Earlier this week, we held a Leapfin virtual cocktail event with 150 finance systems and finance leaders, and heard amazing toasts and insights for 2023 from Sagar Sanghvi of Accel, Jason Berwanger of Lower, and Lisa Arteca of Grove Collaborative, while learning to mix a couple of classic cocktails with Jesse of J Bespoke in NYC.
We’ll have the full video (including the cocktail making itself for those who want to follow along at their home bar!) soon, but wanted to share some of the wisdom from our panel of fantastic speakers.
Today I’ll share some of Sagar’s thoughts.
He acknowledged that finance has a particularly hard job in today’s environment because of its need to balance the responsibility to make sure the organization does what it’s supposed to do from a financial and business metric standpoint with decisions that impact people’s lives.
He talked about how critical the role of finance is in difficult times like today, highlighting three reasons:
- It’s finance’s job to be the steady hand of the company to set the tone and set the plan that people can follow.
- Finance leaders must have very clear principles and very clear metrics that allow people to see progress and understand what finance is solving for.
- Finance has to be able to clearly communicate why that matters to the company.
Then Sagar turned to highlighting three lessons for success from his time turning Instacart’s business around in 2015 that today’s finance and finance systems leaders can apply in 2023.
- Focusing on just one or two of the most critical priorities.
- Making the hard decisions.
- Focusing on unit economics.
When Sagar joined Instacart in 2015, the company was burning 12 million a month, had only one hundred million dollars in the bank, and was losing $20 on every delivery. The business was upside down.
Within six months, they cut burn to under $4 million a month and got to break even unit economics. How?
First, the focus. He recommends only one or two priorities, with cash, runway, efficiency and unit economics as one of them two priorities.
Second, hard decisions. Don’t make many incremental small changes because it makes you feel a bit better. Make the hard changes up front. For Instacart it was changing how they paid shoppers. They were honest about it, took a press hit, but ended up with a much healthier business on the other side.
And third, continued to focus on unit economics, good ROI in growth spend, and extending the cash runway.
Sagar then shared how data and measurement enabled his team to focus, make decisions, and fix unit economics in 2015, and perhaps even more dramatically in 2020 with the onset of the pandemic:
You have to measure progress in real time, and you have to be able to make it really easy for the rest of your executive team and for the rest of your company to see that progress. And I think financial systems and finance can move that ball forward.
When I first joined Instacart, we only measured our financials on a monthly basis. And the process of going from negative $20 in order to break even, we moved to measuring it on a weekly basis. And that was huge progress for us. We were able to see every week were we making or losing money on every order by geography, by type of delivery, by type of customer.
Fast forward five years to the pandemic, all of a sudden it wasn’t that we were losing money, we were making money, but our volume exploded. We grew five times in three weeks. Think about that. We went from a million deliveries a month, to millions of deliveries a week in the matter of just a few weeks. And at the beginning that we said to our systems team, we said to our data team, weekly measurement isn’t good enough anymore.
We need to understand what’s happening on a daily basis. And so we had these views that looked at the same unit economics on a daily basis. funny enough, three days into that, we realized we had a bug in our code that would’ve cost us millions of dollars and instead of cost us a few hundred thousand.
Finally, Sagar closed by wrapping it all together: focus, unit economics, communication, and the systems to make it all possible can power finance to deliver amazing change.
If you can really focus the company, if you can make sure you work on those unit economics really clearly, communicate it to the company and use tools like Leapfin and your own internal financial systems to really make that obvious, I think you can accomplish a lot. And good luck next year.
I know it’s been a tough year. I’m optimistic going into 23. And hopefully you guys can use tools like Leapfin in the stuff you’re building internally to help accomplish that.
