Leadership Lessons at Wayfair with Kate Gulliver

Speaker A: Financial leadership is changing. CFOs no longer record history, they make history. This podcast will help you become a better leader, strategic thinker and digital visionary. Welcome to Secrets of Rockstar CFOs, the ultimate podcast for chief financial officers. Follow along as Jack McCullough engages in exciting chats with accomplished CFOs, learning how they overcame obstacles and position their companies for the future. Here's your host, Jack McCullough.

Speaker B: Hello, rockstars, and welcome to another episode of the Secrets of Rockstar CFOs. I'm your host, Jack McCullough. Before we start, a big shout out to our, uh, sponsors, Intuit and Planful. Welcome back, Rockstars. I'm really excited today for this guest, partly because she works for what I would call an iconic Boston company, and partly because I am actually a customer of this company. And also because she's a phenomenal chief Financial officer. So my guest this week is Kate Gulliver, the CFO and CAO of Wayfair. Wayfair, in case there are two or three of you who don't know, is an online retail that offers a vast selection of furniture, home decor and household goods using a technology driven asset light marketplace model to connect consumers with suppliers at scale. Kate, welcome to the secrets of rockstar CFOs.

Speaker C: Jack, happy to be here. Thank you for having me. And glad to hear you're a customer.

Speaker B: Oh, yeah, actually, this bookcase right behind me. I realize you have tens of thousands in your inventory and you're forgiven and I believe those plants too, but I'm not 100% sure on that.

Speaker C: All right, so.

Speaker B: And a few other things. But anyway, the description I got for your company I got from publicly available things, but I'm wondering if you could fill the gaps a little bit to share a little more about Wayfair.

Speaker C: I actually thought it was a pretty. You did pretty well with that. So, you know, whatever you know, ChatGPT is serving up these days on our description is not bad. But I, um, guess what I would add to it is we sell everything home and we aim to help you find your exact right piece in a convenient and sort of customer delightful way. Primarily, we do that through E commerce. Um, although we've recently launched into physical retail and we have two sort of large format Wayfair physical retail stores open. One, we operate in the U.S. canada, the U.K. and Ireland.

Speaker B: Okay, fantastic. That's a great pullback and we'll definitely explore that journey. But, uh, first, uh, I'd like to introduce you a little bit to our listeners. And I know the answer to this. We're both fellow New Englanders. But where did you grow up?

Speaker C: I grew up just outside of Portland, Maine.

Speaker B: Oh, okay. So Susan Collins, the Senator of Maine, is my favorite senator only because my sister is also named Susan Collins.

Speaker C: There you go. Nice match.

Speaker B: Yeah, that's about all I need to make my decision on favorite senators. But, uh, but so you're up in Portland, which for those who don't know, is just a lovely area and, you know, probably a fantastic place to grow up. I'm, um, curious, what was your first ever job as like a teenager?

Speaker C: So, um, first of all, Portland is a beautiful place to grow up. Um, I, you know, it can be a very touristy area. And so my first job was actually working, um, in the summer scooping ice cream at sort of a ice cream store and tourist gift shop. Um, and I did that actually for many, many years. I eventually became the manager. The last summer that I worked there, the couple that owned it, they also owned sort of a bakery right down below that I would help with. They had some sort of family challenges and so they weren't able to be. This was on a little island. They weren't able to be there as much. Um, and so I was actually doing all of the ordering for the store. I figured out some of the gifts that we were selling. I would place the ice cream order each week. I hired and fired, and I got a lot of responsibility for a kid, frankly. Um, and it taught me that I actually really enjoyed retail candidly. And I enjoyed that, you know, engagement with the customer each day.

Speaker B: Yeah, that's something, I mean, you know, who would have. You went from that experience to, you know, several years later working for, you know, one of the most fascinating retailers. Not like an ice cream stop, but still it probably set you on a career journey that brought you here.

Speaker C: Yeah, there's still, there's always the key piece in any retail engagement is how are you delighting the customer. Right. Whether that's a small scale ice cream shop. You know, I used to work, I worked apparel, uh, retail when I was in college, um, to, you know, what we do, which we don't have as much physical interaction with the customer, of course, but, you know, how in an e commerce way are we delighting her? And that, that through line is certainly there in any retail engagement.

Speaker B: Fantastic. Well, a little side story when I was, um, the drinking age for me was 20 when I was a teenager and I had a fake ID made that listed Portland, Maine as the address.

Speaker C: Oh, really?

Speaker B: Yeah. So first time I used it, I went to a bar. I gave it to the guy. What would I have, uh, known the guys? How could it be? The guy was from Portland.

Speaker C: Oh, God. And he knew, right?

Speaker B: Yeah, he recognized. He said, nice try. That's the business district of Portland.

Speaker C: That was. That was bad luck for you, Jack.

