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Money! It can be an emotional topic. But, as my guest on today's podcast, fractional CFO Lauren Pearl says, it's emotional for everyone in different ways! In this episode, Lauren reveals her perspectives on how to approach these difficult conversations. Given how many leaders she’s worked with, we also explore her thinking about effective leadership, intentional decision-making, and how it’s crucial for founders to be endlessly unafraid to ask why. She makes an excellent point in the opening quote: we often listen to respond. And when we respond from that place we're missing a lot of crucial information. It's hard to do but it's so important to take the risk to slow down, to ask why and to be a little bit more vulnerable with what you don't know - it’s that inner willingness to face your blind spots that separates the best from the rest.
We talk about the life experiences that taught her how to adapt her communication styles for diverse audiences, how she approaches talking with founders about triggering money topics, and we unpack some insights from her course on Business Modelling - how she helps founders turn their core understanding of their business into plain-English business math.
I particularly enjoyed Lauren’s insights around reframing tough decisions not as losses but as opportunities. We unpacked how shutting down a “pet project” can be reframed not as a loss or a mistake but as a day one decision - i.e., we made a choice and a decision one day with the information and the knowledge and insights that we had and today with different knowledge, different insights and different information we’re making another decision. We linked this notion back to one of the key ideas in Annie Duke's classic “thinking in bets” - the idea of “resulting”, or judging a decision based on its outcome. A good bet is one that a reasonable person with the amount of information we had would have made at that moment, not necessarily one that works out exactly as you'd hoped. And Lauren urges founders to start admiring business leaders who didn’t just get lucky once…but ones who repeatedly make smart bets - and can explain why they made them.
Strap in! We also unpack some common financial misconceptions, discuss how to be a founder whose advisors can help them, and we unpack some interesting case studies in strategic decision making. Lauren’s on-the-fly explanation of some key financial assumptions was dizzying in the best way possible.
Key Links
https://www.laurenpearlconsulting.com/
https://www.laurenpearlconsulting.com/newsletter
Thinking in Bets by Annie Duke - A Visual Summary
Video Highlights
Adapting your communication style on the fly
The Founder Finance Gap: Managing Emotions and Unearthing Assumptions
Using Clear Language to define your Critical Business Math
Admiring Founders who make good bets repeatedly
more About Lauren
Lauren Pearl is a Business Strategist and CFO Advisor who helps startup teams build data-driven businesses that thrive.
As a 3x founder with over 13 years of startup leadership experience, Lauren now serves as CFO, advisor, and instructor for over 300 growing companies with L.P.C. Prior to becoming a CFO, she was a Deloitte Management Consultant, tech executive, Chief of Staff, Director of Strategy, Head of Operations, NYU Stern MBA, and a former Software Engineer who grew up alongside a 200-year-old family shoe business. Her rich background gives her a unique perspective on Finance’s role in growing companies.
Lauren collaborates with leading organizations to deliver finance education for startup founders. She is the resident Startup Finance Expert at NYU’s Berkley Center, where she teaches a semesterly course on Financial Modeling. Her partners have included notable brands like HSBC Innovation, Upflow, The FP&A Guy, Fresh FP&A, Glean AI, eWebinar, and Court Street Consulting, and a growing list of others who share her passion for founder financial literacy.
Beyond her work with founders, Lauren is a thought leader on the evolving role of the CFO. She co-hosts The Growth-Minded CFO podcast, sponsored by Upflow, and was featured as the Fractional CFO expert in Zanda Recruiting’s 2024 State of US CFO Compensation Report.
Lauren is also the Co-Founder of Pearl & Elmore, a research-driven advisory practice she launched with Dr. Josh Elmore, professor of organizational psychology at Columbia University. Together, they help teams transform through evidence-based strategies.
Her mission: To empower passionate growing companies with the tools they need to build businesses that will revolutionize our world.
Full Transcript
Daniel Stillman
Welcome aboard. Lauren Pearl. To the conversation factory. Let's get cooking.
Lauren Pearl
Let's do it. So good to chat with you, Daniel. I'm psyched for this, boy.
Daniel Stillman
Let's just talk about money. Everybody's favorite topic, right? What are your favorite kinds of conversations? Really? Like, what do you. What do you love? What kinds. Like, what's the. What's the flavor? What's the scent? What's the color?
Lauren Pearl
So I think at the end of the day, you know, what I do is I'm a cfo, and I help guide small businesses and startups, But I think at the end of the day, I'm a nerd. I like talking about nerdy things, and I can get really passionate about having those conversations. And so I find myself often in conversations, really digging into it and getting deep, getting in the weeds. My favorite kind of conversation is when my conversation partner is into that, too. Yeah. And is having a good time and wants to do that with me, because I think otherwise. Nerds like me know that feeling of, like, looking across the table and noticing that person's eyes glaze over and go, oh, wait, actually, we're not going deep. Let's step back a little bit. Let's go a little more surface level. Let's talk about something else. Let's ask some questions. Yeah, my favorite conversations go really deep. Get really nerdy. Um, and. Yeah. And just get into it.
Daniel Stillman
I love that. And, you know, it's funny, when I think about our first conversation, which I actually remember very clearly, because we were at that event through our friends at the grand, and I felt that sort of, like, the. I have the pull to the nerd as well, you know, and let's just, like, go as deep and as. As wonky as we can as quickly as we can. And it's interesting. Like, I think not everyone has that sense of, oh, we're being pulled in the same direction, and then, oh, I'm gonna pull back and I'm gonna adapt my style, like, because that's actually a very interesting amount of awareness. How do you feel? Like, what knobs do you feel like you're wiggling when you attenuate your style to try and match the style of your conversation partner? Like, how do you notice that that's such a really high level of malleability?
