From Public Accounting to Tech Unicorn IPOs With Brandt Kucharski

Blake chats with Brandt Kucharski, former chief accounting officer at GrubHub and current CAO at Ethos Life, about his career journey from public accounting to leading startups through IPOs. They discuss Brandt's pivotal role in taking GrubHub public as one of the first "unicorn" startups, the process of scaling accounting teams and controls, nonprofit work with the Holiday Heroes Foundation, and thoughts on increasing accounting talent amid growing complexity.

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Chapters

• (01:06) - Welcome Brandt Kurcharski to the show
• (02:37) - Early Career and Joining GrubHub
• (05:07) - What was the first thing you did at GrubHub?
• (05:41) - The Journey to IPO
• (09:51) - What advice would you give a young controller going through an IPO
• (11:29) - Let's talk about GrubHub's tech stack at the time
• (15:26) - Building the Accounting Team at GrubHub
• (18:03) - The smartest thing you did at GrubHub
• (23:56) - Reflection on GrubHub's Success
• (25:21) - Biggest mistake you made at GrubHub
• (26:47) - Size of Your Accounting Team
• (29:03) - The Merger with Seamless and Going Public Again
• (31:09) - Let's talk Sarbanes-Oxley
• (34:47) - The Journey of Grubhub's Second Public Listing
• (35:54) - The Challenges of Merging and Going Public Again
• (37:53) - The Role of Charity in Personal Growth
• (41:04) - Accounting Challenges For a Charity
• (43:19) - The Journey from Grubhub to Ethos Life
• (47:35) - Accounting at Ethos vs GrubHub
• (49:14) - The Impact of Accounting Standards on Business
• (55:13) - The Accounting Talent Crisis and Possible Solutions
• (01:01:11) - Thanks for Listening and Remember to Subscribe

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Connect with Our Guest, Brandt Kucharski

LinkedIn: https://www.linkedin.com/in/brandtkucharski/

Connect with Blake Oliver, CPA

LinkedIn: https://www.linkedin.com/in/blaketoliver
Twitter: https://twitter.com/blaketoliver/

Creators & Guests

Host

Blake Oliver, CPA

Founder and CEO of Earmark CPE

Guest

Brandt Kucharski

My background consists of 20-plus years of consulting experience working for Crowe Horwath/ Crowe Capital Markets and leading the IPO of Grubhub as CAO. My experiences encompass various industries, including manufacturing, professional services, technology, hospitality, retail, and financial services. At Crowe, I spent the first half of my career in the firm’s audit practice, managing public financial statement audits and performing Sarbanes Oxley 404 Consulting. I spent the remaining years at Crowe in the transaction services/investment banking group managing private placements and buy/sell side transaction services for private equity investors, lenders, and corporations. I was a key team member/lead the 2014 successful IPO of Grubhub on the NYSE. I am currently the CAO of a rocket ship that is completely disrupting the 150-year-old life insurance space named Ethos. During my tenure at Crowe Horwath/Grubhub, I have managed and led 50+ successful transaction services totaling over 5 billion in consideration and 6 executed IPOs. I am an industry expert in SAAS and frequently advise scaling SAAS companies on best 606 practices/scaling enterprise SAAS operations. I am passionate about helping kids and supporting our veterans.

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Brandt Kucharski: [00:00:00] You know, it's the single most life changing experience I can tell everyone from being part of that. You know, it's so rare. Um, you know, 99.99% of companies don't get to that point. Um, I think on that day alone, the stat we always talk about is there was 30 people who made under $30,000 who became millionaires.

Blake Oliver: [00:00:23] If you'd like to earn CPE credit for listening to this episode, visit earmark Cpcomm. Download the app, take a short quiz, and get your CPE certificate. Continuing education has never been so easy. And now on to the episode. Hello everyone, and welcome back to the show. I'm Blake Oliver, and joining me today is Brant Kucharski, former chief accounting officer at Grubhub, board member of the Holiday Heroes Foundation and the current chief accounting officer at ethos. Brant, welcome to the show.

Brandt Kucharski: [00:01:03] Hey, Blake. Thanks for having me. Um. I'm honored. And, you know, you're famous. Um, you know, I remember back in public accounting, back in, like, 2003 and four, there was a website called Going Concern. Is that website still around now or still around?

Blake Oliver: [00:01:17] Yep.

Brandt Kucharski: [00:01:18] And remember, that was like the old school, you know, version of accounting influencers everyone would go to to kind of find out stuff. And Francine's what's your name? Francine McKenna was on there. And you know, you're the new version of the influencer of going concern went well.

Blake Oliver: [00:01:32] Thank you. Brant, it's so great to chat with you. I got to work with you quite a lot in my Floqast days. You were a huge advocate for Floqast and we did some webinars together. Got to meet you in person. That was a lot of fun.

Brandt Kucharski: [00:01:46] Yeah, that was that was 20 1415 and that was about ten years ago. Do you believe it?

Blake Oliver: [00:01:50] I it's hard to believe that it was that long ago. But also, you know, things move fast. Uh, well, you know, that you spent almost 12 years at Grubhub and went from being an early stage employee to leading Grubhub through the IPO as the chief accounting officer. And I'm sure our listeners would be fascinated to hear your story. When did you join Grubhub? I think you said it was like 30 employees when you joined.

Brandt Kucharski: [00:02:19] Yeah, there was about 30 people overall at the company, a little bit less than 50. And, you know, I probably had a background similar to a lot of your listeners, right? You know, spent six, seven years in public accounting as a manager. Um, you know, worked for a mid-tier firm, did a bunch of audits, and then, you know, one day just kind of got a little burnt out of working, you know, eight to midnight, 8 to 1:00, you know, January, February, March, working Saturdays and kind of, you know, wanted to see what else was out there. And, you know, the Grubhub opportunity came up and it was super cool, super young. Um, you know, the business is probably 1 million or 2 of revenue, super, super early stages. Um, you know, there wasn't even apps back then. Really. Um, it was all desktop. So really.

Blake Oliver: [00:03:00] Wow. Yeah, yeah, because I first encountered it when it was like a mobile app and I was a big fan, uh, using it in. You're in Chicago, right? Is that.

Brandt Kucharski: [00:03:10] No. Well, I went from Chicago about a year ago, so I'm in Nashville now. Nashville.

Blake Oliver: [00:03:15] So. All right.

Brandt Kucharski: [00:03:15] Yeah, some some warmer weather, you know.

Blake Oliver: [00:03:18] So. So you joined Grubhub and what was your what was your what were you doing when you started? Like what was your job title?

Brandt Kucharski: [00:03:24] I started off the same position, uh, corporate controller, chief accounting officer early on. And, you know, we were like, really only in, like, a city or two, um, you know, mainly Chicago. And, you know, we were raising our first big round of funding. Right. Um, our first funder was Bill Gurley from benchmark. Um, well, he's, he's he's a well known VC. But, um, have you ever watched that show on Netflix, super pump. Yes. About Uber. He's the VC in that show. You know, it's about six foot ten, you know, super, super tall guy. And I remember him coming into the office and trying to understand the business if he's going to invest. And you know, he put his money in. And then kind of from there, every other VC kind of followed, which is kind of the game plan. Right.

Blake Oliver: [00:04:03] So you were the controller brought in to help with the was it a series A at that point, or was it like before.

Brandt Kucharski: [00:04:10] That they raised they raised $1 million, I guess, called Angel round and they had a couple million dollar like series A, it was like a BK type when when I came in. But it was, it was like a, a 10 million, $15 million round. Um, that, that bill put in with at benchmark.

