VP Finance vs CFO

Today on MBA Mondays we are going to talk about the financial leader in an organization. Sometimes this person is called the VP Finance and sometimes they are called the CFO. What is the difference? When will a VP Finance do? And when do you need a CFO?

Like all titles, they can get mangled. A person might be promoted from VP Finance to CFO without exhibiting the characteristics I am going to ascribe to a CFO. That happens all the time. But if you really need a CFO and you have a VP Finance, you will know the difference.

A VP Finance is what you need when you want a leader who will keep the wheels on the bus, who will make sure there are financial controls in place, who will make sure the books, records, and reports are accurate and timely and well presented, and who will make sure you have the right amount of accountants and clerical staff on hand to manage the work of the finance organization. A VP Finance is largely about "what happened" and a little about "what is happening right now?"

A CFO is what you need when you have all that I described above but you also need a forward looking financial mind at your side, when you need deep strategic thinking in the financial function, when you need to do big transactions (both M&A and financings), and when you need someone to manage your relationship with investors (particularly public investors). A CFO is largely about "what is going to happen and how do we get there?"

I generally encourage companies to wait as long as possible to bring on a CFO. Great CFOs are few and far between. And in order to recruit one of them, you will need an interesting business and a meaty role. VP Finance talent is in larger supply and they can take you very far. Get a VP Finance onboard as soon as you can afford one. They will let you sleep at night. Get a CFO on board when you are ready to take on the world. You can't do that without a strong one at your side.

#MBA Mondays

Comments (Archived):

  1. Mark Essel

    Chief of the engine room (VP Finance) vs the navigator (CFO).I remember reading scattered parts of this post before (here), but appreciate the added details. The differentiation of roles was described in a combination of comments and posts over time.Would it be possible to get a guest post from a CFO and or a VP Finance to describe some of their day to day, and quarterly responsibilities to solidify the positions.

  2. Dennis Buizert

    Would do the same with the CTO and i.e. an VP of Engineering? Or is that a total different ball game? I do find it interesting to read that there is a small difference between the VP and the CFO. In a way the VP does everything, but does not have the vision to build the company further. Or am I miss understanding this? 

    1. fredwilson

      i think VP Eng and CTO are very differenti think VP Eng is a managerand the CTO is the strongest technologist in the company

      1. Mark Essel

        Strongest technologist is a pretty broad statement. I can think of a few CTOs (or former CTOs) that fit that characterization, but if I didn’t know them I’d be scratching my head at this description.This differentiation of roles is worth another post.

      2. Rohan

        Another point of view – I think – CXO is a strategic function vs VP which is a more day-to-day role. 

        1. Mark Essel

          The COO must be well connected to day to day activity.Quick reference: http://en.wikipedia.org/wik…”The COO is responsible for the daily operation of the company,[1] and routinely reports to the highest ranking executive, usually the Chief Executive Officer (CEO).[2] The COO may also carry the title of President which makes him or her the clear number-two in command at the firm, especially if the highest ranking executive is the Chairman and CEO. In some cases, the duties of COO may be carried out by a sub-C-Suite executive such as a Director of Operations, Operations Director, Vice-President of Operations, or Executive Director.Unlike other C-suite positions, which tend to be defined according to commonly designated responsibilities across most companies, the COO job tends to be defined in relation to the specific CEO with whom he/she works, given the close working relationship of these two individuals.[3] In many ways, the selection of a COO is similar to the selection of a Vice President of the United States: the role (including the power and responsibilities therein) can vary dramatically, depending on the style and needs of the President of the United States. Thus, the COO role is highly contingent and situational, as the role changes from company to company and even from CEO to successor CEO within the same company.[3] In a similar vein to the COO, the title of corporate President as a separate position (as opposed to President and CEO, or President and COO) is also loosely defined”

          1. awaldstein

            True re: depends on CEO.But in almost every early stage company I’ve been involved with, finance, operations, legal and HR were all managed under one person in the early stages.

          2. Aaron Klein

            Totally agree. This starts out being the CEO, then moves to being the CEO with help from an executive assistant or office manager, then moves to the finance person (Director or VP).

          3. Rohan

            Hi Mark,Thanks for this.I agree – sorry I didn’t clarify.I think CFO can be well connected and depends on his personality. That’s why good ones are a rarity.In essence, CFO can do what VP finance does. The vice versa case likely doesn’t apply.

          4. leigh

            i think everyone has to be connected to what the company does day to day – if nothing else Steve Jobs taught us that 🙂

        2. Aaron Klein

          Just keep in mind that doing strategy has to be additive to a day-to-day role. Anyone doing strategy who is disconnected from the heart and soul of the business is going to develop pretty worthless strategy.That goes for CEOs too which is why a COO is often a bad idea. I think 90% of the time, if you feel like you need a COO, you probably need a CFO (or just a good VP Finance).

          1. Rohan

            Agree Aaron! Realized I wasn’t entirely clear in my comment and clarified a bit below. –I agree – sorry I didn’t clarify. I think CFO can be well connected and depends on his personality. That’s why good ones are a rarity.In essence, CFO can do what VP finance does. The vice versa case likely doesn’t apply.

          2. JamesHRH

            Agreed, obviously.CEO sets strategy by interacting with senior team. They are all part of the strategy process, but the CEO gets canned if the strategy is wrong.If a CEO sets strategy in a vacuum, it won’t work. It will be as worthless as a senior person needing to do strategy without the CEO’s involvement.

          3. Mark Essel

            I see references to the CFO role nearly blending with CEO position as a business matures. Are they interchangeable at that point?They’re both intamitely familiar with the financial health and abilities of the company, they’re both capable of crafting plans for strategic acquisitions/sales.

          4. Aaron Klein

            I would say the open question for a CFO is whether they can do product vision, engineering leadership and P&L ownership.The ones who crossover and do that well often make highly talented CEOs…

        3. JamesHRH

          Rohan – not “strategic”. Don’t say “strategic”. We could be here a month!If someone comes to you and says they need a C level role and you say ‘we don’t have those here, outside of the CEO, who is required…’, the next thing they will say is ‘ but I am strategic….’.RUN. Don’t walk. RUN!