Speaker B: Yeah. So, you know, the good news is I couldn't drink underage for a little bit because of that, but it was so frustrating. So anyway, so I'd like to. So you grew up in Maine. Wonderful childhood. Where'd you go to school?

Speaker C: Um, I grew up going to the public schools in town all the way through high school. I have three siblings, so it was a decent sized family. And then I went to college at Yale. So, um, that was sort of when I left Maine. Went, um, to Yale, worked in New York for a little while post college, and then I went to hbs, Harvard Business School for business school. And since then I've been in the Boston area.

Speaker B: So Yale and Harvard. So apparently you didn't want to really challenge yourself academically. You picked a couple of safety schools. Am I reading, reading that correctly?

Speaker C: I was very fortunate to be able to attend both. They're both wonderful experiences.

Speaker B: Yeah. And you, you didn't start out in business. I. I forget what you. But you majored in, like, government or something like that.

Speaker C: I majored in poli sci, um, so at, uh, Yale. And I also. The big thing that I. I would say my academic career was less exciting at Yale, um, just in terms of my own personal motivations. Then I ran the school newspaper. So I was a publisher of the daily newspaper, um, while I was in college, which, you know, is a meaningful responsibility, and again, taught me about operating a business, um, sort of managing the P and L. And I loved it. It was a, ah, incredible experience to have had.

Speaker B: Yeah, I remember, you know, because I like everyone, I went to a school with the school newspaper. I was like, president of the accounting club, which is about as dreadful as it sounds.

Speaker C: Yeah, I don't. I don't know if that would have been the path I would have chosen. But you got, you know, you got some real world, I'm sure, business experience with that as well.

Speaker B: Yeah, I met a bunch of people that, you know, I. I wasn't the networker then that I am today, but they were, you know, influential people in the Boston community. So. But, uh, I remember the people that looked at the paper, worked at the paper for one. It looked like a lot more fun, but it certainly seemed like a lot More work than we had.

Speaker C: So it is very, it was very time consuming. But, you know, you're part of a team. You're contributing to something that you think is adding value to the campus. And in my case, so I was running the sort of the business operations of it. We operated on about $1 million a year back then, almost 25 years ago or 25 years ago. And that was exciting. You had to go out and sell ads, you had to manage the expenses of the paper, you had to rein the reporters in. It was interesting to sort of understand that dynamic now.

Speaker B: Yeah, it's, it's fascinating what you can learn in college in those sorts of environments. So. So you graduated in your career path. You know, you've worked for some great companies, not, uh, the least of which would be Bain Capital and McKinsey. And I'm curious because when I talk to CFOs, they all say that one of the most important things they had early in the career was mentors who made an impact on them. And, you know, sometimes the mentors don't even know that they played that role. But you must have had some great mentors just because of that talent that's at companies like those.

Speaker C: Uh, you're absolutely right. I'm very lucky to have a number of wonderful mentors, including actually my most recent, sort of the person who held my position prior to me at Wayfair. So I started out my career at McKinsey. To be completely honest, I did not know what I wanted to do. Um, I would never have said at that point that I would become a CFO, but I thought McKinsey would give me this sort of broad business experience, would open doors rather than close them. It would help me sort of understand the lay of the land. And, ah, my very first, um, McKinsey are sort of on small project teams and you have staff that's called an engagement manager. My very first engagement manager, I was very lucky, um, was a woman named Olivia Howard. Um, and she was actually the, or is the older sister of one of my dear college friends. And she sort of took me under her wing. She was a phenomenal mentor for many reasons, one of which was that Olivia always showed up to work authentically as herself. She is a great presence in the room. She, you know, can deliver a really, um, sort of engaging dialogue and really got management teams to trust her. But she was Olivia through and through and through. And I always respect and admired sort of how she knew what her strengths were and she played to those strengths and she leveraged them, but she showed up 100% as Olivia.

Speaker B: That's fantastic. And that's kind of all we can do as a leader. Right. I think people are so savvy. If you adopt a fake Persona, a lot of people are going to see through that pretty quickly. So the cracks will be there. So. And when, you know, it's. To me, it's a wonderful experience to work at McKinsey. I know it's not an EAS easy experience to work there. I never did. But I, you know, enough of my friends have worked there over the years. Um, but what are the lessons that you learned at Bain and McKinsey that really helped you on your journey ultimately leading to being a CFO today?

