CFO leadership in the age of artificial intelligence and rapid growth is the focus of today’s Secrets of Rockstar CFOs episode. Host Jack McCullough chats with Davinder Athwal, the former CFO of Philadelphia-based Phenom, an AI-powered HR technology company and unicorn. They explore Davinder’s unique career journey, from his early days in the UK, and how his diverse background shaped his approach to finance and strategy.
Davinder shares his ideas on building world-class teams, navigating rapid growth and the critical role of AI in transforming the job market. But he also stresses the importance of keeping an eye on what truly matters: happiness over mere success.
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Hello, everyone. Welcome to another episode of the Secrets of Rockstar CFOs. I’m your host, Jack McCullough. By day, I’m the president of the CFO Leadership Council. You can follow us online at RockstarCFOs.com. We have a great guest, so I’m going to get right into it. I am happy about this. I only recently met our guest, but a fantastic CFO, a good guy, and a good story brewing. It’s Davinder Athwal. He’s the former CFO of Phenom. A little about the company. Phenom is the AI solution to help candidates find ideal jobs and assist employees in discovering top talent, enabling managers to build teams efficiently. Davinder, welcome to the Secrets of Rockstar CFOs.
It’s great to be here. I’m looking forward to the conversation.
Me too. I do tend to oversimplify things a little bit. That works for me. Maybe you can share a little bit more about your company.
I’d love to do that. The company is being founded with a purpose. The purpose is to help a billion people discover the right work. I’ll get into how we do that and why that’s important. We’re not a household name, so most people likely have not heard of us. I would say there’s a pretty good chance that anyone who’s been on a career website in the last ten years has likely used our product in some fashion in the back end because we power some of the career websites for some of the biggest companies in the world and some best-known brands as well around the globe.
Think about it like this, Jack. If you go to a typical LinkedIn profile, let’s say for a knowledge worker, people might self-identify 15 or 20 skills that they claim to have. That’s not unusual for most knowledge workers. The reality, though, is that those people have about 100 skills that they possess. They may not be aware of all of them, they may not remember them on a particular day, they may not think they’re relevant, or they may have missed them in some fashion.
We can take the 15 or 20 skills that you self-identify. Using our algorithm, using our database of over a billion candidates, we can extrapolate the balance of those skills with a very high degree of accuracy. We do the same thing on the job site. You think about a typical job description. It might have half a dozen, maybe ten, requirements that are listed. There are about 55 to 60 for most jobs. Our algorithm does the same thing in that respect as well.
Ultimately, it’s about pattern-matching. We identify the 100 skills a candidate possesses and then compare them to the 55 skills required for the job. We overlay them and we look for a fit to do the job. At the core of all of this is the paradigm shift from forcing a resume to a job description to skills to work requirements.
That’s fascinating. One thing that caught my attention, which you mentioned and I also read on your website, is that billion-dollar number. You can’t do more than that? You don’t seem like you’re very ambitious with that target.
That number is growing every day. It is people who have come through our creative websites, but that number is increasing every single day. That’ll continue.
I’m more in the finance space than HR, but they’re tangential. I have to admit, when I was checking your company out, I was a little embarrassed that I was passingly familiar with it at best. How do I not know more about this company? It’s such a success story, a couple of hundred miles south of where I live. There are implications for all executives, but the CFO has been such a part of the talent process that I do think it’s the type of thing that we should be more cognizant of as financial leaders. I want to ask a little bit about your background. Can you share with us where you grew up and what that was like?
I grew up in the UK, about 20 miles southwest of London, in a working-class town that likely nobody has ever heard of by the name of Slough. It is right next to a very famous town called Windsor. That’s where I grew up and went through high school; I then attended college in London before moving to the United States with my family, where I graduated. I’ve been here working since that time. I have a triple kind of cultural aspect to me. I’m Indian by heritage, so I grew up in an Eastern Asian type of household, but was exposed to European culture during my formative years and have been in North America for the last 25 years or so.
To me, it sounds like you have a Midwestern United States accent at this point, almost more than even an East Coast accent.
It varies, depending on the day and the year, but I get that a lot.
A Formative Experience
Mine varies. I have a Boston accent. I’ve always lived in the Boston area, and I don’t have much of one except when I’m drinking a couple of beers, and it comes out. You moved to the US, but before that, I know your father’s experiences in England played a significant role in shaping your approach, not only to your career, but it might be fair to say it’s a significant influence on how you are leading your life. I’d love to explore that if you’re willing and able.
I’d love to share that story because I think it’s important, number one, to understand me. It’s also important because it brought me to Phenom and tied me into that mission at Phenom that I talked about a few minutes ago. My parents moved to the UK from India in the mid-’60s. In India, my dad was a military-trained engineer in a very fast-growing field at the time, around electronics and communications. As he was thinking about transitioning into civilian life in India, there were a lot of companies that were practically lining up to hire him. He had the opportunity to go to the UK and naturally assumed that it would be the same once he got there.
