From lengthy contract negotiations to complicated licensing models, enterprise software is notoriously difficult to buy. But by aggregating third-party software, consolidating cloud spend, and standardizing contract terms, cloud marketplaces from Salesforce, Microsoft, Amazon, and others are promising to change that.

Cloud marketplaces aren’t new, but the increasing proliferation of software and need for digital sales channels have accelerated their prominence. Last year alone, sales through cloud marketplaces grew 70% to $4 billion, which was three times the growth of the public cloud, according to Bessemer’s 2022 State of the Cloud report.

But marketplaces are also tricky to navigate, with stringent review processes for listing software, requirements around pricing and packaging, transaction fees, and more. That, plus the nuances between the different cloud marketplaces, can make it challenging to build an effective go-to-market strategy.

“Ultimately, no one wants to build software to sell software, and that's why we exist,” said John Jahnke, CEO of cloud marketplace platform Tackle.io.

Tackle.io acts as an intermediary between enterprises and the cloud marketplaces run by Amazon, Microsoft, Google Cloud, and Red Hat. The company’s software handles the entire go-to-market process, from marketplace listing to financial management and reporting.

In a conversation with Protocol, Jahnke spoke about the evolution of cloud marketplaces, how software purchasing is changing, and more.

This interview has been lightly edited for clarity and length.

How have you seen cloud marketplaces evolve?

We got started as a company in 2016, and had our first customers in late 2017. AWS started their marketplace in 2012. Microsoft had a marketplace but really evolved it for Azure, I'd say with more acceleration in 2018, 2019. So they have been around for a while, but really what we've seen is, the pandemic accelerated everything online. Like the Satya [Nadella] quote, “10 years of digital transformation in two months” kind of thing. The pandemic no longer allowed sellers to meet with their buyers, and they had to figure out ways to engage with their buyers to let their buyers buy where they wanted to buy. And with all things moving to cloud, the cloud marketplaces accelerated in prominence as being part of the solution.

There’s a few [reasons] behind that beyond just the pandemic. One, the cloud budget tends to be one of the fastest-growing budget line items in a lot of companies. The cloud providers were really smart in saying, “If I can find a way that's good for buyers, good for sellers, and good for us to make cloud budget available for marketplace purchases, that should only allow people to buy more things that are going to run on our platforms,” which make workloads more sticky but they also help buyers get access to the tools they need to accelerate. So they designed the incentives to say, “You can make a long-term commitment to us [and] you can use some percentage of that commitment in order to buy third-party software through the marketplace.”

We're also in this era of Moore's law for software where the number of software companies is growing massively. It's probably not quite exactly at the pace of Moore's law, but Forrester said there's 200,000 software companies today; there will be 1 million by 2027. So a lot of expansion, and that puts a lot of pressure on buyers of software because now there's so many more titles, there's more empowered buyers, there's a lot of user-based software. Procurement teams who once used to govern and protect the software process really closely no longer can do that; they have to find ways to enable buyers to consume more software. Marketplaces also become a pretty interesting avenue to enable them to get access to what they need when they need it, but still have some form of governance around it, where everything's landing on the same bill and the same contract.

How important is discovery? I imagine that [discovery] is going to become more and more prominent as more and more software is listed.

Discovery today, I would say, is still not via marketplaces. The majority of times software products are discovered, they’re discovered the same way we discover products in our consumer life. You go to Google, you search for a problem, you look at the results, you read some content, that content helps you navigate to a place, likely that place ends up being a software company's website where you can read more about the product, you can look at customer case studies and see: Does this identify with me? You can then go to their pricing page and figure out how to engage. Marketplace sometimes shows up in that journey, but oftentimes it doesn't.

John Jahnke, CEO of Tackle.io.Photo: Tackle.io

I do think that will change tremendously as more and more buyers in the future are buying this way. I almost think back to the early days of Amazon.com. You went to Amazon to buy a book, you didn't think about buying a TV. Fast forward to 2005, you buy just about anything there. I think that's the style of transformation that we'll see with shoppers shopping on marketplaces. But today, discovery happens outside.

There's this concept called a private offer with marketplace, where you can use the budget infrastructure and contract vehicle of the marketplace to do a custom deal, and these are the most prominent deals. The majority of deals happening through the marketplace today follow this private-offer motion where someone discovers a product and decides that they want to buy it, but then determines that marketplace is the most efficient way to do it, and they construct a deal that ends up being a private offer and uses the marketplace infrastructure.

