Q&A: Yoto's CFO on balancing books and bedtime stories

The world is increasingly dominated by screens. But Yoto is carving out a unique space in children’s entertainment with its innovative, screen-free audio platform.

Founded in 2017, this UK-based company has rapidly become a frontrunner in the children’s edutainment industry with its flagship products: the Yoto Player and Yoto Mini. These devices, coupled with physical audio cards, offer children an independent way to explore a vast world of stories, music, educational content, and more.

Yoto’s journey from a startup to a major player in just a few years is every business’ dream. With a recent $22 million equity funding round led by the Chan Zuckerberg Initiative, the company is poised for even greater expansion. At the helm of this financial growth and strategic development is Ben Averis, Yoto’s CFO.

Averis, in his first CFO role, is navigating Yoto through a period of exponential growth. The company has made significant inroads in the UK, France, and North America, forging partnerships with industry giants like Penguin Random House, Disney and Universal Music Group. Its content library boasts beloved classics from Roald Dahl and C.S. Lewis, alongside contemporary favourites like Julia Donaldson’s works and the iconic Harry Potter series.

As Yoto sets its sights on new global markets and enhanced product offerings, Averis’s role has become pivotal. His innovative approach to financial management and strategic planning is not just about numbers – it’s about shaping the future of how children interact with audio content

Becoming a CFO

Averis’s path to becoming Yoto’s CFO is as unconventional as the company he helps lead. With a background steeped in Financial Planning and Analysis (FP&A) and experience in private equity-backed companies, Averis brings a wealth of knowledge to his role at Yoto.

“I’ve been a CFO at Yoto for three years, and it was actually my first CFO gig,” Averis reveals. His previous roles include head of FP&A at Audley Travel during the challenging COVID-19 period, and a stint at a garden centre group. These experiences, while diverse, share a common thread of private equity backing, providing Averis with invaluable insights into strategic finance roles.

Interestingly, Averis’s career choices seem to have inadvertently aligned with his personal life stages. “When I joined the garden center, I was moving into the first flat, and got some discounts,” he quips. “And then all the travel pre-kids when I had time and money to travel.”

This personal connection to his work has given Averis a unique perspective on consumer goods and services, a perspective that now informs his approach at Yoto.

Driving Growth Through Financial Transparency

One of Averis’s key strategies at Yoto has been to implement real-time performance visibility across the entire organisation. “The one thing that underlines what I’ve tried to do as CFO is basically visibility of performance,” Averis explains.

Within weeks of joining Yoto, Averis and his team created a centralised dashboard where all sales information could be viewed daily, even down to the minute. This data was then paired with forecast lines and made accessible to the entire company. The impact of this transparency has been profound, fostering a culture of curiosity and accountability throughout the organisation.

“Now everyone can self-serve. Everyone can see how we’re doing. And I get great questions,” Averis enthuses. This democratisation of data has encouraged employees from various departments to engage with financial data, asking insightful questions and developing a deeper understanding of the company’s performance.

Averis firmly believes in the power of this transparency, even when it leads to challenging questions. “There sometimes are uncomfortable questions in the all-hands, such as why did we miss this month?” he admits. However, he sees this as a positive sign of engagement and a driver of continuous improvement.

This commitment to transparency aligns closely with the leadership style of Yoto’s CEO, Ben Drury. “He’s the most open and unpolitical person I’ve known, in a very senior role. Super transparent,” Averis notes.

This top-down approach to openness has created an environment where financial data is not just a tool for the finance team, but a compass guiding the entire organisation as Yoto navigates its rapid growth and expansion into new markets.

Leveraging Technology for Financial Management

In line with Yoto’s innovative approach to children’s entertainment, Averis has embraced cutting-edge technology to streamline financial operations. A key move in this direction was the implementation of NetSuite, a cloud-based enterprise resource planning (ERP) system.

