The Accounting Podcast

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Blake Oliver: [00:00:04] What's funny to me is how many of these founders to have no background in any of this. They've just been customers of, like, tax prep. They're not they're not tax preparers. They're not accountants. And they raise tens of millions of dollars to disrupt our industry. And I think a lot of times they go on the wrong path because of it.

David Leary: [00:00:23] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:32] Hello and welcome back to the show. I'm Blake Oliver.

David Leary: [00:00:35] And I'm David Leary.

Blake Oliver: [00:00:36] And we are back from QuickBooks Connect in Las Vegas. David. Impressions.

David Leary: [00:00:42] Exhausted back.

Blake Oliver: [00:00:43] Exhausted back I feel great actually. I had such a fun time connecting with dozens. Hundreds of people. Listeners of the show. I got to present a session. We got to see Ryan Reynolds, who is not just an actor, but a very successful entrepreneur and marketer. David, your impressions of the show.

David Leary: [00:01:05] It needs to be longer because you can't meet everybody you want to meet. You know, thousands of people at this conference because everybody knows everybody. It's a very community driven event, but there's just not enough time. And I can't go to Vegas. Four days, five days, six days. It's impossible. Yes. Three days.

Blake Oliver: [00:01:19] Three days was long enough for me or three nights.

David Leary: [00:01:21] But in general it is always a great event. I think the breakout sessions are always good. The keynotes this year were a little bit more product focused. That's been a trend at QuickBooks connect, a little bit more, more information. Stuff about the keynotes. I thought Ryan Reynolds was great. The one quote I liked about him is the whole like, just hurry up and do it. Like, why have meetings about stuff for nine months? Just you're making a 15 second commercial, just record it and throw it up there and see what happens. And and then I also loved how I didn't know this about Deadpool and he didn't have the budget. And so he just utilizes what's available. So if they wanted a special effect they couldn't afford it. He just like turn that into part of the movie script. Yeah. And that's a really smart thing to do is you can you can do a lot. Don't be constrained by your lack of money or lack of budget. Just be more creative.

Blake Oliver: [00:02:09] You don't have to spend a lot of money. And honesty resonates. People like authenticity these days and. I'm sure every one of our listeners has seen those mint mobile commercials from a few years ago. I don't know if they still do them, but, you know, it's just Ryan Reynolds in front of a green screen talking about how they couldn't afford to do anything more. And that's because they take all the money that they were going to spend on advertising, and then they reduce the cost of Mint Mobile as a discount service. And he talked a lot about how he used his celebrity to promote these discount products in a way that was unusual. A lot of times celebrities go way up market aspirational products.

David Leary: [00:02:51] For.

Blake Oliver: [00:02:52] Perfume, Johnny Depp and perfume and all that. And he said, I wanted to do something different. And so he used his celebrity and he bought into these companies. That's the other thing people don't know is that Ryan Reynolds? Yeah, he might make $20 million on a movie. Right? But he took that 20 million that he made from Deadpool. I don't know if that was it, but I think it's around that. And he rolled that into aviation gin, and then he marketed the heck out of aviation Gin and made a ton of money. And same thing with Mint Mobile. He bought 25% of Mint Mobile, marketed the heck out of it, fixed everything with that and sold it to I think. Was it t mobile for like $1 billion? Yeah. So this guy is is ten all of his movie? Fees by investing in businesses and growing them and selling them. Now he does marketing. Anyway, it was a great keynoter to have for a conference like connect, which is attracting 2500 entrepreneurial accountants to come together. Because we need that kind of advice. We need to we need to know, you can you can do this on a shoestring budget because we don't have massive resources. Most of us who are in the world of client accounting services, when we go off and start our own firms, right, we don't have staff.

David Leary: [00:04:02] We don't have anybody to do the work. Yeah. We're just really we're accountants might be super resource constrained. Never mind the budget constraint.

Blake Oliver: [00:04:09] Yeah. So really good pick on the part of the attendees or not. The attendees, the the organizers. And I think the attendees really loved it.

David Leary: [00:04:16] And then the opening talk with Jade Simmons, right.

Blake Oliver: [00:04:20] Jade Simmons.

David Leary: [00:04:20] Yeah, the the classical pianist slash 50 other roles she plays, including entrepreneur, etcetera. But she gave an opening talk and I forgot who sent it to me on Twitter. But her opening talk was so amazing and inspiring and had so much energy that they said if we showed that to every accounting 101 class, we'd have an abundance of accountants in the profession.

Blake Oliver: [00:04:45] Well, let's get to the features and stuff. David, what's new with QuickBooks announced it QuickBooks connect.

David Leary: [00:04:52] What got the biggest applause was a lot of people who've used QuickBooks online. They have a menu for you, the accountant, and then your clients get a different menu. So then you're trying to talk to your account, your client and say click here. And they're like, they don't have the same menu. It's going to be one unified menu that got the most applause. You know, it's such a simple thing and it's such a no brainer. But people loved it because it solves such a huge pain.

Blake Oliver: [00:05:15] And I liked it because it indicates that the team at Intuit, the product team, the accountant team, the developer team are really listening to accountants. And that is one thing I've noticed in the last few years in particular, is Intuit is really listening to accountants and building features that accountants want. Yeah. So a great example of that QuickBooks ledger, which is the less expensive, streamlined version of QuickBooks online designed for write up work. This is equivalent to zero cash book, which is one of the reasons that I built a practice on Xero was because I could affordably do it and move my clients off of QuickBooks desktop, thanks to this ledger product, which was for for Xero was, I think, you know, ten bucks, around $10 a month depending. It changed around, it switched around depending on the year and the discount you got. But it was very affordable to do that because for basically I don't know. $100 or so a year. I could host those files online and connect them to bank accounts and pull in the transactions and code them and do that right up work. And that was a lot of our clients, right? They didn't need all the bells and whistles. And this is something that has kept a lot of firms from moving off the desktop. It just wasn't affordable to do it in a QuickBooks online subscription that costs 50 to $70 a month.

David Leary: [00:06:36] And at first, when they announced that they're offering batch migrations, I remember sitting even next to you and I was like, who the hell is going to migrate, you know, 700 files at once, right? But if they're all write up clients and the QuickBooks online files are simple and you want to dump everybody over that batch upgrade or batch migration to QuickBooks online, really? And maybe that's what they're anticipating is massively massive migrations up to that. Well, and they gave.

Blake Oliver: [00:07:01] An example of a firm that moved 700 accounts in a single day from QuickBooks desktop. So that's that's a lot. Yeah, it's $10 a month. It includes automated bank feeds, bank reconciliation, financial statements, 1099 tracking and seamless transition to tax preparation. I believe that means that you can import into their tax products directly from QuickBooks online.

David Leary: [00:07:28] And the best thing about it, unlike QuickBooks Self-employed, which actually isn't QuickBooks, by the way, it's really mint that has a skin and they called it QuickBooks is there's a path. So you could be doing right Upwork for somebody on the QuickBooks ledger product. And then eventually they're like, oh, I want you to do monthly cash for me. And because we're busy enough, I'm doing invoicing now out of QuickBooks or whatever, you can upgrade them to a normal QuickBooks.

Blake Oliver: [00:07:53] So you mentioned some QuickBooks online QuickBooks online accountant improvements with the menu. There are also now expanded roles and permissions granular, customizable roles for your team so you can limit access in a very detailed way to banking, sales or expense data. You can delegate highly sensitive tasks to more experienced employees, such as paying invoices or running payroll, which is a very welcome change.

