In this episode, Sophie Jackson talks to Caroline Bailes, CFO at Koa Health. They reflect on Caroline’s career journey, as well as discussing the importance of working in organisations that share your values and some of the unique challenges for Chief Financial Officers in the healthcare sector.

Hello and welcome to Ask a CFO, a podcast series shining a light on the different paths taken to become Chief Financial Officer and telling the personal stories of those that have made the journey.

I'm Sophie Jackson and in this episode, I'm delighted to be joined by Caroline Bailes, CFO at Koa Health. Caroline has had a very unique career journey, working with organisations aligned with her values. I'm really thrilled to share our conversation, discussing her journey and her insights into the role of CFO.

Hey, Sophie.

Hi. So Caroline, I want to take you back because Ask a CFO is all about people's journeys to where they got to today. And as you know, a lot of that is around our mission to help draw other people into the role, to demystify a path to success that can often be difficult to analyse and to be aware of, and to hopefully lead to a more diverse community coming into CFO roles in the future. So, I want to take you back. What initially drew you to a career in finance? And tell me a little bit about some of your early roles.

So, I studied natural sciences at university. And during my degree, I almost switched to medicine and that becomes relevant later on, which is why I'll mention it now. But I knew sort of coming towards the end of my degree that I didn't want to spend life in a lab.

I'm very much a people person and like meeting different people, getting out there, getting to know people.

And I knew I wanted to use my analytical skills. So obviously, through the A-levels that I've done and the degree that I've done, very much a strength, the analytical skills. So, after some research, I decided a good place to start would be an accountancy qualification. And that would be a fantastic foundation for the rest of my career.

And I think it was a great decision. So, I was really lucky at the time to secure a training contract with Ernst & Young in London. And I absolutely loved my four years there. I went travelling before I started, so I was one of their January intake. We were a smaller cohort than the September intake. We got to know each other really well and studied, you know, for our ACA exams together.

And during my four years at EY, I was exposed to a really wide range of different businesses. If I had to choose my top three audits, I think I'd go with my very first one, which was McVitie's, where we had free biscuits all day, free pizza to take home and yeah, there was a constant, obviously, discussions about Jaffa Cakes and the VAT. Won’t go in to deeply now.

And then BP, I worked on the BP audit, which was obviously a large number of operating companies. But back in the day, they had great corporate facilities and once a year there'd be a Beaujolais Nouveau lunch, which the auditors were allowed to join in with to try the new vintage.

And then probably my other one that I really enjoyed was with a Lloyd's aviation syndicate. I love the sort of intellectual challenge of the insurance or reinsurance spirals in the Lloyd's market and just the history behind the Lloyd's building and, you know, when ringing the bell when there was a major loss and things like that. So yeah, great experience at EY.

But I couldn't see myself staying on in audit. I would say I thrive on “business as unusual”, if that makes sense. I like a fast-paced environment where lots of things are changing and happening, and there are lots of strategic decisions to be had. And that's why, rather than going into an operational finance role at that point, I joined Morgan Stanley's European M&A team.

I'd say the culture was a very sharp contrast to EY, very long hours.

And I was the first person they'd taken on sort of post accountancy qualification. Most people were taken on associate straight from university. So, I've got in at a slightly higher level, obviously. And I was really lucky to be exposed to a couple of Blue Book transactions during my time there. Found it really, really interesting how you would look at the combination of two businesses, what would create value for the shareholders, what the that proposition and the pricing to shareholders. So really interesting.

When I left there, I went to Arthur Andersen's business consulting arm. So that was a part of Arthur Andersen that competed with Andersen Consulting at the time. And I joined their strategy, finance and economics group. And again, a fabulous five years being exposed to a range of different clients and projects and lots of traveling around the globe, which at that time in my late twenties was fabulous.

I spent a year at an oil refinery in Bulgaria, and six months in India, again, working with their oil trading corporation with various different workshops up in the Himalayas and things. I worked in Slovenia for quite a long time as well. I worked with the BBC on rights, and I worked and did some expert witness work in accounting, which was quite interesting as well. So that was fabulous.

