How do you keep your company relevant as demographic shifts are accelerated by technology changes? How do you keep your product and communications updated?
How do you keep your company relevant as demographic shifts are accelerated by technology changes? How do you keep your product and communications updated?
Jack McCullough, Founder and President of the CFO Leadership Council, joined Scott Case to discuss how to stay relevant and current while not alienating your customer base.
Jack leads the CFO Leadership Council that provides world class professional development programs and networking events for chief financial officers.
Watch the full session: https://bit.ly/3rfMyZn
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Scott Case 0:00
Welcome to Founders Focus, a podcast made for founders by founders. I'm Scott Case, CEO and co founder of Upside, and I created Founders Focus to help share free resources and actionable advice. Together we're building a community for business leaders, entrepreneurs and founders to come together to tackle today's challenges. This podcast is powered by my awesome team at Upside. Please visit foundersfocus.com to join the live video sessions or to catch up on past topics.
Scott Case 0:27
I'm thrilled to introduce you all to our co host for today, Jack McCullough. Jack is the founder of the CFO Leadership Council and it provides basically world class professional development programs and networking events designed and targeted specifically for CFOs. And he founded the company in 2006. And as you might imagine, an organization that was tied to a lot of physical in person events had to make a lot of twists and turns over the last year.
Scott Case 1:01
Today though, we're going to talk about something that a lot of businesses face, and I think that it's even gotten more challenging as the pandemic has accelerated things, which we've lovingly called the Oldsmobile problem. But basically, it's that we're all having to cater to an audience that's made up of arguably four and maybe even five generations in order to keep our businesses running and manage our audiences. So we're going to talk a little bit about that. But before we dive in, love to hear your journey, Jack. As an entrepreneur, you've had an interesting story getting off the ground here. So share how you got here.
Jack McCullough 1:43
Sure, and I'm a bit of an accidental entrepreneur, to be honest. But first of all, thanks for having me on. And I just now noticed the Yoda code in the background Do or do not there is no try, so love that, a true entrepreneur mantra.
Jack McCullough 1:58
But my early background, I actually studied accounting undergrad and I'm a CPA, or at least I was until a couple of years ago, I let my license lapse. But I had a relatively conventional path. I worked in public accounting, Peat Marwick and Mitchell at the time, you may know it today is KPMG. And then I worked as a controller and CFO for some startups. And what I wanted to do is I wanted to create a network of my fellow CFOs, who worked with other venture backed companies. So I started the group that's now the CFO Leadership Council, but I did it literally without a business plan or a vision. I just thought we'd get together four or five times a month. In fact, one of the funny early stage stories is I used to provide breakfast, and there was a bucket out front, and I told people, look, if you got value out of it, everybody kick in two or three bucks, it'll cover the cost of the breakfast. We had a local law firm give us the room for free, and so that worked out for awhile then like the third or fourth time I did it somebody actually stole the bucket, which was like, oh god, what kind of people are these? I mean, it probably wasn't one of the CFOs. And it wasn't like a life altering amount of money, but it annoyed me.
Jack McCullough 3:11
But I think the main thing here is I actually connected with people because of this. It was a classic case. I wasn't the only CFO who felt alone in the world. And that is the one thing, like if you're a salesperson in a company and you have a particularly vexing problem, you can go to 8,15 whatever other salespeople and pick their brains to get some help. But most companies, there's only one CFO within the company, and so there's really no one to turn to. So the idea of a network for CFOs, particularly of venture backed startups who don't have a lot of financial resources, it ended up resonating. And the business grew, without really my trying, I had a marketing budget of zero, it just spread by word of mouth. And pretty soon we were the biggest CFO group in Boston. And one of my members moved to New York, and she asked if I would open up a chapter there, and I did. And that pattern kind of repeated itself in Philadelphia, Atlanta and Washington. And suddenly, again, totally accidentally, I was suddenly the largest professional society for CFOs on the east coast of the US, and had to make that decision between love and money. Because I really loved running the CFO Leadership Council, but I had a good job that paid me a lot of money and was fun, but I only liked that job. I didn't love that job. So the fool that I am, I picked love over money. And here I am 15 years into it having a great time.
