“How did they do that? How did they get there?” Companies succeed because of the people who build them - operating leaders who grow businesses to new heights and make decisions every day that can impact entire industries. Each month, our Operator Spotlight gives you the inside track from one of our incredible Operator LPs (Limited Partners) who are changing the game – building and scaling some of the world’s most successful companies. Read on for lessons learned and mistakes made, perspectives from the top, practical advice, and ideas on what’s next.
This month, we chatted with Yolis Ruiz, VP of Financial Planning and Investor Relations at Grindr. Yolis has spent her career in finance and operations roles and has had the opportunity to be part of the IPO journey of multiple companies. Prior to Grindr, she held finance roles at various organizations including Coursera, Eventbrite, and Gap Inc and has a unique blend of experience in marketplace, consumer, and enterprise software businesses. Earlier in her career, she served as an investment Partner at Pacific Community Ventures, and also served as a consultant for The Boston Consulting Group.
Financial planning and analysis has been a hot topic over the last 18 months, have you adapted any practices in response to the current macro environment, and what are a few best practices to maintain?
In early 2022 recession fears were rising and investor focus shifted very quickly from growth to profitability. Many companies found themselves needing to rethink both their short and long term operating and financial plans and FP&A teams played a key role in helping management teams navigate through those challenging times.
Some important practices that have proven useful through different challenging financial times in my career:
Scenario Planning: Being prepared for a range of possibilities gives companies flexibility when going through difficult financial times. One of the key responsibilities of an FP&A team is to create a well-defined yearly financial and operating plan and to have a clear understanding of the plan’s risks and opportunities. Finance teams need to be able to anticipate different economic outcomes and create multiple financial scenarios. In a volatile environment this becomes even more important and can make a significant difference in how quickly a company can react and adapt. Additionally, whether working for a public or a private company, having a robust and clear financial plan is critical to develop a sound Investor Relations strategy and to create strong relationships with investors.
Frequent forecasting: Traditional annual budgets are not sufficient in rapidly changing environments. Financial and Operating plans, set at the beginning of a year, are helpful in creating alignment across an organization and in setting company wide goals. However as the year goes by, it is critical to know if results are starting to shift away from Plan, especially if there is any volatility to worry about. Having frequent forecasts, such as quarterly or monthly, to update financial projections will provide visibility and help management teams understand their options and adapt as needed, i.e. reducing/increasing hiring plans, further investing in X strategy, moving timeline of certain investments, etc.
Cost control and deep understanding of all costs: Regularly review and analyze your cost structure. Identify areas where cost reductions or reallocations can be made without compromising long-term strategic goals. Cost control becomes particularly important during economic downturns and knowing where and how you can change your cost structure will help speed execution should you need to implement cost cutting measures.
KPI Tracking: Monitor key performance indicators (KPIs) that are closely tied to the company’s financial goals. When setting plans, it is critical that financial and operating goals are aligned and that there is a clear understanding across the organization of the definition of each KPI. Many of these KPIs can provide early warning signs of potential issues, and of potential opportunities, and help guide your decision making.
Cross-Functional Collaboration: FP&A should not operate in a silo. Encourage collaboration between finance and all other departments at all times. Creating strong partnerships across an organization is crucial – it helps teams focus on how to move the company as a whole forward rather than individual departments. This will go a long way when needing to have alignment around difficult financial decisions.
Speaking of hot topics - the IPO market! What’s your point of view on what’s happening now, and any predictions on what’s to come?
While I am in finance, I wouldn’t call myself a public markets expert but it is exciting to see the market starting to open up a bit. This will probably be a slow recovery with some bumps along the way but good to see some movement. The IPOs of Klaviyo, Instacart and Arm this month were all oversubscribed and there are rumors of some other big IPOs coming to market in the near future. However, I believe the challenges with the global economy and the dry IPO market have negatively impacted valuations. Some of these IPOs are debuting with valuations lower than some of their last private financing rounds which means some of their private investors are losing money and this might deter other potential IPO candidates. I am still cautiously optimistic about what the IPO market will look like in the next 12 to 24 months.
What are some key strategies that early-stage founders and companies can adopt to make sure they’re setting themselves up for a potential IPO?
First and foremost, there has to be a strong business foundation that will set a company up for a successful exit, whether an IPO or a strategic sale. Building a strong business foundation includes having a scalable and sustainable business model, developing a clear value proposition and differentiation in the market, and being profitable or having a clear path to profitability. You want to have the right base to stand on so that when the market is right you are ready.
Taking a company public through an IPO or a SPAC is a significant milestone that requires careful planning and execution. Some of the key strategies to set yourself up for a potential IPO include:
- Financial readiness - maintaining accurate records and robust accounting systems and internal controls, having the ability to accurately forecast financials, and having audited financial statements.
- Corporate governance - a strong board of directors with relevant experience, rigorous governance practices and complying with regulatory requirements.
- Long-term vision - maintain a long term perspective and avoid making short-sighted decisions. When taking a company public you are selling the success to date and the potential long-term success.
What are some things that people often get wrong about the finance organization in a company?
One question I always ask when interviewing for a new role is, “How is finance perceived in the organization?” Finance can play multiple roles and can be perceived very differently across different companies, everything from being the “expense cop” counting the dollars to being a very strategic partner that is supporting decision making. For most finance people, being a strategic partner is way more enjoyable than being the expense cop; it is certainly the case for me.
There are many misconceptions I have seen across my career but the most common ones include:
- We are only about numbers and managing expenses - we deal with numbers and data all the time but our role is much more than just crunching numbers and managing expenses. Where we can truly add significant value is playing a strategic role in decision making. We provide insights and analysis to support our business partners and the overall business strategy.
- We are risk-averse and only care about the bottom-line - some people come to the table with the preconception that we will say no to any new investment. Finance people typically understand the importance of taking risks to be able to grow and that sometimes decisions have to be made with very limited data. What we care about is that these risks are taken in a calculated way. That we understand the true potential positive and negative impact of new initiatives and that we balance that with the investment amount being considered.
What’s the best advice you’ve received - or given - about how to manage people?
Meet people where they are. You can’t assume the same management style will work well for everyone in your team. It is important to recognize strengths, weaknesses, values, and motivations of each person you manage. This gives you the ability to provide the necessary support and guidance to help each person perform at their best. Some people need more coaching, some more delegation, some are better technically, some better at presenting, etc. Understanding each person’s needs and meeting them there will make you a much stronger manager.
What’s one piece of advice you would give to yourself 10 years ago, if you had the opportunity?
I would tell myself to enjoy the journey and not focus so much on the destination. In a place like Silicon Valley it is very easy to get carried away and focus too much on the next X big milestone (personal or professional). While still working hard, I am now much more focused on enjoying the day to day with all the good, the bad and the ugly. I consider myself very lucky and there is plenty to be thankful for every day.