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Zach Gordon is the VP of Accounting at Propeller Industries, an enterprise-grade financial service firm for high-growth startups. In this episode, he shares how he developed a speciality in cannabis and crypto accounting, the intricacies of serving clients in these highly regulated industries, and his plan for making accounting an attractive profession for young people again.
Join Stuart McLeod as he interviews the world's top accounting leaders to understand their story, how they operate, their goals, mission, and top advice to help you run your accounting firm.
Stuart: 00:00:06.089 [music] Hi. I'm Stuart McCloud, CEO and cofounder of carbon. Welcome to the Accounting Leaders podcast. The show where I go behind the scenes with the world's top accounting leaders. [music] Today, I'm joined by Zach Gordon, a CPA with over 14 years of professional experience across multiple industries and functions. Zack is the VP of accounting for a portfolio of Propeller clients in various sectors including crypto, cannabis, FinTech and media. Prior to Propeller, Zack was the co-leader of the cannabis and crypto practices at two public accounting firms, and the controller, auditor, and CFO for several startups. It is my pleasure to welcome to the accounting leaders podcast, Zach Gordon. Zach Gordon, welcome to the Accounting Leaders podcast.
Zach: 00:00:57.022 Thank you. Thank you. Happy to be here.
Stuart: 00:00:59.637 Now, first up, we tried to do this last week and you were at a crypto conference. So tell me all about the conference. Tell me about how involved you are, and your theories on crypto as it stands today.
Zach: 00:01:15.201 Oh, boy. I hope we have the next 8 hours.
Stuart: 00:01:17.829 Go for it. Go for it. We've got plenty of time.
Zach: 00:01:20.286 [laughter] Oh, man. Not the conference is a lot of fun. So it was actually put together by one of our clients, Masari, and they have an incredible network. And what they've done is they've really aggregated all the heavy hitters in the space. So I've been floating around crypto since probably about 2016. I got introduced to it, I was in a WeWork, so I was a cofounder in a tech company. We were in a WeWork, and long story short a bunch of the devs and a bunch of people around there were getting into this whole Bitcoin thing, which was quite the topic. And it's one of those things that there's very few CPAs, very few professionals at all, including lawyers, finance people, etc. that we're getting into it. So I thought it would be a good idea to get a little more involved. And I've been working in this space ever since.
Stuart: 00:02:04.694 Okay, so there's a lot to unpack there. What was the company that you founded? And let's start with that bit.
Zach: 00:02:12.438 Of course, of course. Yes. So just to tell the story a little bit, start from public accounting about 15 years ago now. Did the whole usual path where you get to the point where you can either stick around forever or see what's on the other side of the table. So I wound up jumping, and--
Stuart: 00:02:25.571 [laughter] The grass is always greener, is it?
Zach: 00:02:27.155 Oh man, boy, is it. So, you know, you get teased with no busy season, actual time off, then. The whole work life balance thing, which is a funny topic in its own right. But wound up going to private equity and yeah, that was not quite the work life balance that one would expect.
Stuart: 00:02:44.517 Oh, tell me you didn't expect work life balance in private equity. You don't strike me as that naive.
Zach: 00:02:53.284 [laughter] Well, so I'm faking it that well. Good. I thought at least there would be, you know, being able to leave before 9:00 at night every day. And that just wasn't the case. And again, you're right. You sort of expect that going in. But anyway, so just sort of coincidentally during that time, a few friends and I started working on a mobile app together, and it started off just a little project, a little bit of fun. Let's see if we can do something here. And what we have worked on was designing it back end algorithm to match fitness seekers with fitness service providers. So let's just say you wanted to do a yoga session at the gym on 54th and Madison, tomorrow 9 a.m.. Let's just say. So based on different variables, so some of them biometrics, some of them geographical, some of them economics, you had to have a payment processor, all that in there. And then the certifications and whatnot on the professional side, it would make the match. You'd be able to book through the app. And it was really one of the first on the market that could actually do that. I mean, everybody and their mother can do that now, but this was 2014 into 2015 and just the technology was not really available at that point. I mean, we had a whole team of developers working on it, and it just was a pretty big endeavor at the time. And yeah, so long story short, we were able to scale that up. We were able to figure out that that sort of direct to consumer business is break even at best. So needed to pivot to some enterprise partners and we were able to expand it out from there.