“We implemented it last October. We’re only a year on it on the 1st of October,” Averis explains. He explains the decision to implement NetSuite was driven by several factors, including Yoto’s rapid growth, future ambitions, and pricing considerations. The company needed a system that could scale with them, supporting their operations from their current size all the way up to potentially becoming a billion-pound business in the next five years.

A key advantage of NetSuite was its pricing model. Unlike some competitors that charge on a per-transaction basis, NetSuite’s license-based approach proved more suitable for Yoto’s high-volume, low-cost transactions. This pricing structure aligns well with Yoto’s business model, where they might sell millions of units annually without incurring prohibitive transaction fees.

The transition to NetSuite has brought several benefits, chief among them being the creation of a single source of truth for all financial and operational data. This has not only improved efficiency within the finance team but has also enabled better decision-making across the entire organisation.

The implementation has also significantly improved data accessibility across the organisation. Averis notes that this centralised system allows teams beyond finance, such as the data team, to access necessary information directly.

This eliminates the need for the finance department to act as intermediaries, downloading and distributing data from a system only they can access. The result is a more democratic approach to data, where information is readily available to those who need it, fostering better collaboration and informed decision-making throughout the company.

Looking to the future, Averis is excited about the potential of AI-driven analytics tools. He sees these as a way to free up his team from time-consuming tasks like creating charts and formatting reports, allowing them to focus on more value-added activities.

“I’m a firm believer in getting rid of the grey work,” he states. “Finance people train too hard for too long to then go and format slides and spreadsheets.”

Balancing Content Licensing and Profitability

One of the key challenges Averis faces as CFO is balancing the cost of licensing high-profile content with maintaining profitability. Yoto has secured partnerships with major players like Disney, Penguin, Universal, and even the Harry Potter franchise. These partnerships are crucial for competing in the children’s entertainment market, but they come with significant costs.

Averis’s approach to this challenge is multifaceted. First, he emphasises the unique value proposition Yoto offers to content providers.

“What we’ve been very keen to demonstrate is that actually Yoto families and the sales that those licensing publishers would make is incremental,” Averis explains. He argues that Yoto’s physical audio format doesn’t cannibalize book sales or digital audio, creating a new revenue stream for publishers.

This strategy has proven successful, with some publishers now making millions from their partnership with Yoto in a category that didn’t exist five years ago. For high-profile properties like Harry Potter that command premium fees, Averis views the cost as an investment in customer acquisition. The lifetime value of a Yoto family, he notes, far outweighs the initial licensing costs.

To further balance the equation, Yoto is investing heavily in original content development. This royalty-free content not only improves profitability but also creates a unique selling point for the platform. Averis sees this as a key area for future growth and differentiation in the market.

Navigating Global Expansion and Supply Chain Challenges

As Yoto expands into new markets like North America and parts of Europe, Averis faces the complex task of managing international operations. This expansion brings challenges in terms of compliance, legal issues, and operational logistics.

To navigate these complexities, Averis emphasises the importance of building strong networks of advisors. “I believe you have to lean on good advisors,” he states. This includes international accountancy firms and tax advisors who can provide localised expertise. However, Averis notes that the key is asking the right questions to get commercially relevant advice.

On the operational front, Yoto is committed to sustainable practices, particularly in its supply chain. The company prioritises sea freight over air freight for product shipments from China, a decision that aligns with both environmental goals and cost management.

Averis and his team have also been proactive in managing production costs. By leveraging Yoto’s increasing production volumes, they’ve been able to negotiate better deals with suppliers, offsetting some of the inflationary pressures in manufacturing. Additionally, the company engages in ongoing value engineering, continuously refining product components and sourcing strategies to optimise costs without compromising quality.

Despite these cost pressures, Averis emphasises Yoto’s commitment to maintaining affordable pricing for consumers. “We’ve largely tried to keep it flat,” he says, referring to product pricing. This strategy aims to keep the barrier to entry low, allowing more children to access Yoto’s educational and entertaining content.

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