Self Learning, Process & AI with Blake Oliver (Part 1)

In a previous episode of the Big Four Transparency podcast, we talked about how much money some accounting firms are saving already by moving away from credit card processors and the fees that those come with and moving all of their payments from clients towards ACH and other forms of direct bank transfers. Now I've worked at a startup that didn't have any kind of tracking or any kind of a real solution around that and it made accounts receivable and accounts payable an absolute nightmare. But look no further because the sponsor of today's podcast is Forwardly. I met the awesome people of Forwardly over at Bridging the Gap conference, did a demo of their product. I am disappointed because personally I can't work with them unfortunately because of some restrictions on Canadian banking. But for any US listeners who are looking for a new solution for your accounting firm, Forwardly is a great solution for you to handle all of your payments, AR, AP, as well as great approval workflow. So check them out. They're linked in the podcast description. Thank you very much. Hello and welcome to the Big Four Transparency podcast. I'm joined today by Blake Oliver, the co-host of The Accounting Podcast, formerly The Cloud Accounting Podcast and the founder CEO of Earmark. Welcome to the podcast, Blake. Thanks, Tom. Great to be here. Yeah, my pleasure. This has been, in my books at least, a long time coming. It felt like a huge, huge milestone moment for me getting to be on your podcast. And while this might not attract the same level of listeners quite yet, I, you know, I love having people kind of back on mine to have a conversation and, you know, it's a little bit like more directed in the other direction. I like to learn about you specifically as well in your journey. So yeah, I'm looking forward to this. I'm a little nervous. I have to admit, you know, I'm not often the guest these days. So I'll try to do my best. Perfect. Perfect. Well, thank you. Yeah, I mean, I guess just to start off as a little bit of a background and, you know, it'll help us warm up a little bit as well. You are kind of the accounting side of The Accounting Podcast, right? So David has a different background, not from like the CPA side of things. And you actually founded a firm, I believe, right? That was acquired. I did. That was my beginning in accounting is I, I was a QuickBooks bookkeeper and I started a cloud-based firm when that was like a cool new thing to do. Nice. And was that like your first experience in accounting was like you just went straight into like self-employed entrepreneurship? Basically, yeah, I was, I was kind of forced to, I graduated with a music degree from Northwestern University, which is an excellent school. It was like the most expensive school in the country when I went there. So I thought I had this, you know, valuable degree. And then the great recession hits and I majored in something basically useless to any other employer outside of music. So I couldn't find a job. I literally, I couldn't get a job at Barnes and Noble. And so I was working at Starbucks. That's the, that's the best I could do. And I guess musicians are good at making lattes, right? And then I got a job at a tutoring company, which paid better and, and the bookkeeper quit one day, just like in the middle of our busy season. And I talked my way into his job and that's how I learned QuickBooks. And then that's how I became a bookkeeper and, and, and started my own firm. It's kind of a funny journey. Yeah. So I play the cello. Everyone always wants to know that. What, what instrument? That was going to be my next question. Yeah. Yeah. Interesting. Do you still play it a lot? I played it this week. Intonation has gotten kind of bad because I've been bad about practicing, but it's sort of like riding a bike, you know, like I did it for 10 years, very seriously. I wanted to be an orchestra musician and you know, I was doing auditions in LA and stuff like that before I kind of decided, eh, this isn't for me, but yeah, it's, it's great. My goal, my goal now is to make enough money where I can be on the board of the Phoenix Symphony. I think that would be a nice, you know, end to it. I like that. I love the kind of like oddball goal, like driving mission. Like what is it for like, you know, this is a different tier, but like Gary Vaynerchuk is like, I want to own the Jets. And it's like, it's not like I want to own like the best team, I want to own the worst team in the league because like that was a big part of my life. And I'm like, I love those kind of like oddball goals. I'll have to, I'll have to find one own some, like maybe the Sens, some like middling NHL team or something to drive me. Yeah. You got to have, you got to have something big that like drives you to work hard. Right. Because it's, it's a lot of work to run a startup, to run a firm, to like what you're doing is a ton of work and, and if you don't have that longterm vision, you're going to give up. So. Yeah. Yeah. Absolutely. And so back to the, back to the accounting firm here, what was, what was that like, like trying to learn that on your own without having kind of started at a firm? Because that's really like not the typical route. And I don't even know where one would go today if you were like, I'm just, I'm going to be a bookkeeper now and I'm going to start a practice and all that. So I, I tell people actually that my music degree at Northwestern was the most valuable education I ever got, even though I didn't have any practical knowledge in terms of how to do accounting or how