The Evolving Role of CFOs and Negotiating Market Volatility

January 24, 2023 Mimi Torrington

digital screen showing market volatility values

The role of a CFO is evolving to include an operational focus as an increasing number of CFOs are crossing over to COO roles. This trend is gaining traction in the startup space, where CFOs, especially those with cross-functional exposure, are at the CEOs right-hand. They are skilled at funding the company vision while driving fiscal prudence in a landscape of business market volatility.

Misha is the CFO and Board Director at Strive, a SaaS startup in the sports and fitness space. He has been instrumental in building and guiding the team at Strive. Misha followed his passion for health and fitness when he moved to Strive from his role as COO at Union Square Park Capital Management. He is a qualified CFA with a bachelor's degree in Finance and Investment from Baruch College.

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Welcome to CFO Weekly, where we're talking with financial leaders about how to build efficiency in their teams, create time for strategy, and ultimately get results with your host, Megan Weis. Let's jump right in.

Megan - 00:00:18: Today my guest is Misha Mikhaylov. Misha is the Chief Financial Officer and Board Director of Strive, and he has been integral in structuring the company's strategy into new verticals, raising capital, and negotiating strategic partnerships. Misha has more than a decade of experience in financial management, business strategy, and best practices from the hedge fund management space. Prior to joining Strive, he was CFO, and COO at New York-based Union Square Park Capital Management. Misha, thank you so much for joining me on today's episode.

Misha - 00:01:04: Hey, Megan. Hello. Hello. Thank you for having me on the show. Really excited to be here.

Megan - 00:01:07: Yeah. You're an experienced CFO and COO with a demonstrated history of working in hedge funds as well as startups. And today we'll be learning about your journey as well as some of the insights and lessons you've learned along the way. And I'm really excited to hear your story. So let's get started. Absolutely first, and as always, let's start with you and your career journey and how it is that you got to where you are today.

Misha - 00:01:31: Well, in my current role, I spearhead capital raising, strategic partnerships, sales, and FP&A. But my journey here was actually an interesting one. In my sophomore year of college, I got my first internship at a boutique hedge fund called Tree Capital, which was really exciting, and I started helping out with really anything they needed. But as time went on, I showed my hunger, showed my excitement, and reliability, and eventually took on more responsibility. They ended up offering me a full-time position in operations and finance role for which I pushed myself to graduate a year earlier to start that position. The company grew very quickly, and over the following five years, I expanded into managing a team of people across operations, finance, marketing, and other roles. Eventually, I ended up moving over to a new fund called Union Square Park as CFO and COO, where the portfolio manager and I launched the fund together. In that role, I set up the infrastructure, systems, and processes all around trading, accounting, audits, reconciliations, compliance, marketing, and a lot of other areas. At that fund, we invest in all sorts of asset classes, and in my 50 years there, we came across this company called Strut. We had this investor group made up of VCs, family offices, and other investors, and we would periodically invest in deals together. But this specific deal was an extremely exciting one for all of us. But really, particularly for me on a personal level, I was always obsessed with anything health, wellness, or fitness related. And in college, I was on the swim team. We practiced for 4 hours a day. And after college, in my career, whenever I wasn't working on analyzing a deal or whatever, the circumstances led to in many cases, you'd find me listening to a podcast on health or reading a book on it. So Strive really resonated on many levels for me, and it was the most unique solution I ever saw in serving a global problem. So after investing personally in the investor group, I was helping out the CEO and founder, much like I did with other early-stage investments. And eventually, I couldn't resist. I decided to follow my passion, leave the fund as a partner, and instead join Strive full-time as a CFO. So I went from investor to operator, and it's truly been an amazing journey.

Megan - 00:03:47: Yeah, it sounds like the perfect fit for you.

Misha - 00:03:49: Yeah.

Megan - 00:03:51: So can you tell us a little bit about Strive and what it is that they do and their mission?