And then it came to around the year 2000, and I thought it was time to move on. Many of my colleagues at that time, it was a dot-com boom. And so many of them were moving to dot-com businesses. But to me, there didn't seem to be a solid economic model behind most businesses.

But you weren't wrong there.

Wow, yeah, so I made a really good decision, the best decision of my career, probably. I joined The Guardian Media Group, development role.

Amazing. I love that because I think you are definitely the first person, hopefully not the last that's mentioned their top three audit. So, thank you for that.

And I love this expression, business as unusual, because I think, you know, I remember when I started my career, if you all talk about black swan events, and no one ever says that anymore because every day is another unique set of challenges. So, I love that.

I know that you've described your time at The Guardian as a particularly significant turning point in your career. So, what made that role so influential and how do you think it shaped your approach to both leadership and to finance?

So, I say firstly, for those that don't know it, it's worth going to have a look actually at the website. GMG is an, Guardian Media Group is an incredible organisation. It's owned by the Scott Trust in a unique structure that exists to secure the financial and editorial independence of The Guardian in perpetuity and safeguard the journalistic freedom and liberal values so that the newspaper be free from commercial or political interference and that was set up by one of the former editors at The Guardian, C. P. Scott was the editor from 1872 to 1929.

So really forward thinking in setting up the trust, you know, when you think about what's happened in the latter half of that century. And I love some of the quotes. So, among the many well-known lines are the assertion that comment is free, but facts are sacred. Yes, that newspapers have a moral as well as a material existence and that the voice of honesty, cleanness and courage, fairness, a sense of duty to the reader and the community. The voice of opponents, no less than that of friends, has a right to be heard. And these are all values that I really strongly identify with. And I think the same was true of everyone else that worked there. So, it was a wonderful thing to be bound together with colleagues with this very strong set of shared values and the first part of my time there was about building and growth.

So, the Guardian Media Group was effectively a portfolio management company. So, we had the main newspaper assets, which are the Guardian Observer at the time. Observer's now been disposed of, which we never thought would happen back then, but hey. And then we had a range of other media asset, and we were involved in a lot of M&A activity as well as new business launches.

And the rest of the portfolio was generating that value and cash flow to support the editorial investment in the two main newspaper assets.

So, the first half of my time there, the media was booming, but we were also very aware that the key advertising revenue streams and ultimately editorial content were facing strong competition from online.

So, the strategy was about positioning the group as strongly as possible for that migration and also preparing for the financial future because the economics of the business model changed. So, the price of pre-classified advertising is very different from online and so we knew we had to do something about that.

We diversified the portfolio further as well. So, we built a radio group from scratch, one new license that were advertised and also acquired existing stations. And then we had a couple of businesses which we run in partnership with private equity. So, one was the Trader Media Group, which is the owner of the Autotrader brand and that was a fabulous case study in how to transition a business from print to online and obviously it's still booming and it's now a quoted business.

We partnered with two private equity houses in the ownership of Trader Media Group over the time I was there and when GMG eventually exited the business, it banked a shed load of cash, basically, that formed the bedrock of the funds that sustain the group now. And then we also partnered with Apex Partners on the purchase of EMAP's B2B portfolio. And this was a really interesting acquisition because it was one that needed competition commission review. So, I was quite heavily involved with a data analysis that were supporting that.

But again, really interesting not only to work on our own small business launches, but also along these established private equity houses and the rigor of running a business and growing a business with the Guardian Media Group's media expertise and their sort of financial expertise coming together in what was great success in those two businesses.

I was also responsible for the group's very first sustainability strategy, which we called ten in ten in 2010.

At the time, it was fairly unusual but it's something which I've retained a deep interest in. And I'm currently on the board of an organisation called the Energy and Climate Intelligence Unit, which is a small organisation which tries to make sure via media and political connections that truth is being told about climate change in the media to the public, because there are lots of other people out there with agendas. And in a way, that for me aligns back with what C. P. Scott was trying to do with the Guardian. So that's quite a nice kind of tie back.

