The Accounting Podcast

Gusto’s Will Lopez joins us to give his take on the continuing MyPayrollHR fraud saga. This week, Cachet gets hit with multiple class-action suits; Michael Mann, CEO of MyPayrollHR, lawyers up with a defense attorney specializing in white-collar crime, and New York politicians, inspired by this scandal, want tighter payroll-industry regulation. In other news, point-of-sale companies are tracking your tipping habits, why the founder of WeWork’s personality helped the company’s rise, but might also cause its fall, and we examine the number-one factor accounting firms need to consider when selling the firm. We’ll also look at big money - Practice Ignition’s $26 million raise, and Stripe’s $35 billion valuation - and even more of the latest accounting and bookkeeping news.

Show Notes

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Show Notes

  • 01:46 – Reminiscing with Will  
  • 03:03 – Will talks about life after YouTube and living life with Gusto!  
  • 04:12 – It's time for reviews!  
  • 06:37 – MyPayrollHR 101 - The nutshell version 
  • 07:31 – Catch up on our recent coverage in episodes 112 and 114 
  • 07:55 – Mum's the word, Mann | Albany Business Review 
  • 08:34 – It's always important to be proactive, especially AFTER committing fraud ...  
  • 09:03 – The fallout begins ... Two class action suits filed against Cachet | Albany Business Review
  • 12:12 – The misgivings of MyPayrollHR may shine a bad light on the accountants and bookkeepers who recommended the company to their own clients 
  • 14:05 – Will explains how Gusto protects itself from payroll tampering
  • 16:21 – According to Will, a payroll provider's level of transparency dictates the level (if any) of notifications whenever something changes in the system.  
  • 19:01 – Is this call for regulation of the payroll industry going to put a damper on innovation? | New York Post  
  • 22:01 – The MyPayrollHR debacle has exposed just how risky the ACH system really is  
  • 24:02 – WeWork - how something so right is going so wrong | Wall Street Journal  
  • 25:04 – A few flaws surfaced when WeWork went under the microscope   
  • 28:15 – WeWork's weak Wi-Fi woes | CNET
  • 29:14 – Data security at WeWork isn't free. It'll cost you between $95 to $195 a month to keep your internet stuff to yourself!   
  • 30:35 – Guy Pearson’s Practice Ignition revs up with a $15 million raise and Stripe scores BIG with a $250 million round | TechCrunch  
  • 35:48 – Straight from Will's mouth - The Cloud Accounting Podcast - all the accounting and bookkeeping news you need to know!   
  • 38:53 – Stingy with your tips? POS terminals are tracking your tipping habits | NYT 
  • 41:46 – According to Toast's 2019 stats, tipping is not practiced by the majority of patrons at cafes, and fast casual restaurants  
  • 45:42 – Ride-share customers tip significantly less than their dining counterparts 
  • 47:40 – Can your firm's client-retention rate make or break selling the firm? | The Canadian Accountant  
  • 49:00 – Jump over to Episode 110 to learn more key factors for successfully selling your accounting or bookkeeping firm 
  • 49:35 – How small, rural firms possibly compete in the cloud accounting universe without reliable high-speed internet? | LinkedIn 
  • 50:22 – It'll be another decade before the FCC implements the fourth wave of broadband internet to some 36,000 'unserved' homes and businesses across 16 states | Business News Daily 

Connect with Will

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Thanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus. 

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Creators & Guests

Host
Blake Oliver
Founder and CEO of Earmark CPE
Host
David Leary
President and Founder, Sombrero Apps Company

What is The Accounting Podcast?

The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.

Will Lopez: I remember when I first read just the announcement that something like this happened. I was thinking to myself, I'm like, just as an accounting professional, I know firsthand how difficult it is on clients when a resource that you're using for a client or the client, themselves, are using doesn't perform as hoped. When I read this, I thought to myself, man, that brings that experience to just a whole new level. Not only did it not perform as hoped, but it aggressively accentuated an experience that no [00:00:30] one desires.

This episode of The Cloud Accounting Podcast is sponsored by BQE Core. If you have niche clients that are architects, engineers, consultants, or lawyers, BQE Core is the app for them to best manage their firm, increase their staff productivity, and ultimately increase their profits. Even if you don't have those niche clients, Core is a great tool to use in your own accounting or bookkeeping firm, as well. Core is an easy-to-use, all-in-one platform for project management, but includes advanced functionality, like budgets, labor costs, forecasting, contract analysis, and approval processes.

Core also includes a standalone accounting module. Even though Core is an all-in-one platform, it still works nicely with other apps, offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app and recently launched a cutting-edge voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E.

Blake Oliver: Welcome [00:01:30] to the Cloud Accounting Podcast. I'm Blake Oliver.

David Leary: I'm David Leary-

Will Lopez: And I'm Will Lopez of Gusto.

Blake Oliver: So, Will, when did that happen? We've known each other for quite a long time. I think I met you at one of the first conferences I ever went to. I think it was the old-

Will Lopez: Yeah, I think so.

Blake Oliver: -maybe SleeterCon, back in the day.

David Leary: I barely just met him at the last Accounting Salon. It was the first time ever.

Will Lopez: Yeah, [00:02:00] I think that was SleeterCon's last conference in Las Vegas, and that's where we officially met.

Blake Oliver: We met. We bonded there. That was when you had your own firm in Florida called AdvisorFi, which I very much admired. You were doing that for quite a long time. Now, you have moved to Denver and ... What are you doing with Gusto?

David Leary: Wait, wait, wait, you skipped the whole YouTube channel he had.

Blake Oliver: Well, yeah, that was quite ... You [00:02:30] were creating all these great videos for business owners, accountants, taking the crazy, elaborately produced YouTube video concept and applying that to our profession. I think you were [cross talk]

Will Lopez: Yeah, it was an extreme hodgepodge of personas oozing out of my channel.

Blake Oliver: It's still there, right? So, if people wanna go check it out, you've got that AdvisorFi YouTube channel there; but you're no longer a YouTube star, or maybe you're gonna keep doing that, but you sold your firm-

Will Lopez: Right.

Blake Oliver: -and now [00:03:00] you are ... What are you doing with Gusto?

David Leary: Relocated, as well, right? You moved?

Will Lopez: Yeah. I relocated from south Florida. Born and raised in south Florida, by the way, so relocating anywhere is going to be my first-time experience, because I was born down in Hollywood, raised in the south Florida area; with college there; got married there; had my family there - all life there. Recently took a leadership position with Gusto to help them lead the accountant community side to Gusto. No regrets whatsoever. Absolutely love [00:03:30] Gusto. Gusto was one of the few companies I thought to myself that if I ever had an opportunity to work with one of these pretty amazing fintech apps, I think Gusto would be it. I'd love to say it's one of those once-in-a-lifetime opportunities, if any, in a lifetime, so, yeah, I just couldn't pass it up.

