Subscribe
Share
Share
Embed
This is your destination for feeling empowered in building your business.
These are the real, raw stories of entrepreneurs and business owners who have built their businesses through the messy middle of $1-20 Million, hosted by serial entrepreneur Matt Tait.
Matt knows what it’s like to scale past the first million, and on this show he’ll be bringing on other serial entrepreneurs and business owners who have been there, done that (or, are currently in it) to share what’s worked, what hasn’t, and what’s next.
Joel Hughes (00:00):
For us, we can't sort of magically make that all happen, but I think we really think about how do we make that champion who is suggesting the change inside the firm and it's going to be the person who's the project or the program manager for that. How do we make them incredibly successful? Because really if they're not then we're not and it won't last, right? We've seen plenty on the downside seeing people try to do something for a year and then decide to undo it.
Matt Tait (00:23):
Hi, I'm Matt Tait, founder of Decimal and Host of After the First Million podcast and like you, I've taken the leap not just to start a business but to scale and grow it. I've hustled from zero to that first million and now I'm building for the next 50. I know firsthand what the messy middle looks like and we need more than just numbers. We need strategy, we need community, and we need real conversations about what growth takes in our line of work. Scaling beyond a million means going beyond the spreadsheet. This is where you learn how to grow. This is after the first million. Alright, welcome to this week's episode of After the First Million. I am excited today to have a conversation with my friend Joel Hughes. For those of you that don't know, Joel is the CEO of Rightworks and has an awesome career of just leading businesses, of growing businesses. But then over, I believe the last eight plus years leading a very successful company in the accounting space. And so as we talk about what it's like to grow past that first million and what it's like to grow and lead in business, I think there's going to be a lot of good insights today. So Joel, thanks for joining us.
Joel Hughes (01:40):
Glad to be with you.
Matt Tait (01:42):
I really appreciate you taking the time today. And I think what I'd like to do to set the stage is tell us a little bit about yourself, your journey and how you got to where you're today.
Joel Hughes (01:55):
Sure. As you said, I've been in sort of this accounting and tax space just for the last eight years or so, but I started as an electoral engineer. I was an embedded software engineer and did a lot of work in satellite communications and digital signal processing early in my career. Turned into a product guy at startups. I moved to Boston after college and I've been here ever since. I've probably done whatever, more than a handful of startup companies that were venture backed, a couple of bootstrap things, had some success, had some failures along the path, but learned a lot I would say. And one of the things I learned as I moved through my career was when I found, I ended up at Constant Contact through a CEO group with the woman who is the CEO at Constant Contact Gail Goodman once upon a time and I stumbled into this scaled SMB kind of a business where it's a company having in that case hundreds of thousands of customers that were small businesses.
Joel Hughes (02:53):
And for the engineer in me it was exciting to be looking at metrics, customer retention and revenue per customer and not trying to work giant deals to sell some voiceover IP switch to Verizon Wireless that took five years. So the scale business, much more interest the business model itself being interesting and that's where I'd say I really got into p and l and got into what do customer metrics look like and churn and expansion and so forth. So I was a cos contact about five years, learned a ton there from Gail and others and after that we sold that business to Endurance. I took a little time off when I came back. I was recruited into at the time right Networks, which is now we rebranded Rightworks in the last year and a half and it was a scaling SMB business but focused in the accounting and tax vertical with accounting professionals. It's been a pleasure to be running the business and growing the business over the last eight years.
Matt Tait (03:54):
One of the things I find interesting here is you are not the first person that I've had on this show or that I've met that started their career out in some form of engineering and how that was actually a really good jumping off point to kind of business leadership. And I think that's interesting because so many people think that it's the sales, the front, the personality, people that drive and rise to the top. But talk a little bit about how the analytical skills that led to that type of a career choice have benefited you as you've risen up the ranks in your career.
Joel Hughes (04:32):
Despite the introversion of the engineering that stereotype, which is true I think and fits well with accounting attacks in some ways. The idea of, I'd say at the core for me building is what I love, building something and it's become more like building a company versus building a widget or a product. But as an engineer, I wrote code and we built computers and we built the graphics engines and so forth and that was incredibly satisfying to be, I'd say on a team with a role with some real expertise. You worked hard and you produce something that was hopefully valuable to the customer and to the market. But I think that whole build it culture, and that's the thing that's driven me, I think forward to move from building products to building companies, the drive to have detail but put 'em into context is part of that for me, it's been hard for me over time I would say to understand managing people as opposed to building things with my own hands, if you will.
Matt Tait (05:28):
Yeah.
Joel Hughes (05:29):
That's been, I'd say probably one of the bigger challenges for me as I've moved through my career, but knowing that I'm building a company and building value in a company has been, that's been the real focus and the payoff. So I'd say expanding on what you can do yourself to what you can do with a small team and then building teams of teams. That's been how you get the scale. To your point, that first million can be done with a small team and if you want to go beyond that, you have to learn some new skills that really allow you to take your own contributions up a different level and support other people doing more of the work.