Scott Case 4:40
And so you basically had to step away from your day job and move into this full time. Did you have a team in place already? Or did you have to kind of build from that point? What was the state of affairs and how did you then grow your team to a dozen or so people you have today?
Jack McCullough 4:59
Initially, what I did the first two years, it was just me. And then it just became too much because I did have a full time job and it was digging into it. So I hired a woman, I actually placed an ad on Craigslist, and I knew exactly what I wanted. Because it was it was a good job for the right person, it was 10 hours a week and you could do it all from home, except like three hours a month, because we had one live event a month, basically. That's pretty easy right now, but back 15 years ago, there weren't a lot of jobs like that for moms. So I hired her through Craigslist, and, she didn't have a financial background, but she just seemed to have a natural ability with CFOs, and to run meetings and things like that. So what happened is, I was perfectly content with that, I wasn't doing it for money, but I was charging dues and using that to pay her, so she was making pretty good money. But then her husband lost his job, and she had to go back full time, and that's when we decided to launch those chapters. And we decided to do it together. But everything was a little bit serendipitous. I mean, had her husband not lost her job, and she needed something full time, I might have just continued as a Boston only chapter with her doing a lot of the marketing and admin. But it worked out pretty well, and, it's not exactly Facebook, but it's been a pretty successful launch. We have 26 chapters across North America, close to 2000 members now, and we're making an impact on CFOs across the globe.
Scott Case 6:33
That's awesome. So when we talked about the theme for today's session, you coined the idea of the Oldsmobile problem. And I'd love for you to just speak about that in your own words, and in particular, how you've experienced that within the CFO Leadership Council, because you've been at it for now, almost 15 years, and so you've seen a lot of shifts happening. So just tell us a little bit about kind of how that problem has come about, and then sort of what you've been doing about it or paying attention to?
Jack McCullough 7:10
Sure. And to date, I don't think we have an Oldsmobile problem, but I'm old, so I may have one without being aware of it. But, sorry, any people in my age bracket. I'll take a step back because there might be some people that maybe don't know exactly what the situation with Oldsmobile was. But in the 1980s, General Motors had five divisions, and they had kind of at the entry level in terms of price. They had Chevy, which you know is iconic, and they also had Pontiac for people who wanted something a little sportier. And then if you went a little bit upstream, you had Buick, which remained a little sportier, and then Oldsmobile, and then at the top of the stack was Cadillac. And Cadillac still remains that. An Oldsmobile, a lot of people call it a poor man's Cadillac, it maybe was a little bit insulting, but it's actually a pretty good description. It's for people who maybe wanted to own a Cadillac, which at the time was considered the elite car in the United States, Japan and Germany hadn't quite penetrated the market as fully as they now have, so they might want a Cadillac, but they couldn't afford it. Hence, they'd end up in an Oldsmobile. Now, the problem Oldsmobile had uniquely, Cadillac didn't have it because it was the most luxurious of cars, and Buick was sporty.
Jack McCullough 8:24
But Cadillac became identified is the old man's car. And, they decided they wanted to sell Oldsmobile to young people because as people age, some of them die, even the ones who don't die, they just they have less money when they retire, and they're buying cars less frequently. So if you want to sell a lot of cars, you have to sell it to the 20 somethings and 30 somethings, who are buying new cars every two or three years. So, Oldsmobile decided they were going to try to create the image of being a cool company. And it was one of the great campaigns that was an absolute disaster, depending upon who you ask. And you probably remember the expression, not your father's Oldsmobile. I mean, as far as commercial lingos, that's right up there with you know, coke it's the real thing. I mean, people still use the not your father's blank. You know, I remember when Bill Clinton ran for office, not your father's Democrat, he was supposed to be new thinking, progressive, but also anti crime and stuff like that. And republicans do it, too. This is not your father's Republican Party. The idea is it's a new image appealing to younger people. So it's actually not a bad phrase.