to do business or really anything other than how to play the cello. What I learned in my education was how to teach myself how to do anything. And I had a really, really great teacher, Hans Jensen at Northwestern. And that's basically, I could distill down like my four years with him. That's what he taught me. He taught me how to learn any piece of music, how to teach it to myself. So I didn't have to sit there in the room with him and him teach it to me. And that applies broadly to anything. So it also helps to be good at Google, right? So basically when I needed to learn how to do something, I would just Google it. And it shocks me still how many people still can't do that. How they can't take the problem they have, turn it into a question, and then look through pages of results, find the answer, and then teach themselves how to do it. That's basically how I've learned how to do everything in accounting. I mean, I obviously went to school, I went back to school to learn accounting, but I would say that most of it I learned just on the internet. And that was really, I suppose to be fair, that was when it became possible to do that, right? All this knowledge was being shared by accountants in Australia and New Zealand who are 10 years ahead of the United States. And I just mimicked what they were doing with their firms, moving to fixed fees, moving to cloud-based technology, building packages that you could sell for X dollars per month to small businesses, operating like a tech company. I didn't innovate really that much, I just sort of saw what was working and did it. And yeah, you can do that with zero experience and you can have a successful exit. So yeah. Yeah, I find it's admirable being able to learn that way, and today more than ever. It's everywhere, right? I'm at 31, 32 episodes deep now, I've got 15 people you could model building your firm off of, right? And it's just a question of going and following those people. And now that accounting content creation is cool, there's a whole heck of a lot of it out there. So it's a lot more possible than ever. And there's communities, you've got Brian Lizanis and Jason Statz out there running these communities that have such valuable information in them. You can go join that and you can basically get the playbook from them. And now with AI and AI-powered search, it's so much easier to find information. I think part of the reason people struggled with Google to learn how to do things is that you had to search through pages of results sometimes, and that's very tedious, opening up all those tabs and reading through and scanning. I happen to be a really fast reader. I can scan through pages and get the answer, but a lot of people aren't. And so that's a big problem. But now you've got apps like perplexity.ai, which basically do the Google search for you and give you the answers and cite their sources. So there's no excuse now. I use that every day, by the way. And if your listeners don't know about perplexity, they should totally sign up. You got to pay for the pro account if you want to get the best answers. But for 20 bucks a month, it's a no-brainer for me. Think about it. It's basically doing the Google search. It's going through all the results and then giving you the best answers. So now you can learn anything. And I think it's a huge threat to traditional education. I've never been the kind of student who was good at sitting in a classroom and learning. I like to learn at my own pace. And now with AI, I can teach myself anything. I taught myself how to record and edit podcasts. I've taught myself how to build an app. I didn't code it myself, but I can do product design and I can do all this stuff. And I didn't go to school for it. So it's incredible. No, I love that. I think we kind of share a view on education a little bit. Every time I hear you say something about it, I really pick up on that. I was not a good student. I did well and I had good grades, but I had good grades in what I deemed valuable to get good grades in. So I got a hundred in every tax class because I knew I was going to go to tax. I did really well in finance and I almost failed HR, I almost failed marketing. And there's a few that I look back and I'm like, I really miscalculated. I did really poorly in my stats two course, which is now the entire foundation of the business of Big Four Transparency. And so I had to go back and learn that. Same with accounting information systems. I deemed that unimportant. And now I'm looking back and I'm like, oh no, this is so important. So I'm like, I'm learning these things. Yeah. So I'm like, I'm going back and learning these. So there was a few misfires, but a lot of the things where I was like, this is not going to be important in my life. I just didn't learn. And same with Big Four Transparency. I built it all myself with no code tools. That's amazing. And you probably learned, you learned online, right? You read the help documentation, do Google searches, you go and look in forums. You can find the answers. Yeah. Yeah, exactly. That's so cool. Yeah. Yeah. And so, okay. So for the sale of this firm, did you get acquired or did you sell it? We got acquired. Okay. So like there was active interest, like someone kind of came to you to like inquire about that. Yeah. I met a guy named Bruce Phillips who owned a firm called HPC. We met at the Sleater Conference, which no longer exists, but it was like the premier conference for cloud accountants. And it was before, you know, QuickBooks started doing their own conference and Xero started doing their own conference. This was the place to be. We met