Matt Tait (06:08):
You know that adding and finding new skills I think is a really important thing. And what's interesting is I've always found that engineers and accountants are in a lot of ways very, very similar in their mindset and how they go about things. Very detail oriented, very analytical, been both, I think you mentioned introverted earlier, and I think both groups have that kind of similar bent and yet whether you are starting your own business or whether you are growing up the ranks in a larger one, you have sales in some form or fashion, whether it's sales to an outward customer or client or sales of buy-in to an internal team becomes a, I mean I guess the majority part of your day at this point is that type of a kind of sales buy-in mentality, which I'm guessing wasn't a natural skillset of yours, just like it's not for most accountants. How have you built on and added to that and been able to be authentic in that growth?
Joel Hughes (07:08):
That's a great question. My short answer is there by sharing what I'm excited about. So realizing that if you share with others what makes you tick analytical piece, so like, oh, the business model, okay, let's talk about how we're growing customers and which ones are churning and it's how this business is working. I want to bring everybody into that and I'm personally interested in that, so I'm sharing if you're trying to do something you don't care about, pretending that you are trying to sell someone something, you don't believe in the product, whatever the product is not going to work. A great salesperson could probably do that with a different a personality. I think for those of us that are, whether we're in accounting or we love tax or we're an engineer, building something, sharing the details behind the passion that's driving you allows you to draw people in. And so for me that's just been making sure that I'm working at a place with people, but also on a project that I'm excited about. And if I share that with people, I generally find that they're interested in getting on my team or helping out or at least understanding what we're trying to do and why we're trying to do it.
Matt Tait (08:14):
So I want to pivot a little bit now to Rightworks and in the accounting space, I have to say there have been a lot of rebrands over the last couple of years and yours is a good one. Some of the others I would say ended in some interesting places. But what I'm really interested in is you and I are in an interesting class in this industry and that we're Complete outsiders that decided and found opportunity in the general accounting space. What drew you to this industry, this space when you were first looking at Right Networks?
Joel Hughes (08:50):
Great question. I think, as I said, I'd sort of definitely fallen in love with scaled SMB as opposed to I'd say enterprise style businesses just because I think the business model and how it works, it was interesting to me. The other thing that one of my learnings at Constant Contact was horizontal scaled horizontal stuff. Everybody needs email marketing, but it's hard to figure out why they really want it or how it's going to really impact them. Hey, you sent a lot of emails, get more people on your list. And the thing that attracted me to Right Networks at the time wasn't necessarily I was targeting accounting and tax, but the idea of a verticalization with a vertical focus to really understand a specific smaller set of customers more deeply I thought would allow me and a company to be more successful. Some combination of really serving your customers as well as you could serve them.
Joel Hughes (09:39):
And by doing that, building a great business. And I think that's been true. And I would say even looking back now, I got lucky in that I think a accounting tax, like the best vertical, we looked at acquisitions early on after I got here and said, Hey, why don't we just do this in legal and why don't we do this in other adjacent professional services? You can convince yourself, Hey, you know what? Same thing, it's 80% the same. And luckily we said, you know what? We think we'd serve a lot more small and immune sized accounting firms in the US better if we just keep focused on them. We have a thousand, let's get 2000, we have 2000, let's get 5,000, we have 5,000, let's get 10,000. Because without diverting our attention elsewhere, I think accounting and tax professionals in my experience are just great customers. They're smart but practical. They're loyal if you're honest with them and you do your best. I think we've been a trusted service provider to the community for a long time and we keep growing the business. Don't distract yourself, stay on track. And I'd say I'm glad that the vertical I sort of ended up in without necessarily targeting it specifically was accounting and tax. I think it's a great place to have a business and to help grow a community and support and be part of the community.
Matt Tait (10:57):
It's interesting you mentioned how it was your love of SMBs that kind of got you here, and I love selling to the SB segment. I think it's fantastic, even in this space. One of the things that I love about it is you can sell big complex deals to SMBs in a relatively short period of time, and at decimal, our average sales cycle is 22 days from closed one. Love that. There's no way that's the case with accounting firms though, and you're selling to a segment that doesn't move at that pace. Was that kind of an adaptation and a learning for you that there are some of those differences, there are some really great things about accountants, but the speed of decision making, they sometimes analyze things a lot?
Joel Hughes (11:41):
Yeah, I think that there's sort of two pieces of that, Matt. I think number one, it's also particularly interesting about accounting tax for us from a business standpoint that we have firm customers and we have non firm SMB customers. One of those are connected since our BusinessWorks was networks, it was really QuickBooks hosting 20 years ago, 15 years ago. And it turns out that product hosted QuickBooks software was particularly valuable to people because they could meet in the cloud, share a file and not have to send the disc or not have to take the disc home on the weekend and close the books at the end of the month and tell their customer not to make any changes to the gl. So just the core value of the product was a collaborative capability along with security, other stuff that was Oh, affirm connected with its clients.
