The Human Touch: Balancing Technology and Empathy in Business - Talroo CFO Jeremy Foster

Welcome to the CFO Corner. I'm your host, Nick Ezzo. In the CFO Corner, we sit now with CFOs and corporate finance professionals to hear about the innovative approaches and technology they use to scale and grow their organizations. They share the challenges they're facing with mundane repetitive tasks, and they give their takes on what they'd like to see in the corporate finance function that can help CFOs achieve a stress-free working life.

I'm pleased to be joined by Jeremy Foster. Jeremy is the Chief Financial Officer at Austin-based talroo.com, the data-driven job and hiring event advertising platform that helps businesses reach the candidates they need to build their essential workforce. He's got more than 15 years of experience as a senior executive, primarily in the technology and banking arenas, and he's been the CFO or COO for three Inc.

5000 companies, two of which have made the Inc. 5000 already, and the third one on its way. The Austin Base Business Journal has recognized all three of these companies as Austin's best places to work. Welcome, Jeremy.

Thanks, Nick. Great to visit with you today. Let's just jump into it. Can you tell me about your current role at Talroo?

Yeah. I'm the CFO of Talroo. Talroo provides recruitment marketing and search capabilities that help employers who are looking to hire essential workers typically and help them find the best match that they can for those roles. It's been a great company.

We've grown very rapidly over the last few years, and that's an exciting space to be in in the US right now. Having been a CFO or COO at several companies, you've got a long history with that. How have you seen the role of the CFO change in the last five or 10 years, and where do you see it heading in the next five years? I think my perspective may be a little bit skewed just because I'm looking at where my role has been.

I would say that I think as those companies that I've been are largely in the technology space, largely the kind of companies that the world is transforming to look like, I think more CFO roles are going to look more like the roles that I've been filling, which largely means trying to get a deeper understanding of the business requirements to enable growth, as opposed to just kind of telling where the dollars have been. I think a big part of the shift that we're seeing is that more and more CFOs are being looked to to help provide visibility to where the dollars should probably go and where resource allocation can help a business grow faster.

You know, I was just talking about growth a couple times in that little segment right there, and you've scaled businesses. You've brought them from very small startups all the way up to the Inc 500. What advice do you have for CFOs about scaling their businesses? So it's all about finding wherever your bottlenecks are.

So regardless of whether you're a factory or a technology shop, there are restrictions that are currently being imposed upon your business that are either limiting profitability or growth or whatever your strategic objectives are. There's some portion of the business where it's under resourced, so other portions of the business are being restricted by that as the bottleneck. The easiest way to think of it, oversimplifying a lot. If you've got an assembly line and 10 machines have to touch every widget and nine of those machines can produce 100 widgets an hour and one can produce 50, adding one copy, one machine of those, the one that's limiting, doubles throughput for the whole assembly line.

The same thing is true even in technology companies. It's just that the inputs are different and often more complicated and you don't always have the level of transparency. So you may be restricted because you don't have enough customers. Well, if you don't have enough customers today, that restriction may be a result of not having enough sales reps reaching out to them.

It may be a restriction as a business development reps not setting enough meetings to keep those salespeople busy. It may be that there aren't enough marketing leads and contacts for those business development reps to call. Once you get those customers, you may have resource constraints in terms of how fast you can onboard them or you may see that you've got attrition climbing up because you don't have enough customer service reps or those customer service reps aren't trained well enough.

Whatever that restriction on your business is, part of the role of the CFO is to help the whole business have visibility to that, help the business understand the other business owners understand the complicated relationships and how those are interacting and then know where you can put resources to help resolve those bottlenecks. Yeah, I love that answer. In years past, people used to think about the CFO as chief accounting, chief bean counter. You're looking out the back trying to figure out where have we been and measuring what we just did.

What you just described is helping organizations understand how their business is actually functioning and where the bottlenecks are and where they might need to apply some additional resources. Speaking of resources, as you scale, obviously having access to cash is important. Given the recent turmoil, I guess I'll date this podcast today, we're sitting here at the end of April 2023, Silicon Valley Bank recently had a rough patch in a manner of speaking earlier in the year. Jeremy, how do you view the capital market situation in the US today?