Lauren Pearl
That is a great question. I think actually, that is, it's pretty core to the thing that I do often, both in my job and my life. And I think the skill set itself is the result of a couple different circumstances of being kind of an outsider in different places. So, like, early, early, early, early on in my life, in my family structure, I'm the youngest of five siblings, and my siblings are all 10 to 20 years old older than me. And so I think very, very early on in my life, I had this sort of sense of really needing to watch and pay attention to. The ways that those my siblings were kind of acting, behaving, speaking, the kinds of things they were interested in because I was so set apart from the rest of my family in terms of age. And so really kind of gave me that skill of like adapting how I was trying to relate to be able to engage with a group that was a little more uniform and had experiences very outside of my own experience. And then later on in life, I think in the workplace I was, I have been, I've worked in business in like running companies, I've worked in tech as like a programmer building web apps and now I work in finance. But in each of those settings I'd often find myself kind of straddling all three of those hats. So when I was working with other technical folks, I was a more business minded person and I would find myself having to do business with engineers, but talking about business in the language of an engineer and identifying the concepts that they would like and thinking through like the, both the language and the preferences of that engineer and then vice versa. If I'm talking about technical things with someone who's a business mindset, I've got to think through like the, so what of what's happening technically. Same sort of thing if I'm talking about finance with someone who doesn't like numbers. So that kind of translator role is I think, very core to who I am and, and what knob am I turning? I think it's, it's so much so part of who I am that I don't notice myself turning a knob. I'm just kind of being there in that moment and doing the thing. And sometimes I only really notice it when I realize it's not, not going right where I realize, like, oh crap, I'm using the too many of the wrong words here and they're not with me anymore and I need to reassess and remember like where they're coming at it from.
Daniel Stillman
Yeah, that's so interesting, you know, watching people for signals of are they with me?
Lauren Pearl
Yeah.
Daniel Stillman
And I think there's these basic ones that I remember when I first read like, oh, just match somebody's body language. And that's just an easy one. They cross their legs. You cross your legs. But it's very mechanical. Yes. But you know, even tone and vocabulary and word choice pace, like all of that, it just sounds like you're reading the room. Yeah, read the room, Lauren. But somehow you may not be able to name exactly what you're, what you're reading, but it sounds like you're, you're scanning as you go. Yeah.
Lauren Pearl
Which is really interesting. Yeah. I think, too, there's a little element of it, of creativity, like. Like not needing to always say something in the exact same way and being delighted by discovering new ways to explain or describe something. Because I definitely get a lot of joy out of that. When you realize, like, oh, wait, here's the unlock, here's the first. Framework that makes this thing that feels complicated to some folks makes. Make much more sense, or here's the metaphor parallel from this other area to make that translation. Click. So I think it's also that kind of like, curiosity and joy when some. To see someone else get it and the love of, like the creativity of trying new stuff out and seeing what sticks.
Daniel Stillman
Yeah. So now, I mean, look, you work in an area that, you know, I don't, I don't want to own my own traumas around this, but like, I feel like a lot of people, you know, have mixed feelings about money. Let's just say. Yeah, you know, I pres. I wouldn't presume to understand the mindset of your clients when they realize they need help with it, but it's, It's. It's kind of a very sensitive issue. I have my own memories of when a good friend of mine just admitted that he was having trouble paying his bills. And I shared with him this idea that I learned from watch. Listening to like financial radio with my dad. This is a super random story, but like just this concept of paying yourself first. Right. And I was like, hey, listen, you know, there's this thing where you pay yourself first, you figure out where your nut is and you put that aside and you pay yourself first. And then you don't worry about taking care of the absolute essential things that cover your nutrition. And. But the fact that my friend was willing to own that he was struggling is amazing because, you know, most people don't want to admit that they need help with this thing. So I guess I'm wondering, like, when in the story of an organization do they decide, I need the thing, the job to be done, the expertise that Lauren brings. And then how do you approach these conversations which I feel like could have some inherent difficulties, some barriers to vulnerability, some.
Lauren Pearl
Yeah.
Daniel Stillman
You know, progressive disclosure before people want to get really, really, really real with you or maybe not because they're like, oh, thank God, here's everything. Yeah. Which case. How do you create that context and that, that, that space for people to, to be that reel with you? That is a really, really long non, you know, preamble question. I hope you can pick something out of there and, and, and drop some knowledge for us.
Lauren Pearl
Totally. No, it's a great question. Honestly, I think it's worded perfectly because it speaks to the complexity of.
Daniel Stillman
Thank you, folks.