          1. Rohan

            Haha. point taken!

      3. daryn

        Just like your description of VP Finance and CFO, the CTO is more big picture and forward looking, while the VP Engineering is focused on operations and day-to-day management.  Unlike in finance, I think you’d typically hire a CTO before a VP Eng, and you don’t need the latter until the eng team is large enough to require another layer of organization. 

    2. Mark Essel

      Alternatively they are so tied up managing the day to day finance and keeping the ship going (a skill set they’ve mastered) that they can’t afford to look forward.

      1. Dennis Buizert

        I see. It has more to do with “agendas” then with vision? That makes sense. I am so glad this community is responsive and helpful. If I had to find this all in book, there would be no way in hell to get a response. 

        1. fredwilson

          so many times when i am reading a book, i want to leave a comment and ask the author or other readers a question.

          1. Mark Essel

            Same here, I end up verbally complaining”this makes no sense, try explaining that again”or”wait I don’t see that jump, how about a different analogy or rationale”The worst was philosophy class in college. I wanted to argue with every author.

          2. Rohan

            haha. they sure are convincing!

          3. AVCoholic

            It’s like a bookclub meeting with the author at every meeting!

          4. LE

            A future opportunity for disqus. They put up their own virtual communities which essentially gather comments that people make and questions for (as only one example) popular books. Could be done with magazines or many other things. They then take those comments and package them in some form for the authors or publishers. Anyone can view the comments of course. But disqus distributes and sells the information as well as allows the publishers/authors to interact with their readers. Regardless of whether the publishers like the idea or not it’s still monetizeable page views. I can think of many things that could be done with this. And yes of course the publishers could do this themselves but a simple system that is ready to go for the publisher with no effort at all is what would make it valuable.

          5. William Mougayar

            It sounds like a round about way to make comments or have an online community. Why not just install a Disqus system on a blog CMS and go from there?I think what Fred is alluding to is the ability to leave a comment for the author straight from the reading experience, something that a Kindle App could eventually do.

          6. Alexander Close

            Anyone CC Seth Godin?  I feel like he and his ‘tribe’ would be all over this.

          7. LE

            Edit:In response to William:”Why not just install a Disqus system on a blog CMS”The idea would be for someone *other than the publisher* (could be Disqus or anyone) to do the work and identify a critical mass of books and come up with a site that is essentially a collection of comment sites for people who read the books of interest.So a  community of book readers is created where people who read a particular book can comment on things in that book. The information is publicly viewable by anyone but can be packaged further ($) to create the interaction with the publisher and author etc. Be notified of next book by the author etc.Starting with the current best selling books.This doesn’t prevent an author from putting up their own site as many already do. And for that matter they could claim the site on their particular book if they wanted to.”I think what Fred is alluding to is the ability to leave a comment for the author straight from the reading experience, something that a Kindle “The idea popped into my head w/o regard to what Fred would want. In any case a web interface is necessary as not everyone likes to type on a kindle ipad etc. keyboard. (Voice to text would be possible though.)In response to A Close:”Anyone CC Seth Godin?  I feel like he and his ‘tribe’ would be all over this. “Reason?

          8. Chimpwithcans

            Fredwilson reads books?? And here i was picturing you with a bright blue laser beam shooting out the ipad screen, locking onto your forehead and uploading terrabyte after terrabyte directly into your brain.Have to say I am kinda disappointed in the whole analog book image….but it does give me hope 😉

          9. fredwilson

            I do read them on an ipad

    3. JamesHRH

      Small difference is not accurate.A VP Eng can say ‘ we can build that & here is how .’A CTO can provide three options on how to build, explain in business terms why there are trade offs for each path, delineate the risk for each path and then recommend the right path. And then manage the Eng.

  3. awaldstein

    I agree completely.Having a financial partner in pricing products, managing spend to build markets, figuring out comp plans and balancing growth of market and brand in the face of cash flow and financial solvency, is a necessity for the CMO or VP of Marketing, or GM.And you nailed it that as you grow in reach the needs for financial partnership with marketing especially grow from simple rules to broader strokes with mergers and IPOs.Marketing is invariably the biggest expense line and the most visible hero or bum or both over time. Having that counterpoint to ideas, that intelligent foil, that other side of the coin has served me and my companies well. Having support all the way through is wise personally and always drives a better result.Not surprising that some of my best friends today were CFOs from past work together.

    1. Stephen Albright

      In my first startup, I led marketing and my current roommate was in charge of finances.  I loved approaching him every day with my latest request.  It was fun constructing the stories to support how I thought each expense would drive our brand’s growth.  He was a terrific “intelligent foil.”

      1. awaldstein

        Thanks for sharing.Marketing and finances goals are exactly the same…profitable growth. The intersection of quite different DNAs is the winning formula. That and a lot of trust.

        1. Dan Sweet


  4. Stephen Albright

    VP Finance = financial operations.  What happened? What is happening?   –> management of financials and financial staffCFO = financial strategy. What is going to happen? How do we get there?   –> big transactions and (public) investor relationsI love forming a question while reading (“When should we bring on a VP Finance or CFO?”), only to have it answered in the final paragraph.Are there any circles with educational resources for future VPs Finance/CFOs?  I have a few friends who I think would love to get involved in such a community.Thanks as always.

    1. fredwilson

      don’t know about educational resources for VP Finance and CFOsmaybe others in this thread do

  5. Kasi Viswanathan Agilandam

    Would he/she not mind being a VP when all other heads are C’s in a start-up?You are all CTO, CEO and COO and CRO etc., why only me has to be a VP? In a public limited company i understand … but when the circle is very small (where we work like a family) would it not hurt the motivational factor of the VP-Finance? I think it would … Go and search and look at the Team-Page of every company … you will find more CFO’s than VP-Finance.I completely agree with Mark when he says “Engine room Vs Navigator” … but practically it is hard I believe …. in small companies and start-ups. 