Why in those cases do companies feel like going to the marketplace would be better than going direct?

I think budget is a big thing, budget consolidation and vendor consolidation. A lot of it comes back to that Moore's law for software theme: They don't want to maintain contracts with 1,000 different suppliers; they'd much rather have an enterprise agreement with Microsoft or an enterprise agreement with Amazon or Google and then a lot of sub-agreements underneath that, but it's still governed under the same budget. The cloud providers also all have terms that make it easy for a buyer to just say, “Hey, I can use the Microsoft or Amazon contract.” So it's standard contracts versus having to negotiate one-off contracts.

There’s some stats in the market around how fast you can sell via marketplace and marketplace being 50% faster than doing a direct contract, and I think we're still in the earliest days of seeing that happen. We think being easy to buy for a software company is actually a killer feature. In a lot of industries, security as an example, there's so many security companies — and I'm not a security expert, but I struggle to interpret who does what. There's five different versions, they all sound about the same, and not being an expert, you look at it and you're like, “I don't know, they all sound like they do the exact same thing to me.” In that instance, the person who is easiest to buy or easiest to do business with may win.

In what ways do you think this might shift the balance of power in the industry? If you have Amazon, Microsoft, and Google, and everyone's buying software through them, does that give them additional power, additional levers?

We’re in this era of the ecosystem, and you think about the clouds, the clouds end up being these big ecosystems and all the cloud providers have many, many services they provide natively, but they're never going to be able to provide hyper-specialized versions of all those services. If you look at a lot of the at-scale SaaS winners today, they are multicloud equivalents of a native cloud service. But what the combination ends up being is people use core infrastructure services from the cloud in combination with third-party software to make up their solutions.

Where I do think the cloud providers have a potential advantage in the future is just by capturing the [cloud] budget. I think IDC says the cloud budget at the end of 2022 will be $490 billion, it’ll add $90 billion in incremental budget this year. The enterprise software budget is $500 billion and I think that's growing — between 13% and 19% — percentagewise year-over-year. The marketplace actually starts to bring those two budgets together, and that's where I think there's an opportunity.

I don't think it gives the clouds a chance to be all things to all people because there's a lot of momentum around multicloud. Maybe not, “I’m not going to run one thing in three places,” but “I'm going to use the appropriate services from the appropriate places and put them together to deliver the best solution.” There is tremendous momentum around that, which I do think keeps the differentiation of why independent software companies and the hyperscale cloud providers will work together.

What are the benefits to independent software companies in listing on one of these, or maybe multiple marketplaces?

The main benefits are one access to the cloud budget, being able to ask your buyer, “Hey, would it be easier to buy from us on your cloud bill?” That is a huge value. Beyond access to budget, the use of their contracts is very beneficial. Then the third benefit is the ability to co-sell with the cloud providers.

What co-sell means is, we have a joint target customer, and they use Microsoft, for example, and I want to register a deal with Microsoft and be able to work together on that opportunity because if my software lands on Azure, it drives consumption for Microsoft, it delivers value to the buyer, so everyone wins. The cloud providers have very large teams of people supporting companies, they have very large budgets associated with them and tapping into that, not just from a software company-driven standpoint but in collaboration, is a huge benefit. But that does take some skill to get to. The clouds have, say, 200 or so services natively that their sellers are responsible to sell, and if there's 200,000 software companies, they can't sell 220,000 things or whatever that math works out to you, so you have to have a unique value proposition.

Why would the cloud buyer want to consume my software in this way? Why is it beneficial for them on their digital transformation journey with cloud? If you have good answers to those questions, co-selling becomes really powerful.

What are some of the areas you see companies struggle with when they're trying to [list] on the marketplace, and then how does Tackle help?

The marketplace is a sneaky, complicated problem, because it's a business model problem and a technology problem. What Tackle does is we built a no-code SaaS platform that allows people to make listing on a marketplace a business decision instead of a product and engineering decision. On top of our platform, we have the expertise to guide you through the journey to be able to initiate a cloud go-to-market [strategy] with success, because listing on a marketplace is not like this easy button of revenue where you list and magically money comes to you. You have to integrate it into your go-to-market system, you have to teach your sellers how to take advantage of it, you have to teach your buyers that it's available to them as an option. Our team partners with our customers to understand how to use our platform in order to build this cloud go-to-market system.

