Today with Bocconi Students FinTech Society, student association leader in the fintech space, we interview Andrea Pietrini, Business Angel and CEO of YourGroup, the first C-level advisory firm in Italy.
Good morning Andrea, we are really pleased to have the opportunity to interview you. To start, what has been your path and experience/career?
I have always been fascinated by corporate finance and I graduated in Finance at Bocconi University. Already at that time I was convinced that SMEs should access the capital market in a more efficient way, in fact the theme of my thesis was on Venture Capital. After completing my studies, I worked for three years at KPMG where I had the opportunity to deeply understand the numbers behind the functioning of a company. This expertise later proved to be fundamental in the world of corporate finance. In 1998 I started working for IBM, which at the time was the most highly capitalized company in the world and, working in the M&A area, I had the opportunity to live an extraordinary experience and participate in a deal worth 7 billion. In 1999 I felt the call of Venture Capital, which in those years meant being in the right place at the right time. Unfortunately, at the beginning of 2000 the tech bubble deflated, and I had to find a place in a more traditional sector, specifically as CFO of a tech company we had invested in. In 2012 I launched YourCFO with the idea of bringing fractional executive to Italy within medium-sized family-owned companies. From there we moved to YourGroup with which we expanded our management services offering and achieved great success. Finally, I always kept the desire to be a business angel and so I joined Italian Angels for Growth (IAG) and then founded my own small investment company for start-ups in the seed stage.
Bringing such a revolutionary management and business idea is definitely not easy. How did you manage to overcome the resistance of entrepreneurs, especially in the context of small and medium-sized Italian family businesses?
Since we are still at the beginning of this process that will bring the fractional executive to be the future of management, I can say that with YourGroup we have certainly done a lot in terms of dissemination and education on the subject. What we try to do in order to find possible companies to collaborate with is to present our services to what we call 'intermediaries of trust', i.e. those subjects that the entrepreneur trusts, such as accountants and lawyers.
And how did you reach large companies?
Just by word of mouth from 'universal connectors'. Although there is still a lot to be done, certainly some episodes such as the Lehman Brothers crisis in 2008 and the pandemic have helped a lot as accelerators of these processes. Unfortunately, the entrepreneur begins to approach managerialism when he starts having problems and, sometimes, it is also too late. Obviously this situation of uncertainty, which has challenged established systems and business models, is bringing this model of management even closer in Italy. On the other hand, there is a need of managers who are willing to put themselves on the line professionally every day. Clearly it's more comfortable to work in a company, so it’s necessary a supply of competent managers who have a desire to do this job.
And what is the current situation?
Right now, I notice that both supply and demand are starting to come together. On the supply side, the theme of work-life balance is starting to be more present, while on the demand side I see the Sharing Economy in the managerial sphere becoming more and more widespread, with access to managerial skills without the need to have them within the company.
That must be great news for YourGroup! Also based on your experience, how has technology and innovation helped transform the role of the CFO in recent years?
Technology is becoming the CFO's domain as data analytics is becoming critical to the efficient operation of a company. Especially in medium to large companies, the CFO is the keeper of data as he or she is responsible for reporting and IT activities. I am convinced that right now the importance of data is enhancing the figure of the CFO in the business context and that companies will increasingly need this figure in the management environment. In the end, the much talked about digital CFO figure is simply connecting the financial world and the world of technology.
And by the way, how is FinTech transforming YourGROUP as well?
First of all, YourGroup was born as YourCFO with the idea of bringing fintech issues into the world of operational finance. The traditional bank still has complex issues of customer relationship management and, also because of its size, finds it difficult to evolve its business model. On the other hand, FinTech allows for more flexible, simple and fast solutions; for example, products such as digital lending can help make access to capital more efficient. I am convinced that this is a topic of fundamental importance especially in the Italian productive fabric since the issue of SMEs is also one of speed. In addition, while bank finance usually evaluates mainly the past, FinTech solutions also analyse prospective plans and the business plan making the analysis more effective. YourGroup, especially in the CFO area, is using and promoting these tools within SMEs, in this sense we are very good ambassadors of the FinTech theme.