there and we started talking and he had a successful CPA firm that he owned entirely. And I had a successful cloud-based bookkeeping practice. And we realized, oh, if we combine these two things, he does the tax, he does advisory, I do the bookkeeping, it's the full package. So yeah, we negotiated an acquisition and then I came over to the firm. I had two partners, one passive, one active. They both got buyouts and left. And I had a deal where I could stay with the firm and after a year, if I stayed, I got equity. And if I left, I got the same buyout that my former partners got. And ultimately after a year, I decided, you know what, I've been doing this now for like six years, I kind of want to do something else. And there really wasn't actually a need for me in this firm anymore. I had made myself obsolete. So I left. But yeah, it was great. It was like, you know, so cool for my first business to have, you know, not a huge exit, but it was like meaningful money. It was like life-changing for me, bought a house, you know, kind of set me up with my nest egg. So yeah. Oh, that's my whole philosophy on business too. Like we spoke when I was thinking fundraising for Big Four Transparency and stuff too and all that, where like, I'm like, I'm looking for like, you know, a base hit. Like I want to build this in a way where I'm like, this is like a meaningful business and whatever. I'm not trying to squeeze every last dollar out of this and like grow this in perpetuity. And I think that there is like a beauty to that in business where it can be a nice business and same with earmark. Like you could over monetize everything to a degree, but instead you're like building something you love. And that I think is a fantastic a tool and business, but like be like kind of a service to community where like CPE sucks. You and David have really made that palatable. I like Expensify's motto, right? Expense reports that don't suck. And while that's not our official motto at earmark, I like to say internally, we make CPE that doesn't suck, right? Let's take the pain out of it. The Savannah Bananas, are you familiar with that baseball team? Yeah, I love them. They're an exhibition baseball team down in Savannah, Georgia, and everybody's seen them on TikTok. And the founder of, I think his name's Jesse, he posted on LinkedIn recently about how his entire business strategy is just stop doing what your customers hate. And so they made the game faster. They changed the rules to make it faster. They got rid of the advertising in the stadium. They don't charge for food. It's all inclusive and people love it. So when you go to the game and you bring your family, you have already paid for all the add-ons. That's what people hate, is they hate buying the tickets and then ending up paying twice as much for parking and food and all that stuff. And so they just changed the business model of a baseball stadium and they're doing great. So that's what I try to do, is just find the stuff that sucks and stop doing it. And accounting firms, there's a lot of stuff that people don't like about accounting firms. One of the things we did is we didn't bill hourly. That's pretty simple. People don't like paying hourly bills, most of them. So just get rid of that and you'll have an advantage. Yeah. Yeah. And I love the rhetoric online too of like, listen, if you're answering your phone during normal business hours, you're already at the top of the heap, right? There's things like that. It's crazy how bad the customer experience is in most professions. I am trying to book... I like to dish on the medical profession because I'm 40 now, I'm 41. So I'm starting to actually need to go to the doctor. And when I try to book appointments, I found a practitioner, like an office, and they had an email. I'm like, oh great, I can email them, I don't have to call. And I emailed and they're like, please call our office to make appointments. You cannot book an appointment with a doctor without calling their office. This is crazy to me. What? Oh, because there's these confidentiality rules, you can't implement technology? I think this has been solved. So a lot of CPA firms are this way. A lot of accounting firms are still this way. They're sending out paper invoices to their customers. They don't make it easy. That's kind of embarrassing. It's really embarrassing. That's ridiculous. Yeah. It still happens. A lot of CPA firms are still sending paper invoices and you got to pay with a check. What is going on? It's not that hard to make a good customer experience. Yeah. Well, the one invoice I'm always late on paying is the lawyer fees that I incur with this business. And Gowling, one of the huge law firms, and it's because they only accept wire payments. Listen, I'm not trying to be delinquent on my bills. You think a law firm is who I would want to be delinquent on my bills with? But it's just that it's so inconvenient every time. And I'm like, this is insane, folks. That's nuts. Yeah. Yeah. And they don't even... The excuse is, oh, we don't want to pay the fees, but I guarantee you they're paying an incoming wire fee. Every time you wire them, it's stupid. They could pay less and do ACH or do credit cards even, probably. I don't know. They could pass the fee on to you. Anyway. Sorry. You set me off here. This is hilarious. I think, timing wise, when this is going to release, this is probably sponsored by Forwardly. Oh, perfect. Forwardly. Shout out to Forwardly. There we go. Get some good, you know, get better on that process. Get better on your AR and AP. Make it easy for your clients to pay you. Maybe. Exactly. Maybe that'll