Blake Oliver: [00:04:27] So what was the first thing you did like, were there other accountants in the organization already? I assume there was a team that existed and you came in? No, no.

Brandt Kucharski: [00:04:36] They're like the founders were doing some of the bake Brex, I swear, like Mike Evans was the, you know, the second founders, him and Matt Maloney. And he was he was doing some of the bank Brex there was like, uh, accounts payable like kind of staff accounting. That was it. Right. And, you know, the business was on, you know, old school version of QuickBooks almost on a cash basis. Right. And the job is to come in there and say, look, you know, raising a bunch of money, how do we take this thing public in two years? Right. And, you know, got to kind of really put in all the accounting. And what's interesting is, right, you know, Grubhub was the first marketplace company to go public, right? There was no Uber. There's really no DoorDash and all that. And, you know, just trying to figure out the accounting of a million things of like, you know, what do you do when you get issued a promotion or concession? It's a contra revenue marketing expense, right? Little different. Right. Is it gross versus net on a bunch of stuff. Right. And, you know, building out the accounting team to go public a couple years later, it was was a lot of fun.

Blake Oliver: [00:05:30] Now, did you know when you were hired that that was the goal was like, Brandt, you are going to get us in shape to go public.

Brandt Kucharski: [00:05:39] Not really. Honestly. Um, I was just burnt out from public accounting. My wife, um, was an early sales person at Pandora. She was like, one of the first sales people there at Pandora media. Um, she she had a connection to the founders and kind of got me intrigued in. And they just need to hire someone senior. And, you know, part of it was their raising around. And, you know, the investors like, look, you have to have someone in there who knows accounting. Right. And what's what's fascinating is like, you know, when I joined, you know, there were maybe a few million of revenue. If I would have waited a year, I probably wouldn't have gotten the job right, because, you know, we would have been, you know, a year out from the IPO and then, you know, they probably would want someone like my age now, 45, 44 that's, you know, experienced Wall Street officer. And they could have brought someone in with a lot more experience, right? Yeah.

Blake Oliver: [00:06:25] Right. And you're a bit unusual in that you came into this role and you continued to lead the accounting organization all the way through the IPO. As the chief accounting officer like you, you must have had to really step up to earn the trust of the founders and the VCs to be able to do that. Like, do you have any, uh, is there was there anything in particular that you did that you felt got you into that chief accounting officer role?

Brandt Kucharski: [00:06:52] Yeah. It's interesting. Right. You know, um, I think of all the original people when I joined, you know, and maybe like six months later, you know, I was probably the only one who made it from start to finish, right? In terms of, you know, the initial exec team. Um, you know, I always had that ability to scale. I was, you know, very outgoing, very inquisitive, very, um, inspirational with teams. And, you know, you're right. Like, I had to prove myself a lot, right? Like, it was probably about a year and a half after I joined, they hired a wonderful Wall Street CFO named Adam DeWitt. You know, well known guy came in to kind of lead the the IPO on the on the, the the finance investor side. And, you know, I had to prove myself to him that I had the capabilities. Right. And then I also had to give the board comfort, the audit committee. Right. And what's what's fascinating is Grubhub actually went public twice. Not a lot of people know that. Right. Really the first time we went public, kind of we started October 1st, 2012, went through the SEC process, cleared all the comments. By January of 13. We were ready to kind of flip it and do the roadshow, and then we merged with their biggest competitor back then, which was seamless, right? So seamless was, you know, a little bit bigger than Grubhub. They're out of New York, made a ton of money, and we put the two companies together.

Brandt Kucharski: [00:08:03] Right. And then went public as this really large delivery platform and kind of started again a year later, October 1st, 2013, and then went live April 14th. Right. And then, you know, I remember having to go in to the seamless board because now now it's a $2 billion, you know, market cap company and look like say, hey, you know, here's my plan, here's my background, here's why I can do it. I have the experience. I've done some IPOs, my accounting firm before I know the game plan. Here's how I'm going to give them Sox compliant. Here's my accounting abilities, here's my research abilities. And really just get them confident. Right. And you know I did right. But you know you never know at that stage. And and honestly like I credit the CFO at the time for like believing in me. Right. And not just saying, oh, Brad, it's only 31. He's only 32. You know, I need to get someone who's 45 who's been there and done that, which a lot of people do. Right. Like, now, you know, I, you know, I have a lot of phone calls now of companies who call me saying, hey, we're going public. You know, we need someone who's been there and done that. You know, our controllers only, you know, 32, you know, doesn't have the experience. We need you to come in. And, you know, that could have been me right back in the day, right?

Blake Oliver: [00:09:10] So let's say that happens. You get the call. There's a young controller asking you for advice. What what would you tell that controller about the IPO process? What what is the what is the most important thing they need to be thinking about?

Brandt Kucharski: [00:09:26] You know, it's the single most life changing experience I can tell everyone from being part of that. You know, it's so rare. Um, you know, 99.99% of companies don't get to that point. Um, I think on that day alone, the stat we always talk about is there was 30 people who made under $30,000 who became millionaires. Okay. You know, at the company. So just just like a nice transfer of wealth. But, you know, I think you really have to look down the road. You got to look back 12 months down the road and start to think about like, look, number one, what's our accounting system? Is it going to scale? Does it have the controls around it to, you know, double or triple in size? Sometimes it doesn't. Right. Three like what are the complex accounting positions that we need to really nail and really make sure we don't get caught blindsided by the SEC. How are we going to be Sox compliant? Have we mapped out all of our risks and key controls? Right. And kind of said like, hey, here's all the bad stuff that can happen. Here's what we're doing to stop that. And then really kind of looking at the team and making sure you can close like a public company. Right. And, you know, like, I'm not here to pitch floqast, but, you know, having great software, you know, that can mitigate some some risk. Is is is crazy beneficial as you know.

Blake Oliver: [00:10:40] Well, I'm happy for you to pitch Floqast. I exercise my options. So I want them to succeed as well. Nice I will um, but you know, like let's talk about the tech stack. Right? That's a that's a great topic. You said Grubhub was on QuickBooks. Was it QuickBooks desktop when you showed up?

Brandt Kucharski: [00:10:56] Yeah, yeah. It's quick. You know I'm sure they had a online version back then. But the problem was like we probably had like 5000 restaurants back then. Right. And the way it works is Grubhub collects the money at least back then. Right. We take our 15%, then we pay the restaurant back weekly or monthly, right. With 5000 restaurants. Right. If we're paying them every week, that's 20,000 transactions a month, right? Quickbooks can't handle clearing 20,000 transactions. You know. No. Right. You know, and you know, you're trying to figure out like, okay, how do I how do I take a bunch of clear checks? How do I match them to a bank statement? Something so easy it took forever, right. And, you know, a year later, those 5000 restaurants were 30,000, right? So, you know, you're you're pumping out, you know, 90,000 transactions and then, you know, doesn't scale. So we we went through a whole evaluation of Intacct versus NetSuite. Right. And I don't see both both are great systems. Um, a lot of your users probably use one of them. Right. Um, you know, I know those two software companies, they're they do not like each other. If you know anything about accounting, I know if you ever heard that.

Blake Oliver: [00:12:04] It's like QuickBooks versus zero Intacct versus NetSuite, right. Dynamics isn't there sometimes. So which one did you end up selecting for Grubhub?