Listing is the starting line, not the finish line. Listing really is the first step, and then we work with teams to figure out who are the best targets for them, how can they position in the appropriate way, how do they think about pricing and packaging for the cloud — because there’s a lot of nuances there — in order to get them to launch, sell, and then sell repeatedly over time. So we look at that journey holistically, and then we give people one way to do it across clouds. Because if you try to go build this yourself, you have to build it once for one cloud, build it another time for a second, another time for a third, then you have to build tooling for finance and tooling for sales operations, figure out how to integrate it with Salesforce, it's just this layered engineering problem. Ultimately, no one wants to build software to sell software, and that's why we exist.

Last week, the Competition Commission of India published a damning report, alleging that Google was preventing major TV manufacturers from adopting Amazon’s Fire TV operating system. This Thursday, Amazon announced that TCL, one of the manufacturers at the center of the dispute, is releasing two TV sets running its Fire TV software in Europe this fall.

The unveiling of the two TV models is the direct result of a deal Google and Amazon struck in recent months, Protocol has learned from a source close to one of the parties involved in the agreement.

As a result of that deal, Amazon has been able to work with a number of consumer electronics companies — including not only TCL, but also Xiaomi and Hisense — to vastly expand the number of available smart TVs running Fire TV OS. All of these companies were previously barred from doing so under licensing terms imposed by Google.

The agreement may also alleviate some of the pressure Google has been feeling as regulators around the world have investigated its Android platform. However, some experts are skeptical a singular deal will address the overarching concerns with Google’s operation and licensing of Android to third parties.

During a briefing about the release of the TCL TVs, Amazon’s vice president of entertainment devices Daniel Rausch said the report issued by Indian regulators “and its findings speak for themselves,” and declined to comment further on the matter.

A Google spokesperson declined to comment on the relationship between the two companies when contacted for this story earlier this summer; the company didn’t immediately respond to a follow-up request for comment this week.

Amazon went on the offensive in India

The deal between Amazon and Google resolves a yearslong dispute over licensing restrictions Google imposes on hardware manufacturers that make Android-based phones, TVs, and other devices. In order to gain access to Google’s officially sanctioned version of Android as well as the company’s popular apps like Google Maps and YouTube, manufacturers have to sign a confidential document known as the Android Compatibility Commitment. The ACC prevents manufacturers from also making devices based on forked versions of Android not compatible with Google’s guidelines.

The ACC, which was previously known as the Anti-Fragmentation Agreement, had long been an open secret in industry circles. Its full impact on the smart TV space became public when Protocol reported terms of the agreement in March of 2020 and outlined how the policy effectively barred companies like TCL from making smart TVs running any forked version of Android, including Amazon’s Fire TV OS.

Google has been justifying these policies by pointing to the harmful consequences of Android fragmentation, positing that the rules assured developers and consumers that apps would run across all Android-based devices. However, the crux of Google’s requirements is that they apply across device categories. By making a Fire TV-based smart TV, TCL would have effectively risked losing access to Google’s Android for its smartphone business — a risk the company, and many of its competitors that develop both smartphones and TVs, weren’t willing to take.

At the time, both Google and Amazon declined to comment on the dispute. However, Amazon was a lot more forthcoming when it talked to Indian regulators for a wide-ranging probe into Google’s Android policies.

“Given the breadth of the anti-fragmentation obligations, Amazon has also experienced significant difficulties in finding [original equipment manufacturer] partners to manufacture smart TVs running its Fire OS,” the company’s Indian subsidiary told regulators in a submission that was included in last week’s report. Amazon told regulators that “at least seven” manufacturers had told the company they weren’t able to make Fire TV-based smart TVs because of Google’s restrictions.

“In several cases, the OEM has indicated that it cannot work with Amazon despite a professed desire to do so in connection with smart TVs,” Amazon said in its submission. “In others, the OEM has tried and failed to obtain ‘permission’ from Google.”

Officially, Google’s position remains unchanged

Signs that the two companies were able to resolve these issues first surfaced earlier this year, when Amazon announced a TV partnership with Hisense, followed by a similar announcement for Fire TVs made by Xiaomi. Asked about those developments, a Google spokesperson declined to comment on the evolving relationship between the two companies earlier this summer.

