Inktomi Corp., a Silicon Valley highflier known for its search-engine technology and for its network-caching software, recently did what many Net companies only dream about: It put the P in “P&L.” Sure, net income for its second quarter wasn’t huge — a penny a share. But the fact that Inktomi is growing so fast (revenue for that quarter topped $47 million, up from $15 million during the same quarter the previous year) and is also making money helps to explain its valuation of nearly $16 billion.
The man with a plan for profit is Jerry Kennelly, Inktomi’s CFO and senior vice president of finance. Kennelly, 49, is a numbers guy. After he graduated from Williams College, he worked for Deloitte & Touche at the same time that he was earning a master’s in accounting at NYU. In 1980, he joined Tandem Computers Inc. as its worldwide sales and marketing controller, before taking a job with Oracle as its controller for U.S. operations. He later moved to Sybase, eventually becoming vice president of corporate finance. In November 1996, he left Sybase to join Inktomi, which was still a pre-IPO startup.
In an interview with Fast Company, Kennelly talked about value and values in the Internet economy.
How different is the logic of finance in a Net company?
I’m an old-fashioned type. I prefer businesses that work. For Inktomi, that meant that we had to create a business model and develop business practices that would help us become a profitable company. We were very business-oriented and cost-conscious from day one.
That said, this is a whole new world. There are no established ways of doing business. Early on, when we were building our search-engine business, we negotiated with Microsoft to provide its search services. But there’s no reference guide for search-engine prices: You can’t look up what something like that ought to cost. You have to sit down with a blank piece of paper and create. You have to be a pioneer, to be creative, and to take some risks. They don’t train you to do that at CPA school.
Internally, how has the role of finance changed?
At Inktomi, the finance department is called “business services.” I didn’t want my people to be thought of as internal police whose job is to stop all of the “criminals” from spending the company’s money. Corporate finance is more than just paying bills and providing facilities and space.
So how have you made finance fast?
What I’ve tried to do is to make planning, budgeting, and forecasting — the three fundamentals of financial control — a religion at Inktomi. We’ve been on top of those issues since the days when only 20 people worked here. Those fundamentals are built into our DNA. No matter how fast we grow, we’re not going to be surprised by our expenses.
That said, control like this doesn’t require armies of people. Payroll for our entire 700-employee company is done by one person. Our company is now generating revenue of about $200 million a year, yet the finance department comprises only 12 people.
On a more functional level, what have you done to make finance move faster?
A small example: We let people email expense reports using an “email signature” from their manager. If a manager forwards a report to us, it’s considered signed and approved.
A big example: We “reforecast” our entire company every week. On Monday mornings, we review revenue, expenses, and head count against actual budgets. We never drop our guard.
How many checks do you sign?
Technology has pretty much eliminated the need for me to sign checks. Payroll is all automatic-deposit. We pay people’s expenses electronically — by adding the money to their paychecks. But I do sign some checks, which is how I keep a finger on the pulse of our business. I sign any check for more than $5,000, just to stay in touch.
Contact Jerry Kennelly by email (firstname.lastname@example.org).
Sidebar: These Tools Make Sense
Speed to Market
If you work in finance, you have to keep up with the markets — and not just the stock market. The mobeo 1.0, a two-way pager from mobeo Inc., provides real-time pricing and quotes on currencies, futures, global indices, options, and stocks. Just enter a symbol for any stock, future, option, or portfolio, and the service not only will retrieve a quote and pricing but also will provide any news that is related to that symbol (including a graph) in less than 10 seconds.
The pager, a RIM 950, costs $400. Basic service, which includes information about most of the equities exchanges, costs $125 per month. Additional features are individually priced, ranging from $10 per month to $50 per month. Visit mobeo on the Web (www.mobeo.com) or call 800-328-0870.
The Write Stuff
If you want to succeed in finance, you need a sharp mind — and a sharp pencil. The Pentopia T2300 won’t necessarily give your brains a boost, but it will help you make your points clearer. This mechanical pencil features a ballpoint pen as well as a stylus that can be used with touch-sensitive screens.
The T2300 costs about $30. Visit Pentopia on the Web (www.pentopia.com).
Sidebar: These Sites Compute
There’s a bull market for Web sites that offer news about the financial scene. There are also plenty of sites that market nothing but bull. Here are some sites that add up.
Financial Job Network(www.fjn.com)
Looking for a job in finance? Look no further than this site, which lists openings in the United States and abroad. Click on a job category (actuary, auditor, controller) and get a list of all the jobs that are available.
Still paying for SEC filings? This site offers free real-time filings. Set up a Watchlist, and the site will notify you by email whenever one of the companies submits a filing to the SEC.
Universal Currency Converter (www.xe.net/ucc)
At this site you can find exchange rates for currencies from more than 50 countries. And since the site is updated every minute, you’ll be sure to get the most accurate rates.
“CFO” magazine online — and then some. You can find information about conferences or jobs, and a discussion area lets you connect with other finance folks. The site also offers resources aimed at specific areas, such as accounting, tax, or technology.