Jason Hershman | Startup CFO
@JasonHershman
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Startup CFO | Founder of Point FP&A | Using finance to start, grow and scale companies from day 1 to exit
United States
Joined August 2015
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Everything you need to know about EBITDA, and why startups prefer to report this way.
Thread:
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You'll never use 99% of the excel hacks you see on Twitter.
How do I know?
I've spent the past 12+ years building models in excel.
Use these tips to set up your excel, and never worry about another complicated formula again.
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The Evolution of a CFO:
Phase 1:
Just manage cash.
Phase 2:
Accounting. Cash.
Phase 3:
Revenue. Accounting. Cash.
Phase 4:
Metrics. Revenue. Accounting. Cash.
Phase 5:
Benchmarks. Metrics. Accounting. Cash.
Phase 6:
Tech. Benchmarks. Metrics. Accounting. Cash.
Phase
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Why I am hesitant to put anyone with a Big4 background in a CFO role.
Those coming out of the Big4 are typically CPAs.
Certified - Public - Accountants.
The whole emphasis of their job is to make sure your books are right for outsiders to read.
Preparing tax returns.
Filing
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The bankers I know have no clue how to;
-Build a finance team from scratch
-Design accounting systems
-Create financial processes
-Work across functions
-Manage a budget
Putting a banker in a startup role is like putting a pitcher in at QB
Some transferrable skills. Many not.
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The focus of finance at every stage;
Seed - Cash
Series A - CAC
Series B - LTV
Series C - EBITDA
Series D - Financing
Series D+ - Exit Opportunities
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I have been doing FP&A for 15 years, and no one has ever asked me…
“What is the net present value of this project…?”
“Does this project have a good internal rate of return…?”
“Can you tell me what the discounted cash flows are…?”
The models I build are to help companies
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The benefits of a good financial model (even if it is horribly inaccurate):
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How do you a build a finance team from scratch?
My answer:
(1) Pay bills, collect cash (AP / AR)
(2) Track spending (accounting)
(3) Use data to plan for next 12 months (FP&A)
And then go tell this story to investors and employees to attract capital and talent
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@SMB_Attorney
Agreed. Still sucks. It gets old quick and you just constantly feel like “what am I doing here and I miss my family.” Also huge waste of time in airports and what not. Definitely not a flex.
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@JustinSaaS
created a $1.3M business for himself in 2 years.
Let's put these economics in perspective. It will keep you going.
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From series C to IPO in 24 months.
How a simple change in our startup made a massive difference.
And how you can start to notice these in your business.
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What founders and CEO’s get wrong about FP&A.
When hiring for FP&A, they think they want:
A documented budget.
A review of estimates vs. actuals.
A financial model they can update.
KPI’s, forecasts, numbers to put into their presentations.
They think they just need all of
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Just helped a company raise $10,000,000.
Took 6 weeks.
4 weeks to build the financial model.
2 weeks to present the plan and convince the investors that we can hit these goals.
Now time to help them execute.
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If this content is interesting, I can go deep on how to build COMPLEX analyses in excel using only SIMPLE formulas.
Let me know in the comments, and please re-tweet this thread if you found it at all helpful.
You'll never use 99% of the excel hacks you see on Twitter.
How do I know?
I've spent the past 12+ years building models in excel.
Use these tips to set up your excel, and never worry about another complicated formula again.
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Why do CEO's talk to their CFO the most?
Because they both think about time the same way;
Weekly -> Cashflow
Monthly -> Budgeting
Quarterly -> Reporting
Annually -> Planning + Strat
Multi-Year -> Vision + Storytelling
The others only think about one of these at any given time.
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Too many people in finance get caught up in fundamentals.
-Reporting
-Reconciling
-Following processes
And miss it's real purpose.
To accurately track [+predict] performance.
And then feed what you see back into the business.
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The last time I wrote something on this platform.
@SecretCFO
had just made his first post.
@RobertMSterling
had 932 followers.
And it was still called Twitter.
But I've decided to pick it up again.
Who am I?
I run a Fractional CFO / FP&A business.
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Context. The only formulas I really use are;
+
-
/
*
sumifs
xlookup
By sticking to these, my models are (a) easy to follow (b) easy to update.
A + B makes it a much more powerful tool to drive decisions and to share with other not-so-finance literate people.
