Accounting Metaverse
David Leary: Are you about to scream because the expense management app that you use lacks customer support? Are you frustrated because the expense management app you use charges your clients for all their employees, even when only a few of the employees filed the expense reports that month? Do you hate in-app ads disrupting your work? If you said yes to any of these questions, stay tuned to hear more from our sponsor Fyle later in the episode.
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Blake Oliver: I also want to clarify that I am not a crypto hater. I am a Bitcoin skeptic, and those are different things. I am very bullish about the potential of blockchain to change the world, and cryptocurrency, in general, to do amazing things, but I think there is a ton of hype around Bitcoin. I see it online, and I see people, who don't have any clue what's going on, hyping it up. There's so much hype, and that is what concerns me
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Blake Oliver: Today is Saturday, November 13. Welcome to The Cloud Accounting Podcast. I'm Blake Oliver.
David Leary: And I'm David Leary. Blake, we were just at the airport two days ago.
Blake Oliver: I know it was so great to see you in person, yet again. We were at Sage Transform Las Vegas, yet again.
David Leary: And this is it. There's no more conferences now, so I might not see you till May.
Blake Oliver: Well, I'm going to Digital CPA, which is the weird one that happens in December; the odd conference that happens in December, but this was the last one you and I are at. It was the Sage Transform conference, formerly known as Sage Intacct Advantage; still featuring mainly Sage Intacct Advantage, although now they are starting to gradually bring in the wider Sage product portfolio. We got an interview with Aaron Harris, the CTO at Sage Global. What he is up to is really interesting. If he can pull it off, it will be game-changing, but I don't want to give away anything other than that.
David Leary: We interviewed him, so that'll be a bonus episode.
Blake Oliver: That's going to be the bonus episode coming out after this one, so stay tuned. And my other favorite interview was Megan Walker. I think she's like VP of Finance. She runs accounting, and finance for Oxford Collection, which is a boutique hotel chain, and she uses Intacct. I thought her story was just so great because she came in as a finance person and implemented a new accounting system after like six weeks on the job, and the former controller left. What a crazy two or three years she had and successfully did it. Great takeaways from that. We also talked to Kevin Cumley, who runs the Accountant Program, and we attended all the keynotes, and we got to see what's new with Sage; what are the big releases that are coming next year.
[00:02:43] Takeaways from Sage Transform
Blake Oliver: What were your big takeaways from the conference, David? I think we should do pros and cons.
David Leary: I think it's very clear, they're kind of building their own ecosystem, or a full stack. They've partnered with ADP for payroll-
Blake Oliver: What do you mean by that? Oh, okay, yeah. So, just like Oracle, they're trying to build more into the product.
David Leary: Well, Oracle, and I could argue QuickBooks, and now-
Blake Oliver: Xero, too, yeah.
David Leary: -we'll get into Xero news in a bit ... Xero, as well, and Toast, the point of sale. We can get in those; that'll be later on in the episode ... Everybody's building this stack. After talking to Aaron Harris a little bit, the bell went off for me — it's kind of like this accounting metaverse, where he made the argument that the accounting data is really the only data anybody can really trust, and that should be the foundation of the whole entire business working.
It used to be, like you would run a business, and then you would use an accounting system. Now, the accounting system, and the accounting data is actually the business. It's actually running the business. It's doing everything from the front end, and the sales, to the backend, to the employees, to ... All the data you need in your business is really part of the accounting- it starts with the accounting data first, which I thought was an interesting way to start thinking about how people run their businesses.
Blake Oliver: It's really what's happening, and it takes me back to that interview we did with the School of Rock CFO, where he said that accounting is the place to be for data because everything comes into you. You have the full picture of the business, so you’re well positioned to understand it and manage all the data, not just the accounting data. That's what's exciting to me about our profession right now is that possibility of accountants owning all the data, not just the financial data, but you’ve kind of gotta step out of your comfort zone to do that.
David Leary: It kind of makes sense, the more I start thinking about this. If you want to write off, like, okay, Facebook knows everything about our personal data; Amazon knows all our shopping and buying habits. Really, Intuit, Sage, Xero, Oracle with NetSuite, they all have like this amazing business financial data that's kind of not yet tapped and utilized very good yet.
Blake Oliver: No, not as well as it could be anyway.
David Leary: And that's why there’s so much upside, and it's exciting to hear about what people's plans are.
Blake Oliver: That is one of the things that both companies are really working on, and that was one of my big takeaways from the Sage Transform keynote by Dan Miller on the first day, Tuesday. He really outlined where Intacct is putting its resources. There are four key categories where they are developing the product. Accounting, and analytics are still there — have always been there — but they added payroll, and planning to those top four. So, accounting, planning, analytics, and payroll. You mentioned the big payroll announcement. This goes to all of these systems trying to be all in ones.
[00:05:32] Sage is partnering with ADP for built-in payroll
Blake Oliver: What's the big announcement that Sage had with payroll?
David Leary: It's called Sage Intacct Payroll, and I think it's (Powered by ADP). They partnered with ADP to offer payroll directly inside of Sage Intacct.
Blake Oliver: NetSuite already does this with SuitePeople, where they built their own payroll. I feel like partnering with ADP is probably going to be an easier way to build this than trying to build it yourself, I'll give that to Sage, and a lot of folks are already using ADP already; they're the dominant one. It got a smattering of applause at the keynote. I think people were pleased with that, in general.
David Leary: In that same slide where they talked about the four things — accounting, analytics, planning, and payroll — it kind of expands out from there, and if you really start looking at it, it's from the one end, point of sale, time, and expenses, your employee stuff, all the way to the other side, where treasury management, tax management, CRM-
Blake Oliver: CRM’s in there.
David Leary: They're starting to expand out everything that they're doing in the same way all the platforms are, right now.
[00:06:32] A/P automation is coming to Sage Intacct
Blake Oliver: The practical announcement, the one that they actually demoed at the conference, was the A/P automation, which gave me flashbacks, of course, because NetSuite's doing the same thing. Everyone's doing this. They are building accounts-payable automation directly into the product. What does that look like? Well, you open up a bill in Intacct, and now, you have a pay button. This is just what is happening inside of QuickBooks Online now, where you have the pay button. You guys power that at Melio-
David Leary: Well, I think, now, all of the major accounting platforms, QuickBooks Xero — even though Xero doesn't have it in the U.S. market-
Blake Oliver: Xero doesn’t have it yet.
