In a recent episode of The Building Texas Show, Bart Davis, founder and CEO of Austin-based 512Financial, advised startup founders to prioritize hiring a controller and an HR lead as their first two employees, rather than waiting until later stages. The episode, titled 'Fractional CFO: The 2 Hires Every Founder Gets Wrong Before Their Exit,' was hosted by Justin McKenzie and published on July 16, 2026.
Davis, who served as a fractional CFO across Joel Trammell's portfolio from 2014 to 2021, emphasized that most Texas startups delay building accounting, finance, and HR capabilities until it is too late. He noted that the 'monetizing churn' thesis behind the 2025 acquisitions of Austin PeopleWorks and HireBetter.com underscores the importance of HR and finance infrastructure. 'He had been using a different outsourced accounting firm and what he referred to as the output was random number generator financial statements,' Davis said, referring to the state of Trammell's portfolio companies Packet Design and iGrafx before he stepped in.
Davis stressed that founders cannot repair years of poor financial records just before an exit. He pointed to Trammell's successful exits in 2018 and 2021 as proof that early investment in the finance function directly shapes valuation. He challenged founders to confront 'the things that make it real uncomfortable at night' by building a solid back office from the start.
The conversation also explored the counterintuitive hiring order Trammell used: a controller and an HR leader before product or go-to-market hires. Davis extended this logic to today's fractional market, noting that founders often ask for a CFO when they actually need a staff accountant at roughly 20 percent of the cost. He called this mismatch 'bringing a bazooka to a knife fight.' According to Davis, healthy startups should spend 2 to 4 percent of top-line revenue on the accounting and finance function.
Davis also warned against hiring a Fortune 500 or Global 1000 CFO for a company scaling from $1 million to $15 million in revenue, as such experience rarely translates. He highlighted the 1099 versus W-2 risk that he sees regularly when onboarding new HR clients. On AI, Davis noted that his team uses it daily but has inherited Claude-built financial models 'riddled with errors' that only a trained CFO would catch. He advocates an 80/20 approach: letting humans drive the 20 percent of work that produces 80 percent of the value.
