As the pandemic shut down in-person corporate meetings, New York City-based Confetti rejiggered the marketing strategy for its virtual team-building and experiences platform to focus more on remote workers.
It was a dramatic pivot that taught CEO Lee Rubin important lessons about the importance of agility—particularly in finance. Lee spoke with StrategicCFO360 about how CFOs can best navigate unforeseen pitfalls, why culture is essential and why CFOs should put more pressure on their CEOs.
How has the role of a CFO adapted and become more agile over the last few years?
Having to navigate the pandemic and the task of capital allocation—stretching every dollar as far as you can take it—in what was one of the quickest expansions to recession turnarounds in modern history, is no easy feat. I don’t think there is any period in the last 100 years that compares to the pandemic that required so many businesses to optimize for capital efficiency.
CFOs had to work with Paycheck Protection Program loans and needed to revisit their financial statements on a much more frequent basis because changes were happening all the time. Let’s also not forget that a lot of CFOs did not successfully adapt and help their company navigate through these tough times, and a lot of businesses closed and laid off many employees.
Unemployment in April of 2020 was 15 percent, the highest since 1948, when the government began tracking the data. At least for the companies like Confetti that needed to aggressively pivot in order to survive, the agility was largely in strategy shifting, and the CFOs were mostly there to help say, “Here’s how much money we’ve got to get there.”
What advice can you provide for CFOs helping to run a startup that’s trying to expand?
I think the new norm, especially after what we recently saw with a lot of tech companies in public markets, is that it’s better to be default profitable—alive is not good enough anymore. The more profitable you are, the stronger you are. I think more CFOs should put pressure on their CEOs and CMOs to ensure that from the very beginning of the company their unit economics make sense, their strategy is feasible and they’re scaling responsibly. This often doesn’t play into a lot of the VC mentality, but it looks like a lot of these ideologies are also starting to shift.
In the spirit of the pandemic, when many of us were forced to rethink our business models, it’s easy to see some line items in a company’s budget and think, “We can live without this.” Far too often culture falls under that category. I do believe that during a company’s hard time it’s just as important, if not more important, to make sure that your entire team is re-aligned with the mission, vision and goal at hand. Your people come first and they’re going to be ones that either help you sink or swim.
How have you been able to grow Confetti over the course of the pandemic?
While I do believe marketing takes a lot of work, I also believe that when you truly build a great product, marketing should be a LOT easier—and not like pulling teeth. During the early days I think it’s more important to have a closer connection with your customer in order to gain additional insight as opposed to focusing on growth and revenue, which will occur naturally if your product is good.
Fortunately, for Confetti we really took our time to focus on our customers and their pain points and to build a great product that people wanted. Events are relatively viral by nature, since they’re being exposed to additional people. However, if you don’t have that inherently baked into your product, you should look for other ways to do product-led growth and lean on network effects so you can decrease your marketing expenses and have more profitable businesses in general.
The lower the cost to acquire a customer and the faster the payback period, the stronger a company you’re building and the more profitable you become. In 2020, we grew completely organically and didn’t do any marketing until February of 2021. Then, we started working with a marketing agency that helped us prove that Google ads were profitable. When coming up with a marketing strategy, it’s important to put yourself into the shoes of the customer, think about where they are looking for your services, and start from there.