Shortly after Chris Mausler was hired in 1996 to help bring order to the financial planning and analysis (FP&A) process at Informix, a fast-growing database software provider, internal accounting problems rocked the company and ended up making it restate its revenue for several years.
The experience showed Mausler, now CFO of data governance company PeerNova, the value of internal controls — and how to apply them without stifling growth.
"That lasted with me the rest of my career ... always trying to find a balance of process and controls," Mausler said this week in a CFO Thought Leader podcast.
Prior to joining Informix, Maudler spent more than 10 years at IBM in FP&A roles, where his experience proved valuable in the context of a high-flying company.
"IBM does feel a little bureaucratic at times," Maudler said. "You wonder why you have all these controls in place, but in this instance, I saw how a company can be brought almost to its knees due to some control deficiencies. It wasn't the case where everything wasn't proper. It was a hard-working, professional group of accounting folks, but there were some control issues in a few spots that didn't get caught."
In 1997, IBM was hit for its revenue recognition practices involving some sales contracts, leading to senior officers' resignation, including that of the CEO and CFO.
Heading off problems
In joining PeerNova almost six years ago, Maudler is once again at a fast-growth technology company and he made it a priority to create controls to help prevent the kind of accounting weaknesses that almost did in Informix.
"I had to build everything from scratch," he said. "When I got here, there were a few consulting resources, basic bookkeeping. So I hired a controller and accounting staff. We put the first audit together. Brought in the first auditor, first tax folks. There was a lot of data and money moving around and we were able to organize it."
The company launched in 2013, and in its most recent round of funding, in the third quarter of 2019, attracted $31 million from investors, bringing its total funding to $74 million. Its enterprise platform helps large financial institutions organize and govern massive amounts of data they collect from around the world, much of it in systems that don't seamlessly link together.
"We have a way of combining it in our platform so that it's organized, characterized, and there’s a lineage associated with the sequence and timing of the transactions that are performed on it," he said. "And then, broadly, we can make assertions as to the correctness of the data. Where did this data come from? What do we know about it? Who transformed it last? What state is it in? Can we trust it?"
PeerNova is the fourth startup for which he’s been CFO, a career trajectory that’s helped him hone his fundraising skills.
"It's a discipline to learn," said Mausler, who estimates he’s raised $100 million for companies over the years. "It’s not the norm you get funded the first time out talking with pitch sheets. You can end up talking to 100 or so investors and walk away with one or two term sheets at the end of it."
The core skill in fundraising, he said, comes down to communication: being able to articulate to people your company's strengths, why the opportunity is large, why you're going to win, why you have the right team on board, and how you have operations focused.
"All of that is pretty good skills to develop over time," he said. "There’s a little bit of art to science as well. You have to figure out what investors to go find, who are the best investors for your company."
For finance leaders more broadly, networking is a skill CFOs should develop early, he said.
"You have to do networking to be successful," he said. "As you evolve to the CFO role, the need to be reliant on networking is 100 times more important [than in your earlier years].You’re running a company, managing investors' money, you’re trying to be a business partner to your CEO. In a startup, there's not a lot of resources around you, and having a network of colleagues, professional finance people, senior leaders that you can turn to for advice, bounce ideas off of, is invaluable."
Managing through downturn
Mausler said PeerNova is well-positioned to survive the downturn, both operationally and from a business perspective.
"We're constantly iterating what we think [the pandemic] will do to our growth path going forward, but we're a startup company, so we have a long way to grow," he said. "We think our market potential is huge. So, for us, it’s not a huge course correction, it’s how do we close all the things we have in the near-term, and then how do we tweak our strategy for the longer term?"
Operationally, the cloud-based company is able to function with staff working remotely. "We're probably better organized than most to actually work in this environment," he said. "I've actually been surprised how efficiently our company has been able to maintain operations and focus."
The bigger problem for him, he said, isn't keeping his teams going; it’s preventing over-working.
"Being at home, people sometimes have a tendency to work 24-7," he said. "The leadership team has been focused not just on how to keep everyone engaged and organized, but how do we make sure people aren’t burning out?"