Brandt Kucharski: [00:12:12] We chose Intacct. It was a great system for us. Right. Um, you know, at least back then. Right? I don't think we got the attention we wanted from NetSuite during the proposal process. This is, um, you know, early 2011, um, you know, intact center c ctl out this guy named Aaron Harris. Um, I think they're really solid. Holy cow. Grubhub is going to go from a million to 30 million to 100 million of revenue in like two years, right? Yep. And he's like, look, this thing is going to get big. And, you know, they may only have 4 or 5 seats. Now they're going to have 100. And you know we want to invest in them. And you know it really treat them as a marquee logo. And you know that that is how they approached it. Right. That's good. So you know I think it's different now. You know I use NetSuite now at ethos. It's great. It works well for us. Um, you know, a lot of factors went into that decision too. But, you know, in tech scale, you know, we um, we were pumping in 700,000 orders a day into intent. Right? And they have multiple lines in there, no problems. Um, you know, every day we, we had a feed that would go from our database to Intacct, connect them, put the entries in, you know, at least on the revenue side and, you know, no problems. The things scale great with us, you know.

Blake Oliver: [00:13:22] So you had every Grubhub order coming into Intacct.

Brandt Kucharski: [00:13:26] Yes.

Blake Oliver: [00:13:26] That's incredible because I would have I would have guessed that you might have been summarizing transactions, but like, what was the reason to have all of the orders come in every day?

Brandt Kucharski: [00:13:39] You know, I will clarify that near the end we did summarize them by restaurant by total aggregate amount. Right. Okay. Yeah. But and we're talking like 2019 or 20. But up until that point every order came in. The reason for that was I think audibility. Right. So you know, if if our orders want to come in there and do a dump, right, and say, okay, you know, here's all the revenue for the year, here's what it is. All they had to do was just click one button, say, okay, here's a credit for 350. Show me the order. Right. If you summarize, you know, assume you're doing it by date, right? Yeah. You know, it's it's a lot harder because they're clicking a lump sum for, you know, $155,000. Then we got to show them what makes up the 155 outside the system. Right, right. So, you know, and to be honest, it wasn't that expensive to get the computing power from Intec, right. And it didn't really slow things down. Eventually we summarized it. It just, you know, we really didn't need it as much as we thought we did. Um, you know, in terms of that. But, you know, overall, um, you know, it kind of worked that way. And it was it was great. That's fantastic.

Blake Oliver: [00:14:45] So you came in. You're the only accountant. It's 30 people or something at Grubhub. Like, how did you go about building the accounting team? Had you been in a position where you were hiring a bunch of people before, or did you have experience doing this? Like how did you decide who how did how did you go about it?

Brandt Kucharski: [00:15:01] I mean, you know, I came right from public accounting. I was a very, very technical accountant. You know, I was a guy who knew all the standards. I could argue anyone, you know, on research and all that type of thing. But, you know, I had to hire a team. And, you know, the first hire I ever hired was a guy named Rob Kreuter. Actually, no, I take that back. It was a it was a woman named Kate Robertson. Then I hired and she was my accounting manager. Then I hired a wonderful senior staff, Rob Kreuter. And, you know, it was weird because back then we were kind of short on recruiters. So we actually had to source our job and then we would look through the resumes ourself. Right. And Grubhub started to get a name. And I remember I would have like 200 resumes in there to look at of like, who do I want to talk to? I've never done this right. And then try and like pick the person the the pocket of five people you think fit and kind of talk to them. And everything worked out well. They were with me a long time. Rob is still there and you know, you're trying to assess this, like look like I'm probably going to see your count. I probably need a manager. Let's have that in there and kind of see what we need next. Right. But I had no idea, like what I needed or didn't need until we kind of got a couple people in.

Blake Oliver: [00:16:11] And is there a different personality for an accounting team at a startup like Grubhub, versus what you would want at an accounting firm? Like, how did you find those people?

Brandt Kucharski: [00:16:21] So I think the reason I was successful is I'm pretty, pretty outgoing, but I'm also pretty personable, right? Like my job, like Grubhub was public from 2014 to 21 before we sold the company. But my job was to take really complex standards and make them sound simple to non accountants. Right. So I think I really want to hire people who could, you know, speak and relate with other departments because we need to work with them to get information if it's IT camp or whatever, marketing accruals. But I really needed people who could, could kind of take my playbook of, you know, being a partner, right? You know, not being too technical to people who aren't accountants. Right. And really build that rapport. Right. Because, you know, if you if you go to marketing and to start making demands and you don't build a bond, you're you're not going to get a good output. It's not going to work. They're not going to work with you. Right? You know, you have to be relatable. You have to be likable. You still have to be knowledgeable, know accounting. But I need to hire people like that, right.

Blake Oliver: [00:17:23] What was the smartest thing you did at Grubhub?

Brandt Kucharski: [00:17:28] Oo oo oo.

Blake Oliver: [00:17:30] Or the thing you're most proud of.

Brandt Kucharski: [00:17:34] I mean, I remember that there's there's a really, really good story about how, um, right when we were starting to really get serious about going public. Right. Groupon filed to go public. Remember? Groupon? Yeah.

Blake Oliver: [00:17:46] My wife was really into the groupons when that was hot. Yeah.

Brandt Kucharski: [00:17:50] Everyone.

Blake Oliver: [00:17:50] So many Groupon.

Brandt Kucharski: [00:17:51] 1011. Right? Yeah. Um, I remember Groupon, if you remember there were counting, right. They would sell a $30 voucher. Right. And they would record $30 as revenue and then like $26 as cost of sales. Right. And you know, that clearly was wrong. They they went through the SEC process. They got knocked, you know, why was their auditor. And then they had material misstatements. And you know, the company never really recovered.

Blake Oliver: [00:18:16] So tell me what was wrong with that $30 revenue $26 cost.

Brandt Kucharski: [00:18:22] Well, if you look at the principal versus agent Gap, right. And we're going back to 605 or 606. Right. They should have recorded like what does the $4 of net commission they earn on that. Right.

Blake Oliver: [00:18:34] And that's their revenue.

Brandt Kucharski: [00:18:35] Yeah. Yeah. And it goes back to, you know, inventory risk. Can you change the price of the good? Do you really control it? A bunch of indicators. And none of them were there. Like I, I don't know for the life of me how NY signed off on that S-1 financial statement. Okay, you know, I'm throwing out some sauce now. That's okay. So, you know, I remember you know, that at the time though, right? Like top revenue was great, right? So you know, I remember that got around to like Grubhub and the founders and even like our board of like we're doing it wrong. I'm like, no we're not. Like, no, we should be recording the $30 as a food as gross.

Blake Oliver: [00:19:13] Because they wanted to show really high top line revenue growth.

Brandt Kucharski: [00:19:16] Well, it wasn't, but what happened was that's what Groupon did. So all they heard was this is what Groupon is doing. I said, no, we're doing it right, right. We're picking up the 15% I o I o for the restaurant. Right. So, you know, I remember really staying my ground, putting other research memos saying like, look, this is it. I don't know what they're doing. I don't know how they're getting through this. Right. And, you know, really saying, look like we can't do that and staying firm, right. And, you know, eventually because it was even with the investors. Right. Because if you think about, you know, like benchmarking these other companies, right? They all know what's kind of going on in the market. They're very, very smart. You know, Silicon Valley investors, they heard this. They're like, well why aren't you doing that? I'm like, well it's not the rule. It's not right. So then eventually, you know, the proof is in the pudding when, you know, they had to change their numbers, right?

Blake Oliver: [00:20:05] Yes. So you stood your ground on that. You said we're going to do the accounting the right way according to the rules. And you were proven right. Yeah, yeah.

Brandt Kucharski: [00:20:14] I mean, but once again, you know, we were doing net net revenue the right way, you know, for, for ever since I've been there about a year and a half. And then this came up, it was more a question of like, look like, why? Why aren't we doing what Groupon's doing, right? Are we doing it wrong? You know? You know what I mean, right?