Jack McCullough 9:39
What Oldsmobile did is they put the sons and daughters of famous people in their commercials, and they tried to sort of be the cool people through them. So they had like William Shatner's daughter, Ringo Starr's daughter, Leonard Nimoy's daughter, and a couple of other people, but the children and they usually were daughters of fathers, they weren't famous on their own, they were hoping to maybe break into an acting career or something like that. But the program was just an absolute disaster. Because what happened is, it didn't appeal to young people. Despite having 20 somethings in the commercials, they weren't famous 20 somethings, they weren't particularly talented or beautiful or anything like that. And all they did was anger their customer base, they basically said, people who drive Oldmobiles are old farts, we recognize this, so we're going to try to get you 20 somethings to buy it. But if you're the average buyer was probably my age today. Now that's not exactly a compelling message for me the next time that I go out and buy my car. So it seemed like it was a catchy little slogan. And in fact, it was. The fact that 45 years later, people still occasionally say, not your father's whatever, to reference something that's new and improved. It was just an absolute disaster. They didn't retain their older customers who just found that the idea offensive, and they didn't get the new customers that they were targeting. So it's hard to say that one commercial series would bring down a company. But that was about as close to doing it as one can come up with. They were selling millions of cars. And then like two years later, they were down to 400. And a few years after that, they decided to shut the division down. So it was a classic case of identifying a problem that they may or may not have had, and making it worse, if that makes sense.
Scott Case 11:42
And I think that the key point is that you've got one audience, in this case, a demographic that you've been selling successfully to, you're trying to open that audience up or open your addressable market up to a new, in this case, a younger demographic. And as I mentioned at the head of this, we're in a world now, and I think the pandemic has forced this, where 75 year olds are now figuring out how to use Uber Eats and online grocery ordering where a year and a half ago, they probably would have avoided it and said I don't need any of that stuff, I can just go to the restaurant or I can do whatever. But now they've learned that wow I can use this technology from that standpoint. And then of course, you've got the younger generation in the workforce, at least the Generation Z is who are looking at it saying, Well, of course you could do that like, and there's 20 other things that I expect to be able to do.
Scott Case 12:35
I was talking to an entrepreneur this morning. And he was thinking about the absurdity of the life that he was thinking, Why do I have to empty the trash? Why doesn't it just empty itself, right? And this notion that we're now in this world, in a lot of ways, every generation's expectations have shifted, and yet, you as a leader, you're catering to all of them, and they still have whatever it was attracted to you when they first joined the CFO Leadership Council, they sort of expect those things. And now we're in this world where you've got live events you were doing with everybody, and now they're virtual, and now they're probably gonna expect hybrid, like, how are you navigating all of those expectations shifts? Because they're happening everywhere.
Jack McCullough 13:20
Absolutely. And just one point I want to make, like the Oldsmobile problem, it's not necessarily about generations, it's like taking care of your customer base while getting a new one.
Jack McCullough 13:29
And I'll date myself a little bit, but it's still kind of interesting. Massachusetts used to actually be dominant for technology, even was the head of Silicon Valley at one point in the 70s. And there was this great company called Apollo Computer. They were back when digital and data gen, those are like the three big computer companies in Massachusetts, IBM in New York was the fourth and then there were a bunch of these flaky countries out in Silicon Valley that actually ended up doing pretty well. But when Sun Microsystems came out with their system, people at Apollo computer basically tried to buy it pretty quickly and they failed. And they just said, checkmate, this game is over. Because Apollo was stuck, they had to find a way to service their existing customer base with what was suddenly outdated technology that they didn't see coming. And Sun Microsystems got all the new business. And they're like, we're not going to get any new business, we're basically going to live as long as we can to take care of our customers before Sun takes them. And that happens over and over again. That was a stark case because I know in Massachusetts, they were like the second or third biggest employer in the state at the time. But it isn't just generational.
Jack McCullough 14:45
To your point, you asked me, how do I take care of the generations? And it's interesting because you want them all to benefit from each other. I'm a big proponent of reverse mentoring. And in fact, she left for a startup but I hired a, she was a kid when I hired I think she was 16 or 17, and she worked with me through high school and college, and she graduated a year ago and worked with me until last week. But I learned as much from her as she did for me, I think, just new ways to approach problems, just candidly a different way to think a little bit. And I don't think I'm one of those people, I'm going to do it because we've always done it this way. But I don't think I do it on purpose. But I think I probably do it every once in a while that I just sort of rely on familiar things. And, this is when she was like, 18, 19, she would challenge me, it's like, Hey, can't you do this better or can we try it this way, that type of thing? And then at the same time I learned from her. And in a member organization, we have a lot of that going on as well, where the veteran members are sort of being mentors to the younger members. On the other hand, the younger members know a lot of things and a lot of times it's around technology, that the veterans haven't learned and would really benefit from that expertise. So if you focus on the community and you treat everybody like equals, and everybody can contribute and everybody can learn, I think you're going to solve a lot of your problems, if that makes sense.