Misha - 00:03:56: Absolutely. So I'll start with a personal anecdote. I have a bunch of friends and folks in my community that play basketball or run or cycle, and a large portion of them have all sorts of risk-based hard trackers. And almost all of them at some point stop opening their apps because the data doesn't really tell them anything aside from sleeping more or drinking less. Alcohol will make them perform better, which is nothing new, really. And so what's clear is that most people want actionable insights that give you recommendations on your next workout or like a video game, tell you which parts of your body to improve and how in order to get you to your fitness goals. I can bore you with statistics regarding how we collect 30 to 50 times the data points of a risk-based device or the correlation between heart rate and muscle fatigue. But ultimately, Strive is a behavior-change company. We create intelligent clothing with sensors that monitor your neuromuscular health, your movement, and heart rate to understand your body and make it better. Using patented algorithms and AI, we empower people to understand how to achieve their fitness goals by quantifying true physiological strain and making people unbreakable. We work with some of the top athletes and performers in the world, including Jonathan Taylor, Mark Andrew, Spencer Denwitty, Drew Holiday, Cheyenne Parker, and military special forces. But whether you're a professional athlete or whether you're a military service member or a manufacturing line worker, we help you stay healthy, we prevent injuries, we achieve your goals, and at some point soon, we'll actually launch consumers as well. For me personally, one of the craziest statistics that most people don't know about is that one of the highest correlations to human longevity has nothing to do with sleep, nothing to do with diet, nutrition, supplementation, or even genetics. The fact is that one of the highest correlations to human longevity by a large order of magnitude actually has to do with your muscle strength. And there are specific muscles that obviously have the highest correlation, including the glutes, forearms, and others. But beyond that, one in two people in America will suffer a major musculoskeletal issue within their lifetime. And so at Strive, that's what we focus on. We focus on neuromuscular health through clothing that people are already wearing and loving.

Megan - 00:06:28: Yeah, that's amazing. I look forward to the day when it is available to consumers. I work out at Orangetheory and as you said, I just go every day and do what I'm told, but I don't really know what areas of my body need more work than others. That's truly advanced.

Misha - 00:06:47: Yeah. I'll add you to the waitress.

Megan - 00:06:50:
Yes, please do. So talk to us about your proudest achievements since joining Strive. You've been there since 2019, is that correct?

Misha - 00:06:59: Yup, that's right. Proudest achievements. I guess aside from my family and seeing my little girls grow up and develop in all seriousness, it's really building an incredible team of very intelligent and hardworking people. We have an amazing culture and it really is like a second family. I think we've done an amazing job at being methodical with our hires and attracting the right people to the company. With the team that we have with their teamwork, we made a game-changing product that I think is unlike any other. And because of that amazing product, we ended up announcing some really powerful partnerships, like with Spartan Race and a few others. During COVID when the world was shutting down, all of our employees actually stayed with us for basically no pay because they believe in the mission and we have a very, very close-knit culture.

Megan - 00:07:50: Yeah, I guess when you have a product that you truly believe in and a story that resonates and changes people's lives, it's easy to enjoy what you do.

Misha - 00:08:01: Do every day 100%, that's really it just focusing on that vision and that product and making sure everyone sees it as well.

Megan - 00:08:09: And as you mentioned before, you spent the first part of your career focused on investments and hedge funds. So what inspired you? And maybe you touched on it a little with your love of sports, but what inspired you to leave that world for a sports software company like Strive?

Misha - 00:08:29: This was an alignment of the stars. I met Nikola, the founder. We hit it off immediately. This was back in early 2019. Once I experienced the product he built and then his vision for where this could go, I was immediately hooked. There was nothing else like it and I really knew that I wanted to be a part of it. And there was no better person to partner with in Nikola. Actually, I don't want to diminish that last point. Having the right work partner is arguably as important as having the right business plan. So it was passion and excitement. I've always been a super tech-forward person. When you combine all of my interests between tech, health, finance, and deal-making and joining a team of amazing people, it really was just a no-brainer for me.

Megan - 00:09:16: I love when the stars align like that. And how has it been working for a startup and what do you enjoy most about that kind of environment?