Blake Oliver: Awesome. Well, we're very lucky to have you on, given the ongoing drama with payroll and fraud. I'll look forward to getting your take on that.

Will Lopez: Oh, yeah.

Blake Oliver: We've got [00:04:00] some other stories, of course. I want to assure our listeners, even though the last two episodes have been very focused on MyPayrollHR, we're gonna have more than that in this episode. We're gonna not dwell on that too much. But first, we have some reviews, right, David?

David Leary: Yeah, we'll jump right in. This review is five stars. It's from Melissa Wasgatt. "Amazing podcast! I listen through Spotify while I work. Excellent full coverage of everything accounting! Thank you so much!"

Blake Oliver: David Schingler said - five stars - "I currently work at ADP in the small business market and partnering with CPAs is the sole role I have here, so keeping up to date on the newest information and trends is key for being a valuable asset to the firms I work with. I love listening to Cloud Accounting to keep me updated on the industry, growth for firms, and anything I can obtain knowledge wise to best partner with the CPAs I work with. Their podcast makes it easy to listen to and is extremely informative, especially for someone who does not deal with the "ins & outs" that many CPAs deal with on a day-to-day basis. I highly recommend this to all accounting practices and anyone curious about the updates/trends within the CPA world!" Thanks, David. [00:05:00]

David Leary: This is five stars from Trevor McCandless (trevormccandless) - "Great podcast. Blake and David live accounting industry news and updates and share their insights in a way that I do not hear or read anywhere else. Keep up the good work!"

Blake Oliver: Awesome. Thanks so much! Finally, "The single best source for digestible news in the accounting world. As a partner advisor at Gusto, I speak with dozens of accounting and bookkeeping professionals from around the country weekly who are all asking how I’m keeping up with the latest tech and changes in the industry. The number one resource I recommend outside of the Gusto Partners Blog is the Cloud Accounting Podcast. I listen weekly and am able to often times bring up relevant news and happenings with my partners to ensure they’re maximizing their profits and offerings to their clients. The recent episode on the MyPayrollHR scandal was the best source of information I was able to find on the tragic situation because Blake and David put in the time research to provide us with a clear explanation on the situation as we know it. Thanks for keeping me and our partners a Gusto up to date!" Matt [00:05:30] Woodson.

Thank you, Matt. Thank you, Trevor, David, [00:06:00] and Melissa, for your reviews this week. A reminder to our listeners, if you wanna write a review, you can head over to our page on Apple Podcasts or on Podchaser.com, as David said, and leave us a review, and we will read it on the air.

David Leary: It's like a free commercial, right? ADP got a free commercial; Gusto got a free commercial. So, Paychex, or any of you other payroll providers that are out there, go write us a review.

Blake Oliver: Yeah.

David Leary: Love to read it on the air.

Will Lopez: Well, you know The Cloud Accounting Podcast is part of our toolkit over here. That's how we stay up to date, right?

Blake Oliver: That's [00:06:30] awesome. That's great to hear.

David Leary: It's in the new hire manual?

Will Lopez: Yeah, it should be. It should be, officially ...

Blake Oliver: Let's get on that-

David Leary: Get on the news, yeah ...

Blake Oliver: So, yeah, we've got lots to talk about. Some updates on MyPayrollHR, and for those who are not familiar, we're talking about the $35 million payroll fraud. A small payroll processor in New York, at the beginning of this month, shortly after Labor Day, just up and shut down, went out of business, disappeared, leaving 4,000 employers, as [00:07:00] many as a quarter-million employees in the lurch. For some of them, their payroll didn't process, and, in fact, they ended up having negative account balances, because of a whole mess that occurred with the payment processor, Cachet. We've got an in-depth interview with the chief legal counsel for Cachet Financial Services. That was our most recent episode. Check that out for a full, almost like True Crime episode about what happened [00:07:30] with this fraud.

David Leary: You wanna listen to episode 112 and then episode 114. Episode 114 is the interview.

Blake Oliver: We're not gonna go back into the whole thing of what happened. Let's just talk about the latest updates, David.

David Leary: So, since the last two days, there's a news article that Michael Mann has hired an attorney, and there was even a-

Blake Oliver: So, he's alive!

David Leary: He's alive.

Blake Oliver: He exists. Okay ...

David Leary: The attorney made a statement. Where did we-

Blake Oliver: This is Michael Koenig now representing Michael Mann, the owner of the now [00:08:00] closed MyPayrollHR, and the parent company, Valuewise Corp.

David Leary: He's the guy who's been missing along with the money. I'll read the quote here, "Almost two weeks ago, through me, Michael Mann contacted the U.S. Attorney's office. Michael has since voluntarily and proactively met with and is cooperating with the U.S. Attorney's office in order to fully and accurately address recent events. He will continue to do so but will not be making any public statements."

Blake Oliver: So, he's cooperating ... We still don't know if he's in the country, but [00:08:30] we know he's got an attorney and is cooperating with the U.S. Attorney's office.

David Leary: Yeah, and he went on to reiterate that, "We affirmatively reached out to the U.S. Attorney's office before any law enforcement or regulatory agent came to him."

Blake Oliver: So that must've been then before the raid on his home that was, what? A few days ago, right?

David Leary: Yeah, or before Governor Cuomo announced that he's launching an investigation, et cetera, et cetera. Either A) it was guilt, right? Like, "Oh, I made a big mistake. I shouldn't have done this," or, like [00:09:00] I said before, is he compromised? I don't know.

Blake Oliver: Another story - breaking news - two class action lawsuits have been filed against Cachet Financial Services, the third-party processor that handled payroll direct deposits for MyPayrollHR. A Los Angeles-based law firm filed a complaint on Thursday against Cachet in the U.S. District Court for the Central District of California, where Cachet is headquartered. Then another firm, a Las Vegas-based firm filed in Nevada against Cachet, and also named MyPayrollHR in that lawsuit. [00:09:30]

I think they're representing the employees, as a class, who reported having their direct deposits pulled back from their accounts when the money was missing from the settlement account. Cachet, really ... They bungled that. I think we can we can all agree - that's not a complicated analysis - that causing the payrolls to go twice was a bit of a problem, and it caused some major issues for some of these employees. People couldn't pay rent; they couldn't buy medication. Big problem. So, there may be more consequences to this, [00:10:00] to Cachet, and possibly the banks, too, than MyPayrollHR, than just the missing money.