    1. fredwilson

      titles, titles, titlespeople get so wrapped up in titlesif it walks like a duck, talks like a duck, it probably is a duck

      1. Kasi Viswanathan Agilandam

        Completely agree Fred … but hard in practice is what i meant to say.BTW, why did you put the word “probably” in your sentence when you are sure it is a duck … :-)That one word “probably” is what i wrote in 10-sentences.

        1. JamesHRH

          Don’t give the C to the others.

      2. Will Washburn

        I remember when I was younger, my dad (who owns a small business) used to tell people he was the janitor, and the guy who worked under him was the CEO. Not for any other reason except that bigger organizations wanted to talk to the CEO when setting up partnerships / making deals. People are strange when it comes to titles. I think a lot of it comes from outside pressure though, not just internal squabbling.

      3. Cam MacRae

        When you’re still small enough to know everyone by sight titles are for external people. (Or should be.)

      4. Charley Severs

        then what was the point of this post?

        1. fredwilson

          I guess that reply wasnt well putPeople often want titles they arent qualified for

      5. Jonathan Whistman

        That’s why at our start up on of our 5 guiding principles includes as  3.     Titles Don’t Matter.  We give ourselves titles so people outside the company can understand who we are as we communicate publicly, establish partnerships, and recruit talent.  We have very little use for them inside the walls of our building.

      6. Elia Freedman

        Hold the bus. Titles do matter and here is when: when you are working with much larger companies than your own. I have worked with dozens of multi-billion dollar companies and they all want to know the “level” at which they are working. It doesn’t really matter internally, as long as someone is in charge, but I argue that externally it can be very important (to the other party).

        1. daryn

          At some point, I think titles are an ego thing, but Elia’s point is definitely valid. I know that when we have people on the phone or working with potential partners they get a lot further if they’re a “manager” than an “associate” or some other junior sounding title. 

        2. fredwilson

          I agree titles are importantWhat i was trying to say (and mangled) is that people often want titles they arent qualified for

          1. LE

            “I agree titles are important ….people often want titles they arent qualified for”Remove my initials from the above (obvious word) and it’s also true. Of course money and power can change that. 

        3. JamesHRH

          Not buying.I report to our CEO. Problem solved.

          1. Aaron Klein

            I agree.I’ve never been in a situation where it didn’t work to say “we might be a flatter organization than you’re used to, but we’re fast and nimble. Let’s get moving.”

      7. Donna Brewington White

        or make that Chief Duck

        1. ShanaC

          I’ll take it!

    2. Mark Essel

      Balancing roles, egos, titles, and responsibilities of sharp experts.This is one of the things that makes operating a growing company so fascinating.

      1. Kasi Viswanathan Agilandam

        yes Mark … I am just up on the roller-coaster ride…We 3 are all Technical guys but one is a CEO other CTO and other Director but we understand each others weakness and strength… No issues so far after 3+ years.

        1. Mark Essel

          With only the core 3, I’m surprised you didn’t stick with “founders” as titles since responsibilities and roles will overlap so much. A silly thing I did with Victus Media was title myself CEO and the chief web hacker the CTO. We were founders. Those titles and roles help as the company grows though, and I can appreciate you making clear strengths and company roles as the business matures.

          1. Kasi Viswanathan Agilandam

            We all come from different Technology background and all are required to make the product lines. Mechanical, Electrical, Imaging…and We have a CFO who in my opinion is a VP-Finance as Fred says … that is what prompted me to make that comment in the first place…Title Title Title and people are so obsessed with it and sleeping with it.

          2. JamesHRH

            A start up needs a CEO. All companies need a CEO. A company does not need any other C title for a long time ( I can make a case for never ).

        2. ShanaC

          you got lucky!

          1. Kasi Viswanathan Agilandam

            It is not luck Shana it is maturity (atleast that is what i think it is) . I have the mysterious word there called “so far” … because i have seen matured people fight over stupid and silly things.

        3. Donna Brewington White

          So Kasi — given that you exceeded the 3 year mark, did you resonate at all with Fred’s post on the 2nd year? (http://bit.ly/vm0R7l ) I don’t think you were there since you didn’t respond when we did roll call.

          1. Kasi Viswanathan Agilandam

            Yes I do … Second year does not mean second year … the second phase .. though we crossed 3+ we are in the second phase. Crossing this is the challenge.Started manufacturing and even exports … making new products etc.,etc., getting to the break-even point is the challenge now for us.Again i fully resonate with what Bloomberg and Fred told about second year (phase).

          2. Donna Brewington White

            Kasi — I look forward to your “Phase 3” story. From what I recall from other comments you seem to be ahead of the game in many ways. Do I recall correctly?

    3. Donna Brewington White

      Whether right or wrong, it seems that in many instances the title is selected to position the role within the company relative to other internal roles rather than based on thought given to the difference between the CFO and VPF.  I honestly have often wondered what the difference is and you’d think I would know! (as an executive recruiter)

    4. JamesHRH


  6. Mark MacLeod

    Before moving into the VC World last year I spent 11 years leading finance for various startups, so I have some thoughts on this:Fred’s distinction between VP, Finance and CFO is, as usual, on the money. BUT, I think the role of a CFO can and should be broader in a startup and that there is a business case to bring that person on earlier than Fred suggests. In a startup you need people to wear multiple hats and startups need the forward-looking & transaction capability early. Plus, as soon as you have institutional VCs they want proper governance and communication.So, I recommend starting with a part time CFO as soon as you hit series A. This person should not be someone that is between full time gigs, but someone committed to part time who has the right experience. Someone who can run the back office, has some transaction, budgeting and investor relations experience.I have held a VP finance title once and CFO title every other time. My duties were the same. As was my impact.IMHO the role of a startup CFO is to be the right hand of a CEO and bring as much leverage to that person as possible, freeing them to do what they do best. If that person is technical, then get out and help close business deals. If that person is a rainmaker, then run the internal operations so she can get out more and bring in the deals!I’ve posted in the past on the elements of a great startup CFO (http://www.startupcfo.ca/20…. Bottom line – way more than numbers!One final point: even if you have a “CFO” early in your lifecycle, if you truly have a huge opportunity on your hands then at some (pre public) point you will likely switch that person for someone that has the “big”, “public” experience you need. All goo.

