From Bootstrapped to Global: How CFO Aaron Watson Built a Multi-Entity Powerhouse — and the Framework Any Founder Can Steal

00:00 Aaron: If I make a decision and it gets met with pushback, we’ll reverse it quickly. But I think a lot of the dialogue that happens with the team is where I’ll be super convicted to something, have a conversation, and someone on my team will completely reverse my decision and explain why.

00:23 Joe: Welcome to the Next Moves. Today on this show we’re joined by Aaron Watson. He’s the CFO of the Chrysalis Group, which is the software behind much of North America’s wireless retail. Aaron helps this organization on a daily basis take what was a single operating organization to a global multi-entity portfolio. He has rebuilt the finance stack. He’s played roles in redesigning go-to-market from a small medium-sized business order-taking enterprise to one that has massive carrier wins. I want to talk to Aaron because in my journey, I’ve met him and some of the decisions he made would be very interesting for anyone who is a founder building an organization or a CFO looking to maximize growth in a healthy way. He understands where to trim, what to build, and how to turn complex operations into simple, repeatable rhythms. Welcome, Aaron.

01:12 Aaron: Thank you. Nice to be here. Thanks for asking me to join. Not something I’ve done in the past, but I’m looking forward to it.

01:19 Joe: I think the easiest way to get this started — and it doesn’t matter that it’s your first time doing it because you have an interesting story — is to start at the beginning, which is really how you started building your career. Within that I thought were some very interesting decisions that people probably haven’t contemplated themselves.

01:35 Aaron: Elevator pitch on the origin story — went to university, was thinking about doing finance or law, ended up doing accounting. My mom was an accountant, so it was a familiar journey for me. Ended up going to work at KPMG, spent four years there in Regina, Saskatchewan. Ended up meeting someone really fascinating — the CFO at the organization I’m currently at. Met him, had a lunch with him, and over that hour and a half decided I was going to go work in tech, which was something I wasn’t familiar with, and which ended up with me moving to Vancouver. Moved halfway across the country into a very unfamiliar organization, unfamiliar space, just because of a lunch with a really fascinating individual.

02:20 Joe: Well, it worked out. Anyone looking up your background — you left as a senior accountant from KPMG in 2016. By 2018 you’re the lead finance person within what was iQmetrics, but more broadly Chrysalis. And you’re the CFO now. That’s been a fairly quick set of steps within your career, hasn’t it?

02:40 Aaron: Yeah, it obviously went pretty quickly. I still felt like when I took over the finance team I was still learning a lot about the industry — a lot about tech in general and SaaS and recurring revenue streams and how that all works and plays together. And then diving into the vertical of telecom, which is such a complex vertical I had never been exposed to. It was kind of like drinking through a fire hose early on, but I had a really solid mentor that could help me navigate things and also pushed me to learn on my own. And I had a really strong team, so it didn’t feel like you were trying to recreate the wheel alone. There were a lot of strong people that cared a lot about the organization, which led to high engagement and quite frankly a lot of willpower to improve things.

03:41 Joe: I want to talk about something you just mentioned — the nature of the organization at this time. Because what it was before is not what it is now. Give me a very brief overview of what it looked like when you joined versus what it looks like currently, because the scope and scale are completely different.

03:56 Aaron: Early on when I joined it was really just one operating company operating in Canada and the US. Most of our people were still located in Canada but we had a go-to-market arm in the US. Headcount was probably around sub-200 collectively. Then what ended up happening is we realized a lot of different things along the way about why we’re successful in what we’re doing and how we could utilize those same principles and technology to be successful elsewhere. So we spun out — and the first time we really branched from telecom was around 2017 or early 2018 with a cannabis tech company, using the same kind of principles that iQmetrics had used. That was the first branch — we went from one company to two companies, then started a third and acquired a fourth. We went from one operating company in two countries to four operating companies operating in Europe. We have a development shop in India and in North America. Customers are more global now, and we’re in different verticals, all in the SaaS space.

05:12 Joe: So you’ve probably 4x’d revenue or more in the time you’ve been there?