Joel Hughes (12:26):
So I, it's both a challenge to get that. It's more complicated to pull that all up, but once you do, it's much stickier. And to your point, I think I would say our time to close somebody who knows they want QuickBooks desktop hosting is 14 days. They call us great, I want, but we have sales teams calling on accounting firms who are trying to work their way through their technology transformation, their digital transformation, are they ready to do that? Maybe they have an MSP but that's not meeting their needs or they've got their brother-in-law doing the IT and they're having a problem with CCH access on April 15th, et cetera. So we show 'em and say, Hey guys, we really understand your business, the applications that drive it, what your workflows are, what your needs are. They're not going to be turning that thing on a dime and saying, great, I'm going to move my 15 users onto your platform.
Joel Hughes (13:18):
I think that part of our evolution as we've been more focused on firms and then working through firms to help their clients has been building thought leadership and really showing the profession that we're here for the long term and we're here to serve their needs. And so it just sort of becomes, it takes time and I'd love to always grow faster. I'd love to be able to, you can't push on a rope, right? It's going to take time for accounting firm or a set of partners who run an accounting firm to make a consensus decision to make a move to move their technology forward and move into the cloud, adopt a new technology. It's certainly being patient, given the customer requisition stuff is not as directly, it's not SEO sign up, it's not software, PLG freemium. It takes more, I think to educate the customer over a period of time and to build trust and within accounting and tax as in every business, but I'd say maybe even more, it's referrals, it's recommendations and referrals from firms who've had success and are willing to say, Hey, you know what? We went to Rightworks. It was great for us. We had a better tax season this year than last. That's the most important thing we can do, so that is marketing.
Matt Tait (14:32):
It is. We talk a lot about do a good job, make friends grow, do it in those, I'm going to steal that. You can't push on a rope analogy actually. I really like that.
Joel Hughes (14:44):
Yeah.
Matt Tait (14:45):
It's been a long time since I've heard that.
Joel Hughes (14:46):
You can't do anything except frustrate you.
Matt Tait (14:48):
Oh yeah. I may use it with my kids before my company, but I think they'll get the analogy. One of the things that I think is really, really cool, and I'd like to dive into a little bit, when I started in the industry about six years ago, the only thing I thought of when I thought of write networks at the time or write works was hosting QuickBooks Desktop and I viewed it as a depreciating asset all going to the cloud. QuickBooks Desktop is being sunset by QuickBooks, all of this stuff. But when I first talked to you, I was blown away because your vision and what you were really doing and now what you've really started to enable at Rightworks is something that that's a part of it, but it's a much broader platform type and even community mandate. Talk to me about the vision that you had to see that as an opportunity, whereas somebody like me came in and I'm like, I don't want to touch that with a 10 foot pole. And yet you've done an amazing job of building this into so much more. Talk to me about how that started and how you've gotten to where you are today.
Joel Hughes (15:55):
So certainly when I showed up eight plus years ago, it really was a QuickBooks desktop hosting company. It was the leader, which was great. All of our deals came in and closed quickly and we were, so the good news about that was a lot of people needed that, but you know what? Looking forward, that's not the future. That's the past. So from the day I got here, it's been okay, that's 95% of the revenue. Let's grow, but we've got to grow it in something that's going to last. We've been diversifying the business. We're trying to, ever since we've done some acquisitions of technology to help us build, we had a view which was, Hey, you know what? The core value prop, as I said before, that hosted QuickBooks in the cloud is delivering, is needed security, taking care of the data, connecting firms with their clients, making them more productive.
Joel Hughes (16:41):
But what's that going to look like in the future? What's it going to look like? Certainly in an all software SaaS only world, in an all cloud world where we're going and we've been building toward that ever since. So I'd say that what we now talk about, and we'll be releasing a new version of our, we call our one space platform again probably May whenever, first May 15th in the next month or so, but it's got all kinds of SaaS centric functionality, but it's still securing users and their data and giving access to their applications they need. So it's SS selling into things. So it's just taking that view of QuickBooks Desktop with solving a problem, but it was only your gl. I said, what about all of your applications? What about your accounting and your tax applications, your workflow applications, your non accounting specific applications you use in your business?
Joel Hughes (17:30):
Securing all of that. So it's both legacy applications hosted, but also new SaaS applications. That's the future we live in. We're going to be in this hybrid world we think for a long time. So we've just been building toward that. We've found as we do that, obviously we're providing more value to our customers. We've been trying to your point, the community piece of that is just educating everybody around, Hey, what is the technology evolution that's happening look like. I think you've built a relatively new slash bright modern firm with a sort of cloud tech stack from the get go. You didn't have the legacy luggage, if you will, which is great. And there are people that are in different parts of that journey. I think we see the future as all cloud. The distant pass is only hosted and we're in the middle of that, which is probably going to be a long time where it's a combination of those things and we're here to really support all the applications across the profession on a common secure platform that makes it easier for our customers to do their work.