David Leary: I get it, right? If Cachet was able to possibly eat $26 million, the lawyers are probably like, "Hey, what's another $5 million to sue them for?" Nobody's gonna be able to sue MyPayrollHR, because it's pretty clear that money's gone. Nobody has that money.

Blake Oliver: Well, but there is a frozen account with $19 million in it, at-

Will Lopez: Yeah, I was going to say, is it really gone?

Blake Oliver: Yeah-

Will Lopez: Because I read the same thing.

Blake Oliver: It may take a long [00:10:30] time to figure out where it went, I guess. We still, of course, don't know what Michael Mann intended to do with the money. Speculation, if he hasn't fled the country with it, then maybe he was just trying to keep other businesses afloat by moving money around? It's very strange. We'll find out ... I'm really happy that we have Will on, because Will - being at Gusto as a connection to the accounting community - I wanna learn from you, what is the insight [00:11:00] from somebody inside a payroll company, watching this happen? What is your takeaway from this? Then I've got some more follow-up questions as to how do you ensure, at Gusto, that this doesn't happen?

Will Lopez: Yeah, I remember when I first read just the announcement that something like this happened. I was thinking to myself, I'm like, just as an accounting professional, I know firsthand how difficult it is on clients when a resource that you're using for a client or the client, themselves, are using doesn't perform as hoped. Public accounting is riddled with those kind of experiences, where some things work, some things don't, just in a very broad way. When I read this, I thought to myself, man, that brings that experience to just a whole new level. Not only did it not perform as hoped, but it aggressively accentuated an experience that no one desires.

This episode of The Cloud Accounting Podcast is sponsored by BQE Core. If you have niche clients that are architects, engineers, consultants, or lawyers, BQE Core is the app for them to best manage their firm, increase their staff productivity, and ultimately increase their profits. Even if you don't have those niche clients, Core is a great tool to use in your own accounting or bookkeeping firm, as well. Core is an easy-to-use all-in-one platform for project management, but includes advanced functionality like budgets, labor costs, forecasting, contract analysis, and approval processes.

Core also includes a standalone accounting module. Even though Core is an all-in-one platform, it still works nicely with other apps, offering you and your clients the maximum amount of flexibility. Core offers a full-function mobile app and recently launched a cutting-edge voice-based assistant for your smart speaker of choice. To learn even more about BQE Core, head over to CloudAccountingPodcast.promo/core. That is Cloud Accounting Podcast dot promo forward slash C-O-R-E.

Blake Oliver: We've [00:11:30] been talking a lot [00:12:00] about the employers, the employees, but what about those accountants and bookkeepers who recommended MyPayrollHR to their clients who partnered with them? It looks like they don't know what they're doing.

Will Lopez: Yeah, or it pins them in a light where they made a bad recommendation.

Blake Oliver: Yeah.

Will Lopez: Or, even look at the accounting professional - what processes do you have to make sure that the resources that you're recommending are good resources or resources that have longevity to it? Obviously, [00:12:30] at Gusto, one of our pillars, or our mission here is obviously to create [inaudible] work empowers a better life. Something this does not empower a better life. So, no doubt, it's a sad day in the land of accounting and business. One of the pillars associated- our mission is peace of mind. There's very little peace of mind going on here for those who are affected by the MyPayrollHR situation.

Blake Oliver: The way this happened, as it was explained to us by Wendy Slavkin at Cachet, is that somebody [00:13:00] at MyPayrollHR messed with the payment file, or the batch file that was sent to Cachet, instructing them on how to move money around. Basically, an account number got changed in a file. Is that something that is an industry standard practice, where it's possible that any payroll service could be the victim of this? The other one was, as well. There were two, actually. NatPay was also a victim of MyPayrollHR. How does it work at Gusto? Do you guys partner with a payment processor? What's [00:13:30] the workflow for you? Is it the same? Is it different?

David Leary: Yeah, because I think - to elaborate on that - that's what goes off in my head is you have ... Somebody like Gusto, or a modern SaaS application is all based on APIs; making API calls to QuickBooks; making API calls to Xero, et cetera. There's error controls in all that, but the ACH system sounds like it's still just a text file. How does Gusto bridge that world of, on the front end, on one end, we're this high-tech SaaS company; on the back end, we're still dealing with technology that was designed, and procedures [00:14:00] from 1975.

Blake Oliver: Why should accountants trust Gusto?

Will Lopez: Yeah, no, great question. Obviously, Gusto has dedicated risk teams that oversee all this kind of activity. In general, though, Gusto's payment systems, they're designed in such a way so that if any changes happen to a bank account that's initiated, then that change is screened for either fraudulent, or suspicious behavior, using our proprietary machine learning model systems [00:14:30] that we have internally. Any transactions that are flagged as suspicious are then blocked until our dedicated risk team manually reviews them and approves the transaction.

On top of all that, though, our payment system not only automatically notifies the customer every single time, anytime, a change is made to their bank account information, which is kind of not the story you heard on the MyPayrollHR front; that is, you had MyPayrollHR obviously doing something with employee bank account information and no one knew it. There [00:15:00] was no transparency on that side; whereas,. on our platform, there's full transparency. Anytime something triggers where any kind of changes are happening at the bank-account level, every single time, the customer is notified.

David Leary: Everybody had that covered-

Will Lopez: And the accounting professional gets notified, as well, if you're working with a Gusto partner.

David Leary: The employee account number stuff, everybody's handling those use cases. It's expected, right? It's expected when employees move banks. Maybe an employee got phished, and they're contacting the HR department, and then somebody manually [00:15:30] changing the bank accounts- of the employee bank accounts. That's not really what happened here. What happened here is the file of the source account got changed - the actual main, main ... Where the real money was. That's the one that got redirected.

Blake Oliver: The money was diverted from the employer accounts. Instead of going to a settlement account, went to a MyPayrollHR account, an account controlled by Michael Mann.

David Leary: Exactly, yeah.

Blake Oliver: How do you prevent that?

Will Lopez: From personal experience, I remember, even before Gusto, I used to be a controller for a not-for-profit [00:16:00] that did a lot of batch payments for payroll. The way we would run employee files is we would create just this batch file that gets submitted into the payroll company. Generally speaking, there is always a front-end software that you upload this batch file to that gets associated to the payment processor.

Same thing at Gusto, where, if there are any changes that happen to bank account information or batch files, the front end of that is Gusto. In [00:16:30] conjunction with changing anything, it always triggers something. You can't go into the payment processor's end and manipulate data there. It's always front-end-software-driven. Depending on whether or not the payroll company is as transparent as they should be versus want to be, that drives notification, as far as who gets notified of the change.