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Crazy realization today.
My last FT role was at a company that raised $30M+ at a $300M+ valuation.
As a soloprenuer I am now making more money than that company ever was (annually).
And TBH, that was the flame that sparked my initial thoughts to leave.
The flame I needed to
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It's no coincidence.
Companies with awesome finance teams also have better;
-Marketing Teams
-Product Teams
-Sales Teams
-Tech Teams
A good finance team informs the above on how to best achieve results.
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The role of a finance team at a startup
Accounting
AP - Pay Bills
AR - Collect Cash
Audit - Comply
Account - Track
FP&A
Budget - Plan
Forecast - Prep
Report - Communicate
Finance
Fundraise - equity
Finance - debt
Acquire - grow
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Tip 6 (cont):
Quick way to do this.
Ctrl G + Special
Choose formulas or constants, and then pick the font color.
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@cfo_mm
Not just the audit team. I've worked with a lot of young PE pro's with pedigree who like to throw out meaningless questions with lots of jargon just to land a "zinger"
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Your fast track to become a CFO:
1. Find a Start-Up.
2. Spend 6 months doing their accounting (directly for the CFO).
3. Take your accounting knowledge and start forecasting expenses.
4. Forecast all expenses in microsoft excel. Share it with the CFO.
5. Expand on your
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If you want to make a killing in FP&A, steal my pitch.
How do I know this works?
Because over the past 16 months I’ve had to turn down $1M+ in annualized income.
Here is my typical pitch
(aka my go-to-market strategy).
First. I talk about my process.
Say this.
1. In less
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I'm the CFO of 5 Startups. Run FP&A for several more.
And I've single-handily replaced AI software at these companies.
Me. A Human. Team-of-one.
And I did so at 5X the cost.
Why is this happening?
Here are the things I am seeing in the CFO role that still need a human touch.
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A lot of layoffs recently.
Here are the areas I've helped companies find savings and minimize layoffs.
-Software licenses
-Social media ads
-Sponsorships
-Contractors
-Agencies
-Travel
-Tech
-Swag
It takes more effort. But these add up and benefit the co more in the long-run.
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Here is how to be a CFO:
(at least 90% of the job).
1. Focus on Cash
Know your payroll and hires / changes
Know how much you owe vendors (AP)
Know how much you have coming in (AR)
2. Use the GL as a guide
To track the AR and AP
To know what has worked in the past
Answer
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It's too bad that a lot of people on here are too cool for school when it comes to LinkedIn.
I probably charge 2X-5X than the average fractional CFO.
I don't beg for work on Upwork
I have no problem finding clients
I am regularly referring work to others
All because I am
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Tip 4: Create Links
People always ask for data by month, by quarter, by year. So you want to be able to easily summarize each sheet that way.
To do this, I create links. Here is what the first few rows of my sheet always look like.
Now I can easily sum or find a value by date.
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Most people in finance don't understand software.
Just completely clueless about;
-Frameworks
-Monitoring
-Languages
-Servers
-Data
-APIs
If you want to differentiate yourself in finance, learn the basics.
You'll be more valuable, get paid more, and get to the top quicker.
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Bankers rely on financial models. Entrepreneurs rely on operating models.
Here is the difference.
A financial model tells me:
-How we did in the past
-What our net income will be
-Upcoming cash requirements
-Current valuation of the company
An operating model tells me:
-The
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As a finance leader I have;
-Informed marketing on how to spend
-Overseen sprints for new features
-Created offers for sales to sell
If your company wants to hit it’s goals, you need to bring finance to the front of the house.
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Where are you going to get your first CFO job?
It’s very rarely going to come from…
Some giant company.
With a ton of resources.
People and processes in place.
With a large salary, office, and cushiness.
No…
Most likely you’ll get your first CFO job at a -
Younger
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The irony as a finance person building a budget is how little of the budget you end up allocating into the finance department.
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You can’t unsee your company’s P&L.
Here is what I mean (and why I do what I do).
If there has been one personal requirement for me, for any job that I take on in my career.
It’s been this.
Having visibility into the company’s full P&L.
You might be thinking “Obviously,
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If you like this content, let me know. I'm just getting started and welcome the feedback.
If you can, give me a follow/re-tweet. It motivates me to write more.
Everything you need to know about EBITDA, and why startups prefer to report this way.
