Secret CFO

Hi 👋 I’m The Secret CFO.  I just crossed 10k followers on here, so it’s a good time to re-introduce myself. Here’s my story👇 I’m a career corporate CFO (10 figure + revenue biz). I’ve been in the finance profession (starting in the Big 4) for over 2 decades. With almost half of that time as CFO, in big multinational businesses. Through a combination of luck and hard work I got up the ladder quickly. I had a few mentors along the way, but I mostly worked it out myself. The path to CFO felt a bit like a mystery. Even after I’d walked it. Being one of the lucky ones, I feel a responsibility to make it simpler and clearer for others to climb the ladder. In August 2022 I started sharing my thoughts on Twitter about how you might do that. I assumed no-one would read it. I was wrong. Very wrong. It blew up. I grew to over 100k followers in less than 12 months. My goal is to get real life insights to as many current and future CFOs as possible. And where better than LinkedIn? Most content written on the CFO role is sh*t. Based on textbook theory, written by people who have never done the job. Often by those with something to sell (Big 4, technology companies, etc). I promise to be different to that. I bring my decade of experience in the top finance job, and a willingness to share. Writing is a hobby for me, and this is my way of sharing it. I have specialized in complex situations; turnarounds, refinances, exits, M&A, transformations, etc. I’ve been lucky to work with super-entrepreneurs, outstanding public company CEOs, and experienced boards. Not to mention all of the accounting and finance pros I’ve worked with and for along the way. I enjoy documenting my ever changing views on what I’ve learnt. And by remaining anonymous, I can be more interesting and helpful to more people. You can expect content on: - simple summaries of finance concepts - insight into the CFO mindsight - skills leading large teams - broader business skills relevant for CFO - how to make great finance career decisions - hot takes on hot finance topics. - silly jokes and memes Make sure you follow my page, so you never miss a beat. Please say “hi” below and introduce yourself👇🏼

Time to take a question: Big Ben from London, UK asked: "I have reached the top position at a small company ($5 million ARR), where I lead their strategy and helped the CEO triple revenue on a tight budget over the last few years. I feel there is no room for further progression, and my next step is to start my own company in the same market, targeting a different client segment. This would make my new venture a direct competitor. Given the positive relationship and trust built with the CEO who promoted me, should I offer him an opportunity to invest in my new business, or is it better to cleanly part ways by leaving the company without involving them?" Do you have any advice for Ben? Put it below.

It's budget season. Thoughts and prayers with my brothers and sisters in finance grinding out those gaps between the top down expectation, and bottom-up budget. Here's a little video to say 'I'm thinking of you':

Peloton's unit economics are CRAZY. Before we start - this is NOT investment advice (seriously, don't take investment advice from an 8bit cartoon.) This is just me nerding out on Peloton's financials. Peloton sell fancy static bikes for $1,500-$2,500 per piece. And then charge a $44 per month subscription to access the content that integrates with the bike. If you haven't tried it... it is a cool product. But it's the unit economics that fascinate me. They lose $927 per unit sold upfront when accounting for both the gross profit on the equipment sale, and the marketing costs to acquire customers (mostly paid advertising). Then they make 72% contribution margin on the $44 monthly subscription. Like the classic Gilette razor and blade model - but on steroids. Customers typically stick around for 5 years, so that upfront loss of $927 is amortized at ~$15 per sub per month. Variable costs (content, music licensing etc) are $12 per month. Leaving $17 per sub per month to recover the fixed cost base and eventually deliver cashflow. By my calculations they will have to reach 4.3m subscribers to fully recover all fixed costs. Today they are at 2.9m and expected to fall to 2.75m by the summer. The brutal math (in my opinion) is that Peloton has to reset its unit economics: 1. Rip out as much fixed cost as they can. More and sooner to bring the breakeven point down. 2. Find cheaper routes to market. They need to cut their customer acquisition cost by at least 50% to improve contribution to fixed costs. 3. Deliver this all while increasing prices either on the upfront equipment or through the subscription price to restore unit profit on equipment sales to a level where it can cover customer acquisition costs There's a new CEO in, and it's going to be fascinating to watch the next moves. I'll be rooting for them. Any assumptions are my own. If you want to read the full analysis, I've been breaking it down through my newsletter over the past two weeks. You can read the series so far by clicking here... Part i: https://lnkd.in/e8XtGT6M Part ii: https://lnkd.in/eQKpyu9j

Is Peloton actually making money on Bikes and Treads? How profitable is that $44/month subscription? Can they ever get back to growth with these unit economics? In this week’s CFO Secrets newsletter, we ripped apart Peloton’s P&L as part of our month-long series on financial statements. You can read the full deep dive here in case you missed it. Click here to read it: https://lnkd.in/eQKpyu9j

I’m flattered by this, and it was nice to read the comments underneath too . Carl Seidman, CSP, CPA is a fantastic voice on LinkedIn. He speaks from experience, not theory. Choose your content diet carefully …

M&A projects are complex. Not always long, but complex. And fragile. Man are they fragile… Primed to fall to bits at any moment. And all this is happening at a breakneck pace. Good M&A execution means anticipating and removing roadblocks at every stage. Micro management of detail. Deals don’t complete until you have eliminated every possible reason they could fall apart. For more on M&A, check this out --> https://lnkd.in/eX8rXXj2

Peloton CEO Peter Stern might not be a household name (yet). But there's a good chance he will be... for better or worse. Peter was recently named CEO of Peloton. The fitness giant is in the midst of a rebuild after an epic fall from grace. If Peter succeeds, they'll write case studies about him. If he doesn't, well, I think we all know how that story goes. This is part of the reason I have chosen to cover Peloton in our 4-week financial statements deep dive. Last week we broke down the 10K. And this week we are getting into the unit economics of the business. What I found has surprised me. Part 2 of our 4 part breakdown of Peloton is released at 8:45am ET tomorrow. You can get access by subscribing to the CFO Secrets weekly newsletter for free Click this link to subscribe: https://www.cfosecrets.io/

In this week's question, Cheeseball from Tampa, Florida asked: "Our CFO has started to say financials just need to be ‘good enough’. This good enough stance means things are booked into the GL to the wrong cost centers & accruals are completely disregarded. I’ve been in finance & accounting my whole life, and accuracy has always been the name of the game. What do you make of this?"

I love it when other finance folk reach out to say they have been inspired by my content to start writing or sharing their own experience in finance online. It’s happening more and more. I hate it when people just rip my content off word for word. That’s happening more too…. One strategy will work, the other won’t.