Scott Case 16:16
Going back to the Oldsmobile problem, how do you avoid, I guess communicating or positioning your products in a way that in an attempt to be more inclusive to a different customer base, you end up being exclusive? In the case of Oldsmobile it was a marketing messaging, but it also could be the product, it could be the events that you run, etc. Are you doing anything to like sort of have a leadership council of Leadership Council? Like where you're bringing a group together that's giving you feedback? Are you doing surveying? Like, how are you getting feedback to know that you're going in the right direction without making a potentially, in the case of Oldsmobile, an existential mistake?
Jack McCullough 17:04
In a way, I'm perhaps the only one in the world who can truthfully say this, but we have 26 chapters across the country. And each chapter is run by a volunteer board of anywhere from six to I think 13 CFOs is the most. So I have somewhere in the neighborhood of 250 CFOs working for me for free, right? How many people can say that? And I'm very careful in the CFOs, there's actually a bit of a waitlist to be on our local boards. But I'm very careful in making sure that it's a diverse group of CFOs, and by the way, not all of them are CFOs, a lot of times I'll have controllers or finance directors who while a little bit more junior, they're a little bit younger, and maybe a little bit more cutting edge in terms of the things they know, and also a little bit more intellectually curious. So I just have this incredibly geographically diverse, diverse by industry and a little bit diverse by years of experience advising me on not only what programs we should have, but what the community should look like, things of that nature, and all of the good ideas that we have come from the members. I'm pretty lucky, I don't really have to come up with any good ideas anymore, because people are pretty comfortable sharing them with me.
Jack McCullough 18:23
And like one of them, we have an Emerging Leaders Program, for example. And what it is you have to be nominated for it. But if you're a CFO who's a member and you have a controller or someone that you think is going to be a rockstar CFO at some point along the way, you can nominate her or him for the Emerging Leaders Program. And that person will can get a one year membership to the organization, so they can now because it's virtual, they can attend all the programs that they want. We assign them a mentor, and we make them part of the community. And we encourage them to ask a lot of questions because this is where you can make your mistakes and it doesn't really matter, so go ahead and ask that dumb questions. And it's fantastic because again, the younger people get a lot from it too, because, it's not at all uncommon for somebody to say, Hey, I'm thinking of getting a new ERP or we're doing a new strategy around digitalization, do you know anything about that? So the knowledge sharing actually goes both ways, even though one is a mentor and one is a protege, so if that makes sense.
Scott Case 19:28
So because of the way you've set things up, your chapters have a natural, happen to be geographic constraint, but that keeps those groups, those communities small. Are you doing anything to enable those local communities in a more digital world? Have you set up either online tools or services or are they listservs? What kind of keeps those people connected? Because in your case, your customers are the CFOs themselves, but in a lot of other businesses, you see customer communities form around products or around services, so I'm curious if you've done anything to enable, basically make that the those communities sort of easier to manage or for people to connect to each other.
Jack McCullough 20:13
Sure, we actually, pretty early in the game, we were meeting once a month, but there was just value in the community. Because candidly, everybody can come up with pretty good content. But where we're different is that we're a community of CFOs that candidly take care of each other. But we actually early on in it, we just started a simple Google Mail group, and so what people can do if they're having a problem, they send it out to the community, and there's now 1,800 people on it or something along those lines, so it would be very unusual that you would have a problem that somebody else hasn't faced at some point in their career. And even if you did, the members, if somebody just doesn't get any useful answers back, we'll just set it up like, Hey, you know, he just needs to brainstorm with another CFO, even if they haven't been through this particular problem, you think you can do it? So that's a big thing, that goes through, like, we probably get maybe 100 messages a month, people will ask for some stuff. Some of them are pretty basic like I hate my auditor, who were you using, what do you pay, that type of stuff? And some of them are a little bit more complex, like, there was a guy he's setting up manufacturing in Ireland, software development is in India, and he's doing something in China too, and he just wanted to pick a CFO's brain about tax structure and other things, and so he sent it out, and he got 15 responses, and a bunch of them said, if you want to meet with me half an hour over zoom, I can do it. And it's pretty cool, because we're like a true global community. And it's sort of interesting when you see like a CFO from Charlotte, North Carolina, helping out a CFO from San Francisco or a CFO from India, helping a CFO from Boston. And those sorts of things do happen from time to time.