How does it affect fundraising and how does that alter your thinking about what banks are secure? Great question. I would say in terms of how it affects fundraising, valuation multiples are down everywhere. Some of that's just a natural outcome of interest rates rising.

That becomes more expensive, which means that any companies that are using leverage to purchase or acquire or invest in businesses suddenly put a lower valuation on it. Some of it, I think, is we're seeing a return to more normal and rational valuations after several year period of record multiples and values being dramatically higher than at any point almost in history. Somebody would say unrealistic multiples. Unrealistic multiples.

A lot of that, I think, is actually the outcome of this 10-year fascination with blitz scaling. There's the idea that you can throw money at a business and make it grow is true. It's the whole premise behind investment. There's been a focus on growth at any cost.

I think we're going to see movement away from that. We're seeing flight to quality in public markets. I think we're seeing flight to quality in private markets. Investors are going to put much more of a premium on businesses that have a clear path to profitability without having to generate $10 billion in revenue before they get there.

I think we'll see a lot of that. As far as evaluating which banks are safe, I would say logical, justifiable, and quantifiable bias, which is when you look at where most of the systemic risk in the last crisis, most of the systemic risk in the current crisis, that all comes largely from very large financial institutions or big regionals. When you look at what we've seen with SBB, that is largely a function of the fact that, one, they were dependent upon a huge amount of long-term U.

S. treasuries. They didn't match up their assets and their liabilities. Not every CFO is going to be able to look at that and go, okay, is there a good asset liability management strategy in place here?

I think you do need to look at deposit diversity. Is there core deposit diversity? Really, you have two choices today. The U.

S. Treasury has pretty much said, we're going to bail you out if you're at one of the megabanks. Then community banks and a lot of small regionals are actually very healthy because they have diverse deposit bases. I think those are probably the two routes to go.

I would tend to stay away from banks that have significant concentrations of U.S. treasuries that have a large negative mark-to-market right now. I would tend to stay away from large regionals that have a handful of customers constituting their primary depositors.

Yeah. So diversification and distribution of risk seems to be the name of the game here. It seems like some people either failed banking 101 or took their eye off the ball, or their priorities were a little bit out of whack somehow. I think probably some of all of that.

So the next question is kind of near and dear to your heart, I think, because Talroo is a recruitment platform. It helps people connect with employers and jobs. Specifically as a CFO, how do you think about the challenges around building a quality finance and accounting team and retaining, attracting and retaining that talent? Yeah.

I think there are a couple of different ways you can go about it, depending on the size and scope of your team and the level of specialization that's required across that. At Casasa, I had a very large team. I had a 38-person team, analytics, finance. Most of it was analytics.

And I tried to make sure that I had really good, broad relationships across that whole stack. So when we're closing the books every month, I'm walking around to everybody hand-delivering a donut. There's that kind of an approach. At Talroo, it's actually a smaller team, but really my key relationships are even smaller than that.

I don't interact a lot with our kind of our accounting team below our controller and our assistant controller, but I have very deep relationship with our controller. I have in our FP and A side, very deep relationship with that side. So I think it really depends on the degree to which you can provide value and insight and interaction. And I think you kind of have to look at it on a case-by-case basis.

But I think the key is do the people that need your time, get your time. And I think that's one of the main things. So actually, as you're talking about, I love that donut thing. You know, just walking around, handing out donuts for the people who are doing the hardest job in the company.

You know, thankless job, closing the books every month. Now, you joined Talroo about a year before the pandemic. And so I'd like to figure out, I'm sure you guys were all in person in the office there. And so my question is, did you guys then move to a distributed model where people are working from home?

And then did you move back? And where are you in that continuum now? Yeah, we did. We moved to a fully remote model during the pandemic.

And now we've moved back to effectively a hybrid model. So we sub-least a portion of our space. And then we brought back team members that are on teams where interaction with those teams on a daily basis felt really valuable and important and meaningful so that the engineers could have more direct interaction with each other. And other teams where it was largely kind of autonomous or independent work, they're still largely remote.