Data is also used a lot by companies to show their superior performance. Do you also use it to show that you can achieve better goals with your CFOs?
Let's just say we try to do it when they let us. We always operate on other people's data, so it's our clients who have to say whether their results have improved with our joining the company. Usually what we try to do as soon as we come in is digitize as much as possible. This makes work faster and more effective and working remotely allows the CFO to manage the financial side of the business from the comfort of home. Certainly, digitization is an accelerator of fractional executive as it saves us time on the physical and bureaucratic aspect and, consequently, being able to follow up with three or four clients at once.
You mentioned that sometimes we turn to fractional executive services too late. How can this be remedied?
In Italy we are behind, but we are catching up for two reasons: First, because the corporate and managerial culture is improving, and second, because there are tools that the legislature is introducing for the management and prevention of crisis situations. Clearly, if these procedures are not seen as impositions, they are more easily accepted. When the entrepreneur calls you personally to understand how management can benefit his company, the chances of success are greater.
In addition, managerial services allow companies to overcome the typical Italian procedural problem. In Italy we have many excellent entrepreneurs who manage companies in an instinctive way and, although instinct is fundamental in many situations, it is definitely not the most effective way to manage a company. This is because without procedures, it's difficult to fully understand and scale your business model. Finally, there is a theme of educating the entrepreneur on tools that can assist them in running the business.
Among these are all the data analysis tools that can give answers to the entrepreneur to make an informed and guided choice.
How is your remuneration system organized? Since it depends on the business performance, do you get a percentage of the returns?
It depends on the availability of data. We do it whenever it is possible. In a business, the professionals’ remuneration can be linked to the business performance only if performance measurement is effective and correct, but that is not the case for many of our clients. In business meetings, people discuss more often on the reliability of data than on the number itself. Moreover, Italian enterprises often use old technological tools, like Excel, rather than new ones for the financial planning. This makes data even more complicated to read. The new planning instruments are more reliable, make more accurate forecasts, and can collect data directly from the managerial system. This is a challenge for your mediation system. We need a better system that is able to link the remuneration of managers and professionals to business results. It is not easy, given the difficulties in collecting data in the first place, for many Italian businesses.
Moreover, there is a necessary condition: to leave managers room for manoeuvre to reach the business goals. There exists a tradeoff between result-orientation and freedom of action.
How does this negotiation process work and how long does it take?
A fractional executive business has the advantage that we can choose our clients and refuse to collaborate if there are not the conditions to do it comfortably, such as when the partners disagree with each other about relevant subjects. My advice is not to collaborate with clients that do not have clear objectives in mind. Also, we must be able to take the lead when there is still freedom of action and room for improvement, not when the business has already tanked and there is nothing we can do to lift it. This problem is linked to the Italian stigma of business failure. Young people like you should try to change it. In our country, when things are not going well for a business, managers often try to keep up appearances by taking disastrous decisions. If that is the case, we can do nothing to help them. Prevention is always better than cure.
What are the factors leading an entrepreneurial activity to success?
The first factor is commitment. Many people struggle to keep enthusiasm and motivation in the face of difficulties. An entrepreneur endures to the end of the difficult moments. YourGroup has had hard times but, since I believed in its concept, I found a way to overcome them. At some point one has to choose whether to go forward or stop. A successful entrepreneur always goes forward. When I worked in the venture capital sector, I always said that there are 5 factors leading to success: product, market, management, management, and management. This means that if one has a valuable product and a market that likes it, what is left is just effective management. “Management” means anlyzing the market and its competitors, identifying threats and opportunities. We cannot plan anything, but we must always seek confrontation, which is essential as the proverb says: “If you want to go fast, go alone, but if you want to go far, go together”. Trusting the judgement of skilled experts helps us avoid fatal errors, especially at the beginning.