David Leary: [00:08:22] Between that being added. And then speaking of payroll. So they added HR tools to payroll, which which were neat. And because I think a lot of people have been using the notes field to track all this kind of stuff about employees, right. Personal information like it's really needs to be in its own field because it needs to be protected by permissions. But they also added to the QuickBooks payroll the cost allocation feature. Yes. Basically it's a table and you could break down a paycheck by jobs, expense accounts, classes, and you just keep breaking it more granular and granular. And if I take the combination of the granular permissions and you take the cost allocation stuff of the payroll. Those might be the last two hurdles from desktop desktop, enterprise desktop to online. Maybe inventory is still not all the way there, but those are two major hurdles, because now construction companies can really utilize QuickBooks online in the same way they use QuickBooks desktop. Yes.

Blake Oliver: [00:09:22] Yeah. And that was the example they had. And that's one of the things you haven't been able to do in online is you'd have to use journal entries to do it. Not a not a pretty thing. We had chart of accounts templates announced. So you can upload templates and you can save them in your QuickBooks Online Accountant dashboard. And they are available whenever you set up a new client. And you can have multiple of them and you can upload from Excel. So if you are niched and you have a particular chart of accounts that you use for all your real estate clients, upload it there. Your team has access to it. Boom. Pop it into a new account. Saves a ton of time because you used to have to do this all manually. I understand one at a time, deleting accounts, changing accounts, that sort of thing. So another welcome change. Like, like these are things that people have been asking for. It's so great to see that boring.

David Leary: [00:10:14] They're not sexy. It's just you're right, you're right. They're just, you know, but.

Blake Oliver: [00:10:17] It makes a meaningful difference for a firm because think about all the time that's saved. If you're a growing firm and you're adding, you know, you could add one client a month or dozens of clients a month, and that's a big difference, even with just one a month. Any others? Oh, there were some changes to the QuickBooks ProAdvisor program. I'm not sure. Did you follow that?

David Leary: [00:10:38] Anything big? Not too much. I mean, they're going to. They're offering you training and third party apps that connect to Proconnect tax. I know the Intuit developer team is going to have a new, like badge for apps that it's like accountant approved or recommended. I think that's a little bit tied in there. But the the community thing for the certification, like it's got a revamp on the UI, but they don't really show it. So I didn't really see it. It's like in the press releases they talked about it, but you don't really see it per se on there. One other thing that was not on mainstage, and arguably it should have. So the Intuit developer team gave a talk about the ecosystem and apps and the changes they're making to apps, and they have a function they're adding. That arguably would have been a standing ovation at the at the main stage. I'm going to share a screen to this quickly. Hey, that's.

Blake Oliver: [00:11:28] Me.

David Leary: [00:11:29] That's you. We'll talk about your presentation soon. But so what they did, it's sorry, it's a blurry photo. You know, kind of on one hand try to focus with my thumb. But if you notice, that's the QuickBooks app card, right? So the App Store has app cards. And usually there's three buttons on those. Those app cards. There's a Learn More button. There's a get app or add app type button. And then now they've added a new button says that's called Test App. And so me being somebody who's always testing apps and many times accountants usually are trying to test apps to see if they're good fits for clients. You connect an app, it puts some data into QuickBooks. So you create a bunch of fake things like test customer, a vendor customer a test test item, right? You're syncing data. Sometimes you mess up and you sync too much real data, and now you've duplicated data. You have a mess, right? What it's going to do? You hit that button that says Test app. It copies your client file into its own separate sandbox, connects the app to the sandbox, and for up to 45 days, you can play play around in it.

Blake Oliver: [00:12:27] This is genius.

David Leary: [00:12:29] When you're done, you're done.

Blake Oliver: [00:12:32] Amazing. What a great feature because I've done this. I have had this happen where I've connected an app to test it to a client account, and it has messed things up. And then I have spent hours undoing the mess. And sometimes you can't delete the mess, you can only avoid it. And it's in the record forever. And I'm kind of a perfectionist and I feel like I hate that mess.

David Leary: [00:12:55] Oh yeah, it gets messy. And then mine was so bad two years ago. I was testing so many different things in my real QuickBooks file that it actually delayed me getting my bookkeeping done because I was always like, I got to delete that mess or fix that mess, or and I just constantly delayed it. And what was great about this, the accountants, before the session was even over, we're figuring out like, oh, I could use this. Not even to test an app. I want to train the client I want I have a new employee and I don't want them messing up the real data. Yes, it's they're seeing all these other uses for it. And it's really arguably that should have been shown at the main stage that feature not in some developer breakout because ultimately. The only a portion, a teeny portion of people know that feature is coming, and it's arguably one of the most important features that are adding.

Blake Oliver: [00:13:40] The training concept is great, so create a company file. It could have test data in it and clone that into the staging environment or the sandbox. That's what it's called. Clone it into the sandbox and then give that to somebody that you're thinking about hiring and ask them to do a monthly reconciliation cycle or, you know, go through like that's the best way to test a new hire is to just give them the job to do and see how they do.

David Leary: [00:14:07] And even even if the bank fees are connected, it'll pull down the transactions. But then when you open up the real file, it'll go pull down the latest transactions. So you're not it's really an amazing feature. Like I said, nobody. Well, our listeners will know about it, so hopefully now it'll get some attention. But I think it was one of the the best features that they probably added. The other one that was great. Blake is the sessions. We mentioned the sessions. You had a session? I did a little photo of you in the session here.

Blake Oliver: [00:14:33] Cpa Practice Advisor put me on their home page for a day, I was honored.

David Leary: [00:14:37] It's amazing. Like it's your session. There was standing room only in your session. That one empty chair. There was my chair. I got up to take a picture of you and you did a talk on AI and it was super well received. I think my understanding was one of the most filled up sessions of all the breakouts. Yeah, but you basically really started walking people on how AI is going to save accounting. And one example you gave, which I thought was so amazing and illustrated the power of of AI is you were talking about you had a friend and he texted you with and you used the same language all clients use, like, hey, I have a tax question. It'll only be five minutes. Can you give me a call?

Blake Oliver: [00:15:15] Yeah. The the I'll let you take.

David Leary: [00:15:17] It from there.

Blake Oliver: [00:15:18] The actual text which I shared in my presentation was I have an accounting question to ask. Let me know when you have five minutes for a call. And the joke is, of course, there's never a five minute call. It's never a five minute question. And I was in a pickle because this is a close friend of mine, and I have redacted names here to protect the innocent. And I got this while I was relaxing at the pool. I had just done my afternoon swim and I didn't really want to call him back, but I did. I got a voicemail for him, so I. I figured, okay, he'll call me back when when he's free. And he did, but I wasn't available and he left me a voicemail. And I noticed when I went to go listen to it that Siri had transcribed the voicemail. It was kind of a messy transcript. And. I thought, I wonder if ChatGPT can help with this, so I copied. The voicemail transcript copied it all, and I pasted it into ChatGPT on my mobile. And by the way, I'm doing this all sitting by the pool. And I said, I'm an accountant. I got this question from a friend. This is an auto generated transcript. So it may have spelling or grammar errors. Please interpret it and tell me how I can answer his question.