David Leary: Not in the U.S. market, but Intacct, and NetSuite all now offer bill capture/bill scanning, and bill pay in the accounting system, which is kind of like the natural home.
Blake Oliver: It's the ideal, right? It's the dream to be able just to do that and have it all in one place and not have to go to a separate system. But at the same time, we've got great A/P systems that do this and probably do it better. It kind of feels to me that they're just copying bill.com ... Like, “Oh, who's doing really well in our marketplace? Bill.com is doing well; AvidXchange, whatever (all these different A/P apps) ... Let's just copy their functionality into our product.” That’s not new-
David Leary: They're adding everything. They're adding approvals, and they're adding a virtual card, vendor directory. They're putting all that in.
Blake Oliver: Yeah, so, it’s not exactly innovative, but I guess it will be more practical for folks. It does make me wonder though what's going to happen to all these A/P companies. There are definitely going to be winners and losers.
[00:08:02] Comparing SuiteWorld and Sage Transform
David Leary: If I had to compare and contrast, like going to even QuickBooks Connect ... I've been to Xerocon ... I would say NetSuite is the one that doesn't feel as open. NetSuite has payroll ... There's ADP- there were no payroll companies on the show floor, the expo hall floor at NetSuite. QuickBooks, you go, there’s OnPay, and Square's Payroll is there, and ADP, and Paychex. Even though Intuit has a billion-dollar payroll division, all these other payroll companies were there. The same was true for Intacct’s conference. Other payroll companies were on the floor. There were a lot accounts-payable apps there. Obviously, bill.com had a big, huge booth. My guess is next year, even though Intacct’s rolling this out, those players will still be at the show floor. I think they're trying to be a little bit more open platform.
Blake Oliver: We asked Aaron Harris about that, and he said they're committed to staying open. Again, gotta go listen to that interview, but he's all about building the Sage API. He doesn't want to shut it down. That's how, philosophically, it seems, the two companies are different, where NetSuite is more of a suite approach. It's in the word. It's what Evan Goldberg has been trying to build for 20 years, and they're more likely- they're going to close it down. If you compete with them, you cannot be in that expo hall where hopefully, hopefully-
David Leary: Not only that. It’s hard to even get API access.
Blake Oliver: Exactly.
[00:09:17] Thank you to our sponsor
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[00:10:24] Sage's global expansion
Blake Oliver: So, the other thing that I heard in the keynote that was interesting was the global expansion, and this, we knew was going to happen because when Intacct got acquired by Sage, Intacct was pretty much U.S. only, and there's an obvious opportunity to take it global, and they're doing that. So, global banking, and payments, multilanguage, global tax, and compliance, e-invoicing ... They're working on all that stuff, which will make them more competitive with NetSuite because NetSuite's already global. They're behind, and they’ve gotta catch up.
David Leary: And they also are going a little bit deeper on their industries that they do really well in — manufacturing, nonprofit, construction.
Blake Oliver: Yeah.
David Leary: They’re going a little deeper on that. That's an example of openness because I think, in construction, they partner with a different company for construction payroll.
[00:11:11] The Sage Data Mesh
Blake Oliver: They also talked, right at the end of the keynote, about this concept called the data mesh, which I wasn't totally clear on, but it sounds a lot like this data warehouse, but a slightly different take on it. The data warehouse they do at Oracle- basically, this idea of getting your Intacct data, your non-financial data together, so you can do cool stuff with it. That's in there, too, but that seems sort of like more pie in the sky right now; not practical-
David Leary: Well, I think, right now, it's only, as it improves- first, it's just going to be the Intacct data they have; then, open it up to other Sage data they have; then, open it up to third-party API partners; then, just to random data, like, “Oh, I got the weather. I'm going to plug that in and see how it crisscrosses to my other data. They plan on having it, but you're right, it does sound a lot like the data warehouse.
Blake Oliver: That's the thing is if you can get your data all in one place, you need to be able to do cool things with it outside of Excel. This is the vision — instantaneously — not have to do spreadsheets ...
David Leary: They're unifying their API. That way, it's easier for developers to build and integrate, which I think is really- I'm happy to see things like that. Open APIs; APIs that are easier for developers to use.
[00:12:17] Blake and David's criticisms of Sage Transform
Blake Oliver: So, I do have a criticism, and, I said, you know, let's do pros and cons. Do you have any criticisms of the conference or of what Sage’s strategy is?
David Leary: I don’t have any criticisms, but I did have big bell, or question go off for me. How come they aren't in the capital space, like giving out loans, and they're not- like, there's no Intacct bank? All the other three — QuickBooks, Xero, and NetSuite — have all launched banks, and they all are giving loans to small businesses. I just thought it was weird that there was nothing around that because it seemed like it would be a natural announcement: “And when you pay bills, you also can sign up and get a bank account, so you can pay your bills from our bank.” That, I'm surprised about, that there's no Sage bank.
Blake Oliver: So, my takeaway, or my suggestion for Sage has to do with the Accountant Program. We talked to Kevin Cumley about the Accountant Program. We talked to him years ago. It really hasn't changed that much, and it kind of feels old school, I gotta say. You have to- as an accounting firm, if you want to be a Sage Intacct partner — and NetSuite does this, too — Sage is partnered with AICPA/CPA.com, so it's more important, in the accounting community; CPA world, anyway, to focus on their program. You have to pay money to be part of their program. I was talking with an accountant-
David Leary: But you get a lot, I think, right? You get a lot of training. You're putting some stake in the game, in theory; skin in the game.
Blake Oliver: Supposedly, you get a lot, but I was just talking with an accountant yesterday, who is part of the program. He says it costs him $5,000 a year, and he gets nothing from it because they did their own implementations. They figured it out themselves. They didn't use the Sage training, which you know ... That happens a lot of the time, right? You're in this program. You don't need the certification. You can go figure it out yourself, right? You have to apply- I was talking with another accountant at the conference on the floor who’s starting a firm, starting a firm from scratch, and wants to do it on Intacct, not Xero, or QuickBooks-
David Leary: Because you want that to be your niche, or your specialty, which would make sense, right?
