Burn. Growth. Valuation.

The triangle every startup CFO must master.

I was on a podcast the other day. The host had clearly done her homework. She had gone into my writing and some of the little frameworks and ideas I have put out there over the years. One of the things she brought up was this piece I wrote about how CFOs are really Chief Frameworks Officers.

Then she asked me “So what’s the most important framework…?”

Honestly, I kind of liked my answer, and so I thought I’d share it here.

It’s the one framework I would put above all the others. And it’s not only the most important, it is also the hardest one to get right.

It is the relationship between burn, growth, and valuation.

You are constantly playing this game of triangulation between those three points. It’s the holy grail of running a venture backed SaaS company. Some just get lucky when it comes to this, many get it wrong, and others do it super skillfully.

The basic idea is that you are trying to figure out what we might be able to invest in order to grow at a certain rate, and if we grow at that rate, what that might mean for our valuation when we go raise again. If that is the valuation, is that a raise we feel good about? Is that the ownership we want to preserve? And will that raise get us to the next level. This is the game you sign up for when you take venture funding.

And it is the thing you are always working on as a CFO whether you realize it or not.

The thing I really struggled with early on at Intercom was the pressure I put on myself to have the answer.

Sometimes I would feel like I needed to figure it out myself, run the model, make the calls. Other times it would be me and the CEO locking ourselves in a room for a couple of days, going through all the inputs and scenarios, and then coming back to the rest of the management team saying, “We have got it. Here is the plan. Here are your resources. Here is what we are going to do.”

In some ways that was easier. It is much easier to make those decisions with one other person than it is to do it across a whole group of leaders with different perspectives and priorities.

But here is the big realization I wish I had reached earlier. My job was not to decide the answer. My job was to set up the conversation that would allow us, as a team, to find the answer together.

When I say “set up the conversation,” I mean a few specific things.

It meant building a model that could hold all of the different ways our teams operated. Something that could take the sales team’s inputs — if we hire X number of reps, we can close Y amount of revenue. Something that could take the marketing team’s inputs — if we run these campaigns with this amount of budget, we can generate this many MQLs. And the same for product, engineering, support, operations, talent, all the different functions.

Because every leader has deep expertise in their own area. What they do not necessarily have is the broader context… the bigger picture of what all those inputs mean for the company’s overall burn, and ultimately for the valuation we might be able to raise at in the future.

That is where finance, and specifically the CFO, comes in. You are the one who can stitch it all together. You are the one who can help the team see that bigger picture.

Before I understood that, it was a mess. Sales would come to me and say, “We need 100 headcount to hit our number next year.” I would come back with, “We can only afford 80. Figure it out.” And suddenly I am the bad guy.

They had no idea why the answer was 80. They did not feel like they had any input into that decision. Then they would find out marketing had 50 headcount and a 50 million dollar discretionary budget, and they would be wondering, “Why do they get that?”

It all felt siloed. Territorial. People fighting for resources instead of working toward the same goal.

Usually that is a symptom of the CFO not setting the conversation up the right way.

When we started opening up the whole model, the conversation shifted. We could say, “Here is the burn we can afford next year if we want to raise in a year at a valuation we all feel great about.” We could say, “Here is roughly how that pie might get divided.”

If someone wanted more, the question became, “How do we grow faster so we can raise sooner and at a higher valuation?”

If someone did not like the way the pie was split, the question became, “How do we reshuffle this as a team without changing the size of the pie?”

It did not make the work easier. In fact it meant a lot of thrashing, a lot of debates, a lot of re-running the numbers. It meant the finance team had to act as shepherds of the conversation, keeping everyone on track.

But what we got in return was buy-in. Alignment. Teams that were actually playing together instead of against each other.

That was the biggest lesson for me. The burn, growth, and valuation triangle is not just the most important framework for a CFO to understand. It is the most important conversation for a CFO to facilitate in an early-stage or scaling, venture-backed startup.