To the Stockholders of Ecom CFO,
Last year, I bought a collection of Warren Buffet’s letters to shareholders from 1965 to 2014 and became inspired to share a letter to shareholders annually – even if I’m the only shareholder to date.
My goal is to have a public record of our performance and my thoughts on the business as we progress.
If you read Buffet’s first letter to shareholders from ’65, it’s a very simple, numbers-driven 1-page document. Since I don’t answer to real shareholders, I can do whatever I want, so I’m including some additional sections about market position, key decisions, and a SWOT snapshot.
Market Position
In 2023, we saw a steady increase in our market position with 8 and 9 figure clients, fueled mostly by the great work of our team and our unwavering commitment to tackling the ever-increasing complexities of e-commerce and online retail.
Our team continues to be relentless in establishing and applying ground truth in our “sell first, accounting later” industry. Also, notably, our software partner A2X was a refreshing surprise in their shared vision and commitment to supporting us in our mission.
Financial Performance
Our revenue growth was 58% from 2022 while maintaining 15% EBITDA. I attribute our ability to drive meaningful EBITDA % in 2023 to the following:
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Our current clients asking for more services
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Top-tier LATAM talent
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Crossing an inflection point to cover fixed expenses
In particular, our commitment to top LATAM talent is a unique differentiator among competing firms. We’re able to onboard and deploy amazing talent quickly and effectively.
Despite being a remote-first company, we recognized the value of being in-person and hosted our first in-person company gathering in Austin. I underestimated just how rewarding it was to me as the founder and the impact on our overall culture.
2023 SWOT
Strengths
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We’re in a big, growing market – the volume and basket size of products purchased online continues to increase
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Our positioning is winning – our target 8 and 9 figure clients find it increasingly difficult to drive EBITDA, making our services more valuable
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We’re doing great work – we’re receiving frequent, great feedback from our clients so we know we’re driving real value
Weaknesses
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Finding and onboarding CFO talent – I underestimated the challenges of hiring and onboarding great CFO talent. We have to create a perpetual pipeline of candidates and improve our onboarding process to deploy new CFOs to our clients
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Fear of losing quality as we scale – I’m obsessed with avoiding the traditional firm’s problem of losing quality at scale
Opportunities
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Client’s operational issues – many of our client’s issues are not inherently financial but operational. We have a huge opportunity to drive more value by providing an in-house or partner solution
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Clients want a single source – our clients are constantly asking for our help in tax, treasury, and other service lines we don’t currently provide
Threats
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Market Downturn – Most of our clients sell consumer discretionary products. Although our services are usually the last to be cut in a market downturn, I’m always nervous of an impending sharp, sustained macro decline
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Perception of AI – we’ve seen an emergence of “automated” accounting solutions like Finaloop. Because clients don’t usually have accounting expertise, they are not able to holistically evaluate the trade-offs of these systems and may conclude (wrongly in our opinion) they don’t need (or need dramatically less) human accounting oversight
Looking Ahead to 2024
Looking forward, we are committed to cementing our position as the market leader in fractional CFO and accounting services for eight and nine-figure brands.
Our financial performance goals for 2024 are 40% revenue growth while maintaining 15% EBITDA. We anticipate further strengthening our relationships with our technology and other partners.
Finally, we will continue fostering a culture that reflects the firm we’ve always worked for.
Sincerely,
Sam