Unfortunately, when he did get there, what he found was that despite sending out countless applications, he wasn’t getting any response from employers. It makes you wonder, was the technology that different that he was using in India? Highly unlikely because most of it came from the UK or the US at the time. The real issue was that employers weren’t assessing his actual skills. In the absence of being able to do what I described, skills inference, they were using proxies. The proxies they would have used at the time would have been, Where did you go to university? Who have you worked for? What’s your job title been? None of those applied to him because he was in the military in a country that none of these people knew well.
As a result, he couldn’t find the right work because nobody recognized his experience. As a result of that, what I realized was he had been doing this work very proficiently. He’d been trained at a very high level, and literally, people’s lives depended on what he was doing when he was in the military, but he couldn’t get a chance to apply that in the commercial space in the UK. That hit me hard. The first time I met Mahe, who was the co-founder and CEO of Phenom, we talked about his mission for Phenom, about taking that off and helping connect people to the right work.
That’s an amazing tie-in, such a thing that had an impact on you in your youth. Now, you’re working for a company that can make that thing go away. There is the fact that we’re in a different world than we were in the 1960s when your parents emigrated to England. That’s fantastic that you have the technology to make sure that thing doesn’t get repeated. I’d love to explore your career path. You’ve worked for a few companies that I don’t think anyone’s ever heard of: PwC, IBM and Nortel. You worked for some very large, well-respected companies. I’d love to chat a little about some of the lessons you learned along the way, maybe if you could share some of your key mentors.
Before I dive into my career path, I’d like to share how I’ve approached it. My career has been built around three foundational aspects. It’s around curiosity, learning and making an impact. Everywhere I’ve gone, I’ve looked at the opportunity through that lens. If you think about going to PwC, that was easy because that’s a great place coming out of college, a tremendous amount of opportunity to learn. If you’re curious, you can learn even more. To my surprise, I did have an impact. Maybe not the first year where I was buying doughnuts and bagels for the team, but as I progressed up to senior manager and saw companies go public and saw companies expand, in some cases, or have to go the other way and wind down operations.
That work was very meaningful and impactful, and I would say necessary at that time for those clients to achieve their goals. That first experience was around learning the basic building blocks of a career. How do you show up to work? How do you be a professional? How do you have that ethic of basically working to get the job done? From that, I loved that work. I thought I’d end up being a partner at PwC in San Jose in the technology practice, but then something called Sarbanes-Oxley happened.
What that meant was I couldn’t do the stuff that I loved doing, which was helping and consulting clients around expansion and things like that. I decided at that point that I would look elsewhere and find an opportunity to go to IBM. What attracted me to IBM was that, at PwC, I was advising on the accounting and finance impact. I went to IBM and became a part of their Corporate Development Team. Now, I am evaluating those impacts. That’s a mind change.
Rather than just saying, “Here are three ways you can do this transaction,” now, I’m the guy who’s trying to pick one of the three ways to do it. It helped me dial into how businesses create value. How do you create economics in an M&A deal, for instance, and things like that? That was a tremendous experience. I loved that time. I thought for a while that I would have a career for the rest of my life at IBM. I got a little impatient. I used to work for the corporate treasurer at one point.
I remember having a year-end performance review. I asked my boss at the time what it would take for me to get to the next level, which would have been a director-level position. The response was, “Keep on doing what you’re doing, and you’ll get there.” Great. How long will that take? The response was, “About five years.” I’m a patient person, but not that patient. I was looking for other places to go and have an impact rather than bide my time.
That ability to have an impact and something much faster came in the form of Nortel. You may recall that Nortel, at one point, was a high-flying technology company during the dot-com boom, and one-third of the Toronto Stock Exchange. They fell on hard times. What happened to them was that they used to be a hardware company, became a software company without realizing it and messed up their accounting, their material weaknesses and all kinds of things that needed to be taken care of.
I joined them. It was an opportunity that I thought about from the perspective of going to learn a lot here. I can have a big impact if we can turn this around. The curiosity was up the charts. How do you do all of that stuff while you’re trying to resuscitate a once-great brand? We did that. I joined their corporate strategy team, and we came up with a great plan to downsize the business [in markets] where we thought we didn’t have the right to win or we couldn’t win. [Then] we took [those] proceeds and put them into places where we thought that we could win.
That plan was great. We were executing it, but then the 2008 financial crisis hit, and a big part of the cap structure at Nortel was leverage. There was a huge balloon payment that we needed to refinance in early 2009. After that crisis, we couldn’t get that done. It ended up putting the business into bankruptcy. Not the outcome I had hoped for going into the company, but I will say that some of the greatest business lessons I learned were through that process.
After that, I took a bit of a right turn or left turn but joined an energy company, which I never thought I would do because I was always a technology type of person myself. That opportunity came about in early 2008. At that time, a new administration was forming or running for office, I guess. There was a lot of excitement around renewables and things like that and what the energy space might do. It was a way to get into that disruptive space, if you will, and have an impact through that in a different way than I had anticipated.