Blake Oliver: He went out there, he looked at all the options, and he said, “For my niche ...” and he's very- I mean, he's doing it perfect. He's doing it exactly the way you should, to start a new firm. He picked out a niche; it's super targeted. It's like a micro niche within a niche, and he's just going to own it because he knows it. He knows, after doing his research, that Intacct is the platform that can serve it best. This is gonna be not cheap bookkeeping. It's going to be really good outsourced-accounting services. He had to apply. They didn't even want to talk to him because he had no clients yet. He had to apply and convince them with a business plan to let him into the program.
David Leary: I've heard this; a similar story from a value-added reseller implementation company before, where they have to go through a credit check, and then, they have to almost spend $30,000, and then, you’ve gotta- I think we talked about NetSuite, where you’ve gotta bring in so many sales a quarter, or net-new users. It feels, for me, and maybe you, as well, it's really opposite of the QuickBooks/Xero model, which is you want the accountants to just push any client that could be on there. Why let this client, or this accountant, “You're allowed to put clients on our product, but you, this accountant, you're kind of not. We're not going to help you.” It doesn’t make sense. Why not just help all the accountants, right?
Blake Oliver: I get why they do it. They don’t, though. That's why you put a price on it. You put these barriers to entry because- I understand this. You want to protect the time of your support people over at Sage, and Intacct. If you have a very people-heavy set up for these firms, and they require lots and lots of handholding, then, yeah, you have to put a price on it. Otherwise, you'd be overwhelmed. But I think there are ways now to automate that and to allow people in where it's self-service. Let me sign up as an accountant for a demo account, so I can at least see what's possible. That's doable, right? You can automate that. Then, anyone could do that. That’s what Intuit has done ...
David Leary: Wouldn't it be like an investment ...? It would probably be a hit, at first-
Blake Oliver: Of course, but it will pay off so enormously-
David Leary: But then, eventually, like Intuit has so many experts on QuickBooks-
Blake Oliver: Yeah.
David Leary: -that they become the support for the front end. It actually helps your support on the back end, eventually.
Blake Oliver: Yeah, you get guys like Hector Garcia, who provide, through YouTube videos, probably more support than anyone at Intuit, ever, right? What I don't like about this kind of approach — I'm bashing Oracle, and Sage for this equally — is it's exclusionary. So, it excludes small firms, which I don't like from a competition standpoint. It just perpetuates these old traditional firms and lets them keep doing what they're doing because they don't have competition. If you like to look at it through this lens, I think, also, it hurts diversity. It is excluding the people who run small firms, and you know, who those people are? More likely to be women; more likely to be non-white old guys-
David Leary: That's an interesting take because Aaron Harris did the keynote the second day — the day-two keynote — and he laid out a really interesting case about how e-invoicing, accounting data, accounting systems, accounting workflows is really going to help solve some social ills — diversity, global warming, inclusion. He really laid out how Sage, and Intacct are putting their money where their mouth is on this, but you're arguing like, “Well, then, start with your Accountants Program.”
Blake Oliver: Yeah. If you want to disrupt the patriarchy, whatever you call it, then yeah, make it more open. You're literally excluding people on purpose with putting a price in front of it. So, that's my challenge to the Accountant Program at Sage. That's how they could be different than somebody else, and I think it would be good for the profession. Don't put up barriers to people using your product. It's also just bad business these days to do that. It's old school ... That's my take.
[00:18:06] The best part: Passionate customers
Blake Oliver: But, overall, hey, loved the conference. I loved the ... We got to talk to some customers who are super, super passionate about Intacct in a way that people are in love with QuickBooks, and Xero, and these other small business products, and that was really exciting and encouraging.
David Leary: Well, we met somebody who, I think- Tonya; I forget her last name, but this is like her 14th year in row of going to the event, or some ridiculous number.
Blake Oliver: Yeah. We talked to a CFO who was like, glowing about it, and that, to me, is an excellent sign. They're headed in the right direction. It was great.
David Leary: A couple other small things they announced. They really want to have it accessible to employees, so they have a mobile app now for employees, and you could give them a custom little dashboard in there for whatever they need to know about the data; they can do time-tracking in this app. They can do expense reports in this app ... That’s other partners, right? Time sheets, and expense reports are other apps ...
Blake Oliver: It was interesting to see in the mobile app, they've got the receipt scanning, bill processing, and you said that's from the acquisition-
David Leary: It looked, and smelled, and tastes ... AutoEntry, which Sage acquired; even the bill pay, some of the bill-pay stuff looked a lot like AutoEntry.
Blake Oliver: We also like to say Sage, and Oracle move slower than Intuit, and Xero, but, in this case, Sage managed to get AutoEntry in their product faster than Xero could get Hubdoc in their product. So, that's an accomplishment. We're hear in app news, right? Shall we just keep going on that?
David Leary: Well, yeah, because I think everything we're touching on is like most of the app news this week. We could talk about other platforms building in functionality, like A/R, and A/P. We could talk about Xero’s numbers; Expensify had an IPO. There's a lot to chat about, app-wise.
[00:19:44] Crypto voicemail
David Leary: Don't, we have a voicemail though, first, we should do?
Blake Oliver: We do have a voicemail. Let’s listen to the voicemail ‘cause I love it when we get feedback from our listeners. This is a good one-
David Leary: That'd be a good transition before we jump into apps.
Blake Oliver: Here we go. So, this is from Greg.
Greg: Hi, Blake and David. This is Greg Bayramian. I was calling because I wanted to speak to you guys about, or comment about your guys' episode on cryptocurrency. I was really shocked because you guys are a cloud-accounting podcast, and I’m like, wow, you guys should really be up on tech, and digital, and all that stuff. And to hear that you guys were against it and that you had — I think it was Jamie Dimon, the one who is like really against it ... I think it's best to do your complete homework before having an episode like that. Maybe you guys did, and you came to that conclusion, but I was surprised; I was really surprised, and it kind of reminded me of how accountants are because accountants are really behind. They always want to take a check; they don’t want to pay the fees, and they just stay stuck in the old school.
I think crypto is the future. Who knows how soon, or how long, but I think it's a good investment. I would just like to ... Maybe you guys have a balanced perspective on it, and maybe have somebody who's for it, somebody who's against it, so people can make a good decision, instead of just assuming that, you know, it's not good, or it's like Beanie Babies, or whatever fad is out there, you know? It’s definitely not that. I've done my homework on it, and I'm definitely investing in it for the long term and going to learn how it's going to affect the accounting world, too, in the future because it is going to have a big effect on it, especially with NFTs, and all the different cryptocurrencies. Anyways, love the podcast. Love listening to you guys, and, um, thank you. Bye.
