How did Alex Wang (CEO of Scale AI) hire his first Head of Finance?
Evaluation Criteria
Able to prioritize and evaluate investments: Track record of building a rigorous process around (a) evaluating all investments above a certain size from departments, (b) working with departments to forecast ROI, (c) evaluate performance against forecasted ROI
Has evaluated and understands existing practices: Has reviewed companyʼs approach on key metrics
Strategic thinking: Forward-thinking on how different business models, pricing structures, etc. impact reporting
Investor reporting: Proactive in identifying value-maximizing ways to report performance to investors and auditors
Cultural fit: 1) Aligned with company investment philosophies and 2) Compelling examples that demonstrate at least 5 of 8 values
Strong external presence/capabilities: (1) Track record of interacting directly with investors, board members and (2) Track record of managing private financing rounds end-to-end (i.e., requiring minimal day-to-day oversight from CEO/founders)
Experience managing a team with a broad mandate that includes:
- Strategic planning, analysis, forecasting
- Treasury, cash management, accounting
- M&A
- Board meeting preparation
Audit preparation and experience: Has led a team that underwent a third-party audit
Team management experience: Ability to hire and retain high-performing team and
experience in managing a team of 10+. Set challenging and productive goals for team, keep team accountable for actions, provide leadership and motivation, provide resources and support, use checkpoints and data to track progress, set up systems to measure
Case Study
Revenue recognition
Consider ratable recognition vs. usage (or consumption) based recognition. Assume that a contract can be interpreted in either way. From a business perspective: How do you determine which model to adopt? How do you determine if/when to transition from one to the other? Note: This topic isn't about technical accounting merits of methods, but more about how you think the business should approach this choice strategically.
Cost allocation
Companies with large or complex operational aspects (e.g., Palantir, Uber) seem to approach cost allocations in different ways. How should our business think about and approach the allocation of these operational costs between cost of sales and operating expenses?
Top-level metrics
ARR (annual recurring revenue) is a standard SaaS topline metric. Some infrastructure companies (e.g., DataDog) have adopted a variant of ARR (e.g., annualized revenue run rate) as a headline metric. Other infrastructure companies (e.g., Twilio) use total annual revenue (though this seems to get called ARR by investors). How should our business think about using this top-line metric—or others like it—over time?
Headcount/OpEx planning
Assume that a business has top-line unpredictability, and that massive customer growth deals can also come with near-term price and margin pressure, leading to cash burn unpredictability. How should our business manage OpEx investment given this volatility?
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