I ended up at UGI. We grew that business from $2 billion to $9 billion when I left there. A lot of disruption did come, but it wasn’t the way we thought it was. It was through Marcellus Shale and other kinds of things that ultimately nobody had predicted at the time. I loved that. I ultimately became the CFO of a business unit. That was my first CFO title. I immensely enjoyed that work.
At the end of that secondment that I had as the international guy, I had a decision to make. Do I want to be in the energy space, or do I want to go back to technology? I had an opportunity to go back to technology. That’s what took me back into a different role, but back in the technology space as my first-time public company CFO role. That was a great experience. Since then, I’ve been in smaller businesses because the ability to have an impact on smaller businesses is something that drives me and excites me.
A couple of things, more from my curiosity, did you say Nortel was one-third of the Canadian stock market value?
It was, in 1999, on the TSX.
I worked for a startup, and our exit plan was to get acquired by Cisco, Nortel or Lucent. Nortel, a different decision here and there, a lucky break here and there, and they could have been Cisco. I’m a finance person, not a tech person. I was pretty knowledgeable in the industry. I didn’t see a whole lot of differences between the capabilities of the two companies. Cisco changed the game. They went on a buying spree, and they didn’t make too many stumbles during their glory years. That’s for sure. They were extremely well done.
You’re right, Jack. You may recall there’s a company called Bay Networks that used to be a direct competitor to Cisco, and Nortel acquired them. I would say that the acquisition didn’t go as planned. It’s one of the classic examples of overpaying for it, not integrating it and getting all the synergies. That’s what put them on that road to where they ended up, unfortunately.
A friend of mine joined a startup, which merged with a different startup. That combined company was acquired by Bay Networks, which was acquired by Nortel, which spun the company out. He had 5 or 6 other companies, and he never changed offices. He was in the same chair every day through six companies. It was a crazy time, to say the least. Anyway, you mentioned Sarbanes-Oxley and a little bit of trivia. Sarbanes-Oxley was signed into law July 30, 2002. Do you know how I remember that so exactly? My firstborn son was born the same day. I came home from the hospital, and I was a CFO of a private company. It didn’t impact me all that much, but I was upset when I learned it went through. Quite a time.
The Phenom Opportunity
I’m going to ask you a dumb question in the sense that I could probably answer it for myself, but you’re with a great company, Phenom. I’m curious if there’s a story between how you became aware of the role and what attracted you to the opportunity. Perhaps that second part is fairly obvious, but I’d love to hear it anyway.
It’s an interesting question because I wasn’t looking for a role. The first time I spoke to Mahe, who’s the CEO and co-founder, it wasn’t the idea of interviewing for the role. It was more out of curiosity. I spent several years in California when I was with PwC and got to know the ecosystem around startups and software businesses and high-flying tech, in general, quite a bit. I retained a network of folks out there who I still rely on. One of the people in that network was a recruiter. He had called up and said, “Do you know these guys, Phenom?” I’d never heard of them. He described that they’re an enterprise software business or a unicorn, and they’re getting ready for an IPO.
My first reaction was that there’s all of that here in Philadelphia, and I’ve never heard of them. I got to meet these guys to see what they’re up to. That’s what led to a conversation with Mahe. The conversation wasn’t about the IPO or the business. It was more of a philosophical conversation. It was a conversation about why Mahe believed in the purpose of the business. The founders are two brothers. They’re from India, and their dad had a business while they were growing up there. One of the things that their parents impressed upon them was to make sure they created meaningful work for people. That stuck with them. They carried that thought and that vision.
When it came to founding a company, they wanted to do something around that. We talked about that a lot. I thought that was a fantastic reason to be in business. I could tell very clearly that this is not a business that’s being founded to flip it or make a quick buck. It’s been founded with that purpose in mind. Everything the brothers have done and everything that I’ve done since I’ve been here has been around how we realize that vision.
We rarely talk about the next fundraiser or how we grow more for the sake of growing. What do we need to do to get to that vision that we founded the company with? That was it. I left there, and I talked about my dad’s experience and some of the things Mahe and I talked about. That’s when that experience emerged in my head. This isn’t what should have happened with my dad. Something different should happen. The reality is until you think about these things, you take them for granted. You think that’s how the world is. When you see an ability to change it in a powerful way, it’s a call to action. That’s exactly what happened to me, and here I am.
It’s interesting, all your experience beforehand, and they were with substantially big companies for the most part, but it led you to this fantastic opportunity. I’m curious as we sort on your career path a little bit, what are the couple of lessons that you learned along the way that prepared you for this ultra-high growth company? I know that they remain private to this day, I believe, but it’s a bit of a different challenge. What are some of the lessons you learned, and maybe some key mentors that you had along the way?
I’ll break that into two if I can. One is the career journey, how I prepared, the mentors, and stuff like that. I think there’s another aspect to this, which is a personal growth journey and may be worth touching on as well. In terms of the career path, it’s about adaptability. If you think back to what I said, if you’re serious about being curious about what you’re doing and where you are and you want to learn and have an impact, that’s what you need, these smaller hypergrowth types of businesses.
