E6: The hidden complexity of B2B finance - with Axel Amar

I feel like B2B finance is way harder than B2C finance. Being very very crisp on the metric and the driver of your business in your communication is important and too often missed by finance team.

What's one piece of advice you give other finance leaders that are scaling their team and their company?

I would say that you have to get the timing of building the systems and hiring right. And I think a lot more today than before lends on the leaders to really take a critical look at the system, understand and have a vision on how those things should work together before hiring expertise and hiring people to manage those systems.

What's one trend in finance and accounting that you believe will shape the next five years?

How do you train the next generation? And how do you give that to your FP and A person or your Rev up person? And how do you like cross pollinate those those talents is gonna be super important to share the next five years.

You're listening to the 10x finance podcast. Quick, candid conversations with the people shaping modern finance. Hosted by Albert Ghazi.

Hello, everyone, and welcome to the 10x Finance Podcast, where we dive into the real challenges and opportunities shaping modern finance teams. I'm Albert Gozi, Co Founder and CEO of Aleph. And today I'm joined by Axel Amar, ex VP of FP and A at Turo and currently VP of Finance at Erwyte. Axel, great to have you here.

Hi, Albert. Thanks for having me. I'm excited for this conversation.

Akhil, before we jump in, can you give us a little bit of context about, you know, what Airbyte does and because it's relevant to this conversation, also what Turo does?

Yeah. So Airbyte is open source leader in data movement. We enable data engineers, companies, engineers to the agents moving data from A to B, their Google ads, Facebook ads into any destination that they may need their data to lend. And when it comes to completely different space, completely different model. Tiro is the largest peer to peer car rental marketplace, and I spent ten years there leading marketing strategy and eventually becoming the VP of FP and A at Era.

So if you've heard a podcast, you see how this goes. So what's your one hot take around finance?

Well, as you said, the move was relevant to that hot take. I feel like B2B finance is way harder than B2C finance.

Right. Well, after the podcast, we'll do a LinkedIn poll. We'll see what the crowd thinks.

Please fund them and make your argument. And I'm going to, I'm going to try to take the other sides and ask some questions and poke some holes.

Well, I think that B2B gives you that impression that it's fairly easy that you can get to eighty percent very quickly. You can get a quarterly revenue either using like pipeline and conversion or capacity of your Salesforce. Like it's very famous that Wall Street will like scrap LinkedIn to see how many account executive a B2B SaaS company has and multiply by quota to get a sense of their next quarter revenue. And then on your cost side, eighty percent is people forecasting salaries are fairly straightforward. And so it ends up being like fairly easy to put a forecast together.

The thing, though, is that operating that forecast, that's where you really hit the hard part because to operate that forecast, you need to get to like monthly details or even like weekly details. You need to get like KPIs that really drive your business. And it's not clear how like your booking and your AR are impacted by those underlying business. And that's where the real work of finance really starts in B2B and that's where the hard part is.

Great. So you're saying in B2B, math is simpler, but maybe how the inputs like speak to one another is harder. And in B2C, it might be the opposite where the math is harder, but then like it's easier to interpret. Is that a little bit how you're thinking about it? And can you give me examples from either Turo on things that look complex, but in the end were easy or now at Airbyte things that are easy, but looked easy, but in the end were complex?

Yeah. I think the math at first looked much harder on B2C, right? Being Turo, a marketplace or e commerce website, I think subscription, B2C subscriptions are gonna be a beast of their own, but when it comes to like, yeah, let's say e commerce or Turo, so revenue forecast is going to be like traffic multiplied by conversion, multiplied by pricing. And so, traffic, you think about all the inputs in it and start being complex like, oh, you want traffic by source and you want traffic organic traffic and how much we spending, etcetera.

But then you realize, especially at scale that those, your paid traffic, your organic traffic, and then cross pollination of often linear with some seasonality, especially for business like Turo. And then, and so you get better as you get more data and as you get scale at the beginning, you may have very high, high variance, but then you get better quite fast if you grow. And then there's also the thing that, because it's such a like linear equation, right? Traffic multiplied by conversion, multiplied by price, you kind of get bailed by one or the other when you over forecast traffic, when you forecast traffic, you'll often have like impact on conversion and you always have the price levers that you can put to get there.

You don't have any of that on B2B. On B2B on a monthly basis, like forecasting, forecasting when your deals are going to land, even renewals could have delays. A deal can flip from one quarter to another. There is that weird seasonality where it's kind of a U shape where the quarters start very strong because deals moved from the previous quarter into the other one.

And then they, the quarter ends very strongly because AEs want to close their quarters and then they become in accelerator territory. So you're like, oh, commissions and salaries are easy to forecast on a monthly basis. Again, a super hard to forecast, because then you're in accelerated territory, who's going to be in accelerated territory is going be your mid market segment in accelerated territory or your, or your, enterprise segment, gets really hard. And yeah, and then being at the level of like how each team in the company is impacting that ARR growth and not seeing like, okay, I'm doing x and here's what's happening on ARR.

Not seeing that right away is also very hard to manage a business.

Do you think there are like learnings that like you had from your B2C days that do apply to B2B things that you're mentioning, all the things are different or the things that are more similar or things that you learned that you're using now?

