As the CFO for Balsamiq, a remote software company whose product is used by 500,000+ companies, Natalie shared her expertise and leadership lessons in our leadership community, The Watercooler.
Every few months, we invite one of the 1,000+ managers who are a part of our leadership community, The Watercooler, from all over the world to share their greatest leadership lessons in an “Ask Me Anything” (AMA) session. It’s an opportunity for managers, executives, and business owners to gain in-depth insights that they might not gain otherwise. Past guests have included Amir Salihefendic, CEO of Doist, Valentina Thörner, Happiness Team Lead at Automattic, and David Heinemeier Hansson (DHH), CTO at Basecamp.
I am honored to be in charge of bringing AMAs back with monthly regularity to the Watercooler community. Last week, we hosted Natalie Gould, CFO for Balsamiq, the remote software company that builds Balsamiq Wireframes – a product used by 500,000+ companies – as our “new, first guest”.
Natalie joined Balsamiq in 2010, and has been involved in many areas of work as the company has grown. She has learned a lot of leadership lessons, and is currently is the Team Lead of the Admin Team and leads Kaizen projects (cross-team and company-wide process improvement projects, policy setting, and discussions). She is honored to serve in a role she hopes has contributed to building not only a financially healthy company, but also one with a safe, welcoming, and positive work environment.
Natalie started her career at Balsamiq as an office manager, has experience in customer support, and was involved in the creation of a licensing and invoicing database. Though she is no longer very involved in these things, she has continued roles in administrative, financial, and legal projects which grew out of her office manager role.
I learned a lot following Natalie’s AMA. Here were the top 7 leadership lessons:
“I’m very curious about your work in your company-wide process improvement projects. What are your biggest struggles and insights doing this kind of projects?”
Rodrigo, yours was the hardest to answer because I could think of many different directions to go! I’ll try instead to keep it as simple as possible.
Two personal struggles:
Projects that are outside of my regular work
Some of these improvements are in areas of the company I don’t work in much or have limited knowledgeable about. The two biggest of these currently are projects around privacy and security and others about improving our design and product development processes. My challenge is knowing how to support and encourage the people involved, and knowing when I am of use for facilitating certain aspects of the process. It is hard because I don’t have as much clarity on what I need to do and where we need to go as with other projects. But it is a learning curve, and I strongly believe in my colleagues, so I know we’ll get there together.
How to involve the whole company
The other main challenge is how to make the projects inclusive and open to everyone, while still making actual progress. It is hard to tell during commenting periods (either in meetings, or KYT, or on a wiki page) if lack of participation is because of the process we chose, because people are too busy, if they are fine with what we are doing, or if they just don’t care. 😉 We have a good safe and playful atmosphere here, so I’m pretty open about this struggle. Just yesterday, one of my colleagues told me he enjoys watching my reaction (which ends up often with me laughing nervously) to awkward silences. He sent me this as encouragement. 🙂
When working on these projects I see many layers. The project itself has a goal, of course. We define the goal and the scope, work towards it, and create some end result.
But I’m also very interested in what the process itself is doing. I try to build my project teams with intention. It’s a mixture of volunteers and my recruitment. I think about the team size, needed skill sets, the diversity of the project team (which can be areas of the company, location, gender, job type, personality), etc. I’ve asked some volunteers to wait for another project (and made sure to invite them to one later) in order to build what I think is the correct balance.
Then I also think about how we are going to work together, what seems right for this group of people and this project.
This layering of preparation I hope creates a better end result, but there are also some side benefits. We want to build better communication in the company. We want to share insights between teams. We want to build leadership and knowledge. We want to build a better feedback culture. Through the process of working together on a Kaizen project we are also doing all of these same things – even if that is not the project’s goal.
Wednesday we presented a new draft of the Handbook for the whole company to review. I asked the project team members to say a few words about the new drafts or even the project itself. One colleague couldn’t be there but wrote up something for me to share with the whole company. She ended up not commenting on the Handbook itself, and instead about this other layer which I think is equally as valuable as the work the project creates. She is already gone for the day so I’m hopeful she is fine with me sharing it here!
