Dustin Williamson, Virtual CFO & Managing Director at vcfo

Welcome to the podcast Above the Cloud: Stories from the Boardroom. In every episode, we interview business leaders who are navigating the complex world of B2B marketing. Whether you're trying to grow revenue, swoop into a new market, or launch new products, we promise you've landed in the right spot. And now, your host, Richard Bird. >> All right, today we have a great show. We have Dustin Williamson on the podcast today, and he is the managing director and BC CFO. Welcome to the show, Dustin. >> Hi, Richard.

Thank you for having me on. It's a great honor. >> Well, I'm glad to have you on the show. Glad to, you know, we've known each other for a little while now and you always have the most interesting fun stories about your path and I thought you'd be a good fit for the show. >> Yeah, thank you. I'm excited about coming on today. >> You may or may not know, but we have a tradition here on the Above Clouds podcast where we ask our guests if their company was a bird, what kind of bird would it be? Well, fortunately I had the ability to maybe watch a prior podcast or two, but I wouldn't pick a bird as an aven species.

You didn't really define that, but I did pick a bird as far as uh I think maybe a long lost relative of yours, the admiral bird of uh Antar Antarctica exploration after World War II. That that's a fascinating story. I think it's called operation high eye jump that US sent the admiral down there to uh explore and map and discover what was beneath the ice over there. So yeah, pretty fascinating >> that and that is a that is a relative of mine. Uh and I actually have the some of the transcripts from the telegraph transcripts from uh from back in the day.

Really interesting. He had a he got carbon monoxide poisoning and almost died down. >> Wow. like from a heater or what? >> Yeah, there was a heater and the everything was sealed up. One of the heaters uh was producing carbon monoxide and it uh he passed out from it that somebody had become in rescue. So, it was a really really interesting story, you know, as I ever met him. I don't know anybody who or knew him. Uh but yeah, he's one of the one of our relatives from Virginia >> back in the day. Yeah, >> fascinating guy, fascinating story.

I I don't know if anybody is ever interested in that. Um there's a lot of really cool stuff that comes out periodically about, you know, what's in Antarctica and what was there and uh the uh it's almost like a little icy Indiana Jones type story. So >> yeah. >> So that's that's the bird I would pick. >> All right. Well, I'm honored. I'm honored you chose a distant relative am just walk us through your career and tell us how you know how you how you got here uh to where you're at today. >> You want the long version or the short version?

>> Hey, let's uh this this is long format content, baby. Let's go let's go deep. >> Awesome. Well, I grew up in a small town in West Texas. I I had decided at an early age that I was not going to be a CPA or an accountant because my father like before that he was a partner in a CPA firm there locally in Vernon, Texas. And uh I was determined. And so when I came out of high school, I went directly to Baylor and uh I thought the world dropped off at the Texas State line. All had no idea what was out there in the world.

And uh I went through Baylor. I came out with uh international business and accounting degrees and uh was getting recruited by you know Arthur Anderson and I thought at the time Arthur Anderson was the like that was the place to be if you're an accounting major like that was number one at least in Texas. >> Oh yeah. >> City's a little different but Texas markets in a lot of the other markets around the around the nation or world which Arthur Anderson was number one or number two. Um and so they said so what do you want to do?

I was like, "Audit or tax?" And I was like, "Well, international tax, that's what I want to do. >> If you understand international, you have to understand all the rest." Sure. Like if you start at the bottom and like state and local stuff, you don't have to understand like federal or international. So if you start at the top of the pyramid, then you can start looking at the other pyramids. Uh so they pull me in the office and say, "Hey, uh what do you think about Brussels Belgium?" I was like, I'll take it.

>> Yeah. >> And then uh and so I just kept nodding my headsuh. Let's go. And uh that night I went home and found a globe and figured out where the hell I just signed up to go. Had no idea. And I just knew it was international and overseas somewhere in Europe. Uh my girlfriend at the time had just moved to Dallas to follow me for from TCU. Oh no. >> And I said, "What do you think about Brussels, Belgium?" She's like, "I don't anything about Brussels Belgium till you I'll get a commit better commitment out of you.