Blake Oliver: [00:20:29] Well, and what happened with Groupon, it didn't work out for them, did it?

Brandt Kucharski: [00:20:32] I mean, I think what happened is they had a giant business. It was kind of a very popular thing. But once once you have to take your revenue down from, you know, 2 billion to like a net of like 400, right, or whatever. Right? Yeah. You kind of lose the investor trust a little bit, right? Yeah. You know, and, you know, the business was actually a solid business. But you know, Wall Street is is tough, right. You you lose investor faith right? You lose confidence. It's very hard to recover.

Blake Oliver: [00:21:00] I think the other problem with Groupon was, if I remember correctly, people would do a Groupon like we would do a Groupon. My wife and I would do one, and then we wouldn't necessarily go back to that business again. So yeah. Yeah. Right. So the businesses would do groupons, but they weren't seeing like long time success. And so then they'd stop doing the groupons. Right. And that isn't you can't build a business, a marketplace business, unless you have people that keep coming back over and over and over again. Yeah. And that's what. Yeah.

Brandt Kucharski: [00:21:30] Well, I think you're exactly right. You would see a situation where a restaurant would offer Groupon and then, you know, customers that really want to eat there couldn't get in there because the Groupon and then folks would come in there and, you know, order $50, get half of it for free, not tip and then take up reservations. Right. And it just didn't work for the business. Right.

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Blake Oliver: [00:21:49] So there were a lot of marketplace apps, a lot of food delivery apps at this time when when Grubhub was growing, what do you think made Grubhub successful and become a public company? What was Grubhub doing that was different?

Brandt Kucharski: [00:22:06] I think we were really the first ones to really. Grow efficiently. Grow smartly and really, you know, build a great base of diners and technology and have a great restaurant base, right? Because remember, up until 2015, we did not deliver, right? Really? Oh, wow. Yeah, it was all independent restaurants. Right. So, you know, the business was built around, hey, you know, you own a pizza place. I'm going to market on your behalf and find you, you know, 100 diners who are going to use our app and you're going to deliver. But I'm acting as a marketing agency, right. And, you know, the business was very profitable, very powerful. Um, it grew tremendously. You know, our peak was probably 2018. I think our net revenue was a billion. Our EBITDA was like 300 million around there. So so 30% EBITDA margins are great. Right? Um, and just really built a great marketplace of restaurants and having really smart people who understand analytics and then obviously launching our own logistics was great, right. And kind of launching our own delivery platform that scaled to really bring, you know, that that restaurant that doesn't deliver to the diner base as well. Right. Um.

Blake Oliver: [00:23:13] What was your biggest mistake at Grubhub? Oof.

Brandt Kucharski: [00:23:19] Um, I don't know. There's anything that comes off, um, to mind offhand. Um, I think it would have been interesting to launch delivery a little bit sooner. Right? Like, we we launched it, um, probably like February, March of 2015. I think we could have launched it maybe like a year or two earlier, but that would have required a lot more investment. Right? It's a lot more money up front in the business, made a lot of money and grew tremendously. Maybe, maybe that's one thing I would think about differently a little bit. But other than that, I mean the business sold for 7 billion, right? Yeah, that's pretty good. So so our investors were pretty happy. Um did you success. It's doing well now and I'm proud of the team.

Blake Oliver: [00:24:01] Did you have competitors that were doing delivery? Is that why you said that?

Brandt Kucharski: [00:24:05] Well, I think in February and March. Um, you just started having our February March of 2015. You just started having Uber Eats, um, open up their business. Amazon was opening up. Doordash was still, you know, very early on, um, you know, back then, but I think, you know, it was it was an easy one, like, look like, if you want to go outside the top 20 cities, you know, if you want to go outside New York, Chicago, you know, LA, right? And go to the burbs where, you know, there's business in there. You have to have delivery, right? Because, you know, California Pizza Kitchen is not going to deliver. Burger King is not going to deliver. Right.

Blake Oliver: [00:24:40] So. So these people you hired, like how big was the accounting team when you ipoed?

Brandt Kucharski: [00:24:47] So the first time we did it, when it was just Grubhub solo, I probably only had five people. 5 or 6 people. Right? Okay. What's you know, I'm pretty hands on, like I the first time we did it, I actually, you know, both times I actually did the whole S-1, like, I, I put the numbers in, I drafted it, you know, I would do all the footnotes. Um, how.

Blake Oliver: [00:25:06] Did you learn how to do that? How did you learn how to fill that out?

Brandt Kucharski: [00:25:10] I did some IPOs in public accounting. Right. Just reviewing them. Um, you know, I also have a good network of public chief accounting officers to, to ask them, like, hey, what's going on? Um, one of the things we did too is right around then, um, we kind of pulled the ten latest S-1 filings, right? It was like Zillow, OpenTable, Yelp, Ancestry.com, and we kind of looked at like, what did they do in their S-1? Where did the SEC beat them up? And kind of like, pull best practices from them and kind of pulled them into ours. Now, the one mistake I did make, I'll tell you, was that I should have hired my SEC director much sooner. I she didn't start till we were like 2 or 3 weeks away from being public. So it's kind of like the S-1 was approved out the door. Everything was good, and I should have brought her in like nine months before because she was. Her name's Kathy. Wonderful, brilliant, brilliant person. And, you know, she was the reason for our success on a lot of areas, honestly.

Blake Oliver: [00:26:10] So, SEC director, her job is just like doing those ongoing filings, making sure that you're compliant, dealing with the SEC.

Brandt Kucharski: [00:26:19] But more than that, I mean, usually your SEC director will do a couple of things, right? They'll put together a 10-K 10-q, right. They will help with technical research. Right. And then they're they're kind of like your go to person where if something complex happens, you know, I sit down with her, we go through what do you think. What's the guidance. She would draft all of our memos honestly. Right. I would review them or update them. And then if it was like super complex, we would just go to a third party. But you know that that person is so important, so key to really, you know, figure out the complex stuff, right?

Blake Oliver: [00:26:53] So. You guys go public. The first time. And then you merged with. Seamless.

Brandt Kucharski: [00:27:01] Yes.

Blake Oliver: [00:27:02] What was the scale of Grubhub versus seamless? Seamless versus Grubhub when that happened? Were you equals? Was it, uh, you know, like was one what was what was the situation there.

Brandt Kucharski: [00:27:15] So seamless was probably it would probably like 60% bigger. So the revenue split was probably 4060 seamless. Okay. Now the difference was Grubhub is growing triple digits. Right. And then seamless, you know, was bigger. But they really only were in New York. Right. Got it. So they they owned Manhattan. They were corporate catering there. And you know, they had this massive really well positioned marketplace in in New York. But, you know, couldn't really grow outside of, you know, New York. So, you know, they kind of made a ton of money. And then you had us that were growing, you know, triple digits. And both companies put together told a really good story. Right.

Blake Oliver: [00:27:57] So Grubhub smaller but it's growing. And then that's I assume that's part of the reason the board took you very seriously when you came in and said, hey, I can lead this combined organization from an accounting standpoint.

Brandt Kucharski: [00:28:10] Yeah, I mean, it's it's a difference between, you know, being a CEO at a $60 million company versus 200 that's going to go to 500in a year, right? Yeah.

Blake Oliver: [00:28:21] What about that title? Sorry. Go ahead.

Brandt Kucharski: [00:28:24] Well, it just you know, it was a lot of like presenting like I remember putting together a, a two hour pitch of like, how do I think about IPO. How am I going to take Grubhub and seamless public. In sitting down with the audit committee and walking them through like, here's my plan, here's my grid of like we were Sarbanes-Oxley compliant ahead of time, which is not a lot of people were. So I kind of showed them that here's our IT controls, here's our memos, here's all the things we're thinking about. We close in seven days. You know, we feel really good about our process. We haven't overlooked stuff. We've had clean audits. And, you know, the message was well received.