“I highly recommend you to consider taking part in a Kaizen project, and consider it as your primary job. The main benefits for me were 1. Being aware of and actively helping build our awesome company, 2. Working with people I don’t usually work with, and 3. Taking a step away from my usual projects. Actually this change helped me with my ongoing marketing projects.”
“I’m curious what it was like and how long it took you to move from an office manager to a CFO? Can you describe your experience?”
I should clarify that I started off at Balsamiq as an office manager (though we didn’t really use that title, I just picked it to try to best describe what Peldi – our CEO – hired me to do back then). The actual start of my career was as a scenic painter, and the line from that to what I do now is really a rambling road.
What allows to me to do what I do today is a collection of skills and experiences, and great mentorship from a number of people over the last 20 some years.
When I first got the title CFO, I was doing the financial work at Balsamiq, but the reason for getting the title was more practical than anything. We were and are a pretty small company, but as a micro-multinational it was easier to have named officers for various paperwork.
I used to make fun of the title, since it was overinflated. I still don’t care that much about having it, but no longer tease. I realized through my jokes I was undervaluing the work I do and contribute to the company.
Basically I have grown into the position as the company naturally grew in size and complexity, and I feel very lucky for this experience and opportunity.
What I still do tease about is the fact that I last took math as a junior in high school, and my B.A. was in Theatre Design. 😉
I struggled in the past with the fact that I was not career-driven. I know plenty of people have a clear vision of what they want to do. Most see some sort of stepping stones of accomplishments or a ladder to climb.
Instead, what has always motivated me was whether I was doing work I valued, allowed to work with integrity, and helping others. Because these were my main motivating factors I ended up doing all kinds of things in many different fields. I worried this would actually be a problem for me long term. I carried skills and experiences with each new change, but there wasn’t really a master plan.
As it turned out, because I took each new thing quite seriously, and am driven to always learn the most I can about doing things well, this haphazard path has probably been the most important thing allowing me to do what I do today. The variety of past experiences gave me confidence to know even if I had never heard of Tax Nexus or Transfer Price Agreements, I could figure out enough to be able to help my company and my colleagues.
“What has been the biggest change in Balsamiq culture over the last 9 years?
From my perspective the biggest change is one of necessity: we’re learning how to keep our highly collaborative culture as we grow into a bigger and more complex company. We’ve had some rough spots and bumps doing this, but I feel like we’re on a good path.
We just spent time defining our Company Values. I think we’ll be announcing them publicly in the winter. (We love slow and measured progress. So though we decided on them in June, we wanted to give them a test drive for 6 months before really finalizing them).
When I look at them I don’t see anything essential has changed about our culture from when I started. I just see greater depth and clarity on the original culture.
For example: Early on we ALL took part in every decision. If you wanted to work on a project, you were on the project. When I started we were 6 people. This was easy.
At some point – I’m not sure the exact number of people, but we’re 33 now – this made decision-making and project management very hard. We didn’t want to be exclusive. We valued collaboration and the benefit of ideas from many and diverse people. I think individually we had fears of taking leadership because we didn’t know if it was our place to do so.
With time, we’ve realized having more defined roles, defined project teams, clearer ownership of decisions or areas of work didn’t have to be authoritarian or un-collaborative by nature. We could have those structural things and still work in a collaborative way.
One of the things we’re really embracing now is the idea of servant-leadership. It helps us in our defining of roles and needing to create structure and define processes, but with an ethos of teamwork that we value greatly.
What are some of the skills you picked up from your previous (very varied) jobs that have come in handy?”
I have a lot of project management skills that I didn’t even realize were skills until recently. 🙂 Most of these things I learned as a kid in 4-H. Organizing people, leading brainstorming, creating to do lists and assigning action items, building timelines, communicating plans: these were all things we learned through the leadership development offered in 4-H.
