When were looking at our supply chain, we're really trying to optimize our working capital. And then marry that with the way that we do our Revenue forecasting looking at the repeatability of what people are purchasing on their first time that they purchase what are most highly ranked repeat purchase items hello and welcome to another episode of the backbone a podcast exploring the Journey of finance and operations within tech company. I'm your host Siobhan data a trabant on Twitter. If this is your first episode welcome and thanks for checking it out for those returning listeners. I'm so glad you're here. I hope that you've subscribed rated and reviewed the show on whichever platform you're hearing this now, it would mean so much to me and help spread the stories of these amazing Finance leaders. We feature on the backbone joining me on this episode of the backbone as Katie sellers Director of Finance at Missouri, Missouri is a toronto-based direct to Consumer brand that empowers women to buy fine jewelry for themselves Katie. Receives the finance function and the jury this role has allowed her to marry her love for creativity and business. She began her career at Ernst & Young and the audit practice in Toronto and transition into serving Fortune 50 technology companies in the Bay Area in any wise accounting and transaction advisory practice. She has gone on to work at several high-performing technology and Innovation firms Katie specializes in establishing lean and agile teams and helping startups achieve scale. Her key strengths include a passion for improving operational effectiveness and her ability to use data-driven insights to create impactful change. Katie obtained her CPAC a designation while aye aye aye she also holds an honors business administration degree from the Richard Ivey School of Business at Western University. Here's Katie Director of Finance at Missouri. Hey, Katie, thanks for spending some time on the backbone. We've got lots to cover and so Was Dive Right In you started your career at ey in Toronto from there. You worked on each piece separation into to public companies in the Bay Area before moving back to Toronto to join coin Square as a director of fpn a your now the finance leader at Maggiore and emerging direct to Consumer brand. So talk to me about your journey into Tech and how it all started for you. I shoe bomb. Yeah. Thank you so much for having me on the backbone. I'm excited to be Be here. So obviously by that introduction. I have a little bit of a non-traditional career path for a CA but really the way it started was I ended up in business school at Ivy and graduated there in 2012. I then joined Ernst & Young in Toronto and their core Assurance practice. And so for my first three years at ey I really was focused on serving large public clients not specifically in the Space but a lot of public clients so really exposed to financial reporting public filings and things like that when I qualified for my CA with ey in Toronto, I actually had the opportunity to join ey in San Francisco and was internal your recruited to work in the Bay Area and was lucky enough to work on a really interesting transaction in more of a transaction advisory and accounting advisory capacity. For Hewlett-Packard. And so at that time that really was my initial introduction to Tech and that was more really high-tech more of a legacy company. So there wasn't really the same aspects of you know, growing his house business and things like that. It was more around. How do you maintain and keep a large company agile, so that it really can compete with companies that are coming up of the startup environment that they're in and whether it's the Bay Area or Toronto. Or wherever else around the globe but that really was my first sort of introduction to Tech and while I was in San Francisco, I really was exposed to startups in general different ways that people were thinking about solving complex problems. And so when I decided that it was time to move back to Toronto in at the end of 2017, you know, Toronto is a very different City at that time than it was when I left in 2015 to go to SF there. It was a really big startup scene. There are interesting things happening specifically around blockchain Ai and just really Innovative companies. So when I came back to Toronto I decided I wanted to really take the leap of faith be a problem solver and join a start-up and so that's how I ended up at coin square and around that time as some people might remember that's really when there was the initial uptick in Bitcoin and other cryptocurrencies and blockchain was a really Topic so I joined that startup really in their FP and a capacity and it was around the time where we were it was around 250 employees and the business was really looking to scale. So I was taking what I had learned really with my time at ey being in the Bay Area and really helping that company scale and put in place a lot of processes and procedures really to help them grow at the end of the day. I've always been a creative person. As well. So in high school, I did Art and art history all the way through grade 12. And so when I was picking my career path, my mom had sort of said to me, you know, are you sure that you want to go to business school? And I had always said yeah for sure I do but I think I've learned through my career that I am a much more creative person than I had initially thought I was so during my time at ey and then I coins where I'd always been drawn to projects or Times when I was working on things that were more creative in nature. I have side Instagram accounts on the side or I had sort of been really into interior design and things like that and I actually had the opportunity with my sister to do some work for Missouri in a social capacity earlier in 2018. So that was really my first introduction to the brand itself. And then you know, as I was sort of to think about who I am as a person and a professional when Jury was looking to hire their first in-house Finance hire as a director. I sort of thought to myself, you know, this