And I found what you were saying at the beginning, they're quite moving. Like I wasn't expecting that, but I felt quite almost choked up because I remember when I, I was at university in the early noughties in London and I wanted to go into newspapers and The Guardian, along with others like The Independent at the time, I thought, well, all these places I'd love to be.

And if you think about it, The Guardian is the only one that's been able to retain this principle first approach to journalism which I think the UK used to be quite synonymous with and now is really not. I mean, I think I would almost defer to certain US organisations now, which seems like unthinkable compared to then. So, I really think that's phenomenally important.

And this principle of having your purpose aligned with your talents as well, I think I can see that as a thread for you ever since that role. And it's lovely to hear because you can hear people's voices change when they're speaking about work they've done that's really mission led and ethically aligned with what they think is important.

So, tell me a little bit after you left The Guardian, what led you up to your first CFO position and how did your slightly unconventional career path prepare you for those responsibilities? Because you've had a very diverse set of experiences already when you got to The Guardian.

So, I wouldn't say it's completely unconventional. So, I think my time at EY gave me a good ground for something in the operational side of finance already.

And then I had kind of best in class training in reporting and financial management from my consultancy years. And at GMG, as well as doing the exciting stuff on the M&A side, I was also overseeing group finance and reporting, budgeting, five-year plans. So that was always a kind of consistent thread for me.

And I think the other thing that my time at The Guardian gave me was that I was the group board representative on several of the subsidiaries. So, I had great experience at board level, challenging almost as a non-exec type role at quite an early stage of my career. When I left GMG, I had a young family, so I took a few years to have a bit of a portfolio career at that time, so that I could juggle work and spending time with them, as many of us do.

Based on my experience to that point, I was lucky to secure a non-executive role within the NHS with the East of England Ambulance Service, and I spent seven years on that board. And that built the foundation for me to move across into healthcare as a sector and again, that tied back to my long-term interest in medicine. And I knew leaving the Guardian that I wanted to work in a very strong impact values-based environment, and I thought, right, the NHS, it's a mess, it needs some very strong financial skills. I can take what I've learned and try and add some value there.

So, coming in as a non-executive is a really good way to kind of see the system because obviously you've got a three sixty view. And the ambulance service, if you think of it, is at the start of the supply chain and blockages later on all have a knockback effect.

There were several times where we had a gold command set up at the trust headquarters, either because of strikes or because there were issues with the acute hospitals and we were having to set up military tents for patients in car parks and things. It was great experience and actually I'd really encourage anyone if they get an opportunity to apply for those type of public roles because exposure. And then by that I took a non-exec role with a social housing group in North London, which was really interesting in Tottenham.

I was the chair of the audit committee in both of those non-exec roles, which again was great experience and a different view of working with the auditors from my financial view.

And the other thing I did was I joined the University of Hertfordshire Business School, and I was a senior lecturer in accounting and finance and I actually ran two of their modules. One was auditing and one was governance. So, I wrote those study modules, delivered the lectures, I worked with my student groups, I was quite passionate about it. These were a lot of these students were kind of first-generation university and I felt passionate about wanting to give them opportunities to start their career in finance.

At one point, I took a bunch of them up to Chartered Accountants Hall and arranged to have a kind of round table with them, those that won a little competition I'd run. So we got some fun stuff in there and I still miss it a little bit, if I'm honest, that teaching. I loved especially teaching the corporate governance module because I've kind of lived through a lot of those corporate governance disasters in the nineties and I was able to bring that real experience to the students, I was there through baring’s, etc, etc.

And then when I was ready to return to a full-time role, I found that this period of portfolio work had prepared me really well. So quite a range of experience there that was useful then I went straight into a board level role as Director of Finance and Facilities at a care home group. And it was a smaller organisation I'd been working with, so £80m revenue, but 27 care homes across Hertfordshire, Bedfordshire and Buckinghamshire.