So, uh you need to step up, buddy." And so, next thing I know, I'm engaged. and uh we um I head over to Belgium and uh and so then that's where I really got into international tax as far as um from inbound outbound international tax consulting but also got into transfer pricing and uh transfer pricing it's a really unique tool that I didn't quite understand when I was getting into it but I was kind of like you know a lot of times I'm just like let's go let's go in a direction >> let's learn >> yeah let's learn Yes.

And so I had that three-year assignment just so happened to coincide with when Arthur Anderson was blowing up with uh Ed and Ron and World coming. And so a lot of the offices in in the world got uh in the US they got just liquidated. People just scattered. Nobody wanted that liability at the time. But uh in the uh outside the US they all the other big big five or big five at the time were snapping them up. At that time it was more the choice of do you resign with the void or do you go back to your home office which basically was uh a choice to be laid off.

So I was like well will you send me to Glendale Arizona Arizona because I I had been fortunately my planning about it. they didn't have to worry about, you know, 80,000 accountants in the market at the same time. And so, uh, went back to grad school, decided I was going to be a venture capitalist. And, um, I was there at Thunderbird for two years and worked for the Wasatch Venture Fund, um, and which is now called Epic Ventures. And, uh, that was a great experience. And from there, I went to work for a family held fund.

It was a private equity fund there in in Phoenix. and we did and that was a great experience as well. Um the uh the family held fund invested in you know all different types of assets. We weren't like a p regular private equity fund might be looking at particular groups particular profile. We were doing everything from Lloyds of London to um private equity investments in lead VC alongside VC investments. typically wouldn't lead a deal unless it was a small like angel deal. We ran the Arizona Angels Fund.

I mean, it was a lot of different types of investments, even international stuff. And so, one of the deals I was looking at was a mortgage back security fund that was, this was in 2005. Um, and they would come to me and say, "Hey, we're looking for funding. were trying to get, you know, mortgages for gringoes and and and buying property in Mexico and on Mexican property, but the the borrowers were American or Canadian. And uh the family had had a lot of that's how a lot of the original uh wealth was created was through the banking industry um and through actually the patriarch of the family.

he had uh come up with uh novel things outside of mortgages like for example um a second mortgage or home equity line of credit. So back in the back in the 80s and so uh anyway um kept saying no no no this is too big of an investment. You need hundreds of millions of dollars. We're we're not in that mode. And so the fourth time they came back and said well we're no longer looking for money. We got funded by a German investment bank. We're looking for you. and like are you interested in going to uh Austin to set up the investment bank's uh operations and so it was for Deutsche Structure Finance and that's what really got me back in Austin the closure of family and so I worked for the German investment bank we did all kinds of deals with the mortgage back security fund as soon as I got there the bank and the people that brought me in got in a huge fight >> oh no >> so it was it was supposedly already structured I was just supposed to be there to like set up the entities and do the next deals >> and a dog >> and holy smokes they got, you know, just white knuckle hands around each other's throats fight in the middle of >> oh no >> and so I kind of ended up being like like and it actually ended up being pretty fortunate.

Um so it's doing that plus finding new deals and structured finance is very different from investment banking like let's say that your average investment banker might be um you know listing other companies and going out and talking with business owners and things of that nature. this role was very different like it was um you were taking US debt and then German equity and taking the US debt from like let's say credential or uh some of the life insuranceers or um like GE capital things of that nature where it was pretty cheap debt.

My job was to go find like the people that would operate the fund. So like let's say multif family like rehabilitation companies >> or commercial real estate or well they did most the aircraft out of uh Germany but uh wind and solar deals find the operators find the builders you know go put it together um structure it but we would structure it a little differently and my job was to help sell them on hey uh we're bringing in German equity but we need to make this look a certain way so it's going to clock like a chicken and and walk like a duck, you know.

So, it's and you're still going to get your bird, but you know, we we need to make it look for using the double tax treaties. We need to make it look like they are engaged in US trade business. And so, engaged in US trade business, that's that's where my tax tax background came into play. engaging them in the US trade of business meant that paying like the lowest rates like if they didn't have substantial these investors didn't have substantial assets held in the US that are kicking off cash that they're paying taxes at 10% versus maybe 40 50% on the same investment like it it's really critical to understand like if you're going outbound taxation you're taxed on your worldwide income and so um but Germans are territorial they're not taxed on their worldwide income, they're taxed on the German income, German incomes.