Blake Oliver: So, I'm really glad that Greg left that message because I do want to clarify something.
David Leary: Well, first off, he called us — we have the same mindset as accountants, and that hurts a little bit. No, I'm kidding. Should I be offended by this? I thought that was kind of an interesting comment, but I'll let you clarify, and I also have a take, I think. Go ahead.
Blake Oliver: Well, you're the one who said the Beanie Babies thing, so I'll let you sort that out, but-
David Leary: Well, the key word — he said it like 12 times — the word investment. I think that's where you and I do not think this is an investment.
Blake Oliver: So, it is an investment, but it's a speculative investment, in my humble opinion. And I just want to say, I'm not a crypto expert. I read about it in the context of what we do to prepare for this show. So, I'm more educated than your typical person, who may not even know what crypto is yet, but I'm also not an expert. I'm really looking forward to — now that I quit my job; I can be a professional podcaster — learning more about this. On my other show, Earmark, I am planning to have on crypto CPAs to talk about this stuff so I can learn more. So, subscribe to the Earmark Podcast if you want to hear more about that.
I also want to clarify that I am not a crypto hater. I am a Bitcoin skeptic, and those are different things. I am very bullish about the potential of blockchain to change the world, and cryptocurrency, in general, to do amazing things, but I think there is a ton of hype around Bitcoin. I see it online, and I see people, who don't have any clue what's going on, hyping it up. There's so much hype, and that is what concerns me is that the fundamentals-
David Leary: Because people are buying it as an investment; as a straight-up investment, like Beanie Babies were an investment.
Blake Oliver: They're buying it as a speculative investment. Just because it's going up, they're like, “I gotta get on this train,” and we — maybe I'm just a little bit jaded having grown up and seen both, as a child, the Dot-Com boom, and bust, and also, the financial crisis due to the housing boom, and bust. I see so many similarities in terms of just the hype cycle going on with Bitcoin, and that's all, okay? That's where my criticism comes from.
There's other really smart people that everyone loves to listen to, like Warren buffet, who says, “I don't invest in Bitcoin because I don't understand it,” and everyone's always like, “Oh, Warren Buffett's so smart,” but now that he's Bitcoin skeptic, people are like, “Oh, he's an old man. Doesn't know what he's talking about.” So, that's all.
I do have concerns. Like, when I ask questions, I'm a skeptic. That's what I love about accounting is professional skepticism is one of our core values. So, I like to ask questions; questions like, what is the intrinsic value of Bitcoin? Is it a currency? Does it do better as a currency than anything else? Is it a good store of value? When I ask these questions, I just end up with more questions. It's not like solid for me.
[00:24:19] Thank you to our sponsor, Fyle
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[00:25:42] Bitcoin as a currency
David Leary: My question is, everybody's investing in it, but it's hard to talk to people that are using it. Now, Blake, I actually use it, so if you want — and I'm using it in the podcasting space — if you go to newpodcastapps.com, you can download different podcast apps. I'm using the Breez app, so I have a Breez wallet, and basically, it's, they send satoshis; they call them “sats.” It’s like 1/600,000 of a Bitcoin. I don't even know the exact number.
What I do is I listen to podcasts, and then I can send the producer of that podcast, or the host, directly through the podcast player, money. Not only do I send them money, it automatically distributes it to the host of the podcast, the person that does the show notes, the index, the podcastindex.org, and it's all done. So, it's not that I'm anti-Bitcoin, or the technology. I use it. I'm just not investing in it. That is just like- to put your life savings into a thing like that is risky. That would be my question to the caller: do you actually use Bitcoin, or are you only investing? He said investing so many times in the call that I'm just- I suspect he just invests in it, only.
Blake Oliver: Yeah, and that's what practically everybody's doing. You're probably the only person in the world who’s actually using that service to send people money. Anyway, I don’t wanna get-
David Leary: If we had our podcast set up to receive satoshis like this, which I would love to do one day, in the app, right now, people could hit a button that says Boost, and send us satoshis. People could kick us five bucks-
Blake Oliver: Yeah, and nobody's going to do it ... So, anyway, I really do want to talk more, but I want to just repeat, like, I am not a crypto hater. I am a blockchain enthusiast. I am a Bitcoin skeptic. I want to learn more. I do hope everyone gets really fabulously rich and doesn't lose all of their money in some sort of crash that I fear is ultimately coming ... Just look at the hype. I always wonder, too, also, like, who are these people? Like when you buy Bitcoin for $50,000, or $60,000, who's selling it to you? Do you ever think about that? There's a ton of people who — like 2% of all the wallets in existence control almost all the Bitcoin.
David Leary: It's not my $61.64 cents in my Breez wallet.
Blake Oliver: No! So, there's like a ton of people who bought it super cheap that are hyping it up that are selling it to you for $50,000–$60,000. They're going to do that all the way up, and by the time it crashes, they'll have sold most of their stuff to you, and institutions that are too dumb to ... I'm not saying you're dumb, I'm just saying the institutions are dumb. They just, they follow the market. Anyway ... I could be totally wrong. I mean, I'm already wrong because I heard about Bitcoin when it was a dollar. If I’d bought any of it, I'd be fabulously wealthy-
David Leary: Here’s how we can prove if he uses it or not-
Blake Oliver: I’m a podcaster ...
David Leary: Maybe I spin us up a node, a lightening node, and he can listen to our podcast on one of the new podcast apps and send us some money to prove the use of-
Blake Oliver: To prove that you can actually use it? Yeah, that it has a use, a real use, other than speculation?
David Leary: And really what this is, is these are like micropayments, right? They're super teeny micropayments, and I find that kind of very interesting.
[00:28:37] Blockchain audit
Blake Oliver: So, actually, on this topic, one of the cool things about blockchain is the possibility of audit on the blockchain. And I saw my old firm there. Armanino had a huge booth, and they have a giant crypto team now, and they are building tools to allow — this actually is really exciting — tools to allow auditors to continuously audit stable coins. Now, this is something that gets me excited because one of the big problems with stable coins, which are — stable coins by the way are-
David Leary: They’re tagged to the dollar, right? Is that-
Blake Oliver: A stable coin — one of the big problems of crypto is variance in value, right? The swings, massive swings. Like, it's hard to use it as a currency when it's going up and down all the time. So, people have created stable coins, which are crypto coins that are linked to the U.S. dollar, so you can use them for payments, and stuff and not worry about the exchange rate, and all this stuff going crazy.