Matt Tait (18:31):
One of the things that I've found to be really cool over the last year, let's say year and a half, and you'll correct me on my timeframe on this, but you guys didn't just stand there. You said, Hey, we also see AI as coming in and having an impact in the profession. And out of all the big companies in the space, including the QuickBooks, the Intuits, the Zeros, you guys actually were one of the first to really release an AI layer on top of what you've been doing. And jumping ahead too. You're not just on the same path, but you also have a hand and part of you as a company really looking at the future too, and that was a leap forward. What led to that?
Joel Hughes (19:14):
Yeah, so first I'd say structurally inside the company, we launched what we call Rightworks Labs. So Labs team, which was basically the innovation guys and gals who come up with really cool stuff fast that the core engineering, product delivery infrastructure have got their long-term roadmaps, which are critical, but where can we innovate? Where can we try new things? And one of the things that the Labs team that was dealt this thing called Spark ai, as soon as AI came out, obviously we were playing with stuff and they said, Hey, let's try to make a safe for accountants and accounting firms use case and make a tool that's viable right now. So instead of building it into all these pieces of software, our view here is always, wait a minute, we're going to be able to platform, so it's going to have QuickBooks and it's going to have alter tax and it's going to have 50 other applications in it.
Joel Hughes (20:05):
So if we want to do ai, we need to do that kind of across all this stuff. We really, there's AI in QuickBooks and AI in Alter tax and ai that's helpful, but you're still in and out of these different applications not getting the visibility. Our team integrated to multiple LLMs and just started building this AI thing, which we made free and it's still free to the market. So go to ai dot Rightworks.com I think to sign up for Spark. And we think it's super helpful. It segregates data, it makes it safe for use. You can put client data and it's not even shared with lms. And I think that's just our approach generally here. And this idea of community is looking ahead with the community, what's coming, what's disruptive. And we feel like part of our job is testing into that and then trying to make practical things, tools that our customers can use and then make 'em safe to use and certainly train them and make them comfortable that they will be able to use those and adopt those, right?
Joel Hughes (21:00):
Because adoption is part of this stuff. It's not necessarily even I'm worried about technology, it's I'm busy doing other this stuff, so is this going to be worth my time to cross train or go do the trainings or do the CPE to learn the stuff? And I think we have a decent sized team that's just doing that, right, publishing things. We've got our big right now conference coming up in Nashville next month, which is going to be fun. We're going to be doing a lot of that stuff. So it's like what's coming at the industry and the profession? Here's what we're doing, AtWork to try to tease apart a bunch of this stuff. And AI obviously was a huge version of that. And we continue to have our Spark AI separately available and we're also building it into our core of OneSpace platform.
Matt Tait (21:41):
I love the idea and that mission towards community and now that technology is changing and the industry I think is changing so much, so fast, I think we're going to see a condensed version of 20 years in five just with how much things are changing with ai, with outsourcing globalization of workforce with an aging workforce in the US with less accountants joining. There's just a multitude of variables that are hitting the industry all at the same time. You guys have additionally really looked at creating an actual community that works together and talks together and it's come out of that Labs that you spoke on and you guys have iterated your way through it. Talk about how impactful that is and how important that is to your go forward as you've continued to try to figure out the best way to get people communicating as a community and working together as well.
Joel Hughes (22:42):
So, the first realization that for me, again, being from outside the profession originally was wow, how do we build the right combination of core understanding and empathy for our customers needs and yet bring new technology and scale that. So we have a combination of people who who've been in accounting tax forever and people who are technologists and people who are marketers from different places. So how do you keep building that magic sauce? I think we acquired Rootworks probably what, five years ago or something, which Darren Root was one of these. He ran a firm, he wrote a couple books. Darren is awesome. He loves listening to Darren because he can tell the stories and he knows do this thing to be successful. And I recognized that was important for us. How can we keep telling the story and educating people? I think as we moved forward the last four or five years we've recognized, wow, the peer interaction is as valuable as just the sort of talking head kind of stuff as well.
Joel Hughes (23:40):
So how do we scale right from having a thousand people being impacted to having 10,000 firms being impacted by what we're doing in community. And it's really, so we're moving in. Our Labs team has moved us forward from what was Rootworks and what we call Academy and now what's becoming community for us and looking at best practices and other communities and other professions and industries. It's really getting a broader set of thought leaders who are active in the profession onto a platform, sharing their ideas and of course having real firms and practitioners sharing their best practices and their knowledge, trying to go from one to many to we're all in the same community interacting. And you certainly think subreddit down to the people who want to talk about how do you use alter tax better or whatever it's going to be. And I think we'll be rolling out a bunch of really new interesting stuff in that area because it's complimentary and critical to our platform. So how do you use it? What's the point? What are people have a success with? And ideally we can impact the whole profession in a profound way.