Lauren Pearl
Relationship with money. And I think what you're alluding to is exactly right. Different people have totally different, like money is emotional, I think for most people, but it is that way in totally different for everyone. And I think there's, you know, there's, there's such a diversity of kind of attitudes that founders come to me with, I would say, 2 Pro. Profiles stick out in my mind most. The first being that founder that comes and is like, as you kind of mentioned, just like relieved. They're just like, oh my God, this is a total mess. I totally don't know what I'm doing. Help me fix everything. Like ah, where do I start? And has no qualms about being vulnerable, but often feels like helpless. Like they're, they feel not competent and they feel like they don't know anything. And I think for those folks the conversation actually is very much around 1, like holding space for that and like kind of meeting that vulnerability and being like, okay, yeah, great, I have you, like we got this and like accepting all the info. And I think I do a lot of work in the early days with those types of founders in just pointing out what they actually do already know because oftentimes if they're self aware enough to be like, ah, it's a mess, I don't know what I'm doing. They probably know a lot more than they really think they do because they don't have a lot of those like hidden blind spots. They have already identified that they don't feel confident in this area. And so it's sort of we're building up this arsenal of things. Like you might not feel competent in the whole thing, but like here's the stuff that you're already doing that's working and that's where we're going to start building first. And it might not be that you don't understand these things, it might just be you have a different vocabulary for thinking about them. Often when I'm doing my course on financial modeling, Financial modeling is like a very kind of complex advanced finance topic because you're in Excel, like building the math behind like everything and how it works in your business. It feels really intimidating. But I have a course where I teach financial modeling and the expectation in the course is you come knowing nothing. And in two and a half hours you should know everything you need to know to be able to build your first model. And how do we get there? The crux of how we get there is most of the course is spent investigating the math of your business in the way you already intuitively think about it in your head. Because even if you don't consider yourself educated in finance, if you are running a business, you understand your business and there is likely some math going on in the back of your mind of how you think your business works. There might be some mistakes there, but it already exists. And so the first thing we do in that course And a big chunk of that course is just spent getting that math in your head, out on paper, and then starting to build your model. So that's kind of the approach there, where you feel like you have no basis. And basically our combos are going to be about. No, no, you have something, it exists. We're just going to like get it out of you and put it down on paper so you can look at it and then we can build from there. Yeah, that's one port, that's one profile and how I kind of deal with that. The second profile is actually more challenging. This is the founder who thinks they know everything and they just want a little help, but actually they don't know everything. And they're often struggling not just from this educational barrier on like the topic itself self. They're also struggling with like the psychological barrier of having a bunch of false assumptions or just gaping holes in their knowledge that they're not aware of and they may not be willing to acknowledge. And for those folks, there's more kind of introspection that needs to be done. There's more unearthing, investigation, questioning, and oftentimes I can help those founders too. But there's a lot of trust building that has to happen there because as you mentioned, the issue of vulnerability, sometimes they have to be vulnerable to help me discover what they don't know so that I can know how to help. And so there's a lot of work done to build trust, break down those barriers, and get down to the, the parts where those gaps live.
Daniel Stillman
So I hear two strategies. One is honoring and sort of lifting up the people who feel like, oh my God, I don't know anything. And the financial modeling piece seems to be. But in their head is grammar and creating math. Yeah, it's a word problem. They're like, well, I do this, this and this. And then you can, you can model that, you can put that in Excel and decide, well, if you do more of this and you'll get more of that. Right. If you do less of this, you'll get less of that. That's right. All, you know, thesis, but at least like to have it clear, clearly set down. And I'm wondering with the, with the people who are not asking the questions that they should be asking because they think they know the answers to them, what aren't they? I mean, this goes to a question I wanted to ask you. What aren't they asking that they should be asking? What do they think they know that they are totally wrong about? Obviously you can't name names. I understand. Remove any details so, you know, clients don't feel like they're being called out specifically. Yeah, but like, what are, where, what are some misconceptions or false pieces of knowledge that founders develop around this, this issue that they should be disabused of.
Lauren Pearl
Yeah, I would say the overarching theme that I see in folks who think they know everything they need to know, but actually have these gaps. It often comes down to a lack of precision of definitions, of miscribing or of misattributing something, or not quite understand the building blocks that go into it. So, for example, a couple of. And actually stepping back. It totally depends. Like, blind spots could be anywhere, right? Because it depends on which good sources of information they happened to take in and which ones they never interacted with or didn't listen to. And that's completely variable. But this definitions thing, I think, really seems to be a big theme, because math is about precision. And so some examples of this. So, for example, in, like, the space of customer acquisition, right, we have things like what sorts of tasks you're going to do to get more customers, to ultimately get more folks that you're serving. Right? And there may be this idea of like, well, I'm going to do a bunch of outbound marketing. I'm going to go reach out to a bunch of people, and I'm going to try to get people to come into my pipeline, eventually become customers. And they look at this happening, maybe even they hire a salesperson to do it for them. And they're spending all this money on reaching out to potential customers, but they're not actually increasing their number of customers. Right? Yeah. And what's going on there, and what they might do is they might say, well, this salesperson's just not good. And they rip out the salesperson and they pull in a new person, and they think that's going to solve the problem, and it doesn't. And the reason it doesn't may be because actually what they thought was just a problem with that individual salesperson or like, the number of leads they were reaching out to. It actually might not be about how many people they're reaching out to. It might be about conversion. Right. And conversion of leads could be about how good that salesperson is, but it also could be about how good your product is. It could be about which leads that salesperson is reaching out to and how much this in particular value your product. And so, like, there's a whole kind of chain of math that explains how someone becomes a customer. They hear about you, they are in your customer, or they're in your customer consideration set. They hear about you, the salesperson happens to reach them. They actually want to get on a second call with your salesperson. They then see a demo. They then are accepting of a contract. They then decide to sign that contract. They then become a customer. And then, of course, the ultimate contract value, all of those steps have a percentage associated with them and a number that connotes how valuable that lead is. And if you don't get that connection, you don't know what the actual next best move is. It may be the case that you need a new salesperson or you just might need to improve your product or improve your product marketing or improve the trust you have with the customer or go after a different kind of customer. So that's a place where people will go wrong, where you find founders that are doing the wrong thing over and over and over and over and over again because they don't really know how the math of the whole chain works. So that's one. Another one, just briefly, not as long of an example will be things like, you know, my profit and loss statement shows that I'm profitable, but I never have any cash. Right. This doesn't make any sense. That's a gap in understanding because it's a gap in understanding what the difference is between cash flow and profit, because they are not the same thing. Like the notion that they should be the same thing is a misunderstanding of these two numbers. And so. And lots of folks get frustrated about this. How is it possible that I'm making profit and not cash? Like. Well, because they measure two different things. And so it's things like that as well, where you just literally misunderstand the definition. And so things feel frustrating and illogical. And it's not that they're illogical, there's just factors at play you don't understand.