I’ve seen many companies like Phenom when I was out in Silicon Valley with PwC. Some of the companies I took public were names like Yahoo, eBay, and a bunch of others that have since fallen by the wayside. What they all had in common, though, was that they didn’t know. They didn’t have all the answers. Nobody at those companies has all the answers because you’re on the cutting edge of something new. It’s about applying curiosity, learning, and adaptability to move the business forward.
That’s what you need, whether it’s my experience at PwC, or even at IBM. I co-created one of the first ERM programs. That was a cutting-edge thing for IBM because it had never been done before. It’s that ability to not be afraid of failure, on the one hand, because if you get too risk-averse, you tend to not push it hard, and you tend to miss opportunities. That’s what it was.
I’ve had some great mentors along the way who connect that in, thinking about this idea about failure. When you think about finance folks or the finance function in general, we have a well-earned reputation for spotting risks before they become problems. When leadership seeks a strategy to avoid financial pitfalls, they often turn to finance.
Playing it safe with corporate resources generally serves us well. What about our careers? Does it pay to play safe there as well? That was a question that hit me hard from a mentor that I had worked with a number of years ago, a gentleman by the name of Lon Greenberg, who was the CEO of UGI. He said, “You’re great at protecting the company’s money, but when was the last time you took a risk yourself?”
It made me realize that I’d been applying my own risk-averse mindset, not only to my work decisions but also to my career. What that resulted in was the hesitation to share ideas and meetings, unless I was 100% sure they were perfect, turning down some opportunities to do different things because I was worried that they might expose weaknesses in my skillset, even though they could have been great career accelerators, thinking back to it.
Something had to change. What I did was challenge myself not to fail at failing and set a goal to fail at three things over the following year. Being a finance guy, these were risk-adjusted failures, so nothing catastrophic happened. Over time, that fear of failure subsided. What I felt was that it made me a much more valuable business partner. Lessons learned along the way, if anything, would be that while I can’t always avoid failure, what I can do is I can try and make it happen quicker. I can learn quickly. I can do more experiments in the same amount of time.
That’s what best prepared me to come to Phenom because this is a business that is growing at breakneck speed. Part of our culture is to fail fast because we know that we don’t have all the answers. The only thing we can do is experiment, reiterate what we learn, and move forward. That’s a mindset you have to have. I think some of that might be innate. You have to be comfortable with failure. A lot of finance people tend not to be, but like my own journey, I think you can get there if you do it in a structured way.
You mentioned failing fast. Is that a mantra in Silicon Valley? I’ve heard a lot of people who work there say similar things over the years.
It is. When you’re trying to build great companies or you’re trying to push your frontiers of knowledge, you have to fail fast. You don’t want to linger on something. If you think it’s dead, you have to accept that and move on. It is a mantra, though.
Relating to the Founder
It makes sense. One thing I’m curious about, and correct me if I’m wrong here, but Mahe is not only the CEO. He is the founder of the company, too?
He’s a co-founder. That’s correct.
As an outsider without a prior working relationship, how do you, as the incoming CFO, build a relationship with an obvious genius who’s very passionate about the company? I’m not suggesting it’s egotistical, but there’s a different sense of ownership when you’re the founder of the company versus when you just work at the company. How do you build that meaningful strategic partnership?
I’ll start by saying that I think I’m fortunate in the sense that, compared to many of the founders and given Mahe’s vision for this business, he understands that the only way we’re going to scale to the size that we need to be to help a billion people discover the right work is he’s going to have to let go. That tends to be one of the biggest challenges with founders. It’s their “baby,” and letting go is very hard for them. I think Mahe instinctively knows he’s going to have to let go. Part of the reason I was brought in was to help him scale himself, if you will. I had a bit of a head start there.
I think the question is a good one, but it’s not all that dissimilar to most CEO relationships that I’ve had. What does that look like? If you think about your typical CEO, and you think about the personality, these are people who are driven. They’re ambitious. They have a vision, and failure is not an option for them. If they’re not succeeding, they’re waiting to succeed. A big part of that is developed around an inability or an unwillingness to hear no. They want to charge ahead at full speed, they don’t want to hear about obstacles, they don’t want to hear no, and they want to be able to get it done. That’s what makes a CEO typically successful.
What makes a CFO successful is saying no a lot of times. I think the worst thing a CFO can do is say yes all the time. If it makes sense to say yes, you should say yes. What I’ve learned in my career is that you have to be able to temper some of the enthusiasm that a CEO might have for some ideas by saying no. It’s that ability to say no without offending them, by making them stop and think. That’s what gains their respect.
What I’ve learned is that CEOs expect their CFO to tell them no. They look at their CFO as their guardrail. If you’re not able to do that, a lot of the value goes away from that partnership. What I try to do with Mahe is to try to get him to stop and think. He does. He’s a genius. He’s a very fast thinker. Because he thinks about the long-term, it’s not hard to do that. The partnership is about doing that in a way that doesn’t turn him off or get his guard up, so he wants to dig in and overrule the objection.