Scott Case 22:07
When you look at, from a, I guess, sort of an overall brand standpoint, we'll start here with the CFO Leadership Council, Have you made any adjustments to your brand or your positioning, especially as the pandemic has pushed everything online? Have you had to shift anything from either the way you communicate about the value proposition or have you emphasized more of the community aspect over the events access, like, what have you done to make that shift? And, then we're going to talk a little bit about what do you think it means as we go forward?
Jack McCullough 22:48
Sure. And yeah, I mean, the community's always been how it differentiated a little bit. We were never set up, there other professional groups like ours, where if they have 26 chapters, it's basically 26 fiefdoms and whatnot, and we've never been like that, we've always encouraged that the members from other chapters to interact with each other, because they can learn from each other. So there's been a lot more of the community, it wasn't necessarily anything that I had to make different, like, a lot of people who were maybe skeptical of the benefits suddenly at the beginning of this crisis were not.
Jack McCullough 23:30
And just, for example, you're undoubtedly familiar with the PPP loan program. Well, that was a bit of a mystery even to CFOs, when it first came out, and so we went from having like three or four questions a day to 15. And all of a sudden, we're bringing in people to help out. And, as you might imagine, when you've got a group of 1,800 CFOs, you could call a lawyer and say, Look, they're confused, can you throw a webinar together for an hour for them, and you have a waitlist for that type of thing as you might imagine. So that sort of made the community come together a little bit more quickly than it was just happening on its own. I think it's fair to say.
Jack McCullough 24:11
And then the other thing, it is tough, like we're proactively doing it right now. Like before, people used to just like going to the live events and they'd go to the event, there'd be networking before we'd have the program, and like in Boston, a lot of times would hang out for an hour and a half after the program ended. And I always like Boston, because after the program, we could get together with a couple of folks and have a beer. And some chapters thought that's funny, because our meetings were at 7:30 in the morning, and we're having beers afterwards – not really but that's our reputation I think. But, some cities, what I've learned is they don't value that as much, and without naming the cities, there's some chapters it's just a different culture. If they go to an evening event, they want to run out as soon as it's over and get home. But there are some cities where they linger a little bit, and they just sort of value the opportunity to network a little bit extra.
Jack McCullough 24:17
But, I wouldn't say there's been a lot of other than we've sort of had to do it a little bit more proactively. And, so we have what we call watercooler conversations, where we limit them by design, and we'll say, okay, we're going to talk about topic x. And the first 20 people can jump on, and we'll chat about that. And we have a member portal, I describe it as a combination of LinkedIn meets YouTube, because you can go in and connect with people, and you can see their profiles and develop a relationship. But at the same time, our programs are recorded. So like if you live in Boston and there was a program in San Francisco that you couldn't see, you can actually watch the video recording of that as well. You miss the in person experience of networking before and after, but you get some value out of it as well.
Scott Case 25:59
That's awesome. So we got a few questions here. One is more probably comment about the PPP. And if you've got questions there, we actually have a program that we set up called Upside Financial. If you just go to upsidefinancial.com, you can learn more about it and we've got support for both getting a loan while they're still open as well as handling all the forgiveness piece of it. And that's partly how we've worked with Jack and the CFO Leadership Council, so I saw a question about that.
Jack McCullough 26:31
Yes, many of my members can vouch for that one, so thank you,
Scott Case 26:34
Well, thank you.
Scott Case 26:36
There's another question of, how can entrepreneurs access or get benefit from your CFO leaders? Have you done any programs where you're either providing access to or helping get questions or finding people for recruiting? Like, how might we as a bunch of entrepreneurs somehow either support and or benefit from your CFO community?
Jack McCullough 27:05
Sure. Well, a couple of things. If anyone is simply looking to hire a chief financial officer, just send the job to me, and I will send it to the community, and I don't charge for that, I think it's a good service for our members, and my emails is jack@CFOlc.com.