Blake Oliver: [00:16:40] And then I paste it in the voicemail transcript. And to summarize the question, it's basically my friend is buying a house. He's borrowing some money to do it, and the person lending him the money is concerned about gift tax. And asked him. Do we need to do anything to avoid this becoming like a gift tax situation with the IRS? And my friend's instinct was the IRS is over, over understaffed. It's not going to ever be an issue. Do I really need to do anything about this? And he was calling me to ask. And so I put this to ChatGPT and it gave me a really thoughtful response. It said the critical factor is whether the transaction is structured as a genuine loan, and not a gift for the IRS to recognize it as a loan, there should be a formal agreement in place, often a promissory note, blah, blah, blah. Without formal documentation, the IRS may indeed view the money as a gift, especially if your friend doesn't repay the loan in a timely manner or pay interest. So the recommendation from ChatGPT is to have a promissory note, pay interest, right? Have a record of it. And even if the IRS is currently facing resource challenges, it's important to comply with the law and maintain proper documentation.

Blake Oliver: [00:17:55] This is everything that I would have told him. And so it was a little formal and I said, now drafted as a text message so I can send this back to my friend. And I told ChatGPT, this is a close friend. Keep it casual. It drafted me a text message. Understood. Regarding the loan situation, it's crucial that the arrangement with redacted is properly documented as a loan. A formal promissory note with repayment terms including interest should be in place. This is what differentiates the loan from a gift in the IRS's eyes. Ensure all loan features are clear and the agreement is signed by both parties. Remember to include any interest income on your tax returns despite IRS resource issues. Proper documentation is key. If redacted has doubts, a consultation with a tax adviser could be very reassuring. Best. Blake and I copied that and I pasted it and that took me five minutes. So it's an actual five minute. Accounting question, really a tax question. And that has never happened in the history of the world, I don't think. And that's thanks to I and I shared this because it's a real example of how you can use ChatGPT today to speed up one of the most painful parts and the most time consuming parts of being an advisor, which is answering all these questions.

David Leary: [00:19:13] And every accountant is totally capable of writing this email. You're fully capable of it, but it'll probably take you 25 minutes to an hour because we'll get distracted. You'll type some of it. You'll distract you. Do you get a cup of coffee? It just. It doesn't. It just eats up your day or stacks up. You have two, three, four, five of these and you can't get to them. Then the client emails you a second time. But yeah, this is where anybody can do this. And it's not about replacing your experience that you're giving the customer. It's not about replacing the work you're doing. It's really just making you you're just utilizing. It's like having a personal assistant, right? Or you have an intern, hey, answer this question. I'm going to review it right before you hit send. Okay. Send it off. Yeah.

Blake Oliver: [00:19:53] It's what I would have written, but honestly better. So I just got to review it and then send it. And I love thinking about AI in the future, how it's going to automate all of these accounting workflows once we build the software. But I realized that we need to start using it now to understand how that's going to work. And I've polled audiences, and I think I talked about this on the last episode, that my guess is only about 20% of accountants or CPAs have used any of these tools, have tried them, like meaningfully, not just to write a poem or write song lyrics, right, to actually use it. And I think if you start using it in this way while protecting your client's information, right. Don't redact the names. Don't put in personally identifiable information, but you can still use it to write emails. If you just change the names, right answer questions with it. And by the way, you can even have it. Fact check the answer. So I didn't show this in the demo, but I had it go out and find the IRS page. The link that I could include if I wanted to after the text message to send to my friend for more information, or where I could go and check the information. So yeah, it's just I like focusing on the real world today applications just as much or even more than what's going to happen in the future. It's changing so rapidly that we might get there soon. It's just it's just so much fun, and it was great to see the audience's eyes light up. And I hope our listeners here on this show will give it a try. You know, if you haven't signed up for ChatGPT, you can do it for free, pay the 20 bucks a month and get the pro. And now they've got this new feature called GPT where you can build your own customized chat bots. And I've been playing around with that, and I want to talk about that and show you some examples. I'm not quite ready, but perhaps in the next episode I could show you some of that. David.

David Leary: [00:21:50] So, like, we got a question in the chat. Somebody wants to know. John I cannot. My eyes are too small.

Blake Oliver: [00:21:57] You're too blind, John. Oh. Cronin.

David Leary: [00:21:59] Cronin. Okay. Got it. Wasn't sure if it was A or G asking you specifically if the presentation will be available for you to watch and listen to. I know that Intuit QuickBooks recorded the sessions. Yes. I don't know what the plan is for the sessions, if they're going to publish those on YouTube or anything like that. But what do you think, Blake, of doing a webinar on our platform and kind of redoing your talk?

Blake Oliver: [00:22:20] Yes. And I want to show the I you can use today. So stay tuned, John. We're going to make that happen toward the end of the year. Things calm down a bit, so I'm hoping we can actually do that in December. I would love to and it'll be the latest. We'll we'll use the GPT feature that's now available, the custom chatbot feature in ChatGPT walk through, like making your own tax research bot, a bot that could write like you in your style. I've done that for myself, and now I can ask it to write posts for my blog. And it it can copy my style pretty, pretty. Well, it's I'm I'm getting better at it. So doing tax research is a great example analyzing documents. So yeah I want to bring this to a wider audience. We had 500 people in my session at QuickBooks connect, but I feel like there are thousands of accountants who would be interested, so look forward to that. We'll let you know when it when it happens on this show. Stay tuned.

David Leary: [00:23:17] Do you want to talk about? There's a are we done with QuickBooks connect or is there anything else QuickBooks connect related? Do we catch it all? I mean.

Blake Oliver: [00:23:25] We probably missed some stuff, but. I think that was a good summary. I think we should move on.

David Leary: [00:23:30] We got most of it. So we in Texas got a $3 million penalty by the Texas Board of Public Accountancy. And you'll never believe why. Blake, why they got this? Fine.

Blake Oliver: [00:23:44] What did Ernst and Young do, David?

David Leary: [00:23:47] Well, there was an SEC investigation, and eventually that trickled trickle. You know, they start opening doors, right? Pandora's box. They discovered that CPAs in Texas have been cheating on the ethics exam of all exams.

Blake Oliver: [00:24:01] Cheating on the ethics exam.

David Leary: [00:24:03] So this is not just Australia because this happened in Australia right now. Well, it's happening here now as well. And you know the big huge fine of $3 million when it was revenue for 2023 was $49 million. Just doesn't seem like enough. Again it's just the fines are a joke. And you would think though too like the Texas State Board like that money's going right to their coffers. Right? Like it's not like they take a fine and it's allocated and it can only be spent on charitable, I don't know or deals. It just goes to their general fund. I bet they could spend anything they want. So you think they'd be motivated to have bigger fines?

Blake Oliver: [00:24:41] Yeah. I asked Bing to look up the annual revenues of us and then divide this fine by their annual revenues. And then I said, what would that be if this was like an individual making $100,000, what would be the equivalent? Fine. And it said $15. So the question is what's a.

David Leary: [00:25:02] Burger and fries nowadays?

Blake Oliver: [00:25:03] It's a it sounds like a lot of money, but in the context of these big firms, it's a. That's a slap on the wrist. It's it's meaningless. It's not even a.

David Leary: [00:25:14] Slap on the wrist because you would feel a slap on the wrist like this is they've they won't even notice it. Nobody's going to notice this.

Blake Oliver: [00:25:22] Well, so I saw this reported in the accounting press. And we should say that this follows a $100 million fine that was issued by the SEC in June of 2022. So now Texas has gotten around because this happened in Texas to fining. But, you know, even. Even $100 million. Is. You know, it's still only a few hundred dollars. If I was an accountant making $100,000 a year. It's only like a few hundred dollars. Fine. It's like a it's like a speeding ticket. So. Is behavior going to change? I mean, it's shocking that you would have staff cheating in a systematic way on ethics exams. This does more.