That makes sense because it’s not like you’re supposed to be like, “No, no, no.” Some people have shared a philosophy that roughly supports them in public but challenges them in private. By the way, a lot of CEOs now say that the CFO is the only one who’ll do it for me. You don’t want to be surrounded by a bunch of yes men and women. The expression “the emperor has no clothing” sometimes, it’s on you to say so.
Your point is right on, which is number one, I would never air any disagreement that I might have other than in my one-on-one with my CEO. That’d be the same for all the prior CEOs as well. I’d never be able to write something without fear of being taken out of context. I think it’s also essential to have that face-to-face conversation. It makes me think about what I am going to say. What might he respond with? What do I respond to his response with? It forces you to have that conversation in your mind. The nature of being able to do that face-to-face forces you to confront how important this is.
Ultimately, what I’ve told all of my CEOs is I’ll support it, and it’s your call. As long as you’re not asking me to do something illegal or unethical, I’ll support you. I’ll give you my point of view. Once we make a decision, I’m going to be in lockstep with you. That’s the part of supporting them in public that becomes important.
You can’t challenge the CEO publicly unless the person is lying. I’ve had a couple of those awkward moments in board meetings. God, make the word stop coming out of your mouth. That’s not true. He wasn’t lying. He just didn’t understand something. I want to ask a question. Your answer to it will be quite interesting because of your experiences in the company you work for now. It’s an interesting company, rapidly growing. I don’t tend to think of Philadelphia as a tech mecca. How do you build a world-class team around this unicorn-type company? Recruit, motivate and train the talent, not only in finance and accounting. CFOs are across the entire enterprise. What’s your philosophy, and what can you share about building a team like that?
I think it starts with learning. I’ve now been in several positions where I’ve had to go in and build a team, whether it’s in Philadelphia or any other city that I’ve worked in. The common denominator, in all of that, is learning about the business. Ultimately, the team has to serve the business, not my ego or my desire. If you’re coming into a new role, you have to understand what the business needs. It takes about 30 days to do that.
I think a lot of times where people can go wrong when they’re trying to build a team is moving too fast and trying to make changes based on prior patterns that they may have seen without fully assessing whether those patterns are still appropriate for the current situation.
It starts with understanding what the business needs. A lot of times, it could be a one-day strategy session with all the stakeholders and asking them, “What do you think finance should continue doing? Why should we stop doing it? Why should we start doing it?” That surfaces all kinds of ideas. I’m never shocked anymore about what people think finance should be doing because they’ve developed their ideas about what finance is.
Once you have that inventory of what people think you should be doing, it becomes a much easier conversation to have around, “Okay, we’re not currently set up to do X, Y and Z.” Either we don’t think we can do that, or we can do that. Still, we need more resources because that’s where the rub is. You receive the proper funding and resources, enabling you to deliver on the expectations people have for your group. When people realize that that means more investment or it might mean some other reallocation of resources, you get that list down to something that everybody aligns on as to what finance should be doing. That’s the starting point.
After that, it’s about making sure you’re filling those holes. There are a lot of things where I found, in every case, finance over time takes on opportunities and takes on other responsibilities that might’ve made sense when they were taken on, but two, three or four years later, they don’t make any sense at all. You should stop doing those and then reallocate the resources to what the business is looking for. I think in terms of geographic location, there’s a higher receptivity now to remote work and finding the best people wherever they might be. That’s something that used to be a little bit less before the pandemic.
I know things are moving back to returning to the office, but some hybrid is likely going to exist in the right situation. If I needed a SaaS expert, for example, and there are not a lot of those types of people in PA, as you can imagine, I could go to the Silicon Valley area. I could go to New York, which has good pools of people like that, but they’re expensive.
The approach that we’ve taken is, “We can teach you the technical stuff. What’s the innate stuff that I can’t instill in somebody?” It goes back to the curiosity. Do you have a willingness to learn and a desire to make an impact? What I found is that if you bring people in like that, you can teach them the technical stuff and if they’re willing to learn it.
Agentic AI
I sometimes joke that I’m required to ask this question, but about gen AI or AI in general, what’s the impact that AI is going to have on jobs and maybe even the job market generally?
That’s the trillion-dollar question at this point. I’d say that AI is probably already beginning to transform the job market, and we’re getting started. The biggest shift is that AI has gone from being a tool to becoming an agent on its own. The game changer is these AI agentic models. What that means at the end of the day is that any job that involves a lot of repetitive, predictable tasks is likely not going to exist shortly.
Think about customer service roles, entry-level financial analysis roles and even in the legal space. AI can draft reports, reconcile accounts, and write code faster than humans ever could and much more accurately. That doesn’t mean that humans become obsolete. It means that the nature of work is evolving. We’ve seen this pattern repeat. When PCs and the internet came out, it didn’t mean that jobs were lost in totality. It just meant that jobs became different.