Stuart: 00:04:20.715 And what was the dividend with the direct to consumer model?
Zach: 00:04:24.565 Well, it's really expensive to make sure that people actually have the certifications that they say they have. It's really expensive to do direct to consumer marketing. So the whole pay per click thing is really, really expensive. So if you're running Facebook ads, Google ads, if you're trying to get any sort of placement in, whether Apple or iOS's app stores, it's-- or Apple or Google, excuse me. It's expensive. Long story short. And realistically, if you actually crunch the numbers, if you go full cost accounting on this thing, it's problematic.
Stuart: 00:04:55.200 Yeah. And so the pivot up into enterprise is like you use their algorithm and pay for it if you already have a distribution and go to market motion, right? And so how did that go?
Zach: 00:05:06.273 Exactly. Why pay for marketing yourself? Let someone else do it. And there's no pride in this. I would be happy--
Stuart: 00:05:12.742 [laughter] We don't need our brand or all over it.
Zach: 00:05:15.359 No. There's no ego here. If one of the big gym players or whomever wants to spend the money to get the distribution and take all the credit, we're happy to be the Intel, the powered by. So that model actually worked pretty well. And the whole reason we're even talking about this is that's how we got into the WeWork. And when we were in the WeWork, then just coincidentally in the office next to mine was a retired Wall Street professional who would deploy capital into, not only crypto, but cannabis as well.
Stuart: 00:05:43.632 Oh, well, that's two of the hardest industries to get banked in.
Zach: 00:05:48.583 Oh, yes. Oh boy, is that another conversation.
Stuart: 00:05:52.532 Did he have a safe full of cash in his office?
Zach: 00:05:55.350 I feel like I don't want to answer that.
Stuart: 00:05:58.353 Don't worry, we go everywhere in this podcast. So we've talked about, you know, cash in gun safes, so they had to take their guns out so they could fit all their cash, because their dispensary was making so much money. So there you go. That's what I'm picturing in this WeWork.
Zach: 00:06:08.874 Oh, I have one of those stories.
Stuart: 00:06:09.967 Oh, there we go. Cool.
Zach: 00:06:11.754 Oh man. So not to go too far down this rabbit hole, but very early on, I actually dealt with a client based out of California.
Stuart: 00:06:18.987 Of course.
Zach: 00:06:19.486 Of course, because where do all these good stories happen? They literally, they bought a bank, and they bought the bank, and they bought the-- the physical location.
Stuart: 00:06:27.790 Right, Oh, okay. Yeah.
Zach: 00:06:29.166 And they bought it for the safe. So they had 30 something million dollars in cash in the vault. And I had to go in and do some sort of testing to see if there was actually that much cash in there.
Stuart: 00:06:40.453 How'd your cash counting go? [laughter] Do you have a machine?
Zach: 00:06:44.402 That was an adventure. Let's put it that way.
Stuart: 00:06:46.346 That cash would have stunk, too, though.
Zach: 00:06:49.404 You don't want to know. Let's put it there.
Stuart: 00:06:51.429 You were as high as fuck, just counting their money.
Zach: 00:06:55.394 Man. That's a good way to put it. It just absorbed the smell. Good lord, the story that cash could have told.
Stuart: 00:07:04.375 I bet, I bet. Were you a bit nervous going into the safe?
Zach: 00:07:09.138 No, going in. It makes for one heck of a story. More nervous about actually coming up with some sort of report. How do you get comfortable with this? Good lord.
Stuart: 00:07:21.220 I don't know. Video of you counting it so, I don't know. Did you [crosstalk].
Zach: 00:07:25.648 Well, it's funny, that's actually one of the procedures now.
Stuart: 00:07:27.955 Is it?
Zach: 00:07:28.688 I mean. Let's just say audit guidelines weren't what they were now. So we sort of had to make it up, you know, use some calculus to get comfortable with it, but man, what a fun industry.
Stuart: 00:07:38.111 So sorry, I've got you distracted. So Wall Street guy with a gun safe full of cash, in his WeWork office.