Misha - 00:09:26: For me, having a role where you can have sort of a leadership presence and really get boots on the ground to kind of affect change and change things. Right. The biggest difference, I would say, between the startup world and the hedge fund world is that in the hedge fund world it really was a massive change. At that point in my career, I went from giving management teams my input on how to run their business to being in the trenches and actually solving the issues. As an operator, there was this big element of affecting true change and driving results. After going through the ups and downs of running a business, I developed an enormous amount of respect for entrepreneurs. Really being in that driver's seat is what taught me a lot about leadership building teams and really across so many disciplines. It also infected me with that entrepreneurial bug, so I don't think I'll ever shape that.

Megan - 00:10:26: And when you think back to 2019 and your first days at Strive, how did you integrate yourself into the company as the CFO?

Misha - 00:10:36: That's a good question. The team actually made it really easy. They were very quite welcoming. Before I officially joined, I actually spent a ton of time with Nikola, the CEO, met everyone on the team, and spent time planning my role. I ended up making a 90-day execution plan along with the CEO, which we identified together the key areas of focus for the business and I really just went straight to the juggler on all of them. Over time, as I continued to build rapport with the team, trust came very easily and as we began to grow and had our milestones together, that expanded even more. I'll also say that buying gluten-free bagels and nonalcoholic beer for the team goes a long way too.

Megan - 00:11:18: And with the pace of growth at Strive, how do you make sure that you're hiring the best talent to fill each role, particularly as the roles are continuously evolving?

Misha - 00:11:29: That's a good question. I'd say that we're very, very focused on those cultural fits. We have a set of core values that we really adhere to and we make sure to identify those that fit into that. Because we have such a close-knit culture, it becomes easy to see if there is that mutual fit and if we resonate on an individual basis and on a team basis, skill is obviously very important, but if the values don't resonate, it just doesn't work. And so to simplify it a bit, we want to make sure that even outside the workplace, we'd love to hang out with this person. Basically.

Megan - 00:12:01: Yeah, that makes coming to work a lot easier when you really enjoy the people you work with.

Misha - 00:12:05: 100%. Yeah, we all get along really well. We're like a really close family, so it definitely helps a lot.

Megan - 00:12:12: And just this year, you received $6 million Series A round funding at Strive. So tell me about the approach to, first of all, bringing in that money with new investors, and secondly, what initiatives you're focused on as far as growth.

Misha - 00:12:30: Sure, hang on one, so basically, I would love to tell you that it was easy, but truly this is a daily grind when you're inventing something that hasn't been done before. There are many naysayers, obviously, and as such, as part of every raise, we want to be very strategic with the investors that come in. We wanted to ensure as part of all of our raises, that not only could they provide the financial capital, but that they would also understand the future potential and value, support us in the best of times, support us in the worst of times, and really help us get to that next level, I'd say. I think everyone at the company agrees. We're very blessed to have the investors that came in for that Series A, especially some of the athletes you probably saw in ESPN and a few other places. We had some really amazing athletes come on board with those specific athletes. Our approach was really just to provide as much value as we possibly could with the product. They ended up just falling in love and jumping in with both feeds, and that ended up helping us a lot in all sorts of parts of the business, whether it was more sales or more funding. On a very specific level, though, a lot of my founder friends that I exchanged notes with, always ask about the process of fundraising. I think one thing that's just worked for us really well is networking as much as possible. I know that's really cliche and common, but some of our biggest and best investors came from 1% probability events, a random meeting at a conference or a trade show, or even offering product feedback to another company that ended up making an introduction out of gratitude. I have a lot of other hacks for capital raising, so I would just encourage anyone to reach out and ping me on LinkedIn. I'm always happy to help wherever I can.

Megan - 00:14:18: And you study finance and investments in college. You're also a CFA and that's a chartered financial analyst.

Misha - 00:14:26: Correct. Right.

Megan - 00:14:27: So how does that background, along with being a CFA, how do you feel gives you an edge as a CFO?