On top of all of that, there’s an even bigger trend taking place, which is the merging of what I would call the physical, digital, and biological worlds. You think about AI-powered wearables and how they’re changing healthcare. Think about digital twins that Amazon, Tesla and people like that are using in their manufacturing facilities. In finance, AI is making risk analysis and fraud detection way more sophisticated than it’s ever been.
We’re moving into this world where resources are no longer capital and human. There may be a blur between those two. That line is getting blurry every day. When you think about HR, talent management and CHROs, this is a massive shift. CHROs are accustomed to managing human resources, but now they may have to oversee robotic resources that can potentially perform the same tasks as humans. Where does that sit? When you think about those big strategic questions, that’s exactly where Phenom comes in. It’s why we exist.
What that means is that companies are going to need to stop and rethink what they’re hiring for. It goes back to what I talked about with the pattern matching of inferred skills. If AI can handle routine tasks, you need your human workers to focus on things like problem-solving, creativity, emotional intelligence, and all those areas where AI still doesn’t do much. The key becomes hiring for adaptability rather than the technical skills or a prior demonstration of what you’ve done.
Secondly, how companies manage talent will change. AI can personalize training, you can predict burnout before it happens and maybe even analyze team dynamics. It also raises big ethical questions. How do you ensure AI-driven hiring decisions are fair? How do you prevent bias from creeping in? At the end of the day, what it means is that AI isn’t just changing jobs. It is changing what it means to do work. The people who succeed aren’t going to be the people who know how to use AI, but it’s going to be those who can collaborate with it in ways to create new value. I’d say the best thing that any profession can do right now is to stay curious, keep learning, and be ready to adapt. This shift is coming, and it may come faster than we think or expect it to.
I think you’re spot on. We’ll know for sure in a few years, but if nothing else, it’s a fascinating time to be in the workforce. When we were chatting, you said some things that I thought were interesting, and my colleague referred to them as your approach to success. I wanted to touch upon them briefly. You had three that stuck out to me. The first one is not necessarily intuitive to CFOs, and yet I would argue that it’s critical. It’s knowing how to sell an idea.
I learned this one the hard way, and I’m happy to share that lesson with you. I was championing and leading a major project that was meant to revolutionize how we manage commodity price risk. It was a variant of value at risk, which is a well-proven model, but we were adapting that for our particular use case. On paper, this was a no-brainer: demonstrably higher margins, lower risk, and a lower path to success. What’s not to love?
I made a critical mistake. I assumed the idea would sell itself, so I didn’t invest any time in bringing key stakeholders along on that journey. I missed, or maybe completely outright ignored resistance that I saw bubbling earlier on under the false impression that a rock-solid business case by itself would convince people. Instead, what happened was I hit every single barrier that you can probably hit in change management. I’ll go through them to share some of the lessons learned.
The first one was a lack of trust. What I didn’t realize is that people may nod their heads and agree with you, but that doesn’t mean they believe change will have any value or that they’re vocalizing it. There’s another one around uncertainty. This is where people feared how it would impact them, and they weren’t voicing it. Maybe they were afraid to voice it. Thinking back, these are people who had learned a process and had applied that process, in some cases, for decades. They knew how to do it. They knew how to look good doing it. They knew how to get compensated for doing it. I come along, and I upend all of that.
There’s all that uncertainty and fear that’s under the surface that people don’t always raise in these meetings. The other one was different perceptions. Where I saw solutions, people saw problems. That conversation never had a chance to take place. We never resolved which side those things were on—conflicting interests. When you think about change management of that magnitude, you’re going to have winners and losers. You have to be able to reach out to those people and understand things from their perspective. The last one is probably emotional pushback. People often don’t want to change. It may be an innate human feeling that the status quo is safe. The status quo works. Why change it?
People don’t want to take that leap to do something different because somebody has a better business case. The result of all of that was this model that we built, but never got fully adopted, ultimately died a slow death, not because it was a bad idea, but just because I failed to get that buy-in from all constituencies. The company spent close to a million dollars on that project. The lesson that I learned was that pervading isn’t about logic. It’s about relationships. If you want to make a change, have an impact, and have people embrace change, you have to build trust. You have to address their concerns, make them feel like they’re part of the process and develop their relationships. That’s a lesson that I learned the hard way, not at the cost of a million dollars, but one that I’ll never forget.
It wasn’t your money, but I’m sure it felt like it. That makes a lot of sense. One of the other things you said, and you touched on it a little bit earlier, is to listen and remain curious. Is that your nature or is that something you consciously put effort into to develop good habits? How does that pay off for the CFO?
It was pretty triggered during a management training session when I was at IBM. One of the things that IBM does well is that it helps its resources move from department to department. One of the first things I learned in that session was the idea that when transitioning from department A to department B, it’s helpful to think of yourself as a virus. When you go into department B, you’re the virus, and everybody in that department is going to act as antibodies.
The way you overcome that is you have to fit in, look like them and feel like them, so they don’t feel threatened by you. If you go in with an agenda looking like a virus, you’re going to get a very severe and immediate reaction. How do you not do that? This is where the idea of learning came from. Go in and take the time to learn.