On our side, any changes that happen, whether it's singular [00:17:00] changes or even batch changes, the employees get notified; the partner gets notified; if they're working a Gusto partner, the company gets notified, because that front-end activity is what's happening on the Gusto platform.

Blake Oliver: Does Gusto go through internal controls, audits, security audits? How do partners- how can they be reassured that the controls are in place, as you say so?

Will Lopez: Great question, and you're kinda speaking to my heart here, right? I used to be a former financial-statement auditor; love this side of the [00:17:30] business, just never sold it as a practice. Obviously, Gusto's built to be a durable company that serves small businesses, hopefully, for many decades to come. Even recently, we got our Series-D financing from leading investors, like Fidelity, T. Rowe Price, General Catalyst. It goes through substantial due diligence process.

Doing due-diligence work prior to AdvisorFi, at my old firm called Daszkal Bolton, it's really, really heavy stuff. We [00:18:00] look at financial-statement integrity, financial health, burn rates, cash flow, the whole thing. Because we've gone through regular series- regular rounds of funding, we constantly go through those due-diligence reviews by not only just one party or two parties, but by multiple parties, because each of these investors have their own due-diligence teams. If we get investments from Fidelity, T. Rowe Price, and General Catalyst, that's three due-diligence teams coming in and reviewing the same [00:18:30] thing over, and over, and over again. They're not utilizing each other's work papers, so-

David Leary: And now, because of this use case, what's happened here, Cachet wasn't ready for this. NatPay ... Was it NatPay, Blake, or NetPay?

Blake Oliver: Yeah, NatPay was the other one.

David Leary: They had all the tax deposits. They weren't aware of this possible fraudulent use case, so now, all the payroll players are, and they're going to put in controls around this, because ultimately, it would be somebody internally at Gusto, or [inaudible] like this, but now, [00:19:00] it's led, though ... If you saw the article, the New York State Senate is considering putting regulations on the payroll industry. My thing on that is I get why, what's gonna motivate that, but I also think it would kill things. Imagine if there was high regulations around, eight to 10 years ago. Would we have a Gusto, or a Wagepoint, or an OnPay, or even would Square be able to get in the payroll game, if we have this heavily regulated environment, from an innovation standpoint?

Will Lopez: I think regulation is good. I don't think any [00:19:30] payroll company should think this is a bad thing. I know that New York has put forth those two pieces of legislation, which is ... The legislation that they're putting forward is a little more after the fact [cross talk] I think one of the bills basically just makes it- or creates a criminal penalty for any intentional misappropriating of payroll and payroll tax funds. That's one bill, and that's an after-the-fact thing. The other bill is basically making payroll processor [00:20:00] companies responsible for paying up to three times the value of a paycheck, if an employee misses a paycheck. That's an after-the-fact thing.

I know, at Gusto, we're as transparent as we can possibly be, not only to our partners, but also our 'Gustomers' - our Gusto customers - so, I don't think regulation is bad in making sure that companies are very transparent when you have a tremendous amount of users and their employees very dependent on you as a resource. We would welcome it. I would [00:20:30] welcome it. I think it's a good thing.

David Leary: To me, it's almost unimaginable in the payroll industry ... If lawyers get that money from clients, that retainer, they have to put it in a trust account. Those trust accounts cannot be commingled with their operating accounts for running their actual law firm practice. The trust accounts are completely separate. But apparently, in the payroll industry, the deposits - this money that's moving back and forth - you can commingle that with your company finances.

Blake Oliver: Wow.

David Leary: It [00:21:00] does not have to be handled separately. There's no legal reason to handle it separately, and that seems insane.

Blake Oliver: Yeah.

Will Lopez: Yeah, I would totally agree. I remember just even having these conversations with clients at AdvisorFi. People would ask me all the time, "Should I have a separate bank account for my company, or is it okay for me to commingle my business funds with my personal funds?" It's the same argument. At Gusto, we have completely separated customer funds [00:21:30] from its own corporate funds. We include any money Gusto holds on behalf of customers for purposes of tax payments.

Like I said, a lot of the behaviors that ... A lot of the good habits and the good things that one should do as a business owner, we're already doing at Gusto. The question is - is there a law that forces you to do the good things? We try to be as intentional as possible; but will there be legislation that mandates good business practices to happen? [00:22:00]

Blake Oliver: I think one of the security risks that this whole episode with MyPayrollHR exposes is the weakness of ACH, as a system, and the risks associated with it. When you give somebody your account number and routing number to make direct deposits or to withdraw funds from your account, that could be misused. The company might screw up and take out too much money or do it twice, as it happened with Cachet. One of the things that I've always done that [00:22:30] I think everybody should do, if it's not too expensive, is just have a separate bank account that you use for ACH deposits; then move the money, as soon as you receive it, into another account, and you don't give out that number.

That way, you're protected from somebody scamming the ACH system and tying up your money for potentially months; because it can take months to resolve some of these issues with banks, which is part of the pain these employees are going through is that there's been a hold [00:23:00] on the funds that have been drawn out of their accounts, and they have to work with the banks to get that unfrozen. That is a very- They have up to 60 days to decide what to do, and you don't exactly have 60 days to pay your rent.

David Leary: It's a very low-tech process. I talked to somebody who is involved in technical support recently for payroll. If something happened, an employee didn't get paid, you'd have to investigate. A lot of times, it's because somebody mistyped an account number somewhere. Essentially, it would be the payroll company would be [00:23:30] doing a Ctrl+F and searching in a text file for this employee's name, social, bank account numbers. Then, on the other side of the phone call, would be the bank doing the same in their text file, trying to figure out where the typo is, and then get it fixed, and then resolved, going forward. But it's very, very low-tech in the grand scheme of where we are in 2019.

Blake Oliver: Unless there's anything else you guys wanna talk about with MyPayrollHR, I'd love to move on, because there is other news that has happened.

Will Lopez: There is?

Blake Oliver: Will, I think you wanted to talk a little [00:24:00] bit about WeWork, right?

Will Lopez: Yeah, WeWork is notoriously known in the startup community. I cannot imagine a world, at the moment, without WeWork. Any startup knows about WeWork. It's such a great coworking space, as a business owner, to kind of get yourself into without committing to any real real estate-

David Leary: Like Starbucks.

Will Lopez: Yeah, like Starbucks. WeWork has really become known as connecting entrepreneurs and others who, in the past, would have worked from home [00:24:30] or, like you said, David, a coffee shop. The company just kind of became known as bringing a new way of working to a changing world. Recently, in The Wall Street Journal, or recently, WeWork, themselves, have thought about going public, and want to go public. They've built this office-rental giant at an amazing private valuation of, I think, $47 billion.

