When John Evarts became CFO-COO of Mediafly almost a decade ago, one of his first tasks was to determine whether an acquisition — it would have been the company’s first — would be a good move. In making the decision, Evarts also figured out something larger: the company culture.
“That was a watershed moment for me,” Evarts said this week in a CFO Thought Leader podcast. “It started driving home the point around the idea that culture is critical.”
Evarts said it quickly became clear that Mediafly, a sales enablement startup that helps companies keep their field reps armed with resources, couldn’t proceed with the acquisition without first looking inward and examining its own identity.
“It goes beyond this typical finance kind of conversation,” he said. “The reason we’re acquiring this company is, not only do we get the benefit of the products, but we get the really great people that are on the team [...] Over time, you get to the point where you’re talking about culture” — i.e., how would they treat the people who came onboard? What would remote and other work policies be?
Investment banking roots
Evarts got his start in the late 1990s in investment banking with Robert W Baird & Co. in Chicago. After the recession, he moved to the not-for-profit sector, working as the finance chief for a pair of organizations, including one that provided a temporary campus for young people with HIV.
“It was a unique opportunity for me to have a permanent legacy,” he said. “I had some pretty complex sources of capital, and so was able to build this campus using private and public funds, grants and donations from foundations and corporations. It was a really interesting way for me to be exposed to financial structures, fundraising and cashflow management.”
One of the main cultural differences between the profit and not-for-profit sectors is what Evarts calls mission inertia. That’s when board members and executive leaders become so focused on their social cause that they neglect the practical, financial side of the organization, which can impede their progress.
“I became a cop,” he said. “I became the finance guy in the room that is just a ‘no’ guy.”
CFO-COO opportunity
Evarts said he was drawn to Mediafly in part because of the merger of the CFO and COO roles, which let him bring together the practical, financial side of his work with the strategic and operational.
“It was an amazing opportunity to be part of the strategy setting,” he said. "I [saw] where we should be going and how [to] deploy these resources in a strategic way. So, not only was I able to look at resource allocation as CFO, but also strategic deployment of those resources as COO.”
On metrics, Evarts said he looks closely at net promoter score, which measures the extent to which customers are saying positive things about their experience with the company. “One of the most important things we can do is ensure our customers are happy and satisfied,” he said.
Evarts also looks at net and gross revenue retention, new logo growth, cost of customer acquisition and average contract value. And he tracks annual recurring revenue (ARR) and how efficient the company is at generating it.
“We’ve been settling in on this cost of revenue to ARR metric,” Evarts said. “It’s almost an index, a ratio between the cost of a team relative to the ARR driven by that team.
"With the focus on this number almost religiously, it has really helped us to tune in on how much we should be spending relative to the capacity to drive ARR," he added. "The combination of taking a look at that sales efficiency with the opportunity to look at the demand generation pieces, and the sales pieces, really have helped us ensure we’re an efficient organization, not just a growing organization.”