Learn by doing is one of the 4-H philosophies, which leads me to the other skill I think has been most handy. I have done a really weird number of things and worked in very diverse industries. This means I have often been asked to do something I had no idea how to do. This is nerve wracking, and stressful, but I start each time with the mind of a student. I think about who I know or who is involved in the project and just start asking questions.
From those questions I think of more questions, and do more research, and find more questions to ask. Eventually I have the right personal knowledge or have assembled the team with the right knowledge to take an idea or a request from nothing to an actualized project.
I once had a many thousand pound professional deck oven disassembled at a bakery in Oregon, shipped, and reassembled in a bakery in California through this process. The day my new boss told me it was my task to get done was terrifying. My job before that was as an administrative assistant at an opera company.
But humility, some generic problem-solving skills, and building a team of people (through good listening and people skills) goes a long way. 🙂
“I read that you relocated from the US for your job at Balsamiq in 2010. (Not sure if you’ve moved back to California since!) Were there challenges and considerations, or did you just make the leap and go for it? How big of an adjustment was it for you?”
After saying I had a haphazard career path, it’s going to sound strange to say I’m a planner. But I definitely am and usually consider my choices with much deliberation. I like to say I’m a practical dreamer.
However moving to Italy was not my regular decision-making process. I had said no to the job offer some months before. I had moved multiple times in the previous years and I loved what I was doing at the time, so I wasn’t interested in pulling up the few roots I had finally set.
In the Spring of 2010 Eyjafjallajökull the Iclandic volcano blew up. My flight from SFO to visit Peldi and his family in Italy on vacation was one of the first to be cancelled. Through a series of small events the days after, I realized my own stress level at work was like that volcano and I needed to make a change. Peldi emailed me and said he had planned to convince me to change my mind during my trip.
Within a week, I decided to leave my job (with many weeks’ notice of course!) and move to Italy. I wasn’t sure it would work out. I gave it one year, but it didn’t feel risky. I knew I needed a change either way.
So very unlike me, I made a leap, and it turned out great! But it wasn’t all dreamy (and definitely not just like Under the Tuscan Sun or Eat, Pray, Love). We struggled for over a year to get me a work permit for Italy. I was paid in dollars during that time and had to keep coming back to the US every 3 months since I was only on a tourist visa. The time and expense involved for me and the company to figure out the practicalities of having me there were really large. My personal taxation situation was very complex. On top of that, learning Italian (I knew some, but was not at all fluent) was very hard for me. I learn many things quickly. Learning a foreign language in my 30’s was painfully difficult and at times very lonely.
I don’t want to say this to discourage anyone. I did the move because I was at a point I wanted to try. I had lived abroad before, so knew there would be challenges. What I have learned and been able to do because of this choice have been great. (And yes, I moved back to California on an almost a similarly quickly decided leap, when I realized a small farm was for sale next to the land my mom grew up on). 🙂
I’m the only one the company has ever tried to relocate (and get a work visa for). We did it in the early days of the company, and it was an eye-opening experience. I don’t think we regret it, but I will say, since then we do ask that anyone applying has a work permit for wherever they are based.
“I’m curious about the early days of the company. Balsamiq was one of the first few tech companies I remember reading about the decision to be 100% independent and not seek funding. So, my two questions are:
1st – Was the company cash flow-positive (or profitable) since the early days?
2nd – How was the process to scale the team related to revenue/profit, and how was the planning for growth in the context of not having funding.”
Early Days Profitability and Funding
We have been profitable from day one. From my perspective, this was a mixture of luck and planning. I think we always want to recognize the element of luck and timing in our history. I am well aware that this has made many of our choices and the way we work possible. It even made it possible for me to grow into my role in the company. The complexity of finances has increased slowly over the years, which allowed me to learn slowly.
But as luck is hard to write about, I’m mention part of the planning that made our business possible.