is the perfect opportunity for me to bring together both my creative side and my business side and really join a company where I feel like I'm invested in the product and the brand and can help scale a company. That's just more attuned to me as a person. That's amazing. So thanks for that overview. Now tell me a little bit more about Missouri. What does the company do and what is it all about so measure Is a direct-to-consumer e-commerce brand that is really focused on the luxury find good jewelry market. So we target women between the ages of 25 to 35 for working professionals and really empowering them to make those purchases that may be traditionally before were made by a man or as a gift or by family and really empowering women to buy those luxury items. As for themselves and so we're able to do that by being a direct to Consumer brand really sourcing and producing all of the goods ourselves and cutting out the traditional middle man. We also have a retail as well as an e-commerce component. So we're trying to identify with our come customers in both a physical bricks and mortar location as well as online for people who might not be in some of our key markets like Toronto or New York or LA. Makes sense. And so unlike, you know typical software companies or SAS company's direct to Consumer Brands like Missouri that you mentioned have less predictable revenue streams. And so a customer that may have bought your product or a piece of jewelry last month may not make a repeat purchase for months. And so what challenges does this pose for you as a finance leader in things like forecasting? Yeah, so it is definitely a different business model. It'll than a lot of tech companies. You see that are really developing software applications. So instead of being really focused on monthly recurring Revenue. We are the way we forecast our business is we're looking at new versus repeat customers and really trying to understand what is the purchasing behavior of our customers themselves instead of locking them into a 12 or month by month contract. We forecast our business really In a cohort model so breaking our customers down into X number of people purchased in January of 2019 based on our the repeatability that we see in our customers and we're using historic data for that. We say okay at thousand people purchased in January 2 percent of people will repurchase from that cohort in any given month on a recurring basis, and we're for we forecast are recurring customer Revenue. You using that methodology, but it's really around new customer acquisition where we're making a lot of assumptions in terms of what our revenue is going to be. And so that's really striking a fine balance between marketing life cycle Marketing in terms of who our new customers where they going to come from. Are we pulling customers from Paid channels organic or we really have lien investing on Instagram or Facebook? Her Pinterest or any of those social channels to really Drive revenue and then also, you know looking at based on our repeat customers. What do we think is our average order size how many units per transaction generally do we see people purchasing and trying to forecast the business out that way but with any High Growth Company, obviously, there are things that are always changing different customer taste new product lines that were launching. So it really is something that we actively monitor on a weekly basis and then are always re forecasting based on how we see our customers behaving. Yeah. Well that makes a lot of sense a couple of things. I wanted to dig into, you know against unlike SAS companies imagery. I imagine you have to manage inventory levels and and being able to forecast demand like you mentioned through cohort analyses. How do you bend take that and determine how much inventory you need to maintain on? And when you're launching a new product for instance, how do you know how much of it to manufacture, you know, just given your predictability and forecasting abilities inventory is the largest asset we have on our balance sheet. So there is a large emphasis that we place on really understanding how our inventory is moving optimizing our supply chain. And that's really, you know, the core of how this business was built. Noren Maj our CEO. Yo and CEO of the co-founders. It was really built on having a almost a just-in-time supply chain where we could keep really low inventory levels and be really responsive to customer needs and not really investing in an overly large amount of our cash and supply chain. But as you can imagine as this company's grown and we're now processing tens of thousands of orders a month and so Maybe a couple hundred our supply chain has had to change dramatically. So we've we've had to invest in relationships with third-party manufacturers manufacturers that are overseas. And so instead of having maybe a two to three week turnaround on our inventory purchasing. We're now in more of a four to six or even six to eight week from when you place the purchase order to when you might receive the inventory when we're looking at our supply chain, we're really trying to optimize our working capital and then sort of marry that with the way that we do our Revenue forecasting looking at the repeatability of what people are purchasing on their first time that they purchase what are most highly ranked repeat purchase items and then really focusing on our Tier 1 product mix so that's drives eighty percent of our Revenue but might be 20% of our actual skus and really pays placing a high emphasis on the fact. That we never want to have stock-outs in our Tier 1 inventory and are actively managing to ensure that there is no lost sales opportunity there and so how big of a role or maybe not big at all does a data play into all of this data plays a huge role in our organization and I'm really happy to say that as a start-up. I think sometimes startups can get lost in the weeds and make decisions based on gut instead of data and where a very data-driven organization here. Everything is tracked everything feeds into looker