Speaker C: Yeah, it's a great question. Um, both Bain and McKinsey. So I went from McKinsey to business school and then to Bain Capital and you know, I think a few things. One, how important the team around you is and how critical the management team is. So at, uh, Bank Capital, we, you know, invest in many different types of businesses. I mostly looked at retail consumer businesses there, but the fund overall invested, you know, across the spectrum. And the consistent theme was you could have an incredible company, but if you didn't have an A plus management team, it did not matter because at the end of the day it was ultimately about execution. And I thought about that when I was, you know, sort of interviewing with Wayfair and thinking about the Wayfair opportunity. The thing that really appealed to me about it was new agency of our co founders, Michael Fleischer, the CFO at the time, um, you know, Ed Macri, Steve O. Back to other executives at the time, sort of the quality of the executive team and, and how important the quality of that team was. The strategy matters, of course, but the execution, the quality of that team is the most critical piece and the importance of sort of following that team. And that wasn't just in investment opportunities. It was also in sort of how I chose, you know, who I worked for at, um, McKinsey. I always followed great team managers and when I was at Bain Capital, I always want to, you know, have great deal quarterbacks because the person that you work for ends up being far more important than sort of the day to day content of what you're doing. At least in my personal experience, that

Speaker B: makes a lot of sense. I want to, you know, think to me that's really interesting about your background and I believe you're the first one like this, but your role before becoming the CEO and eventually the cfo, uh, was that you were the head of global talent at Wayfair. Uh, not exactly a conventional path. So, you know, it's great, right? I mean, the one thing about the modern CFO role is there's no such thing as a conventional path. I was CPA, firm controller, CFO. That's how you became a CFO in the 1980s and 90s. Yes, but today there's a lot of path to that. But I'm curious, you know, what sort of made you want to go into the blackouts of finance, if you will.

Speaker C: So I definitely had, you know, McKinsey and Bain Capital. I mean, Bain Capital. I was on the deal side. So you're building LBO models. You're definitely doing finance. I am not, uh, a cpa. I certainly don't have that background and would always defer to an excellent controller. But I still never thought I was going to go be a cfo. When I came into Wayfair, my original role actually was, uh, head of investor relations. We were about nine months out from our IPO when I joined, and I was brought on by our CFO at the time, a man named Michael Fleischer, who became an, uh, incredible mentor to me over the years to really help, you know, craft our story, position us for investors, launch the, you know, build our first investor relations team, run the IPO process, which was an amazing experience. And to that point, I was making earlier, sort of, you pick teams and you pick people. I never thought of myself as an IR person. I never thought I was going to, you know, build an investor relations team. I wanted to go work for Michael. He seemed like a great person to work for, and I want to work at Wayfair. And so I said, you know, I'll take whatever job. Um, and that was the job that they had available that seemed to align with some of my skill sets. I did that for about two years, and I loved it. It's an incredible, very unique experience to get to help take a company public. And the work that Niraj and Steve are two co founders have done over the years, you know, very exciting to sort of have that moment. But about two years in, Neeraj, our co founder, who's still our current CEO today, and Michael approached me about becoming the chief people officer. So at that point, Wayfair didn't have anybody in that role. We had probably a couple thousand employees then we were probably doing a couple billion in revenue, and. And the company was still sort of very nascent in figuring out those structures. And the way that Neeraj sort of saw it at that time was that the thing that he felt was the biggest limiter on our growth then was if we had the right people in the right roles. And so the thing that was most important to him was how are we thinking about who those people were? How are we developing them? Were we finding the right people were, you know, sort of helping to shape them while they were at Wayfair? And he wondered if I might be interested in this position. I had no background in the people space. You know, there's. That's a place where there's a lot of great practitioners, but I didn't have that sort of technical knowledge there. But I did have an understanding of how Neeraj and Michael and how they operate and how they want to see and structure the company. And I knew the business really well. And I think what was appealing to them was the idea that I could sort of connect the business front with, uh, the sort of softer, maybe skills of the people side. And when your CEO tells you it's the most important thing he's thinking about, you sort of take a jump and do that. So the thing for me that was an aberration really, was going into the people role versus, you know, continuing on maybe sort of a more traditional finance strategy path. I ended up doing the people role for about six years, and I loved it. Um, I thought it would go in for two years and then move on to something else. It was just an incredible experience. Over that time, you know, our headcount grew from a couple thousand to over 10,000. The business really boomed. We opened up fulfillment centers. You know, it got a lot more complex, and it was a really exciting time to sort of help shape and develop the company.

Speaker B: Yeah, I think, you know, any C level experience when the company's going through that kind of explosive growth is rewarding. But, you know, from the people side, that must just be. Every day is so much different than the day before, Right?

Speaker C: That is definitely true. There's everything from the sort of more profound questions, you know, how do we define our culture? What do we want it to be? To very mundane, you know, do we have the right snacks in the snack wall? Right. So there's a very wide range that you approach in that role. And. And I think actually I enjoy that. I enjoy the sort of differing levels of questions. And it's rare a job to see an impact, you know, such a direct impact. And in that people function, um, because the people you're supporting are sort of all around you. You see the direct impact of if you change Compensation or if you structure a review program in a different way, if you change an interviewing approach, you can really see the impact of that right away. Um, which is quite appealing.

Speaker B: Okay. Interesting. Yeah. I mean, what a fascinating run that must have been. So, so then one of the things I like to ask people, and your answer will be particularly interesting because you're not a CPA and because you, since you spent on the talent side of it, is what are some of your Favorite non traditional KPIs? I'm not talking about, you know, accounts receivable, turnover and things like that, but are there any that you think, wow, understanding these really helps me make better business decisions.