So the the fortunate part about the them getting in a huge fight uh whenever I arrived, which meant that I was the mediator, you know, I was kind like guys, you just hired me to like do this thing and you're all pissed at each other. I'm like, how do I get the Germans and the American side to like really get along? because they were the ones that recruited me over there were the ones that were putting together the fund and and underwriting the the mortgages and so the Germans were just bringing in the equity and the debt to fund the mortgages.

Um, but they needed it to look a certain way. And so, um, it drugged on for almost the entire at least half the time, if not threequarters of the time that I was doing other deals, like just me pushing it along in a time I was thinking, and this goes back to like maybe career-wise. Um, sometimes the worst thing in the world, and I was just talking to somebody about this about, um, I'll tell you about Arthur Anderson in a second, but the worst thing in the world seems it might happen to you could actually be the best.

>> And so, like, for like they're fighting over these mortgages and I'm fretting about it and like thinking, >> oh man, like how the hell do you explain this to someone, you know, how bad they're fighting and like I'm right in the middle of it. I'm the media. This can't be good. Well, it took so long that by the time the mortgage industry blew up, they only had like like 10. >> Yeah. >> Maybe 15 million um of mortgage outstanding. >> If they had done it whenever I'd shown up, they would be several hundred million deep in >> like that would have been >> a that would have taken a huge hit on that bank.

And not only that, but everybody else around it. >> Yeah. Seek it. Procrastination pays off. >> Yeah. Well, no. And here's another story. I mean, like, so like I was just talking to um a friend of mine, a Weiss um that that uh I think you kind of run in the same circles with um here in Houston and we're talking about the story of Arthur Anderson and Anderson Consulting. how and this is a great branding uh a branding case study those I mean like Anderson partners Arthur Anderson created Anderson Consulting but Anderson Arthur Anderson was growing tip tax was at maybe a 10 plus percent and audit was maybe 5% growth year-over-year they created Anderson Consulting and it's growing 20 30% every year >> that's where all the money was coming in and so these partners with Anderson Consulting didn't like eventually as it got bigger and bigger bigger and it tax not no longer the lead.

Anderson Consulting was generating the lion share of the profit. Well, they all get in a big fight and they're fighting over the Anderson name, Anderson Consulting, where Arthur Anderson, but it's it's they you think that it's the worst thing in the world. Like I remember they cut off the floors at Arthur Anderson like between Arthur Anderson and Consulting. We couldn't like I was on in Dallas at the 50 50 55th floor and like they had four or five floors and they had a stairway between them and they just walled it off like like they were fighting and it was really pretty a serious a fight over that name.

So they lose the rights to the name as they spin off and they were really upset. And then one year later um the Anderson uh the Anderson company blows up at the same time uh one of the things that was at the time when you thought you know that was the end of the world for Anderson Consulting >> and they turned into you know they took on the name Accenture >> and uh >> you know 6 months to a year later uh turns out >> Arthur Anderson's name was trashed >> and so uh they it gave them the bridge they were able to navigate the the waters without it serendip serendipitously.

And so, uh, >> just like they drew it out, >> right? They couldn't they couldn't have planned it any better without planning a thing about it. They were forced into it. They like they're kicking and screaming and turned out that was the best move they ever made. >> I remember when all that went down and um I was working at a branding firm when that happened and I remember we were going, "Why would you lose that awesome name?" like they're losing all that brand equity and they made up this stupid name that didn't mean anything and uh and uh so we were you know in the peanut gallery going what the heck are they doing over there and so uh then I read later the case studies of how it all went down and of course the branding for that I worked on it was like yeah you know look at look at this brilliant thing we planned out was good to hear that you what really happened on the inside >> yeah the Uh it it certainly was an eye openener.