which is our business intelligence tool. So we're very highly focused on data. We make all of our purchasing decisions and forecasts Based on data, like I was talking about new versus repeat as well as mixing in you know, what are our top Tier 1 products, but ultimately where we really want to get to is as you can imagine there's a margin of error that comes They're forecasting especially in this day and age when people's tastes are changing quite dramatically and with the number of skus that we have, you know, it's a lot of pressure that we place on our forecasting planning and Merchandising divisions here. So our ultimate goal really is to be able to integrate Ai and machine learning and I know those are buzzwords in the startup Community, but really to be able to leverage those Technologies to be able Able to actually facilitate our purchasing and planning functions at Missouri. So instead of having someone manually going through and calculating, you know, what's the inventory that's outside of our optimal purchasing schedule. What is inventory that we're going to sell out of before we have a chance to reorder really using machine learning to sort to train a program to understand the way that our inventory flows our customers purchase habits. And then actually having this as a system tell us when we need to be ordering inventory instead of relying on a human. Obviously, we'll still have a human reviewing and stress testing to make sure there's no issues or errors or really bad judgment calls, but at the end of the day we want to be enabled by technology and I think that's one interesting way that we're working towards having data play an even larger role in our organization. So, you know sticking with the data driven. Approach theme you mentioned some of these already but what are the key metrics that you're always looking to monitor as the finance leader of a direct consumer brand and then as a follow-up to that, you know, like you mentioned majority not only sells online but you have physical bricks and mortar locations at Toronto New York City and LA and so Are there specific metrics that you look at given the company's omni-channel approach versus just selling online or bricks and mortar definitely in terms of KP? Eyes at the Top Line a lot of them are similar to any traditional start-up. I mean we're very concerned around our cash burn that is something that instead of being invested really in head count. We do have large head count here as well. But a lot of it is going into capex and expanding our business and like you said, we do have a retail component as well as e-commerce. And we're investing log into our supply chain. So cash burn is something that we're looking at on a daily basis and then on a weekly basis doing sort of a flash report for our executive team to really see where that's sitting on the flip side of that. We're also really looking at accounts payable days and they pee since we have suppliers that we have relationships with, you know, we really want to make sure that we're Organizing the terms and not paying before we have to but then at the same time keeping our suppliers happy and making sure we're not going over any of our credit limit something that's probably quite different than a lot of startups in the tech Space is really looking at days and inventory and inventory turns so like a traditional jewelry company like a Tiffany's or Birds. They might be having an inventory Turn 1 to 1.5 times a year based. It on the way their supply chain works or more interested in having our inventory turns a lot faster than that. So anywhere between 7 to 10 times a year, that's our ultimate goal of how fast we want our inventory to be turning and then when you think about the consumer side of things, you know, we want to be looking at our revenue or average order size how many units per transaction our customers are transacting with and then really looking at the But our funnel, you know, when we're driving people to our website using marketing what their ultimate conversion right once people are getting to the website and then tracking them all the way through to their actual ultimate purchase. So even if someone's put things in their cart, what's their actual check out conversion? So those are some of the main things that we look at overall as a business as you said about the omni-channel approach bricks-and-mortar versus e-commerce we We are looking pretty heavily at the profitability of the retail stores themself, whenever we open a retail location. We were making the decision in our head. Is this a revenue driving location or is this a marketing expense So based on if you're going to a tier-one city like Toronto New York at La SF. Those are Tier 1 locations where we can expect our retail locations to be profitable versus if you're going somewhere like Boston or Charleston or Chicago based on the customer there? It might be more of a branding exercise. So really looking to see how we're going to evaluate this bricks and mortar location, but then still looking at you know, what's the conversion of people who walk through the door versus purchase. What's the net promoter score when people are leaving if we have any detractors really looking to see you know, what could have made their experience more positive but at the end of the day we want to be looking at both. with bricks and mortar any e-commerce separately, but then also taking a holistic approach and evaluating our business as a whole and so I want to dig into the two types of bricks and mortar strategies that you mentioned one being a revenue-generating location and another being a marketing or brand awareness the type of location the three that you mentioned I guess Toronto New York and LA are all revenue-generating in the revenue generator category if you were to have Let's say a location more for brand awareness. How does that play into the amount of inventory that you keep at those locations would you keep less because it's more of a, you know have more skews so you can showcase the brand or is there a different approach to a