Well, I felt the most comfortable was our PLG motion. So, AirByte has that dual motion that we see more and more where, you can, you can go on the website and you can start putting and extracting data, even for free if you do open source, and then you can go on our cloud offering and start start using, using data and pay by usage. And then you have like the sales led enterprise motion, that's different. The PLG side was way easier because it's a lot more about traffic, cohorts, etcetera. But even then in that PLG motions, every now and then you're going to have a big whale landing in your PLG motion. And that whale may convert into a sales led contract. And then you have to maybe do some like discounting or some like, yeah, discounting of their contract from PLG into sales led that ends up being like creating a lot more variance than what you would have on the B2C side.

So it does seem that like, you you're talking about it in two places. One is, you know, just individual AEs and their estimates, and two now, even like individual accounts swing in much more than one given tour customer won't affect the outcome. I mean, I'm a tour customer. I didn't use it as much to move your forecast, but like one account might change your B2B forecast. So like there's clear something around that. Do you think also that means that the tools that you've used, you know, have you found, I know, for example, you know, from having worked it out together that like, you know, you're technical, you can go into Python if need be. Do you feel that like in B2C, you use more like that part of your skill set and now in B2B it's just like the math is simpler and there's no need for that or not really?

No, even though the math are simpler, if you want to get to like that monthly execution excellence that I was mentioning and reducing your your monthly variance, those skills actually end up being quite, quite important. There are a few reasons why I think compared to B2C as b to b companies, the way they are built or at least how airbags is built, on a lot of like different external tool for go to market with Salesforce, for billing, etcetera. And so you have a lot less central place where where your data is in your production database, like you will have in a B2C that will track all your orders, etcetera.

So getting access to that data can get complex. So we're in the business of extracting, extracting data and bringing that all together. So we have a very good database. Then so those skills, those technical skills have been very helpful to, to get around that.

I think, Python, we've used it to do flash forecasting to get a sense of, okay, knowing historical pipeline conversion and what the pipeline snapshot is today, what do we think is going to convert compared to that, to like what the field is telling us? That's been very helpful. I think one thing that's interesting is how Excel alone in B2B is tricky.

I think that's why a tool like Alephine- Tell me more about that.

Yeah. Tell me more about that.

Well, the problem with B2B, the reason also why things are so hard to forecast and why monthly versus quarterly is so hard is because there is a lot of timing to get right. There is a lot of like waterfalls to get right from like pipeline stages into into close contract as a renewal timing. And when your upsells are going to are going to grow the ramp of your AE and how your capacity to to close more deals are going to be impacted. And then also how how your your mix between like enterprise, the bid market is going to like delay that. And all of those waterfalls, I think in my experience are the hardest piece of forecasting and the forecasting of timing is by far the hardest piece. Excel can do waterfalls, can do one waterfall, two other falls, but then ends up being way too complex for one model. And that's why a tool like Aleph has been helpful to break it down in smaller models where only one model is one waterfall and sums up at the end.

Perfect. So I think like, you know, it's been great to unpack, I believe, of this difference between B2B and B2C as we're thinking about going to wrap this episode. We like to do this rapid fire chat. Are you ready for three, four final questions?

Sure. Let's go.

All right.

First one is what's one mistake that you see finance teams make over and over again?

Well, I think it's stopping at the financials. I think, especially in the role of FP and A, I'm really big like communicating often in the same format, because I really think that there is like good value in the repetition to help the company and the individual contributor understand the business and understand what's driving it. But if you stop at the financials, you don't get the same the same adoption and the same learnings because it's harder for people to, especially in B2B, to understand how they work, unless you're the AE, is actually impacting the financials. And so being very, very crisp on the metric and the driver of your business in your communication is important and often often missed by finance team.

Yeah. We always talk about this idea of turning data into stories and I know people react to stories, not to just numbers.

Exactly.

What's one piece of advice you would give other finance leaders that are scaling their team and their company?

I think especially with AI right now, completely changing the systems that we use and also completely changing the system that you could build specifically for your use cases or your needs. I would say that you have to get the timing of building the systems and hiring right. And I think a lot more today than before, lands on the leaders to really take a critical look at the system, understand and have a vision on how the things should work together before hiring expertise and hiring people to manage those systems.

Yeah, no, that makes a lot of sense. And I think like, yeah, when it's a burning pain and a burning need, sometimes there's the temptation to just replace solely with people where if you have forecast of, you know, one month, one quarter before you would have had systems in place. What's one trend in finance and accounting that you believe will shape the next five years?

I won't talk about AI again, but there was an article actually this morning, that I think is super relevant, was the fact that CFOs are becoming also like CEO more and more. And I think that that cross pollination of finance leaders becoming operational leader is going to continue quite a bit, especially as like the IPO market are slower, where that need for investment relation and investment banking is lower, I think. And given the pace at which AI companies are growing, I think that that's going to be a trend that really shapes the finance team and it's going to be very important and challenging to really be able to hire for that because we tend to hire for the accounting expertise, the FP and A expertise, and maybe you have the RevOps reporting into finance with that expertise.

And the leader kind of get to have all the fun and being able to like go from one topic to another. But how do you train the next generation and how do you give that to your FP and A person or your REVVOP person and how do you cross pollinate those talents is going to be super important to share the next five years.

Very interesting. Thanks, Axel, for the time and for coming to the show.

Thank you for having me. It was great.

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