Thread:
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Surprising things that companies rely on their finance team for:
Providing the narrative for the “all-company” meetings.
Reporting data for sales to use in their conversations.
Improving the payment flow of the product.
Structuring legal agreements.
Coming up with a hiring
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Unless your numbers…
(historically, across sheets, tabs, systems, and files)..
Tie out exactly.
To the penny.
Your model (and other output) is completely useless.
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Want to understand your customers better?
Look at them in cohorts.
Here is how to set up a complex cohort analysis in excel using only 5 basic formulas.
No background knowledge in finance or marketing needed.
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My life-to-date customer churn rate is 0.000%
The CFO role can be one of the hardest to get,
but one of the longest to stay.
If you can...
Manage cashflow
Know the numbers
Stay true to a budget
Hold people accountable to the forecast
Run the close, HR, AP, and AR in the
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I don’t see how anyone can disagree with this. Tax accountants only care about your financials at a very high level and on an annual basis. Management accountants and good controllers care about the details, and on a monthly basis.
Tax CPA that offers bookkeeping 🚩
Many tax providers like this option because they have control over the books. And they make their lives easier.
But it's not the best option for the SMB owner.
It's like writing.
When you write with a specific audience in mind (i.e. SMB
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I'm the CFO of a number of fast growing startups.
And I do it all as a one-man team.
Here is how I scale myself.
You need to set up 3 things:
Banking
Accounting
Financial Model
In that order.
For banking -
I suggest you buck the trend of going with a big bank and you use
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One constant thing I have to remind myself when building a financial model…
It's that I don’t need to forecast every single thing.
Sometimes it’s best for:
Marketing to give you the leads
Sales to tell you the deals they will close
Product to tell you the features that will
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You think companies just raise $10M+ or get acquired for $100M+ after a few convos?
No. It actually takes a ton of work.
But anyone can do it.
If you want to get your co acquired or get involved in your company's next fundraise or acquisition, here is how you run the show.
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@cfo_mm
Your response… “can hop on a call at 6am tomorrow your time” if not, let’s schedule something for 2nd week of Jan. Should have a good flash. Enjoy the slopes.
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Just built my finance solopreneur business to $12k MRR.
Figuring out how to productize my process.
The solopreneurship game is not just for designers, marketers, developers and writers.
If you work in finance, you can make it happen too.
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I can get your startup’s finance function off and running within 24 hours.
Here is how I would do it (this set up will get you pretty far):
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Asking someone in finance to use Google sheets is like asking a:
-Developer to only use no-code tools.
-Designer to only use Canva
-Customer service to only use a phone
It will get the job done. Just not as well and it will be a lot more painful for everyone.
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The only 3 things you'll ever need to know about accounting, and how it will make you more successful.
All in one short twitter thread
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I’ve learned so much in the past 16+ months since starting Point FP&A.
Different Industries
Financial Concepts
Business Models
Processes
Marketing
Systems
Sales
Taxes
And all of this…
Has accelerated my career faster than any other path I was considering.
The learning
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The more CFO roles I take on, the more I am starting to realize…
That being a CFO is not about your ability to get “finance” and “accounting” done.
Rather, it’s a great balancing act.
Here are the things I am constantly balancing in my CFO roles.
(1) Extending the company’s
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I have built 10+ financial models from scratch for multiple multi-million dollar businesses over the past 20 months.
Here is what I am finally realizing.
It’s that the financial model tracks everything in the way that people want it to be tracked.
So every system the company
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Collaboration:
Financial models aren't built by Finance. Rather, it takes input from literally every team
How each team contributes:
-Sales -> Pipeline
-Ops -> direct costs
-HR -> Hiring, comp, benefits
-Product -> Roadmap, releases
-Marketing -> Budget, impact, leads
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8/ But what are we actually saying when we look at EBITDA?
What we're saying is "This is how profitable the company would be if we..."
- never borrowed money (I)
- never paid taxes (T)
- never paid for equipment (D)
- never paid for software development (A)
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@Nicolascole77
6 months, so $30K
Awesome Bike $8k
Wholesome Groceries $6k
Therapy (weekly) 6k
Massage (bi-wk) 4k
Running Shoes 2k (4 pair)
Apparel 2k
Supplements 1k
Misc 1k
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Tip 6: Blue + Black
The only colors that should be present are blue and black.