Instead, the spokesperson shared a statement with Protocol that outlined the company’s reasoning for its use of the Android Compatibility Commitment against forked versions of the mobile operating system. “Our focus as a platform is to provide consistent and secure software experiences to users and developers, across our ecosystem of partner devices,” the statement reads in part. “If a device is incompatible, we cannot guarantee that the apps on Android will work reliably, which could put user security at risk.”

Google’s statement also maintained that hardware manufacturers who sign the ACC were “free to build, distribute and market any device based on any OS.” However, if that operating system happened to be based on Android, the company would “ask them to ensure compatibility for [Google’s] ecosystem.”

The statement mirrors Google’s long-standing stance on Android compatibility — a position that would have effectively forced Amazon to make significant changes to the Fire TV operating system in order to more closely align it with Google’s version. Yet there are no indications Amazon has made any such changes.

Only a temporary reprieve?

Following Protocol’s initial report on the issue, regulators in India also began a separate probe to specifically look into the impact Google’s policies were having on smart TV manufacturers. The current status of that smart TV-focused investigation is unknown, but it’s entirely possible that India’s regulators would proceed even with an agreement between Google and Amazon in place.

After all, Google’s public statements suggest that the company hasn’t changed its tune on anti-fragmentation policies in general. This means that consumer electronics companies may still be prevented from using their own forked versions of Android on TVs if they also make Google-licensed Android TVs or smartphones.

Those concerns were echoed by a source familiar with Google’s OEM partner operations who spoke to Protocol on the condition of anonymity for fear of retaliation from the company.

“No one believes Google has found religion on the value of fair competition,” that source told Protocol. “What is more likely is they are feeling the relentless gaze of Congress and federal regulators into their anticompetitive practices, and are picking and choosing the battles they want to engage in to avoid unnecessary headline risk. This means some players may be allowed a temporary reprieve. [...] But it is at most a tacit short-term move.”

Chitra BalasubramanianCircleCI

CFO at CircleCI

Impactful CFOs are ones that go beyond numbers and understand all aspects of their business. In today's business environment, they play an important role in breaking down silos between teams, communicating to external audiences, setting hard and soft metrics, and ensuring all parties are aware of their company’s business model and value proposition.

With Gartner recently predicting that employee metrics like well-being, burnout, and brand satisfaction will override ROI evaluation in 2023, CFOs and financial leaders need to be thinking about the ways in which they contribute to keeping teams engaged and customers happy. It will be critically important for CFOs to not only focus on business metrics and strategy, but also on the employee experience.

In my current role at CircleCI, I've been fortunate enough to work on many parts of the organization (that extend beyond finance), including our People and Places function. During our transition to remote work during COVID-19, our organization was primarily accountable with ensuring the teams were supported and recruiting goals were met. Our team has also been responsible for being the glue between other parts of the organization, whether that's working with the revenue teams on how to best serve our customers or our product teams to provide supporting analysis resources. The role of finance is evolving, and people partnership has become more critical than ever.

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Tom FennimoreLuminar Technologies

CFO at Luminar Technologies

While this is a tough market for financial capital, it's a great market for human capital. Growth companies need to strike the right balance between financial discipline and investing for long-term success.

Tweet this.

Ambereen ToubassyAirtable

CFO at Airtable

Market leadership requires innovating quickly and executing company-wide. As businesses try to do more with less, identifying a singular, unifying goal across the company has never been more important. Accomplishing that North Star goal requires speed of decision-making and coordination of effort.

CFOs have the opportunity to strengthen the quality of decision-making, drive cross-functional execution, and enable growth by building legibility across the organization. Efficient growth starts with accurate data, and CFOs need to identify and consistently and correctly capture data around the most important metrics - which is easier said than done in a hyper growth company or global business with teams around the world. By building company-wide data legibility, CFOs can equip leaders to identify and pull on the levers that unlock the most growth with the most efficiency.

Tweet this.

Sarah SpojaTipalti

CFO at Tipalti

CFOs have more tools in their arsenal than most other executives, and those tools have a broader impact across the entire organization. Yet, we’re seeing stories every day of industry-leading companies clearing house with record layoffs.

CFOs bear the responsibility of considering the massive cost-saving benefits of retaining talent. The reality is that retaining staff is far less expensive than replacing someone, but it’s also a driver of employee engagement and organizational culture. CFOs have the capacity to invest in and directly impact the happiness and well-being of employees, which attracts the best talent to the business and incentivizes the current talent to stay.

While most signs point to a recession in the new year, CFOs should be looking at the company’s tech stack and betting big on efficiency-drivers such as automation and data.