    1. JamesHRH

      You describe a very risky structure. I read a great article in the late ’90’s that espoused that the lead finance executive stick to the time honored role of being the CEO’s ‘truth serum’ – solely focused on internal issues and assurance. People & process at 100% reliability.The article partially blamed unconstrained CFO desire to build relationships on Wall St for the poor financial integrity of the era.

    2. William Mougayar

      These are great points Mark- definitely if there’s one person that’s done all of that, you’re the most experienced startup CFO that I ever met. The risk with starting with a part-time CFO is that you’re assuming they’ll be able to step-up and be the big time CFO you want them to be when the company goes big. At the end of the day, I think it’s what gets done that matters during these part-time periods. 

      1. awaldstein

        CFO is a state of mind and knowledge, part time or full.The big step is experience with the public markets. I’ve worked with brilliant CFOs as a partner through channels and M & A but when you get to managing the relationship to the street, there’s a different set of rules.Some can make the leap; some can’t.

        1. William Mougayar

          Absolutely. A public company changes the dynamics of the CFO role completely.

        2. fredwilson

          Managing the street is wishful thinkingThe street manages youBest you can hope for is a stalemateA great CFO can get you there

          1. awaldstein

            True. Poor choice of words.The CFO does have an active relationship with the investment community that does have impact. A great one that is.

          2. fredwilson

            Not a poor choice of wordsA conversation starterInstigator!

          3. William Mougayar

            With the street, a great CFO will always under-promise and over-deliver. It’s about managing “expectations”. It also depends how much financial visibility they have. 

          4. fredwilson

            you really cannot manage expectationsthe street will get caught up in a story and create their own expectations which you can never meet

          5. William Mougayar

            Yes and No. I have worked for a public company where the CFO did an amazing job at managing WS. What helped was a very clear visibility into forecasting the business (90%, 6 months out) and very simple & consistent messaging on the metrics that matter. It worked.

          6. Douglas Crets

            There is also a side alley there called Media Way. Filled with people who don’t know what they are talking about.

          7. ShanaC

            why does the street manage you?

          8. fredwilson

            It sets its own expectations for you by bidding up your stock price beyond what it is worth and then you are in this horrible place

          9. Dan Sweet

            money quote of the post/thread so far for me.  great CFO gets you a stalemate!

      2. Mark MacLeod

        Thanks for the kind words William. I think there is a clear understanding of the limits of a part time CFO. You can’t be a little bit pregnant. The best ones know that they can’t pretend to be on the same level as full time team members, but they can absolutely be there for the big moments.During my 2 years doing part time CFO work I raised a lot of cash, made a lot of boards happy and sold Tungle. But I never pretended to be on the same level as the management teams I worked with. And there was a clear understanding that if a company needed a full time CFO they’d have to replace me (which is exactly what we did at Shopify).

    3. Donna Brewington White

      Fitting that you used the phrase “on the money” in affirming this post. Ha.Great to have an “expert” in the thread.Fred made such a clear case for the difference between the two roles (not just titles) that it struck me as strange that I’ve not seen much distinction made between these roles and the titles have often seemed to be used interchangeably or based on how other roles in the company were titled.  I might have thought it was just a case of limited experience on my part, but your personal experience seems to agree with this. The exceptions I’ve seen have been outside the startup world.  From your experience in the financial field:  Do you think the distinction between the titles/roles is important?  Have you observed this interchangeability (lack of clarity) between the roles aside from your own career?  If so, why do you think this is?    Occasionally, I am requested by clients to suggest an appropriate title and I always take this seriously.  (I should explain that I am an executive recruiter.)

      1. Mark MacLeod

        Hi Donna, the pun was not intended. :)I think Fred’s distinction makes sense. Before that, it was more of a seniority thing. The more senior folks were almost always called CFO. Also, any financial leader that is outward facing helping raise capital and close business deals tends to be CFO. A more inward facing person is a controller or VP finance.

        1. Donna Brewington White

          Thanks, Mark.  Appreciate your response.

    4. Scott Perlman

      The link is broken to your article on the elements of being a great startup CFO. Can you repost or let me know what to search on on your site. I’d like to take a look. Thank you!

    5. Rayhan Rafiq Omar

      Crickey! Getting a full-time (good calibre) CFO is hard at the best of times… how big is the pool of people able/willing to be part time?

  7. Tom Q

    Fred,I think what you call the VP Finance can also be called the CAO or Chief Accounting Officer – I think it is the same role with a fancier title.

    1. JamesHRH

      Seriously? Wow. Why do people give in to these requests? The external optics on a title like that are ridiculous. It implies a deep lack of confidence.

      1. Cam MacRae

        VP Anything isn’t a universally understood title – it actually doesn’t exist in much of the world.As an aside, you’ll often see another chief in the financial structure: CAE (Chief Audit Executive) who will report to the Board Audit Committee with a dotted line to the CEO.

        1. JamesHRH

          I would never allow that as CEO. Either you have the trust of the Board, or you leave.I would have a VP Finance or CFO frequent BoD meetings, but never a dashed line report. Not in an early stage company and you would need at least 3 good beers (time wise, not alcohol-wise) to convince me to go for it at a mature company.On the VP front, the title, most of the time, connotes a scope of responsibility, even in its sketchier uses. That’s why retail brokers are VPs, even when they have no staff or budget responsibilities (they have a big book, at least!).

          1. Cam MacRae

            It’s not an issue of trust, but compliance. e.g. your industry is heavily regulated. It’s a strange title because the CAE is neither a chief, nor an executive. 