Matt Tait (24:42):
Well, that's really cool. One of the things that I'm really interested in, and I've really loved to be, I've loved being a part of the community and I think it's been cool to watch it evolve and I think this is going to be a fun year for it too. But one of the things that I'm interested in is you as a business person, you now have the opportunity to get exposure to lots of different businesses and firms and you get to see a multitude of all sizes of all shapes of everything. And you spoke earlier about that evolutionary point in the industry where we're going from all on-premises to eventually it'll be all cloud and like you said, and I agree, there's going to be a really long middle ground where it's some form and function of both, and that's where we are right now. But as you've looked at that evolution as you've looked at all of these firms, what are some of the things that stand out to you as identifiers of really good successful firms versus some things that you think are troublesome and create problems down the road?
Joel Hughes (25:47):
Yeah, I think it's probably oftentimes we think about specific tools or applications or if you use this, you'll have more success. I think that I feel like probably you and many others who are these modern firm successful leaders are recognizing it's primarily I think around standardization and repeatability of a process. So whatever tool set you have, I think we might argue, hey, it's easier to use modern tools and maybe use cloud-based things and this to use some things from the past. But fundamentally it's really knowing the process you want to run for the customers you've identified as your ideal customers. So we often are talking a lot about more, not the exactly what applications, what's your tech stack per se. We can support any tech stacks on our platform. It's like how are you going to use it and how are we going to really train onboard your staff to use it to be more productive, independent of your tech stack?
Joel Hughes (26:49):
So I think sometimes you get stuck in a little bit of the features and the new is better than the old, which in general is true. Change is change and it's really are you changing so that you can improve your process and measuring that ultimately, I think a lot of people talk about the internal, how long does it take us to produce a tax return or close the books or it's a lot of internal resource management. To your point, we're thinking about lack of people in the industry coming in, maybe outsourcing it. A lot of that moved away from maybe charging per hour, but we're still measuring things per hour. How long does it take? And ultimately it's like, well, what's your client's view of that? So you try and get that client view in. So if the client poorly you're going to put in place is great for you because you think it looks great on the backend, it's easy for you to use, but your clients hate it, it's a mistake.
Joel Hughes (27:39):
So there are a couple of things to me there. It's like, yeah, don't focus. Only the people that are particularly successful are thinking about are we building a process that gives a great client experience that ideally makes us more productive? But it's like the productivity enhancements in and of themselves probably aren't going to make you successful. It might reduce your time to produce by 12%, but you really should be thinking about in the longer term your clients and how you can I think, satisfy 'em, of course retain them and then offer additional services down the road. So I think that's probably it. Don't focus too much on tools and functionality, think more about client experience backwards in and then look at the productivity or renewal.
Matt Tait (28:20):
Well, one of the things I think is important too, and you danced around this a little bit, is breaking things apart a little bit for us. And I'll give an example. At Decimal, we break apart doing of the work from the client experience, which allows us to optimize processes around doing the work, which saves us time and money. And then we're able to apply some of those savings to the client experience because we don't have the same resources doing the same things. And so we're able to determine resource allocation by creating good processes and tools are a part of that, but it's really the world's greatest tool that nobody uses is worthless. The world's okay tool that's better than the bad tool that everybody uses is much, much, much better. And that's the key thing. And I'm interested too, you talked about firms and kind of these bigger implementations.
Matt Tait (29:16):
One of the things that I keep seeing with firms today is a real problem implementing new technology with Decimal. Last year we implemented a new workflow management system, we put keeper in place and it's been great. We built a plan ahead of time, we implemented it in three months and we've since been tweaking and adapting it. But that implementation period was very well planned out. It was very well resourced and it was done very quickly versus I've talked to firms that are doing similar things and they're taking 18, 24, 36 months. Talk about how you've seen that play out for the good and bad
Joel Hughes (29:59):
As you've talked to firms. Well, there are a bunch of things in there. I think Matt, to your point like expectation setting and does whoever let's say is leading or proposing to lead the change at the firm? Are they setting expectations internally with their partners correctly about firstly what are their real objectives and then their solutions suggestions to get to that objective? So part of that's just all of that, like the solution architecting and what are you trying to get? If you're trying to get productivity gains of X percent, can we project that's going to work and really feel good about that? Great. Let's say we get there. Then you've got a lot of implementation training, onboarding and really looking at usage. If you don't get the staff using the new tool set with the process, you don't get there. And that's really probably the hard, of course the human element of that, which is the change management is always a really big deal.