Automating will alleviate time-consuming tasks to allow workers to focus on being strategic and creative. At the financial level, that additional time may mean finding ways to save money or consolidate spending. Automating goes hand in hand with data collection and analysis, which is the best way to diagnose waste and prevent it before it gets out of hand.

Ultimately, a strategic CFO is looking not just for ways to survive economic downturns but to thrive and come out the other side as a stronger company. To do that, they’ll need their team and commitment from the entire organization; I predict those who don’t put their people first will have more tough days than those who do.

Tweet this.

Michael TannenbaumBrex

CFO & COO at Brex

CFOs — especially in this environment of macroeconomic uncertainty — are always looking to increase return on company investment. A related trend that has me most excited is the move to digital-first operations and workforce models, which actually lower bureaucracy and increase efficiency, especially of the largest expense: personnel. This global shift gives finance leaders the opportunity to be catalysts of organizational change, efficiency, and growth. Traditional finance has always been about command and control, but the shift toward distributed and global work in the last two years has made this more problematic. There is now a massive — and urgent — opportunity for CFOs to rethink the financial tools and look for solutions that empower teams, reduce bureaucracy and overhead, and enable money to flow to where it can have the most impact for the company.

By adopting a consumer-grade, digital-first approach to finance, CFOs can help their companies move and grow faster without sacrificing control or financial discipline. Furthermore, a modern approach, such as that enabled by the Brex Empower software platform, can scale and adapt in a way that other financial services and software can’t.

To survive and thrive, organizations must make strategic investments in digitizing and modernizing their financial systems and workflows. And CFOs are poised to lead this digital acceleration of the enterprise to drive profitability and growth.

Learn more.

Tweet this.

Abishek ViswanathanNuro

CFO at Nuro

Periods of economic uncertainty can be an opportunity in disguise. Decreased capital availability and a higher cost of capital compel management teams to evaluate their capital allocation process and exercise more discipline to prioritize the most critical investment areas for their companies. This means eliminating "nice to have" spend items and eliminating any waste altogether. A lot of us are doing this already, but the past few months have been a reminder that lean operations and thoughtful spending — whether it is in a period of stability or uncertainty — is a timeless, effective strategy. With macroeconomic headwinds remaining persistent, CFOs should be running through a range of scenarios constantly, and have a playbook for a prolonged, multiquarter recession.

Tweet this.

Anna BrysonDoximity

CFO at Doximity

One of the most impactful ways we can deliver long-term value to all of our stakeholders is by operating responsibly, sustainably, and ethically. As CFOs, we have a unique opportunity to help deliver that value by investing in and operationalizing our businesses in ways that maximize our purpose.

ESG continues to be an area of focus for CFOs because we know it builds trust and leads to greater long-term value. Over the next few years, I believe we will see more CFOs leaning into ESG, particularly diversity and social impact, and investing in people, products, and services with a more inclusive lens. By investing in these areas, we can not only attract and retain a more diverse workforce, but we can also deliver more inclusive products that better reflect the society we serve.

I also believe we will see a greater focus on corporate purpose. Whether you’re a startup or an established public company, aligning your strategy with your corporate purpose, is critical to creating long-term value. At Doximity, our mission of making doctors more productive so they can better serve their patients is our North Star. By staying firmly focused on this mission, we believe we can make the most meaningful impact and deliver the greatest value for our stakeholders and communities.

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Andy WamserMativ

CFO at Mativ

Right now, financial and business leaders, especially of global organizations, need to be focused on balance. We all see the ongoing volatility in the global economy, particularly in Europe, and hyper-inflation keeping its grip on the input environment as the prices of energy and raw materials continue to surge. While many once forecasted that inflation would abate and prices would cool, it’s likely that we’ll exist within this hyper-inflationary environment for longer than we expected.

Therefore, a primary objective for global CFOs is to strike the right balance between positioning the business for continued, sustainable long-term growth while preparing for a short or prolonged recession. Our job is to deliver value for all key stakeholders — not just shareholders and investors, but employees and customers as well. We have to satisfy Main Street, where our employees work and live, as much as Wall Street. And so, for coming quarters, CFOs must constantly focus on balancing between raising the sails for growth and battening down the hatches.