What has happened is obviously the founders' behaviors, while it worked as a privately [00:25:00] held company, has not worked in its initial public offering last month. The New York Times article made a really good case, where WeWork, themselves, has just been besieged with criticism over its governance; even tying back to good governance - does a company have good governance? When others get involved, does that good governance just break, because they're not really performing good governance ... Not only is their good [00:25:30] governance, or their governance being questioned, but their business model, their ability to turn a profit. Now, they're expecting an IPO valuation as low as one-third of the original $47 billion sticker price [cross talk]

David Leary: -I think I saw their biggest investor, SoftBank, is also their biggest customer. It's like 10 percent of the revenue.

Will Lopez: Well, having a concentration, a revenue concentration, is not a bad thing. It just needs to be disclosed in the financial statement. Now, you're talking to an auditor ... Having concentration [00:26:00] is not bad, it just needs to be disclosed, because if you have a concentration of revenue and you lose that one client, it could materially impact [cross talk]

David Leary: But the concentration of revenue is from the main investor.

Blake Oliver: Well, and potentially one that could help prop up IPO valuation, right, because they've talked about putting in hundreds of millions of dollars into this IPO. To me, it shouldn't be [00:26:30] necessary, if there's real value there, for them to do that. The banks underwriting the IPO are the ones that are also invested in the company, currently, and also a huge tenant. Then, there's all the self-dealing with the founder. Is it Adam Neumann is his name, I think?

Will Lopez: Yeah.

Blake Oliver: He has all these loans and he has ... He owns buildings that WeWork is leasing. That's been a big issue. Entangling that has been an issue.

Will Lopez: There's [00:27:00] definitely a lot of related party activity going on there.

Blake Oliver: I think even his wife had the ... I guess they're changing this, but she could designate his successor, if something happened to him? That's a little bit unusual; the board doesn't get to do it, she gets to do it?

Will Lopez: Yeah, well, like I said, in the land of a private business, almost anything is free range. I think what's interesting about this case is realizing the long-term health of a business, when [00:27:30] you're not only staying as a private business, but if you're even considering about going public and getting other people involved in making sure that you're doing good business ... Things worked, beforehand. Things are not working so much, after the fact, when investors, and auditors, and everybody else gets involved.

Blake Oliver: Now, I may not be a huge fan of the WeWork IPO and what's been happening here, but I'm a big fan of WeWork. I was a customer, or a member, I should say, because they call them members. I was a member for three, four years, [00:28:00] when I had my own firm. I loved using it. I loved that you can travel around and then book conference rooms in the cities you're in. I would go to New York, and I needed to record a podcast episode. I'd just go to WeWork and book a conference room and do it. That's pretty awesome.

There's been a downside to all of this attention with the IPO is that it's drawing attention to other aspects of WeWork that may be a little problematic. One of them, which I was aware of, when I was a tenant there, is their Wi-Fi. This is based on an article I spotted in CNET. The [00:28:30] title is "WeWork's Weak Wi-Fi Security Leaves Sensitive Documents Exposed."

Will Lopez: Interesting.

Blake Oliver: Apparently, if you're just a member, and you're using their free Wi-Fi that comes with your membership, it's super high speed; it's great; but they deliberately do not - to keep it fast - they deliberately do not protect that Wi-Fi network. It's like you're using the Starbucks Wi-Fi, or Wi-Fi at the airport. A lot of people apparently don't realize this. A security researcher has been going around to all these WeWork offices in [00:29:00] New York and finding many sensitive documents just exposed on the network. People who have shares on their on their computers ... These are companies that- it may be financial companies, and a lot of big businesses are using WeWork now.

What you need to know is, if you're a tenant, or you're thinking about being a WeWork tenant, is that you need to pay extra for a VLAN - a virtual local area network - that then separates your company from everybody else in the WeWork building, so you're not sharing a network with them. That [00:29:30] costs an additional $95 a month with a $250 setup fee. A private office network costs $195 a month. I don't know the difference between those. I'm guessing different levels of security ... That can add to the cost of having an office at WeWork, which, the whole point is that it can be as low as a few hundred dollars a month to have a membership there.

Will Lopez: Yeah, the beauty of VPN, right? Talk about trying to protect your data on your computer, when you're bouncing from Wi-Fi to Wi-Fi ...

Blake Oliver: Yeah. And it slows things down, right? That's [00:30:00] the thing about VPN. You could use that with WeWork, just a VPN client on your computer, but then that slows down Zoom, or any video chat, or gaming, or whatever you're doing.

Will Lopez: Yeah.

Blake Oliver: You gotta pay extra. Yeah, just something to watch for. So, David, what else do we wanna talk about this week? I've got some stories about Intuit, and TurboTax, tipping at the counter ... All these point-of-sales that now let you tip - who tips, who doesn't. We can talk about broadband-

David Leary: Two companies took some [00:30:30] pretty big rounds. Practice Ignition-

Blake Oliver: Oh, yeah, Practice Ignition raised what, like $15 million US?

David Leary: Yeah. Guy Pearson was on the podcast way back in our early days, going back to October of 2018. They took a $26 million raise to really ramp up their team. They wanna ramp up to almost 200 employees, and really make their global push now, and add new features and more functionality. It's helping them make that next step. It's a really good story, because Guy was an [00:31:00] accountant.

Blake Oliver: Yeah, I love this ...

David Leary: He started on his own practice, an accounting practice, and now he has a well-funded SaaS-based startup.

Blake Oliver: I love it when accountants found companies to solve their own problems. Those always tend to be great, great companies.

David Leary: Will, did you use Practice Ignition at your firm, when you had your firm?

Will Lopez: Actually, funny story there. I actually built a mini version of Practice Ignition before I knew Practice Ignition was PI.

David Leary: You could've took it to market.

Will Lopez: I could have took it to market, but I totally built it for [00:31:30] my firm, specifically, because in the beginning, when I first started my practice, I didn't realize Practice Ignition was around. I think, at the time, they were in Australia, and they weren't really in the United States making a lot of noise, or ground, or just trying to get market share here in The States. So, I built a solution that allows my prospective clients to select plans with me, to onboard plans with me, to capture their payment information securely through Braintree [00:32:00] and everything. So, I built, actually, a mini-onboarding solution.

I remember having a conversation long ago with Guy Pearson, when I first ran into him, and he wanted to see what I had built. At the time, I thought to myself, he just wants to see if I'm competing against him; but it was just genuine interest, because he ... In his mind, I think it validated what he was doing. While I felt like [00:32:30] I was slightly ahead of the curve by doing something like that and building an onboarding solution, I didn't have the power that he did on his platform. I wasn't able to customize the plans. They were just kinda pre-baked 1-2-3 plans.

