Trulia’s Sean Aggarwal Talks About Balancing Growth and Profitability

Sean Aggarwal has long experience with fast-growing Internet companies.

Mr. Aggarwal, the chief financial officer of Trulia Inc., a San Francisco-based online real-estate portal with about 1,000 employees, was previously a vice president of finance at PayPal Inc. as well as at eBay Inc., and a finance director at Inc.

At the beginning of this year, Trulia said it expected sales to grow 50% in 2014 from last year’s total, to about $250 million. In July, the company said it would be acquired by rival Zillow for $3.5 billion in stock.

In an interview with The Wall Street Journal, Mr. Aggarwal talked about the CFO’s role in a rapidly growing company, including his part in balancing that growth with profitability. Here are edited excerpts of that discussion.

Internal Growth

WSJ: Tell me about the size of your finance department, how much it has grown and in what areas.

MR. AGGARWAL: We are a young, high-growth tech company and we have a finance organization with about 40 people. When I started here in late 2011, there were four people on the finance team.

It was a typical story for a high-growth tech company—the business was fantastic and growing 100% a year, but there was nothing [invested] in finance. They were running on QuickBooks, which is an accounting ERP [enterprise resource planning] package built by Intuit. It is a great product if you are a dentist and need to manage your books, but isn’t meant for companies of size and scale.

Over the last two to three years, we have been in a constant build-out stage when it comes to finance. We have built out financial planning and accounting, tax, analysis, financial systems and business-unit finance.

Strategic Thinking

WSJ: What are the three biggest issues facing CFOs in high-growth tech companies?

MR. AGGARWAL: The first is how to be a strategic partner to the chief executive officer and the business.

A CFO’s Role in a Fast-Growing Company CS AA068 TRULIA 16U 20141016140606ENLARGE

WSJ: How do you go about it? 

MR. AGGARWAL: First, I own mergers and acquisitions and strategy in the company.

From very early on I put my hand up. I had the background and skills in both of those areas. We were looking at a great number of companies to buy, use of capital, entering new businesses, bringing together products.

Second is owning the annual strategic creation process. Every summer, for six weeks we are working through a three-year strategic view, given what customers are looking for, given our strengths and weaknesses.

It’s also important to always try to see things as the CEO sees it.

Every Tuesday night, the CEO, the chief operating officer and I have a standing dinner. We’ve done this for three years, and again, early on I owned the agenda for the meeting. If we are all taking time from work and our family lives it has to be worth it, and it forces me to identify challenges and opportunities that are front and center with the CEO.

I ask myself what’s the unique perspective I can bring to the CEO and the company. [One thing is the] investor perspective.

I spend a great deal of time managing relationships with investors, big and small, hedge funds, long-only mutual funds, U.S. and international investors. I spend days with them at conferences and so on. These are incredibly smart people and they talk to many other companies in our space or adjacent to our space.

After I finish the day with investors, I go back to my hotel room and ask myself, “What did I learn from these investors?”

No one else from the company can offer these perspectives, and they tend to be around big-picture ideas, M&A ideas, competitive hedges, because they’re talking to others in the space.

Building the Bench

WSJ: What is the second big issue?

MR. AGGARWAL: For CFOs of high-growth tech companies, the key is managing growth and balancing growth and profitability.

What I mean there is it is easy with the CFO hat to play the role of the heavy. But it’s the wrong perspective to have in a high-growth environment. Yet on the other side, it’s wrong to let it be all about growth and nothing else.

The challenge for the CFO is balancing growth with profitability. How to ensure that we’re making the right investment and maximizing for the long term, and telling that story to investors who will support the long-term path and understand why we’re choosing to make these investments while we haven’t yet achieved profitability in the short term.

In a high-growth environment, lead with customers and don’t lead with finance. What I mean by that is, if I show up with my business leaders, the CEO and COO, leading with a finance agenda, it isn’t likely to get a lot of receptivity. Whereas if I approach them with a customer-first orientation—what is the right thing to do with customers—and center myself in that view, it aligns me with the rest of the business team and from there I can bridge to financial imperatives.

WSJ: And the third?

MR. AGGARWAL: Building and scaling a finance team.

Very early on I start to rotate people and give them skills and put them in jobs they couldn’t get from the outside. We hired the head of our M&A team; she came from 10 years of investment banking and had aspirations to be a CFO one day. Within a year I moved her into a division finance role. It isn’t likely she’d be able to get that job from the outside, and it is a fabulous career move for her. But what was really powerful was the reaction from the finance team.

They could see possibilities for advancement exist. It also helped with recruiting, because it helped our reputation and created a buzz.

One other conscious, proactive thing I’ve tried is to seed finance people into the business—actively move people from finance into an operating role. That has been incredibly successful. Some people who started in finance are now general managers of smaller business units. It sends a signal to the rest of the finance team and helps in recruitment. It shifts the perspective of how finance is viewed in the rest of the organization.
Source link