This balance is not only in the business decisions we must make and execute, but also in how we communicate and the tone we set with all stakeholders as we navigate the current environment together. Everyone knows that there are challenges and uncertainty ahead, while expectations for growth will always exist. So we must balance realism and optimism to keep credibility and maintain relationships. The CFOs that strike the best balance can best set up their businesses for continued growth.

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​Ken StillwellPegasystems

CFO at Pegasystems

The biggest trend CFOs need to be thinking about is adjusting company strategy to address a more uncertain economic outlook. For the last decade, the economy was growing — a period that included the longest boom in U.S. history. Many companies, including Pega, were focused on revenue growth acceleration for a decade or more. Firms made significant investments in go-to-market strategies.

Between a likely global recession, cost-of-living increases, inflation, and a general gloomy outlook, consumers are wary of spending. The market has shifted from a “growth at all costs” attitude to a demand for responsible growth. Given this shift, CFOs need to be thinking about how to increase cash flow by streamlining operations and increasing operating leverage, and do so responsibly. In my experience, many clients consolidate vendors during times like these, which is one of the reasons organizations may want to focus less on capturing new logos and instead maintain a laser focus on their existing clients — focusing sales capacity on cross-selling and upselling into existing client bases is less expensive than chasing new logos. At Pega, we are fortunate to have marquee customers in our installed base with tremendous untapped potential.

Our current goal is to achieve the Rule of 40 (that a software company's combined growth rate and profit margin should exceed 40%) as we exit 2024. An increased focus on operational efficiency and corporate responsibility will help companies — including Pega — ensure durability so they can weather the uncertain economic landscape ahead.

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See who's who in the Protocol Braintrust and browse every previous edition by category here (Updated Oct. 27, 2022).

Good afternoon! In today's edition, we asked nine CFOs about the trends they thought others in their role should be paying more attention to. Questions or comments? Send us a note at braintrust@protocol.com

Chitra BalasubramanianCircleCI

CFO at CircleCI

Impactful CFOs are ones that go beyond numbers and understand all aspects of their business. In today's business environment, they play an important role in breaking down silos between teams, communicating to external audiences, setting hard and soft metrics, and ensuring all parties are aware of their company’s business model and value proposition.

With Gartner recently predicting that employee metrics like well-being, burnout, and brand satisfaction will override ROI evaluation in 2023, CFOs and financial leaders need to be thinking about the ways in which they contribute to keeping teams engaged and customers happy. It will be critically important for CFOs to not only focus on business metrics and strategy, but also on the employee experience.

In my current role at CircleCI, I've been fortunate enough to work on many parts of the organization (that extend beyond finance), including our People and Places function. During our transition to remote work during COVID-19, our organization was primarily accountable with ensuring the teams were supported and recruiting goals were met. Our team has also been responsible for being the glue between other parts of the organization, whether that's working with the revenue teams on how to best serve our customers or our product teams to provide supporting analysis resources. The role of finance is evolving, and people partnership has become more critical than ever.

Tweet this.

Tom FennimoreLuminar
Technologies

CFO at Luminar Technologies

While this is a tough market for financial capital, it's a great market for human capital. Growth companies need to strike the right balance between financial discipline and investing for long-term success.

Tweet this.

Ambereen ToubassyAirtable

CFO at Airtable

Market leadership requires innovating quickly and executing company-wide. As businesses try to do more with less, identifying a singular, unifying goal across the company has never been more important. Accomplishing that North Star goal requires speed of decision-making and coordination of effort.

CFOs have the opportunity to strengthen the quality of decision-making, drive cross-functional execution, and enable growth by building legibility across the organization. Efficient growth starts with accurate data, and CFOs need to identify and consistently and correctly capture data around the most important metrics - which is easier said than done in a hyper growth company or global business with teams around the world. By building company-wide data legibility, CFOs can equip leaders to identify and pull on the levers that unlock the most growth with the most efficiency.

Tweet this.

Sarah SpojaTipalti

CFO at Tipalti

CFOs have more tools in their arsenal than most other executives, and those tools have a broader impact across the entire organization. Yet, we’re seeing stories every day of industry-leading companies clearing house with record layoffs.

CFOs bear the responsibility of considering the massive cost-saving benefits of retaining talent. The reality is that retaining staff is far less expensive than replacing someone, but it’s also a driver of employee engagement and organizational culture. CFOs have the capacity to invest in and directly impact the happiness and well-being of employees, which attracts the best talent to the business and incentivizes the current talent to stay.