When is it right to stop instead of going forward? Some people say that to take two steps forward one must take one step back
Rethinking the business model is a perfect example of “one step back”. If we realize that we made a mistake, and we have the humility to recognize it, we must move one step back to have a better restart. YourGroup has changed its business model two or three times, even if the concept and the market were remained the same. It even changed name two years ago. I have often listened to the advice of professionals that knew it better than me. We need to remain consistent with the foundations and objectives of the business, but this doesn’t mean that we cannot change our mind about the strategy to achieve them. The two concepts do not conflict. One can take one step back, as we did, because sometimes a trial-and-error approach is the best choice.
Are you born an entrepreneur or do you become one?
I believe you’re partly born one, because an entrepreneur has a natural risk appetite. Moreover, the family background plays a key role. I come from a family of entrepreneurs: my parents and my granparents were. I liked the idea of being a manager, and Bocconi University taught me how to become one, but I soon felt an inner “entrepreneurial call”. I believe you’re “born” an entrepreneur because you’re socialized in that way, not because it’s in your DNA. If one were born in a family of employees, he may choose to remain in that comfort zone by becoming an employee himself: having role models is crucial. At the same time, the entrepreneurial world is very meritocratic, because the market makes no concession. In other fields, meritocracy isn’t always respected, especially in Italy where we have such low social mobility.
What’s your advice to young Bocconi students who are asking where to start their careers?
Times have changed with respect to 15 years ago thanks to the digital revolution. Bocconi University opens many doors, but we must not forget that we live in a “network economy”. We must always start from building an extensive and powerful network. As an adult, I have understood that people will change their minds multiple times during their lifecourse, thus having a high-quality network can help. When we are young, we often have dreams that are not our own. We shape our own dreams when we start working and understanding how the world goes. Personal branding is just as important and complementary. If our contacts do not hold us in high regard, it is better not to have them at all.
Always look for new chances to improve the two things: your network, because it’s the foundation of our society, and your personal branding, because it constitutes your own value (which includes improving your personal and academic skills).
Moreover, cross-discipline training enables you to adapt more easily if you change your goals. Reorienting a specialized career is much more complex. When I wanted to work in the venture capital field, it didn’t exist in Italy yet. As soon as it was born as linked to the FinTech sector, I was one of the first ones to work there thanks to the competences that I had acquired at IBM. However, it took me 6 or 7 years to reorient my career.
Did your network in the venture capital field help in starting YourCFO?
Yes, it definitely did. Working in that field I have come to meet very important people in few years. Not only have they helped me, but they also offered to me many job opportunities in their companies. YourGroup was born because I had too many jobs to handle at the same time, thanks to my high-quality network and my competences. Since I had many activities going on, I started sharing tasks with other CFOs that I deemed more skilled than me, so their personal branding played a role as well. If I hadn’t acquired new competences and contacts during my time in the venture capital sector, I would have never founded YourGroup.
What’s your advice to the ones who end up being the youngest in meetings with older experts? Is it better to get noticed or to keep a low-profile?
One only needs to get noticed if he has something relevant to say, otherwise silence is the best option. Meetings with peers are less stressful because one can count on good credit and reputation. I am a shy person, but I think the opposite would also be wrong: one has to find the happy medium. A networker has to be extroverted but not intrusive, and must respect others’ boundaries. Of course, when those meetings revolved around topics that I knew and felt confident about, I felt bold enough to advance proposals before the more important ones, who maybe didn’t have the same knowledge that I had in that regard. My remarks were appreciated because they were useful. We must talk without fear of being wrong, but we must expose our ideas in a kind and proactive way and with some sensitivity.
Thank you very much Andrea for your time, it was an inspiring interview. We are grateful to you for sharing so many points of view with us. We are always very happy to have the opportunity to discuss with prominent professionals like you.
Bocconi Students Fintech Society