Speaker C: It's interesting. I'm not sure that I would say that any of these are non traditional, I think. Um, so I look at all of the same things up and down the P and L that most folks look at. I think what maybe is a bit different in terms of how we tend to approach things here, and I love this question, is we are very focused on, we're quite comfortable with a lot of fluidity in our forecasting. So we actually, we update the forecast obviously every quarter. It's sort of a rolling eight quarter forecast combined with a seven year, um, projection. So we do both and then inter quarter we'll be updating it. And we're very comfortable with big swings and movements in this approach. But I think part of that is because we're pretty good at looking at individual initiatives and understanding are those panning out in the way that we want them to pan out. And so rather than being overly myopic, perhaps on a public accounting number report, we look at something like our physical stores and say, hey, what is it that we want to see? Um, within the physical retail store performance? We only have one store, but what do we want to get comfortable with there before we open the second store, which we did, and what do we want to get comfortable there before we open the next five stores? And we then know that that will have an impact on the overall Inc Wide P and L. But we're pretty good at looking at each initiative to understand, you know, the drivers of that specific initiative and why we might be more or less excited about that. I tend to focus far more on sort of the commercially impactful pieces, um, than, you know, sort of maybe more of the traditional numbers. But we're obviously very focused on our top line comps. We're very focused on our margins, we're very focused on our cash flow. Um, we spent quite a bit of time cleaning up the Balance sheet. But those numbers are how we're driving that EBITDA dollars, how we're driving that EBITDA margin. Both ink wide but on individual initiatives are really where you want your focus to be.

Speaker B: That sounds fantastic. So yeah, it's interesting. I worked in tech company and we all have sort of the same KPIs, which usually I'm talking about back in my CFO days. It's usually just about revenue growth almost to the exclusion of all others. But uh, the revenue is going tech investors.

Speaker C: Well, tech companies have great margins. So you have the luxury of uh, you know, the revenue is growing, the margins are going to be there. We're, you know, at the end of the day we're a mass market retailer and so we have to be very mindful of that margin and make sure that we're holding, you know, that margin. So for example, I look a lot at team budget numbers and our teams holding to their, you know, their headcount expense targets and making sure that they're hitting those because if that number goes up too high, you know, that can have a pretty meaningful impact on our EBITDA margin.

Speaker B: That makes a lot of sense. One question that I get asked a lot by my members and I'd love to get your perspective on it, is the CFO CEO relationship, how you build a meaningful relationship. And in your case it might be interesting because your CEO and his name is Niraj, am I saying that correctly? Neeraj. Thank you. So Neerish, uh, he's not only the CEO, uh, he's also kind of an icon in the industry and he's the founder of the company. So you know, maybe it makes it easier, maybe it doesn't. But I'm wondering how you build that kind of.

Speaker C: I do think there is something different in working for a founder, um, in this case Neerij and Steve, his co founder, Steve Conine is still quite involved in the business day to day as well. So I spend a lot of time with him. The two of them co founded the business almost 25 years ago. They also still, they're co chairman of the board. Neeraj is the operating CEO and they still um, actually control, so their founder shares. Um, they still have voting control. So we're a public company, but we're a controlled company. Um, Neeraj and I have worked together now for uh, going on 13 years. So we built up a lot of trust over that time period. And I'm very fortunate that how Neeraj thinks about talent and I think you see this in the way that sort of I moved through the company is he thinks you hire great people, hire people that are smart, that ask good questions, that can lead a team, that have a bias for action, you know, that are focused on execution and, and then uh, he's very comfortable moving them throughout the organization. Um, and you know, I credit Newer Ridge with thinking it wasn't crazy to put somebody like me into a chief people officer role and then thinking it wasn't crazy to take me out of that and put me in the CFO role. And so I think because I've also worked in so many different areas of the company, I have, you know, a pretty broad perspective on the business which probably helps build our relationship as well. Um, with a founder, I think some of my role is a bit to you know, be somewhat of a foil to push, you know, to ask the right questions, um, to make sure that you know, we're thinking in both the founders mindset and you know, sort of in a maybe a longer term investor's mindset as well. And how do you help sort of bring those pieces and bridge them together?

Speaker B: Okay, that sounds Good. And yeah, 13 years. You certainly had plenty of chances to figure out if you like working with each other.

Speaker C: Oh definitely, yes. I'm very lucky to work with a wonderful team, you know, near first and foremost.

Speaker B: Indeed. So I, um, uh, this will not be surprising the question that I'm about to ask you, but I'd love to talk about Wayfair's strategy in the workplace. You uh, know, obviously the biggest game changer of our careers. But um, you know, what's your sort of philosophy on AI? Obviously the most powerful tool at a CFO's disposal and a business disposal. Uh, but of course you need to be discreet and CFOs tend to be naturally cautious in deploying new game changing technology. So how do you approach it both as a company and in your role as cfo?