Daniel Stillman
Yeah. So how do you. I mean, everyone, you know, presumably like me, thinks of themselves as a fairly intelligent, rational human being. And we've been going along living our lives, and we get to this point where the math isn't mathing. And even when we've hired someone to help us think and see differently and to. To push back on our mental models, I imagine that there's sometimes where there's friction. I know that you were saying that it's a very. Watching and adjusting kind of comes naturally to you and adjusting your, your vocabulary and your approach is kind of second nature to you. But I'm wondering, like, do you ever feel that friction of. I don't know if I. How to bring this up with them right now. Do you feel. I think one of the challenges with difficult conversations or this idea of difficult conversations is people kind of tense up and avoid them because they're worried it will be hard. What do you do to prepare yourself to step into something that you are concerned will be challenging to talk about.
Lauren Pearl
Yes. I've definitely been in the situation where explaining this feels like a lot of conflict. I think that I think of a combination of preparation because I'm a preparer and trying to be diligent about not just telling, but asking questions and coming in kind of with questions in mind and gathering data as well as sharing data and really trying to trust myself that no matter what I hear, I'll be okay to address that without necessarily preparing every single thing I'm going to say. So for me, it's that balance. When there's a conflict, when there's not a conflict, it's like a mutual conversation. And we can just kind of like we say something. I see how it lands, and it just kind of like, feels like it builds in this collaborative way, but when there's friction there, it feels like it can take a nose dive, right? It's. Some point. And then you're, you are at risk. I think even as someone who's trying to be helpful, you are at risk of losing that trust. Losing them. The eyes glaze over sort of thing. And, and in finance, it's so, it's, it's funny. Like finance itself, whether it's delightful or super boring or frustrating, has so much to do with the communicator. Right. Like we all think back to. There's so many. There's almost like this stereotypical story of like when you ask someone why they learn to love math. Like, well, I had this great math teacher in high school named Mr. Newman and he was just that it's, it's that teacher. It's someone who like gives you the passion for it. But it does mean that there is that risk that if you are not a proper kind of messenger for the information, it doesn't stick if especially for someone who doesn't have an inherent passion for the topic. So it is quite a responsibility and it can be a little bit of a risky situation. But going in with that combination of preparedness and I think curiosity is the best method that I found to deal with it.
Daniel Stillman
Yeah. What that highlights for me one of the. When you're talking about eyes glazing over and seeing how something lands, this really speaks to the importance of synchronous communication for particularly difficult conversations. I think we could draw some sort of a matrix where it's complexity of the conversation and the necessity to have what I would call a high bandwidth interface for the conversation.
Lauren Pearl
Okay.
Daniel Stillman
This is like why text? There's one of these classic memes where like somebody's like throwing a table over. You're like, clearly you misunderstood my text message. Text messages are really, really hard to communicate. Nuance and complexity. It's great to tell people what bar you're going to next. And I myself have, have the experience of when someone calls you. Yeah. Hey, are you still at such and such bar? I'm like, I just called you, dude. I just texted you. Don't call. You know where I am. Like I'm in a loud bar. Don't call me. That's annoying. Yeah. But in an office with a whiteboard is like the highest bandwidth connection you can have because you can see them, you can touch them and you can put things on a whiteboard. Like that is a seven dimensional conversation as opposed to a one dimensional text conversation. And it's clear that in your, especially with these more challenging conversations, you're not having them over Slack.
Lauren Pearl
Honestly, actually I'm going to push back on that just a little bit, if you don't mind. I also love in person conversations. It's. Like my, probably my favorite way to not just have difficult conversations but just also like meet and get to know people in bond. Because I do think there's a lot of kind of emotional connection that happens in person of like more likely to give someone the benefit of the doubt, more likely to see someone's humanity. Like those are huge benefits from in person conversations. But I've also worked with a fair number of engineering companies and I especially have experience working in the cyber security industry with a lot of folks who kind of grew up online and grew up in like a chat based interface and often maybe like a bit more introverted who actually like in an in person conversation are endlessly distracted by discomfort.
Daniel Stillman
That's amazing. Digital natives.
Lauren Pearl
Yeah, I don't think that's incredible. There are people, I mean myself included, I'm right on that kind of borderline of the spectrum between introvert and extrovert where I feel like I, I varied on a day to day basis depending on the activities I've done that day and, and sometimes in person's too much. So yeah, totally. I, I like, I like the back and forth. I think that as you and a lot of this I think too can be sussed out by working with someone on repeat and kind of getting to know them better because you get this sense of knowing what the best place is for a given conversation where like this is one where I know they want to, I want their utmost attention, I want them paying closely, close attention and for this person, if I have them in a meeting in person, they're going to be on their phone distracted the entire time. But if I send them a slack message they're going to be entirely focused on this at least until the problem gets solved. Right. In which case you've got to kind of translate what it is you're trying to say to that venue and be thinking about that venue as your best weapon. So you're kind of catering your messaging to where they personally listen the best.