While most signs point to a recession in the new year, CFOs should be looking at the company’s tech stack and betting big on efficiency-drivers such as automation and data.

Automating will alleviate time-consuming tasks to allow workers to focus on being strategic and creative. At the financial level, that additional time may mean finding ways to save money or consolidate spending. Automating goes hand in hand with data collection and analysis, which is the best way to diagnose waste and prevent it before it gets out of hand.

Ultimately, a strategic CFO is looking not just for ways to survive economic downturns but to thrive and come out the other side as a stronger company. To do that, they’ll need their team and commitment from the entire organization; I predict those who don’t put their people first will have more tough days than those who do.

Tweet this.

Michael TannenbaumBrex

CFO & COO at Brex

CFOs — especially in this environment of macroeconomic uncertainty — are always looking to increase return on company investment. A related trend that has me most excited is the move to digital-first operations and workforce models, which actually lower bureaucracy and increase efficiency, especially of the largest expense: personnel. This global shift gives finance leaders the opportunity to be catalysts of organizational change, efficiency, and growth. Traditional finance has always been about command and control, but the shift toward distributed and global work in the last two years has made this more problematic. There is now a massive — and urgent — opportunity for CFOs to rethink the financial tools and look for solutions that empower teams, reduce bureaucracy and overhead, and enable money to flow to where it can have the most impact for the company.

By adopting a consumer-grade, digital-first approach to finance, CFOs can help their companies move and grow faster without sacrificing control or financial discipline. Furthermore, a modern approach, such as that enabled by the Brex Empower software platform, can scale and adapt in a way that other financial services and software can’t.

To survive and thrive, organizations must make strategic investments in digitizing and modernizing their financial systems and workflows. And CFOs are poised to lead this digital acceleration of the enterprise to drive profitability and growth.

Learn more.

Tweet this.

Abishek ViswanathanNuro

CFO at Nuro

Periods of economic uncertainty can be an opportunity in disguise. Decreased capital availability and a higher cost of capital compel management teams to evaluate their capital allocation process and exercise more discipline to prioritize the most critical investment areas for their companies. This means eliminating "nice to have" spend items and eliminating any waste altogether. A lot of us are doing this already, but the past few months have been a reminder that lean operations and thoughtful spending — whether it is in a period of stability or uncertainty — is a timeless, effective strategy. With macroeconomic headwinds remaining persistent, CFOs should be running through a range of scenarios constantly, and have a playbook for a prolonged, multiquarter recession.

Tweet this.

Anna BrysonDoximity

CFO at Doximity

One of the most impactful ways we can deliver long-term value to all of our stakeholders is by operating responsibly, sustainably, and ethically. As CFOs, we have a unique opportunity to help deliver that value by investing in and operationalizing our businesses in ways that maximize our purpose.

ESG continues to be an area of focus for CFOs because we know it builds trust and leads to greater long-term value. Over the next few years, I believe we will see more CFOs leaning into ESG, particularly diversity and social impact, and investing in people, products, and services with a more inclusive lens. By investing in these areas, we can not only attract and retain a more diverse workforce, but we can also deliver more inclusive products that better reflect the society we serve.

I also believe we will see a greater focus on corporate purpose. Whether you’re a startup or an established public company, aligning your strategy with your corporate purpose, is critical to creating long-term value. At Doximity, our mission of making doctors more productive so they can better serve their patients is our North Star. By staying firmly focused on this mission, we believe we can make the most meaningful impact and deliver the greatest value for our stakeholders and communities.

Tweet this.

Andy WamserMativ

CFO at Mativ

Right now, financial and business leaders, especially of global organizations, need to be focused on balance. We all see the ongoing volatility in the global economy, particularly in Europe, and hyper-inflation keeping its grip on the input environment as the prices of energy and raw materials continue to surge. While many once forecasted that inflation would abate and prices would cool, it’s likely that we’ll exist within this hyper-inflationary environment for longer than we expected.

Therefore, a primary objective for global CFOs is to strike the right balance between positioning the business for continued, sustainable long-term growth while preparing for a short or prolonged recession. Our job is to deliver value for all key stakeholders — not just shareholders and investors, but employees and customers as well. We have to satisfy Main Street, where our employees work and live, as much as Wall Street. And so, for coming quarters, CFOs must constantly focus on balancing between raising the sails for growth and battening down the hatches.