Blake Oliver: [00:29:02] Let's talk a little bit about the Sarbanes-Oxley compliance. The Sox controls all that. Like, um, was that something you were familiar with before you joined Grubhub, or did you have to learn that on the job?

Brandt Kucharski: [00:29:15] You know, I spent my career at a mid-tier firm called Crowe. Are you familiar with Crowe?

Blake Oliver: [00:29:19] Yeah, I've heard of him.

Brandt Kucharski: [00:29:21] Yeah. So probably in the pecking order. 7 or 8 overall. Um, you know, my my career there, like, I would do audits October through March, right? Do some ten K's and all that. But outside of that, like my summers, I would do socks work. And then I would do M&A work and then some IPO stuff. So, you know, I was pretty fortunate where, you know, I had like six months there in the summer where, you know, there was nothing going on. I would just do socks work. And if you remember, probably before your day. But Sox came out in oh three and oh four, and the firms didn't have enough staff to do all the Sox work. Right. And all they would do is they would, you know, the big four couldn't do a lot of the Sox work, right, because of independence. Right? So Crow was doing, you know, Sox work for $10 billion public companies like whirlpool, GE and these other large companies because the big four couldn't do it. And, you know, some of the partners came over from the big four to kind of like lead that practice at Crow. And, you know, you're getting experience on these massive public companies and you learn Sox. Right?

Blake Oliver: [00:30:24] So I'm not very familiar with Sox. I'm sure many of our listeners aren't, unless they happen to have worked in public companies and dealt with this. Like, what does it mean to become Sox compliant as a startup like Grubhub?

Brandt Kucharski: [00:30:39] So once you're public, you basically have a year before socks counts. Okay. And everyone's familiar with an audit where you have an audit of your your balance sheet and income statement. Right. It's almost like an audit separately of your internal controls. Okay. And you can pass your audit and not pass socks right there completely. I mean, your controls will feed the quality of your balance sheet and income statement. Right? But you know, the two speak to each other. And really what it is, is, you know, it breaks down your balance sheet okay. It goes from cash Prepaids are payroll revenue, expense, tax, corporate governance and says, okay, here are all the bad things, right? That can happen to my company. Somebody could add a fake employee, someone could steal money, someone could write a fictitious check. Revenue is not recorded. Right. So it lists these things out and you got to build it for your company. And then you have to put a control in place that stops that from happening. Right. So like the risk would be payroll. Fictitious employees are added. What control do you have in place. There are dual signatures on every employee that is added outside of the person who entered it or something like that. Right? So, you know, you have this controls you have to put in and they test it, right. And your controls have to like live and satisfy it. Right. And you know, a lot of stuff go into that. There's it controls and it just it's a big process.

Blake Oliver: [00:32:04] Got it. So a lot of documentation a lot of putting in place procedures if they don't exist. And then and then when they're tested like I might. Does that mean the auditor might actually try to add a fake employee to the system and see what happens? Is that how they test it?

Brandt Kucharski: [00:32:19] Are they they'll do walkthroughs, right. Or or they'll, they'll pull every employee that was added for the year and see and say, okay, show me the two signatures that signed off on this employee. Right. Got it. And you really can't miss. Right. And you know, if you miss, maybe you can explain it away or something. But, you know, it's it's kind of hit or miss, you know. Yeah.

Blake Oliver: [00:32:41] So. Seamless and Grubhub combined and then went public again. Yeah. Or and and then so you know, it's kind of like doing it again but bigger this time. Anything anything really different about that experience or was it really like, let's just do it again. We're gonna we're gonna repeat this.

Brandt Kucharski: [00:33:00] Well, I mean, I remember the first time we did it before seamless, you know, working 8 to 1 in the morning. Right? One day, Tuesday, Wednesday, Thursday, Friday. And you know, the way these IPOs work is like you'll work on it during the day. You'll you'll put comments in and then bankers and lawyers all want to get together right. And they want to, you know, review stuff. Your auditors are looking at stuff. Um, you know, they're they're putting comments in. And a lot of times you meet at 10:00 at night to go over changes and approve changes, right. And, you know, from when you start, like if you start on October 1st, right, you have to have it out the door within 40 days. Okay. There's kind of like this timeline. So there's not a lot of time. And you know, everyone has to audit it, sign off on it. A lot of diligence questions. And, you know, it just takes time. So, you know I remember working 8 to 1 and then, you know I thought we're done. I thought we're gonna go live. And then I get the news like, oh, we're merging. I'm like, oh, I gotta do it again. You know, right now, the second time, like, I had more of an understanding of like, kind of like, okay, how can I be a little more efficient, a little more organized, right.

Brandt Kucharski: [00:34:04] So that helped, right. But the problem was when when we merged with seamless, right? They were, for lack of a better word, outside of urine. They were on a cash basis. So we had to go back and like their financial statements, survived right from the accounting rules. Right. They were like the the survivor. Right. Because they were bigger. You know, we had to go back and put them on a GAAP accrual basis for three years. And you know, I yeah, that was brutal. You know, I from from August to through like November of 2013, I was in Manhattan every day. Right. I'd find Monday leave on Friday. You know I had no kids, which was fine back then. But, you know, working with the team, fixing stuff because you also have to fix the quarters, right? So so your quarters have to be right. So it's not like you can just do like a year end adjustment, put everything on accrual basis that that in itself is, you know, challenging. But you got to fix every quarter for three years right.

Blake Oliver: [00:34:59] Wow. Yeah I mean I can't even imagine how you begin to go about that. I guess you're just working down through the balance sheet, right? You're working. You just go account by account. Like how did you how did you approach it.

Brandt Kucharski: [00:35:13] So we had to go back to 2010, right? Yeah. So we would just start with the first quarter that we had to maybe it was like Q4 2010 or whatever. Um, look at the balance sheet, close it. Right. Go through the accruals, fix all the prepaids, fix the stock comp it cap. That looks good. Okay. Let's go to Q1 of 2011 and just work your way down. It took it took a while. Right. And you know the business itself. You know they raised money, they raised venture capital. And you know they had their own complexities right.

Blake Oliver: [00:35:45] So what? At what point did you start getting involved with Holiday Heroes? Is this something? Because I remember what floqast you were, you know, involved in this? You've been doing it for 14 years now. Yeah. Um, what what inspired you to, like, get deep into a charitable organization like this?

Brandt Kucharski: [00:36:08] You know, I think for me, um, I didn't appreciate what grew up. I was going to be when I joined. Right? I was like, look, I'm burnt out from accounting. I want to join a startup. I saw what happened with my wife. And, you know, maybe this is cool. And if it doesn't work out, I'll go back to public accounting. Right. That was kind of my mindset, right? I think like a month or two in, I'm like, Holy cow, this thing is, you know, going to be the next, you know, Uber or whatever, right? And, you know, really, really appreciative of kind of like the opportunity that unfolded in front of me that I didn't even see coming. Right, honestly. Right. So I kind of set in my mind, like, look like, how can I give back to others? And, you know, what can I do to kind of pay it back a little bit? Right? And I started looking for some, you know, charitable organizations. You know, I'm a big believer in helping kids who are, you know, in need, kind of trying to find something, you know, affiliate with some sports and some athletes and, you know, got connected to Holly heroes to really kind of, um, serve as a startup. And like, I didn't want to join, like, a board of a museum or a shed or something like that where, like, they have tons of money. I wanted to join a startup like Grubhub and build it. Right.