Peldi took years to think about starting the business, including narrowing down a problem (which resulted in a product) he thought was small enough in scope for him to handle on his own, and for which he saw a real business need (and something people would pay for).
This was planning: to find something that had a viable business model, including one that would not require funding. He only needed his own time initially, so the funding required was him saving up a year’s salary to support his family. He worked nights and weekends before that year of “funding” began, in order to have a product on day one of the funded year.
He waited to hire our first employee (I think he admits almost too long) until he really couldn’t do it on his own any more. (In fact, his wife was actually helping with part of the company at that time, so when the two of them couldn’t do it on their own any more). It was a scary leap, because though he did have the cash for Marco’s, and soon after Val’s salaries, the commitment he was making to support their families along with his own was a big step.
Scaling Since Then
Our focus never has been on growing into a large company. Scaling has pretty much been based on wanting to keep up with supporting our customers well (which also means improving our product for them).
Because we weren’t focused on rapid growth and without any notable production costs (due to our digital product type) or overhead such as buildings to maintain (we had an extremely basic little office in Bologna and everyone else worked from home), we could save profit in the early days; profits weren’t pushed straight to expansion of the team.
We were able to build a strong cushion of savings (we call it our rainy day fund) and developed a calculation for how much the fund should be based on current revenue and expenses. This cushion (which again I think was built both by luck and planning) has made choices about growth and scaling much easier.
We are big on setting a livable pace. Without debt and with a cushion in the bank, we have been able to keep a moderate growth rate for our team size, and also relatively painlessly go through the decrease in revenue during 2017-2018 (which we had projected in advance, based on our release timeframe for improvements to our product).
We know this path is not possible for all business types. The scope of certain problems to solve is larger than ours and wouldn’t allow for stating with just one person to build and launch the first product. But in an economy, especially the software world, where “grow big and grow fast” are often the default expectations, I think our experience is a nice example that fast and big doesn’t always have to be the case.
“What tips can you pass on or strategies do you use to forecast budgets? I ask because I occasionally create budget and resource bids on incomplete information. It’s easy enough to look at previous work and say ‘this new work looks like a twelve month, two developer project’ but I won’t get any budget or resource released until I’ve sat down with the team and estimated every detail for the business case. Weirdly, the estimates done this way are always less accurate than the finger in the wind method, but are far more time-consuming to do.”
You’ll see in my answer to Daniel’s questions, we’ve had a strong savings cushion from very early on. This meant for a long time we didn’t really do much forecasting related to expenses. We did most of our analysis looking back at actual expenses, rather than having much of a budgeting/forecasting process for the future.
The last few years however, Peldi and I have been doing projections on revenue, expenses, and profitability. This is because of the expected reduction in revenue I mentioned, but also because we had some large expenses planned: a 10th Anniversary trip for employees and families in 2018, and much larger, building a headquarters and meeting space in Bologna (2018-2019). These things, particularly the shift of some of our savings to non cash assets for the building project, required more forecasting than we felt was useful before 2017.
We still don’t need incredibly accurate forecasting, so I don’t know that I am an expert to speak about it!
But just in case it is useful: what I do for a project or if we’re doing it for the whole company (we actually have two companies, so I’ve done projections for the Italian and US company separately, and then a combined version), I usually start with previous expenses, then think of variables that will be different in the next project or period, and estimate down or up accordingly.
I do my best to base these things on some kind of actual and logical estimate: say a quote we were given or pricing online, or an average or percentage of past expenses. But there is definitely a “finger in the wind,” quality to parts of it!
I also try to go back to my projections after the project or period is done to see how my estimates faired in order to improve on the next one.
We try to stick with what actually feels useful. In addition to the company wide forecasting, we’re just starting out doing more project or team budgets. Budgets are work to create and do add a bureaucratic layer to projects. But we’re at a point where we realize the work involved will be helpful. We don’t have anyone spending wildly that we need to control, but having some budget guidelines are very helpful for aligning expectations and spreading out decision-making power in our growing organization.