This balance is not only in the business decisions we must make and execute, but also in how we communicate and the tone we set with all stakeholders as we navigate the current environment together. Everyone knows that there are challenges and uncertainty ahead, while expectations for growth will always exist. So we must balance realism and optimism to keep credibility and maintain relationships. The CFOs that strike the best balance can best set up their businesses for continued growth.

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​Ken StillwellPegasystems

CFO at Pegasystems

The biggest trend CFOs need to be thinking about is adjusting company strategy to address a more uncertain economic outlook. For the last decade, the economy was growing — a period that included the longest boom in U.S. history. Many companies, including Pega, were focused on revenue growth acceleration for a decade or more. Firms made significant investments in go-to-market strategies.

Between a likely global recession, cost-of-living increases, inflation, and a general gloomy outlook, consumers are wary of spending. The market has shifted from a “growth at all costs” attitude to a demand for responsible growth. Given this shift, CFOs need to be thinking about how to increase cash flow by streamlining operations and increasing operating leverage, and do so responsibly. In my experience, many clients consolidate vendors during times like these, which is one of the reasons organizations may want to focus less on capturing new logos and instead maintain a laser focus on their existing clients — focusing sales capacity on cross-selling and upselling into existing client bases is less expensive than chasing new logos. At Pega, we are fortunate to have marquee customers in our installed base with tremendous untapped potential.

Our current goal is to achieve the Rule of 40 (that a software company's combined growth rate and profit margin should exceed 40%) as we exit 2024. An increased focus on operational efficiency and corporate responsibility will help companies — including Pega — ensure durability so they can weather the uncertain economic landscape ahead.

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See who's who in the Protocol Braintrust and browse every previous edition by category here (Updated Oct. 27, 2022).

LendingClub's earnings on Wednesday offered a worrying sign for fintech lenders — even as LendingClub itself holds what could be a key advantage during hard times.

The San Francisco company’s third-quarter earnings Wednesday of $0.41 per share topped analyst expectations. But the firm's share price was still trading down by nearly 10% in after-market trading, some of which may be in response to gloomy fourth-quarter projections.

The firm sounded a warning about the market for the loans it originates and then sells to investors, an arrangement often called marketplace lending.

"As we anticipated, marketplace volumes were impacted by higher funding costs for certain loan investors, driven by rapidly increasing interest rates," CEO Scott Sanborn said in the earnings release.

The company reported an 8% quarterly decline in the total value of its loan originations, driven by a decrease in marketplace loans.

Investors in consumer debt are seeking higher yields and getting pickier as interest rates rise. That has put a squeeze on marketplace lenders.

"Certain loan investors' cost of capital is based on forward interest rate expectations," Sanborn explained on the company's earnings call. "As expectations go up, their cost of capital goes up and so does their yield requirements."

LendingClub can reprice its loans to meet those higher funding costs over time, but Sanborn said the company needs to remain competitive against credit card rates, as the majority of its personal loans are people refinancing credit card debt.

LendingClub is not alone in relying on the marketplace model. Upstart, which reports earnings on Nov. 8, has already described constraints on its funding.

The good news for LendingClub is that it is no longer solely reliant on the marketplace. LendingClub last year completed a $185 million acquisition of Radius Bank, giving it the banking charter required to hold deposits and directly fund its loans.

While the $2.4 billion in originations that LendingClub sold to investors in the quarter is down about 15% from the three months prior, the $1.2 billion in loan originations that LendingClub is holding onto was a 13% increase.

LendingClub is now holding onto 33% of its loans, compared to 20% one year ago. The spread between the interest LendingClub is paying depositors and collecting from borrowers, or net interest income, climbed 89% year over year to $123.7 million last quarter.

"The benefits of our bank capabilities could not be more clear," Sanborn said.

Still, the company is projecting $255 million to $265 million in revenues for next quarter, which would mark a decrease up to 16% from the $304.9 million it reported in the third quarter. That could be driving the negative initial reaction on Wall Street. LendingClub's share price is down 54% from the start of the year but had shown signs of recovery, climbing 4% over the past month.

Sanborn last quarter compared LendingClub to a car reducing its speed while approaching a curve, with plans to accelerate coming out of it.

"We are in the curve right now," he said. "But as we look further down the track I would note that some of the negative dynamics in today's market will point to future opportunity. Most notably, record high credit card balances at record high interest rates should be a boon to our core refinance business. Our marketplace revenue has a proven ability to quickly rebound."