Blake Oliver: [00:37:16] It's really kind of a magical organization, right? Like like taking. Taking a hospital floor and changing it into this party, this wonderful experience for the kids at the holidays.

Brandt Kucharski: [00:37:30] Yeah. I mean, the two founders of the charity, um, Heather Hagopian and Haley, they were like 17 and 13. And, you know, I met them randomly, right? Just total, total random occurrence and got to know them a little bit. And they were just going on their own selling, you know, raffle tickets or selling apples and, you know, going to hospitals and buying kids gift cards and bringing them presents. And, you know, I met him, like, look like you really have something powerful here, right? We can really make this a national charity and help a lot of kids. So I kind of met him and then built a board of really influential, connected people in Chicago, you know, really network guys and, you know, scale this thing from, you know, a couple thousand revenue to millions that is today and helping kids across the country. But you're right, like the ability to go into an underserved hospital, if that's in Chicago, Nashville, LA, and take take a floor where these kids don't get to leave the rooms a lot. Right? And, yeah, you know, transform it into a superhero party. We hire professional superheroes, right? People dressed right, Spider-Man, Captain America, Wonder Woman. We bring in food, drink, we bring in gift cards, and we really cheer up the parents and the kids. And, you know, if your kid is in there 2 or 3 weeks at a time for, you know, cancer transplants, whatever it is, a little bit of excitement means a lot to them, right? A kid seeing Spider-Man playing with them or, you know, getting a gift or a toy or the parents getting 100 bucks is meaningful.

Blake Oliver: [00:38:56] Are there any, uh, unique accounting challenges for a charity like holiday Heroes that you've had to deal with?

Brandt Kucharski: [00:39:03] No, I'm just raising money, you know? Um, a really, you know, the funny thing is, is that we're very fortunate that, you know, the the two founders, their their godparent was Fergie Jenkins. You know who that is?

Blake Oliver: [00:39:16] No.

Brandt Kucharski: [00:39:17] So here's a statue outside of Wrigley Field. He's a Hall of Fame pitcher for the Cubs. Right. So this thing kind of kicked off when we were able to really leverage him, who was like a name. You know, everyone in Chicago knows who this pitcher is, right? He would help us get meetings and support with a bunch of organizations and donations early on in the kind of feed us, right? So, you know, the thing really built, built up a lot because of him. And really we were able to get some really good board members because of him, which is awesome, right? But the challenge is just really raising awareness. Like, there are the crazy thing about foundations, Blake, is that we would go to apply for money like scholarships. What's it called? You know, foundation grants or whatever it is. Right. And a lot of them would say, well, we're not going to give you $25,000 until you're half a million revenue, right? I'm like, well, we're 200 grand of revenue. Can we get ten? Well, that's not our fun guidelines. And, you know, it's kind of like, how do you grow with all the grants and endowments are, you know, set up for larger foundations.

Blake Oliver: [00:40:16] Right, right. Interesting. So what did you. How did you solve that? Get somebody to write a big check.

Brandt Kucharski: [00:40:24] Well, eventually, you know, we we built up enough support. And, you know, I always tell people like our first, our first fundraiser, I think we raised $30,000 in the event, cost us 35,000. Okay, so our first year, we lost $5,000 on a fundraiser. Okay. Right. And, you know, we probably had 150 people. The next year. We netted like $80,000. Right? So we we improved the the playbook. But you know, we were able to take our annual galas, which drove a lot of support from a couple hundred people to a thousand people. Right. And it was like, uh, it was like a mainstay in Chicago before COVID to attend our event. And, you know, we couldn't find a venue big enough to hold our events, you know, for our galas.

Blake Oliver: [00:41:09] So you left Grubhub in, uh, 2021?

Speaker3: [00:41:14] Mhm.

Blake Oliver: [00:41:15] What what was the I mean, you'd been there for a long time so I don't think anybody would, would you know question wanting to change things up. Was there a particular reason you left. Like what was.

Speaker3: [00:41:27] Well.

Brandt Kucharski: [00:41:28] I left, um, Grubhub was sold, so we were sold to Just Eat Takeaway. They took possession of the company middle part of 2021. Um, I was kind of, um, in a position where, like, look, we're sold. And, you know, I'm probably not the best person as a chief accounting officer to report into another CEO. Right. It's different. Right. And, you know, I had the opportunity to kind of join, um, the former head of investor relations from Grubhub, who was who also was a CFO at Poshmark. His name was Anand Kashyap. He was a CFO at Ethos Life, where I'm at right now. Awesome, awesome place, awesome opportunity. And he kind of sold me on the business. And I joined him in, you know, the later part of 2021. And, you know, it's a great company, right? We raised $500 million. You know, we're growing very heavily. We're, you know, EBITDA positive, right. And, you know, it has a real chance to potentially hit the public markets in a year, right. You know, who knows what will happen. But you know it's on that kind of path. It's that kind of company. Right.

Blake Oliver: [00:42:36] So you're addicted to the IPO. You can't uh can't stay away from it.

Brandt Kucharski: [00:42:40] I mean, I like to build, right? I like to put my playbook in right. Kind of build the playbook of everything. And, you know, once, once you've done it, you kind of have a playbook and it works. Right.

Blake Oliver: [00:42:51] Ethos. It looks really interesting. Instant life insurance. I'm on the website here and you can just click a button, get your rates. No medical exams or blood tests. Is it really that simple?

Brandt Kucharski: [00:43:03] So I think what ethos did is there's there's a problem with life insurance. Right. Um, you know, just some just some context. Blake, seven of the top 50 fortune 50 companies are life insurance companies. Right. And I think if you go through it like I have my policy from 2013, you know, I went in, I had a blood test, a urine test. It took me six weeks to get my results right. Yep. They came back and said, okay, you're decently healthy. Here's your rates from five different carriers. What do you want to do? Right. And that is six weeks, right? The ethos said, look like who really wants to spend six weeks for something that important. Right. And they developed a artificial intelligence okay. They take 300,000 data points. Right. And they can pull your medical records instantly. Right? They can tell if you've seen a doctor for cancer, if you're, you know, overweight, if you're diabetic, they can pull your prescriptions right away. They they pull your credit and they kind of profile and say, look like, Blake, you're very healthy or no, Blake, you know, you've had, you know, your smoker, you've had cancer, you've had heart problems. We don't want to insure you. And you kind of kicked out or you're healthy and we want to insure you right and right. You know, they'll go through qualify you and say here, here's your rate. And then they pass you to a carrier who's one of our partners, and they take on the risk of your policy. So we're, we're we're a marketplace, right.

Blake Oliver: [00:44:28] Another marketplace. But instead of food, instead of food, it's life insurance.

Speaker3: [00:44:32] This time it is.

Brandt Kucharski: [00:44:33] It's very.

Speaker3: [00:44:34] Similar. Yeah.

Brandt Kucharski: [00:44:35] In terms of that aspect.

Speaker3: [00:44:36] Yeah.

Blake Oliver: [00:44:36] Yeah that's fascinating. So using AI you can you can define the risk, create a risk profile for each customer without having to do blood tests, medical tests, all that. Yeah.

Speaker3: [00:44:51] That's absolutely that.

Blake Oliver: [00:44:52] Must save just a ton of money.

Speaker3: [00:44:55] Well, it's.

Brandt Kucharski: [00:44:56] You know, think about it, right. Life insurance is something where so many people start the process, like today. And if you have to wait six weeks and you're a life insurance agent, right? You know, half those people don't go through with it, right? They change their mind. They don't want to do it right. So like whenever you have a sale, you want to get the person when their intent to sign up now, right? Yeah. If you can, if you can commit in 10 minutes or 15 minutes, it makes a lot more sense than waiting six weeks. And there's a disruption there, right? Because the business hasn't changed in 150 years, right?