So sometimes I guess the the the critical thing to think about over you know as I look back over my career and that's why I kind of don't get too wrapped around the axle anymore about you know um you know deadlines are certainly important and there are things that are important but sometimes the the thing that you think is the most important is not necessarily uh end up ends up being the most important. I think the most important is the people uh moving in the right direction but you know getting fixated on um >> the the brand itself especially one that's dependent on somebody else or >> getting too fixated on the objective to the point where it you think it's the end of the world if you don't don't meet it.

Um sometimes that >> it it does work out. and does it work out well? And then I've had other instances that it weren't >> um and you know or M&A deals didn't work out and then you look back in hindsight and go like whoa we dodged the bullet on that one. I'm glad I didn't, you know, it's uh it's certainly uh it takes a little bit lighter view of the of of you know, whenever I was a young guy and you know, in investment banking and everything was serious and everything had to be done in exact way and and uh and uh you know everything was end all beall type you know black or white type you know >> goalment.

So, I'm a lot more relaxed about it now. >> Yeah. Yeah. I could, you know, I know that like whenever you're young, you start your career, you think it's going to be this long, flat stretch, rot, you know, that's straight like the ones you grew up in in West Texas, man. Uh there are actually pretty uh windy and hilly and there's ups and downs and, you know, obstacles in the road and all these things that you can never plan for, >> right? Yeah. So, uh certainly, uh I I'm pretty much, you know, this what this does is it lends itself like the way that I kind of hopped through my career going from um international tax to PC to family held funds, private equity to investment banking.

And then, um I ended up uh when they when the economy blew up in 2009 uh 2010, all the Germans went back to Germany. I was going I was like, uh, the hell am I going to do, you know? So, um, I thought at the time that, uh, I would do busted wind deals, busted solar deals, and like I I knew enough people in the industry. I had the knowhow. I knew how the structures worked. I wanted to work out some turnarounds in that area. And six months of that, me trying to get into the cracking into the industry, and these were hundred million dollar deals.

it's just me. And so I was kind of more like Don Coyote, like out there, you know, chasing the windmills down. But uh what turned up happening Yeah. And like uh the what ended up happening was uh you know, in the 80s I found out, you know, if you start looking in the history books, especially here in Houston, the banking industry went through a a a turnaround in the in the you know, real estate space. And when they were doing that, um, the developers, like when they whenever things got really tight, they just sent the keys back.

And so they called it jingle mail. And so jingle mail was what the banks received every day. They got they got a bag full of mail. And the reason it jingled is because the keys were in >> Yeah. >> So that's pretty much what happened. And uh when I was at investment banking, I was the largest client of this law firm there in Austin. um especially because of that when everybody was fighting and the lawsuits and stuff like that and started up on a mortgage back security fund. Um and uh I went and sat down with the managing partner there and and was licking my wounds and telling him, you know, like how I just wasted six months and and uh tried to do turnarounds and went in solar space and and uh he uh he's like, "Well, you know, you've got your CBA." like I had a valuation analyst credential and >> and your CPA is like I've got tons of of valuation work for estate planning.

>> It's like >> you want to do that because that pays money and I was like well that pays a lot more than what I was doing so let's get done. So I ended up being one of the uh probably if not the largest but at least the second largest mission violet in Austin, Texas at the time which valuation industry was really just just in its infasy. And so I did that and then I started getting into fractional CFO type roles and um and then also doing M&A and fundraising and things like that that were a lot more exciting that was a lot more conducive to my background but valuation really um bridge that gap because and that's another important lesson u there are things in vogue at certain times and if you don't have the skill sets to be able to trans like only do the things in both.

So like for example, if you're only an M&A guy or only a private equity guy or only PC guy, >> I beat them. >> There are times when that's not in favor at all and you're going to be out of luck. And so uh having a broad diverse skill set is like one of the things that you know has really helped me along the way. And so, um, there are things like turnarounds and, um, valuation and things like that that do well when the economy is down and nobody's funding. Can you add? >> Sure. And so I did that for a while and then I started doing turnarounds and sales and did a a couple of energy companies turnarounds and then um one in particular sold one to a it was I was the CFO there and sold it to a um strategic buyer and um that worked really well and then um went out to Midland to try to do the same thing uh around 2017 18 and uh that was uh not working as well because we did it during COVID two turnarounds and um man Midland is a is a um special place so didn't end up selling it got it turned around twice but uh I didn't feel like sellable so I I called up BCFO and was going so what are you guys doing I think I want to come back to Austin and >> got And next thing you know, they're uh uh they're looking for a managing director in Houston that I didn't know about.