Zach: 00:07:44.478 Allegedly.
Stuart: 00:07:45.296 Allegedly.
Zach: 00:07:46.387 So he was deploying capital for himself, for some other individuals, family offices and such. And it's one of those things where he had the financial side covered, but in order to do proper due diligence, he did want that CPA's perspective on this thing. So at that point, like I said, there's very little guidance. There was very little road map. So we had to come up with some real procedures to actually figure this thing out. And especially on the cannabis side, so we were called AICP, I called the New York State society CPAs, local politicians. Anyone we could think of just, yeah, you have a license to protect. You're touching something potentially that is federally illegal. So I would love to not get any felonies or have a record. Yeah, little things like that.
Stuart: 00:08:27.196 Yeah, you're fucking picky.
Zach: 00:08:33.215 So yeah, call me old fashioned that way.
Stuart: 00:08:34.596 Yeah, that's right. These accountants and their wish to stay out of jail, I don't know. Fuck.
Zach: 00:08:42.738 Weird, right? It's a stereotype as old as time.
Stuart: 00:08:44.222 [laughter] Yeah, that's right. Not conservative at all.
Zach: 00:08:48.341 No, weird. And yeah, so long story short, I founded the cannabis committee for the New York State Society of CPAs. So it was the first time that we were able to put together a committee like that to have CPAs, lawyers, finance people, business owners, and operators, etc., just because there wasn't anything like that. And now pretty much every state has one now, but it was a really, really unique time to get all these thought leaders together. And that's how we sort of started the process there. And I sit on the AICPA committee now, and I also sit on the digital assets committee. So, you know, really running the line between digital assets, you know, crypto and cannabis.
Stuart: 00:09:25.445 Fuck, does the IRS just ring you, like, daily? Can we go up?
Zach: 00:09:30.019 [laughter] I've been on one or two calls, you know? Yeah, there's a couple of things going on there. But yeah, it's one of those things. You have two industries that are very real. They have a ton of economic firepower. Everyone wants to know about it, and someone's got to figure out the right way to handle this thing.
Stuart: 00:09:44.008 And what's your view-- so whenever we talk cannabis and accounting, what comes up is, and skews my ignorant definitions or ability to describe the issue. But my understanding is the issue that your business expenses aren't deductible in the cannabis industry federally, and therefore you're at a disadvantage to nearly every other recognized industry going around. Is that still the case?
Zach: 00:10:09.401 That's 100% correct. And you get into a few issues there. One, the effective tax rates are through the roof. Half of our job is really doing all these tax calculations on the fly to make sure there's simply enough cash to pay for the tax. I mean, it's a big problem. The other part is coming up with a good cost of goods sold methodology. So you can get some people that are, hold onto your hat, but a little cowboy with this. They can be a little aggressive in what they want to write down. And so coming up with something that's reasonable supportable, but not completely unfair to the owners or operators, because at the end of the day, it's a really tough position to be in.
Stuart: 00:10:46.171 Is there any line of sight to a legitimate tax deduction for your business expenses in the cannabis industry, do you think?
Zach: 00:10:53.861 The second that we can convince the federal government that they will make a dollar more from a fully legal and operating market, then that. It's pure economics at this point. There's a few politicians that still, I think, believe in the moral issues that have been brought up for a long time.
Stuart: 00:11:09.188 The ones that have all been caught at the houkas smoking smoking dope.
Zach: 00:11:13.699 Of course, yeah. That changes the conversation a little bit. But yeah, not to beat around a lot of things, but it's economics, and then there's a social equity aspect to it as well. That's sort of can push in the right direction here.
Stuart: 00:11:27.537 Yeah, well, the illegal industry will just continue to thrive until this can be--
Zach: 00:11:32.682 Well, that's what happened in California. They start to over regulate, they overtaxed, and the illicit market's never been stronger.
Stuart: 00:11:38.612 Yeah. Yeah, hang on, and just one sec, I just got to meat my dealer. Then how does this relate to your experience with crypto then? Is there an overlap in these industries?