Speaker3: [00:45:27] Interesting.

Blake Oliver: [00:45:28] Is there anything, uh, really different? I mean, you said it's a marketplace, but, like, are there any big differences between accounting at Ethos and Grubhub?

Speaker3: [00:45:40] I mean.

Brandt Kucharski: [00:45:40] You know, you have the same principles about how do you prepare for going public in terms of your, you know, your wrist, your socks, you're building the team, technology, software. Um, you know, looking where that is at, the accounting is different. But, you know, the accounting is not not overly complex. I mean, accounting, you know, if it's nuclear fission or rocket science, whatever it is, like, you know, you can learn it and you just learn it, right? It's not we all we all went to school for general accounting. You can kind of just pick it up pretty quick.

Blake Oliver: [00:46:10] Well, but also accounting at public companies can be really intimidating. When I look at the public financial statements, you know, of a company. There might be like 180 pages long in the case of Silicon Valley Bank. Um, I don't know how long was how long were Grubhub's financial statements? It's a lot. A lot of footnotes.

Speaker3: [00:46:33] Yeah. I mean, footnotes.

Brandt Kucharski: [00:46:34] Are probably 40, 50 pages, but, you know, they're they're consistent, right? Everyone's got to talk about their their fixed assets. They got to talk about their revenue policy. They got to talk about intangibles, goodwill. They have to talk about the equity they raise if they have debt, the deferred taxes, stock comp I mean, you know, there's footnotes there. And, you know, the larger the business is, the more complexity there is.

Speaker3: [00:46:55] Right? Um.

Brandt Kucharski: [00:46:56] You know, it just naturally goes that way. But you know, their standards and, you know, there's firms you can partner with to kind of take a look at your financial statement and say, hey, am I missing something? And you can do that as well, right?

Blake Oliver: [00:47:09] So one of the trends over the last 100 years has been that accounting standards have gotten more and more complex. Yes, GAAP has not gotten any simpler. Right. And financial statements have gotten longer and longer and longer. I think the a good example is like General Electric or GM, right? These these these companies used to have financial statements that were dozens of pages long, and now they're hundreds sometimes. Right. Do you think that this has helped or hurt? Do you do you think that we we have gotten too in the weeds with accounting or are we just fine?

Speaker3: [00:47:49] You know.

Brandt Kucharski: [00:47:50] It's it's a great question, Blake. Um, I think it can't hurt to have more information available for investors. Right. Um, you know what? What usually happens is the reason the accounting standard comes up is because somebody tried to abuse that standard, right? Right. You know, you can or not not not abuse the standard. But you know, like you're trying to give investors a better picture. Right. Like to take um ASC 842 leases, right.

Speaker3: [00:48:17] Yeah.

Brandt Kucharski: [00:48:18] You know, you could look at some of these companies that would have, you know, 10,000 airplanes under lease before the standard that wouldn't show up on their balance sheet right now. It would be in a footnote. The investors could see it. But chances are if you have an eight year lease, you probably should have that on your balance sheet to really show investors what money is due, right? Yeah. You know what what was happening was, you know, people were building leases to satisfy the four objectives, right? Which is, you know, does it transfer ownership? Is it bargain purchase option, is it 75% of the economic value of life? Or are the present value of minimum lease payments 90% of the fair market value? Right. If any of those happen under the old standard you put on the balance sheet. Right. But people would do it. So oh, the present value of my minimum lease payments are only 80%. Guess what? Doesn't go on the balance sheet, right? Right. So you know, everyone was building their leases that way because they didn't want to put on put on their balance sheet even though it was in the footnotes. So a lot of the standards are written because people are, you know, not being overly transparent.

Blake Oliver: [00:49:19] Right, right. Well, they, they, they figure out a way to get around the standard. So then we write a new standard so they can't get around it. But accountants are pretty good. Accountants and lawyers are pretty good at getting around standards. So then it happens again. And then we make more standards, right?

Brandt Kucharski: [00:49:35] Yeah. I mean it's why 606 came out. They tried to, you know, close some loopholes a little bit on 605 and, you know, just make it a little more transparent and put everyone under the same playbook. Right. Like the theory is like, hey, if everyone if you're a software company, right? Everyone's doing your performance allocations and your POS and your SSP the same way, probably have some consistency between my company and your company. Right. And, you know, I can look at Okta and I can look at Salesforce and say, okay, like the revenue is under the same theory seems okay. Right. And that that's kind of what they're trying to do. They're trying to get everyone to be consistent. Right?

Speaker3: [00:50:14] Yeah.

Blake Oliver: [00:50:14] But I wonder if it really makes a difference or if it it hurts us in that it creates more work for accountants and we have fewer accountants than ever.

Speaker3: [00:50:24] Oh, right. Well, you know.

Brandt Kucharski: [00:50:26] It's so it's counterintuitive. Right. So think about like how does an accounting standard get passed. You know I can tell you.

Speaker3: [00:50:34] I would love.

Blake Oliver: [00:50:35] I would love to learn how this happens.

Speaker3: [00:50:37] Yeah. So.

Brandt Kucharski: [00:50:39] The big four. You have to pull the number. Right. But I think they made like 25 billion or $30 billion when firms when companies went to 606. Okay. So the way accounting standards get passed is you have people from the big four. Okay. They see an opportunity. Oh, we really aren't comfortable with companies that are doing this. We need to pass the standard and they start going to the AICPA, and they start going to their SEC buddies and start pushing them and meeting and lobbying. Right. They spend lobbying money. Right. Then, you know, they say, okay, this is great. It's going to be more transparent. It's more fair. They love the word fair. So something gets passed. And guess what? Their firm just made $10 billion. Right.

Speaker3: [00:51:22] Right.

Brandt Kucharski: [00:51:23] So it's money. So the the more complex you can make something, the more standards you have to put in, the more money accountants are going to make at the big four firms.

Speaker3: [00:51:33] Right, right.

Brandt Kucharski: [00:51:34] But I remember in 2018 and 19 when companies were putting in 6 or 6, I got a buddy at the big four. If his bonus was like $8,000 that year, like the year before, right? His bonus that year was 35,000.

Speaker3: [00:51:50] Okay.

Blake Oliver: [00:51:50] Because of this extra work.

Brandt Kucharski: [00:51:52] Yeah, yeah. His bonus went up like 3 or 400%. And that was because of 606. Right. And then if you think about socks. Right. And I'm not saying the stuff is like doesn't make sense. But you know, socks has put in 0203 hundreds of billions of dollars are spent in incremental audit fees, putting socks in and just creating work. Right?

Speaker3: [00:52:14] Yeah.

Blake Oliver: [00:52:15] It creates work.

Speaker3: [00:52:16] Yes. Yeah, it creates work.

Brandt Kucharski: [00:52:18] Right. You know, and you need more people. Um, you're right there there is a massive shortage of accountants now, right?

Speaker3: [00:52:25] Yeah.

Blake Oliver: [00:52:25] We created more work for ourselves, but we don't have enough people to do all the work now. Yeah.

Brandt Kucharski: [00:52:29] I mean, you know, I don't know what the model is now, but I think the firms all trying to offshore the work. Right. They try and, you know, put the first and second year work overseas hoping it's a little better data point. But you know accountants now and that's probably indicative of culture a little bit. But you know like they're not going to work eight to midnight for $65,000 as a first year. Right, right. Staff anymore. Right. They're just not going to do that anymore. Um, people are different. They value different things. And, you know, they have to find a way to kind of make ours a little more reasonable or create more incentives. So people want to do it. Right.