The problem with stable coins is they're not regulated, so how do you know that the issuer of the stable coin actually has reserves to back up the stable coin? This has happened to where they lie about it, and then that's a problem. The SEC is really concerned about this, too. Well, Armanino has developed a tool that can instantly audit stable coins so that you actually know that they are backed up by currency reserves. That is a really valuable thing, and a really cool thing, and they'll probably just ... It'll probably change audits of cash as companies move more to that sort of thing. Let's keep on moving because we’ve got lots of news.
[00:30:13] Expensify booth and IPO
Blake Oliver: The other company that I saw at Sage transform was- the giant Expensify two-story booth was there that we saw at Scaling New Heights. And funny enough, the, Expensify team themselves, they weren't there that much because the IPO happened, and I think they all got flown out to New York to celebrate the IPO in the middle of the conference.
Expensify went public. They went with a direct listing, which is unusual. They're so profitable, they don't need to actually raise money. They just went onto the market so that their employees could sell their shares finally. They were priced at $27 each; 9.73 million shares priced at $27 each in their IPO. The stock opened at $39.75 before closing at $41.06, a 52% jump that pushed Expensify market valuation to just shy of $4 billion. $4 billion ...
I like this CFO.com article because it highlights, and Expensify highlighted this in their prospectus, that they have a viral, bottom-up business model that focuses on marketing to employees rather than CFOs. This is the thing that intrigued me about Expensify from the very beginning. It is their unique differentiator. They do not have to sell to management. They just make their product amazing for the end user, and the end users, grassroots, bottoms up, push this into the organization. Genius. Genius!
So, there's actually a blog post that I wrote that's still up there called “Expensify is the Slack of Accounting” because it's the same idea, right? The end users start using it, and then the company buys it. It's an amazing model. And if you can make that work for your product, it works. There's opportunity there. Take a look at what they did, if you are a developer, and you’re looking-
David Leary: There's a whole blog post David has written about this back in the past. That march of using the employees was there from day one. I actually have an old article we can talk about. Before we jump into that, going back in the time machine, though, there was an article in- this is Oregon's local business paper, OregonLive. They were talking about how Expensify now, with its market value, is the seventh most valuable company, but I think that was before it went up another 10 bucks. So, maybe it's the sixth most valuable company instantly.
Blake Oliver: Sixth most valuable from where? In Oregon?
David Leary: In Oregon. So, right away-
Blake Oliver: Well, it's funny because Expensify obviously was in San Francisco most of their existence, and then they added an office in Portland, and now, Portland-
David Leary: Four years ago, already. It happened ... It’s been a long time now.
Blake Oliver: I know, but it's funny because Portland, and Oregon are like, “Oh, it's our darling Expensify ...” That they're from- you know ... It’s like, no ... The only reason they opened an office up there was because the Expensify employees couldn't afford to buy houses in San Francisco.
David Leary: It's the cheapest thing left on the coast, Portland ... Just like other tech companies moved there. The article does have a quote; it talks with David Barret about- and I think we've loosely talked about this over beers at the airport ...
[00:33:03] Dave Barrett's famous emails
David Leary: Dave Barrett obviously sends out these emails. and people question how much control does he have? Is he going to get checked by Wall Street?
Blake Oliver: Before you say the emails, you've got to kind of explain what you mean, ‘cause I don't think everybody listening gets Dave Barrett’s emails ...
David Leary: So, Dave Barrett’ll write these long emails-
Blake Oliver: He’s the CEO, by the way; founder and CEO.
David Leary: Founder, and CEO, and if you remember right before the election, he sent that huge email, not just to the Expensify customers ... So, think about accountants; like, you're an accountant. Dave Barrett sent an email to the accountant, your accountant’s clients, and then the employees of your clients that are using Expensify.
Blake Oliver: Every user got this email.
David Leary: Everybody got this email: “A vote for Trump is like a vote against the planet.” I don't remember what the headline was, but it was very politically charged.
Blake Oliver: He was saying, like, if you vote for Trump, you're voting against democracy. That was the ...
David Leary: That was the title. Okay.
Blake Oliver: Yes, yes.
David Leary: And super politically charged. Usually CEOs of public companies don't really shoot off emails like that. The thing is, like, how is that going to work in a world where you answer to The Street? Well, this article, there's a little paragraph in here that kind of addresses that.
[00:34:05] Expensify insiders maintain control
David Leary: So, Dave Barrett said he recognizes that pressures will mount if the company doesn't deliver the results investors expect. So, Expensify has a three-tier stock structure that concentrates voting power with him, and two colleagues, which Barrett said will insulate the company from Wall Street's quarterly demands for profits, and financial progress. It's designed to ensure a long-term focus on long-term results.
Blake Oliver: So, this is the Facebook model that Zuckerberg pioneered because he still controls Facebook, even though it's a giant public company. This usually doesn't happen. I question whether this is good for markets that shareholders can buy in, but they have no control. ‘Cause Barrett, he can do whatever he wants, basically; he and those two employees, and shareholders have no recourse. They can't vote them out. They can't vote for a new board of directors. They can't do anything. They're just along for the ride.
[00:34:58] Expensify employee millionaires
David Leary: This is great ... There's articles about how all 140 Expensify employees are going to be millionaires on paper-
Blake Oliver: They did give them- I heard a rumor. they gave them like a big options bump. Pretty cool.
David Leary: Yes, but this ties to another paragraph. I'm gonna read a paragraph ... This article is in Business Insider. This goes on to talk about the catch with what happened. So, there are a few catches. Those shares will fully vest over eight years with a one-year cliff, meaning employees will get nothing if they leave before the first year because the stock grant contains a type of share called “long-term 50,” which gives employees startling voting. I don't know if that's a typo in the article, but it gives the employees voting power at 50 votes per share. Employees need to notify the company of their intent to sell, and then they must wait the [15] months to sell. So, the soonest and employee can cash out is going to be five years from now.
Blake Oliver: I was wondering about that because I thought, if everyone becomes a millionaire, how do you keep your employees?