And it was real focus on making that organisation more financially efficient and managing working capital because margins are very, very low in that sector and so I made a lot of changes both in the finance team where we operated, but also in our core contracts to improve the finances, so that was a really useful period of time. And then from there I moved to my first CFO role in healthcare, which was the UK subsidiary of a large US healthcare organisation.

Amazing, and I love that you mentioned kind of the impact and the energy giving feeling of being in teaching for a while, because I've seen quite a few people step out and go and do that and I think so as long as you're in your role, you can get a bit lost as to why you were doing it in the first place. And then when you step back and you're teaching the next generation, I see people often come to life who've been maybe perhaps just in the weeds for a long time. So, I love that you shared that and how important it was to you and that you still miss it.

But as you mentioned, you move across to one of your original loves, which is the healthcare space. What are some of the unique challenges, do you think, with being a CFO, particularly within that sector?

So, I've kind of held roles at large organisations, private organisations, I've moved to startups. I've been in the NHS, a lot of it is about me trying to have the biggest impact I can. But actually, when you say unique challenges, I would say, how long have you got? I don't think I've picked the most straightforward sector. But if you have to boil it down, I would say three things.

Funding, so who's paying? And there's often a convoluted route to being reimbursed for particular products or services. Margins are tight, budgets or in the NHS, their annual budgets and then the money disappears. Different organisations have got different, you know, motivations.

If you're working with a private health insurer, they're often part of big groups and they move very slowly so that can be a challenge. I think secondly, the pace of change is frustratingly slow sometimes something seems like a no-brainer. You've got brilliant innovation, something that's going to change patients' lives, staff lives, and, you know, save money and time but still, decision making is really slow, inefficient, procurement processes, very frustrating.

And then thirdly, regulation, particularly if you're running a global healthcare business, you've got to navigate different regulatory systems in different countries. And they're all set up very, very differently. The US, where you know, you need, if you're going to grow a new healthcare business, you need to be big in the US. That's a particular challenge itself in terms of the different players and the way the money flows.

The NHS and then Europe, different again, I've worked with Australian healthcare systems too, slightly different version. You need to be on top of all that and have really good advice. So yeah, that's what I would say the challenge is.

But obviously your purpose is stronger than your sensitivity to captioning your environment. Tell me a little bit about where you are today, because I know you're passionate about your organisation's mission.

And tell me a little bit about that union of working for an organisation where you really feel you're aligned with the value system.

So, I'm currently a CFO at Koa Health, which is a digital mental health business. And over my time in healthcare, the start inequity between the funding for physical and mental healthcare has always struck me. The system seems very unfair and many people are unable to access the care they need due to lack of clinicians.

When I found Koa, I was really struck by their solution, which addresses this gap with really clinically proven digital therapeutics. So, they'd spent eight years meticulously researching and validating digital equivalents to the best in class face-to-face treatments for the same mental health complaints.

And also developed some algorithms based on AI, which can predict when people are going into mental health crisis, useful in different types of settings, from the kind of person at home who's fine, but is maybe getting a little bit worse over day and actually can be nudged towards seeking help sooner rather than later.

And then someone who's perhaps already in an inpatient facility and maybe becoming suicidal, and that can be flagged to clinicians. And these therapeutics have been developed with universities, such as Oxford and Harvard, those are two primary partners that Koa’s had.

They're already available to over four million users worldwide and cover a wide range of mental health conditions, depression, PTSD, BDD, anxiety in adults and our products for children and adolescents have been extremely successful in the NHS. So, anyone who's had experience with CAMHS will know that they're very challenged in terms of resource.

And we have some digital therapeutics aimed specifically at young people partnering with their parents that can be used to make sure that many more families get help.

So that I find very inspiring because I have some experience and friends of mine have experienced issues with CAMHS. So, I'm really proud of those solutions, it's a really interesting company.

Again, Koa was founded in Telefonica's Innovation Lab originally in Barcelona, and our product team's still based there. And we're backed by leading investors such as Morningside, Ancora Finance Group, Wellington Partners, and MTIP. So really fascinating exec team and bunch of backers.