Misha - 00:14:34: That's a good question. I think there are really two elements of it. Number one is even kind of the investment background. I think it allows me to talk to all sorts of stakeholders, whether they're investors, board members, internal folks, or internal teammates. I think having that background of what investors look for, and how they expect to see things. What are some of the things that they're focused on in a particular market, like right now in this specific economic environment? So I think that part has helped me a lot. Being a charter financial analyst has also helped me understand sort of the nitty-gritty of things, not just from an analysis point of view and financial planning point of view, but also from an operational point of view. So it's definitely made me a more well-rounded leader, I think. But obviously, I didn't always know that I wanted to get into this world. Actually, the way that I came into the investing world, like most kids in high school, I actually didn't really know what I wanted to do. But one day I meet the guy who would eventually become my brother-in-law. He was working in finance at the time, and I was enamored with what he did for a living. I was enticed by what he was experiencing on a daily basis in the markets, learning about various businesses. And at that point, I decided to just go all in. I applied to Baruch College, join all sorts of investment extracurriculars, and eventually knew I wanted to become a CFA charter holder, and the rest is really history. But the move from that into the startup world was really interesting. I just wanted that sort of in-the-trenches feeling. It's been amazing, really.

Megan - 00:16:18: Yeah, I'm sure that background works beautifully at a startup.

Misha - 00:16:22: Yeah, the aspect of financial modeling and making decks and things like that obviously goes to some lengths, but I think really it comes into play with the whole strategy of things. So, yeah, definitely very helpful.

Megan - 00:16:40: And prior to joining Strive, you served as both COO and CFO for Union Square Park Capital. So talk to me about how the role of the CFO has evolved to allow this to happen, where a CFO can be both a CFO and a COO. That's something we would have never seen, like two decades ago.

Misha - 00:17:03: Yeah, that's a good question. It's somewhat common in the hedge fund space, particularly for hedge funds that are initially just starting out. The role is somewhat interesting because in hedge funder world, the COO does a lot of the financial aspects of the business. As the hedge funds end up growing, they end up donating and siloing those roles where the CFO becomes a lot more involved than just the pure financials of the business, the auditing, the investor relations, and the COO handles things related to trades and reporting and portfolio attribution and things like that. So I ended up having both roles there and it really allowed us to build a holistic kind of smooth operational process at the fund.

Megan - 00:17:56: And talk to us a little bit about the difference of being CFO for Union Square Park Capital versus Strive. What's the difference when you look at those different types of companies?

Misha - 00:18:08: Yeah, that's a really good question. So the two biggest differences are the roles of, I would say the roles of leadership with respect to the stakeholders and how headwinds are felt and navigated. The role of the CFO isn't just to deliver financials and tax returns, but it's to help the CEO achieve his or her vision while being the balancing force of realistic financial and operational limitations. So Union Square, which was an amazing place to work, by the way, the persona of teammates and stakeholders is somewhat similar. There's sort of a singular frame that you lead from, whereas at Strive we have hardware firmware, software engineers, we have a sales and marketing team, manufacturing operations, customer support, and a board of directors, shareholders, and vendors, you have all these sorts of stakeholders. And that's quite a lot of different personas. And so my sense of EQ understanding people building rapport expanded rapidly with respect to the headwinds at the fund. The biggest headwinds came from the markets and there was in many cases little that we could control when the entire market was falling apart. At Strive, like other startups, the headwinds, I guess can feel sometimes like Whack-a-Mole, where you solve one problem and then another pops up in another area and a lot of times they feel existential. So having a great team is really what helps with this because our teammates have a true sense of ownership and their mindset is really solution-oriented.

Megan - 00:19:45: And talk to us about building teams a bit. What do you feel is the key to successfully leading and building teams as a CFO, particularly in today's talent market where good talent seems to be few and far between?