David Leary: Yes, on paper, they're all millionaires, but at the same time, they get to ride this out for five years.
Blake Oliver: Got it.
[00:36:00] Thank you to our sponsor Reach Reporting
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[00:37:24] Expensify origin story
David Leary: I'm going to just go back to- going back in time with Expensify here, this is an old article from- this is from August 24, 2010. There was a tech blog podcast at the time called RedMonk. So, this is an old, old article. Actually, Intuit paid RedMonk to interview Dave Barrett. This was the Intuit Partner Platform, which is really the Intuit developer platform. It eventually got rebranded. Expensify was one of the first apps. So, back when I launched ViewMyPaycheck, at the same time, Dave Barrett was launching Expensify.
And he talks about, in this article, really the origin of this, and he tells a story about how, you know, he was working for another company. They’d take these trips to India. and it's such a hassle to file expense reports. And I think if I remember correctly, talking to him, they used to have to use Oracle iExpense. And if you've ever used that, it's the worst experience in the world to file expense reports on.
What they would do is they would sell each other, at a 20% discount, these receipts. Dave Barrett’s like — he’s an entrepreneur. He's like, “All right, I'll buy all your receipts ‘cause I'm going to make 20% profit when I get back and filed the expense reports ...” except for it's such a nightmare. He hated it so much. He just said, “Hey, there's an opportunity here,” and that's why, hence, their first tagline: “Expense reports that don't suck.” He built Expensify. The other big part of this article is talking about, you know, how using the employees is lead generation, but you already covered that, so we don't have to talk about that.
Blake Oliver: Well, so, what's great about that is he built it based on his experience as an employee having to do this. So, he felt the pain.
David Leary: He felt the pain. That's the same way Matt Rissell founded TSheets, right? People were
Stealing- clocking in and out at his other company [39:07] selling time sheets. Same thing. Then, the other quote to end this on is he talks about their focus, and he said, “... Do what we're going to do, just do it better, but we're not going to try to do everything in the world here. We try to pick one problem and do it incredibly well,” which I thought was interesting that that was his core, right? Deep in the core of Dave Barrett ... Now, he sent out a new email this week when they went public. You want to cover it quickly, like all his plans in that email, which is not solving one problem. It's solving every problem in the globe ...
Blake Oliver: You know what? Folks are just going to have to go find that email. I mean, maybe we can link to it. I don't know, are these even public on the internet?
[00:39:45] Xero acquires Locate Inventory
Blake Oliver: We’ve got to move on David ‘cause we've got to cover the Xero acquisition. That's big news. And this goes to the whole idea of everything's becoming all in one. Shall we?
David Leary: Yes.
Blake Oliver: So, Xero is acquiring LOCATE Inventory, a cloud-based inventory management provider based in the U.S. The LOCATE team is joining Xero. Xero currently has inventory, but it's like very simple inventory, not anywhere near as complicated as you need to be, if you do any manufacturing, or multi-warehouse, or anything; it's like very, very simple, and this has been a problem for a while. People have relied on outside inventory solutions.
Now, Xero's going to build in what looks to be like advanced inventory into Xero. When you say that, it also means it has to like deal with e-commerce, right? It has to connect to your e-commerce platforms. It has to work for your in-store. With every business being a multi-channel business now, or omni-channel business, it's very complicated. So, it sounds like- I don't know, what's your take, David? It sounds like this isn't an acqui-hire because this is the other big thing about this. They are going to shut down LOCATE’s independent product.
David Leary: And fairly fast — October 10, 2022. If you're a slightly bigger company, and you're using LOCATE as your inventory, you’d better pick something fast because it's gonna take you six months to roll this out to your company, right?
Blake Oliver: Not, not great for people who really bet on LOCATE when they were little, and now they're screwed, you know, basically? They’ve got to go find a new solution. I don’t like the feel of that.
David Leary: Xero also had their numbers out, and it looks like they plan on really building this out first in the U.S. market, and North America.
Blake Oliver: Interesting because Xero had the big push into the U.S.; kind of lost momentum on that. Could this be the new big push? I hope so, ‘cause, as a Xero user, somebody who built a practice on it, I'm still- I still love Xero. I want them to succeed.
David Leary: Yeah, so, they released their numbers. I think the interesting thing in the numbers is really their user base. They, overall, globally, are now at 3 million total subscribers to Xero.
Blake Oliver: Put this in perspective for me.
David Leary: QuickBooks is probably pushing 4.4, 4.6 now? I don't know for sure-
Blake Oliver: Okay. Okay. Xero catching up-
David Leary: Or QuickBooks Online is-
Blake Oliver: QuickBooks Online.
David Leary: You want me to put it in a different-
Blake Oliver: David, we don't talk about Desktop. We don't talk about Desktop ...
David Leary: Wanna put it in a real perspective? We were talking to Aaron Harris, and apparently, Peachtree, which is Sage 50, still has like 600,000 users.
Blake Oliver: Well, and this is why he's trying to build an API that can connect to it.
David Leary: It makes my eyes and my ears bleed. So, um, some of the things with Xero’s numbers — Australia, they now have 124- I'm sorry, 1.24 million subscribers, but it's up 22% over the year-
Blake Oliver: Still growing, and they've been dominating that market for years, and they're still growing 20%.
David Leary: UK had a huge growth. They added 65,000. So they're up to 785,000 in the UK. U.S. only added about 23,000, but now they're above 300,000. They have 308,000 in the U.S.; 23%.
Blake Oliver: How many in the UK did you say?
David Leary: The UK has 785,000, so they're- another two years, they’ll be at a million, based on the current growth.
Blake Oliver: I think I saw Gary Turner has been leading Xero in the UK. Is he retiring? Did you see that?
David Leary: I want to feel like some executive was like, “Hey, this is the last earnings report for me.” I don't know.
Blake Oliver: Yeah. And he posted the year-over-year revenue growth in the UK. It's just insane, you know, going from nothing all the way up to that. What an accomplishment.
David Leary: And now they're starting to show some of their other numbers in here that are not directly related to the businesses, but they're starting to report on the numbers, like the ecosystem play. Intuit's reported on this, and now, Xero is. Planday- Planday is their clocking in and out product; their time sheet-type product. Planday, that’s growing, quarter by quarter by quarter, at a nice clip. The employees that are paid through Xero Payroll, that has grown. It did take a dip in September, but everybody quit their jobs in September, so, who knows? Then, total payment volume. So, this is, you know, they have payments moving through the system, payment of invoices through the platform. That continues to grow every single quarter. So, they're pushing through, and like you said, they’re really pushing on this inventory to really help move the North American market.
