Business Software

10 Questions for Fonality CFO Dan Rosenthal

Name: Dan Rosenthal

Age: 45

Time with company: 6 years

Education: Bachelor of Science, electrical engineering; Bachelor of Science, business, Carnegie-Mellon University; MBA, Wharton

Company headquarters: Plano, Texas

Number of countries: Four

Number of employees total: 235

Number the CFO oversees: 17

About the company: Fonality offers cloud-based, open source VoIP, Unified Communications and contact center solutions for small and midsized businesses. Founded in 2004, Fonality has delivered more than 2 billion phone calls across the cloud while enabling more than 1 million users of open-standards based communications software. The company website is http://www.fonality.com.

1. Where did you start in finance and what experiences led you to the job you have today?

I started my career as an engineer, doing product management for a line of custom semiconductors in Silicon Valley. It was quickly obvious that I wasn't nearly a good enough engineer to make it far, but I had an aptitude for looking at the business holistically -- from technology, product, sales, manufacturing, etcetera. So, I went back and got an MBA, did management consulting for tech businesses for a number of years, and then wound up as a venture capital investor evaluating, investing in and managing small technology businesses. After a few years, I thought I'd "put my money where my mouth is" and join a company instead of just investing in them -- that landed me at Fonality when we were just seven people. We all sort of had to pick jobs, and since I happened to be the one with the MBA, I got to be CFO! It was a bit of a learn-on-the-job situation.

2. Who was an influential boss for you and what lessons did they teach you about management and leadership?

First bosses are always very influential and mine was no exception. I worked for a young middle manager at National Semiconductor and he taught me a bunch of things -- especially about how to navigate organizations and work with people who don't work for you, to bring them "into the fold" and get them to do things for you that might not directly be their job. This was important as a product manager, since we didn't directly drive development, sales or manufacturing -- and it's important as a CFO for similar reasons. People don't naturally like sticking to a budget, or thinking though margin implications of design decisions or negotiating investment terms, and it's often my job to help them understand the bigger corporate picture and to participate in the process even if it's not directly their "job."

My first boss also taught me a lot about the importance of work/life balance and getting that right has been something I continue to work on.

3. What are the biggest challenges facing CFOs today?

Well, obviously, access to capital is the number one challenge. For private companies, like Fonality, the entire venture capital market has changed over the past 10 years and the whole process is more difficult. Sure, there are the hype-driven "successes" like some of the social media guys out there, but those are by far the exception rather than the rule. In fact, in many cases, the more revenue and customers a company has, the harder it can be to raise venture capital -- when there's nothing to put a multiple on, valuation is a guess and can easily get bid up. When Fonality was first raising outside capital, we called our already-significant revenue base "painting our own ceiling."

Beyond capital, finding talent is always a challenge. As a growth company, we need people who can be effective in a small company -- self starters, idea generators and initiative-takers. But, in fact, even though you might feel like a startup, once you have about 25 employees, let alone several hundred as we do, you start to operate like a "big company," and process becomes really important. So you need people who can be effective on both sides of that equation.

Finally, as a telecom CFO, I'd have to say that our complex tax code is a huge challenge.

4. What is a good day at work like for you?

Every day's a good day, right? But my best days are when ideas we've been working on for months suddenly come together and we can see that our customers are recognizing the real value we are delivering to them.

5. How would you characterize your management style?

I guess you'd have to ask my staff! I have a pretty hands-off style and expect people to operate independently. When problems do arise that need my input, I expect people to come with some analysis showing the problem and it's probable causes, and a set of next steps to identify a solution and put it in place.

6. What strengths/qualities do you look for in job candidates?

Smarts, initiative and the ability to think on their feet.

7. What are some of your favorite interview questions or techniques to elicit information to determine whether a candidate will be successful at your company?

Having grown up in management consulting, I tend toward the "case interview" style of questions, where I lay out a specific business situation and ask the candidate how they would resolve it. I'm always looking for creative thought processes, quick thinking and a drive toward completion, rather than a specific "right" answer.

8. What is it about your current job, at this particular company, that sets it apart from other chief finance positions?

As one of the early co-founders, I spend a lot of my day on non-finance activities. I spend a lot of time on corporate strategy, working with out investors and board. I also seem to serve as the repository of all of our company history.

9. What do you do to unwind from a hectic day?

At the end of my work day I start my second job -- I'm a single dad with two school-age kids. There's no unwinding for me!

10. If you weren't doing this job, what would you be doing?

I'd like to get back on the other side of the table eventually -- returning to the venture capital world. But that's only because I'm not nearly good enough of a guitar player to join a rock band.

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