David Leary: [00:26:14] Damage. Maybe the ethics training is really boring and they don't want to do it.

Blake Oliver: [00:26:17] That's the problem.

David Leary: [00:26:18] I think actually they just like it's too much work. I don't have time. It's boring. Just give me the answers. I'll take the quiz.

Blake Oliver: [00:26:23] Yeah, well, and they got I think they got in trouble. I don't know all the details, but it was because they were passing around the answer key. Right. So actually maybe I is going to be the solution to this. And they won't get caught anymore because now you can just take the exam and you can copy the problem, the multiple choice question into ChatGPT and ask it to give you the answer, and it will give you it will, it will, it will pass the ethics exam. That's easy for AI to do. You got to pay for the pro version, but for 20 bucks a month you can have it. Take all your exams.

David Leary: [00:26:54] From the other side though you could possibly have AI create a random test for each single person real time, right?

Blake Oliver: [00:27:00] Yeah. And actually, if if.

David Leary: [00:27:02] Nobody would ever have the same test ever.

Blake Oliver: [00:27:04] I blame Nasba AICPA, these boards of accountancy for this, because they've created a system where the exam doesn't change year after year. It's the same for everybody. And so it's really easy to cheat because all you need is one copy of the answers and pass that around and you can cheat. So if you create a system in which it is easy to cheat. You have created an unethical system. If you ask me.

David Leary: [00:27:33] And I'm going to go back to my college days. And I remember going, I think I had a friend in a frat house. I was never involved in a frat. And I remember there was a room with file cabinets and all that was was old test for decades.

Blake Oliver: [00:27:45] Yeah, I was in a fraternity at Northwestern University and one of the selling points of the of the fraternity. It wasn't the it wasn't the reason you joined. But one of the selling points, the sweeteners, was we had a file cabinet full of exams.

David Leary: [00:27:59] And they were difficult many cases.

Blake Oliver: [00:28:02] Many times the professors didn't change the exams because a lot of work to change your exam. And these were tough courses, right? We had a lot of engineers in my fraternity. And so they had all the prerequisite courses like the ones they had to take. They didn't really want to know. You know, like all the all the pre-med students would have the, you know, the bio chem or whatever stuff, exams that were really hard. Yeah. You create a system in which you make it easy to cheat. You are guilty too. So I think that it's the it's not just UI and it certainly I don't really blame the staff because when you're brought in as a young staff person into a firm where unethical behavior is prevalent and systematic and endemic, right. It's really hard for you to be ethical. You have to choose your job, basically, or your ethics. And what do people, you know, when people have to feed their families, what do they do? Right?

David Leary: [00:29:00] You choose your job.

Blake Oliver: [00:29:00] Yeah, you choose your options. So this is on Nasba. This is on AICPA. I don't know which exam this was, but it's on them too, for not investing in creating an exam that is is resistant to these cheating tactics. I spotted this story in a Dot article that also highlighted something interesting about E! They disclosed proactively that the Public Company Accounting Oversight Board found flaws in 46% of the audits that examined in 2022. 46% of E audits were deficient, according to the PCAOB. It's very much higher.

David Leary: [00:29:43] Previous stats were, in general, one third or all faulty. And now we're for E specifically. It might be half.

Blake Oliver: [00:29:50] Is that yeah close to it. Yeah. And it's way higher than their deficiency rate of 21% in the previous year. So think about this. We have like really high audit deficiency rates. The Pcob already announced that when they put out their formal report for 2022, it's going to be like close to half of all the audits they looked at were deficient. So you've got rampant cheating. And we know that if this happened in one instance at E.y, if they got caught for one time and it was this broad, they were like, you know, 50 something people involved in it. I think we can bet that it's happening a lot more. Right. You catch one instance, how many go uncaught, right. Yes. So we've got this problem with like rampant ethics issues at big firms. And then we have massive audit deficiencies. I mean, the profession, the audit component of our profession has a serious problem. And has it really gotten that much better since Enron 20 years ago? If anything, it might have gotten worse.

David Leary: [00:30:49] Well, I mean, how much of this is a shortage, like people just don't have? I have to knock out my billable hours. I don't have time to do a four hour ethics training.

Blake Oliver: [00:30:56] Well, that's the that's the situation these staff are in, right? They are pressured to to get all these audits done. Partners are under budgeting, under charging, working their staff to the bone. It's all to make a buck right. Where's the ethics in this. So. One of our live stream viewers, and thank you for joining us. If you want to join us on our live streams, you can subscribe to us on YouTube. Mr. Hall says what is the effect of audits with errors? Why does it matter? And that's actually a good question. And maybe this is why so many audits have errors, because research has shown, according to Baruch Lev at, I think he's at I don't want to say where he's at. He's in New York. I forget what university he's at. But he wrote the end of accounting. He's got stats based on his research that like. Audited financial statements only account for a small percentage of investor decision making anymore.

David Leary: [00:31:51] We had a perfect example of this last week. What was that news? So there was a Bloomberg published an article that bill will bill holding. So as we all talk about Bill.com, Bill Holdings was going to acquire Melio for $1.95 billion bill. Bill Holdings stock fell 15%. And the next day, Bill.com announced that they are not. It was just a rumor. They're not going to do it. So so major market movement, not on the financials in any way, shape or form. It was based on a rumor or press or it's just reinforcing. The entire book was written about this.

Blake Oliver: [00:32:26] Yeah. Well and it's, it's it's too easy to manipulate financial statements with estimates. Right. It's gotten really easy to do that. And we know that management does it. They smooth out earnings. And so those earnings really aren't that useful to investors. And so what is useful it's the rumors. It's the subscriber numbers. Remember when Netflix stock plunged I don't remember if that was like a year or two ago. But it was it was they reported that their subscriber numbers dropped and the stock tanked. And I looked at the GAAP financials and there were no problems with cash flow, no problems with anything else. And it's because the investors care about the subscriber numbers. But that's not anywhere in the GAAP financials. But that's the thing they care about the most when it comes to subscription businesses. And FASB hasn't tried in the slightest to take any of these subscription metrics and build them into GAAP. I don't even I don't know why they haven't even tried. It's kind of. Did you know that the only financial ratio in GAAP is earnings per share? It's the only one that is actually defined. The rest companies can use or not. And. We have this whole world of SaaS metrics, which are very useful for evaluating SaaS companies, but we don't require subscription businesses to report them in any standardized way at all. It makes no sense.

David Leary: [00:33:45] What's even tougher to. Because what is just a subscription business? Like all business, we've talked about this two years ago. I think we were at Oracle NetSuite conference and it was Kevin O'Leary or all businesses are businesses now are everything businesses. Yeah. You know, they're a widget creator and they're a service provider and they're a SaaS business and they're everybody's everything. And like, how do you compare that side by side by side?

Blake Oliver: [00:34:08] Dark Horse says audits have errors because know nothing. 20 somethings do the majority of the work. I know because I was one of those at one time. And this is what's wrong with our profession is that we send. Kids right out of school who know nothing. Haven't even passed the CPA exam. We have them go work as staff accountants at big firms auditing fortune 500 companies, the biggest companies in the world. They don't know anything. How are they supposed to actually do a good, good audit? It should be the other way around. It should be. They go work in corporate America, they get their skills, and then we take the best of those people and turn them into auditors. And those people should be really independent and be empowered to go. Find the problems.