05:17 Aaron: It’s certainly grown — not 4x’d but grown pretty dramatically. We’ve taken some businesses from zero to 10-plus million in recurring revenue, and iQmetrics itself has grown and expanded globally and shifted its customer base from SMBs to more of an enterprise space. What’s been fascinating is seeing us go from an SMB selling to entrepreneurs that own 20, 50, 100 dealer locations, to adjusting who we are and getting the DNA in the organization that still has that same cultural foundation — but how do we take that fabric and make it successful at an enterprise level selling to carriers, which is a completely different beast as it relates to how they operate and how they make decisions. I think it’s actually been easier for us to expand into different verticals like workforce management, hospitality, and cannabis than it has been going from SMB to enterprise. That’s been far more challenging and far more different in terms of what you need to do and the processes involved.

06:37 Joe: So what’s the role you play when you’re considering a massive pivot like that to a whole new segment? Because I agree — it’s counterintuitive. You would think same industry, different customer set would be a better idea than going to adjacent industries. You have to quantify this when you’re sitting in your seat — what risk do we take and why. What role are you playing in this decision as it unfolds?

07:18 Aaron: The market had gotten pretty saturated. When I kind of joined, we were reaching that market maturity — you’re getting all these wins, you’re the leader in the space, and as you continue to win it just feels good. You don’t really think as much about what we need to be doing differently for what’s next, until you reach a point where it’s like okay, growth is slowing because our addressable market just is no longer there. So the decision kind of gets made for you. Our learning throughout this process was that decision gets made for you, but that decision needs to actually be believed — what does that actually mean? We had a lot of road bumps and hiccups along the way. Yes, we understand we’re going to have a different customer segment. Yes, we understand it’s an enterprise sales motion. Yes, we understand it’s an enterprise product. But to actually fully commit and fully understand what that means was the biggest hurdle. Once you start getting momentum and different groups get it at different times, it creates this snowball effect of wind starting to stack up again. But it does take some time for the organization to buy in.

From a finance perspective, we’re sitting there being like — if we’re looking at shareholder value and our addressable market isn’t there and our growth isn’t there, we need to be doing something differently. We need to be identifying new opportunities. As an organization we firmly believe that ideas generate from the ground up. From a finance perspective it’s really identifying: where is our issue, why aren’t we having this growth, if the addressable market’s not there where do we need to be going, and then how do we allocate our capital, resources, and people to ensure that we don’t jeopardize our core business but still attack that new market segmentation effectively.

It wasn’t like anyone had this big epiphany of “we need to go upstream.” We all kind of came to that realization that our addressable market slowed, we need to solve this. And quite frankly we kind of made two bets at the time — we spun out the cannabis company. We had the luxury of being a bootstrapped organization with capital at the time to say let’s go new vertical and let’s also move upstream. So we actually ended up pivoting into cannabis — created a whole new company, carved it out, used some of the tech. It was almost like placing two separate bets. Long story short, we ended up raising money for the cannabis company that gave them some reprieve to go out and be one of the larger cannabis POS companies in North America, while iQmetrics could continue to maintain its strong market position in telecom. But in hindsight, that might have put a little strain on both and lowered the percentage of success on both by creating that resource constraint on both sides.

10:24 Joe: Let’s talk about value creation under constraint, because you’re talking about a bootstrapped organization. For so long it was about let’s raise capital, series A, B, C — and that just wasn’t the ethos within Chrysalis. You’ve had to take an organization and put in a framework for how to think about creating value and assigning resources — and you’re working across four different operating entities with people hitting you for money. If you gave an overview of how you introduced that discipline, every founder and every new finance leader would love this.

11:11 Aaron: How do you allocate people, time, money across four different organizations that have four different end customers, all at different stages of maturity? iQmetrics is obviously more mature, founded in 1999, seen tremendous growth, profitable — and we were using those funds to fund our other innovation, which actually existed outside of iQmetrics. One of the foundations we had — and I’ll get to how we did it — but I think the most important part is our belief system in employee ownership, and our employee ownership existing at the Chrysalis level. That’s how we created the environment where everyone across the organization wanted the other companies to succeed as well. Because iQmetrics being cash-flow positive and funding other organizations — people within iQmetrics could be sitting there thinking “wait, we have opportunities we want to attack too, but we’re using our cash flow to fund other organizations we don’t have direct insight into.” Employee ownership was a very important point — so that across all four companies, everyone wanted each other to win. It wasn’t a competition for resources. It was rallying for shareholder value creation at the Chrysalis level.

