Why CFOs Are To Blame For Killing Innovation According to Teslas Antonio Gracias

Supply chain issues are causing massive disruption.

Whether it’s a small business or a billion-dollar conglomerate, the term “supply chain” is now a priority for every C-level executive and owner. Without products, there are no customers, and when customers are lost, the business is doomed to fail.

But the most significant supply chain problem isn’t what you’re reading all over the news; it’s:

The financialization of the income statement.

This is a trend you hear very few people talking about.

Antonio Gracias explains it masterfully around the seventeen-minute mark in this All-In podcast. He believes that too many CFOs make the wrong, short-term bets to beef up their profit and loss statement.

When CFOs decide to buy a cheaper piece part from China to improve the income statement, they hurt the balance sheet. This is because they send capital overseas and never bring it back.

They reduce the product iteration cycle, killing innovation.

Chamath explains this more and says the financialization of the P&L led to the decline of American manufacturing.