And so they said, "Well, uh what do you think about Houston, Texas?" I was like, "Oh no." Like all my in-laws are in Texas. I'm not going back to Houston or in Houston, Texas. And I was like, "But the famous last words were, but I'll ask him why." And next thing I know, we're going to Houston, Texas. >> Yeah. He's like, "Hell yeah, I could be back with my family." >> So, >> we we could gang up on you. >> Yeah, exactly. And so, it's actually been a really great experience and I I kind of regret like avoiding Houston for 25 years, but here we are.

And, you know, I I do enjoy uh Houston and getting to know like the the market, how deep the breadth of it is, and then how open people are here. And so, uh, >> yeah, >> it's, um, it's a great place to do business. >> So, >> yeah, it's super businessfriendly place. Well, you know, one of the things that I really like about your story, you're telling all these stories and you just you got these little building blocks of skill and you picked them up at it at each place and then created this really great, you know, uh, wall for your career.

you know, you it it made you free uh uh capable and you got a lot of experience on a lot of weird niche things. So, when you put them all together, it's like really helpful for for cup pizza. >> Yeah. So, I've got I mean the the CFO experience, but like the tax and the private equity and the VC and the a lot of that's really helpful in what I do, but it's almost like um you know that it's a 1964 movie, the Rudolph the Red-Nosed Reindeer >> where >> Yeah. You know, Rudolph and Cornelius stumble upon the land of the misfit toys.

So, >> yeah, that's right. >> I'm more like the the from the land of the Misfit finance guys. I don't fit any boxes really, but I' I've checked them all. I think at at some point. >> That's cool. Well, I I can imagine when you're going to be a fractional CFO that that really helps because I you know, I can imagine you get thrown a lot of different things your way, >> right? >> Yeah. So VCFO is uh we do fractional CFOs, controllers, high-end HR people. And so when we we're approaching the the lower middle market, so about 10 million to about 150 million in revenue.

Um there's all different types of situations from turnarounds to high growth to family transitions where you're transitioning from one patriarch of a family to the next generation down. Um there's a lot of different areas that we we assist in, but um my background and I'm the managing director of Houston, so I'm mostly doing all of the uh business development and and relating with um you know, our partners, relating with the CEOs, relating with like basically everything that's not involved with doing the actual work.

So, I get to I get to go and talk about everybody's problems and tell you about like how we we solved them and I get to diagnose the problem, but when it comes to fixing them, we have some excellent CFOs and and controllers that actually go in and fix them down. >> Yeah. Well, there and so there goes another skill when you're uh in your skill set, business development and sales. And I think one of the things that we do a lot here, we talk to people sales and marketing. It's been the focus of this podcast and we're it's surprising how many people uh wind up in a business development role or a sales role or even a marketing role and they never wanted to go into that.

You know, it's like they want to be an engineer or a finance person or a doctor and then next thing they know they find themselves in a PD role. How then uh how do you like that? Well, I I love it, but it was a hard transition, you know, for being a CFO and talking about uh different uh you know, technical problems and shifting into being able to relate to people on a very foundational level and not getting too deep into the weeds and being able to read people and and understand that their problems even though they think they're technical, they are very much soft touch and even cultural.

And so being able to see that from a mile like for example I remember the first one the first deal that I walked into for me being a managing director of VCFO and and it was more of a an important lesson I learned very fast was I uh I go in and I speak like I'm sitting down with the CEO and it's like hey Mr. CEO what's what's keeping you up at night? What's what seems to be going on? And uh he he kind of looks around and then he like goes up quietly shuts his door and sits down at like this office.

And the office by the way is like uh because I worked for the Germans. I knew like a lot about furniture. It's all like hering and he but like original stuff the shag carpet like so this is like the fourth generation um there and and so I was like man I was floored. I was like man this is all original. Like this is this is the coolest office I've ever been into. And so he shuts the door and he looks at me like straight in the eye and he's like, "It's that guy down the hall. It's that dirty bastard. I cannot stand him.