Blake Oliver: That's great.
[00:43:51] Sage Intacct integrates with Zapier
Blake Oliver: Hey, I gotta jump back to Sage for a second ‘cause I missed a story. Sage is adding Zapier to their marketplace. I think this'll be like really positive news for our accounting firms that are all in on Zapier. Apparently, through the partnership, Zapier can now work with approximately 4,000 apps available to the accounting software company’s users in the U.S., Canada, UK, and Ireland. Oh, I guess that's the 4,000 apps that you can get connected to through Zapier. There we go ...
David Leary: Yes, which helps them on the e-commerce side, right?
Blake Oliver: Big time on the e-commerce side. So, that's kinda cool. There's opportunities. If you are an expert in Zapier, you could work with Intacct companies on automating stuff for them. There's not really a good, cheap solution. Well, I won't say cheap — affordable solution for that sort of automation. Now there is.
[00:44:39] Toast earnings
David Leary: Toast, the point of sale for restaurants, they released their earnings, and part of the announcement in there is they are announcing they are now going to offer — they're going to focus on the back end of restaurants. So, instead of just the point of sale on the front end, the back end. One of the major things they're going to do is they are now launching a business-to-business payments platform. So, just like QuickBooks- we just talked about this. The four major accounting platforms have built-in bill pay. Well, now, one of the leading restaurant point of sales is now going to have built-in bill pay for business-to-business.
Blake Oliver: Do you know how they're doing it?
David Leary: That was not clear because the article called out Plate IQ, who really focuses on restaurant accounts payable- considering it called them out as somebody else in this space, I'm guessing they're not the one powering this for Toast. So, I don't know how Toast is doing this under the covers; if they’ve partnered with somebody, or if they’ve built it from scratch, and-
Blake Oliver: I have follow up. Oh, go ahead.
David Leary: Then, there's other accounts payable news out here.
[00:45:35] Bill.com adds new features
David Leary: So, bill.com announced- because obviously, if Intacct adds bill pay, built in, Bill.com’s added some higher-end features for higher-end enterprises.
Blake Oliver: I was wondering how they were going to stay relevant. Okay, what is it?
David Leary: They've added on more single sign-on dual controls, like dual approvers, to eliminate, um, fraud; client groups. So, different entities can be under different client names. Also, multi-entity support, or the start of that. Um, they've added, uh, some custom dimensions; they can tie back to Sage Intacct’s data. So, Bill.com bumped it up to offer more than just built-in bill pay that you get inside of Intacct. They did that. Veem debuted a partner platform where they're going to let people be able to embed bill payment in other apps. They launched an API for that. They talked about that.
[00:46:27] Melio ads new features
David Leary: Melio released- last week, they basically released three major features; Melio, as well; you know, my company I work for. Partial payments, international payments, and then vendors, if they want to be paid by virtual card, they can choose that when they're getting paid side. A/P was a little bit hot ...
[00:46:43] Relay adds new features
Blake Oliver: Yeah, well, listeners may know that I am working with Relay, and Relay has payments, as well. Everyone has payments these days. Relay’s the bank for ... I like to think of it as the best bank for accountants. Relay has a new set of features that just came out. Here's the new Relay features. Payment improvements. So, it's now cheaper to send wires; domestic, international wires are $5 and $10 per wire, respectively. They're up to 50% faster. This is one I like — you can now schedule payments in advance, and schedule recurring payments. You can now automatically sync statements into QuickBooks Online, and you can transfer money to multiple accounts at once using percentage and dollar-based transfers.
So, I know there's a lot of people that use Profit First, and some of them are using Relay for Profit First because it makes it super easy to spin up the- I don't know how many bank accounts you need. Sometimes, a dozen bank accounts without paying fees for them. And now, you can automate the transfer of funds into different accounts, which is a big feature of a Profit First. So, check out Relayfi.com if you are interested in learning more about those things. I'm doing a webinar with them, next week, about that, and I'll put the link into the show notes to that. I've got follow up. Sorry, go ahead.
David Leary: Just staying on the line of people building everything in-
[00:47:58] New law firm software
David Leary: MyCase, which is law-firm software, they’re announcing the upcoming launch of MyCase Accounting. It's a legal-specific accounting solution. Apparently, they quietly purchased a law-firm accounting system called Soluno. They acquired that, and then, they're also rolling out some practice-management software called CASEpeer, and a document-automation tool called Woodpecker.
Blake Oliver: What’s the name of this company?
David Leary: This company is MyCase. Actually, the current CEO is Jim McGinnis, who used to be the VP of Accountants at QuickBooks back in the day.
[00:48:31] Legal Zoom acquires Earth Class Mail
Blake Oliver: Oh, no way! On this trend of Intuit execs going to the legal-profession software; LegalZoom ... Who's at LegalZoom now from Intuit?
David Leary: About eight people ... Rich Preece, who was the leader of the Accountants Group for a little while, also,, at QuickBooks. He's there, but there's a team of people, like former engineers, or the CTO; partnerships person’s there. There's six to eight people there.
Blake Oliver: We've been talking about how LegalZoom is building out bookkeeping. I haven't heard anything new on that for a while, so maybe still building it. But here's an acquisition that may point to the direction they're headed. They just acquired- LegalZoom just acquired virtual-mailbox provider Earth Class Mail, of which I am a customer, so I got the email. One of our listeners messaged me and said, “I love Earth Class Mail. I use it because you recommended it, and I hope LegalZoom doesn't destroy it.” You always wonder about that with these acquisitions-
David Leary: It's funny, actually, that was one of the comments I saw about Intuit with MailChimp. Somebody was like, “I hope they don't TSheets it.”
Blake Oliver: That's right. Don't TSheets it ... Oh, man. So, anyway, yeah, LegalZoom is building out back office, and it makes sense because a lot of people use LegalZoom for business formation, so you can sell them back-office automation technology when they get formed. A specific use case for Earth Class Mail is you can have them be your registered agent, so you don't have to use your home address and have that all be tied- all your business registrations will be tied to your home address, if you don't have an office. So, I think they're going to do very, very well. Obviously, Earth Class Mail has probably just done fantastic in the pandemic times because, you know, you don't have an office; you want mail to still get received and scanned to you.