Well, I think it's amazing because when you first were telling me about Koa Health's mission and the work that's gone behind it, I mean, it's such a space that needs innovative approaches and some disruption approach and hasn't had it. And I think that when I saw lots of the funding going, particularly in the UK toward mental health provision, you're just, you can see the data showing like the very real risk to life that this represented.

And as you well said, it's just not taken anywhere near as seriously. And you think how many times people might reach out for help who never actually get it there's no way of mapping that, so I think that's fabulous.

You're within a challenging sector, but you're also working for a startup. So, tell me a little bit about how that impacts your role and the work that you're doing.

I think you either love it or you loathe it. The pace is breakneck at times. A week in a startup is seriously like a month anywhere else. And being part of that small agile team where you're making quick decisions that are going to impact the future of the business for me is brilliant. So, working at pace, you can draw on each other's experience and skills. So, everything that I've learned through the different roles I've talked to you about is coming to play here in this startup environment. You feel like you're almost like warriors trying to change the world together. So it's ideal for me, it's very strategic.

There's lots of analysis and constant revaluation of our strategies, pricing, everything else. I also quite like the fact that I roll my sleeves up and it's probably a bit more hands on. And with each of the startups I've gone into, I've often been like having to be very hands-on myself and build the team up underneath me.

And I quite like that because it means that you know the detail, you're right in the detail and you understand it, and then you bring in the right people to build out the team. One downside with startups is I've had to say goodbye to Excel because they all use G Suite. That's wild to get used you.

And I think in terms of the skills for working in startup, you've got to be comfortable with uncertainty and knowing some things that you'll try won't work and being okay with that and trying different things and that's just part of my general approach to life. So that fits for me quite well.

I think having a very strong focus on data, because being in startup is like a blank sheet of paper. So, the more data you can build to drive your decisions, the better, building yourself a good picture, building, how often do you have a chance to build businesses, processes and systems from the start? That's a great opportunity, I think you need to be able to build trust with investors and the board.

So, they need to be able to trust your numbers, trust that you're going to be able to deliver on time, trust that your cash flow forecast is right, because that's fundamental. In the current environment many startups don't have a long runway in front of them. So yeah, that's really important. And I think being comfortable talking to a range of different external stakeholders, probably a much broader range than you would if you were a CFO in a larger business.

I've had negotiations with large pharma insurance companies. You're the little minnow down here trying to carve a new path and you're trying to negotiate with these really big established players.

It's interesting because I spoke with Eric Ball early on in our series who went to be the CFO of an AI startup and he said the same thing, like you've got quite a different role because you're also being brought in often to communicate externally about what the company's doing and like be the sensible person. And he said, well, that suited my personality type because I was going to be more kind of the charismatic face of a trust us, like it is going to happen.

But I also thought as you were speaking there around like the fast-paced nature of startups that might get around the fact that you can stay in your passionate space of healthcare, whilst avoiding some of the frustrations that you had in other forms of it, such as the NHS, where it's very slow for things to move and you might have a fabulous idea, but you've still got to go through all those kind of painful cogs of it actually coming to life.

Yeah, I think so with the caveat that often you'll need the NHS or those other organisations as your customers, so you still have a bit of a barrier to get across there sometimes.

Amazing, and then if we look back on your journey, because you've shared some highlights there of the steps that you've taken on the path to where you are today.

I know this is hard for some people to do, but when you look back, what do you see as some of the moments that stand out to you, either for being a large challenge or a big success? And what did you take away from those? Because I think when we look back, you don't realise it at the time, but there are these defining moments, I think, for us all that help us on our way.

Sure, so in terms of successes, starting there, I would say like GMG, the whole thing was absolutely brilliant, especially proud of the radio group that we built, it was teamwork, ambition and hard work gets results, basically. Aligning a team with values and the magic happens, you know, we still meet up as a team many years later on.

And then switching gears, the corporate governance module that I wrote at Hertfordshire Business School, as I've already said, I think I loved bringing other people to life.

And I'm connected with many of those students still on LinkedIn, and I've seen them go sort of rising through the ranks in different organisations with their finance careers. That's brilliant.