help. Yeah. No, and it's half the battle. Right? Yes. Okay. Back to some of the topic. Yeah. What topic were we on? I mean, the point is there shouldn't be too much of a topic. And that's what I really like about your and David's show, too, is there's a lot of banter and back and forth. And I'm so used to, like, I don't have a co-host, so I'm like, I got to keep this ball moving. Yeah. I wanted to ask you, because you were so early to the cloud accounting game, what do you think the next thing that, like, some people are doing today where it's going to, like, seem so obvious in hindsight that they were ahead of the curve? That is a great question. I mean, it's going to be, obviously, AI is going to change this, right? So I view AI as a technological development that's equivalent or greater than, maybe even 10 times greater than cloud. I happened to get on the bandwagon with cloud computing, like, really halfway into it. There were firms doing it 10 years before I started doing it, but I caught the wave when it was at its peak. Right? And that's what you want to do with AI. And the good news is it's only been a few years. So we've got, like, a 5- to 10-year window where the wave is going to peak, and the firms that are at the right place can really benefit from it the same way I did. So the question is, well, how is that going to change the services we offer, what we deliver? Everybody has been talking over the last few years about how important it is to offer advisory services to your clients. And my criticism of that has always been, well, that's a stupid service to offer because it's really hard to hire people that can do advisory. Right? If you want to scale a firm, you don't want to be doing stuff that takes a lot of people power, a lot of brain power, and a lot of expensive labor. And the people who can deliver CFO-type advisory services are going to cost you a ton of money. And you're going to have to mark that up. And so selling that is hard. I'd rather focus on doing bookkeeping, bill pay, payroll, outsourced accounting-type work, where I can do that with automation, I can offshore that, I can do it with cheaper labor in rural parts of the United States. That's a good business model if you want to build a business. But AI offers the potential to offer the advisory services without a ton of labor. So that's what I would be focused on, is what kind of advisory can I deliver to my clients in a scalable way that I do with AI agents? We see firms already doing this, and a great example is your part-time controller. They're a top 100 firm. They only do client accounting services for nonprofits. Amazing, right there, that they have that focus and they're a top 100 firm. They have built an internal application that does variance analysis and financial statement analysis based on QuickBooks financial data, using ChatGPT securely to send the financials to ChatGPT along with custom prompts, and then deliver that back into their app. And then they can edit it, review it, and email it out to the client. That's incredible. I actually didn't know they had that offering up and running. That's cool. It's probably still in beta. They're using it internally, but they intend to sell it as an application for other firms to use. So that kind of work, like variance analysis, looking, and by that I mean comparing previous periods to the current period, and looking for substantial material differences and explaining that, that is something that is very time-consuming right now. Just identifying the variances, putting together the report is time-consuming. AI can even look into the GL and try to find the explanation for it, or at least get us to a starting point. I mean, that can save 80% of the work. And then the financial statement analysis, if you take financial statements and you plug them in to upload them to ChatGPT or to Clawd, and you ask it to do basic financial statement analysis, it does really good work, fantastic work. It's great at it. So you can automate all that. And then you can just take the most important pieces of information, edit that thing, and send it off to the client with the financial statements every month. That is a huge value-add service that would have cost, I don't know, at least an hour, maybe two hours of a CFO's time. And how much is that going to cost you? At least $100 per hour internally. And then you have to mark that up to like $250, $300 per hour to your client. Well, for a client that's paying $1,000 a month, you're going to have to charge them maybe twice as much, 50% to 100% more, just to offer that doing it manually. But with AI, you can offer that for the same price. And now, if they have questions, that's where you can do the advisory engagement, but you're giving them the information every month. That puts you in a huge competitive advantage versus all the other cash practices that are just sending out a PDF of financial statements with no explanation. Yeah. Yeah. And I think that the lift on that doesn't seem tremendous as AI continues to progress. Yeah. So the last demo day at my last job, that's what we built. We built a custom GPT to do variance analysis, very specifically for like month-end commentary. And you can set up materiality thresholds. You can do like, give me anything that meets both criteria of this dollar value and this percent value. Because there might be like a variance, like one category where $100,000 matters, but another category where you actually care if it's $10,000 because it's like, oh no, this is like gone out of whack, right? And it takes like a day, right? But it's like, oh, this will save us like