          2. JamesHRH

            As I said, sounds like a 3 Pint convincing. Very strange.Airtight admin is airtight admin, IMO. If you are heavily regulated & BoD is exposed, then regular reporting / exec exposure to BoD makes sense. Paying admin a premium makes sense too.Hard to see a rationale for the CEO not having hire/fire……

      2. Jaed

        If we want to get into ridiculous, we should also include sentences like “the external optics on a title like that are ridiculous.”  External optics? Seriously? Wow.

        1. JamesHRH

          Yes, all the words are well chosen and worth repeating. Good on you to notice.Let’s start with Seriously:What kind of amateur hour rookie-fest creates a culture where there is a Chief of Accounting? There should be one Chief, the CEO.Here’s what a Chief does: builds a shared vision , recruits the players and then provides them with the resources to succeed. The chief also holds them accountable for results and, just as importantly, holds them accountable for creating a positive, performance based culture.And, the CEO is the person charged with making the tough decisions when the senior team cannot agree on a course of action (like firing the goof who needs to be CAO in order to keep the books). On what planet does Accounting need that level of leadership?Let’s go with External next:Many startups spend WAAAAAAAYYYY too much time talking to themselves about themselves. Eric Ries is making a nice living off of this issue.And why do most smart VCs will tell you Execution is more important than Ideas: because they have seen zillions of startups do nothing except cook up new ways to organize the paperclips and have never ending brainstorming sessions.While making sure that the 5 of the 6 people working at the company have C level titles. Beacause that is REALLY important.So, yes, taking an external perspective will hopefully keep you from choosing asinine titles for your group.And, finally, Optics:Merriam-Webster defines ‘optic’ very simply as ‘eye’. The definition of ‘optics’, admittedly, also talks about the bending of light.When combined with External, optics would seem to be a suitable noun. The point would be welled expressed by ‘perception’, ‘impression’ & ‘message’: but optics is shorter and more fun to say.But, because I think of AVC as partially a public service, I will rephrase the post:”A title like CAO tells experienced outsiders that, 99 times out of 100, your company has no idea what it is doing.If you want to be taken SERIOUSLY, don’t act like 9 year olds, playing at the idea of work (“You always get to be the Chief, I want to be a Chief!”). “

          1. Mark Essel

            Scrap all the titles, call the corporate leader Khan, and require ritualistic sword duals to manage transfer of leadership. You’d end up with frightening execs.I admit to not catching the drift of external optics, but appreciate the explanation.

          2. Cima

            Or if you prefer them Game of Thrones-style, call them khals. And the CFO/ VP Finance can be called the master of coin. Just don’t trust them completely. 🙂

          3. JamesHRH

            This is Oracle, right? 😉

          4. Mark Essel

            Ha :DActually a little too familiar to several modern corporate structures.

  8. leigh

    What do you think about hiring on consulting basis?  And at what point do you think you should bring someone on full time?  To me, it’s a hard one bc when you are ramping up it’s a very expensive bit of overhead that isn’t contributing to product or revenue but without it, you could take your eye off the financial ball which is a worst case scenario for any company.  

    1. fredwilson

      A part time vp finance can work

      1. Srini Raja

        We had a part-time finance person in my second startup who took care of books  and it indeed helped to sleep well at night (at least for our CEO).The biggest issue is finding and convincing good startup financial folks. Fred, any insights on this?

    2. Guest

      Leigh,I happen to think Fred is correct and that a part-time person can work. It really depends on the founders/owners; the business model being built and the industry.  I happen to think part-time VP Finance role is a bit easier to fill on a part-time basis because (and this is because I agree with the definitions Fred uses above) of the lack of a strategic element. Backward-looking analysis is easier to just pick up and run with than longer term, strategic analysis. I think Finance folks with a strong creative forward thinking element are harder to find. When you need hardcore firepower you need someone who can help dissect the business model to see what may happen to cashflow timing, run-rates, etc. etc. I always use the following you want a creative finance/accountant person you do NOT want creative accounting. Just my two cents.  ~ Geoffrey

      1. leigh

        We’ve already had to fire one bookkeeper (lack of attention to detail in a bookkeeper should be generally avoided) – found a new one who rocks – but now we need to start looking 12 months out and start managing growth.  I’ve been with two companies who went from 10 pple to over 150 in a year and figuring out how to do that right can make or break you…..want to find the right finance person to help us……

      2. ShanaC

        geoffrey, you’re logged out!

    3. awaldstein

      It can work in my experience.

  9. William Mougayar

    And in Canada, the VP Finance will be busy filling out forms and proposals for Government refund/credit programs.

    1. leigh

      Uch the dreaded SR&ED — I know it’s a great way to get extra cashflow but man i hated that process.  So much freakin’ time.  Really wish they would relook at that entire thing.  It should only be for companies with less then X revenue and then after that it should loosen up the criteria for innovation.  I’m going to start to rant so i’ll leave it at that! 

      1. William Mougayar

        And there are others. It’s more involved than just filling out forms. There are consultants that will “help” you and take a 10-25% cut  from that money. 

  10. jason wright

    ‘C’ is for ‘Chief’, which implies that there should be other people below or to one side of  that position in a company with some measure of competence in that vertical specialism. There always seem to be a lot of ‘C’ positions in companies. I sometimes think about restaurant kitchens and the chef count. Too many or not enough?

  11. chhhris

    i came from a hedge fund environment where what you described as the VP Finance is generally the role of the Controller. Haven’t seen that title as much on the startup side.

    1. Tom Labus

      They were usually tough, good guys who were team players.

    2. PhilipSugar

      Yes I was thinking the same thing.

  12. Aaron Klein

    The whole thing about titles is interesting.In my first startup, I was a big time title inflater. “I can’t pay a lot but titles are free.”I suppose that’s harmless in some cases, but if you’re going to play long ball and need to rapidly fill roles that your existing people may or may not grow into, you’re setting them up to fail.If I had to hire in this role right now, the title would be a tossup between VP Finance and Director of Finance, depending on experience.

  13. andyswan

    We are lucky.  At our startups we have always called the VP of finance and the CFO the same thing:  “Dad”.Reminds me of my startup tip of the day:  Be the son of a gray-haired CPA.

