Mike Rasic picked a bad time to leave his public audit practice at PricewaterhouseCoopers after 18 years. It was 2006 and, on the basis of a cold call from an executive search firm, he joined home loan brokerage Metrocities Mortgage as its CFO, his first time in the role. Not long afterwards the mortgage crisis hit, forcing him to rethink his new job.
“I went in thinking my world was just going to be predominantly finance,” said Rasic, today CFO of banking-as-a-service (BaaS) company Synapse. But the circumstances forced him to expand his horizons early on.
In addition to the strategic response he helped the company execute as credit froze up globally, he came face-to-face with the human side of his work.
“On a daily basis I was making decisions, ‘Can we afford to keep people? Can we not afford to keep people?"' he said last week in a CFO Thought Leader podcast. “What are we going to be doing for the shareholders? How do we preserve value for them, if we can at all?”
The job forced him not to shy away from hard decisions, he said, “but at same time, you realize how important your decisions are.”
People management
His years managing people and teams at PwC, including his last six years as partner, taught him lessons that helped him get through the challenges, he said. To succeed, your teams must succeed, and for that to happen, you must know each team member as an individual. That’s the only way you can help them achieve their goals.
“If you try to take a one-size-fits-all management approach to people, you will fail,” he said. “I had a few instances early in my career when I tried the one-size-fits-all approach and it bit me. Thankfully, I was able to understand what I was doing wrong and learn from that.”
Building the function
At Synapse, which he joined in November, he’s taking a go-slow approach as he builds out the finance team and its infrastructure.
“Synapse was an interesting situation to step into,” he said. “The finance function was kind of non-existent. The team had been eliminated and the function outsourced. I walked into basically a blank sheet of paper.”
His first hire was a controller. His next will be head of financial planning and analysis (FP&A), a position he’s looking to fill with a person who demonstrates a strong curiosity about the company’s core business drivers, a desire to grow intellectually about not just finance but the broader business, and a strategic mindset.
“An FP&A head that says, ‘I generated your report; here are your numbers,’ doesn’t cut it in today’s world,” he said. “I need a person that’s going to say, ‘Here are the numbers. I dug into this and here are the three or four things we as an organization now need to do to be better.'”
Decisions about technology systems and processes are on hold until after his team is in place and work being done on the company’s data infrastructure is completed.
“Now’s not the right time to introduce new technology,” he said. “The controller is new. We need more time together to ensure we’re aligned on direction. I’m not a fan of being prescriptive. I’m not just going to make a decision. And I want the FP&A person in place. How the financial and FP&A systems interact is important. The data has to flow seamlessly.”
Growth metrics
At Synapse, which provides a platform for companies to offer branded credit cards and other financial products to their customers, Rasic tracks five principal metrics: sales growth, implementation time, revenue growth, gross margins, and referenceable customers.
Implementation time refers to how long it takes for a company to get set up on the platform and start offering financial products to its customers. Synapse touts an 8-week implementation period, so Rasic looks for problems keeping that promise.
“Average time from contract sign to going live is super important,” he said.
Referenceable customers is a variant on net promoter score (NPS). It refers to contacts at companies using the platform who are willing to validate the product in the media or to others if the company requests it.
“It’s the number of customers that, at a moment’s notice, we can ask to pick up the phone and talk for an article or to another customer,” he said. “The goal is what we want that number to look like at the end of the year.”
Beyond face value
While CFO at another financial services company, Zest Mortgage, Rasic learned how easy numbers can make it hard to grow if they’re not looked at carefully.
Like any business relying on recurring revenue for growth, the company was willing to bring in new customers at a low revenue point in exchange for gradually growing lifetime customer value (LTV). Although LTV was growing, inspecting the numbers closer showed the pricing strategy was standing in the way of growth, he said.
“We didn’t do a good job drilling down to when that lifetime value would be realized,” he said. “We made a strategic decision about what we were willing to accept for first-unit economics. We felt we could recoup it later on subsequent products and offerings. But we hadn’t focused on how that got staged.”
The result, he said, was a growing gap between the revenue the company was generating from new customers and how long it would take for those customers to drive growth.
“We were digging ourselves such a big hole that, yeah, we could get a good lifetime value, but it was going to take us a long time,” he said. “We needed to change that mindset.”
Raisc said the leadership rallied around the fact it had to do a better job with the first unit and be better at accelerating when it got to the second, third and fourth units.
“Taking numbers at face value is not a good thing to do,” he said.