three hours a month forever. Right now it's tough because just like with cloud computing and building a cloud-based firm back in the day, it took a lot of technical knowledge. You had to do a lot of learning to set this up, to get all the pipes connected and they break all the time. And I spent a lot of time in my firm just fixing stuff. And now we've seen the development with the vendors in the space of like solutions that are really end-to-end and don't really have as much of a problem. So it's easier for firms to onboard. We're at the same point with AI where like you described, you have to build this custom GPT. It takes a lot of technical knowledge, a lot of time, who has a day or two to build this thing. We have to figure out how do we deliver it at scale to all our clients. It's not so easy. Vendors are going to come along who are going to see that and say, oh, I'm going to build this in a scalable way for firms and they can just like buy my app. And now they're offering this advisory service and they'll figure out the nuances, but it's going to take time because a lot of these developers are not accountants. They don't know exactly how to build it. There's a lot of nuance. So that's several years down the road, I think. And so for now, if you want to jump on this, you've got to build it yourself or bring somebody in who can build it. Otherwise, you've got to wait. That's where we're at. So the firms that kind of jump on it now are going to have an advantage because even if they end up using one of these apps that gets developed, they know how it works. They know how to put it into their firm, right? They've already built all the processes around it. Yeah. Interesting. So speaking of kind of these like these providers to accounting firms, has there been an explosion in like tech around accounting firms and like supporting processes? Or am I just like now becoming aware of this? When I started my cloud based firm, the QuickBooks online app store had six apps in it. Yeah. Now there are more than 600. I mean, that's I checked that years ago. It could be a thousand. It could be thousands, right? So there's all sorts of options. That is how crazy the development has been with this online ecosystem. And same for Xero, right? There's dozens of solutions for almost every problem and that can be overwhelming, right? But for a guy like me who loves to like find these solutions and put the puzzle together, it's amazing. Yeah. Yeah. No, I love that. The last person I released an episode with was Isaac Perdomo, who like specializes in that. And we had a conversation about how like being the process person, like as tech takes up more and more. of like the busy work of a job, becoming the process person becomes more and more important. And I shared with them, I was like the most lucrative job offer I've ever been brought was not as an accountant. It was like as a process improvement person. And they were like, we actually really like hiring CPAs because you have the kind of like logical thought pattern behind that. And they find that we're really good at doing that. And so I find it. I find it a good match of like there being all these things to optimize processes in accounting firms and CPAs being well suited to being able to adopt and implement these things. I find that like really, really interesting. Yeah, I agree. I love process. It's it's all a puzzle. Trying to figure out how to combine technology with humans in a systematic way is just fascinating. It's like a it's like building an assembly line. And and and and we're we're we're manufacturing financial statements. If we do it right. And if we do it right, we can do it at such high volume and ensure quality. We can be like Toyota. And and. Yeah, that's it's fun. Yeah, well, building building a more efficient machine, right, like there's this I had written this thing and I didn't end up publishing it because I found it was like a little bit too is a little bit too like spicy is a little bit too much like conflict driven for what I wanted to do as a brand. But ultimately, like there's this metaphor of like every business is you've just built a machine that makes money. And like a lot of problems like might be that you don't have enough inputs or whatever that might be. But a lot of them boil down to. Listen, pal, you just didn't build a good enough machine. Right. And so I might still end up publishing it at some point. But I had this whole write up around like people who are kind of freaking out about like how the salaries are finally moving in accounting. And I'm like, well, if your business was reliant on there being 20 years of wage stagnation, like I think you just maybe haven't built a very good business. And like you actually like you need to learn to fix your machine. Right. Like you you have the things that are in here. You're just you're not good enough at converting it into money. And so ultimately, like what you need to do at that point is it's the processes you need to build these processes out and you need to improve it. Yeah, well, you know, it's funny you say that, because if you actually look at the business model of accounting firms that sell time, it's a pretty great business model, because if your input costs go up, you simply raise your prices. You should anyway, because you're selling hours and you continue to make 20 percent net margins indefinitely. Right. As long as the prices don't go so up so far up that your customers, you know, dump you from some other solution. But at a certain point, like for certain expertise, they just don't have another option. Right. They have to go with you.