You may think you have the best idea in the world, but that doesn’t mean somebody hasn’t already tried it. That doesn’t mean there’s a reason it’s not going to succeed. You have to snuff all that stuff out. I think the tendency for most folks who are ambitious and driven is that they want to have an impact on day one. I’ve talked about curiosity, learning and having an effect.
For me, having an impact was maybe more overweighted earlier in my career. What I’ve learned is to have a bigger impact, you have to be curious, learn and ultimately, develop the right plan to be impactful. At this point, it probably feels like second nature. If I’m honest with you, it’s not something that I had innately. I did have to work at it and develop it over time.
Confusing Success With Happiness
Most habits do require a little bit of work. Some things were born in. The last one, and perhaps the most important, is more of a life thing than a business thing. Don’t confuse success with happiness. What does that mean to you?
I think a lot of people assume that those two are the same thing. In my mind, they’re very different. I think of success as being external to me. It’s about achievement, promotions, financial rewards, and things of that nature. Happiness, though, is about something internal. It comes from why I’m here, what the meaning of my life and my relationships are, and whether I’m truly fulfilled with my life.
There’s a great book written by Jonathan Haidt called The Happiness Hypothesis that I read a few years ago. He has a great metaphor that he uses. He talks about our mind being like a rider on an elephant. The rider represents our logical, goal-driven side, the part that plans, strategizes and chases success. The elephant is the emotional side.
Think about that as our need for connection, purpose and well-being. The point of the book was that you can push the rider as hard as you want, but if the elephant’s unhappy, you’re going to feel unfulfilled. No matter how much you achieve, you’re never going to feel that sense of fulfillment that I think we crave. That’s maybe one distinction.
The other real eye-opener for me was, again, from the book, the idea of this hedonic treadmill. We all think about getting that next milestone, that next race, that next title, that corner office, whatever it is, will finally make us happy. It does, but only for a short period, because what ends up happening is we’ve all got a set point of our expectations in life. Once you get to that next level, you get a euphoric high, but then you normalize back to where you were initially.
The book mentions a great study about looking at the lives of lottery winners and people with quadriplegia. What they found was that even though the lottery winners experienced this high after winning the lottery, two years later, they were exactly where they were at the start of that journey—the same for people with quadriplegia. We adapt very quickly to our circumstances. That’s why chasing the next milestone won’t bring you satisfaction, because you’ll always find something else to pursue.
My challenge to folks that I mentor these days is not just to chase success. Design a career that makes you happy. Work hard, aim high, build wealth, and do all those things, but don’t ever lose sight of why you’re doing it. Success should be a tool to make you happy and to give you fulfillment, not an end goal in itself. Invest in relationships and find purpose in what you’re doing. Make sure to build the life that you want to live.
I want to turn back to Phenom. I’m curious, great success story. What do you think are some of the biggest challenges and opportunities facing the company in the next few years?
Where we sit, we are still a small business, despite being a unicorn and the success that we’ve had. I would say the greatest challenge and the greatest opportunity are probably two sides of the same coin, maybe not surprisingly. We do think we’re sitting on a very interesting point in life in general, given this seismic change that’s going to come with AI. The opportunity is going to be around some of the stuff I talked about around AI agents and how the workforce gets transformed because of that.
I’ll give you some statistics to help make that more real and concrete. If you think about the United States, there are about a million people who work in HR in some capacity or other. You think about the average salary that people make, and you end up with a payroll just in HR of about $100 billion. It’s a big spend in total. If you think about what these AI agents can do, it’s not inconceivable that you could take out about a quarter of that cost.
You’re talking about a $250 billion potential opportunity or time in business speak. The way that we think about business is if we can capture, let’s say, 10% of that, that becomes a $25 billion business. That’s exciting because that will undoubtedly allow us to do what we want to do to further our mission. We’re building tools, and we’re planning around how we can help that come about. The risk, of course, is somebody beats us to it. It’s the blind spot.
In technology, you’re always paranoid a little bit because you know what you know, but you don’t know what you don’t know. There are a bunch of startups that are forming every day, doing great work. Some of the funding that’s going into these businesses is incredible. The risk becomes that somebody beats us to that punch.
It’s quite a special opportunity and some challenges. I also want to talk about your role as a CFO. It wasn’t all that long ago that strategy and finance were almost different things. They lived in their own silos to an extent. Your role as the CFO is to make sure that doesn’t happen unless you happen to work for a company, 1 of the 100, where the CEO is a former CFO. You’re the only person who’s a strategic thinker and a financial expert. It’s incumbent upon you to make sure that they are talking to each other. How does one do that?
Through the AOP or the annual operating process, a planning process. To me, that is the glue. If you do that right, you can link those two things very closely for all the reasons you talked about. The beauty of the AOP is that’s what most compensation plans are based on. When people’s compensation is at risk, they tend to focus on details. The key for a CFO is to make sure that the annual planning process is tethered closely to the strategy.