When I was at Quantum, which was a care home group, I managed to secure funding to expand the portfolio. So, we built three new homes, and Quantum was very focused on delivering excellent care. It was a not-for-profit organisation and so that was great because I knew that local people would have a better choice, you know, in terms of care for their relatives, so just knew that I'd made a difference in that way.

I think getting regulatory approval, my last startup, Entia’s blood testing device for people with cancer patients to get UKCA approval for that device, that was a great moment because a lot of work had gone into building to that point. And then as I've just alluded to at Koa, hearing feedback from clinicians and families that are using the digital therapeutics for young people with anxiety, hugely, hugely rewarding.

So often it's the end point of a long process where finally we've been involved all the way along the way and it's about the people as well.

Amazing, and I love this idea that there's all these kind of results of your work continuing to have impact in the world now, even while we're talking, I think that's such a more beautiful legacy to have.

Finally, if there was one piece of advice that you'd like our audience to take away from this conversation, what would it be? Because you have potentially the next gen listening who are aspiring to be where you are today.

So, I would say there is no standard route. Build your own story. If it makes sense to you, go in that direction. Push yourself out of your comfort zone and you'll get results. Don't hold yourself back. Try things and don't be afraid. And yeah, always remember cash is queen.

I love that you said there about like the not taking always the route that you think you have to, because it stood out to me that you mentioned moving to a portfolio career.

And at the time, I suppose that probably wasn't as common, we're talking around 2010, right?

Yeah.

And I think that's amazing because often, particularly for those who want to have children, it can be a bit difficult to imagine that you can achieve that and still keep growing and reach CFO level. I think it can feel like the odds are stacked against you.

I think what's really important in that phase is just to take a step back and think, how can I keep a thread going? I don't necessarily want to be in a fifty hour a week role at this point. What skills can I build? So, for me, having had the non-exec experience, which is quite a different skillset, was hugely valued when I went for interviews for the next phase and also a confidence booster as well.

So, I think you've just got to think a bit creatively about how can you go with minimal time but still be building a useful skillset for your career.

Yeah, and I just think it's amazing because often people don't think about those NED roles until they are like thinking about retirement. And then I've seen a lot of people that I've really admired coming into the end of their careers, but they're not really, don't have a network that would set them up for that. So, I think it's a great thing to be conscious of as you're going along, like even in your early thirties to think about that kind of stuff.

Thank you so much. Is there anything else that I haven't asked you about that you feel those aspiring to be future finance leaders should know about or words of wisdom you've gathered on the way?

In terms of words of wisdom for, CFO, I would say another few things. So always think beyond the numbers. So, you're a business leader and not just a finance person. And having that broad strategic view just makes your job more interesting.

Make sure you build relationships at the top. So, a strong relationship with your CEO, the board, the exec team, build your profile, even when you're at the finance manager, finance controller roles, try to get that exposure and start to build those relationships.

Make sure you translate the numbers into actionable insights for the business. So, the kind of so what, get comfortable with ambiguity. It's quite hard actually to fight when I've been recruiting for heads of finance, that type of level, to find people that are comfortable with ambiguity.

And I think it almost goes against the DNA of someone who wants to be in charge of finance because you have control. But being comfortable with ambiguity, training yourself to do that, I think is key for kind of building to a CFO role. And then own the tough conversations, don't be afraid to challenge things, don't avoid difficult discussions about budgets, risks, tackle these things head on, you know, be confident in yourself.

Yeah, absolutely, I think that's such good advise and it is a muscle that you can practice, right? And I think when you've gone a long time biting your tongue, it becomes harder and harder and harder to have the confidence.

Thank you so much, I've loved speaking with you, I can't wait to see what will happen with Koa Health next. And thank you ever so much for giving us your time and your story, I couldn't appreciate it more.

Thank you, Sophie. It's been great talking to you too.

A very big thank you again to Caroline for taking part in our Ask a CFO series. What an amazing, inspiring woman with such a vision and a sense of purpose. I really loved speaking with you, Caroline.

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