Jack McCullough 27:24
And the other thing, if there's just a problem that maybe needs a CFO but you don't need to hire a CFO full time, but maybe just as a one off, send me that, too, I'm sure I can find somebody that will talk to you, free. I mean, if it becomes three hours a week ongoing, you'll work something out with that person, but my members are pretty generous with their time, they understand that they have an important expertise that a lot of entrepreneurs don't, and they're usually willing to do it. I don't know about other executive groups, but there are a lot of, like, part time CFOs in the world, and they're phenomenal. I think there was a time where if you were a part time CFO, it looked like there was something wrong with you. But now a lot of super talented professionals actually go into being a part time CFO for a living because they can make a lot of money. And it gives them a lot of flexibility and whatnot. But they're really talented, some of my members have taken companies public and done several 100 million dollar exits, and then they decided to start a family and they want to work part time, so the part time CFO is perfect for them. And for a company that needs that expertise, but doesn't want to fork out $300,000 a year or whatever a CFO might cost, it's a wonderful option. So, it's definitely something any entrepreneurs should consider.
Scott Case 28:52
I'm a big fan of part time CFOs, especially if you can get access to people who are more senior that have got 20 years of experience, and because they've got all that experience, they can help you set up your financial systems, they can help you hire a controller, and you don't necessarily need all that wisdom all the time. You just need it when you need it. And it's a big benefit to a lot of companies, especially startups where you can screw things up really easily, this is a way of avoiding some obvious mistakes when you're very early in your development.
Scott Case 29:31
But we got another question here about the CFOs. Are there any criteria for CFOs joining the CFO Leadership Council? Do you vet them? Do they all have to have a CPA? Do they just have to have the title CFO? Like if as long as they pay their dues, they're in? What's the criteria?
Jack McCullough 29:49
Yeah, it's a little bit of a judgment call. There's only one CFO I've ever not let in. He was actually like 22 or something, he was the CFO of his fraternity, and I admired his gumption for trying to join. And I said, call me when you get to that point. But generally speaking, if you're a legitimate CFO, you would be eligible to join the group. Now, a lot of times, there's like one person and two person recruiting firms, and they say, Well, I'm the CFO of my firm, and I tend not to let those folks in. But if someone is legitimately doing CFO work, he or she is certainly welcome to the group. We also let in people that we have reason to think are on a path to becoming a CFO. And that again, getting to the Oldsmobile problem, that does keep my group relatively young, because like controllers and VPS of finance are typically younger than CFOs, so it sort of brings a youthful demographic to the group. So, if you're a controller, a VP of finance, a treasurer or something like that, there's a really good chance you would be eligible for the group. Now, if you're like a staff accountant or something like that, unless one of my members said, Look this is a rock star you have to admit her to the group, you know, I'm usually going to say no, if they're a little bit too junior, just because what can they bring, right? You're part of a community, so you're expected to give to it, not just take from it.
Scott Case 31:16
Yeah, absolutely. We have some folks who are actually looking for a fractional CFO in the nonprofit space or social entrepreneurs. Is there a part of your group? Is it just email jack and you'll connect them? Or is there another way to find those? Do you have some recommendations on fractional CFO kind of communities?
Jack McCullough 31:37
Yeah. I'm happy to chat with anyone about it. Yeah, if you sort of know you want one, just send me an email with a job description and the contact information, and I'll send it to people, I don't charge for it. The drawback to that is you're going to get a couple of people, and it's like, what the heck is this, right? But, you know, what's the expression? You have to kiss a couple of ugly frogs to find your handsome prince?
Scott Case 32:01
That's great. Yeah, I think it's very helpful. And it's super useful.
Scott Case 32:05
There's another question is, you mentioned your CPA expiring. Is there like a CFO certification that someone gets? Like, is there a way to say, Oh, you know, you've reached some milestone in your CFO-ness?