Zach: 00:11:50.155 Well, anytime I've seen crypto and cannabis overlap from an offering standpoint, it's a red flag every single time because you're talking about a pretty easy way to launder a whole bunch of money, and you're talking about an industry that lives on that, two of them, really. So.
Stuart: 00:12:05.009 [laughter] One needs the other.
Zach: 00:12:06.264 Good lord. But if we're talking about inventory management, we're talking about actual cybersecurity, things like that. Yeah, there have been some really, really interesting overlaps. If we're talking about from a compliance perspective, man, you're talking about two highly regulated industries that have a lot of gaps. And a lot of market variances and two really popular topics. I never have to worry about something to talk about at a party or anything like that because 50/50 someone's going to come knocking.
Stuart: 00:12:35.479 Yeah. One of the two speaking about tax and regulatory aspects of cannabis. I mean, the biggest issue in the take up of crypto, of course, is the treatment of every transaction is a capital transaction, not a-- or what's the alternative? Like cash transaction, right? So is there any light at the end of the tunnel for that?
Zach: 00:12:57.550 Well, even worse, to keep compliance with U.S. GAAP, they're technically intangible assets unless they're held as inventory, unless you're going to-- your businesses to sell NFTs or whatever the case. So that's been a really, really tricky area. And honestly, that's where I spend a lot of my time from a client facing perspective is just trying to help owners and operators, holders of these assets to understand that, all right, the numbers you see on the balance sheet are not reality. No, your wallet is going to say one thing. The balance sheet is going to say something completely different. So the issue being that you have the date that you buy, that's the number we're putting on the balance sheet. And then we have to go through the whole impairment testing thing, and the number can go down, but it can't go up. And that's just, it's super confusing for people. It's not exactly walk on the park for us either. So one solution that's unique that my team put together was actually a statement of digital assets. So think of it as a fourth financial statement. And to oversimplify a little bit, it's basically a reconciliation from your actual holdings at market level. whatever your wallets say, what are accepted numbers that we would feel comfortable looking at, and translating that to what's on the balance sheet. And then come up with a small little narrative of this is what happened, this is why, etc. And that's how we really help the bridge the gap. But to answer your question from a regulatory perspective, I don't have a ton of confidence that-- I can tell you with a lot of certainty it won't be this year.
Stuart: 00:14:21.017 Yeah. [laughter] We're running out of time. It's be lucky to be this decade, right? I mean, there's no grand swirl around this.
Zach: 00:14:30.079 And a lot of politicians outright have said that it's not on the agenda for the rest of this year. So that pushes it hopefully to early next year, if I were looking at this glass half full, but I don't even think that's realistic either.
Stuart: 00:14:43.021 Have you had experience in some of the countries that are sort of more embracing, like--
Zach: 00:14:46.385 Well I know, El Salvador, it's accepted, and we've done some work down there. Germany is actually the most friendly market in the EU, and we've had some work there. Believe it or not, we've had some work in Israel as well, but it's actually one of the less friendly countries out there, which is a little counterintuitive, because they can-- Israel on the whole can typically be a bit more friendly on that front. So that's been a little tough. And we've had a few groups come out of Australia, actually. And that's been very interesting.
Stuart: 00:15:14.180 Careful of those Aussies. You never know what you're going to get. They're drunk. A lot of the funding or private funding, the invasion from Russia and the Ukraine has, crypto as boomed in the Ukraine, because of its ability to quickly move, move money around and pay for the legal and illegal things that they need in order to defend themselves.
Zach: 00:15:40.198 And it's one of those things that the blockchain is instantly auditable, but you need to understand, well, the standards. There needs to be a standard set. And we just haven't gotten there yet. So it's one of those ironic things that you can move currency instantaneously with very few to, if no controls whatsoever. But it might be the most auditable, the most readily readable of any sort of line of currency. But you have to be able to read it. You need the endpoints. Everything in between is easy.
Stuart: 00:16:09.618 And so you were getting experience in these two industries, you're in New York at the center of some of it, at least. So how did Propeller Industries come about after or during this period?