Joel Hughes (30:52):
So for us, we can't sort of magically make that all happen. I think we really think about how do we make that champion who is suggesting the change inside the firm and is going to be the person who's the project or the program manager for that, how do we make them incredibly successful? Because really if they're not, then we're not and it won't last. We've seen plenty on the downside. We've seen people try to do something for a year and then decide to undo it, and it's a career killer for people. So it really needs to be, I think from a firm standpoint, again, going back to this idea of recommendations and referrals, talking to people who've done the same thing or something very similar, what do they learn? Pluses and minuses. And I think that onboarding program management training to get to success. And for us, once we've onboarded a new firm, it goes live.
Joel Hughes (31:44):
But then we really look at our people logging in, doing what they're supposed to be doing the new way just to try to give feedback too. So we can arm the champion inside the firm on, Hey, you know what we did, it happened. And it's not just like we collapsed over the finish line, now we have people using this stuff. And ideally it was follow through. I'm trying to justify and document the gains or the objectives being achieved that they started out with. And I think there can be people at firms who want to undermine that. There can be internal things going on inside the partnerships. There's all kinds of stuff. People are people and businesses are businesses and small businesses with partnerships sometimes are super challenging, makes for a lot of great stories and a lot of super interesting people. But the biggest thing I would say is it really is expectation setting.
Joel Hughes (32:31):
What are your objectives? Can we help you achieve those? And then to do that, it's going to take both of us to make this work. And we want to make sure your person who's driving this is going to be successful, but it's going to take this long and we're going to need you guys to do these tasks and we're to do our tasks and we're going to measure the fact that we're up and running when it's done. And it can be a big lift. It can be a big lift. And I think, and that could be incredibly transformative. And I think to your initial point, I do think that more firms are recognizing that their need to modernize, standardize and build better flows and have better client experiences is a competitive challenge slash problem. They do need to move forward and sometimes they certainly need help.
Matt Tait (33:17):
Yeah, it's interesting because I've worked with a lot of firms, even worked inside one at one point and there can a lot of times be a difference between seeing the need and being able to actually execute on it. And that becomes the harder mentality to overcome.
Joel Hughes (33:36):
And I think it's interesting talking about the community and the general. I do think the professions likes to, most of our discussions seem to be the list of problems, the lack of people ongoing, more regulation, whatever it's going to be AI coming. And it's often a bit of a list of hurdles that seem, when you keep talking about 'em, seem more, you can't overcome those things. We're trying to, some of that's true, but we're trying to just, I think getting to the next click of what can you practically do? What can you do to move forward that's not going to upset everybody's apple car to change everybody's workflow and require retraining of everything and can you make incremental progress? It doesn't have to be some gigantic metamorphosis, right from ancient firm to modern firm that disruptive to everyone. And I think trying to be super practical and incremental improvements can also be a very effective way to get from A to Z. You say, Hey, a year from now we want to be somewhere. We can do that in three steps. For example, instead of saying we have to do it all and switch over weekend and have everybody come in on Monday and we're up and running with everything's new, that's incredibly daunting and risk.
Matt Tait (34:47):
Oh, I mean I think what you're getting to is that change management is really important in all of this. It's something that I struggle with as a leader because I would like to change everything immediately and do it so often and I'm really glad that I have a leadership team that slows me down and anchors me in reality sometimes. But the reality of all of this is just making incremental changes is just fine as long as you're building a plan and you also need to understand the capability and capacity of your team to change and have that empathy around the whole situation that's going on to figure out what can we do and what is right to do. And really also sometimes I think where people struggle is they think only halfway. They don't think to what's my ideal end state and then build towards that. They think of I need to make some changes. And so they make some changes, but they're not doing it with that full. What is the end state really look like? I don't know if you ever see that too.
Joel Hughes (35:49):
Very good point. No, I think having, and that's where how do you get the team on board? How do you get staffers pulling on the rope instead of you pushing on it, which is them saying, oh, we can be here in a year or two years. Here's our long-term roadmap, so we're going to have some steps of change between here and there, but we're all in agreement on where we're going. So here's a step on the path. Versus just saying without that view, with that north star, it's kind of like, well, where are we going? Why are we going to go do this thing next quarter that's just going to be, I don't get it. Are we going to do something every quarter? I don't want to do that. So you just have this, how do you get people onboard and pulling instead of you pushing? And I think that we're back to building teams, building companies, it's shared future vision, which is a thing that aligns people and allows them to all be on the team. You're on the same side of the table now and you're saying, Hey, let's move forward together.
Matt Tait (36:43):
So that actually, you've created a very good transition point for me. We've talked about people and processes and all of that stuff, and I want to circle back on the people side of being successful because one of the things that I've noticed from watching you over the years is you have multiple people that are now at Rightworks that have worked for you or with you in previous jobs, and that means you've done something very right in terms of being a leader and painting that vision. Talk about how important that's been to do that, how hopeful it's been to you to have that and why it's important for other people to figure out how to create that buy-in and that team. Because ultimately it doesn't matter what we do in process and technology and whatnot, if we can't convince people to do it and have the right people in the right seats, it's all going to totally fail.
