disgusting to me. But maybe not for the 18 to 24 year old frat guy who's drunk and need, you know, a quick kid. So he turned an entire paradigm on his head. So became fast food. All the mobile apps, I mean they went first, right in terms of ordering. So to make money on 39 cent tacos is that flip the balance sheet on its head looking for money as analyst. And they hired an army analyst, I ran regression analysis on profitability in half hour increments to say, how do we even like staff labor in half hour increments? I was able to look at sales mix of 3,000 restaurants the day after in half hour increments to understand when we made money throughout the day. You had asked me before, are the best analytics people in retail? I would say maybe in fast food. To make money on 39 cent tacos means that you squeezed blood from a rock.
- [47:06]
A
I can't beat that story. That was amazing. Angela, I'm going to take you into what we call our long ass lightning round. So the first question I ask every successful leader that comes on the show is, what's an example of something you've messed up on the job before?
- [47:19]
B
I'll give an example, actually a mistake that I made as a people manager. So, you know, we all make technical mistakes and probably a lot of people could share plenty of stories. Early in my career, I was a people manager. I was a CFO of Asia Pacific for General Mills, very young cfo, and I was hiring a team. I hired based on resume, the company that the person worked for versus true vetting of the person's experiences and talent. So I was like, oh my God, this person worked for ge, must be a great person. So looked great on paper, but did not stand a test of time. Hiring somebody based on credentials, whether or not the school that they went to, the degree that they got, the companies that they work for, without truly understanding what they've accomplished, what they're capable of accomplishing, the resilience that they have, their problem solving abilities or their curiosity, it was painful for the employee as well.
- [48:14]
A
Your empathy shines through telling that story because you didn't just think about it from the angle of the company. You really hit on what it meant for that person. Like their performance, good, bad or indifferent, you wanted them to be in the best fit, right? Next one I got for you. If you could tell your younger self something, knowing what you know today, what would you tell her finest?
- [48:31]
B
People are very analytical, very logical. We pride ourselves on our analytical prowess. Right. And ability to see around the corner. I would say that if I know now, today, the work is not the best piece of analysis, the best investment thesis. It's really about building your network. The network is the work, not just the deliverable. What I mean by that is in order for me to advance the business, whether or not it's Murphe's or Mars, Vanier Health, I have to sell the corporation on a vision and I need to win allies. My beautiful analysis does not stand on its own at the day. It's the trust and teamwork that you establish, rapport that you establish with the whole stakeholder ecosystem that would help you advance your business more than anything else. So I would say that I over torqued on the analytical and the best piece of analysis and the best pitch deck and the best scrap plan that's out there. Yes, that's important. By the end of the day I probably fell short as an advocate and a salesperson for my business because I didn't think deeply and work hard enough on winning allies for the business thinking that my intelligent alone would sell. That's not true.
- [49:45]
A
I've made that mistake many times. Or I just tried to blind people with my science with the work that I did and I didn't do the actual work to go and gain buy in on something as if I was like a senator trying to get a bill passed. It's not enough just to write it up. You have to go and get allies.
- [50:01]
B
That's absolutely true. Yes.
- [50:03]
A
Last one I got for you. In all your years, what's the craziest thing you've ever had someone try to expense?
- [50:09]
B
Gosh, I hate to keep going back to North Face, but this is the craziest thing that I've ever seen. The product development team tried to expense the rental of a snowcat on a backcountry ski trip.
- [50:21]
A
What did they need it for?
- [50:23]
B
To go back country skiing. Have you heard of cat skiing?
- [50:26]
A
No.
- [50:27]
B
You go back country and you have a snow cat take you to the top of a slope that you could ski down or snowboard down in the backcountry.
- [50:38]
A
They should have expensed the helicopter, Angela.
- [50:40]
B
That would be more expensive. I have to give them credit for that.
- [50:43]
A
Angela, this has been such a treat. I really appreciate you coming on and sharing all your experience. I think people are really going to enjoy this episode.
- [50:49]
B
Thank you for having me Run the
- [50:51]
A
Numbers is a mostly media production yelling an intro by Fat Joe. Artwork by Meg d' Alessandro show is executive produced by Ben Hillman. Nothing said on this podcast is intended to be business or investment advice. It's the sole opinion of me. A guy who feeds his dog way too much ice cream and has a history of net operating losses. Lol. If you like this podcast, hit subscribe and give us five stars. It'll take like two seconds and our algorithm overlords love it. Drink water, call your mom and have a great day.
- [51:19]
B
Peace.