I'm really excited for Guy. I mean, Guy has worked very hard on PI, and I think a Practice Ignition is such a great solution not only for accounting pros, but just anybody who's in the professional industry; anybody who's thinking about selling plans, needing recurring engagement, wants to capture payment upfront, [00:33:00] scaling that whole onboarding pain point, PI is such a great solution for that. Kudos to Guy for locking that in. I'm excited to see what they're gonna do in the future.

Blake Oliver: Who else? Somebody else raised money, you said?

David Leary: Yeah, some gigantic company called Stripe.

Blake Oliver: Oh, yeah. We know them.

David Leary: So, Stripe took a $250 million round, bringing its total valuation to $35 billion dollars.

Blake Oliver: Wow.

Will Lopez: Wow.

Blake Oliver: Man, it's amazing. I wish [00:33:30] I had a business where I could just take 2.9 percent of every transaction in the global economy. That'd be great.

David Leary: Well, Gusto's a unicorn, now. Gusto's got a ... Is Gusto a $2 billion valuation now, Will?

Will Lopez: Well, no ... They received $200 million, and I think that puts our valuation up into ... Man, what did I ...?

David Leary: I think you're a unicorn. I think Gusto's a unicorn. I'd be safe to ... I don't know if you're a 2X unicorn, but I think Gusto's a unicorn. But, if you think about that, this is like 35X of whatever Gusto's at. [00:34:00]

Blake Oliver: The unicorn of unicorns.

David Leary: It's very, very insane. Yeah. It's pretty insane. They're now the most valuable private financial technology play that's out there.

Will Lopez: There's no doubt Stripe is a game-changer out there. They've done some incredible stuff. Some of the solutions that they've rolled out are pretty amazing. That's what's kinda cool about being on the other side of the fence and not doing accounting full-time anymore but being on the app side. Maybe, Blake, you [00:34:30] can speak into this, but it's interesting to see more closely just the passion of the industry and just pushing innovation forward, forward, forward, forward, as much as possible. Then, the market responding with validation. What Stripe has done is pretty incredible, and the market's validating their success.

David Leary: What they did is they solved one problem really, really well, because previously, if you were an app developer, and you wanted to, on your website, take somebody's credit card, you [00:35:00] basically had to create the code yourself. Like, this field has to have 16 digits. This field only accepts dates. This field is for the three-digit verification code. This is the name on the ... You had to do all this work. What's the billing address? You had to do all this work yourself. They basically developed it so you could just, as a developer, copy nine lines of code and paste that into your app, and now you can take credit cards. Of course, every developer, if it was gonna take you three weeks to build a credit card charge system, and you got a nice [00:35:30] secure one in 10 seconds, you were gonna do this. They just solved one thing really, really, really well, and look what's happened because of that.

Blake Oliver: So, Will, I know that you've gotta drop off now. David and I will continue. I just wanna say thank you so much for joining us and offering your insight into this issue and the stories that we've talked about today.

Will Lopez: Oh, absolutely. Thank you guys so much for just everything that you do. Believe it or not, here on the partner side at Gusto, a lot of the partner advisors that work [00:36:00] with the accounting partners out there, they're always constantly asking what are the podcasts to listen to? Obviously, top of mind is Cloud Accounting Podcast; so much so that I think I'm actually gonna work on a toolkit for our partner advisors of all the top podcasts for them to listen to, so that way, they could stay up to speed.

Blake Oliver: If people want to connect with you online and learn more about what you're up to, Will, where's the best place for them to do that?

Will Lopez: Yeah, two places. Twitter, first. You can follow my handle: @Zewillster, and [00:36:30] you can just friend me on ... I was gonna say 'friend me on LinkedIn ...' It's more like connect with me on LinkedIn, right? You can connect with me on LinkedIn/WLopezJunior, I think, is the actual landing page. Get in touch. Follow me. I still do my quirky videos on YouTube. Still kinda do all of that, so still pretty involved out there.

Blake Oliver: Awesome. Thanks, Will.

Will Lopez: All right, thank you, guys.

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Blake Oliver: All right, we're [00:38:00] back, and Will is gone, so now we can talk about him ... I don't anything to say, because Will's such a nice guy, and I think Gusto's really lucky to have him.

David Leary: I honestly could say I did not know Will. I only knew Will from his YouTube videos. I was always like, "What is this guy?" Because he would edit crazy emojis that were on fire in his videos. I was like, "What is this guy doing? Does he have his real accounting firm?" It was a little bit confusing. I only knew him from that. Then, I got to meet him, and got to know him pretty well at The Accounting Salon. He's totally legit; really like him ... [00:38:30]

Blake Oliver: Continuing on, sort of related to what Will was talking about, or what we were talking about together, about Stripe - Stripe's biggest competitor in the payment space is Square, on the retail side. Everybody's familiar with those point-of-sale Square ... The Square dongle or the actual iPad screens. We all have- at this point, I think everybody has purchased something with one of those. Well, I spotted an article in The New York Times titled "Counter Service Tipping - Who Gives?" The [00:39:00] subtitle is "Those Customer-Facing Touchscreen Payment Systems in Restaurants are Confounding Customers in the U.S. and Beyond." I was so happy to read this article, because I feel this way, and I feel very passionate about it, and I hate it. This is the thing I-

David Leary: Confounding, as in confusing people.?

Blake Oliver: Yes.

David Leary: Okay.

Blake Oliver: I love Square. I love their app. I love their hardware. I have implemented it. I have installed it for people. I think it's fantastic, but the one thing that I really, really, really dislike is now, wherever I go, when I'm buying coffee, when I'm getting a sandwich at the counter, I'm constantly [00:39:30] being asked to give a tip - 15-, 20-percent, sometimes even 25-percent, and I have-

David Leary: Oh, yeah, and this is not just Square. This is every one of these is e-point-of-sale, iPad-type terminals. When they swing it around for you to sign, there's three huge buttons there, and everybody's watching you. You've gotta pick one.

Blake Oliver: Everybody's watching you ... You know that the person behind the counter is gonna see if you left a tip. You know that the people behind you are gonna see. So, then you have this ... I have this, every time I buy something, this moment of frustration, or [00:40:00] anger that I'm being asked to tip, because I - don't know about you, David - but I firmly believe, out of principle, I do not believe in regular counter tipping, meaning tipping when I am going to the counter and buying something. I understand having a jar for money, and change, and maybe occasionally giving a tip, or, if I'm a regular, maybe leaving a tip ... I've always believed that tipping should be reserved for table service, for waiters.

