Ken Stumder is the VP of finance of Bombfell. Bombfell is a subscription clothing service for men. Personal stylists select and mail clothes to their customers. They are located in New York City and raised $7.5 million Series A led by Volition in 2015.
Carta Blog: What has your journey to finance been like?
Ken Stumder: I would say it was a natural progression. I started my career in accounting, at an audit firm, and later became an internal auditor at an ad agency. Then I went into operational finance. It was a 15 to 20-year path to where I am now as a first time VP of finance for a startup.
eB: How is being a VP of Finance at a startup different than your previous jobs?
KS: I think the challenge is to be more strategic and to be more value add. I have zero day-to-day record keeping responsibilities for the company. Previously, as a controller, I was very hands on with the daily accounting. That’s less true now and I am more focused on the strategic aspect. I’m evaluating third party vendors and review contracts. I’m doing random things and working with other managements that aren’t related only to finance.
It’s not the all powerful job that I thought it was when I was reporting into a CFO. From the outside looking in, I thought it involved a lot more single decision making. That’s actually not the case. There is a lot more teamwork and interaction with other departments. I would say individuals that report to a CFO might not fully appreciate how far the team dynamic extends. Wherever someone works in finance, they will know quite a bit about that particular business, but they may or may not interact with people very much or they may but in a way that is specific to a finance process. At Bombfell, we have weekly management meetings, which I attend in addition to our board meetings. The board meetings are particularly valuable – attending is a good way to learn how to evaluate a business both internally and externally. You learn to challenge your own assumptions more.
eB: What are the differences in the challenges you faced at the earlier stages as to now?
KS: I think they are similar challenges. At a startup, you are always looking at the process. Do we have the right tools to do the job in the most efficient way? Instead of having one or two big things we needed to change at the start, now there are four or five things I would like to do. Verses at the start I was coming in saying “okay this is the one thing I have to do that will make the most impact.
I think as companies grow they still have to commit to perpetual improvement. It is a steeper curve initially, but there will always be incremental changes along the way. But it’s important to tackle those changes and to do them as early on in the company’s life cycle as economically feasible. Nothing is worse than working at a company that thinks it can get its act together in one sweeping change, a year or two out from an IPO for example. That’s just asking for unnecessary pain.
eB: What is your model?
KS: We do clothing sales, in a subscription service model. It is similar in some respects to other recurring revenue models such as software as a service (SaaS). However, this was the first time I have worked this closely with inventory. The economics are completely different. I recall that at the early stage we were primarily buying as we went, however, we could get the credit. When I started, relatively little of the purchasing had terms. From a tactical and a financial perspective, that wasn’t scalable. One of my first initiatives was to reach out to all of our suppliers and negotiate terms with them. We didn’t have huge cash flow so we needed to stop paying for everything upfront. Our strategic buying team is just as in tune with this as I am.
eB: When did you realize your cap table was broken?
KS: What I saw was there was an option grant that wasn’t even the system. The only way I knew about it was because we were interacting with a third party. Using Carta means there is another check on the system – the employee. Similar to payroll, an employee is never going to not get paid and not say something. When they have direct access to the system that administers their option grants, they will look to confirm that data. If you open it up to the employee, it is an additional check and control on the data.
eB: What do you like most about your job? What would you change?
KS: I like the financial modeling. I think that’s my favorite part. If I can change anything, it is to do it more strategically – more interactively. I need those interactions to do it better. I get pleasure from sitting down in front on an excel file and figuring out an answer to whatever question might be posed, but that’s not really where the value comes from. You can’t sit in a room all day by yourself; you need to get information from other departments.
eB: How would you describe a CFO to a child?
KS: A CFO is a person who asks a lot of questions about how a company uses its resources.