Blue font for inputs. Black font for outputs (formulas).
This will help you quickly identify all assumptions and where you will need to update when you refresh the forecast.
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Tip 3: Be consistent
You want consistency across all of your sheets.
This will save you a ton of time when writing formulas, and adding new sheets.
In this example, every sheet in this work book should have the dates in row 6, with Jan 22 being column F.
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Tip 1: Make Space
Start each sheet a number of rows deep and columns in.
Rows allows for adding in titles to each page, and makes it more ascetically pleasing.
Columns will allow you to bring in data attributes you might need for each row
I like to start in cell F6
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@thesamparr
@sumFBA
Eat food. Not too much. Mainly plants.
Key is knowing what food is…Basically you want to eat mostly plants, some animals and if I comes in a package make sure it has less than 5 ingredients and that all of the ingredients are things you recognize. Not chemicals.
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You would be surprised by how much of the FP&A job is just giving people visibility into things when there previously wasn’t any…
Cash forecast
Historical Results
Pipeline and when it converts
Estimated costs based on future decisions
Every FP&A person I know would make for
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Most FP&A professionals will go their entire careers without building a financial model from scratch.
But – man – there are so many benefits if you go through this exercise.
To both you personally and to the company you are at.
(1) You’ll get the experience of actually doing
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If you’re building a financial model from scratch, don’t use a template.
It becomes more work than it is helpful.
You basically spend all your time retro-fitting something…
And then it breaks…
What you want instead - “template pieces”
Things that are pretty standard to
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As a fractional CFO to a number of business,
I’m realizing that automation does not come from the software I use…
Rather -
It’s all about the processes I put in place.
The software [or lack there of]
Are just steps or pieces of a process that allow me to streamline:
AP
AR
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So few founders have a finance background.
Which makes me - the finance person - that much more valuable.
Now, you might be thinking
"Deep expertise in finance and accounting isn't necessary when just starting out."
But...
Look - I can guarantee you this…
Behind every
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Tip 2: Dates across, data down
People are so used to reading things left to right, and chronologically.
You'll start to confuse people if you do this in reverse
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The tech stack I am currently using:
GL: Quickbooks
AP: Ramp
Credit Card: Ramp
Banking: Meow
HR: Gusto
Cap Table: Carta
Model: Excel
What else should I be looking into?
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@SecretCFO
I provide FP&A as a service to companies from seed to series C.
It’s not just a model, I take all of the pain out of FP&A processes and lead initiatives across the company to make the forecast a reality.
All at 40% less than the cost of an FTE
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When I build financial models, I don’t ever use templates.
Here is why and what I do instead.
Why I don’t use templates.
I have come to find that every company, regardless of business model is too different.
The chart of accounts is different.
The CRM is different.
Data
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@DOBCapital
Here’s the problem. You don’t need finance and accounting to start. You don’t need it for PMF. But I’ve helped some amazing companies blow up because they started to understand their financials better. Problem is they start doing this 6 months too late.
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@GoodsCapital
I did
#1
. Went Ivy League. Cost way less than $200k. It’s afforded me some awesome opportunities. But if I had to do it again, I would definitely go the
#2
route. Or do what someone said in the comments and buy a business with 10% down. Although I prob wasn’t ready for that then.
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Doing finance at a start up typically means:
Creating offers for the sales team to sell.
Establishing a commission structure that works.
Creating the hiring plan for the HR team to go recruit.
Guiding the product roadmap for the tech team to develop.
Identifying the
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Ten things every founder should know about finance:
Accounting is the right way to look at things. Not the complicated way. So learn it.
Hire someone who can tell you honestly how the company is doing. Call that person CFO.
If it’s not written down in a financial model, no one
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Salesforce is worth $300B
in 2023 they made $208M on $31B in Sales (<1%)
Hubspot worth $35B
in 2023 they made $330M on $2B in sales (15%)
The $330M is non-gaap Net Income.
Last year Hubspot laid off 7500 employees paying each employee on avg $67k.
That move cost them $506M
Google getting ready to buy HubSpot for $35B.
