Olivier Adler is the CFO at Shippo, a leading company in the shipping and logistics space backed by Bessemer Venture Partners, Union Square Ventures, and D1 Capital. Previously, Olivier was the CFO at eero helping launch the first home wifi system growing to over $100m in revenue when the company was acquired by Amazon.com.
Prior to making the jump into corporate finance for tech startups, Olivier worked as an investment professional at KKR in San Francisco, and in investment banking for Moelis & Co. in New York. He has a BS in Economics from the Wharton School at the University of Pennsylvania, and was born and raised in Antwerp, Belgium.
[MV] You were a classically trained finance professional having worked in investment banking and private equity. In those roles you live and die by Excel. It's hard to match the flexibility and capability that comes from spreadsheets, but it can also be error prone, hard to maintain, and unstable. How do you think about when it makes sense to leverage Excel and when you need a more robust software system?
[OA] It’s a good question. To me the answer is unrelated to any particular metric – sales, headcount, etc. The biggest mistake most companies make is jumping to a software system because they reach a certain threshold, when in reality they aren’t actually ready for it as an organization. Excel is extremely powerful but it’s a general purpose tool, not a planning system. It’s terrible for collaboration and it’s a terrible system of record, but you need the internal capabilities to successfully roll out a software system. From my experience, that means having someone in house who is deeply passionate about business systems and has the ability to architect the implementation and establish best practices. Only then does it make sense to consider a more robust software system.
[MV] When choosing a vendor for a software product, what is the most important factor for you?
[OA] The main piece of advice I would give is to use the systems that others in your industry are also using. There is no reason to reinvent the wheel. There is huge value in using a product that everyone else is using because that is when you have the most robust APIs, tools, and reporting. Oftentimes I will come across companies that are taking on the legacy players like a Netsuite with a slicker product, but in particular for critical systems of record there is a lot of benefit from the incumbent software that has a network of integrators, implementation managers, etc. There is a whole ecosystem that surrounds the product.
For point solutions as opposed to systems of record you can be more aggressive. For example, expense management – that’s a point solution. It’s much easier to rip and replace these systems.
[MV] Most CFOs have a love / hate relationship with their ERP system which probably favors hate. Any thoughts on how best to make the most of your ERP system to ensure you get the most out of it?
[OA] ERPs are such malleable and broad systems that like any generic tool, the person who wields the tool makes a huge difference. Even if I had the exact same paint brush as Monet, what I could produce and what Monet can produce is going to be vastly different despite using the exact same tool. If I get my hands on a brand new paint brush manufactured in 2022, it will improve my painting a bit, but I’m still not going to produce the quality of Monet. The tool matters, but how you use it matters more. It requires expertise, discipline, and commitment to the process. I have implemented Netsuite three times now and I’ve seen it done poorly and I’ve seen it done well, and when it’s done poorly it's easy to blame Netsuite, the tool, when in fact it’s how it was implemented. At eero, we eventually got to the point where we had a great implementation of Netsuite and we complemented Netsuite with the right point solutions for things like procurement, sales, etc. Any tool can be good or bad, it just depends on how well it’s implemented.
[MV] What makes the biggest difference between having a good implementation vs. a bad implementation?
[OA] You have to treat it like it’s another product for your company and when you build a product you start with the architecture. You need to own the architecture as a company and you need to do that in-house rather than trying to outsource it. Sure, you can hire an implementation firm and ask them to also architect it for you. They are happy to log more billable hours, but you would never outsource the architecture of your core product that you produce as a company and the same goes for architecting a core software system like an ERP.
[MV] Do you have particular finance SaaS products that you just can't live without?
[OA] It’s hard to love finance systems. Netsuite is still my default ERP system. For a long time Coupa was my default software for procurement, but there’s a new company called Zip which I recommend looking into. For AP automation, we historically worked with Bill.com, but more recently I’ve been using Tipalti which I’ve actually been pretty impressed by and it shines for slightly larger businesses. For expense management, more recently you have seen the rise of Brex, Ramp, and Airbase. All 3 are doing some cool stuff – we use Ramp internally which works well for us. Stripe for everything payments.
[MV] What are the best practices that you having for better managing cash flow?
[OA] There is a key metric to monitor which is the Cash Conversion Cycle – essentially it measures how many days of cash that you as a company need to float from start to finish (i.e. how much time it takes to produce inventory and turn that inventory into cash received) and that’s a number you want to minimize. In practice it’s a bit company dependent to determine how best to do that. In general, it’s worth it in my experience to just ask for better payment terms from vendors and be ready to walk away if you don’t get them. Be willing to push a vendor for better payment terms, for instance net 60 days instead of net 30 and then see what happens. If you are prepared to walk away, and then magically vendors will find a way to provide you net 60. In practice, no one ever walks out on a deal because of payment terms and if you negotiate hard on this, it can make a big difference. I bet more often than not, it will work, and to be clear the impact can be massive. If you can cut your cash conversion cycle in half from 60 days to 30 days and previously your working capital was $10M and now it’s reduced to $5m, you just made $5m. It’s a one time savings, but it adds up.
[MV] Thanks Olivier! We really appreciate you sharing your insights.
[OA] My pleasure!