Misha - 00:20:02: Yeah, that's a loaded question. I think one of the biggest keys, I think, to building a relationship, being a leader, I should say, is building those relationships with each individual person. Each person is going to have different wants, different needs, and different desires. And so as a leader, you have to develop each teammate to become the best version of themselves. In my view, leadership has nothing to do with the title. I think the greatest leaders lead by first showing their team that they can execute, whether in the past or in the current team and then truly, truly developing relationships and helping elevate each person. Ultimately, you then end up leading them with a vision that everyone can get behind. In terms of your question on the evolution of the role, and especially in these times, I think the past few years specifically have shifted the definition of a CFO when times are great and there's minimal volatility, leading a team is much easier. But the last two years have been very trying on businesses and more importantly, people. I've talked to a lot of people in the space, whether they're investors or founders or anything in between. I think the CFO role is now expected to be right there alongside the CEO leading the company and its teammates during those troubling times, helping them make sense of things, helping them deal with some of the volatility, with sort of a hands-on approach. I think we're lucky to have navigated these macro waters, but I also think it's very important to row alongside the team.

Megan - 00:21:44: You sound like you're a great leader. That's really great insight.

Misha - 00:21:48: Thank you.

Megan - 00:21:49: So what are the biggest challenges as you look out into 2023 that you and your team are facing?

Misha - 00:21:57: I guess going back to that macro, I think it's going to be just navigating the macro uncertainty. We're still very optimistic about our business, given the sectors that we provide value into, but we will have to maintain our prudence, for sure.

Megan - 00:22:10: And what advice do you have for other CFOs or aspiring CFOs?

Misha - 00:22:17: I'll preface with the fact that my position evolved and morphed more into this broader leadership role because of my desire to contribute more globally beyond perhaps what a traditional CFO role might have. I know many people who believe the role is very numerical and accounting-focused, which obviously isn't the case. And as the role continues to evolve and the world navigates more of these turbulent economic waters, even beyond that, I think over time, what defines a great CFO will also shift. The strategic elements are most likely going to become a lot more emphasized, and I think there is going to be a need for CFO to have that broader leadership role. I think the CFO will be even more relied upon for strategic guidance or leadership of the team, helping set the culture, and really just being the right-hand person for the CEO. So I think really it's a greater focus on higher level strategy, focus on EQ, focus on team building. I think all that's going to be paramount for CFOs and for aspiring CFOs in the coming years.

Megan - 00:23:25: Yeah, that's great advice. Last question and this is not the question on this list, but as a CFO, what are you doing to prepare you, yourself and your team and your organization for the future when things seem to be changing constantly? How do you prepare and how do you budget? How do you prepare your organization for the future during these tumultuous times?

Misha - 00:23:56: That's a great question. There are a lot of different aspects to it. From a leadership perspective, I think communication and transparency with the team, you know, meeting with them regularly, making sure that they're constantly aware of what that vision is. Right. Because if the economy has volatility, if the management team is feeling volatility, you're sure to bet that your team as a whole is feeling it, even if they don't tell you. So I think from a leadership perspective, there's that angle of just letting people know exactly what's going on in the company. Maybe not necessarily second by second, but just very frequent communication about where we see the company going, what are some of the things we're going through, and how can each person help. Being very clear and direct with how all of us can pitch in in terms of sort of the strategy aspect, it's really whenever things happen in a startup, there's a multitude of sort of optimistic things that happen, things are looking forward to, things you're working on. I think having a range of potential outcomes, whether they're bull case, bear case, base case, you kind of have a range of outcomes that can happen and you try to prepare for the worst and obviously hope for the best. But I think preparing for the worst situation and just maintaining Prudence, like for Strike, for example, our finances since the inception of the company have always been very prudent. We didn't overspend on things. We were very careful about projecting out additional expenses, et cetera. I think, really, that's the biggest thing. I can't sit here and say that I or anybody else knows exactly what's going to happen at this point, even a month out or two months out, let alone six months to twelve months out. But I think just having that constant strategy view of being conservative, having help from all stakeholders, whether they're teammates or investors, and just really having your pulse on things is really helpful.