“It generated $2.2 billion of revenue in 2023 and posted a net loss of $176.3 million. Despite this loss, investors are excited about the Cambridge, Massachusetts-based company's growth prospects, driving up its shares 50% in the 12
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17/ Summary
-EBITDA is income excl. certain costs
-EBITDA is a common denominator for diff types of businesses
-Startups prefer EBITDA because it suggests long-term profits
Just be weary when you see "adjusted" EBITDA
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@SecretCFO
Thanks so much. It's lost on me how people quickly forget the purpose of putting financial data into excel. It's to help understand past performance, and to help make smart decisions about the future. Too often a model accomplishes neither.
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Cohesion:
A good financial model forces everyone at the company to think about the business in the same way.
Weather that's by
-Revenue Stream
-Customer Type
-Product type
-Lead source
-Geography
A good model will forecast the business off one (the most important) of these.
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@thesamparr
@sumFBA
I know you read like 5 books / week.
Give this a read. Only resource you’ll ever need and from the most credible person on food.
Ever since I’ve read this book, I’ve been at ~6% body fat and don’t even think about what I’m eating.
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Clients hire me for my financial knowledge.
But they also hire me because…
- I move fast
- I require no training, no onboarding, no equity
- I can start, and own finance immediately, day 1
- Through finance, I’ll help HR, Sales, Marketing, etc.
And you know what this has
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When I see a startup finance job requiring investment banking or consulting experience…
I cringe.
It should honestly be the other way around.
You need experience running finance at a startup before…
Trying to assess it’s value and pitch it for $100M++ (banking).
Or before
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My life-to-date customer churn rate is 0.000%
The CFO role can be one of the hardest to get,
but one of the longest to stay.
If you can...
Manage cashflow
Know the numbers
Stay true to a budget
Hold people accountable to the forecast
Run the close, HR, AP, and AR in the
0
0
8
Startup finance teams will spend 80% of their time managing cash outflow and 20% of their time managing cash inflow.
Too much emphasis on spend, not enough emphasis on growth.
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“I wish I hired a CFO sooner”
-Every startup ever
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Accounting is 10% numbers, 20% rules, and 70% how you wish to view your business
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I recently helped a company refinance $30,000,000 of debt.
Here is everything you should negotiate on to get the best loan possible.
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You’re very skilled at finance and / or accounting.
But you’re completely unfulfilled with your career…
You’re working at the Big 4 or a Consulting firm or an investment bank.
You stay because you think no where else will pay you as well.
Busy season, rudeness, long greuling
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The days of the buttoned-up formal CFO are over.
No one wants to talk to the…
Old,
Stodgy,
Smarter-than-you
“Building shareholder value”
Jargony, accounting-focused,
CFO.
What they want is a
Optimistic,
Able to agree,
Willing to help,
Happy to teach,
Speaks plainly,
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You can templatize most of a financial model.
But you can’t templatize the most important piece.
I use the same templates for:
Opex
COGs
Headcount
Balance Sheet
Statement of Cashflow
KPI’s, format, structure
But I can’t templatize - revenue.
Which is the most important piece
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One upside down thing about being a CFO.
It’s this.
When someone asks you something…
The answers are “black and white.”
It’s this number, percentage, etc.
Basically Math.
…But most of the questions are…
Not black and white.
You usually have to clarify the question they
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@SecretCFO
Thanks. I’m just getting started on Twitter. I’ll be tweeting about how finance works at hyper-growth companies. Give me a follow and I’ll reach you everything. No finance background needed.
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@ConnorAbene
I studied finance. Started my career in finance. But it wasn’t until I learned accounting (on my own) that things really started to click, which helped my career take off. The trap here is to avoid Big 4 out of school.
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7/ The reason these are the talking points is because EBITDA does have merit.
The calculation makes it so there is a common denominator between businesses that require large loans & those that don't. And business that are in growth mode vs. those that aren't.
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You’ll know your financial model is working when:
(no, it’s not when your balance sheet balances)...
It’s when:
Sales uses your template to forecast.
HR uses your headcount to recruit.
Marketing references your model for budgets.
Accounting syncs the GL to your format for
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@Brian_Stoffel_
Nice thread. As a finance person, I hope that the people who get the most out of this thread are actual other finance people. I tried to do something similar here;
The only 3 things you'll ever need to know about accounting, and how it will make you more successful.
All in one short twitter thread
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@ecomchasedimond
Talk about (1) how people can make more money (2) how people can create more time/ freedom (3) how people can do both. Consistently post content with these undertones and you will grow your audience.
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