Fractional CFO Bart Davis: Founders Should Prioritize Controller and HR Hires Over Product Teams

Bart Davis, founder and CEO of Austin-based 512Financial, is urging Texas startup founders to rethink their early hiring priorities, arguing that a controller and an HR lead should come before product or go-to-market hires. In a recent episode of The Building Texas Show titled "Fractional CFO: The 2 Hires Every Founder Gets Wrong Before Their Exit," Davis drew on his experience running fractional finance for Joel Trammell's portfolio companies from 2014 to 2021 to illustrate how back-office missteps can undermine exit valuations.

Davis noted that many founders ask for a CFO when they actually need a staff accountant at roughly 20 percent of the cost, calling the mismatch "bringing a bazooka to a knife fight." He emphasized that a Fortune 500 CFO rarely translates to a company scaling from $1 million to $15 million in revenue. Instead, he recommends that healthy startups spend 2 to 4 percent of top-line revenue on the accounting and finance function.

The conversation, recorded virtually after the pair connected through Texas Venture Fest, also covered the 2025 acquisitions of Austin PeopleWorks and HireBetter.com and the "monetizing churn" thesis behind them. Davis highlighted the 1099 versus W-2 risk he says he sees regularly when onboarding new HR clients.

Davis was blunt about what he inherited when he first began working with Trammell's portfolio companies Packet Design and iGrafx. "He had been using a different outsourced accounting firm and what he referred to as the output was random number generator financial statements," Davis told host Justin McKenzie. He warned that founders eyeing an exit cannot repair years of bad books on the way out the door. He pointed to Trammell's 2018 and 2021 exits as proof that early investment in the finance function directly shaped valuation, and challenged founders to confront "the things that make it real uncomfortable at night."

The conversation went deeper on the counterintuitive hiring order Trammell used when he first raised significant capital: a controller and an HR leader before product or go-to-market hires. Davis extended that logic to today's fractional market, arguing that many founders wait too long to professionalize back-office operations.

Davis also weighed in on AI, noting that his team uses it daily but has inherited Claude-built financial models "riddled with errors" that only a trained CFO would catch. His 80/20 framing: let humans drive the 20 percent of work that produces 80 percent of the value.

The episode lands as Central Texas founders navigate tighter capital, growing compliance demands, and rising pressure to professionalize back-office operations well before an exit. For more insights, the full episode is available on YouTube and major podcast platforms.