revenue-generating bricks and mortar store versus a marketing or brand awareness store? Yeah. So in terms of Revenue generating really we're really focused on converting people. You who are walking through the store doors. So Toronto is actually our number one converting location for customers and we think that's because it's not really in a in a high foot traffic area. So it's actually up on College closer to Ossington area versus our store in New York is on Spring Street. So people might not become going into the New York store with the intention of a trip to go and visit Missouri. It might be there a passerby And they've heard of our name so they come in to check us out but really at the end of the day with our Revenue driving stores were really focused on conversion when people are walking through the door. So that's really, you know, having product on the floor that they can see and feel and try on having educated stylist on the floor who can show people what things might work with their skin tone or complexion or what type of Lifestyle they lead whether they're super active and Going to the gym, or if they just like something that they're going to be able to wear to work. So that really in the revenue driving side of things, you know, having the product having things that people can try on and really focusing on converting but then if we're thinking about something that's more of a branding exercise, we don't care as much in terms of having our full skew set in those locations so we might be focused on Take care one products that people can try on and then potentially order online later and really focused on more of an experience. So people can identify with the brand and remember it and become a customer down the line. So we might do things like are piercing parties where you can come to Missouri. We have a set of studs where you can get pierced by a piercer and then that's an experience in a relationship. You're building with the brand or we might do things like yoga in the park or do a workout class in the city where we showcase our 14 karat jewelry that won't tarnish or rust while you're working out. So it's really just dependent on you know, building that experience and fostering the relationship with the customer. So ultimately they will purchase but in the Tier 1 markets really focusing on conversion of one there in the stores themselves, that's that's incredible. One last question here before we move into our quickfire round and that is you know, you've had some very unique roles within Finance after leaving Professional Services both at coin square and now at Missouri and so in your opinion, what is the importance of the finance function add an emerging direct consumer company and then as a follow-up what makes a great Finance leader in companies like this. I think the name of your podcast actually says it all I really do think that the finance department is The really solid backbone of any organization, especially as a start-up. I did not pay you to say that was just want to make that clear. Yes startups, whether there's a spaced or direct to Consumer base. I think a lot of these companies start with a Founder co-founders with really great ideas were super Scrappy and able to maybe raise a little bit of seed round and really get things going and get some traction. I don't necessarily think that The finance function is the first thing they're thinking about when they're building their business. So having the opportunity as a finance leader to come into one of these companies really are being relied upon to ensure the financial tells and longevity of the organization the same way any CFO is at a larger public company, right at the end of the day. Your ultimate concern is that the company is a going concern and there's not going to be any cash flow issues. The investors and VC's are going to be happy and are going to get the return they're going to want to give you that series C or D and ultimately stand by you to an ultimate exit or IPO. So I think the finance function is is ultimately critical for the success of a lot of these organizations and I think the more that the co-founders are willing to work with the finance team and see them as business partners to the Benny and not just the police were telling people like hey, you can't be spending that much money on a trip or don't go to that conference. That's never what I want to be in my finance function. I want to be the person that someone comes to you and says hey, how do I make a better decision around this while optimizing the capital that we have? You know, what are some I guess characteristics or traits of because you know, these types of rules aren't for everyone and like you mentioned you kind of followed a non-traditional path. Path into this. What would you say are some things that make a great Finance leader for companies like this because it is in a traditional company. I think the first thing is you genuinely need to be interested in the business and what they're doing. So for me coming to measure you like I said earlier on I am a very creative person in my spare time, even when I was working at ey or coin Square, I was always doing creative things. On the side like doing interior design for my condo or taking creative photos to put on Instagram or even working with Brands like Missouri to show my friends. Hey, this is a cool brand that is doing something that you'd be interested in. So for me, this was a natural fit because it was sort of my hobby outside of work and I think especially when you're joining a start-up, you know, you have to be Scrappy. You have to be a problem. Um solver you have to be hardworking and it's way more motivating to be those things when you're actually interested in the product and the outcome of the company itself. So definitely you need to be invested in the company the product and the brand I think the second thing is you really have to be a problem solver and you yourself as a finance leader have to have a backbone. You can't just let the sales department. Mentor operations or anyone really come and