12:48 Joe: People are owning at the parent level, not in each of their subs — because their job is to drive performance and therefore they can make the right trade-offs in their head. I think some companies wouldn’t get that right. I think you guys nailed that one.

13:04 Aaron: When you’re really close to something and you want to invest in it but the money’s going elsewhere, it can be very challenging for people to accept. The shared employee ownership at the Chrysalis level — meaning the success of all the organizations is to everyone’s benefit — really helped mitigate that a little bit. But we also had to be really transparent about what those opportunities were and what the financial results of those organizations were, to ensure that people felt like your entity that might be funding something else isn’t just going to waste. We really needed that team unity around actually trying to drive shareholder value at the parent company level. In a lot of private equity models that’s not necessarily the case. We were pretty unique in being bootstrapped and able to set this up to ensure we had that collaboration and understanding across it. Now there are detriments to it — if your company is really thriving and others are struggling because of macroeconomic factors or just misses, it could create some resentment. “Hey, our organization grew 15-20% and that one was stagnant and our shareholder value hasn’t actually grown all that much despite the work I put in” — that’s a little challenging, it could create some resentment. Didn’t happen consistently or very often, but that risk exists. Overall though the benefits of shared ownership far outweigh the negatives.

14:41 Joe: Aaron, I want to really talk about how this becomes real, because you’re talking about a way of thinking. But to take a way of thinking and turn it into a habit and a way of operating, people have to be coming together on a certain schedule, looking at information, trained to think. Give me what information was looked at, who’s around the table, how frequently. For those people that haven’t seen this in their organization — I deal with $100 million companies all the time that have none of this and can’t understand why they can’t move faster. Give us the playbook — what tools, what information, who’s around the table, what frequency?

15:26 Aaron: First I’ll start with how it was structured from a board perspective and then we can touch on the information. Every quarter the companies would present back to the Chrysalis board and the decision makers there — so a quarterly cadence with updates on all areas: sales, product, financials, etc. There was a board member called a corporate steward that was linked to each organization, so that each board member was one layer deeper in the organization than a board traditionally is. They would join the monthly strategic meetings. At our organization we have a weekly implementation meeting and a monthly strategic meeting — we’re reviewing our strategic maps monthly and the implementation of execution every week. So that corporate steward would be tied very closely to the organization, one layer deeper in the information and understanding. They weren’t on the executive team, but they were there participating in strategic meetings to get a really deep understanding. That was really important.

From an information perspective — monthly financials, and every month we have a rolling forecast update, meaning a refreshed forecast every month, along with financials produced every month for all the different departments. We have a bunch of shared costs as it relates to shared services — finance, legal, people and culture, etc. — so we have a framework around allocating those costs out to those organizations so that we have a fully costed P&L for each organization to really understand their performance. Quarterly board meetings, the corporate steward at strategic meetings and with a one-on-one with the CEO weekly or bi-weekly — it was really about embedding those board members deeply into what was going on.

Then how do you make those decisions? That’s where the capital allocation model came in. Two things need to be true for capital allocation to work. The first is you actually have to put in some accountability around outcome — if this is what we say we’re going to do, this is what we’re going to do, and we’re going to hold them accountable. There are going to be gates, and if you don’t hit those gates, that puts the project at risk. People need to feel accountable to what projections and what they’re saying. It’s never going to be perfect — we’ll never be 100% right, ever. But people need to be accountable and have that in the back of their mind that they need to meet what they’re saying or else it’s going to erode the foundation and trust will be lost. And then how do you really fund something you don’t trust anymore?

18:30 Joe: I want to clarify that — we are saying that I’m accountable and therefore I understand that if I undertake this decision it needs to hit these criteria, and if not it’s shut down. Is “shut down” described in a clear way before I undertake the investment? Do I know what’s going to happen on what timeline? Because I think that’s what’s missing for a lot of people — the “so what, now what, what happens?”

18:59 Aaron: Yeah. And look, we’ve held on to things longer than we should too — I want to be very clear, we’re not perfect in this. But that needs to be the thought process. If it’s not meeting expectations — and there could be reasons why — but if the expectations are X and it’s only Y, then the resourcing and expectations on resourcing maybe need to change too. We can’t just let things continue to miss target and miss target, because then you start to lose the accountability of it and you have a capital allocation problem. That accountability was really really important. In our cannabis company Kova, we saw this really work — we ended up making it independently financially viable, meaning it was on its own. We raised some capital and some debt for it and they were no longer able to use the cash flow being generated by the core business. Once they got put on their own with those hard boundaries — you can’t just go back and ask for cash — that’s when we really started to see performance resiliency. They had to do with less and it got really creative and made them really scrappy.