Zach: 00:16:21.411 I was working at a top 50 CPA firm helping to lead the crypto and cannabis practices there as well as throwing my two cents into a few other places as well. Don't want to be bored. And just by chance, through LinkedIn, someone from there reached out, and the interesting about Propeller, while they may be-- technically we're a consulting firm, but filled with the CPA, CFAs, etc. And it's actually run more like a tech company than a professional services firm, which I thought was really novel. And I hope it highlights some trends that the greater accounting industry can pick up on later on. There's certainly more specialization. So the experience I had in public accounting, if you're a senior manager, director, principal partner, you're handling client relations, you're reviewing work papers, you're putting together product, you're doing everything. And there's very little room to breathe, frankly. And you're worried about the billable hour. There's all sorts of things to worry about. There's all sorts of things in your queue. And what I'd like that Propeller's done is they've taken a lot of that away. So there's specialized biz dev people. There's specialized billing people, there's specialized admins. And as corny as it sounds, you focus on the client. I thought that was really interesting. Not to mention the fact that they were amongst the first movers in the crypto space. And that spoke pretty well to me. On top of everything else.
Stuart: 00:17:48.242 So they made you an offer that you couldn't refuse.
Zach: 00:17:51.524 [laughter] That's a good way to put it. Not as threatening that, but no, it was a great offer. It was a unique opportunity. And I mean, I've never been more happy about a decision.
Stuart: 00:18:01.344 Yeah, and you get to work on very interesting things every day, right?
Zach: 00:18:06.010 Never a dull moment. And honestly, with a lot of these clients, it's been a lot of fun. Part of our job is to help guide them to the right operational decisions. And I have to say for a bunch of really, really smart people, that's usually pretty difficult, but it hasn't been that bad.
Stuart: 00:18:23.113 Yeah. Well, and tell us about the-- so Propeller Industries have clients that are well known. [Away?], Hims, Abound, Fellow, Casper, Sunday, Citizen. You know, there's a who's who of startups and progressive companies that as clients for Propeller Industries. Tell me about some of them that you've worked with and perhaps-- you don't have to name names, of course, but perhaps a story where you've seen how propeller has impacted their success and their journey.
Zach: 00:18:58.544 Well, the most simple way to measure. We're dealing with a lot of VC backed startups and relatively young companies. The sweet spot for us is really in that C to series A or B rounds. And the most simple way to measure that is going for the next round and being successful. So we've had a couple of our clients just in the last two or three weeks, it's been, raised in total, I think we're well over a 100 million. If you want to quantify that, I would say that's pretty good. And being a big part of that is pretty rewarding. But in addition, though, if we're talking about really quantifying the impact we've had, and some of it's in the form of gratitude, which is the funniest thing. Like actually the clients being excited to give over work and asking what more they can give over. So taking some of that stress off of startup founders, which is a big deal. And having been a former founder myself, it really does make a difference. You're worrying about things 24/7, there's about 7000 things to think about. And if someone can come up with the right investor reporting or someone can figure out just, all right, we'll take care of the monthly close, we'll make sure the bills are paid, we'll make sure that the lights are on. That is a big deal. Just within the last couple of weeks here, we've had-- again, we'll leave the name out of it, but a very recognizable name really hand over the keys to the kingdom. And that, I think, was a pretty cool moment. Just, we have all these other things to worry about. You deal with this. And we'll pay the bill with a smile on our face. That's sort of thing.
Stuart: 00:20:19.379 And the team's capacity to sort of work with these clients and help them along their journey is fulfilling.
Zach: 00:20:26.450 It is. I mean, you can see substantive impact. It's not just as simple as filling out a tax return or putting together an order of financial statement, but it's actual impact. And I know that, at least just my personal opinion, it seems like that's the evolution of the industry, where accounts are tabbed as the trusted advisor. And I know that term gets thrown around a little bit. But being able to sustainably do that, to sit in on board meetings, to be able to speak to the different KPIs that matter to them, to roll up your sleeves a little bit. It's not only rewarding, it's kind of fun, honestly, to [inaudible] out there for a second.
Stuart: 00:20:59.684 And why did you get involved in accounting, Zach?
Zach: 00:21:03.011 You know, what's really funny, someone asked me that yesterday. So it's a good question. So going into college, I went to Binghamton, and got into the business school there. School of management. And I actually didn't declare as accounting until I believe was the end of my sophomore year. And that was, it took a little bit of time.