    1. fredwilson

      Your secret weaponI always knew you had one

      1. andyswan

        LOL another tip:Marry the girl that wants it all, but doesn’t need any of it.

        1. fredwilson

          I dont know what that means 😉

          1. andyswan

            Clearly you do.

          2. Donna Brewington White


          3. William Mougayar

            Troublemaker again. Are you coming over on Nov. 9th so we can take turns at returning your favors? 

          4. andyswan

            Hmmmm not sure what favors you are referring to but alas….no I will not. Surgery on the 6th will sideline me for Nov.

          5. fredwilson

            Ooh. I hope the surgery goes well andy

          6. William Mougayar

            Good luck with the surgery. Hopefully its not a very serious one.

        2. LE

          “Marry the girl that wants it all”My dad used a phrase for a woman like thishe would say “eh – she pushed him”. Usually in reference toa man that was a “kuni lemel” (low motivation and notthat smart).”but doesn’t need any of it”(Hmm. Haven’t really seen that behavior actually.)

        3. ShanaC

          what if you are a straight female?  then what should the advice be? 😉

          1. Rufus

            Be in a state that allows same sex marriage, I guess.

          2. andyswan

            Marry rich.Easy now….it’s a joke

          3. Donna Brewington White

            And what’s wrong with that advice?

          4. Donna Brewington White

            Andy — Hope all goes well with this surgery you mentioned below.  Will check in on Twitter to see how you are recovering.  Take care.

          5. ShanaC

            I really shouldn’t have made jokes about being single from the response *sighgiggle*

          6. ShanaC

            Also, feel better with the surgery and all!

          7. Donna Brewington White

            Be the girl that wants it all, is willing to go after it, but doesn’t need any of it.  Marry the guy who wants it all, is willing to go after it, but does not need it.  Easy. 😉

          8. jason wright

            The Italians have a saying about money. Inherit it, marry it, or steal it. I’m not sure where entrepreneurialism sits in the Italian mind.

        4. LScott

          SO true.  Mindset compatability.

    2. Aaron Klein

      That’s awesome.I actually started working for my dad at the age of 12.He stuck me in the warehouse packing boxes. By 14, my voice had stopped cracking and I could take orders over the phone. By 16, I was doing marketing. By 18, I was running marketing and ops.But the most important thing he ever taught me was how to sell.I watched him visit with customers, cut through the BS and figure out what was really going on, and then say “I want to be your guy. So if I do X, can I get your business?”Some times it was a yes. Some times it was a no and then the real objection would pop out.But watching it – and learning it at a gut level from 12 years old on – was something magical.

      1. Donna Brewington White

        Great story.I know there are exceptions both ways, but I meet so many people who are successful in business whose parents exposed them early on to their business or their work. I think it gives our children a more holistic view of us and of life in general when we expose them them to our work life as appropriate.

      2. CamMi Pham

        The best school is life. We learn from watching other people and doing it.  It is a great story.I believe the best way to teach our children it throw them into life, let them experience it. No book is better than life

        1. Aaron Klein

          +1 totally.

  14. Tom Labus

    I would add for both of these roles the ability to withstand pressure, usually from the CEO, to cast a different look on financial reality. This position can come with a lot of heat too.

    1. fredwilson

      Oh yeah

    2. Chimpwithcans

      Great point this. My girlfriend works in a bank. Each year at the end of the year (financial) they cut a bunch of jobs to make the books look tidy, then each year at the start of the year they hire a bunch more people.This financial tactic seems crazy to me.Also seems like it would involve a lot of heat from CEO’s on the CFO and a lot of emotion from employees towards those responsible for balancing the books and strategy for finances.Have you ever come across this sort of thing?

      1. Tom Labus

        Unfortunately, yes.I’ve seen the emperor dancing in the street with no clothes on and no one saying anything.  And if you did you were most likely fired. 

  15. mikenolan99

    The way I have always thought about it is:  The “C” suite is acting in the best interest of the shareholders long term interests.  They are the “Doing the right thing” group acting as agents on behalf of the board and the shareholders. The VP and operational people are the “doing things right” people in the company. A friend of mine recently spoke to my MBA students. He was CEO of a privately held company faced with a 1.1B last minute offer – one that would defeat a Private Equity deal he had championed to install his group with ownership and control. As CEO it was his duty to present the offer fairly to the shareholders – and do the right thing on their behalf. The deal did go through, and he is on to other things.

  16. Matthew MacDonald

    It seems like there is a subtle gap here.”A VP Finance is largely about “what happened” and a little about “what is happening right now?”I like your description of the role of the CFO (“what is going to happen and how do we get there?”) but believe that you could further classify the roles by including the position “controller”I believe a Controller’s responsibility it to answer “what is happening right now” by giving current data to the CFO for future planning and owning the data that they compiled which is being reviewed by the VP Fiance.Just a thought.  Overall great post!

    1. JamesHRH

      Staff think about the past.Managers think about today/next 90 days.Executives think about this year/next year.CEO & BoD think about people and the next 10 years.

      1. fredwilson

        that is an excellent model

      2. laurelfreyja

        Excellent breakdown!

  17. Luke Chamberlin

    Nothing is sadder than a two-person startup where one founder is the CEO and the other founder is the CFO. I see a lot of these…

    1. Aaron Klein

      Totally agree. CEO + CTO startups are a great story…I’m the only CxO in our company. My two teammates are future leaders of the engineering and core tech organizations we’re going to need to build. So they have Director titles for now.They are well qualified to carry CxO titles some day, but we want our organizational structure to be both aspirational and realistic.

    2. ShanaC

      well, startups got hot…then stuff happens…and technical people tend to ignore…

  18. Jack Sinclair

    All senior executive roles evolve as a company grows from startup to a profitable, successful business. But the senior financial one may change the most.  A startup can have a good VP finance as the most senior financial exec for quite awhile. As Fred describes, it is a very operational role. While the CFO role is more strategic, public and more about leadership than about getting into the weeds every day. The skill set and experience that a true CFO brings is needed as the business complexity, exposure to public markets, and general size (revenue, people, countries, etc) requires someone who can think proactively year or two ahead, communicate to bankers, research analysts, and be a real partner to the CEO and Board.  I have done both and for me, they are really two different jobs.