David Leary: What Earth Class Mail does is they bought Shoeboxed. Earth Class Mail can scan your inbound bills, and your receipts-
Blake Oliver: Did they buy Shoeboxed?
David Leary: If you’re building- yeah, they bought Shoeboxed. And so, if you're building a QuickBooks Live type service, you need to automate some of these processes.
Blake Oliver: Yeah. So, that's the thing. Earth Class Mail basically turns your physical mailbox into an email box. They scan your mail into like an inbox, and you can go use it ... They did a new release of their app. It was pretty old school for a while. They just fixed it up, and it's good.
[00:50:43] Wrapbook raises $100 million
Blake Oliver: Follow up — Wrapbook ... Remember Wrapbook, David? This is the payroll company specifically for entertainment and film.
David Leary: Oh, the movie industry, yeah.
Blake Oliver: Yeah, ‘cause there's a lot of special things you’ve gotta do when you're producing a show, with payroll, that are unique, and the standard payroll companies just can't handle it. Wrapbook is a startup designed specifically for entertainment. They just raised a $100 million equity funding round from Tiger Global Management that led that round. They’re unicorn. They’re a billion-dollar unicorn; valued at a billion dollars. I wonder how many customers they have. The startup says its technology supports more than 1,000 projects a month, and their revenue went up during the pandemic. There’s no other financial results provided. They are a remote-first company with offices in New York, Los Angeles, and Toronto. So, I guess-
David Leary: It makes sense, right? You have all these new companies — Apple, Netflix, Hulu — all these new tech companies; you wanna call that, Amazon — with these huge budgets paying for all these huge movie and TV productions. So, it's a good place for them to be in.
Blake Oliver: So, yeah, if you're in LA, or New York, and you do production accounting, look at Wrapbook.
[00:51:55] Zenwork raises $163 million
David Leary: Zenwork. Are you familiar with Zenwork? Probably not ...
Blake Oliver: This is the last story in my list. Same one.
David Leary: Okay. They make tax 1099. They also have a product called Compliancely to verify business IDs, like tax compliant ... That “know your customer” type thing that tech companies need to do ... It wasn't in the article, but I'm pretty sure they also own a whole cannabis thing, a SaaS product for cannabis products-
Blake Oliver: For compliance?
David Leary: It's not in this article at all, but they just took a raise; their very first raise ever of $163 million. They've been bootstrapped, and they've bootstrapped their way up to 100,000 small businesses, and 30,000 accounting firms, which is very impressive.
Blake Oliver: That’s amazing. Congratulations.
David Leary: Yeah, to be bootstrapped that way ... Congratulations to that time. They're going to use that to keep building out their go-to-market; build out their product more; take more of a market leadership position. Then, Knowify ... Are you familiar with Knowify?
Blake Oliver: Oh, you’ve got more?
[00:52:46] Knowify raises Series A
David Leary: Yeah, one more, and this is it. Knowify, they are a construction niche. So, they're an app that works really well with QuickBooks Online. So, if you want to have a good- A lot of people are like, “I need to stay on QuickBooks Desktop Contractor Edition.” Well, you don't. You could get QuickBooks Online, and Knowify, and be ready to go. So, they just took on a round of $5.45 million for their Series A, and they're going to use that again, similar — go-to-market team, and support new product announcements. So, congratulations to the Knowify team.
Blake Oliver: Well, that's great because when I hear reasons why firms can't go to QuickBooks Online, construction accounting is often one that comes up, so good for them.
[00:53:25] Wrap Up / Outro
Blake Oliver: Well, David, we spent the whole episode talking about tech this time. That’s pretty good. All cloud accounting, the episode. If folks want to get in touch with you, where's the best place for them to do that?
David Leary: I’m on all the socials, just @DavidLeary.
Blake Oliver: I am @BlakeTOliver. We love to hear from our listeners! Send me a voice memo, record it on your phone, email it to blake@blakeoliver.com. We will listen, and we will almost certainly play it on the air. Even if you don't like what we have to say, we want to hear it. We want our listeners to hear it. Let us know what you think about these stories, our opinions, your opinions on these, or anything else in the accounting profession. David, until next week, stay safe, stay sane. Enjoy the weather in Tucson!
David Leary: Bye, everyone.
Blake Oliver: Bye.
[00:54:12] Time for the classifieds
David: Time for the classifieds.
[00:54:18] Fast track a scalable 7-figure firm with Future Firm Accelerate
David: If you're looking to quickly grow a scalable, systematic seven-figure accounting firm without having to work 50-plus hours per week, check out Ryan Lazanis’ online coaching membership, Future Firm Accelerate, designed around Ryan's experience taking his cloud firm from scratch to sale so that you don't have to reinvent the wheel. You'll get online learning in topics that help you automate and systemize all aspects of your firm. You'll get coaching when you need help with implementation, and you'll also join a collaborative community of hundreds of other forward-thinking firm owners. For more details, head over to www.futurefirmaccelerate.com.
[00:54:55] Oh My Fraud: A True Crime Podcast for Accountants
Blake: Hey, podcast listeners. It's Blake, and I wanted to let you know about a new show I'm working on with CPA/comedian, Greg Kyte, and blogger/former CPA Caleb Newquist. It's called Oh My Fraud, and it's a podcast all about financial crimes. That's right, a true crime podcast for accountants by accountants.
Caleb, and Greg are going to come together every couple of weeks to unpack their favorite frauds and explore the circumstances, psychology, and interpersonal dynamics involved. They also fully indulged in victim blaming the defrauded widows, orphans, infirm, and feebleminded because who can resist?
If you fancy yourself, a trusted advisor, or prefer your true crime with spreadsheets instead of corpses, listen to this show to learn what to watch out for, and to keep your clients, your firm, and even yourself safe. To subscribe, go to ohmyfraud.com, or search “Oh My Fraud,” on Apple Podcasts, Spotify, or wherever you get your podcasts.
[00:55:55] How to advertise in these classifieds
David: Want to get the word out about your newsletter, webinar, party, Facebook group, podcast, e-book, job posting, or that fancy Excel macro you just created? Why not let the listeners of The Cloud Accounting Podcast know by running a classified ad? Hit the show notes for the link to get more info!