Megan - 00:26:05: Yeah, that's some great advice. And that word transparent, I hear that from a lot of the great leaders that I've spoken to. It's right. People want to know the news, whether it's good or bad, they want to know what's going on. I mean, it's their livelihood, after all.

Misha - 00:26:22: Exactly. I think at the end of the day, if you take care of your teammates, your customers and everyone else will be taken care of as well.

Megan - 00:26:29: Misha, thank you so much for being my guest today.

Misha - 00:26:32: Megan, thank you so much for inviting me to the show. This is a lot of fun.

Megan - 00:26:36: Yeah, I really enjoyed speaking with you and hearing about your experiences and all of the resulting insights, and I wish you and Strive all the best. I can't wait to see what you both do in the coming years. And to all of our listeners, please tune in next week, and until then, take care.

In this episode, we discuss:

  • Follow your passion - pivoting from a large investment fund to a SaaS startup

  • Funding strategies for startups

  • CFO role evolution - CFO and COO can be two faces of the same coin

  • Building high-performing teams

  • Challenges for the new year

Key Takeaways

Follow Your Passion, Transition to a SaaS Startup

Quote saas startup

Misha has a passion for health and fitness, and Strive was one of his clients at Union Square. Strive offers wearable technology in compressed clothing to optimize muscle performance. Professional athletes are the target audience, but the market potential is limitless once the product is taken to the consumer space. The leadership role at Strive was an opportunity Misha couldn’t pass up.

“I went from giving management teams my inputs on how to run their business to being in the trenches as an operator and driving true change from there,” Misha said. - 07:50 - 10:26

Funding Market Volatility Strategies for Startups

Quote Misha Mikhaylov

When a startup is breaking new ground and doing something that hasn’t been done before, funding it becomes a challenge. Look for investors who believe in the product or service's potential, who will stand by you through good and bad times and help you get to the next level. Resist the temptation to say yes to every opportunity.

Networking is still the number one strategy to identify and get in front of the right investors. Some of the best investment opportunities can come from attending the 1% probability events like conferences and trade shows.

“I have a lot of other hacks for capital raising, so I would encourage anyone to reach out and ping me on LinkedIn. I’m always happy to help wherever I can,” Misha said. - 12:35 - 14:19

The Evolving Role of a CFO

Quote cfo tackling market volatility

A background in investment banking enables you to communicate with stakeholders across the spectrum, from investors to board members and internal team members. The CFO comes with the perspective of what investors are looking for, providing an ideal foil for the marketing team.

Good stakeholder skills are helpful for handling headwinds at startups and bringing people from different verticals to a common page while resolving issues. With time the strategic elements of a CFOs role will get more defined, and CFOs will play a broader leadership role.

“Today, a CFO in the startup space is routinely tasked with delivering the founder's vision while acting as the balancing force of realistic financial and operational limitations,” Misha said. - 17:04 - 19:43

Building High-Performing Teams

Quote high performing teams for market volatility

When hiring talent, the candidate's cultural fit is as important as their skill fit. Building strong relational bonds with team members is critical based on mutual trust. Each person will have different needs, wants, and desires, and identifying these and relating with them through this prism on a one-to-one basis is what a good leader does. This makes it easy to bring people onto the same page and ensure everyone is pulling in the same direction.

“Leadership doesn’t flow from a title, but rather from the ability to make everyone the best version of themselves,” Misha said. - 20:02 - 21:43

Tackling Market Volatility Internally

Quote what to do about market volatility

The current period of macro uncertainty will extend into next year, and its impact needs to be cushioned across all levels of the organization. At the board level, fiscal policies need to be conservative, and this prudence needs to be driven across the organization.

At an individual and team level, communication and transparency are vital. Volatility has a trickle-down effect. If the economy is volatile, it will affect how boards operate at companies, which will trickle down to individual insecurity. From a leadership perspective, frequent communication with the team members becomes vital. These engagements enable the leaders to share how the company is combatting volatility and act as reassurance.

“Be open about discussing a range of outcomes, best case, worst case, and base case. Hope for the best but prepare for the worst,” Misha said. - 21:58 - 26:00

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