So, you know, our sales, our sales team is still largely remote. And so it really depended upon how critical it was to have in-person collaboration as we kind of came back. Yeah, for the finance function specifically, I talk to people all the time on this podcast and CFOs in general. And a lot of the themes I've heard are things like, thank God, we moved to the cloud.

Thank God, we implemented some technology that allowed us to run our businesses. If we hadn't done that, we'd be dead. So how do you think about technology in your role? And technology specifically to enable your accounting and finance teams to be better, more efficient, more error-free, things of that nature?

Yeah, we obviously absolutely echo that. Thank goodness we moved to the cloud. And thank goodness, you know, we're not shuffling papers back and forth between each other. I would say we're constantly looking for places where automation will have an ROI.

And sometimes that ROI is huge, right? We recently implemented what's effectively a middleware data management solution. And that was incredibly valuable for us to be able to have, you know, you can suck it up from six different systems now and work transformations directly within that. And, you know, you're not having to import data back and forth to try to make systems talk.

That became very, very helpful for us. You know, there are places where you can over automate, right? If you have six months of an engineer's time to try to automate five hours a week of a clerk's work, that's probably going to have a really long payback period. And so I think a lot of it is trying to find where's the sweet spot in that, figure out what's your own kind of internal hurdle rate, right?

What's your rate of return expected on that automation, and then pursue those highest ROI opportunities first. So given the proliferation of technology specifically in the finance office, I got asked the question, are robots going to take away accounting jobs? A lot of them. A lot of them.

I think AI, well, one, I'll wax a little philosophical. There are lots of roles that are mechanical, and they're not always the ones we think about as mechanical. There are accounting jobs that require more creativity in the good way, not in the IRS. You don't want to talk about being creative way.

There are lots of accounting jobs that require more creativity than the creativity involved in someone drawing a picture that's very similar to the picture someone else drew, but the colors are different, right? Like the, I think one of the interesting online dialogues I've seen over the last six months has been as we've seen AI able to write, and we've seen AI able to render art. There's been a reaction from a lot of people that, hey, they're invading. Those are creative roles that went away.

Well, AI is not creative. It's not creating, but a lot of the jobs that people previously claimed were creative weren't creative either, right? So if all you're doing is painting a portrait of me, that's not a creative function. Well, having a set of watercolors doesn't make you Rembrandt, right?

That's right. And so it's still a mechanical function. And so I think that that's a big part of what we're going to see is mechanical functions will continue to be automated very, very rapidly. Creative functions and those will never be fully automated.

Cognitively complex routine functions will take longer to automate than simple ones, but it's going to come fast. So we're at the inflection point where even very difficult, very complicated processes, if they are automated and they are recurring and AI has an example that it can look at or a model that it can look at and learn from, those jobs are going to go away. Yeah, for sure. The other ones I think that are going to stick around for at least my lifetime would be anything that involves empathy or judgment, because we've got an irate customer on the line.

They don't want to talk to a bot. They don't want to talk to chat, you can see. I think that's right. We saw in, I used to have, Kazas, I used to have debates with our chief innovation officer who at times felt like, hey, the bank branch is dead in 2009.

Well, no, it's going to take a while, or a lot of them are going to go away. Absolutely. But people don't, the last thing somebody wants to do is try to resolve a fraud issue on the phone with somebody that they've never met. In much the same way, I think we're going to see that there will be specific roles where it's going to be really hard to go see, could AI do a better job of therapy than a lot of therapists may be?

It could probably be pretty objective, probably do a great job diagnostically, but there's a comfort level, right? And there's an empathy component to it. Exactly right. Exactly right.

So I'm going to leave you with the last word before we wrap up here. So Jeremy, any final thoughts for the CFO Corner audience? Just look for your bottlenecks, and if people are one of your bottlenecks, look at Talroo . I couldn't have said it better myself.

So on behalf of Auditoria, the CFO Corner, the rest of the team here, all my robot army behind me, I'd like to thank Jeremy Foster for spending the time with us today and enjoy the rest of your day.