Jack McCullough 32:21
I'm not aware of like an accreditation, specifically to be CFOs. But there was an interesting study amongst the fortune 5000. One of the large search firms and I'm gonna say Russell Reynolds but I'm not 100% sure, they actually determined there were more CFOs in the fortune 5000 with MBAs than CPAs. Because the job has actually changed since the start of my career, where early on it used to be if you were the best accountant, you were probably going to become the CFO in your company or at a company just by being a great accountant. But that's no longer the case. In fact, not to brag, but I probably know as many CFOs as anybody in the country at this point, and I couldn't name one who got their job as CFO because they had great accounting skills. It's more, what's your strategic acumen? How well do you communicate? What are your leadership skills? Can you partner well with the CEO of the company? So CPA used to be the main credential to become a CFO, and it still is, but it's no longer majority. You're seeing more people come in from FPNA or even people from investment banking that just want to do something a little different, they're a natural for CFOs, particularly CFOs that maybe are thinking they're a year to three years away from an exit. No one you can get better than an investment banker to take a company public, I suppose. And they need to hire a good controller and an accounting team to keep them out of jail, right? You want to make sure that the finances are pretty good. And, luckily, we live in a world where there are a lot of great accountants out there. But the skill, unfortunately, is so common that it's not a differentiator for the CFO job.
Scott Case 34:07
So I got a question. For startups, let's say you're very early stage, maybe you've got a few people working on a project, at what stage of the business do you think having a there full time or a fractional CFO at the table as you're making decisions, is there a good spot to start when you reach a certain either customer level or employee level or you're raising capital? What would you say is the time to really pay extra attention if you don't have somebody on your team at that point?
Jack McCullough 34:38
Sure. And, investors tend to be very forgiving of bad accounting for early stage companies. So I certainly would not recommend bringing one in when you have revenue. A good point to start thinking about it is around the time of the Series A capital round, because then you've got some accountability to outside investors, you got to keep them abreast of things. It's not a bad point in time, depending upon how sophisticated the operation is. But I've seen companies actually, they'll get a Series A round, then they'll bring in a part time CFO, and then as they get a B round, they might actually bring in a controller and the part time CFO may remain with the company, but just in a less active role, they do some of the heavy duty negotiations, they serve as a mentor to the controller. Because a lot of companies, they'll bring in a controller and hope that he or she can grow into the CFO role. In fact, I know one part time CFO, she's kind of funny about it, but her role is basically mentoring controllers, and she brags about them, like the controllers who have worked for her, the ways colleges brag about their alumni. She's like, yeah, I've worked with 18 controllers who are CFOs. I said she bragged about it, that probably doesn't paint her in a good light, but she's really very proud of that fact, that she took people who were a little raw, they had a traditional accounting background, but with a little bit of mentorship and sharing what she learned, they're able to grow into the CFO role. And that's a model that you're seeing a lot because, in Boston, say you can get a controller for 175 and a CFO for 300. If you're an early stage company pre-revenue, that extra 125,000 doesn't bring you that much value. There's not that many things that you need a CFO for early stage, so maybe get a really good controller and have a CFO on call to mentor the person.
Scott Case 36:31
That's great. Well, I want to give the last couple of minutes here to you, because you have a book coming out in May. And I think the title is The Psychopathic CEO. And you want to just tell us a little bit about what to expect? And then we'll share out a link to the book once it's ready. But what did you discover? And what's the book about?
Jack McCullough 36:55
Yeah, a couple of things. You know about psychopathy and people do get confused about a little bit. It's not psychotic people. Psychopaths are similar sociopaths, and narcissists and whatnot. But the main thing with them is they're thrill seekers and they just fundamentally don't care. It doesn't mean that they're evil. But a couple of things. Now the rate of psychopathy in the general population has been rated as between 1% to 3%. So if you take the average of 2% and multiply that by the world's population, that would mean psychopaths would be the ninth biggest country if they were a country, a little bit bigger than Russia. So if you're wondering, have I ever met a psychopath? Almost certainly.
Jack McCullough 37:38
But here's the scary part. According to one study, 21% of American CEOs are psychopaths. Now, that one is a little bit of an outlier, the actual number is probably more between that 12 and 15% number. But that still is higher than the prison population, which means if you meet a prisoner, a CEO, it's more likely the CEO is a psychopath than somebody who's committed crimes. So, from a CFO perspective, usually they have six or so jobs during the course of their career, they tend to change every three to five years, so if you have six CFO jobs, that means you work for at least six CEOs and maybe more, if there was some turnover in those jobs, so there's a really good chance at 21% that you've worked for a psychopath before.