David Leary: [00:34:50] And hopefully they're at a point in their career financially, personally where they can. They're not they're under pressure. Yeah. Just like they've they've matured enough where they can't be put under pressure by a boss as much. Right. Yeah.

Blake Oliver: [00:35:02] So related story, David, before we move on, the PCAOB also announced that they have doubled their fines in recent years. They're bragging about this taking more enforcement against the big firms, which sounds good. But then you look at the amount of the fines for 2023. So far this year, PCAOB fines have reached $11.9 million. Now, if you add up.

David Leary: [00:35:29] For a quarter of $1 trillion in revenues, if you start taking the top 6 or 7 firms, right, and add it up, it's almost like a quarter of $1 trillion of revenue. Yeah, find $11 million.

Blake Oliver: [00:35:39] I haven't verified this, but I asked Bing. I asked Bing Chat, which is now called copilot, I guess soon to add up the revenues of the big four in the US. And they said it was like $80 billion. So 12 million divided by it can't be.

David Leary: [00:35:56] They can't be because oh, you said the US just.

Blake Oliver: [00:35:59] Just the US. Yeah. Yeah. Because remember these firms are just networks. They're independent in every country and they share the same brand and logo. So I don't think it's fair to compare their global revenues against a US fine. So I do.

David Leary: [00:36:14] It's a better headline.

Blake Oliver: [00:36:15] Well the we'd have to look at the global fines. But anyway if you divide there if you divide the fines for audit deficiencies by the US revenues and then you like it's like 0.000151%. Which is if. If the entire audit industry were a staff accountant or a manager or something making $100,000 a year. That's $151. So again, it's like two parking tickets.

David Leary: [00:36:46] For an entire industry.

Blake Oliver: [00:36:48] It's crazy. Yeah. So, like. Like, of course, it doesn't make audits better, right? You're not going to change behavior unless there's a financial incentive or you send people to jail. That would help too, but we're not going to do that. All right, let's move on.

David Leary: [00:37:03] I have one piece of negative news that kind of ties back into all this as well. And then we can move on. But, you know, I've been we're going to lose everyone.

Blake Oliver: [00:37:10] David, I know the.

David Leary: [00:37:11] Last couple weeks we talked about how workday ERP migrations seem like they're have been bubbling up for the public sector and education. Well, it's not just workday. So apparently the city of Saint Louis is now had a botched rollout of an ERP. But for this time it's Oracle. And they worked with the censure. And it's and they also have the same stories. Everybody everybody's trying to replace their 40 year old system. Yeah. They're signing deals with these consulting companies. The deal is $8 million. It balloons into $14 million right. And it gets rolled out. Bills aren't getting paid so vendors aren't getting paid. You know the worst case scenario is employees of the city aren't being paid. And you know, and the funny thing is now people are a lot of name are blaming. Right. So the current mayor is blaming the old mayor. Well they picked it out. This is their fault. It's not our fault. And they're using quotes like this new system is horrific. We were sold something that's kind of wacky and we're having to fix it. And one of the real issues they're saying is a lack of preparation and training in the controller's office. And I'm thinking like, yeah, it's probably because there's not enough staff to actually properly structure this in a way to roll it out. Then it makes me wonder, who are these consulting companies? And then it's like, oh, it's probably a 20 year old that's never actually done anything. It's coming in to roll out.

Blake Oliver: [00:38:23] A system.

David Leary: [00:38:23] For government. That's great. Yeah.

Blake Oliver: [00:38:25] Okay, let's go back to App News, because there's a bunch of news that we haven't covered in a while. Where do you want to start, David?

David Leary: [00:38:33] I thought it was interesting that Zoho, which I've always said because Zoho has maybe, what, 75 products. And I said if they ever figure out how to start getting them to talk to each other in unifying that experience, it could be kind of a little bit of a force to reckon with. Well, they've rolled out and I didn't see this coming at all, but they rolled out a practice management software for accountants.

Blake Oliver: [00:38:55] Really? And accountant practice management software. Wow.

David Leary: [00:39:00] For for a firm.

Blake Oliver: [00:39:01] Okay.

David Leary: [00:39:02] So you have your your your client management. So your clients are in there, right? They you can track your tasks for your team and the work, you know, getting the work done for each client. Secure document management. So these are all kind of separate products that Zoho has always had. Right. And they're bringing it in. You have task management that's streamlined timesheets and billing for your accounting firm. They're doing insights and books reviews so it can read the connected Zoho Books file, maybe your QuickBooks file, and it can pull and makes those insights. So it just thought it was really interesting that they have a whole like they're really pulling together their entire ecosystem into one product because they also have, you know, document signature products. They have Zoho Mail, Zoho CRM. So you can really you could really run an entire firm now just on Zoho and not just the firm, all your clients on a complete stack, but did not see them releasing client management. I thought, that's kind of amazing.

Blake Oliver: [00:39:58] So I personally don't know any firms that are like on Zoho. It's everyone I know is either on Microsoft or Google Workspace. So if you're listening and your firm is on Zoho, I would love to know what you think, how you feel, and if you are going to try this practice management. Here's my tech story that I've been saving for a while. David, this is really just to dig at you. Techradar.com did an article Best Laptops for accounting in 2023, which I've never seen any tech site do that before. That's very specific, right? And guess what? The best overall laptop for accounting is? It's the Apple MacBook air 15 inch.

David Leary: [00:40:36] Because this was written by who? Probably not an accountant.

Blake Oliver: [00:40:40] Probably not an accountant. Right.

David Leary: [00:40:41] They use.

Blake Oliver: [00:40:41] Excel. I am an Apple user, and I know a few of my accounting friends have made the switch, but the vast majority are die hard PC users. Which makes sense given that everybody's on the. It seems like most people are on the Microsoft stack. Yeah, it says. In our in-depth review of the latest 15 inch M2 MacBook air, we lamented that it doesn't offer much above and beyond the model with the 13 inch screen. While this may be true, those extra two inches or so can make all the difference when poring over spreadsheets on the breathtaking Liquid Retina display.

David Leary: [00:41:14] Does it have a ten key that Mac? Does it have a ten key? It does.

Blake Oliver: [00:41:17] It. None of them do.

David Leary: [00:41:19] This article is bunk. This is total crap. You should never bought this. There's no way the top five laptops for accountants. Not one has a ten key. Give me.

Blake Oliver: [00:41:28] A break. Good call out. Good call out. Yeah. Uh, into has made some updates to other software. Their tax software. Intuit Tax Advisor, now allows users to preview up to five clients simultaneously, offering insights for potential tax savings and strategies. It's got new strategies for client plans, the ability to switch between state and federal returns, and strategies for determining qualifications for certain tax benefits. This is Intuit Tax Advisor into its planning suite that I think is actually fairly new. We may have talked about it last year or the year before. Uh proconnect. Tax users. Proconnect tax users can now directly import client data from the IRS, create and send templated letters to clients, and access a comprehensive dashboard. Additional features include email notifications for rejected e-filed returns, customizable digital templates for tax return documents, and the ability to batch up to ten Multimodular federal, state, and local extensions. Listserv users can now send client returns to safe send directly within the platform. Start tax plans for 1040 clients with a single click and create an E file. An unlimited number of W-2s and 1090 nines. The feature also supports E filing and printing forms within a business and across multiple businesses, individually and in bulk. And if you are a Pro Series user, you can now automate data transfer from your existing infrastructure to the hosting environment. You can also transfer current year TurboTax individual 1040 returns to current year Pro Series returns and create an E file. An unlimited number of W-2s and 1099. How did I do, David?