Speaker C: So you, when you were giving the description of Wayfair at the beginning you mentioned that sort of our heritage was tech. We're tech enabled and I think that's actually really important to how we as a business are thinking about AI. Neeraj and Steve are engineers by training. They are lifelong entrepreneurs and you know we happen to sell furniture we love. I love furniture. I'm actually a personal decor sort of, uh, you know, that's my, you know, personal interest in my own free time. But basically they took a great model which was E commerce and applied it to a pretty complex space. And so the core of what they did was build an incredible storefront, an incredible supplier back end, an incredible logistics network all through technology. So at our core we are tech. We, um, have an excellent cto. Her name is Fiona Tan. And you know, from the beginning we were early adopter of machine learning models many, many years ago, which were the precursor to sort of generative AI. So as generative AI started getting sort of, uh, more accessible, um, we've been pretty good about trying to get it to our employees directly and enabling employees to experiment with it. Perhaps that's in contrast to other companies. I can't really speak to that. But our view was let's get tools in the hands of the people that are actually doing the work and see how effectively they use them. And we will learn a lot from how quickly folks are able to see changes from using these tools. And so we use a wide range of different tools. We have some specific finance AI tools that we're using. The legal team is also part of my purview. We have some very specific legal tools. Talent still sits under my purview. So we have some talent tools. So we use some specific tools. We also give all employees have access to Gemini and ChatGPT. A number of employees are using Claude. So we're using all of the various frontier models. So it's like step one is get the technology in the hands of the people actually doing the work and start to see what they will learn and how they will experiment. And then step two is how do you think about how that applies to sort of top line gains? Right. There's a lot to be done from an AI perspective. You know, you yourself mentioned when you were talking about your bookshelf, you said, oh, I bet you have, you know, thousands of these. I'm sure we do. What we want to do is try to find and serve up to Jack. Jack's right bookshelf and Kate's right bookshelf and I, ah, can really help with that personalization and improve that sort of site and discovery experience. So we look at the top line implications and then we're also looking at efficiency implications internally and how can we make sure people are using the tool not just as a curiosity, but now at this point to start doing their job in a more sort of efficient and effective manner.

Speaker B: Yeah, no, that's interesting. And you know, speaking as a customer and the spouse of a customer as well, like, you know, my wife and I get very different emails.

Speaker C: Yes, that's probably right.

Speaker B: It seems like Wayfair knows that I'm a simple guy, not really good with My hands. But I'll do it anyway. I'll muddle through. So they send me things that are easy to build.

Speaker C: Yep.

Speaker B: And basic colors and stuff like that. But they know exactly what my wife likes, too, and it's. It's not the same stuff. She buys a lot more than I do, so.

Speaker C: So she probably gets, you know, maybe something a little bit more design oriented, you know, maybe more exciting, more edgy.

Speaker B: Yeah, exactly. If this weren't. If my bookshelf weren't in my plane of vision, I'm not sure I could tell you exactly what color it is.

Speaker C: There you go.

Speaker B: I think it's black or charcoal or something, but, um.

Speaker C: Well, we want to. You know, I think you actually, though, are articulating this sort of range of customers that we have on the site. Right. We have, you know, people that are searching for sort of a purely functional reason, which might describe you a bit to. All the way to sort of, you know, design enthusiasts. Right. And that to the extent that we can make the storefront experience meet your needs, you probably want to find that product really quickly. You want to know it's easy to build. You want the delivery to be really quick to. Your wife may want to browse more. She may want to, you know, use our tools that allow you to create different imagery and create nice AI generated images. She could say, you know, please, you know, do a picture of an office with a brown bookshelf in it and then add on to it a plant and a light and, you know, a piece of wall art. And, you know, her attempts to maybe judge up your office a bit, but the tools allow her to do that now, and we want to make sure she finds those tools quickly, that she can play with them in a way that feels like it's supporting her and allowing her to go as deep as she wants to go.

Speaker B: Sounds like. Do you and Beth know each other?

Speaker C: Sounds like you've met our, you know, our best shoppers, share a lot of similarities.

Speaker B: So you go. So cool. Well, you actually stole my thunder. I was going to wow you with the fact that I know the name of your cto, Fiona.

Speaker C: Oh. Uh, so. I'm so sorry about that. I preempted you, Jack.

Speaker B: Yeah, we'll have to edit that part out so I get credit for my knowledge. But, you know, another question. I get more and more. And we were talking about AI, but you know, that partnership with the cio. Because you guys, you're going to implement this, right? Because if you don't, your competition is. And they're just going to crush you. Uh, so what is that relationship between the two of you, like, if I may ask?