20:16 Joe: And it wasn’t nothing — they weren’t left with nothing. They were just left with decisions.

20:20 Aaron: Left with decisions. And they grew through COVID. I remember during COVID trying to find them some debt capital — you’re on your own. You raised some equity for your organization but we need some debt. I remember trying to raise debt during that period and it was crazy. We ended up getting it and that provided them that additional lifeline, but the culture that got created in that organization was just around being scrappy.

20:47 Joe: I want to come to this — you had individuals managing their business, you had to partner them with someone from finance. Was that you or was it your team? Because someone had to be the person that taught them how to make decisions this way for the first time.

21:01 Aaron: Great question. It’s a combination. For iQmetrics I’m embedded in that organization, I’m on that leadership team. For the other three, we have someone from our FP&A group that is embedded in the organization. One of our companies actually has a strategic planning meeting this week and someone from our FP&A team who’s fantastic is there in the strategic meeting. So finance is embedded in the strategic process in order to help make good decisions, help them allocate capital, help them think from a finance lens — but also ensure that when we get together as a finance team collectively, we have all the information around this too. We’re embedded a little bit deeper as well.

21:45 Joe: This was awesome — there are a whole bunch of nuggets in here for people. I always like to end with some quick hits. Number one: time is tight, what’s your go-to shortcut for deciding something in under a minute?

22:02 Aaron: If there’s a decision that needs to be made, I trust my gut probably more than I should.

22:06 Joe: Name one metric you’d keep if you had to ignore all the rest.

22:09 Aaron: Looking at the Chrysalis level — revenue per FTE.

22:14 Joe: Revenue per FTE. Interesting. Number three — you make a call, you reverse it quickly. What’s the signal that told you to switch?

22:25 Aaron: Generally my team is the one. If I make a decision and it gets met with pushback, we’ll reverse it quickly. If there is buy-in on said decision — no different than your capital allocation model — if something is going awry and not meeting expectations, you need to flip that decision. But I think a lot of the dialogue that happens with the team is where I’ll be super convicted to something, have a conversation, and someone on my team will completely reverse my decision and explain why.

22:54 Joe: Okay, this is a good one. What’s a myth about moving from SMB to enterprise that you think should just be retired?

23:02 Aaron: The myth is that it’s easy. We’re still living it — we’ve been far more successful and we’re continuing to get better, but it is a drastic change in how they operate culturally, everything. The myth is that it’s easy. It’s easier to go to a different vertical than it is to go upstream.

23:25 Joe: What’s the shortest email you’ve sent that actually moved a deal forward?

23:27 Aaron: My emails are pretty concise honestly, so I probably have a lot of very short ones. I feel like the one word — “yes” — like that would move things forward.

23:39 Joe: What’s the coffee order before the budget meeting?

23:47 Aaron: Half cream, half sugar. Pretty simple.

23:53 Joe: What’s the non-work-focused book or podcast you recommend to people?

24:01 Aaron: I’m so bad for this because I’m a sports guy. When we talk about business books, I am not going down that path. My podcasts are filled with NFL football, college football, NHL — that’s my podcast rotation. My favorite right now, it’s college football season so I’m biased — the Cover Three podcast, which is just in-depth college football.

24:37 Joe: And the last one — what’s a business cliché you would just ban forever?

24:41 Aaron: I think I would ban most clichés, and this is why I don’t read business books. I don’t like admitting that out loud because it strikes people as not wanting to learn, but I’m a lifelong learner — I like to tell myself that. I think there are a lot of business books that just reframe things in a way where most people already know most of it. It’s more of a reminder. I don’t have one specific cliché I’d ban — I just don’t really buy into them in general.

25:09 Joe: Aaron, thank you so much for being on. If people want to contact you, where would they find you?

25:18 Aaron: Reachable on LinkedIn. And I just want to return the thank you — I really appreciate you having me on. It was a really fun time.

25:23 Joe: We should do this again. Maybe a round two at some point.

25:26 Aaron: Getting me to do the first one was the hardest, so a second one will be an easier sell.

25:32 Joe: Fantastic.