Like most businesses, your planning process may involve an annual fiscal cycle, but the investments that you’re making and the initiatives that you’re doing tend to have lives that are shorter or longer than a year. That’s a fiscal creation. The idea is to make sure that the planning process takes into consideration not just what happens this year, but also a multi-year view.
That’s how I’ve done it. You can do that in the right way, and you have a good outside-in view of where we want the company to be. I always start out thinking, I want to be in the top decile of all high-growth companies. What do the metrics of those businesses look like? That informs me what my planning process needs to deliver. I have to make sure that I have the right behaviors and the right compensation incentives built in to drive that.
That makes sense. I believe you are, or at least were, a CPA at one point in your career. It’s great for a rules-based system, but sometimes, those aren’t the best metrics for measuring business performance. What are some of your favorite KPIs that you use to determine success or failure at Phenom?
Being a SaaS business, software as a service for folks who may not be familiar with that term. We have some very unique metrics that are important to us that we look at and are probably more relevant from a valuation perspective than the GAAP numbers. I don’t think there’s any SaaS software business in my lifetime that’s ever traded on any GAAP number; not to diminish the importance of GAAP, because ultimately, that’s the final check on what we report.
The numbers that we tend to look at are things like growth retention. How many of our customers are we retaining? Net retention, which is how much those customers buy more of our product. You want to expand that relationship over time. That’s a good indicator that people are getting value out of what you’re selling them. In the SaaS space, in particular, there’s a concept called the rule of 40. That’s the sum of your growth rate, plus your profitability should be 40 or higher. That’s a capital allocation technique. That’s what I mostly spend my time looking at and then trying to improve.
I haven’t been a CFO since 2007. You are all still using the rule of 40. That’s good to know.
It’s coming back into vogue. You lost favor for a little bit when multiple got blown out because that’s the only way you could fund these things, but they’d come back with a vengeance.
Work-Life Integration
I like the basicness of the rule. It’s intuitive, you can calculate it pretty simply, and it leads you to the correct conclusion long term. I want to switch gears a little bit. I know you have three kids. You have a lot going on. One of the challenges for CFOs, I think for executives generally, is the work-life balance, or as a few people have corrected me and said, the work-life integration. What’s your secret to doing that? From what I know about you, you seem to probably have a good grip on those things.
The thing that has helped me has been to integrate my goals and my to-do list for work and home. When you do that and you prioritize what you’re going to do today, it helps you focus on what’s most important. Sometimes, it’s going to be something at work. Most of the time, it’s going to be something at work. There are times when there’s something on my personal to-do list that when I look at the totality of what I have to get done, I can tell it’s going to be more important to do that.
That’s also from the lens of not looking at it just today, but looking at it from the perspective of how I feel about this decision a month from now. Am I going to regret this priority order a month from now, a year from now? That helps keep me grounded. There are times when I have to say, “I can’t do this.” I will say the culture at Phenom, given the background of what we’re trying to do, is around empowering people to be productive in their work lives through having flexibility in their personal lives. I’m thankful for that. That would be the secret.
That makes a lot of sense. One thing I like to conclude with is what’s your advice for the next generation of CFOs? I’m thinking controllers, VPs of finance and even people who are CFOs for the first time. What should they be thinking about in terms of skills to develop, how to form relationships, whatever it is in your mind that you wish you knew earlier in your career?
The one thing that I wish I’d learned earlier was the idea of selling ideas. It’s not innate to most CFOs or finance people. It’s not innate to me, but I think that’s becoming more important for the role. I see this role evolving over the next 5 or 10 years. All these folks that are aspiring to get into the role, into the seat, during that period. I think it’s a fantastic opportunity, way more than I had. The reason for that is, if you think about what we used to call the Chief Operating Officer role, you don’t see as many of those anymore. That role is slowly declining. For the most part, it tends to be only in a situation where somebody is being groomed for the CEO role.
The idea of a COO is going by the wayside. That’s great news for CFOs because I think CFOs are becoming that COO. That gives us the ability to move out of the accounting, the numbers, and the GAAP stuff into having an impact on the business. I would say remain curious, learn about the business and understand the value drivers. If you can do that, sell ideas, create relationships and build trust, I think any CFO with that complement of skills could be truly dangerous in terms of what they can accomplish.
I think that is fantastic advice. Davinder, this has been a great conversation, a lot of fun, and some fantastic insights. I know you have a lot going on, so I’m certainly grateful for your time. I’d love to give you the final word. If there are any things you’d like to recap or share with our audience, that would be fantastic.
One thing I’ve learned about life is that if you’re clear about where you want to go, the universe has a way of orchestrating events and things around you to drive you to that point. You’re going to get there one way or another. The best thing you can do is get out of your own way and get there as quickly as you can because it’s powerful.
That wraps up this episode of the Secrets of Rockstar CFOs. A huge thank you to our sponsors, Planful and TravelBank. Don’t forget to subscribe and leave a review at RockstarCFOs.com. Until next time, rock on.