Speaker C: Yeah, I'm very lucky to work with Fiona. We have a very close relationship. I think maybe it's helpful to describe. Our company is, um, you know, over 10,000 employees, including the fulfillment centers, et cetera. Our corporate team is roughly 5000ish, let's say, but our leadership team is quite, quite small. Um, and so many of us have been working together for many years and we sort of collectively sort of meet to talk through decisions. Just a few hours before, I was meeting with John Blotner, our president, Neeraj, our CEO, and Fiona myself, and sort of our regular weekly talking through a number of issues. So we're pretty good at sort of bringing things to the table to hash out. Um, I would also add that for Fiona's team, from a finance perspective, we've seen we try to support that team with some direct finance resources. So we have, in the way that we're structured, what we call our strategic finance team, which is really aligned with different parts of the business. So there are some folks that are aligned with the physical retail org, some folks that are aligned with, you know, sort of more of the commercial org, um, some folks that are aligned with our operations Org. And we have some folks are aligned with our finance org so that as we're experimenting with these tools, they can really help the CTO and her staff understand. Here's what we're sort of run rating at on costs on token usage. Here's how we might think about the ROI on some of those pieces. Here's how that might pan out over time if the pace continues to accelerate. Here's how that sort of gets factored into our overall cloud costs and how we think about our cloud computing costs, which is one of the more meaningful sort of costs from the CTO staff perspective. And our goal is that the finance person gets really integrated with the CTO staff and leadership team so that they can really help that team with these questions, help them understand sort of the implications, but enable them to move faster, not slow them down. So not be a barrier, but be an enabler.

Speaker B: That makes a lot of sense. So earlier when we mentioned that I worked in tech companies, you mentioned that they have high margins, but I know Wayfair has this kind of asset light model, uh, which enables you, you don't have tons of inventory the way some other retailers might, like IKEA and whatnot. I have no inside knowledge of ikea, but from your perspective, you know, one of the biggest advantages of a model like that. And, you know, does it take special discipline to, to make it work?

Speaker C: So you're, you're absolutely right. So we don't take inventory or on the front end, we act as a retailer to the end consumer, but on the back end, we're really a marketplace. Right. So we work with tens of thousands of suppliers all over the world. We have millions of different products. The benefit to the consumer, which I think is really a core part of the model, is vast selection. So, you know, you and I can both find what we want on the site because we have a very wide range of selection. We have a wide range of styles, of price points, um, you know, of sort of different aesthetic interests. And again, that's why AI is so critical, because it can sort of help narrow that funnel down. We start very, very broad and we want to be able to bring that down. So you cannot. If you were to inventory product, you just wouldn't from a capital intensity perspective, it would be too capitally intense to be able to provide that breadth of selection. Um, and you would. You get forced into, you know, a style or an aesthetic or price point. And this way we don't have to do that. And I think that is a huge advantage for our customers because they know they will be able to find what they're looking for on our site. Um, from a sort of balance sheet perspective, you're absolutely right. It means that we operate in a much more asset light basis. We also operate. And so that's pretty exciting, right? So we don't have that inventory risk. You know, we don't place inventory bets. It also is partly from a cash flow perspective how, you know, new agents are candidly still able to control the business today because as the business was growing, if you think about the working capital cycle here, a supplier, we show the supplier's product on our site. The supplier, you know, customer clicks to order that product. Um, we collect, you know, the revenue from the customer, right, Their cash, the product ships, and then we pay the supplier in, say, net 60 days, right? So it's a negative working capital cycle, which means as you're growing the business, you're actually able to, to sort of expand the business without a lot of cash necessary to expand. And, you know, as a result, when we IPO'd in 2014, Neeraj and Steve, you know, were still the controlling shareholders then. Um, and, you know, more than a decade later, are still the controlling shareholders now. And I think that's relatively unique to the way that that model Works the

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Speaker B: Uh, that's great. And you know, when you said 2014 it's like gosh, it was that long ago. Uh, so.

Speaker C: But uh, I know right? Time flies.

Speaker B: But in the last few years, you know, Wayfair has made I think astonishing progress on efficiency and profitability and you know, what are some of the key decisions along the way and even maybe mindset shifts that, you know, help to make that sell.

