When Jeff Epstein was vice-president and CFO at Oracle during the 2008 financial crisis, his team had $10bn (£7.8bn) in cash but were not immune to the market collapse. The experience taught him how to make critical decisions so the business could survive – and fundamentally shaped his perspective on how finance leaders should navigate risk and uncertainty.
Now, as an operating partner at Bessemer Venture Partners, a US VC firm, and leading its CFO Council, Epstein continues to share best practices and offer guidance to finance leaders. As the world teeters on the edge of another financial crisis, past lessons have never seemed more appropriate. “History never repeats itself but it does rhyme,” Epstein says.
Surviving the 2008 global financial crisis
In September 2008, Oracle was in a strong financial position, with 85,000 employees and $22.4bn (£16.8bn) in annual revenue. The company had a solid balance sheet and long-term contracts for selling software. “This was before cloud-based software became common, so we mostly sold software that clients installed themselves on-premise,” Epstein says. “A typical licensing deal might be a $1m (£751m) upfront sale, plus $180,000 (£135,000) every year after that for support and maintenance. These agreements often lasted 20-30 years, which gave us a very steady stream of income.”
However, when the crisis hit, global markets plunged and banks stopped lending to each other, drying up credit for businesses. At Oracle, new sales came to a screeching halt as customer spending faltered. “Although we had $10bn (£7.8bn) in cash and strong profits we couldn’t borrow money through commercial paper,” Epstein says. “The whole market just froze. It didn’t matter how financially secure you were, nobody could get short-term loans.”
The world watched in disbelief as liquidity evaporated in a matter of days. “At that time there was real fear,” Epstein recalls. “People didn’t know if banks would stay open or if depositors would get their money back. This hadn’t happened in the US since the Great Depression.”
Do you have the right team, the right strategy and are you executing well? If the answer is yes, you’re going to be ok
Epstein’s first question was: how can we support our customers? This involved figuring out who was genuinely in trouble versus who might simply be attempting to re-negotiate to their advantage.
“If a customer was struggling financially, I had to decide whether to strictly enforce payment terms or be flexible if we believed they’d eventually pay,” Epstein says. That meant going case-by-case – a mammoth task considering Oracle’s 300,000 customers at the time. “The idea was to help our customers stay in business, even if it meant short-term pain for us.”
By focusing on customer support and building trust, Oracle was able to retain a significant portion of its customer base. Its new software licence revenue, a crucial metric linked to the company’s health, rose 14% in 2008 to $1.2bn (£900m). This was below its expected forecast, but illustrates the firm’s ability to attract and retain customers even during a period of uncertainty.
Another key priority was looking inward at Oracle’s own costs. With sales slowing, Epstein had to reassess headcount in sales and operations. “We had 1,000 people working on contracts, but with fewer new deals, we had to make cuts and press pause on hiring,” he says. “We managed to avoid major layoffs but not every company was so lucky. I’ve seen companies that had to lay off a third of their staff in downturns.”
“When making those tough calls,” he continues, “it’s important to stay rational and make decisions that don’t compromise the business in the long-term.”
Understanding exactly how money flowed in and out of the business became critical. Contracts were especially important because they define the terms of revenue and spending, he says: “You need a clear grasp of the company’s financials, where the money comes from, where it’s going and whether it’s being used efficiently. Every dollar spent should have a purpose and a return.”
“At the same time you can’t ignore growth,” Epstein adds. “I had to find a way to keep growing, but in a sustainable way.” During this period, Oracle embraced the cloud, diversifying its revenue streams and gaining a competitive edge in what was then a burgeoning market.
Part of this meant ensuring the leadership team understood key financial concepts, such as how much profit it made per customer or product and cash flow. “These things become absolutely crucial during uncertain times,” he says.
History repeating
Sixteen years after the global financial crisis and economic data suggests the world is sliding, once again, into a recession.
The Trump administration’s new tariffs have disrupted supply chains, roiled global markets and escalated the trade war between the US and China. In the last week, J.P. Morgan has raised its forecast of the global economy entering a recession by year end from 40% to 60%. The current climate is leaving many finance leaders wondering how best to protect their company from an impending economic downturn.
The whole market just froze. It didn’t matter how financially secure you were
“The time for CFO resilience is now,” stresses Epstein. He believes those that can pivot quickly between growth, cost control and capital preservation will be most successful. Finance leaders must be prepared, not just reactive, he adds, which means investing in systems and talent that strengthen the company in the long-term. Finally, they must make decisions based on data, not fear. “CFOs should ask themselves: do you have the right team, the right strategy and are you executing well? If the answer is yes to everything, you’re going to be okay,” he says.
Ben Horowitz, co-founder of Andreessen Horowitz, a VC firm, explored the distinctions between wartime and peacetime leadership styles in his book, The Hard Thing About Hard Things. Epstein uses this framework to explain the mindset shift required of CFOs facing an impending recession. In easy times, he explains, a leader must focus on proper protocol: growth and strategy. Conversely, under tougher conditions, they must be ready to act fast, make hard calls and do whatever it takes to keep the business alive. “Unlike the peacetime CFO, they must violate protocol in order to win,” Epstein says.
He points out that it’s possible, but “very difficult” to be good at both, as everyone has natural strengths that lean more towards one side.
Epstein is also a strong proponent of the “anti-fragile” theory, a concept introduced by Nassim Nicholas Taleb in his book Antifragile: Things That Gain from Disorder. It is the idea that some systems don’t just survive stress or chaos, they become stronger because of them. “This is one of those moments where we will see who is anti-fragile,” Epstein says.
When Jeff Epstein was vice-president and CFO at Oracle during the 2008 financial crisis, his team had $10bn (£7.8bn) in cash but were not immune to the market collapse. The experience taught him how to make critical decisions so the business could survive – and fundamentally shaped his perspective on how finance leaders should navigate risk and uncertainty.
Now, as an operating partner at Bessemer Venture Partners, a US VC firm, and leading its CFO Council, Epstein continues to share best practices and offer guidance to finance leaders. As the world teeters on the edge of another financial crisis, past lessons have never seemed more appropriate. “History never repeats itself but it does rhyme,” Epstein says.
