#14 - Building operational efficiencies with Thrasio's ex-CFO

While the Amazon aggregator Thrasio’s meteoric rise and fall has been a hot topic, there’s been little coverage of the people and processes that underlie the business itself.

On today’s unique episode, we spoke with Joe Falcao, who led the financial functions for a range of global companies like Dunkin’ Donuts International and of various sizes from $50M in revenues all the way to $2 billion in topline, with his recent stint as a founding member and CFO of Thrasio.

Tune in to learn from Joe about how the finance function plays a large role in operational unity and performance.

You can also listen to the full episode on either Spotify or Apple.

🎯 The TL;DR of our conversation 🎯 

1. (3:25) What is the role of the CFO in operating businesses. Joe discusses the top 3 paradigms he believes that hone the CFO mindset, ranging from important administrative (bookkeeping, taxes) functions, improving operational processes, to making decisions that impact profits.

2. (7:42, 10:42) Identifying points of inflection managing a scaling business and the importance of checklists. As Joe puts its, “what Dunkin’ sells is a pattern of cash flow by different zip codes or geographies that someone wants to invest their personal funds to run that business and fulfill the dream of owning that business.” As such, keeping franchisees consistently following best practices required simplification. Joe discusses how the team leveraged checklists to empower Dunkin’ Donuts international franchisees to be successful. The most important insight, checklists should be 1-page or else they may go unread!

3. (18:33) How difficult macro conditions impacted Thrasio and other Amazon aggregators. High interest rate, supply chain shortages and surpluses, upside down capital structures (oh my). But can there may be a second wave of aggregators that can pull this off?

4. (20:27) Complexities that Amazon based businesses face. From SKU mix to Amazon marketplace costs, Joe reviews how the increasing capital needs of the business may impact the ability to scale.

5. (27:45) Where in the financial statements should businesses look for efficiencies. Overall understanding your margins across core line items, especially your cost of goods and cost to acquire customers through marketing efforts.

⭐️ North Star Metric & Key Data Tools ⭐️ 

North Star Metric:

Contribution Margin and EBITDA

Specifically, looking at the individual inputs of Cost of Goods Sold (COGs), Marketing Expenses, and Operating Expenses across the business.

From:

• Cost to acquire a the product (landed COGs)

• Cost to ship the product (shipping and fulfillment costs)

• Cost for Amazon/marketplace fees

• Cost of advertising

• Operating expenses (people)

Key Data Tools:

• Excel (not a surprise in the finance world and for our VLOOKUP fans)

• Tableau/Power BI for more advanced visualizations

For more from Joe and other Don’t V*LOOKUP guests, don’t forget to check out our YouTube channel, or listen on Spotify or Apple.