Daniel Stillman
Yeah, it's very clear that you're thinking about the right place. I mean I call this designing the conversation. Like the right message in the right place at the right time to the right person in the right way. And yeah, there's no one size fits all because as, as we say courses for horses or as my grandmother would say, that's what makes horse racing, what's interesting by the way. I just, I feel like every time this comes up I, it's my bound duty to say that 80% of everyone are ambiverts. I actually don't yeah. So there's studies that show that we're all ambiverts, and that means that that makes sense. Yeah, it does make sense. So when people tell me I'm just an introvert, like, I. I really need time to recover, and I really like hanging out with people who. Who I know and, like. And like, talking about the things I like to talk about. I'm like, dude, that's 80% of everyone. And then after I go out, I kind of need some time to recover. I'm like, yes, Aimsies. I think there's a very, very, like, it's a bell curve, as you know, math.
Lauren Pearl
Right.
Daniel Stillman
There's like this very small fraction of psychopaths, like, just want to shake everybody's hand and talk to everyone. And there's this very, very small fraction of just pathetic losers who don't want to even talk to anyone that they don't know already. And I say to those people, how did you get to know the people you know? Do you meet the junior high school? And that's great. Most of everyone needs to talk to new people occasionally would like to make a couple more friends. Yeah. And craves a little bit more connection and then needs to, like, be horizontal afterwards. I just. I don't think pure introversion or pure extroversion exists. That speaks to my own, like, you know, if you believe in astrology, My parents labeled me as a Pisces. So I believe that everything is just this milky oceanic soup of undifferential. Like, we're all just people. Sometimes it's hard to talk to other people. I'm an extroverted introvert or an introvert extrovert. I go to parties and I'm like, let's do this thing.
Lauren Pearl
Yeah. And then I turn it on.
Daniel Stillman
And then I go, oh, turn that off. Yeah, you got to psych it up. It's totally context. Sorry, that's just my rant. It's my opportunity.
Lauren Pearl
I love your rant. Thank you.
Daniel Stillman
I appreciate it.
Lauren Pearl
It's a perfect opportunity for it because it's true. Like, I think that's. We're. Listen. We're talking about watching people and thinking through how they best learn and what makes them feel comfortable and how to take the temperature up or take the temperature down on a difficult conversation. So thinking about that is really important for that activity. Yes. The acknowledgment of, like, it's a spectrum. And thinking through, like, well, where do I think they fall on this? And how would that relate to. Yes. How this conversation would be the most helpful.
Daniel Stillman
Yes. By the way, I've used this term so many times. I don't think anybody has a conversation thermometer or odometer. And yet we all have this innate sense of, like, this is moving too slow or too fast or too hot, too cold. How do you do you have any recollections of, like, well, we got to take the temperature down on this, or we need to turn the temperature up on this conversation because we're not addressing this with enough intensity.
Lauren Pearl
Yeah. Yeah. I think I think about that in terms of. I guess when I think about temperature going up in a conversation, I'm thinking about the level of kind of engagement and, like, emotion that's, like, starting to live in it and being felt throughout the room. And I'm. You know, okay, sometimes I will work with founders who are in like a really challenging situation where they've got a ton of pressure from stakeholders, especially founders who are, you know, taking on investment from VC investors at early stage. They've got a ton of pressure on them. They have a co founder relationship to deal with, they have employees to deal with. Probably sometimes for the first time ever. Um, I have a lot of, or at least I have a couple of clients where like crying is a thing that happens on calls, which is totally fine. Like I'm here for that. This is an emotional journey and if, if, if the conversation with me is the space where they feel comfortable enough to let that out, like, great, I'm doing my job. Like that, that needs to get out somewhere. Might as well happen with someone who's an advisor who is just trying to help and get you past. Um, but also in that space where we're kind of like getting that emotion out. It's not the same mode where we're going to start going for solutions. It's not the same mode where we're going to build. It's like that's a, that's sort of one activity that's happening where it's like there's an emotional like rise maybe happening and maybe like a release. But then if we want to build, we have to go back to like our foundation of like, okay, what do we know? What are our goals? What have we done? What are the constraints at play and how are we thinking about next steps? You know, like it's a, it's a less not to say we're putting our emotions away, but it's, we're taking the temperature down on the conversation where we're having to change to a more kind of practical step wise how and do conversation. So I'm thinking about temperature bringing it down in that context. When I think about bringing it up, I'm most times thinking about it in terms of we're having a conversation and this often can happen like in a group call sort of thing where like people are saying stuff and it's fine. Maybe someone's presenting, they're bringing up conversation like, or information and maybe people aren't really paying attention that much. People are a little bit unengaged and then you hear something or you yourself weren't really engaged and you plug back in and you realize like wait, what did they just say? That's a huge deal. Oh my God. And you've basically kind of got to not ring the alarm bells but get everybody kind of engaged. Again on. Wait. Actually, this thing was really important, and we may need to shift gears. We may need to take action on this. We may all need to really, really hear this and then give input on it. So I think. I'm thinking. When I think of raising the temperature, I'm thinking of, like, increasing the level of engagement because something just happened in the conversation. That could get swept under the rug and it needs to not be swept under the rug.
Daniel Stillman
Yeah, yeah. I'm hearing a lot of going, what is sort of classically termed going slow to go fast, laying clear foundation and locking that in so that we can accelerate progress. And yeah, what I'm hearing you say in that meeting, you're like, wait, did everyone just hear that? Like, let's really just make clear what, what I just heard. Did you all hear that? And then blah, blah, blah, blah, blah. And that that creates a foundation for ideally accelerative progress based on clear, clear alignment and shared understanding, which is.