Stuart: 00:21:23.168 I've never heard it called like that. Is that like, is it a ceremonial moment? You declare?
Zach: 00:21:28.319 I mean, we only had a few hundred people at the party, but.
Stuart: 00:21:32.344 Right.
Zach: 00:21:33.904 But no, it's all those things that I got to see different aspects of the educational offerings, let's say, you know, took a whole bunch of classes, got a different viewpoint. Part of it was knowing that there will always be a job. You always need an accountant. So that's sort of, understand as a floor. You'll always be employed. But then, in my mind, accounting has always been sort of like a puzzle. And whether it's a tax return, whether it's a financial, whether it's doing a month end close, consulting engagement, a financial model, whatever it might be. End of the day, all you're doing is putting together a puzzle. And that's always interesting to me.
Stuart: 00:22:04.990 And it's taken you very interesting places. What's next for you, Zach?
Zach: 00:22:09.880 Oh boy, is that a dangerous question. Honestly, I want to make sure I'm having a positive net impact on accounting as an industry. And obviously, the greater world. But if we're just talking specifically, professionally speaking here, because I do think the industry is at a, at an interesting precipice, where CPA enrollment's down, last time I checked, 19%. So one out of every 5 CPAs are not there anymore. The average age of an accounting partner is over 55.
Stuart: 00:22:37.111 I was going to say like 310.
Zach: 00:22:40.961 It's rounding up a little bit. Pretty close. But there's this huge gap in leadership. And just finding the right way to modernize the industry, which is notoriously slow moving. And technology is part of that, so things like process automation will certainly help. But I do think that we almost need a reset. There's some mindset changes that have to happen. There's, I think, a stark realization that we all need to have that how things happen and the experiences we had growing up as professionals are really not the same patterns that we can keep pushing out there. So if I can have some small part in helping to change that, I would say I've done a good job.
Stuart: 00:23:22.250 How do we take the industry that is traditionally very, as you point out, slow to change, slow to adopt, not just technology, but embrace change management, and sex it up a bit and make it appealing to the younger generations? What's the key to that door?
Zach: 00:23:42.876 I mean, we need to rebrand it. The face of accounting is not the young professional coming out of school and to some hotshot new company. It's an older person who's got the tweed jacket with the sleeves cut off, or the elbows cut out, and working the adding machine in the back room. [crosstalk].
Stuart: 00:24:05.513 Hopefully they've got the elbow patches at least.
Zach: 00:24:08.779 Exactly. I do think it is a big rebranding. So I sit on the board for the New York State Society of CPAs, and one of the big things that we're pushing is helping the greater professional population understand that there's people doing some really cool stuff. So it's not just debits and credits, it's not just tax returns, but you've got people working on AI projects. You've got next generation engagements happening. We're working with big tech. We're working with some really cool stuff. We're not just sitting in the back room crunching numbers. So helping to get in front of these kids in college. And even trying to compete with who our real competition is, which is big tech, all these other firms, startup land. If you're a kid out of college, why go to a midsize accounting firm, or why go through the struggle of a tax season when you can go work for Facebook or Google and get stock options and have a great time? And you're going to work really hard, but it's just a different environment completely.
Stuart: 00:25:05.365 It's certainly is. We were doing some research here at Carbon on this recently, and the pop quiz for you. So in 2012, there was 1.28 million accountants and auditors employed in the United States. What do you reckon in 2021, how many accountants and orders employed?
Zach: 00:25:25.120 So it was 1.2, you said?
Stuart: 00:25:26.765 Yeah, nearly 1.3.
Zach: 00:25:29.203 Oh, I would say higher over one.
Stuart: 00:25:32.269 Yeah. It's going backwards. And so as you say, I mean, I don't know where whose job it is, probably AICPA is as culpable as anybody at the moment, in relation to, you know, driving that graduate-- I mean, it's the graduates that aren't coming through. They're not replacing the retirees faster than the retirees are going out, right? So it's one for one at best.
