What to Expect as a CFO of an Internet Titan | Yahoo Chief Financial Officer Ken Goldman

I will give some thoughts. And it's not going to be a lecture. I hate that word lecture. People don't do lectures anymore. They keep things interactive. It's much more interesting for you, more interesting for me. It's funny how I do a lot of technology conferences, and they used to always do these— companies used to do these 25-minute presentations in which CFOs and CEOs would drone on for a while, and the audience would be on their BlackBerrys. Of course, now they'd be on their iPhones. iPads and iPhones and Androids, so it's changed. And so people have gotten away from that, they now do these Q&A sessions, so that's much more fun and I think helpful for you. But I thought before I do that, I would give you some of my thoughts because I've been doing this now for oh so long. My wife thought I was going to retire a couple times along the way. It was commented that I did join Fournette a few years ago, took that company public. Just started with Yahoo and frankly Yahoo came as a lark. Marissa called me up someday and said— actually, the way she said it is, I'd like some advice. And that was always a little concerning. Advice? I don't know. What advice does she want from me? So I was actually in— thank you very, very much. You're welcome. I happened to be in Hawaii because I spend July, a couple weeks in July. I like to windsurf. I like to kite sail. So I happened to be in— all my job changes have occurred when I've been in Hawaii, interestingly enough. when I get time to think and get out and relax and play. And she calls and said, would you like to meet? I did meet and it turns out she did not really want advice, she wanted to know if I might be interested in being CFO of Yahoo. There was already somebody there, but she wanted to make a change. And I'll come back to Yahoo, I think it's really a very interesting case study and I could take an hour just talking about that, but I'd rather go with a few other things first. I would like to give you a sense of how I think about What makes— actually, I'm going to go through this a little different order than I had. I was going to go through running companies. Before I do that, I think I'm going to go through a little bit of how I think about my role, how I think about CEOs. And I know you've— I'm sure you've heard it from a lot of folks, how I think about what really makes a difference in one's career, because I think that's really important as you think about where you go from whatever you've done. And a little bit of advice that I'll have, and then I may come back and Yahoo and just take you through some Q&A. But I thought I would really take you through CFO because I'm a big proponent— well, let me give you an anecdote. I have a daughter who's 25. She has a boyfriend who just went to Tuck Business School now. And he said, geez, I'm being— talked to one of his professors and I'd like to think about working in corporate finance and so forth. And the professor said, geez, that's not a good role. Why don't you go into banking or consulting? And he said, geez, my daughter's father happens to be CFO of Yahoo, and he's done pretty well. And the professor said, well, blah, blah, blah. And so CFO is a great role. Going into corporations and working your way up in finance, as opposed to a lot of folks going into banking, is a great role. You have an incredible impact on a company. You are the person that is effectively the consigliere to the CEO. You're the one that she or he will look at to sort of give the vibe of the organization. Interestingly enough, everything ultimately comes down to numbers. So no matter what you want to do relative to strategy, planning, products, whatever, ultimately it comes down to numbers. When companies report numbers, whether it's Facebook or Twitter or Yahoo, ultimately the investors are looking at numbers. Now, they may digest the numbers in various different ways, but numbers are important. And there's 2 folks talking on those calls, the CEO and CFO. And many companies, Google in particular, The CFO now really runs that part of the presentation. So finance is a critical element. It is a critical element in the technology area that we live in out here. It makes a difference. I can't tell you how many times I get calls from folks I know looking for CFOs of companies that are in the growth stage, want to go public or public and they want to upgrade the CFO. I'm on a number of boards, probably too many. I get calls for a number of— keep on getting calls for boards. I happen to be on NXP Semis board. I happen to be on Infineon's board, Gigamon's board that we just went public a couple, 3 months ago. So, and that's all because finance, corporate finance is a valued resource. It's all because corporate finance is a very valued resource. And I would tell folks, that, you know, and if I had it, and I was on the board of Menlo School where our kids went to middle school and high school. I was on the board of Cornell University for 6 years, no, actually 8 years. Just became an emeritus trustee there. And the thing I always would push for is everyone to take accounting courses. And that's part of the bedrock of CFO is knowing accounting. But as I digress, it's also part of what you need to do to run your life. I'm amazed when I saw the mortgage breakdown in this country, and there was a lot of it was subprime loans in which unfortunately a lot of consumers bought mortgage— basically took out mortgages they had no idea what they were doing, had absolutely no idea what they were doing. Right. They could have had increasing principal over time, They were paying interest below market, but it would come up, go up over time. They assumed maybe that real estate would keep on rising in the old greater fool theory. They could at some point sell out to someone else at a higher price. All of the above. But fundamentally, they really didn't understand how interest and mortgages work. Take out a car loan. How does it all work? And so I'm a big fan— and again, I don't know enough of, honestly, what the curriculum is here or anywhere else. In terms of— but I know I'm a very strong believer