Joel Hughes (37:36):
Right. Right.
Matt Tait (37:37):
We're not all robots yet, so hopefully not in my lifetime, I'll prepare my kids for it, but I'm.
Joel Hughes (37:44):
Correct, correct. Really good question. I'd say this goes a little bit too a theme we talked about too before, which is like in this now let's say profession and this vertical, for me, it's having people that have incredible deep expertise in the vertical who have run accounting firms and have worked in these soccer companies and other people who helped scale businesses. So we're building a great sort of synergy between scaling a business and doing that for a specific vertical. For me, finding people that look, many companies are pretty screwed up and you've worked at a bunch, right? For those of who've worked at many companies, some are really problematic, some are okay, and some you really like to work there again, and there're not as many in the final category. So creating and part of that's about the right place for the right person. I'm not saying we created the world's greatest company, but we created a company that I think is similar to, I've tried to create something that's the best attributes of places I've worked and I've drawn inspiration from and therefore pulling people who I've worked with before into that who I know are aligned with that view of what kind of company they want to work for, what they can contribute that allows for higher velocity of change.
Joel Hughes (39:03):
It's more people pulling the same rope, it's going, I bring some people in here who know a drill and oh, that's going to help us accelerate our growth and our maturation as a company. I think to your point, it means that if you're painting a vision of the future, it's generally easier to get people who've already known you to buy into that you've already got a established, trusted relationship. They've said, Hey, you know what, I've had some success, right? I've worked with Joel before and therefore I'd love to work with him again. And those things are incredibly valuable to any person as you move through your career. And I would suggest networking your way along the path with people who are like-minded. You never know what's going to come down the road. That's been something that's definitely paid off for me over time. And those are seeds you plant along for me, a multi-decade career that are probably flowering now for me on many of which that weren't obvious before. And I'd say people who want and need a shared vision and buy into yours if you're a leader, are going to help you the most, right? And you're going to be happy and productive working together because you share that. And people's need to have that shared vision is one of the critical things for me. They want that, right? So what is it? And they want to help shape that as well as execute.
Matt Tait (40:26):
One of the things I find interesting, and this may apply to you or it may not, I'm an introvert, I can flip a switch and become an extrovert, but in general, I'm an introvert, and yet I find more than anything joy out of being a part of a team all rowing to the same direction. So the introvert in me really craves and loves that.
Joel Hughes (40:50):
I agree. I certainly love some alone time, so I need some of that, I'd say to recharge batteries, but there's nothing better than being part of a team and sharing success on a team, which to me is whatever, building something, delivering something, solving a customer problem, whatever that is. And then reviewing that, looking back on that, enjoying the success you created together is the best feeling, right? And in building a company there, as you know, puts and takes in that some days you feel like you're making progress, someday you maybe you feel like you're going backwards, you get punched in the mouth here and there, but over the long term you can look back and say, Hey, we're building something of value. People want to be part of it. It's incredibly satisfying, but yet little team wins. We've got a sales team in here today. After this, I'm going to jump out and be spending an hour with them. And it's like, that's going to be super fun. It's just what are we doing? What are our top priorities? Where are we going? And people that are hungry for that and looking for that, it's like, yeah, that's my job. And I get a lot of juice from that, even though it's like me putting myself out there, but I know where we're going. I know it's what they want, so it'll be a win.
Matt Tait (41:58):
Oh, that's awesome. I often find that those, I kind of get amped up right beforehand and if they go well, and if it's a good one of those, I'm amped up after, but then at some point I also crash a little bit too. Exactly.
Joel Hughes (42:12):
Yep.
Matt Tait (42:12):
The adrenaline wears off.
Joel Hughes (42:14):
I'm sort of famous for the plane ride home from somewhere. We'd do something, we go somewhere, we're at a show, we went to the airport on the way home and I'm like, I'm not talking to anybody. I just showed now I'm like, you might be sitting next to me on the airplane. I'm like, I'm not doing it. We've been together four days. We had a great time. I did late night drinks. I'm out now. I'm flipping the switch, I'm recharging.
Matt Tait (42:36):
You're a better person than me. I specifically will not book seats next to anybody on the flight home.
Joel Hughes (42:42):
I won't do it on purpose.
Matt Tait (42:44):
Yeah, I'm the same way. I'm like, as soon as we get to that airport, I am, I'm done. I'll usually have a book or a magazine. It's nice to have that flight home too because it means that if I don't, I'll have a big board meeting next week and inevitably my wife is going to take the kids out to dinner because I'm just going to be mentally drained afterwards and I could be there, but even if I'm trying to participate, my brain is off. It's shut down. So Joel, I really appreciate the time. I'm interested. You mentioned earlier that you guys have your big conference coming up next month and a question, what's new with Rightworks? Where are you guys going over the next year or two? What's important going on?