Lauren Pearl
Yeah, yeah, definitely.
Daniel Stillman
Our time has gone so fast, which is crazy pants. There's, there's so much that we haven't talked about. One thing that's been like in my brain is what to do when the math doesn't. Math. I was just reading this article about REI cutting out their. They've had an experiences arm. They've been doing, you know, taking people out to the wilderness. And for them it was part of a mission. Like we want to get 3 million people engaged with the wilderness and we sell all the equipment and people can experience it and learn new things and use it better. It like seems it was totally value aligned. It's. They've been doing it for 40 years and they just shut it down abruptly. And I was like, whoa, that's so tough. And they've got employees and they've who are, you know, believe in it. Who. They have freelancers. They've got employees who are half in the store and half. And the experiences, it's, it's something they've been doing for a long time. And they, somebody in the organization started the conversation that said, like, we are losing money on this and I don't understand how we're ever going to not. So can we just do the thing that we're really good at? And I think that is the hardest conversation that I can imagine.
Lauren Pearl
Yeah, yeah, yeah. I think, you know, this particular example also speaks to thinking about initiatives in the context of the current time. And I haven't read the story about REI and followed up on the chop of their outdoor program, but I can kind of speculate on what might have been going on here. And I wonder if that's informative to then talk about how that conversation goes. What I imagine likely happened. Guess again. Totally presumptive assumptions. I was not there. Yeah, me neither. But I could see it happening in a situation like this is there's a program in an organization like how this maybe got started. Like why they decided to do this initially, as you mentioned, super aligned with the mission, this very cool thing that they could author. To organization probably if they charged money for it. And it's an extra revenue stream potentially. But I bet you somewhere in that conversation of starting the program was likely about compounding long term impacts, right? So this may have been a bit of a revenue driver if they were charging money for it. But also like think about all of the other effects of having a program like that as a retail brand, right? There is an element of customer like emotional connection to this. There's the word of mouth element online. If you're on a hike with REI and then you tag them in a post like that's free marketing for them and a ton of brand awareness and positive sentiment. So amazing marketing opportunity also for employees. Like it's an amazing benefit to potentially dangle in front of employees to make them want to work there instead of working at like H and M. Right. We are aligned with the outdoors we want to have. It's also a way to, if you're thinking about an employee strategy, particularly attract employees who have the kind of knowledge that you want because you are probably not paying. Again, completely presumptive here. I don't know what they pay employees, but all retail is pretty low margin. Generally speaking, in the, in the scheme of buzz business models, you probably can't pay your salespeople all too much more to work at an REI than say, you know, an H and M. But at an rei, the expertise you have in outdoors things is directly related to how much you sell to customers. So it's really beneficial to have folks who really know what they're talking about and are really outdoor enthusiasts. But that skill set's probably more kind of expensive than your typical just retail associate. Hey, so how do you attract those people to be at your stores? Well, you have this whole program where they can also get paid to be guides and to be outdoors and to have that. So like I could see it being a completely beneficial from a dollars and cents perspective activity for that company at a certain time where actually they are benefiting for this is helping their profits because that program existing has all these great marketing returns, maybe some dollars associated in terms of revenue and they get huge cost savings on the employees because they can just like entice them with that program rather than way increasing their wage costs, which I'm sure is one of their largest line items of expenses. Right? So that's beginning convo. Zip forward to today. Today capital is really hard to come by. Like everybody's kind of skimping the investor market isn't there. The IPO market's basically shut down. It's really hard to borrow money. So cash has become really scarce. And, you know, the sentiment in the market has changed. There's a different president involved. Are people so interested in, like, these, like, outdoor recreation? Are they interested in climate change? Are they interested in nature? Like, That might be not so objectively like a good thing for everyone that might be politically polarizing and like, so the marketing thing suddenly is like not as sweet as it once was. And then like from a retail attracting employees perspective, like that may still have some benefit, but maybe not like, who knows what's going on there? Maybe employees don't care about it as much. Maybe, you know, unclear that one's harder to deposit on. But then at the end of the day, if this program isn't really making money, is more of like a loss leader, which is a way to define an activity that you do that loses money, but it's okay because it makes you money in other places. You might not be able to afford to just have that kind of long term focused kind of program anymore. It just might not be. You literally might just not have the budget for it. And so you have to be a little more short term thinking and practical and say like, I would love to continue this but we just can't afford to. We're going to shut it down because it's not essential to the operations of our business and they cut it. So very long explanation of like, what could be going on there. How do we think about that in terms of a conversation to have? I would say that a lot. If you are the person who sees this reality happening and has to have that conversation of we're going to have to shut this program down. I think there's a conversation that happens internally and then there's a conversation that happens externally. In terms of externally, I'm not sure you got to talk to your PR team. Like that's kind of outside my purview of how to, how to deal with that from a branding perspective internally. My gut would be to go to the practical facts on paper that show, you know, we may love this, it may be super brand aligned. Here's why it was wonderful then, here's why it's not going to work now, and here's the even better thing to point through if you've got a tough conversation to deliver internally, especially about shutting a program now. It can be really nice to not just talk about what you're closing, but to talk about what you can use that money to do instead. I had this experience in my own family's business. We had to shut down a retail location that the CEO really was emotionally connected to, but just wasn't making money. And we had to get the permission from him to do so. And we were very concerned that just by saying like, let's shut it down we were going to trigger his like, I can't quit sort of feels right. That's sort of like, no, I'm going to what, got him there. Go down with the tenacity. That's right. So instead, we posited the conversation as. Or we framed the conversation as. Closing this store down represents 500,000 extra dollars that we can spend on new skus for the extra. Still existing stores. Here's all the new brands we're excited about bringing in.