bulldoze you because like I said, you are the one who is ensuring that Financial Health of the organization. So being the person to speak up in meetings and say like hey has anyone really thought about the cost benefit or the ROI of doing and what really is the purpose that we're spending this money for because ultimately you do want an Roi on the capital that you're spending. And so do your investors so really being a problem solver speaking up for things that you think need to be challenged I think Those are two things when when you are joining a start-up as a finance leader definitely characteristics that you need to have that makes a ton of sense. So what I'd like to do now is jump into our quickfire round. And so the way this works so I'll ask you a couple of questions. You have 10 to 15 seconds to respond to each has that sound Perfect. All right. So what is your go-to online resource for all things startup Finance or growth finance-related? This one's actually my network and I'm part of a startup Finance lock group in Toronto. And it's definitely my go-to resource to ask people questions meet with people if they've gone through some where things actually a coffee with someone this morning from that group and learn some great stuff. So don't underestimate your network when you're in startups nice. And what's your favorite productivity hack. Mine is a paper to do list where I write down all my top priorities on a daily basis and just cross them off as I go. I find it very satisfying to see things getting crossed off and it just helps that my intention for the day nice of her. That one before it's a popular one. What's one thing you don't leave the office before finishing. I always check my calendar for the next day and plan exactly what the Cadence of the day is going to look like. I know a lot of things get derailed, but I want to have a good understanding of when do I need to get into the office? Do I need to prep something beforehand? What are any external meetings that I might have what are things I can move around if something comes up but having a solid understanding of what my day. Is going to look like and know what more I can Flex it when I used to that makes sense. And what's one Tech. Jargon that makes you cringe. I actually had to refrain from using this word during the podcast ecosystem. I feel like this word is just over nine right now. Everything's an ecosystem or part of an ecosystem. I mean, it has its time and place but right now I'm just a little bit over it. I'm fair enough. Yeah, that's not where it does get tossed around quite a bit. What's the best advice you've received so far in your career? I think one of the best things that I've heard recently and this is something that I think I really learned at. square and something that I really value and want to ensure we maintain at Missouri is conflict and debate at work are some of the greatest things that you can have and it is actually one of the best ways that you can assess the health of your executive team and the health of your overall organization, if people aren't running into conflict or having debates around key decisions that need to be made it means there's no Oh by in people don't trust each other and you're likely not making the best decisions so really fostering that environment of trust and making sure that people are able to challenge things so the company ends up making the best decision. Wow, that's great advice for sure. Well, thank you so much Katie. I really appreciate your time and it's been a pleasure chatting with you about measure e the unique opportunities and challenges that a direct to Consumer brand faces that unlike its Kind of I guess the more traditional stats companies face and really learning about Missouri's omni-channel approach to retail whether it be bricks and mortar stores or e-commerce how you think about the kpis and metrics that are important in both settings as the finance leader. So I really enjoyed this chat and thank you so much for your time Katie. Thanks so much for having me on awesome. Thanks. Take care. Hi. That wraps up another episode of the backbone and chat with Katie at Missouri is the first Finance leader of a direct to Consumer brand that I've had on this show. If you enjoyed the show with Katie learning about the differences between d2c Brands and traditional SAS companies leave a rating or review on whichever platform. You're enjoying the show while you're here check out some of the other awesome Finance leaders featured on the backbone from companies, like ecobee wealth simple league and many more. Thank you for listening all the way through and joining me. On this journey inside Finance at a tech company until next time. Take care.
Katie Sellers, Director of Finance at Mejuri I chat with Katie about:   Her journey into tech after starting her career at EY and then you working on HP’s separation into 2 public companies in the Bay Area. From there Katie’s move back to Toronto to join Coinsquare as the Director of FP&A, before taking on her current role as the finance leader at Mejuri an emerging direct to consumer brand. Mejuri — what does the company do and what is it all about. The challenges of forecasting unpredictable revenue streams as a direct to consumer brand, including how to think about customer acquisition cost and measuring lifetime value of the customer. Mejuri’s data driven approach for forecasting demand and managing inventory levels and the key metrics she’s always monitoring as the finance leader of an omnichannel DTC brand. The importance of the finance function at emerging direct to consumer companies and what makes a great finance leader in companies like this. We close things off with a quickfire round:    Your go to online resource for all things startup finance related   Your favourite productivity hack   Tech jargon that makes you cringe   The best advise you’ve received   One thing you don’t leave the office before finishing   ---   Send in a voice message: https://anchor.fm/backbone/message Support this podcast: https://anchor.fm/backbone/support 