Understanding Renting Capital

This chapter explores the concept of 'renting capital' and the various strategies employed by different types of investors to ensure returns on their investments. It emphasizes the responsibility of entrepreneurs and managers in managing these funds effectively, while also clarifying the pressures faced by both companies and venture capitalists to deliver value.

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Serial CFO Michael Bayer, who is currently the CFO of Wasabi, joins CJ to share wisdom from his long career. He talks about his journey from being a “CF-no" to becoming a “CF-go” while emphasizing the importance of strategic investment to fuel hypergrowth companies. He breaks down the epochs of growth that a company goes through as it scales from driving revenue to focusing on cash flow. He highlights the significance of order of magnitude thinking and hiring for future needs. Michael also introduces his “rock-turning” exercise for identifying and addressing issues when joining a company, and shares his three guiding principles: speed is God, best ideas win, and if you’re not making mistakes, you’re not trying hard enough. The episode concludes with an insightful story about Van Halen's "brown M&M" clause, and what finance leaders can learn from it.

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@cjgustafson222 (CJ)

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TIMESTAMPS:

(00:00) Preview and Intro

(02:16) Sponsor – RightRev | Planful | Brex

(06:02) The Reason for a Sloth Background

(08:31) A Company’s Epochs of Growth

(12:52) Staffing for the Different Epochs of Growth

(17:08) Sponsor – Vanta | Tropic

(21:29) The CF-No Versus CF-Go Mentalities

(23:42) The “Rule Of” Metric: EBITDA or Cash Flow