Daniel Stillman
Yeah, right.
Lauren Pearl
It's not a conversation about all the things we're losing. It's an exciting conversation about new skus that we can try out here that are going to make our assortment even more exciting. And that's a different conversation. Talking about the same thing. Yeah, but you're talking about the positives as opposed to just the mistake that got made that needs to stop. Yeah.
Daniel Stillman
And I also hear we use that word honoring way in the beginning, and what I also hear you doing here is honoring that. Based on the information we had and the strategy we had, this decision was a good decision to do then, and we have new information now, and it's not denigrating that decision. I think there's a book Annie Duke wrote. She wrote a book called Thinking in Bets. It's a great book. Like, look, you know, we're. It's. She calls it resulting. Well, it was a good decision at the time. You can't say that it was a bad decision just because you got a bad result. Yeah. Which is usually how people think of a bad decision. You're like, well, I got a bad result. It was a bad decision. You're like, well, based on all the information you had, would a reasonable person have made that bet? Like, yeah.
Lauren Pearl
Yes. The bet.
Daniel Stillman
Right. Bat didn't win. Good bet.
Lauren Pearl
Yes. Yeah. I love that book, and I love that distinction. I think it's so important, especially in financial decisions at business, because that conflating happens all the time. And I think even, like in thinking about business leaders, we look up to. We look up to folks who have had success, but that's not a fine enough comb for assessing who you're going to look up to, because it's failing to distinguish between good decision making and luck. To Annie Duke's point, there's so much luck involved. And it really should be about a person who makes good bets, which, you know, repeating over time should result statistically in better results.
Daniel Stillman
Sure.
Lauren Pearl
But we're not often looking at repeated good decisions. We're often looking at business leaders who've made one really good decision or resulted in fame and fortune. And so we're all like, oh, my gosh, this guy's a genius. Whereas instead, I think I'm much more bought into emulating or watching leaders who have made good decisions again and again and again and again. And you can see that. And you can see their process, how they do it. Also more practical because you can emulate it. There's like an activity there of risk assessment and opportunity assessment that you can use for your own decision making, your own bet making, too.
Daniel Stillman
Yeah. We have a few more minutes, I think. I hope.
Lauren Pearl
Okay.
Daniel Stillman
When. When you were. When you were breaking down the REI thing, which we didn't talk about. Talking about. I. I was thinking about the line from the Princess Bride, where. Where the man in black is talking to the Sicilian, and he says, truly, your intellect is dizzying. I was just like, wow. She's just like, You're just tearing it apart. I really see the, the analysis, right? The thing you were just talking about like oh, opportunity analysis and the data, you know, solution tree analysis. You're just like, you're just tearing it apart.
Lauren Pearl
You're not just Asian.
Daniel Stillman
I enjoyed watching you work. I would never go up against you when death is on the line, clearly. So what have I not asked you that I ought to have asked you? We're here, we only have a few more minutes left. Like what, what is one thing you'd like to make sure everyone knows? You know, this is the Tim Ferriss asks like what would be on your billboard? But like what's the important thing that we haven't talked about that we really ought to talk about this thing that you know better than most people know?
Lauren Pearl
I think that, I think it goes back to what often I see founders getting wrong when it comes to finance and how they build blind spots. And I think that maybe the overarching best approach I have to not doing that to, to not making assumptions and to kind of going in clear eyed is to be endlessly unafraid of clarifying and asking why. So I think often in conversations we end up creating gaps in knowledge because we listen to what someone's saying and we kind of understand like 50% of it and then we just sort of move on. But that's the kind of activity that I think leads to a false assumption like profitability is the same thing as cash flow. And I'm just going to round up one to the other. When you are starting out as an entrepreneur and that's really who I deal a lot with. Like I work kind of with businesses who just don't have a CFO yet. For the, for the companies that are like really, really early stage, which I work a lot with those. I have courses and I have a lot of content that I put out for them and, and free stuff and low cost stuff. And then for larger companies, like larger than a million, 2 million plus in revenue, we do one on one work. Um, but I think that for those earlier stage especially and even into the later stage you're going to run into so many things that are unfamiliar because when you are a founder, you go from most times being a specialist in one thing to having to do everything. I think it is so valuable especially when you're speaking with other specialists who are helping you run your company, when you're speaking with your lawyer, when you're speaking with your accountant, when you're speaking with your insurance benefits provider, when you're speaking with your fractional CTO on how to build the technology to never be afraid to ask. Wait. Accrual method. What does that mean? Right. Wait, architecture is different from backlog. Can you just. Why can you just explain that to me? Like not glossing over and pretending that, you know, you know, we have to fake it till we make it so often as founders in certain conversations. But it's really not a bad thing to just admit the gap in your knowledge and get that clarification of definition foundation because it helps you build that web of information in so much of a more robust way so that you're going in clear eyed to more and more and more conversations. You're going to build this sort of like web of information and that web might be full of gaps and you're going to make a ton of bad bets from information that you don't completely get. Or you can be vulnerable and ask why and then build a web that's not full of gaps. And when it comes to making that bet, you have full information on the best bet to make in that situation.