    1. fredwilson

      With a stint as COO in between!

      1. Jack Sinclair

        That was actually a big help.  It is a hard transition so diving in for awhile in a much more strategic role really made a difference.

  19. Dave

    Great post.  Key is to not over-title your VP of Finance as CFO. They are different jobs. Overall observation is that over-titleing is rampant in startups. I can think of one small, highly publicized startup where I know a couple of people where there are probably 10 employees and there are 6 Chief level titles. Most of those with C-level titles are not remotely qualified for them so there will be a day of reckoning at some point.  It looks good on people’s resumes, but any corporate partners they meet with will laugh and it will adversely affect recruiting for  experienced people if/when the company needs to hire them.VP is a great title, and you can at least pair VP with a well understood functional title–VP, Chief Technology Officer–to level set.

    1. Aaron Klein

      Facebook learned this really well. Amazing how many valley VPs showed up there with a director title.

    2. FlavioGomes

      I’ve learned long ago that over (title’ing) {word?} is an empty calorie diet for both the company and the tittlee.In fact, having a title on your resume that you really don’t have the experience and or pedigree for can be disastrous to your future hiring potential.   You loose a lot of credibility.As the old saying goes…”better to not be in a position you deserve than one you don’t.”Should also add…that any one who gets suckered by or uses title as currency wont last too long.

  20. matthughes

    “what happened” and a little about “what is happening right now?”I’ve worked for a company where we had a VP of Finance who was great at looking back and not so great about the present and future. This rings true. 

    1. Dave Pinsen

      Completely unrelated to the subject of this post, but prompted by your comment: http://www.youtube.com/watc

  21. Trish Burgess-Curran

    I understand that titles are always important, at least for two reasons 1) external reference and 2) internal egos. I do tend to think that in a 10-person start-up, working so much around titles seems a bit over-done… The CMO is probably the entire Marketing Department!Having said that, maybe thinking carefully about the structure of the company and the responsibility & accountability required from each team member is a way to ‘build a company’ rather than ‘build a business’ (in reference to October 9th blog)?

  22. RichardF

    Start up’s don’t need a CFO (by the definition you are giving of the role of CFO anyway).If you need a CFO, you are 99.99% of the time no longer a start up.The problem historically has been that many start ups, in order to attract the calibre and experience of a great VP Finance (or Controller or whatever you want to call the person who is directly responsible for the finance function and reporting the monthly’s to the board) have had to use the C word.What a start up needs as soon as they raise VC is a red hot VP Finance, in my (biased) opinion anyway.  I disagree with you about the VP finance being largely about the past and a little about the right now.  (that’s largely an accounts assistant job)  The past for any decent qualified accountant is easy.  The here and now and the future are what a VP Finance should be looking at in a Venture Capital backed start up.In my opinion and experience there is absolutely no better experience for anyone pursuing a career in finance than to go and work for a venture capital backed start up.  Nowhere else will you get the exposure to a business, the senior team and board.The really good VP’s of Finance are the ones that are able to communicate with and understand what the key employees of the business do (whether they work in Sales, IT, whatever) and enable them to do their job to the best that they can do.VP Finance in a VC start up is a fantastic role (it ain’t for the bean counters)

    1. fredwilson


  23. Peter Skalla

    As a former ‘Wall St’ analyst turned CFO, I see your titles creating a bit of confusion Fred.  May I suggest that CFO vs. Controller vs. Bookkeeper is the right continuum.  At public companies, the CFO carries the VP of Finance (usually SVP) title 9 times out of 10.  There’s also a controller in the mix at public companies who does what you’re (incorrectly in my experience) attributing to the VP Finance title.  Sticking with titles prevailing at public companies and the finance world in general will increase clarity for everyone.I agree that in a startup, CFO is a later stage hire . . . appropriate for when the revenue ramp commences in earnest.  Then the CFO needs to be a CFO-Controller, while only carrying the CFO title.  Early on, a bookkeeper and outsourced CFO is great mix, delivering the best of all worlds on cost and expertise. 

    1. Peter Skalla

      Here’s some title data from the first five tech companies that came to mind:Apple:  “Peter Oppenheimer is Apple’s senior vice president and Chief Financial Officer”Google:  “Patrick Pichette, Senior Vice President and Chief Financial Officer”Intel:  Stacy J. Smith, “Senior Vice President and Chief Financial Officer”Salesforce:  “Graham Smith, Executive Vice President and Chief Financial Officer”F5 Networks:  “Andy Reinland, Senior Vice President and Chief Financial Office

  24. shadbs1

    In contrast, I’d love to hear your thoughts on VP Engineering vs CTO roles.

  25. RadJaz

    Completely off topic … Pretty upset I’m missing out on your talk at my alma NYU-Poly. They don’t send out notifications soon enough. Any chance you can say I’m one of your lackies and get me in to listen to Yoda teach the future Jedis of the world?

    1. fredwilson

      Send me an emailFred at usv dot com

  26. kidmercury

    regarding the future of CFOs, it is something i find immensely exciting. as the internet and networking economics continue to grow, virtual currencies will become increasingly important and the approach to managing them introduces immense opportunities — and risks — to everyone, startups included. a great CFO will increasingly resemble a great central banker. 

    1. JamesHRH

      Consider this an official request for a Kid Mercury guest post on the future of currencies.

      1. fredwilson

        I second that request but i would call it the post money world

  27. Nicholas Pritchett

    Thanks for posting this, Fred! Your description of the roles and the comments by others really helped me to understand the differences between a VP Finance and a CFO a bit more clearly.Great topic.

  28. Boris Fowler

    Great breakdown. Startups need a CFO and can possibly switch to a Vp style leader later, but in the initial phases they have to be looking long term.

