What do you get when you combine a tech startup, a management team ravenously fixated on a goal, an IPO, and a mysterious murder? Well, I won’t spoil things by giving up the answer. You’ll have to read Hill Country Greed, the debut novel by CFO-turned-writer Patrick Kelly. I will offer only one hint: the outcome is not what you think.
Kelly has deep experience in the technology and airline industries. He has served as interim CEO of a $750 million airline, director on two public company boards, and CFO five times for public and private companies. He imaginatively weaves his experiences into the novel, which takes place in Austin, Texas during the high-tech boom between 1999 and 2000.
I caught up with Patrick Kelly this week, and asked him about the characters and situations that inspired his novel, and how CFO’s view marketing and sales:
AR: At the beginning of Hill Country Greed, CFO Joe Robbins, and the head of Marketing, Gwen Raleigh, initially have a rocky working relationship. A vignette involves a rancorous staff meeting in which the two argue about whether the company is wasting its marketing investment, and it’s clear that Gwen isn’t accustomed to having her feet held to the fire. What are the biggest sources of conflict between CFO’s and Sales and Marketing?
Patrick Kelly: Joe is from a button-down old-line company where every dollar is scrutinized. Gwen grew up in a start-up environment where speed is valued more highly than solid controls. Eventually, Joe and Gwen settle their differences and establish a solid working relationship. This should always be the case with the CFO and the Sales and Marketing organization. A good CFO realizes that strong sales are essential to growth and that you have to spend money to make money. At the same time, the head of Sales and Marketing must understand that the sales group is accountable for generating an acceptable return for each dollar of spending. By recognizing each other’s contributions, the CFO and head of Sales and Marketing can establish a winning relationship.
AR: How do you make sure project risk—whether IT, business development, or anything else—matches what the company can absorb financially? In other words, how do CFO’s address the problem of business risks spiraling out of control?
Patrick Kelly: Every business has risk, and to create a truly disruptive business with high growth potential it is essential to assume risk. The biggest mistake I see small companies make is to bet too big on unproven concepts. The innovators of a company sometimes fall in love with their own inventions and become blinded to downside risk. They may be tempted to “bet big” on a new product or service before it has been proven in the marketplace. If the initial test fails this can lead to cash flow problems and an early demise for the business. A strong CFO can help the team decide to manage cash conservatively during the market test phase so that when the product IS finally ready, there are sufficient resources to finance growth.
AR: In your book, head of sales Jack O’Shea tells Joe Robbins, “a good CFO knows that all salespeople are coin operated.” But isn’t everyone, to some degree? And, aren’t millenials and younger salespeople motivated by more than just high income?
Patrick Kelly: I suppose everyone is coin operated to some degree, but it is the sales team, with their fine-tuned sensitivity to what the customer needs, that the company depends on to bring in the revenue. The combination of a good product, a well-designed commission plan, and a strong sales force will result in solid growth for the company. I can’t speak for millenials, but I certainly hope younger salespeople are still motivated by the promise of making money.
AR: I don’t want to give away the plot, but I’ll mention that insider fraud is part of the story. How prevalent do you think fraud is at tech companies, what are the warning signs, and what precautions should executives take to avoid fraud?
Patrick Kelly: Fraud occurs at every company, including tech companies, and most of it goes unnoticed. The most important step executives can take to avoid fraud is to set the right “tone at the top.” The CEO and the rest of the senior team will prevent most fraud from ever occurring by clearly communicating that fraud of any kind is unacceptable and by setting a strong example with their own actions. In addition, the CFO, with strong support from the CEO, must design and implement an effective set of controls to make the commission of fraud more difficult.
AR: Many generalizations have been made about what CFOs think—much of it written by people who aren’t CFOs. Is it possible to generalize? Is there such a thing as a “CFO mindset”?
Patrick Kelly: Yes. In my view adopting a “CFO mindset” means looking at the business in terms of the key drivers of success. For example, some software companies make little or no profit from selling the initial product but generate tons of profit from the maintenance and support services that follow the initial sale. The astute executive team will understand those drivers and ensure that the quality of the maintenance and support services is so high that customers never leave.
AR: Are CFO’s really driven by math and “hard numbers” when vetting business development projects? Or, is it really something else?
Patrick Kelly: CFO’s should carefully evaluate the numbers when vetting business development projects. If they don’t, chances are no one will. However, that doesn’t mean there shouldn’t be dreamers in the company. The R&D team must take into account where the market is headed and create new products that are ahead of those trends. That takes vision and dreams. But by the time the dreams have been fine-tuned into development plans there should be market analysis that supports the investment of capital required to make the dreams a reality.
AR: When prospective vendors pitch to CFO’s, what makes a positive impression—and what doesn’t? Are there any top “deal killers” people should know about?
Patrick Kelly: A lot of vendors pitch me with a product or service that sounds like the “idea of the day.” I immediately reject those pitches. I also dislike miracle cures. Never start a pitch with a line that sounds like, “Wouldn’t you like to double your profit in the next three months?” To impress me, a sale representative must understand my problems. Bring me a product or service that solves a real problem in a unique way, or lowers the cost of the business in a meaningful way, and I’ll take the meeting.
AR: Hill Country Greed takes place in Austin. What do you think of the city as a future tech hub or startup incubator? Will it overtake Silicon Valley?
Patrick Kelly: With its rolling hills, evergreens, and lakes, Austin is a great place to set a murder mystery and a great place for a high-tech company to base its operations. Technology companies have been in Austin for decades, even before Michael Dell began his start-up in the mid-eighties. With affordable housing, zero state income tax, and an abundance of recreational activities, Austin is a magnet for young professionals. In terms of size, we may never overtake Silicon Valley, but then again, Silicon Valley will never boast that it is the Live Music Capital of the World.
As author Tim O’Brien wrote, “A lie, sometimes, can be truer than the truth, which is why fiction gets written.” Whether you’re seeking a fabulous mystery, or an excellent “case study” about technology startups, you’ll find something to like in Hill Country Greed. Try out the first five chapters, free!