David Leary: [00:43:06] Good. I think there was a other Intuit news. You know, Intuit shutting down mint. I don't know if we talked about that yet.

Blake Oliver: [00:43:11] We didn't talk about that. And you sent me a blog post from the quicken CEO and you said full circle, something like that, right. Because Intuit spun out quicken. With quicken was the precursor to QuickBooks and a few years ago. Intuit sold off quicken, and now quicken is its own standalone business.

David Leary: [00:43:35] Yeah, and then mint was the big darling, right? It was very hot tech acquisition. They brought in brought in mint. Now they're rolling this into Credit Karma because Credit Karma is the new darling that makes a lot of money, right? The interesting thing I think about this, and this is the tricky part, is at the end of the day, personal finances are a hobby. And that category never really grows. And so it's just like I think Credit Karma has because they're offering other features. They have they have the Credit Karma bank credit reports and all the other stuff. It helps them actually monetize this a little bit more, but it just it doesn't make a lot of sense now where it could make sense when we talk about this from QuickBooks connect. But QuickBooks has their workforce app. So your employees, if you're an employee getting paid by QuickBooks, you can have an app that you can use for your timesheets to check your pay stubs. Right. That app that could be an interesting place to have personal finances right next to your pay stub, right? You see your pay stub and you can also do some budgeting or work. That would make sense. But it's just it's it is full circle. Like these apps come, everybody gets hot and bothered over them. A decade later, they're not the shiny new object anymore. Right. And that's the thing with acquisitions in general. Yeah. You see a lot of acquisitions and not many acquisitions work over the long run.

Blake Oliver: [00:44:58] It makes me sad because I was an early mint user, and I just that thing was game changing for personal finance for me. I started using it when I was making the career transition to being an accountant, and I was the I basically I started using it because I was this. I was a poor musician working at Starbucks, and I couldn't figure out why. My bank account kept going down every month, and that's how I got into accounting, was using mint.

David Leary: [00:45:27] Arguably, mint was the grandfather of bank accounting. That was like the first app that you're like, oh, I connect these banks and it pulls down the transactions automatically. Before that, I don't think any of their apps are doing that.

Blake Oliver: [00:45:40] We have a question from one of our livestream viewers. Aaron says, isn't the workforce app from a third party, though?

David Leary: [00:45:46] I think it's a QuickBooks app. Now they might be working with third party to have it developed and skinned, but it's a it's a QuickBooks app. Yeah.

Blake Oliver: [00:45:55] I realized I forgot to talk about this earlier in the show, and it's in the headline on some of our live stream platforms. So I got to talk about this trend lines had a crazy stat this past week. 42% of accountants turn away work over staff shortages. 42% of accountants are turning away work because they can't find enough staff to do the work. Only 27% say it's not a problem and 24% say we're hitting burnout. So you add those together, the 42% and the 24%, and you've got 66%. Two thirds of firms are turning away work or worse. Because they can't find enough staff. 24% are outsourcing only. About a quarter of outsourcing at this point. So I think that's going to be a big area of opportunity for firms because it's either offshore outsource.

David Leary: [00:46:53] Or it's tech and I you're going to have to supplement and be more efficient. You're going to have to get more.

Blake Oliver: [00:46:58] Yeah. 10% are looking for mergers to save them.

David Leary: [00:47:04] I don't know if that I don't. You're not getting enough. The same amount of work is going to exist. Yes, you've doubled your staff, but you brought in all that extra work.

Blake Oliver: [00:47:13] Well, I think the idea is like, I'm a I'm a partner who's 60, and I just want to get out before the building collapses is really what that means. That's how they.

David Leary: [00:47:24] Refer to save. Okay. Yeah.

Blake Oliver: [00:47:26] It's merge up and get out. And then the staff are left with this, like, totally dysfunctional, even larger firm, unfortunately.

David Leary: [00:47:35] I mean, was it 42% you said or 47%?

Blake Oliver: [00:47:39] 42%, 42.2% of firms are turning away work because they don't have enough staff. And that is from the CPA. Trendlines outlook 2020 for Emerging Issues, Opportunities and Trends survey.

David Leary: [00:47:51] So it's almost half the people are. So you go to go to McDonald's and you get in line. And McDonald's tells every other customer, sorry, we're don't have enough staff today. We can't make your Big Mac move on. That's what's happening and that's industry wide. So then you go next door to the Burger King and it's you're rolling the dice. If you need an accounting firm to do your work, it's a coin flip whether or not you're going to get your work done now.

Blake Oliver: [00:48:18] I'm just going to go and pick out some more stories from my tech stack. Of stories. Client hub. Client hub has introduced AI enabled email integration. The new feature allows emails to be integrated into your workflow, enabling staff to assign, track and manage tasks and deadlines within a unified platform. So basically, in the past, Client Hub had this wonderful chat feature so you could set up your clients with the Client Hub app and they could chat with you securely, but emails were not included. There was no way to bring emails into the client hub. And actually I told them, you have to, you have to have a way to bring in emails. And so I'm so happy that they did it. I mean, you have to be able to bring in the emails in order to act on them and have everything in context. So well done. Client hub, you listened and I assume it was not just me, I assume it was the it was the customers too. So there's also AI powered magic email features. That's their term magic email. It includes drafting replies, summarizing lengthy email threads and assisting with tone, saving time, and improving the quality of responses, which is one of my favorite use cases for AI. As we talked about at the beginning, it's automating drafting of those messages to clients. So it's going to be available to standard subscribers by early December 2023. And if you start a trial now, you can try it out for free for 14 days. David, what's in your stack?

David Leary: [00:49:49] So that's three different apps or three different companies. All raised major amounts of money for their AI tools. For accountants, one was called black or.

Blake Oliver: [00:49:59] Oh yeah, I have black or in my stack, black or.

David Leary: [00:50:02] That tool is a little bit more of a tax document scanning and then eventually connecting it to your Intuit Pro series or your certs or your Thomson Reuters.

Blake Oliver: [00:50:14] Well, what's crazy about it, David, is how much money they raised. So the headline.

David Leary: [00:50:18] Is 60 million.

Blake Oliver: [00:50:19] $60 million. And nobody has ever heard of this company because they were in stealth.

David Leary: [00:50:25] Well, the the one of the founders did build a successful app that's on the platform or in QuickBooks called Fundbox. It's like a small business loan, invoice refactoring style product that's out there. The other big raise is puzzle. So they are building revolutionary AR powered accounting. They raised $30 million. Stampley, who's been around stapley's, been an app that was kind of in the AR side of the business, and they used a lot of AI and technology. And now Stampley just raised another 61 million for its AI powered accounting platform. So you're looking at 121, $180 million raised for three companies to do AI and accounting. So that's the big one. I think it's like money kind of dried up. But at the same time, if you have AI and you're utilizing AI, you're going to get that money. Now, it was interesting. Speaking of AI, I did watch a video with the founder of Blackwater, and it was an interview, and he went on to say that it was only like maybe ten, 10% ish is actually using kind of modern AI the way we're thinking about it. Chat GPT outside of that, the product kind of reminds me of Drake. Which one where you it doesn't. Drake I'm not familiar with this full tech side, but isn't Drake just scan old ten 40s and all those and scan all that and then give you the data that you can work with.