Zach: 00:26:01.194 And something I saw that was actually really novel. I forgot which of the big four it was, but they're going to start pushing a younger mandatory retirement age. I believe I read they're going to push it down to 55 from 65. I mean, just to think about the queue of professionals waiting to become a partner. I mean, if you're getting a more solid rotation, I mean, there's no better way to attract talent than, hey, there's actually upward mobility here. And you can actually have a say and actually--
Stuart: 00:26:23.588 Yeah, there's capacity to actually go somewhere, right, rather than sit around for 30 years waiting for-- nobody, you know, like those days are just long, long gone. Nobody sits around for three months, let alone 30 years, to become partner in a staid old, boring firm.
Zach: 00:26:42.017 And no matter how cool the names on the clients are, whatever the case, it's just not going to happen anymore. No one's got the patience for that. We all have the attention spans of a newt.
Stuart: 00:26:50.220 That has been degeneration in-- a degradation in our generation, and the youngers are even worse. But given the benefit of the doubt for a sec, it's sort of like, honestly, what is the upside? It used to be that that was like, you know, the most satisfying or satisfactory thing you could do is, you know, take over dad's firm, and, you know, hire 12 people, not 8, right? Like, and it's just, life isn't like that anymore. People want more. People are entitled to more, particularly educated people. They want to find purpose in their work, and that's difficult in a big four to find purpose and meaning.
Zach: 00:27:30.932 They want purpose and they want time.
Stuart: 00:27:32.341 Yeah. And flexibility?
Zach: 00:27:34.660 Yeah, I know work life balance is a funny term, but at the end of the day, we frankly don't have to do tax season anymore. The whole billable hour concept is not a great way to run a business, frankly. And if you want an interesting story--
Stuart: 00:27:47.445 Please, I do want an interesting story.
Zach: 00:27:50.427 And we'll keep names out of this, but that's true. So I actually designed a pretty interesting financial model. And built it once, I was able to bill a client for it completely, got paid out and it was actually a profitable engagement. And then we were able to use that model as the basis for other client engagements. And so we were billing the same time. So it was a flat X amount of dollars, whatever it was. And so we got to the point where we had a system down. We could crank these out like it was nothing. And so we billed one client, and it was 10,000, or whatever, the number was. And we put two hours worth of time. And I got yelled at by someone because, oh, why don't you bill more hours to this? Now we're going to have to return the money. No, I don't understand, why do we do this? I thought the whole idea was to become profitable here. So we just got 10,000 or whatever the number was. And we billed $849. That's the dream, isn't it? That we're able to produce something.
Stuart: 00:28:45.599 Produce something valuable.
Zach: 00:28:47.614 Correct. Something that the client clearly wants and are happy to pay for. And it doesn't take us any effort at all because the client's not paying for us to spend time on it. They're paying us for the fact that we know how to do it.
Stuart: 00:28:59.606 They're paying for the value. That's right.
Zach: 00:29:01.784 And we can give it to them, we can explain every intricate detail to them. And we're there. So.
Stuart: 00:29:07.362 That's the true definition of value based pricing. I mean, I think, you know, the fixed fee and the value based pricing arguments have sort of got lost in the ocean a little bit over the last few years. But you're right, that is an ideal arrangement. But it is human nature, well, particularly accountants' human nature to perhaps, I don't know if it's guilt, is it? But it's sort of like, it doesn't fit the model that, you know, they've grown up with. And I guess that's, that is the resistance. That's the issue of take up of all that stuff, right? So, well, Zach, it's been amazing catching up regarding the two industries that are probably the most hardest in accounting to take on. And you do both of them. So you should be proud of your resilience and your perseverance.
Zach: 00:29:55.852 I really appreciate that.
Stuart: 00:29:56.726 And I'm sure the clients and people associated at Propeller and everybody that you come in contact with is grateful for your capacity to further the industry. And as always, if there's anything that we can do to partner together to make that job easier, we'd be more than happy to do so.
Zach: 00:30:15.542 Oh, I think they'll almost certainly be a couple conversations on that front.
Stuart: 00:30:18.925 Zach Gordon from Propeller, thank you so much for joining us on the Accounting Leaders podcast.
Zach: 00:30:23.560 All right, thank you so much for having me. I'm really happy to be here.
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