Finance is not often perceived as a place for experimentation or risk. Typically considered the hub of regulatory compliance—or at most a proactive financial forecasting team—the people working under the CFO are typically relied upon to pay for innovative business ideas, not provide them. To Paritosh Gupta, the CFO of Felix Health, this is a huge waste of team resources.

“Spend time on the ground as much as you can to really understand the pulse of the business.”

Speaking on the Float Retained Learnings podcast, Gupta shared more about his belief that CFOs need to learn to experiment more.

Gupta grew up in India watching his father’s business grow—a steel manufacturing company— instilling in him a deep passion for physical operations. But he landed a finance internship “by accident” while in business school and he discovered a love for financial operations as well.

“I found it to be pretty fascinating in terms of how you could transform money into more money,” said Gupta. “And so I realized that, hey, this is something that could be very, very interesting to do.”

After graduating from business school in 2007, Gupta got a job offer in investment banking at Lehman Brothers. He stayed until the beginning of the 2008 financial crisis, being laid off as the investment bank went bankrupt.

Post-Lehman, Gupta tried to start an EdTech startup which ultimately failed. Then he got a job in Vietnam at a conglomerate on a team that wanted to start and launch companies. One of the first companies was a mining operation and Gupta was named CFO, a position he initially didn’t want to take. From his perspective, he’d joined the team to build businesses and felt the CFO role would pigeonhole him as a glorified accountant. He ultimately took on the CFO role, acknowledging that it ultimately “transformed” his career.

After moving on from the mining company, he transitioned into tech and moved back to India. Eventually, he moved to Canada to work for payments company Plooto before taking on his current role as CFO of Felix Health.

Moving from mining to tech was a big transition, one Gupta initially didn’t realize.

“Mining is a business where your upside is pretty capped,” said Gupta. “There’s only so much material you can dig out of the ground, process in the processing plant and so to your end users every year. And so it really is more of a play on efficiencies, risk management, protecting your downside, making sure things don’t go bust. And when I moved into tech, that’s the mindset I took with me.”

What Gupta eventually learned is that while tech needs downside protection planning, it also has very different upside economics, requiring a big mindset shift on how to approach risk.

He shared the example of Zoomcar, the Indian equivalent of Zipcar where he worked as CFO before moving to Canada. The company charged a damage deposit before someone could rent a car, but the product team wanted to remove the charge to reduce customer friction. Gupta was against removing the charge because of its potential risks, but he was overruled.

What happened next, said Gupta, is the data showed most people respected the cars and returned them in good condition. While there was an uptick in some people returning damaged cars and not paying for the repairs, the company’s top line still grew because of the new customers Zoomcar could attract without the friction of a damage deposit.

“If things go right, what can you generate for you versus what’s is the downside risk?” asked Gupta. “And so that was a critical point for me to change this mindset of trying to understand the upside much better.”

Gupta said he also learned about the power of reversibility when making financial decisions. For instance, the decision to stop charging damage deposits was temporary. Looking back, he could have supported it with the caveat that if it started affecting the company’s costs or revenues, it should be reversed.

“I became much, much more open to experimentation and trying out these different things as a tech CFO,” said Gupta.

This lesson in open-mindedness is one that Gupta shares with other finance leaders aspiring for the CFO role. He sums it up simply: “understand that a CFO is a business leadership role.” It’s not just about running the numbers (though that’s important), it’s also about understanding what drives the business and what could break it. From there, CFOs need to understand what’s happening in the market and how they communicate all that information with others.

“Spend time on the ground as much as you can to really understand the pulse of the business,” Gupta said.

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The post Felix Health CFO Paritosh Gupta on why finance leaders need a new approach to risk first appeared on BetaKit.

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