Speaker C: Yeah, it's such a great question. Um, you know we, from sort of the 2014-2019 period, we were, you know it's sort of the traditional E Commerce type of profile of that time, right. Which was growth is the paramount thing. Um, E Commerce tends to be a winner take most, um, you know, sort of. Share story so you want to be a first mover. And the market at that time was less concerned with profitability. Um and so we were actually not adjusted EBITDA profitable from that period from 2014 to 2019 and you know the growth was significant then 2020 hits and you know the growth is off the charts. You know we're 2020, 2021. Not only are uh, we one of the few places that you can actually purchase from at that time, but everybody is focused on their home and you know, sort of upgrading their home. So not only did the growth boom, but you know, the flow through was quite nice and you know, adjusted EBITDA. Uh, we uh, in the first quarter of 2020 our top line um, sort of doubled overnight. Right. So the run rate of the top line went from 9 billion run rate to about 18 billion run rate in that quarter annualized. Um and so you think about that on the same cost structure, you're just you know, flowing through margin. Um, and so that gave us a sense for sort of, you know, what could the business actually look like if you were more focused on, you know, the, the sort of bottom line. As we moved through that pandemic period, the market shifted as well. Right? The market wasn't just content with growth, they really wanted growth and profitability and we knew we had to get ourselves in shape relatively quickly to be able to meet that need. And that frankly, at our scale, you know, that was appropriate that we should be able to manage profitably, uh, growth at the scale that we were at that time. We sort of exited, you know, around 12ish billion in top line. Um, and the last three years, you know, sort of from 2022 through 2025, um, you know, we spent quite a bit of sort of focus as a company. We did have to shift the mindset to, hey, let's think about this, not growth at all costs, but how do we profitably grow and what does profitable growth really look like? And we became much leaner. We had a number of self help initiatives. Those are restructurings, for example, which are always quite challenging, um, but were really necessary to get us to the place that we wanted to be. Um, and from 2023 to 2025 we grew EBITDA meaningfully. And then towards the back half of 25, the top line was able to return to growth. And so now we're in this stage. You know, last quarter we grew the top line and we grew the bottom line. We're growing the bottom line faster than the top line. Well, that's the sweet spot, right? That's where you want to be. Um, and so we're very excited about the progress that we've made and this sort of shift that we've been able to make in the culture, you know, as we've gotten there.

Speaker B: Well, that's fantastic. Thanks for sharing that. I want to talk about your own career path a little bit more and I know amongst other things you're on the board of a company called pvh. And uh, I'd like to know a little about what they do, you know, what your role on the board is and those sorts things of, of things.

Speaker C: Yeah. So pvh, um, is the company that owns the brands Calvin Klein and Tommy Hilfiger, so sort of two iconic American, um, brands. Um, the company itself is based out of New York. Um, you know, I joined the board probably about a year and a half ago at this time. Um, so when I stepped into the CFO role, you start getting calls from, you know, headhunters about board positions. Um, every company always needs somebody else on their audit committee and so they're looking for a CFO to, to fill one of those audit committee seats. And I got some good advice which was don't take any board roles in your first year as cfo. Sort of sit tight, learn the ropes of the CFO role, adjust to that and Then start thinking about boards. And I did exactly that. I spent about a year sort of adjusting to the CFO role, sort of shifting into a new role, obviously internally at Wayfair. And then I started to think about what was I looking for in a board. See what would be interesting to me. I knew I really liked the consumer space. You know, you and I talked about how I started out in retail. I love apparel, I love fashion. Um, and I wanted to do something in sort of mass market consumer that was also not competitive with Wayfair. Right. To be able to do that, to have another view on the mass market consumer, but in a way that wasn't, you know, directly competitive in any way with Wayfair. And I, and I knew I wanted to be somewhere where the board would be sort of valued and the board seemed to have a good, strong dynamic. I also, as I said, I work at a company where the CEO is also the chairman. And so I explicitly wanted a business where the CEO and chairman were different. Um, and, you know, it was not a control business. Um, and PBH at some point reached out during that and it seemed like an overall great fit. I sit on the audit committee there. Um, and it's been, you know, it's very interesting to be able to get to see another company in that way, particularly while you're sitting in the seat and operating. Because I learn a lot from them. Um, hopefully I'm providing wisdom to them and perspective to them as well. But I also learn a lot from them in the way that they're seeing the consumer and the way that they're structuring something, the way that they're adopting AI. And I think that overall probably makes me a better operator.

Speaker B: You anticipated my question again. I was going to ask if the boardwall changed how you function at Wayfair.

Speaker C: I'm sorry to keep sort of preempting you, Jack, but I mean, certainly it can't help, but again, it's rare to get that view. And so, you know, I feel very fortunate to be able to use that to then inform some of how I operate here. Um, and sort of how I think about, um, you know, Wayfair opportunities.

Speaker B: No, it's interesting because, like, at the start of my career, it seemed like your typical board member was about 114 years old and, you know, 40 years retired. And that's what public companies wanted. You know, I understand the gray hair thing, but now, uh, I don't know the other typical board members such, but almost all of them have full time jobs at semi Related companies. Right.

Speaker C: I do think, yeah, I think that's become more important over time. I mean I have a lot of gray hair, but I work very hard to cover that. So I maybe would still hit that uh, gray hair piece. But, but I, I do think that companies want a mix on the board. So if I think about our own board of Wayfair, we have a mix of folks who have had a long operating career and are now, you know, primarily professional board members, but we also have current operators. And having the two is quite valuable because the current operators understand the environment as it is right now. But the folks who've had a 10 year career now sit on multiple boards. One, they usually have just more breadth and two, they can sort of say, you know, this too shall pass. Right, we've seen this and you will work through this. Um, and I think the combo of the two is actually quite powerful. So the PVH board has a mix of both. There are um, a few of us that are currently in executive seats at other companies, so in current operating roles. And then there's some folks who are, you know, more post their operating experience, professional board members. And I, you know, I find it valuable to hear from everybody because again, it helps inform my overall Wayfair experience as well.