David Leary: I've always thought when you go up to [00:40:30] counters, it's how much a pain in the ass am I being? Maybe my order's complicated, and I'm making a lot of like, "Hold this," or, "Do this ..." Then maybe I'll tip. If I'm forcing more work to happen, I kinda wanna tip something, but, yeah ...

Blake Oliver: I agree with you on that, but it should be a regular thing. Tipping a waiter is a regular thing, to me. If you're a decent human being, you tip your waiter; you really should be tipping them closer to 20 percent. At least that's what I understand as being kinda common practice [00:41:00] here among my family in L.A.. I know everybody's different, right, and this is the problem with tipping. Ideally, actually, we would not tip at all, but that's a lost cause. That's like trying to argue against time sheets. It's just not gonna ... It's not gonna happen.

David Leary: There's plenty of other podcasts, like the Planet Money podcast, et cetera, that have deep-dived on this 'no tipping' stuff and the experiments around that-

Blake Oliver: Now, there's data. Researchers have collected data to find out who is tipping. Am I in the minority?

David Leary: Because, when you just put cash in the jar, there's no tracking-

Blake Oliver: Right, you don't really know-

David Leary: -and now, everybody's being [00:41:30] tracked ... Okay, this'll be interesting, because I would love to hear this data, because I've not seen this article or heard anything.

Blake Oliver: This article is based on data provided by Toast. It's a Boston-based company that provides point-of-sale platforms to thousands of restaurants and cafes around the country. This is 2019 tipping statistics they provided to this New York Times reporter. In cafés, 58.5 percent of customers left tips. For fast casual restaurants, the kind where you go up to a counter and order and then the food is brought to your table, it was 46.5 percent. [00:42:00] So, close to half, but not half, but close to half of people at cafés and fast casual restaurants are tipping on those digital point-of-sale systems. The average tip for both was around 17 percent. So, half of people are tipping 17 percent, and the other half are like, "No ..." like me. This is a clear split here.

David Leary: But I wonder if it's higher than it was prior to the almost forced opt-in. Before, you would have [00:42:30] to remember to do the tip, think about doing the tip, versus it just being in front of you, and just clicking, and signing; just, you press the button and sign ... Fundamentally, from a use-case perspective, it has to be increased ... The tipping has to be up, overall.

Blake Oliver: Here's the thing. Clover, a Toast competitor -another point-of-sale system - they collected data for tipping at tens of thousands of American restaurants under the category fast food, which includes cafés and fast casual restaurants. In May 2019, customers [00:43:00] paying with cards tipped 42 percent of the time that tipping was available to them. So, then, if you add the customers that throw in cash into the jar, it's looking like we've got a 50-percent tip rate, and a substantial tip ... More than just dumping the change they give you into the jar, which is kind of what I always used to do. This is a lot.

Of course, the business owners are very happy because this allows them to not raise wages. This is the weird thing about tipping is that when we tip, we [00:43:30] are subsidizing ... Theoretically, economics would tell us that we are helping business owners not pay a higher wage because we're making up for that. Is that a good thing? It's weird, too, that 50 percent of customers end up tipping, and the other 50 percent don't. Some of us are paying lower prices just because we choose to, and some pay more because they choose to.

What I don't like is the cognitive dissonance I feel. I don't know if that's the right word for it, but I definitely feel this little pain [00:44:00] in my- right behind my eyes, every time I see that, and I have to choose 'No Tip,' because it makes me feel like a bad person. I wanna know if it actually causes discontent among the customers.

David Leary: Well, it'd be more interesting to get a email report of your tipping after the year and find out where I fit in. Maybe I'm over-tipping. I'd like to know where this all slides in, because those scales, too ... If you've ever noticed, sometimes it's 17-19-22; it's [00:44:30] not 15-17-20, because they can make those numbers whatever they want.

Blake Oliver: Right.

David Leary: This is an interesting- this data is very, very interesting.

Blake Oliver: Then the question is, what about ride-share car services, Uber, and Lyft? Do you tip on Uber and Lyft on a regular basis, David?

David Leary: Yes-ish ...

Blake Oliver: What does that mean?

David Leary: Unless I don't remember being in the car, then I don't tip. I'm like, "I don't even remember that ride," and I don't tip, but if I remember who it is, usually I tip. [00:45:00]

Blake Oliver: Uber used to not offer tips, and I actually really liked that. I thought that was a differentiator versus a taxi, where you're obligated to give a cash [cross talk]

David Leary: That awkwardness of the taxi ride, yep.

Blake Oliver: -handed tip. It's like, how much do I tip? Taxi drivers never seem to be happy, no matter what. They always seemed unhappy.

David Leary: It was never enough. It was never enough.

Blake Oliver: Uber held off on tipping until 2017, but then they made it available, and it's available in the U.S. and 48 other countries. So, there's data now on tipping. Lyft provided data- they didn't provide- they couldn't provide data on [00:45:30] the percentage of riders tipping, but they did say that their drivers make an average of $30.84 per hour, of which $2.27 cents per hour is tips. That's well under 10 percent of their income. While tipping is widespread, it's either in extremely low amounts or not yet the norm. Uber wouldn't provide the data, so we don't know about the U.S., but we do know about Europe.

FREE NOW, a European ride-share service that's a joint venture of Daimler and BMW was [00:46:00] formerly known as MyTaxi. They have data on tipping across Europe. So, in Germany, 83 percent of riders tip; 83 percent in Germany; 53 percent tip in Britain; 48 percent in Poland; 46 percent in Italy; 39 percent in Spain, and 35 percent in Ireland. How much people tip is lower than in the United States. Poland is on top with an average of 12 percent.

I'm torn about that, too, right? Should tipping for a ride service be regular? Should it not? What's [00:46:30] normal? It's not like you can just look this ... Things are changing so rapidly, it's not like there's a ... What was that column that used to be in the newspaper where people ask etiquette tips? We don't have that anymore. This is one of those things that I find troubling-

David Leary: I think this is a soapbox survey that you should do for yourself on Twitter. Just finding out how people [cross talk]

Blake Oliver: Do you tip?

David Leary: They're not automatic tips, but they're kind of these social- you're kind of being forced ... Not even forced. It's like opt-in, or you can't- it's hard to opt out. You're just [00:47:00] forced to do it.

Blake Oliver: Here's what I don't like about this is. It's like, okay, I'm tipping at the counter for service. I'm tipping my ride-share driver ... As an accountant, I never asked for tips, but maybe I should. Maybe all of us should be asking for tips when we collect our invoices. Check here to give me an 18-percent tip on this service that I provided to you. Why shouldn't we do it, if everybody can do it? Fair game, right?

David Leary: Yeah.

Blake Oliver: That's my rant, and [00:47:30] the one thing I don't like about these modern point-of-sale systems ... We've got more to talk about, if we've got some time here.