Daniel Stillman
Yeah, that makes a ton of sense. As my, my dad loved to say, when you assume, you make an ass out of you and me, which is where dads get these scripts from it. But really it's if, if you're going and what you say is so true, we're designed to, to kind of assume, we kind of can get along and figure out you have all these older brothers and sisters and you're like, yeah, I kind of get what you're talking about, so I'm just gonna like pretend to be an adult. We all want to just like fit in and it takes a lot of energy and effort to slow the conversation down and say like, I actually didn't understand that acronym. Yeah, what is that? Can you please explain to me like what the difference between those terms are? That's hard to do. It's really hard to slow down the conversation. It takes a lot of guts.
Lauren Pearl
Yeah. And I think folks get a little like worried that they're going to come off as not smart. And yeah, like sometimes if you're asking, like if you're in a conversation with an investor and you ask like a question around like, wait, what is cac? Like, yeah, that's not, that's not good. Don't do that. Right. So like, no, don't go in completely unaware of the knowledge that they assume you will have. Especially for folks who are, their evaluation of you is really important. But especially when you're in conversations where like someone's working for you, like you're paying for your accountant, you're paying for your lawyer, and most times asking questions doesn't make you look dumber, it makes you look smarter. So there's really actually not a huge risk, even reputationally, to doing it. Like, there's no reason to be embarrassed. I think I learned this, actually. I majored in analytical philosophy and psychology and a music minor. But the philosophy piece, I think, was really what gave me this idea of getting really precise requires asking those questions of, like, woo. When you say, what do you mean by that? Like, exactly, do you mean this or do you mean this other? Very close to that definition thing. It's super helpful. And often the person who's exploring. Explain something to you. Actually, you're like, the reason you're confused is because they don't, they don't know. And you're helping them too, by, by helping them, to be more precise.
Daniel Stillman
Yes. Although I think they killed Socrates for that. Not everyone likes being asked all those questions because we all have a lot of assumptions. And I don't really know actually. Where should people who are listening go to learn about all things? Lauren Pearl and, and where in the founder journey do you think? You said early, but it sounds like based on what you' like there isn't too early because it can smooth the. The web of, of unknowing.
Lauren Pearl
Yeah, yeah. So places that you can look for me. So easiest place to kind of find me would be LinkedIn. That's sort of my social media channel of choice. So you can find me. I'm Lauren Elizabeth Pearl and I have a daily newsletter called the Daily CFO that I.
Daniel Stillman
Which I enjoy. I leave you unread sometimes, but when I do read it, I get something for it.
Lauren Pearl
It's a lot to read, Lauren.
Daniel Stillman
I don't know how you do it.
Lauren Pearl
It's a lot. It's a lot. But they are short. So typically if you do open the email, I tend to write the length of something you could read between two sips of coffee. So you're not like reading a blog every day. It's pretty quick, kind of along the lines of like what you'd see Seth Godin write. I kind of took kind of inspiration lengthwise from his stuff. So you can check out the Daily CFO and then, yeah, if you are at the very beginning of your journey, I put out a ton of content for 2025. One of my goals is to put out a lot more free resources. And so even very, very early stage, free webinars, free courses, free templates. And then the JLECFO is a lot of sort of like things that I will normally teach either in my classes or in consulting, I'll actually write about in the email itself. Um, and then for Later Stage, you can also from those same resources reach out to me anytime and we can book a consultation. So for Later Stage companies, we do like one on one advisory where when you are making big expensive decisions because you're getting bigger, but it's not quite time to hire a full time cfo. I can help kind of fill that gap and be that person that you speak with on a weekly basis so that you're making decisions based on data and reality rather than just gut instinct.
Daniel Stillman
Terrifying to to not do that because the math. Maths.
Lauren Pearl
Eventually it does. The math comes to get you.
Daniel Stillman
The math will come and get you if you don't come and get for the math. Well, you ordered your books first. I thank you so much for your time, Lauren. This has been really deeply elucidating. I'm really glad we talked about all the things we talked about. We didn't have time to talk about everything, but I really appreciate you making time you didn't talk about. Did you talk about your podcast? You actually froze for a minute. My Internet connection became unstable. Did you talk about your podcast as well?
Lauren Pearl
You know, it's funny, I did plug for that.
Daniel Stillman
Plug the podcast.
Lauren Pearl
So I have a podcast. I co host a podcast with a, with a startup called Upflow. It's a seat. It's called the Growth Minded CFO Podcast. So this is if anyone listening is a finance person. This is a really good podcast for you. We interview famous and really thought provoking CFOs and finance leaders about what's happening with the role of finance and you know, the role of the cfo, how like the best teams in the world are being innovative. We just had one interview recently with Charlie Kev of Carta, with the regional, with the regional CFO of Roche Pharmaceuticals, Rita Kale. Those are two really good episodes to check out first if you're interested. But. So yeah, it's super fun. But bear in mind if you are not a finance person, it is a bunch of finance people talking about finance stuff. So fair warning.
Daniel Stillman
Yeah. The nerd portion. Going back to our first conversation. What type of conversations you like to have? This is like way up on the nerd to nerd.
Lauren Pearl
It's very, it's very financing. But I will say that said, it's, it's CFOs at these big companies, they're leaders. So there is a lot to just glean from being a leader of a department that is very technical and kind of how to hold that position and push the business forward from that seat. So I think also like anyone who's striving for just kind of like a C suite or leadership role and is trying to think about how to be more impactful. There's going to be episodes with a lot of stuff for, for them too. But yeah, you have to be able to stomach the finance talk.
Daniel Stillman
I'm going to give it a try. Thank you.
Lauren Pearl
Appreciate it. Let me know what you think. Yeah, definitely.
Daniel Stillman
All right, well, I think we can call scene. Thank you so much.