Joel Hughes (43:27):
Yeah, so yeah, we're going to be doing our, it's our second annual right now conference. We started it last year just saying, Hey, we think there should be a profession wide multi-vendor ecosystem view of what's happening. So we'll be talking about talent shortage and cybersecurity challenges and ai, the typical topics, and trying to go hopefully deeper on those things. And we'll be announcing what are we doing about it as we're trying to stay ahead of the curve for our customers and for the profession. So we'll be talking about our update of OneSpace platform and some new packages there that are basically the place to log in and run your accounting firm, right? OneSpace, we think supports all the applications people need, and critically now is delivering incredible security on all your end points, allow you to have remote workers. So we continue to evolve at OneSpace, we'll be announcing a bunch of new features that will be really cool and we'll be talking a lot more about the community. So we're launching a new platform that we're already, I think we've got a few hundred people on that thing already. We're going to be adding people rapidly there to really meet each other, a much broader set of thought leaders who are impacting the industry and have a lot of great stuff to share in order for people to learn and share and hopefully build better firms as they go along. So think one space, think community, and right now, 2025 could be a lot of fun in Nashville.
Matt Tait (44:51):
Great city, great time. Well, I think that sounds awesome and it's been really cool getting to talk to you today and I really appreciate the time and just the honest answers. Joel, thanks for joining us today. Matt, a pleasure to be with you. Thanks. Alright. As you all know, growth doesn't stop at the first milestone or even the first million. It's about what comes next. Build your firm as if you've already passed the first million and are going to keep going. In every episode, I'm going to pull out the key lessons that I learned that can help you grow after that first million and to have that after the first million mindset. So here's what stood out to me from my conversation with Joel Hughes, CEO of Rightworks first. Scaling requires shifting from doing everything yourself to building a strong team and strong teams.
Matt Tait (45:44):
Second, building a culture starts with your first hires. So let's unpack these a little bit. First, scaling requires shifting from doing everything yourself to building a great team. This is that mindset I've talked about and we've heard other guests talk about in the past of don't start a firm to do a job, start a firm to run a company. Think of yourself as a CEO. Joel highlights that growing past that first million means empowering your team to take on more responsibility, give them more, trust them more, drive success through collaboration, not through you doing everything or micromanaging everything. Second, developing systems and processes is key. It is so important to establish that the systems and the processes as a foundation for scaling Joel's experience in particular shows how critical it is to build a team that can manage increased client loads. So as we look at scaling comes from systems and it requires you to empower your team.
Matt Tait (46:52):
That's where culture comes in. And this is Joel's second point that I think we can learn from is that culture starts with your very first hires. You are your first hire, but the second one is tougher. So you have to think, how do I hire people that are going to build and empower the culture that I want our company or our firm to embody and I think are important? Joel made a really good point about how the first hires that you make will shift the culture of your team. And so it's really important. It's vital to think through and choose the people who align to your values and your work ethic. Too many times I see first time entrepreneurs and first time firm just hire the person they think will do the job well, and that certainly is important, but taking the next step and making sure that that person can anchor your culture is also so important as your firm grows.
Matt Tait (47:43):
It was really cool to hear how Joel stress the importance of maintaining that culture by reinforcing it with each new hire, and that's what keeps your team productive, engaged and empowered. Scaling involves all of that. So third and finally, Joel talked about how focusing on creating value through deep vertical expertise, and I think this is a huge point because so many accountants, so many firms go broad when they start. One of the key turning points in him running Rightworks and that has led to the success and growth that they have had was his decision to specialize in accounting and tax rather than going out and trying to be everything for everybody. That specialization has allowed Rightworks to understand client pain points. Deeply, accounting firm owners, bookkeeping firm owners can take a page from that playbook developing really good expertise, really good vertical specific knowledge for yourself and your team will really help you to understand the pain and then solve it.
Matt Tait (48:51):
And solving pain is actually what we do By continuing to improve services and products, companies and accounting firms can focus on one vertical and make your firm indispensable to clients, and that's what ultimately leads to aligned incentives, to great economics, to great lifetime clients. As we look at all of this, as we look at Joel's episode, you can really hear how firms are shifting from offering basic services to becoming critical partners in their client's operation. That shift to advising to helping businesses to be that key person and advisor is so important to where our industry is today and where it's going with all the shifts in technology and outsourcing and ai. My main takeaway from the conversation with Joel in the accounting world, we need to do something that's hard for us, and that means we need to embrace change, stay focused, and be ready to continually adapt to an evolving landscape. Thank you. Thanks so much for listening. After the First Million is presented by Decimal, to listen to more episodes and find tips to help make running a business easier, visit decimal.com/afm. Want to join the conversation, reach out to me on LinkedIn and let's explore a messy middle.