Jack McCullough 38:27
And that's why I wrote the book. I've worked for one and I didn't know it until afterwards. But the guy was a pathological liar. I remember one time he yelled and screamed at me. There was fraud going in the sales organization and I told him about it, I didn't accuse him, I just told him what's going on. And he just went ballistic. I mean finger pointing in the chest and yelling at me, how dare you, and he took stuff and threw it on the ground. I later found out not only did he know about it, but he orchestrated it. And I just remember thinking, this guy's a better actor than Meryl Streep and whatnot. But I just kind of thought he was a weirdo. And then, sort of made a mental inventory of things that he did. And I saw a presentation on the psychopathic CEO. And I said, oh my god, they're describing this guy perfectly, so the book helps you identify a psychopath, and more importantly what to do about it, not only to protect yourself, but the company. And they're not all bad. I mean, a lot of people have said, Steve Jobs is a psychopath, you can make a very persuasive case of that. So it sort of depends on who the psychopath is. Elizabeth Holmes from theranos, you know the needle company, she's a psychopath. You wouldn't want to work for her or Harvey Weinstein, who is one too, but would you work for Steve Jobs? You know, maybe. Or Elon Musk, some people think is a psychopath, I happen to not think that, but there are people who do. Would you work for Elon Musk given the opportunity? You probably would for a year right? He might drive you nuts. But a lot of people would take that opportunity, right?
Scott Case 40:07
Elon and I would be in a foot race of who’s more insane, but right now, he definitely has the prize.
Jack McCullough 40:14
Yeah, he’s up there. I mean, I just think he’s difficult to work with, I don’t think he’s a psychopath myself. There’s actually an opportunity because they can actually be very effective in the CEO role. They are very charismatic, they are great communicators, they can inspire confidence in people, and a lot of them are very smart, so if you put the whole package together and sort of channel them a little bit, you can really get something special. The problem is you do occasionally get the Harvey Weinstein type of CEO and with Harvey got away with it for a long time, it wasn’t just sexual harassment, he wasn’t just telling inappropriate jokes, I mean this guy was an absolute monster. And we all say, well if I worked him I would’ve stopped him, but the fact is that nobody did and nobody particularly tried. And that’s the problem with psychopaths, they’re able to get everyone on their side, so if you want to take one on, you might be alone. Harvey actually had it written into his agreement, he actually wrote into his employment contract that he could sexually harass women, and if he got sued, he could basically buy his way out of it. And so I’m thinking the CFO probably read this employment agreement, certainly the senior human resources person did, it was approved by board members, and you know the company counsel probably wrote it up, no one said anything. This is a normal way to run a business? To agree in advance that it’s ok for your boss to behavior the way he did? But he got away with it for years, and if people didn’t go public and maybe if he wasn’t famous maybe he would’ve continued to get away with it.
Scott Case 42:08
Well, we’ll look for the book to come out and I think that your point about if you find yourself in that situation and I have thankfully not found myself having a partner or someone who is a psychopath, but I have certainly have observed others that have worked in those environments, so it’ll be good to see and we’ll all look for the book to come out. Thank you very much for spending the time.
Jack McCullough 42:27
Can I share one kind of funny story?
Scott Case 42:29
Yeah go for it.
Jack McCullough 42:30
First person in my professional life that I told about the book was my executive assistant, and I said I’m going to be writing a book so I’m going to be distracted, that type of thing. Before that, only my wife knew. She said, oh what’s it called? And I said, the psychopathic CEO. And she said, oh is it an autobiography? And I was like oh god, I hope I’m not one of them. But when you start to research something like that, I was actually wondering myself, am I psychopath, do I have those traits? I have concluded that I’m probably not. Well hopefully.
Scott Case 42:58
Well, we’ll send out a poll and see. Thank you very much. Thanks for tuning in to this episode of Founders Focus. What did you think? You got any feedback for us? Got a topic that you'd like us to discuss, or maybe a future co host? We'd love to hear from you. Just hit me up on LinkedIn at T Scott Case. And join us at foundersfocus.com to stay up to date with the latest episodes. And join us live every week at our Founders Focus sessions. Hope to see you there.