The Secret CFO

Sharing real world insights as the former CFO of a multi-billion dollar company. Opinions, not advice.

[The Secret CFO @SecretCFO]

How did one VP of Finance bring Macy's to its knees with a $151M accounting scandal?

Here’s how I think it all went down… (THREAD)

[The Secret CFO @SecretCFO]

@bygregorr Interesting question. I would say more the former but not 100% sure

[The Secret CFO @SecretCFO]

It’s funny when you step outside the tech and online bubble… most CFOs still aren’t really doing anything with AI.

I asked one about controlling token spend earlier in the week, he said “what’s a token?”

This was a serious finance leader in at a big consumer brand. Was far more concerned about margin pressure from inflation risk, supply chain fractures, a big CapEx program, refi risks / credit markets.

Do remember that this is where most businesses are at still with AI… they’ve got a heap of shit on their desk to work through.

It’s still very very early.

[The Secret CFO @SecretCFO]

@CostCutPro Doh I missed the word ‘important’ after the last very

[The Secret CFO @SecretCFO]

Someone should tell the FT there’s a good reason this part of the cover page of the S1 is not in alphabetical order

[Financial Times @FT]

Goldman Sachs expects SpaceX’s AI revenue to surge 100 times by 2030 https://t.co/T6DyELyfpN

[The Secret CFO @SecretCFO]

@CostCutPro It’s called ‘Lead Left’ and it’s very very very very (one more) very to them. Fees and creds.

They’ll be dining out on ‘Lead Left on the biggest IPO of all time’ in pitches for the next decade

[The Secret CFO @SecretCFO]

@themgmtconsult Exactly right.

[The Secret CFO @SecretCFO]

@FT You know this isn’t in alphabetical order for a reason… right?

[The Secret CFO @SecretCFO]

@VPBigCatCorp_ It’s very easy on here to forget that there is a lot of real work to do right now.

It’s quite unrepresentative of the general tone across enterprises. For most AI hasn’t hit their list of big 3 things yet.

[The Secret CFO @SecretCFO]

@buccocapital This is becoming a huge problem I think. Longer emails, longer ‘one’ pagers , etc. it’s hurting collective productivity, especially anything that is written by one and read by many

[The Secret CFO @SecretCFO]

@thesamparr @artists_voyage Amazing.

[The Secret CFO @SecretCFO]

@austin_rief 👋🏼

[The Secret CFO @SecretCFO]

@victor_zhng Yes

[The Secret CFO @SecretCFO]

Leadership roles done right are basically 3 things:
1. Joining dots others can’t
2. Solving problems others can’t
3. Finding and retaining people who can help reduce 1 & 2

[The Secret CFO @SecretCFO]

@libertylampoon lol yes that bit isn’t easy

[The Secret CFO @SecretCFO]

No other discipline will test your ability to mobilize the business across functions and the C-suite more than working capital management.

Given the opportunity to prioritize something else, the business will always take it, and leave working capital as a finance problem.

But finance doesn't really control the levers. So who does?

Well… it crosses a lot of functional barriers.

Cashflow is where many different business processes converge; order-to-cash, procure-to-pay, inventory, etc.

Some things are easy to allocate: finance owns reporting, operations owns fulfilment, sales owns volume, procurement owns supply.

But the most important levers land in overlaps between the functions.

In yesterday's week's Playbook, we concluded our 5 week series for May; Working Capital Warfare.

It included a whole bunch of practical working capital tactics, and why Cash Conversion Cycle is a crappy metric.

You can read it here: https://t.co/7theD8Wvvg

[The Secret CFO @SecretCFO]

Absolutely nothing can go wrong here …

[Hedgeye @Hedgeye]

Rule changes for the SpaceX $SPCX IPO:

Index providers waived the profitability requirement and cut the seasoning window from 90 days to 5.

This forces over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.

Bloomberg Intelligence estimates S&P 500 funds must absorb 19% of SpaceX's float within 6 months.

Russell 1000 and Nasdaq 100 funds will absorb 24%.

The rules built to protect passive investors:

1. S&P 500 has required 12 months of trading and 4 quarters of GAAP profitability since 2002. Both waived.

2. Nasdaq cut its inclusion window from 90 trading days to 15.

3. FTSE Russell cut its to 5.

All three benchmarks are now structured to buy SpaceX at IPO pricing.

[The Secret CFO @SecretCFO]

@alt_w_v_g The key to making it work is; a lower overhead rate % of sales which is normally built through a scale benefit.

And once an incumbent has it … they become very very hard to beat. Especially in consumer facing industries where price is the ultimate weapon

[The Secret CFO @SecretCFO]

If you can operate profitably on a much lower gross margin than your competition you have one of the best moats there is

[TBPN @tbpn]

.@ericries explains why former Costco CEO Jim Sinegal refused to raise the price of everything in the store by $.03, despite the fact that Costco knew it wouldn't decrease sales, and would increase their net income by 50%:

"He says, 'It's like the business equivalent of taking heroin. You do it once, and then you got to do it again, and again, and again. Next thing you know, you're not the low-price leader.'"

"You can get away with screwing people over. You always do it, no matter what. You raise margins. Margins are a source of strength."

"But Costco is built on a very different philosophy, which is that margins can be a source of weakness. @JeffBezos understood it. He used to always say, 'Your margin is my opportunity.'"

"When you're making too much money, when you are being too extractive, you're actually harming your competitive position in the long run."

[The Secret CFO @SecretCFO]

@denk_tweets @beehiiv I know people are still reading mine …

[The Secret CFO @SecretCFO]

@Bkclaims ‘typically’ is doing a little heavy lifting here