  29. Carl J. Mistlebauer

    Obviously, if someone is investing 20 million dollars into your start up then the rules of the game are different; when your focus is on Seed, Round A, Round B, then obviously the issue about a VP of Finance vs. a CFO takes on a different perspective.Of course when you are a mega tech firm, the rules are different, just like if you are a Fortune 500 company.  So, exactly how many people actually fall into these categories?I know a tech firm that was bootstrapped and now doing roughly a 100 million dollars in sales a year; they have a CEO, COO, CFO, CIO, CTO, and a CSO; so out of 150 employees 4% of their workforce is in the “C” suite.  I actually got to meet all of them in the same room at the same time and I felt very insecure because I was just “Carl.”When you sit down to give out job titles what exactly are you thinking?I know a company that produces goods (but is a well known tech firm) and does about 300 million a year, they have a COO, who lives in Boston, and the company’s factory is in Chicago.How exactly does someone manage the day to day operations of a company that actually produces goods, do that making a trip to the factory once every six weeks?  I think I offended him when I mentioned that it probably would be wise if we met in Chicago because actually seeing the operations was much more important than seeing the Chief of Operations…..So, exactly what is the relationship between job titles and actual responsibilities and actual tasks performed?Then you have the Fortune 500 company down the street, when new CEO is named then all of the sudden there is a big shift in people who are “Senior VP,” “VP,” and then the biggie, “Senior Executive VP” and the last one is reserved for friends of the new CEO….it really sucks to go from Senior Executive VP to VP…that is a real demotion.Exactly how many direct reports does every “C” have?  How many “Community Managers” does an internet firm have?  One per community?How many customer service reps do you have?  Is is determined by number of customers or is it determined by some other measurement?Does your accounts payable clerk also balance the checking account at the end of the month? BIG mistake if the answer is yes.As a founder or owner, you should be a damn good VP of Finance/Controller on your own but at some level (determined by revenues) you need a good controller.  A good controller with an outside CPA firm is a great match.  If you are a public firm or plan on going public a good CFO is next on the list.I was VP-Administration (a job title that someone commented on being useless!) and our CFO reported to me (his business card said, “CFO” but the reality was he was a CPA and a tax lawyer….).Personally, I think job titles are totally overrated…..

  30. Modify Watches

    Before my startup, I used to work for Deloitte Consulting in the Finance Transformation group (basically, all things to do with the finance function). Our perspective is that there a CFO has “Four Faces”: Steward, Operator, Strategist, Catalyst. VP Finance strikes me as Steward/Operator (get the books right, then handle basic accountingCFO is Strategist, or maybe that is shared with the VP FinanceCatalyst is about the finance function creating change for the organization. This is the CFO.Funny how it works for organizations big and small

  31. Skoo

    Very interesting article! Just a naive question: what does the accronym “VP” mean?

  32. Eric R. Ludwig

    Fred,I have been reading for some time and really enjoy your insights.  This post really succinctly outlines the differences between VP Finances and CFO’s and I concur that getting a rockstar vp finance as soon as you can afford it is critical.  I would posit that one forward looking skill that a rockstar vp finance candidate should own/master is forward facing cash forecasting to keep companies from running off the cliff.  Thanks for passing on such great nuggets.  Eric R. Ludwig, EVP & CFO, Glu Mobile (Nasdaq:  GLUU)

  33. Tony

    Fred, I just want to say that I really appreciated your piece on this.  I am a recently appointed CFO at a my very lean startup I end up being both CFO and Senior Finance VP in accordance with how you described them.  Because I do end up doing so much of the SFVP tasks I sometimes wonder if I truly am a CFO, if there are other ways for me to add value, or to idk bring on new hires.  Yet, after this post, I suppose I am more secure in my role haha, and just really enjoying the fact that my former VC boss turned me onto this site a few months ago.  Keep it up!

  34. laurelfreyja

    Enlightening post, Fred! As an aspiring entrepreneur, this distinction gives me a lot to think about. Thank you!

  35. Rayhan Rafiq Omar

    The great thing about Fred’s posts are they put life in perspective. We haven’t released our product, but are already in the mindset of ‘taking on the world’. Always nice to be brought back to earth by some intelligent advice.

  36. danbuell

    Great pst!!!!

  37. W. Michael Hsu

    How very interesting Fred. Your definition for a VP Finance was not what I was expecting – I absolutely get the difference you are making between the two positions or title but I am inclined to called the first position along the lines of a Controller or VP Accounting and leave the VP Finance title to the head of the finance department as opposed to the accounting department. But we are probably just talking about the same thing with different names.Also cannot stress enough on the point you are making in the last paragraph. Too often do we see companies bring on “CFOs” or “contract CFOs” who are nothing more than a glorified controller, or worse, a glorified accountant. A good indicator is probably this – if your CFO is dabbling with journal entries, systems/processes, accounting treatments, or (my favorite) budgeting – they are not CFOs. [edit] went back and found that one of my old associate took a stab at this back in 2010 on the difference between a CFO and controller. Now thinking about writing one myself and linking back to here. Stay tuned. http://www.deepskyaccountin

  38. fredwilson

    so truemaking the leap from VP Finance to CFO is really hard

  39. JamesHRH

    Find a lead investor to do that, until you can justify an internal CFO.

  40. Guest

    Paul,I think you are sharing an important insight. Normal accounting training does not always lend itself to being a CFO. A lot of accountant types are not comfortable with ambiguity that decision making/leadership positions require, like that of a CFO. Of course, my statement is a generalization … and generalizations are always dangerous and exceptions absolutely, positively exist.    ~ Geoffrey

  41. Dan Sweet

    Important distinction you are calling out.  This is why P&G for example has a “Finance & Accounting” function.  We’ve got deep technical people in Global Audit and Corporate Accounting groups (often with Accounting backgrounds) as well as broader finance leaders in more operational roles.  How successful a finance leader is depends on their ability to lead teams, manage risk, help the group make good strategic choices, and ensure the organization is able to deliver on both it’s top and bottom line committments.  People who obsess about ticking and tying every number in a spreadsheet (traditional accountants) tend to find themselves without much influence in the broader organization.