When Drew Vollero helped take Snap public in 2017 as its CFO, he broke the mold in a number of ways. He had never taken a company public or even been a CFO before. Nor had he worked in the technology space. His experience was in established companies like PepsiCo and Mattel. Yet he was the person the Snapchat app maker chose to help lead its IPO because he brought the one thing the executive team wanted: someone who could build world-class financial processes quickly.
"They had done a lot of research on me and my background and knew a lot of what I did," said Vollero, now CFO of security company Allied Universal. "They felt I could learn technology and that going through an IPO is also learnable. But the skill sets I brought were helpful. They were on a tight time frame to go public. So, having been around traditional organizations for 25 years they liked that experience. That was where the match really made sense."
The IPO capitalized the company at $20 billion. "Eighteen months earlier, we were pre-revenue," Vollero said last week in a CFO Thought Leader podcast. "We had no general ledger, had never created an income statement, had never created a balance sheet and had never created a cash flow statement."
Taking Snap public gave Vollero the opportunity to build public-company-level processes, systems and a finance team from scratch.
"A lot of CFOs move the instrumentation on these companies," he said. "I had a chance to build that instrumentation. I also got to build all of the accounting policies, work through the workflows, design the systems we wanted to use from a general ledger and close-the-books perspective. You get that opportunity when it's a greenfield situation like that."
Vollero credited his ability to create systems and processes to his years at PepsiCo, a company he put next to GE as one of two "academy" organizations that incubate executives with the experience to hit the ground running no matter where they end up. "It's an extraordinarily well run company," he said. "A great place to be groomed."
He held 10 jobs in his 11 years at the company, in finance, strategy, marketing, real estate and M&A, among other function areas. He held similarly diverse roles at Mattel.
"I probably out-worked people," he said. "I stayed up late doing lots of spreadsheets to get the answer down to the third decimal."
At Allied, Vollero plans to build systems and processes even though the company has been around since 1957, employs 220,000 people and generates $8.5 billion in annual revenue. The executive team has discussed filing an IPO, which, if it happens, will require an internal audit function, controls, and compliance with accounting disclosure rules under Sarbanes-Oxley.
"We haven't put a time frame around it," he said. "But we want to be in a place where we have the right control profile, right forecasting process and the ability to close our books confidently and accurately."
His finance team has already started working on controls. "The lift will be a lot easier than it was at Snap, quite frankly," he said, since the company already has some controls in place.
He also wants to move Allied to a strategic planning process that takes a total shareholder value approach for managing enterprise value creation. The goal is to focus equally on growth and profitability and not just primarily growth.
"We need to carry water on both shoulders," he said. "There are lots of examples of people who can grow profit and sales simultaneously. They're not mutually exclusive."
Up to this point, the company has grown to a great extent through acquisitions, which it does well, he said. "We've done 60 acquisitions" over the last decade, he said. "It's a very competent acquirer, integrates businesses well. It generates a lot of value from an acquisition perspective."
Going forward, he'd like to see the company focus more on margins and getting cash out of the business. That's particularly important today. Even though demand for the company's services have continued throughout the pandemic — it provides on-the-ground security guards to businesses, organizations and government agencies — he wants to instill a cash focus throughout the organization.
"For frame of magnitude, our payroll is $100 million a week," he said. "So, we have to make sure we have the ability to pay the people who are working hard through the situation."
Part of the push to improve margins entails beefing up the accounts receivable function. In the short-term, that means a culture change in the sales ranks to stay on their customers until they pay their bills; in the medium-term, it means creating systems that can automate the function more.
"What we're doing today is really just by sheer will," he said. "We're focused on incentives, and we probably need a few more collectors. We're working in the medium-term on processes and systems, more of an enterprise system to keep account data, both qualitative, in terms of feedback from the operators, as well as the numbers."
Buying for capabilities
Although Vallero wants to focus more on profitability and margins, the company's culture remains growth through acquisition, which he's been involved in throughout his career.
At Mattel, one of the most significant acquisitions he was a part of was also one of its smallest. It was key because it wasn't about acquiring a brand or an end product but about buying a unique set of capabilities.
"We worked a joint venture with a company called Screenlife, a very small company we found at a trade show," he said.
The company's game, called Scene It?, was a type of Trivial Pursuit in which players answer questions after watching a movie or TV show clip. Mattel was attracted to the licensing arrangements Screenlife executives had negotiated with the studios, actors, and musicians who had rights to the material.
"To make a game around a couple hundred clips is extraordinarily difficult," he said. "They had carved a path where they had gotten a couple of studios to play, so this acquisition was all about the capabilities of that married with the distribution of Mattel. This interesting play changed my perspective on M&A. Certainly you want to buy great brands that make sense, but the idea of buying capabilities was a home run here."
The game became a global bestseller for several years.