David Leary: I have a 'selling your firm' article.

Blake Oliver: Yeah, okay. Everybody wants to sell their firm.

David Leary: This article's in The Canadian Accountant. This is Canada's independent news source for the accounting profession. This is the number-one factor for an accounting practitioner looking to sell. The article touches on ... Everybody always talks about percentage of total billings. What's the going rate? What is your percentage of total billings? She's [00:48:00] kind of arguing that the most important one is client retention.

Blake Oliver: I don't know if you mentioned the author. It's Bridget Noonan.

David Leary: My bad. Sorry, yes.

Blake Oliver: No worries. What'd she say is the most important factor?

David Leary: Her argument is, really, the most important factor is retention.

Blake Oliver: Retention.

David Leary: What's the current retention rates of an accounting firm - are clients leaving? - and your ability to retain the clients, once you buy the firm-

Blake Oliver: Absolutely.

David Leary: -because they might not like you. Maybe it's not the right fit. Now you've lost those [clients], so now you've completely overpaid for a firm. So, it's not what [00:48:30] the current billing rate is. There's other numbers to look at.

Blake Oliver: I agree. That's why it's really important to also have a clawback provision. If you're buying a firm, you want to ensure that the clients are with you for at least four or five years, so that you can make back the profit that you would be paying out to the partner who's departing; definitely always include something like that. You want to have at least five years. If they leave before then, then you get to reduce the price, and there's a formula [00:49:00] for that.

David Leary: Then the other piece of that is we had an episode- episode 110 that really ... There was a panel we did, and we talked about selling your firm. There's a lot of really important bullets in there, if you guys wanna jump in and listen to that episode.

Blake Oliver: The last thing that I've got today is something that was sent to me by Jacob Oberlander, CPA. He was in a LinkedIn group and forwarded me this message ... A CPA who is in a small, rural, and isolated community, and [00:49:30] they still don't have high-speed internet. He was asking the group, "How do we embrace cloud accounting and all this stuff, when we don't have reliable broadband internet?"

It just reminded me that living in a big city like L.A., where we have gigabit Ethernet ... I can get that in my building here, right? It's still a problem in a lot of the United States, where there's not reliable high-speed internet. I think that is gonna be one of the big barriers to cloud adoption in this country. [00:50:00] Thank you, Jacob, for pointing that out. He also said that he was reminded of it, in his own experience, because he was traveling on the New York State Thruway to Canada, and there was a stretch of 80 miles that they didn't even have cellphone reception.

David Leary: That's true. I've driven from Tucson to San Diego, or Tucson to L.A.; there stretches in the Arizona desert here where you don't have cellphone reception.

Blake Oliver: The good news is, though, that the FCC is aware of this issue and has been working on subsidizing [00:50:30] the expansion of broadband into rural areas. The FCC has authorized $121 million in funding to bring broadband service to 36,579 "unserved rural homes and businesses in 16 states," over the next decade. This recent announcement was in August, and it represents the fourth wave of support from the 2018 Connect America Fund Phase II auction.

Providers will receive funding this month, subsidizing [00:51:00] the expansion of broadband into rural areas. Approximately 17 percent of businesses are in rural parts of the country, despite the fact that 97 percent of the U.S. is classified as rural. I think this is a great thing because, just from an economic/political perspective, as we move toward a services-based online economy, if you don't have broadband internet, you're left out. The jobs are disappearing, like at your local hardware shop. How are you gonna get [00:51:30] a job as an online ... I don't know, an online bookkeeper, or something, or whatever, if the best you have is a slow, terrible DSL connection.

David Leary: What I've noticed, too, is in my experience, where there's nobody at and there's no economic activity - empty parts of the desert - there's no service. Some part of the forest, there's no service. It's not so much big city technology based, because you can go across the entire Midwest, where population densities are very low, and you can get very good cellphone service and internet service, because [00:52:00] all the farming equipment now is all online. Between GPS maps, and online and ... People are monitoring their farming equipment from their iPad, sitting in a truck two miles away. It's really where there's economic activity, that's where you're gonna have internet access. Then I'm kind of ... "Well, if there's no economic activity there, is there even somebody with the need for cloud accounting?"

Blake Oliver: Well, yeah, there's businesses out there. Here's the thing, in California, it's well known, I think, that we have a housing crisis. [00:52:30] There's a reason that half of the homeless population in the country is in California. I just read that stat recently, which is depressing. A lot of those people are in L.A., and San Francisco. The reason they're homeless is because it's a supply and demand mismatch. We have too many people, and we haven't built enough housing. Unless we're gonna build more housing - which doesn't seem there's a political will to do that - people are gonna have to leave and go elsewhere to find affordable housing.

Actually, given that I can work in the cloud, I've talked about this with my family ... It's like, "Why don't we just go out somewhere more rural [00:53:00] and set up shop there?" But then, one of the constraints is a lot of these cities that are very appealing, that are out in the mountains that are beautiful, don't have broadband, believe it or not; or, if they do, it's just not very fast. We're talking one megabit is the best you can do and it costs a fortune. I can't operate on that. I need 100. I need 1,000 to do ... To do what we're doing right now, David, where you're broadcasting from [00:53:30] Tucson and I'm here in L.A., and we're doing ... These are high-quality files that we're sharing back and forth. This is a must-have. So, it's actually the lack of broadband has limited our choices.

David Leary: We'll do a challenge here. Next [inaudible] to Mexico ... I'm on the road somewhere.

Blake Oliver: Yeah, we'll try ...

David Leary: We'll try to record something, see how it goes.

Blake Oliver: All right, well, that's all I've got for this week. As always, you can reach me on LinkedIn. Please send me a message and let me know that you're a listener when you connect with me there, and [00:54:00] on Twitter: @BlakeTOliver. How about you, David?

David Leary: You can find me on Twitter: @DavidLeary. You can also find me on LinkedIn at David Leary. You can find The Cloud Accounting Podcast as Cloud Accounting Podcast on all the socials. Please follow us. Please go to Podchaser, write a review. Write a review on iTunes.

Blake Oliver: We will read it on the air.

David Leary: If you haven't, if you tend to be one of the listeners that listens to the news episodes and skips the interview episodes, definitely go listen to the episode we did with Cachet's lawyer-

Blake Oliver: Wendy Slavkin.

David Leary: It's [00:54:30] excellent. It's almost shocking how much she tells us about the whole ... It's the only end-to-end full-experience view of what happened.

Blake Oliver: Yeah, that was really a fun one. Well, David, until next week, have a great one.

David Leary: All right, bye, everybody.

Blake Oliver: Bye.