Twitter CFO Ned Segal bristles when he hears people say today is the era of the strategic CFO. To him, it downplays the importance of operational skills. Better, Segal said in an Airbase webcast, is appreciating the balance between the two roles of the job; no matter how much technology helps, the CFO must still take ownership of the operational side of the finance function.
“I wouldn’t want [the idea of a strategic CFO] to mean somebody is really saying they’re really thoughtful but not very good at the operating components of the role,” said Segal, who joined Twitter as CFO in 2017. “We all want to be really thoughtful. But I would caution all of us about being tagged too much an operational CFO, really good at inputs, or a strategic CFO, really good at insights. You need to be really disciplined about making sure the organization you lead is good at both of these things.”
Segal expects the finance role to become even less operationally focused in the years ahead as artificial intelligence and machine learning applications take over more of the traditional data processing functions. That will increase pressure on CFOs to up the strategic game of the entire finance organization.
“It may be 10 years from now inputting data is zero part of our job,” he said. “We’re still accountable for it, because we may own the software that does it. But, if we’re not inputting data, we better have pretty good insights that fall out of that data, otherwise there isn’t going to be much left for us to do.”
The good news, he said, is value-adding opportunities stand to grow as finance specialists leverage their strengths in pattern recognition to inform their own insights and give context to the data so others in the company can form insights.
“On our finance team, we talk about influencing the outcome,” he said. “Whether someone’s in accounting or [another] part of our finance team, we want them to have their own opinion, and to bring the data to help someone [outside of finance] come up with their opinion.”
The key to finance maintaining its value-added role, he said, is the objectivity in which it communicates the numbers.
“If you allow your opinion to prevent you from helping somebody come up with their own opinion, they’ll stop asking you questions and will just want you to throw the data over the wall so they can interpret it,” he said.
When Segal first arrived at Twitter, amid an executive suite shuffle and other dynamics, finance played an outsized role in decision making in some ways. Since then, he’s been trying to set parameters around which strategic decisions belong to finance and which to other function areas.
“We’re not going to make all the decisions that have a dollar sign associated with them,” he said. “We’re not going to say yes or no to the headcount. We’re going to help people come up with a budget, and fit as many highest ROI things as possible into that budget. And then we’re going to help them hold themselves and others accountable for how those dollars are spent and the outcomes they deliver.”
That was a lesson he spent years learning, he said. When he left investment banking in 2013 after a 17-year career at Goldman Sachs to become CFO at RPX, a patent risk-management platform, and then moved to Intuit as a divisional finance head in 2015, he held a more assertive view of finance’s role.
“Earlier in my time as a finance executive, I thought every decision that had a dollar sign I had to make a decision about or approve someone else’s decision,” he said. “It was a big unlock for me and the people around me to be really clear where I felt I needed to help, where I thought I’d like it if they asked for my help, and where we could rely on someone’s good judgment or some principle or policy instead. I learned I was being a blocker.”
Today his intersection with the company’s data on a day-to-day basis is limited, but once a week at a business review meeting he digs deep into the numbers, relying, he said, on the pattern recognition he’s developed over the years to spot problems or opportunities.
“I’m either really concerned this thing is a canary in a coal mine, or I’ve gone too deep and I need your help coming back out,” he said. “I ask a lot of questions. Sometimes I don’t provide context as to why I’m asking the question. I challenge people to ask me why I’m asking if I don’t explain. Sometimes it’s genuine curiosity…. Sometimes it’s a, ‘I’m worried this is a canary in a coal mine,’ so I’m going to be a dog on a bone about this until I learn more.”
Despite Twitter’s prominence as one of the world’s go-to social media platforms, the company’s business model is relatively simple; 85% of its revenue comes from ad sales.
“I’m able to focus my time on these small handful of revenue lines,” Segal said.
Reporting on the business can get complicated, though, as he tries to create space for the company to move on its strategic objectives in an environment in which analysts and investors and others relentlessly scrutinize the company’s every move.
“I definitely didn’t appreciate some of the complexities that would come with some of our success,” he said. “Frankly, making mistakes amid success in the public eye has been an interesting challenge, and, as someone who has responsibility to speak on behalf of the company, it’s taken some adjustment.”
In some ways, his public-facing role is two-tiered. On the one hand, he acts as spokesperson for the company’s policy decisions, making him accountable for representing the company on decisions he might have participated in but didn’t make.
On the other hand, articulating his own financial reporting decisions helps the company execute on its strategic initiatives.
“When an investor, whether a private investor or a public market investor, says, ‘Well, how come you don’t give x?’ Or, ‘How come your margins won't be y?’ You can tell them, ‘The reason is, we’re trying to create the space for us to invest over a longer period of time and we don’t want that to prevent us from being able to make good investment decisions,’” he said.
Given its growth and the role it’s played in sweeping social movements of recent years, the company is arguably executing effectively on its strategic plans.