that you need— everyone needs to take responsibility for their own life, for their own finances, their own net worth and so forth, which means you need to have the basics and understand the basics of accounting. In finance, it's all about systems. Systems have changed dramatically lately. We used to be in a world where people would develop systems in which you put in a big Oracle database, you put in a big Oracle Enterprise resource system, general ledger accounting, HR systems, and so forth. That world, yeah, same for sales, that world is changing. Systems are really critical. And I actually saw a comment which I actually liked yesterday, which is the consumerization of the enterprise. Because interesting enough, it used to be tops down. IT would tell the folks in the company what they had to buy. Here's the systems you're gonna use, here's how you use it, and so forth. That's changing. There's a concept called bring your own device, BYOD. It used to be companies would say you have to use BlackBerry, here's your BlackBerry. Well, when Apple came out with the iPhone, they couldn't change— they couldn't stop the wave of folks saying, hey, I don't wanna use my BlackBerry anymore, I wanna use an iPhone. And that's permeating the enterprise today. And so understanding systems and how they work, very, very important. And we're in what they call a SaaS, software as a service model, where it's instantaneous. So you, the users are able to put the systems in place themselves basically by pulling the system along. And so all the things you need to do to run your company can effectively be run on this little guy right here in terms of access. That's the world we live in right now. But systems are really important for how you run a company. Liquidity. The— it's interesting, we have haves and have-nots today. The companies that are doing well in the Valley that are hot, the Twitters of the world, Pinterests of the world, Airbnbs of the world, Dropboxes of the world, there's probably about a dozen companies whose valuations today, private valuations today, are above $1 billion, $1, $2, $3, $4 billion and over. And so there's plenty of money for great ideas, great concepts. Pinterest has basically no revenue, valued at about $3 billion. So folks are willing to believe, and very different, I went through the late '90s, I was at a company called At Home Network in the late '90s, took that company public as well. We basically brought out the broadband, basically we superseded AOL because AOL, it's hard to believe AOL still sells subscriptions. Christian Services, by the way. But we brought out the broadband cable modem and then now you have DSL. So basically, broadband, you have both. Well, you have actually 3. You have wireless, you have broadband cable modem, and you have DSL. We were part of the cable modem. We worked with a bunch of the cable companies during that time. And one of the things as a CFO for a private company, you're always focused on liquidity, liquidity, liquidity. and having ample cash. That's a key part of the job. And by the way, I should have commented, the thing I like about the job that I do versus consulting jobs and banking jobs is we are responsible for our decisions and our actions and our recommendations. So consultants, they come in, they consult, they give you advice, they leave. Bankers come in, they give you advice, they consult, they help raise your money, they leave. When you're inside a company, you're part of a team, you're actually making something happen. And I'm a big believer, where I get my jollies, if you will, is making something happen, having impact, having a positive impact on, you know, on anything I do. And that could be whether it's a company, it could be various charitable things I'm working on. And I happen to be, by the way, a very small investor in the Warriors and that's a lot of fun. And how do you think about that? It's another way I've stretched. But having an impact on everything you do, really important. Thank you. I'm keeping on the role of a CFO, financial planning, budgeting. Key aspect, very different than if you're working in a bank and wherever, and I see sometimes bankers come and become CFOs, well they have no concept of how you do forecasting and budgeting. It's very paramount, paramount in a company is how to forecast. We're going through right now at Yahoo budgeting, budgeting for the year. And that is the time you really do affect the direction of the company. Where you invest, where you disinvest, where you invest less, where you invest more, what products you're gonna put in, what products you're gonna reduce or not invest as much, how many people you put in sales, how you're gonna drive sales, what geographic regions you're gonna drive, all that is developed in the budgeting process. If you're a banker, you don't have no sense of how that works. And then the monthly forecasting, quarterly forecasting, budgeting and planning, Very, very important. Investor relations, another aspect of the job. It's one of those things that I have to tell you, all of us learn on the job. You don't learn that in school. I don't know of any schooling course, course in school that goes through how investor relations works. You learn on the job, we all make mistakes because you learn how to say things because you can say the least little thing it may have an impact. Facebook stock was up 15% when they announced their earnings in aftermarket. Aftermarket, it closed down 2 or 3%. Why? One comment to make, you want to answer? Well, I'm guessing it's the decrease in teenager use? That's exactly right. They, so, you know, the numbers themselves were great, but then they talked about a couple of trends that were concerning, That was one concern. One other concern was that they would have to reduce— they were worried about how many ads were showing up and they might reduce some of the ads. They were delayed on creating the video ads and there's a number of things. But that's again the subtleties of how you say something to investors, how they pick up on just the most— and maybe that— I would bet some of those comments were meant to be innocuous. Yeah. Q&A comments, but investors pick up on them.