Blake Oliver: [00:53:06] So. How do we solve this problem? We've got more and more complexity. Every year. Things get more and more complex because of the reasons you just described, which are not necessarily making for better financial statements for investors. Like, we can't say that's guaranteed, right? Like did 842 really improve the situation that much versus what we had before? It sure costs a lot. But did it really help those investors. So you.

Speaker3: [00:53:32] Know, there's.

Brandt Kucharski: [00:53:33] Here's the reality Blake. Right. 842 that information was already in your footnote.

Blake Oliver: [00:53:39] Right? It was there already.

Speaker3: [00:53:41] Yeah. Yeah.

Brandt Kucharski: [00:53:42] So you could go in there and pull something and kind of say, okay, what's my least obligation? You know, if I was united I'm going to owed 4 billion next year. And, you know, Wall Street buy and sell side. They're brilliant people. They're not dumb. Right. They look at that anyways that they're not just going to look at your balance sheet and income statement. They're going to you know, they know what to pull. So you're right. It's like these standards add a lot of complexity. And you know a lot of the information is there already. Or, you know, you can always call management and say like look what is x, y and Z. And they'll give you the answer generally. Right. Yeah. You know, so, you know, a lot of it is, you know, is it is it helpful. Right. Is it really adding that much value. Like if I had to pay $5 million because I have 10,000 leases, right, then I had to put in and I'm T-Mobile, right? Does that add much more value to the financial statements? I'm not sure, you know.

Blake Oliver: [00:54:35] So it's unlikely we're going to be able to persuade FASB to vastly simplify GAAP. So, Brandt, what else can we do to solve the accounting talent crisis? How can we get more CPAs into the pipeline?

Speaker3: [00:54:49] I mean, I'm we're going to.

Brandt Kucharski: [00:54:52] Start talking into your favorite topic, the 150 hours, huh? I mean, you know, I think it's different. Like when I was going to college, like I was the first class that was out of 150 hours, right? And back then, like, my room and board was $8,000. I went to school for $8,000 a year. Right. And now that $8,000 is probably 40, right. So to spend, you know, if you're spending 160,000 already on college now and spend another $40,000 just for 30 hours, right. It's tough for people, man. It's it's tough. Tough pill to swallow, right. You know, so I think they have to think through like are they getting the added value for that 30 hours. Right. And then that's a whole different set. Right. Because you know now you talk about like who who influences that rule. Right. Academics.

Speaker3: [00:55:41] Right, right.

Brandt Kucharski: [00:55:42] You know, you have the University of Illinois, you know, Austin, all these thought leaders who are like, no, it's critical for the profession to be well rounded. Well, okay. I mean, you know, you're also going to make a lot more tuition money at your school, right?

Speaker3: [00:55:55] Yeah.

Blake Oliver: [00:55:55] It seems like money is is the factor in a lot of this.

Brandt Kucharski: [00:55:58] Money drives every decision, right. That's how politics work. It's all politics, right? You know, um, you know, so you think about that and then, you know, there's a talent crisis because I think students don't want to spend, you know, 150 hours. Right. And then, you know, the hours are getting brutal. And then it like, it cascades, right. So I can share examples where, like, you know, I have friends who are, you know, big four firms and they may have six people on an audit team. Right? Two people leave right in November. Right now they have four people on the audit team. Right. So now, rather than working 8 to 10:00, they're working 8 to 2 in the morning because they don't have people. So, you know, it just snowballs and it goes more and more. And, you know, people leave and they're short. They can't get people in. And then the requirements, the talent, you know, you have to get someone in there, right. So everyone pays the price. It doesn't doesn't add up. And you know, the partners have to pay more, right? If they're going to want to demand these hours, they have to pay people more to do the hours. And if that's more bonus, more salary, they have to take money out of their pockets and take care of the staff.

Blake Oliver: [00:57:05] And we have seen salaries increase. But the same. We have this problem where we have, you know, housing inflation in major markets where even if staff salaries increased 20%, 30%, you still can't buy a house, right? You still can't, you know, get that American dream. So it's almost like. And I don't even know if the younger generation is interested in more money for more hours. Like they may just not even want to do the more hours.

Speaker3: [00:57:34] I mean, you.

Brandt Kucharski: [00:57:35] Know, I, I'm, I'm obviously remote and my company right now I just I visit, you know, the office probably every couple of months I talk to my team all the time. You know, I'm generally a fan of, you know, remote work. I think it works pretty well. But in public accounting, I think it's a different impact. Like when I was doing it right. I'm sitting in a conference room with an audit partner. Right. And, you know, I learned so much from the audit partners on my jobs of things. They're finding technical standards, hearing what the senior manager is talking about, hearing the CFO live. Right. And the kids don't get that now. Right. They're they're all behind keyboards. They're not remote or sorry. They are remote. And, you know, they're not sitting down with me live hearing my thoughts, right? Yeah. Because generally when I talk to audit teams, I talk to the senior manager, right. I talk to the partner. And, you know, I'm not talking to that first year grad out of Stanford or whatever they hire from. Right. And, you know, kids aren't getting that experience. And, you know, it's it's hard to get bought in when you're just sitting behind a computer the whole time, right?

Speaker3: [00:58:34] Yeah.

Blake Oliver: [00:58:35] I think that's really tough. I can't even imagine having to like, try to learn on the job because so much of it is right. Learning on the job trial by fire. Get that knowledge from the people you're working with. But to do it via like teams chat, you know, or video.

Brandt Kucharski: [00:58:51] It's just it's hard because you know, you're you're not getting that audit partner telling you what you did wrong. You're just getting a no or you're not hearing all the back and forth. You're not in a conference room with 12 people, right? For all day. Right?

Blake Oliver: [00:59:03] Brandt, it's been great chatting with you. Is there anything else you want to add before we go?

Brandt Kucharski: [00:59:08] No, thanks for having me. This is fascinating. And, you know, big fan of your show. I watch your podcast and, you know, I think you're, what, like rank 9 or 10 in podcasts right now. Is that right, Blake? Yeah.

Blake Oliver: [00:59:18] We we bounce up into the top ten of business news podcasts. So, uh, we are we're doing our best to represent the accounting profession, advocate for the accounting profession, um, on both the accounting podcast and this, uh, on the earmark podcast. So thank you so much.

Speaker3: [00:59:33] I think you're going.

Brandt Kucharski: [00:59:34] To be top five soon, Blake.

Blake Oliver: [00:59:36] Well, we need more accountants, right. So I have an interest, a financial interest in making more accountants and CPAs so they'll listen to podcasts. So we got we got to figure this, this pipeline thing out. And, um, but I thank you for coming on and sharing your thoughts, Brandt. And I think more than that, just showing people that you can have a vibrant, exciting career in accounting, like what you have done in your career is just so inspiring to to go, you know, like 30 years old, like, basically to do IPO with a startup is so cool.

Brandt Kucharski: [01:00:09] Thank you man. Yeah I had a great team and a little bit of luck you know.

Blake Oliver: [01:00:14] Brandt great chatting with you.

Brandt Kucharski: [01:00:16] All right. Thanks, Blake. Take care. Bye bye.

Blake Oliver: [01:00:21] Thanks for listening. I hope you enjoyed this episode and that you learned something new. And if you did, wouldn't it be nice to get some CPE credit for it? Well, I've got great news. My new app, earmark CPE, offers free Naspa approved CPE credits for listening to podcasts, including this one. Visit earmark Cpcomm to download the app, take a short quiz, and get your CPE certificate. That's earmark Cpcomm.