I need him out. I need a new CFO tomorrow." And I was like, "Well, we can help you." So >> it's a really selling selling's easy. >> I was like, "Well, this is easy." And then I completely should have sat paused said tell me more about this relationship with with your CFO and what do you think the uh you know like more of Socratic method of like getting to the more of an answer because you know at the time you you know I was I viewed it as a one-way street and that um you know you could fit anybody into a box and and get them to operate and it was a very singular way of looking at things and so as going to the sales process you need to do a lot of discovery.

Um and sometimes um >> there is no amount of put plugging someone in that will fix that problem and >> right >> and so we found that out and uh we actually you know did an interim CFO and uh within six months of recruiting and finding another CFO that CFO was out of there like he's like threw his hands up said I can't handle this and so uh we're back in the place and that's when I have to have conversations with some of them saying, "Hey, look, there's no amount of of what we can do that will fix your problem.

the problem really originates at the top and we need to talk about like maybe getting some HR help or even some coaching involved but being able to do some problem conflict resolution and u and then the way that I pitch it to them is um it's almost automatically whenever I go in and I see like a silo within a company and like especially when that's the chief complaint of the CEO like it's a silo like my finance department can't get any information out if And uh I can stop and say, "Hey, I need to ask more questions about this, but do you have someone that's uh that really gets after them?" like really like like whenever somebody screws up, they you point the finger and uh I start like asking questions in that direction because the thing I found is that um people take years trying to get rid of silos and you can fix it almost in you know just a couple months flat and it's when you find find detect and solve a blame culture where you have somebody at the top it don't always have to be the C CEO but somebody is out there and creating an environment that is threatening to everybody else and they get very insular.

So as soon as you find that and fix it then uh you can do everything else. So um there's a lot of important lessons that I didn't know as a CFO that like now it's like oh man you can tell me like three or four you can tell me two or three phases and I'm like digging into completely different direction than a normal CFO would. >> For sure. Yeah. when he when he told you, "Hey, you know, I hate that guy down the hall that's our finance guy who's probably making him do like things like, you know, file taxes appropriately or just do a good job to keep him out of jail, right?" >> Yeah.

Well, like it's the the thing about like especially like as companies grow, they might have um somebody in place that's been there for 20 years and they call them the controller or the CFO and uh the the the thing is they're just the person that knows the system the best and they they do really well in the box thinking and they do really well with debits and credits and that's all needed. They do really well with filing things timely. Well, usually it's not always timely, but like it they they do well in the box, but as soon as that owner starts graduating up into size and having needs that are outside of the outside of the business, um normal business operations, and they say, "Well, you're my finance guy >> or or woman or whatever.

You're my accounting person. Why can't you do these things like you know do bank refinances or what if scenarios and cash projections and board ring reports and they fall on their face every time and that's where the animosity starts. It's like they they don't quite understand what a CFO does and and the mindset of a CFO being able to get outside the box and operate without much direction. whereas the type of person that they have in that role needs direction, needs a box, and only knows the box. And so, it's it's a really hard >> once you kind of go through that that concept, it's easier for the CEO to to recognize, hey, maybe I I just need to supplement my team with somebody that can do this.

Um, but that's not always the easiest thing for them to see on their own. >> Yeah. What I can tell you about is um this something we see a lot when we're working with companies and the working with the executive leadership team is you can really tell a controller uh that is being asked to do CFO things and it is a really a fish out of water you know especially when they're going through something really hairy like a M&A work or they're going to you know they're acquiring somebody or they're trying to sell the business to somebody well that person who makes sure your taxes get filed and that everything's at RIT Elco can really get out of their depths very quickly in those situations.

>> Yeah, we see all types and this is the thing that VCFO proposition that that we bring in is that we have all different types of personalities with all different types of experience and uh sometimes the Trump like the the trump card on getting the right person isn't necessarily has in-depth experience of the industry. It's the one that can deal with the CEO best or the situation the best. And and I give you an example. We do a lot of the PI index testing for our C CFOs or basically everybody that comes in the door.