From CFO to CEO: Peloton’s Barry McCarthy’s path to the top job is an increasingly common one

Take for instance Peloton Interactive’s new CEO Barry McCarthy, who began his role today. The former CEO, John Foley, stepped down and will become executive chair amid news the company will shed about 2,800 jobs, impacting approximately 20% of corporate positions. McCarthy was previously a CFO at both Spotify and Netflix.

“Barry is a proven leader, well known for his financial acumen and record of driving transformative change at iconic companies including Netflix and Spotify,” Karen Boone, lead independent director at Peloton, said in a statement. 

Peloton is certainly in need of financial help: its shares have tumbled more than 80% from their all-time high a year ago, Fortune reported. As a result, activist investors called for Foley’s resignation and for Peloton to explore a sale of the business. But the role of the CFO has dramatically changed in just a decade. It’s no longer just about numbers, but strategy and transformation of the overall business. 

The strategic partnership between the CFO and CEO has always existed, but it’s become even more vital, Steve Gallucci, national managing partner of the global and U.S. CFO Program at Deloitte LLP, said. “As I reflect on the last 24 months, the CEO has really looked to the CFO even more,” Gallucci said. CFOs have their hands on the pulse of the business in the midst of having to pivot at a much quicker pace, he said. “Transformation is being asked of companies at a pace that we’ve not seen before in modern day business,” Gallucci said.

“Many of the CFO searches that I conduct are very explicitly CEO succession planning engagements,” said Alyse Bodine, partner and global managing partner of the Financial Officers Practice at Heidrick & Struggles. “In many instances, organizations view CFOs as almost deputy CEOs,” Bodine said. “Oftentimes before an executive even becomes a CFO, organizations like to see that executive actually serve in a president capacity.” Besides finance, the CFO often has responsibilities in other areas of the business, she said. “If you look at what’s expected of a CFO, the bar just continues to kind of rise,” she said. Heidrick & Struggles has been “tracking CEO succession for years and years, and the CFO to CEO path is not an uncommon one,” Bodine noted.

Although many CFOs have headed to the chief executive chair, research by Spencer Stuart released in December found they often underperform. In comparison to promoted COOs, divisional CEOs, and leaders advancing from below the C-suite, finance chiefs can over rely on the numbers. “Comfort with numbers, reliance on logic and sound analysis are important strengths, but successful CEOs must understand the broader landscape when making decisions and hit different notes with different audiences, especially when faced with uncertainty,” according to the report. Those who are successful find ways to “cultivate a growth orientation and risk tolerance,” Spencer Stuart advised. They need to be involved in key business decisions, “occasionally serving as de-facto COOs for the CEO,” and learn to balance analysis with a more holistic view of the organization, the firm noted.

Axel Hefer, CEO of Trivago, a metasearch hotel search site, began at the company as CFO. Matthias Tillmann, current CFO, talked about their strategic partnership. “Axel was the one who hired me in 2016,” Tillmann explained. “And at that time, he just joined the company two months earlier. The first thing we worked on was the IPO for the company. That was a very intensive time to be honest, working together day and night, for over six months.”

But the two learned to trust each other and built mutual respect, he said. “When I succeeded him as the CFO in the beginning of 2020, just before the pandemic, and he took over the CEO position, that was very important.” Though the last two years “have been intense for both of us, we had to work together and that worked out quite well,” he said.

Tillmann said he still learns from Hefer. That experience will certainly come in handy if he’s the CEO at a company one day.