Blake Oliver: [00:51:49] So which of these startups are we talking about right now? Oh, that one's.

David Leary: [00:51:52] Black or.

Blake Oliver: [00:51:52] Black. Yeah I want to go back to that okay. Because like I was like, what is this app? What does it do? Why did they deserve $60 million? So here's the press release. It says. Accounting firms can upload tax documents and data into a secure portal. Okay, whatever. Who cares, right? Everybody does that. The data is then transformed and the return calculated significantly, reducing the time required for this process. The platform also generates tax return and supporting work papers for review. So basically you upload documents, it puts them into the return for you and generates, I guess, work papers.

David Leary: [00:52:34] If you switch to their website Blake click the website link in that the there's an animation on the website that shows the product kind of working.

Blake Oliver: [00:52:43] This this one here. Yeah. So I'm putting in a new prep request create. And then you drag and drop your files. So you've got all the files and then it labels them submit request. And now it's using AI to prepare that return. And we are seeing. Files and folders.

David Leary: [00:53:06] When we say it is OCR, so it's getting OCR of these PDFs. And that's what I said. Isn't this kind of like technology that's been out here for a decade?

Blake Oliver: [00:53:14] Yeah. Well and it's been available with human powered, you know, people putting the numbers into the returns. So like this is basically just the next step in that is, is automating further with I suppose I and apparently there's human review too. And so my question is how much of this is actually AI and how much of this is just that fake AI that we've been covering for years, right. Where. You know, it's just human beings.

David Leary: [00:53:42] Yeah. It's really, I always think of it as data entry as a service. Yeah. Because at the end of the day, if you're an accounting firm or you're a small business, do I care if I put the bill into QuickBooks automatically for me or if a human typed it in for me, I don't care. Right. Just get it into my QuickBooks correctly or get it into my tax software correctly. So I'm okay with data entry as a service, and it could be a mix of the two. So am I saying this because I just don't care? I want the I care about the output, the hole in the wall from the drill right.

Blake Oliver: [00:54:09] Now I think. So I think this is interesting, but what would be more interesting to me is if the I actually went out and got the documents from the client, because that's the bottleneck. It's not putting the numbers into the return. It's getting everything you need to do the return. And that's where you're going to see the next billion dollar tax. Prep company is automating that aspect for accountants. If you ask me. I'd be curious, though, what our livestream viewers and our listeners think. Where is the big opportunity in tech for tax and is black or going to do it? Or is this just, you know, a bunch of people who mean what's funny to me is how many of these founders to have no background in any of this, right? They've they've just been customers of like tax prep. Right? They're not they're not tax preparers. They're not accountants. And they raise tens of millions of dollars to disrupt our industry. And I think a lot of times they go on the wrong path because of it.

David Leary: [00:55:07] I think they're really good at building the the slide deck and building the product investors will invest in. Right. If you go to puzzle.io their website. Right. Essentially it's it's another accounting app that's targeting startups and it's bank feed accounting. Here we go again. It's just like we're going to go and read all the bank feeds, look at all these transactions we've categorized. But then they always have their stat. If you scroll down 150 plus investors have invested. Right, right. It like if you're shopping for this like what do you care who invested right. Is this website set up for somebody to to use with their clients, or is this website set up to get an investor to invest more money? I don't know, this.

Blake Oliver: [00:55:47] Is why an app like this can never succeed, in my opinion, because the market is so narrow for bank feed accounting like this. Like and. I mean that in the sense that people who will pay significant money, anything meaningful for this type of product is very low.

David Leary: [00:56:05] It startups.

Blake Oliver: [00:56:06] Startups making software for startups, which is like this very cyclical, sort of like incestuous thing that, you know, unless you go to the main street businesses, you can't build software like this that will like the only company that's ever become, you know, multi-billion dollar company in the US serving small businesses for accounting is Intuit. As far as I know. It's like the only one.

David Leary: [00:56:30] And the and and you've always said this the the startup accounting is the easiest. That might be the only one that could be automated. You have you basically have some expenses. They're all being paid by a credit card and you have some salaries of employees. You're not allocating costs, you're not doing anything complicated whatsoever. You're just it's the that might be its its only bank accounting. That's the only one you're going to be able to do.

Blake Oliver: [00:56:52] It's burn. Accounting is what it really is. It's just categorizing your burn and startup accounting actually, um, I mean, maybe there's some folks who do startup accounting that might be offended by this, but in many ways it's not that complicated because you're just taking all these expenses and you're bucketing them into like five different categories. You got your R&D, you got your general and administrative, you got your opex. I mean, you got your sales and marketing, right? And it's just it's just ratios of those things.

David Leary: [00:57:20] And the churn of startups is like the average. What is it the stats 90% of small businesses go under. I think startups, it's even higher than that. Barely any startup makes it out. Yeah. So it again it's just but it's a lot of money and it's being raised because of words like AI powered accounting. Yeah.

Blake Oliver: [00:57:37] It just when I see companies like this raise money, it makes me think that a lot of these investors are we know this to be true, that they don't invest based on the product because they don't really understand the market. How can you unless you're deep in it, you know, how can you know whether something really is going to solve a problem? They're betting on the founders who already have a successful exit, and they're just hoping that they'll figure it out.

David Leary: [00:58:01] Yeah, they're even playing it up, right. Founders from GitHub, KPMG, Apple, Lyft, the firm, PwC, PayPal, Y Combinator. Yeah.

Blake Oliver: [00:58:10] So and there's this whole FOMO thing. So if you're a if you're a successful startup founder this is the thing. The second time founders or the third time founders always love to get into accounting because that's something that was painful for them. So they want to get into that and fix that thing that was painful for them personally. But I don't think a lot of times there's a market for that outside of like NetSuite and QuickBooks. And how do you compete? For those. Like as soon as somebody gets big enough, they're going to go on to net sweet, right? So so all the all the big accounts, all the money is going to end up in Oracle's pocket, not in yours if you're a puzzle. Because as soon as they get big enough, they're going to stop doing this bank feed accounting stuff. They're going to have to do real financials. Yeah.

David Leary: [00:58:52] And that's I mean, that's the dilemma I think we've seen firms have this issue. They lose their clients. Yeah. Once the once the start up gets so successful they have to bring they have their own in-house controller, their own in-house CFO. They don't need the accounting. They don't need a cast. They don't need be a client as a cast client anymore. So I guess we'll watch it. But yeah, a lot of money being raised.

Blake Oliver: [00:59:14] Here's one more story while we're here that I just want to highlight, and this is something that I bring up in my talks. I think Google Alphabet as it is now, as the parent company is now known, is in trouble. I think that I would not want to be a Google or Alphabet investor, because 80% of Alphabet's revenue is from search, traditional web search. I have stopped using Google as my first place, I go to search. I am now in the edge browser using Bing Chat, which is now being rebranded to Copilot, and that's where I go to find answers first because it's just faster. I get a natural language response, and I can click through on any of the sentences to find the source of the information. I don't have to go.

David Leary: [00:59:59] Dig through on your phone as well. Your iPhone. Yeah, yeah. Changed all your stuff to Bing now.

Blake Oliver: [01:00:04] Yeah, I have a I swipe over to my widget screen and I have a little I don't know if that'll focus there, but I have basically a widget. It's not focusing, but I have a widget and I just press the little microphone icon and I can ask it any question. So I can say like what was iwai's US revenue last year? Now it's searching Ernst and Young. Us revenue. Last year.