Speaker B: That makes a lot of sense. So, well, you have a lot going on, you know, CFO of a large, very visible public company, uh, and being on a board as well. And you know, but that said, uh, the work life balance thing is important for any executive and I'm wondering if there are any things you do to, you know, do your best to achieve it. And you know, I will say to my listeners, I'm not naive. I realize that being a public company CFO is a hard job and you're going to have to make sacrifices in other parts of your life. But what do you do to sort of the best version of it you can?

Speaker C: Well, I appreciate the question. I think the best version of I can would be probably changes pretty regularly. Um, so that's one thing. And my kids might have a different view on what best looks like than I do. But um, so my husband, I have three little kids. They are currently ages 11, nine and six. And I think um, one and my husband, you know, also works. Um, I think one thing that has really helped us is we live very close to where we work. Um, one of the great things about Boston is actually quite small, um, as you know, and so we've been able to optimize and it's certainly a privilege to be able to do so. But we've been able to optimize, um, sort of reducing friction where we can. So reducing friction in the commute. Reducing friction in terms of, you know, the distance of a child's school from the office, the distance of our pediatrician from our home, um, you know, things like that that actually sort of, from a day to day perspective, you know, help quite a bit in managing the chaos. Um, we also are very fortunate to have an incredible, uh, nanny and a number of other folks who help support us, which none of this would be possible without that. So that's a huge piece as well. And then the, the last thing I would say is that I was lucky to have worked at Wayfair for 13 years. And before I stepped into the CFO role, I'd been here, you know, 9ish years. And so I had a lot of experience with Wayfair before jumping into this even bigger seat. And I think that made the transition, even from a work life balance perspective, much more, you know, manageable. I had trust with the CEO and, you know, with the board and with my own team, and I think that helps quite a bit. But all of that said, there are days where it feels completely out of whack one way or the other. You know, there's the days where you have an unexpected snow day and no one can get in and you're home and the kids are in the background of the zoom calls. And then there are days where, you know, you're traveling for work and the travel goes awry and you're delayed. And so, you know, it's never perfectly imbalanced and it sort of swings one way or the other.

Speaker B: Oh, that's a, That's a great answer. So, uh, and, you know, it's. It's a tough but very important question for people to ask, right? Because, uh.

Speaker C: Oh, absolutely, yeah. And I wouldn't be. It's the sort of full picture of it that makes it satisfying. Right. I wouldn't want to do this job and not be able to be very fortunate to have the family that I have.

Speaker B: That makes sense. So cool. Well, I always like to wrap up, Kate, with, um, advice for the next generation of CFOs. As I mentioned before going on the air, uh, you know, our demographic tends to be what I consider young. Uh, and, you know, some people who are, you know, maybe in their late 30s, early 40s, just on the cusp perhaps of getting their first CFO job. So I'd love to know what your advice is to people like that. Uh, to not only get their first role, but really nail it once they have the opportunity.

Speaker C: I think the first piece is actually before you even get the role. I think, as I said at the beginning, sort of finding people that you trust that you want to work for, but also being comfortable taking a role that doesn't look like it's in the direct path to the cfo. So taking a line operating role, right, running a small business unit of the company that you might be at, getting this kind of broader commercial experience, I think makes folks much better CFOs over time, um, and I think is probably increasingly important. So I would actually say it's, you know, less about when you immediately step into the job, but in advance of that, try to sort of get more breadth in what you're looking at and what you're exposed to before you move into that CFO seat.

Speaker B: I think that's great advice. And Kate, uh, I know you've got a lot going on, so really grateful for your time and, you know, sharing your wisdom with our audience. And I just would like to give you the final word.

Speaker C: Oh, gosh, you did prepare me that you would do this. And now I have no final words. You know, I just say I've been very lucky to work for some incredible people over the years, and you highlighted that in some of your questions to me. But it's been working for these great mentors and bosses that has made my career, you know, worthwhile. And what it is today that wraps

Speaker B: up this episode of the secrets of rockstar CFOs, a huge thank you to our sponsors, Intuit and Plantful. Don't forget to subscribe and leave a review@rockstarcfos.com until next time. Rock on.

Speaker A: Thank you for listening to this episode. To continue your exploration of this role that focuses on strategy, leadership, finance and technology, listen to more episodes of the show@rockstarcfo's.com Join this Revolution, episode by episode. Push yourself to achieve great things and unlock the best opportunities available to you. CFOs are creating a legacy, and it's time for you to leave your own unique imprint on the world today. That's all for now. See you on the next one.