Speaker3: [01:00:28] Ernst and Young generated a revenue of $19 billion in the United States in the fiscal year 2022. However, Uwi's global revenue for the financial year ending June 2022 was $45.4 billion.

Blake Oliver: [01:00:43] And then I can go click through on that $19 billion number. And it takes me to Statista, where I can double check it. Why would I do a Google search? So think about that. 80% of Google's revenue is from search, traditional search, and they have the worst AI chat bot Bard. And even if they can improve it, how do they? How do they keep the market? Because they currently control most of search. So? So there's a big possibility that even if they advance with their chat bot so that it's good, they'll still lose market share to Microsoft and to Amazon. And then. How do they monetize their chat bot? Are you going to have ads in the in the chat bot? And how do you do that? There's a lot they have to figure out. And I think their dominance, they've sort of just like every other company. They get to a point of like dominance and they stagnate. They don't innovate.

David Leary: [01:01:43] And what was great about Google versus everybody else at the time, you just got better results. And arguably the results aren't as good. And now you're starting to see other companies have better results. And at the end people want the end product. That's how they're going to judge it.

Blake Oliver: [01:01:55] So. And something to watch out for is I think Amazon because. We all have these Amazon devices with voice assistants in our homes now. At least I do. Right. I know a lot of people. Do you have at least one? So far the AI and that has been pretty bad. And you use it for weather, kitchen timers, maybe buying reordering stuff.

David Leary: [01:02:16] Who let the dogs out? That's how the Alexa play. Who let the dogs? Don't say.

Blake Oliver: [01:02:20] That. Good. She didn't hear it. But like, if they they made a multi-billion dollar investment into anthropic, which makes Claude which is a better natural language model than ChatGPT. In my experience, it's better at writing, it's better at it's better at all that stuff. It has less, fewer features. Right now. It doesn't surf the web or anything, but like that could be added. And so if they actually make these voice assistants like, really good and have access to all of your different. Calendar and mail and be able to act like you as an agent.

David Leary: [01:02:57] The data that's on your phone, especially.

Blake Oliver: [01:02:59] Yeah. And the data that's just in all of your if they can connect to all that, they can have the ultimate AI assistant. And same thing with Apple, right? Apple with Siri could could totally upend Google. With actually like like just imagine being able to do all the stuff that I'm doing now in the chat GPT interface, but just talking to my phone.

David Leary: [01:03:22] Yeah.

Blake Oliver: [01:03:23] What if you could, like, passively listen to me and just, like, make suggestions like it's an assistant. You know, if I, if I've got my AirPods on, it's just listening. And as I'm having conversations with people, it's like whispering in my ear.

David Leary: [01:03:36] And the fact that apple they they're making everything super secure on the phone now. The data. Yeah. Privacy. Data privacy data privacy data. Really? Because that way when they do create some sort of AI tool, they'll be the only one with access to the data, which will make it the greatest tool that's ever existed in the history of the world. It'll be the most amazing thing, because they're going to keep everybody else out by making under the guise of privacy.

Blake Oliver: [01:03:57] And the biggest concern with these models is the privacy, right. If you're going to let your whole life into these models, you'd better trust it. So I think I think Apple has that advantage. I think Amazon has the advantage of they've built this whole smart speaker network and people a lot of people have them. So that could really help them I think Google. Google couldn't figure out how to make a phone. They couldn't figure out how to make devices. They literally just live in your web browser. I think they are screwed.

David Leary: [01:04:23] The phone's good. I got the phone.

Blake Oliver: [01:04:25] You're like one phone. You're like.

David Leary: [01:04:27] You're a great picture of you.

Blake Oliver: [01:04:29] How many people at QuickBooks connect had one of those phones?

David Leary: [01:04:32] Google?

Blake Oliver: [01:04:34] Right. That's the problem.

David Leary: [01:04:35] I don't know if that's there's a lot of people that phones, but there's also a lot of other phones because accountants are going to buy the top tech usually.

Blake Oliver: [01:04:40] Yeah. So. I don't know is that you know what will happen to the stock price. What will happen? This is truly disruptive. And it's crazy to think that Google like, you know, didn't really even exist like 20 years ago. It was just this little search engine. And here it is now, top of the world. And now it could come all crashing down. That's how fast things move now.

David Leary: [01:05:01] Yeah. And I don't know, we could digress and talk about this is why government regulation and all of that doesn't really matter. Because there's always going to be somebody who figures out how to do it better. That's the beauty of an open market. That's what's funny.

Blake Oliver: [01:05:13] About all this is yeah, Google is facing all these anti-monopoly kind of cases, just like Microsoft was, right? And like it might not even matter because Google might not even be the dominant player in a few years. I so transformative.

Speaker4: [01:05:28] Is there any comments.

David Leary: [01:05:29] We should wrap up on.

Speaker4: [01:05:30] Any? I don't think.

Blake Oliver: [01:05:31] So. Thank you everyone for joining us. Thanks for hanging with us on this Friday. A reminder to our podcast listeners. Subscribe to us on YouTube. You can join us live and get notified. Hit that subscribe button. We will be letting you know about a webinar I'll be doing on AI for earmark. And if you need CPE, don't forget that you can earn CPE for listening to this show and many others such as oh my fraud, federal Tax updates, the unofficial QuickBooks accountants podcast today. Gosh, so many more on our platform and you can earn free CPE one a week. And if you want to support earmark, you can subscribe for just $130 a year for unlimited CPE. You can get almost all of your CPE done on earmark. The only thing we don't have is those state specific ethics courses, but you can just go to some other provider, download a PDF, and put all the test questions into ChatGPT to get the answers, because they make it that easy.

David Leary: [01:06:28] We should have, at the beginning episode welcomed all our new listeners. So when we go to these events at QuickBooks connect, we get lots of new subscribers to the podcast. And it drove us up to we were number eight on the Apple Business News charts. We were up there with so many subscribers.

Blake Oliver: [01:06:41] We were up there with above shows. We were with up there with Wall Street Journal shows. It's kind of funny to think that in five years, David, you and I have gone from broadcasting to a few dozen people, from our spare bedrooms to having a show that is the number one podcast for accountants by downloads in the world. And thank you to our listeners who want to make change and want our profession to be better and want to attract younger people in who have a growth mindset. You want to know one of the coolest things about my son's school is they have this concept. They teach all the kids about a growth mindset and a fixed mindset. We never did this when I was a kid. It was like, I didn't.

David Leary: [01:07:29] Ever see that until I was 30 years old at Intuit, when I started seeing that they're.

Blake Oliver: [01:07:35] Teaching the kids about how to have a growth mindset, right. It's it's a belief that I'm probably I'm not explaining it the best, but it's believing that you can change and be better and having confidence in yourself to be able to do that. They teach that to the kids, whereas a fixed mindset is this is the way things are, this is the way they've always been. And unfortunately, I think the people leading our profession have a fixed mindset about accounting and are not willing to change. And until we make change, until we either change their minds or get them out of their, you know, and get new blood in, it's, you know, not going to change. But I feel like it's happening when I go to conferences and I meet people, I meet these these really innovative practitioners and CPAs and accountants who believe that accounting could be a great and prosperous career. And it doesn't have to be a grind. You can have time with your family, time for yourself, be healthy and be an accountant. And I think all the tech and is going to help us do that. So that's that's my on that note. On that note, thanks everyone. We'll see you again here next week.