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This is your destination for feeling empowered in building your business.
These are the real, raw stories of entrepreneurs and business owners who have built their businesses through the messy middle of $1-20 Million, hosted by serial entrepreneur Matt Tait.
Matt knows what it’s like to scale past the first million, and on this show he’ll be bringing on other serial entrepreneurs and business owners who have been there, done that (or, are currently in it) to share what’s worked, what hasn’t, and what’s next.
Dan Gertrudes (00:00):
I also believe that where we were as a company 12 years ago versus where we were as a company six years ago as opposed to where we are today, I believe that AI and the ability to scrape lots of calls and connect with general ledgers through APIs is going to help. We're already seeing it in our business.
Matt Tait (00:26):
Hi, I'm Matt Tait, founder of Decimal and host of After the First Million podcast. And like you, I've taken the leap not just to start a business but to scale and grow it. I've hustled from zero to that first million and now I'm building for the next 50. I know firsthand what the messy middle looks like, and we need more than just numbers. We need strategy, we need community, and we need real conversations about what growth takes. In our line of work, scaling beyond a million means going beyond the spreadsheet. This is where you learn how to grow. This is After the First Million. Welcome to today's episode of After the First Million. I'm your host, Matt Tait, and I am really excited about today's conversation with my friend Dan Gertrudes. Dan is the CEO and founder of GrowthLab, a firm that partners with accounting and finance teams to help business owners make better financial decisions. I also really like Dan because both of us are totally not actually accountants, and it's fun doing well in making friends with non-accountants that are having fun in the accounting space. But Dan has a unique lens into finance leaders and how they build lasting businesses, but also not just service practices. He does a lot of other things with GrowthLab that I think is super interesting. So with that, Dan, welcome to the podcast.
Dan Gertrudes (01:51):
Cool. Thanks Matt. Appreciate the intro and appreciate the invitation. Yeah. I got to tell you, if you had asked me 15, 20 years ago if I'd be in the accounting, nevermind the public accounting space, the answer probably would've been hell no. But I think I got here because 2008 to 2012, I was doing restructuring and turnaround. The world was sort of turned upside down in oh eight, and I knew by the age of 38, 39, I was like, man, I really need to find something that is a little more entrepreneurial. Had no idea what I was going to do. And once I packed my bags in 2013 from corporate, I ended up finding myself in the world of startups here in Rhode Island and Boston, and that's where it all started, frankly. I was like, whoa, I'm just like a consultant, a mercenary. I was like, I'm not sure I'm liking this.
Matt Tait (02:43):
Well, so you were kind of that mercenary, that consultant, but what led you from point A of that to then I'm going to start building my own accounting firm?
Dan Gertrudes (02:53):
The summer of 2014, it was like always be hunting, and the hunting back then meant three to four times a week. You're out networking, you're coming home late. I still have little ones.
Matt Tait (03:07):
Oh yeah.
Dan Gertrudes (03:07):
And then you come home from the networking events, you're doing the financial modeling, you're doing the customer deliverables until one, two in the morning and then you're waking up on the next train to Boston to actually meet with customers and then you eat what you kill, right? So it was very choppy.
(03:22):
And so at that point, I came across an individual who had some customers in common where her firm, it was a very traditional bookkeeping accounting firm. Her firm was actually doing probably a dozen, or maybe that's too many, maybe a half a dozen customer doing the bookkeeping and the accounting for a half a dozen of my CFO customers. And that's when I approached her and I was like, Hey, what's your exit strategy? And she was like, what's an exit strategy? Back then, people weren't buying accounting firms. It was cool back then. And I said, I can give your customers some runway, hopefully open up another chapter for your employees. And at that time, I had brought on a CRO who ultimately became a shareholder of the company. So the things were kind of coming together and she ultimately said yes and took us six months to finally get to the altar and close a deal.
(04:18):
It wasn't at the speed at which deals are getting done today. Much different. And I know it a traditional bookkeeping business, but I think what it gave me was like, okay, if this dog hunts, if this is a real opportunity in this outsource accounting space and outsourced finance space, and 12 years ago it wasn't all under one umbrella like startups or small medium sized businesses, if they needed a fractional outsource bookkeeper, they would go to Craigslist and find somebody that willing to work for you for six hours a week, 25, 35 bucks an hour. If you were looking for a fractional CFO, you're probably looking for a semi-retired former partner of a CPA firm. And then if you wanted taxes for your Delaware C-Corp because you're a startup, good luck finding one, but chances you would just use your local personal CPA. And so the vision was always to, I don't want to say always, but by the time the ink dried on that paper, I remember being in front of a whiteboard with a few folks. I said, here's the vision. Let's bring the whole accounting finance value stream under one umbrella. And that's kind of how it all started. It was, yeah, I can't say it was intentional.
Matt Tait (05:26):
Well, but it sounds like I always find that when people say it wasn't necessarily intentional, it's all the pieces were intentionally there and putting it together is kind of what happens. And that's just one of the turns that we all make in building companies is preparation, is making sure the pieces are all there so that when we're ready to put the puzzle together, we can.
Dan Gertrudes (05:44):
And maybe the word isn't intentional, it wasn't deliberate from the start.
Matt Tait (05:49):
Yeah. I would also like to point out that both you and I can totally age ourselves for younger listeners by dropping Craigslist, which is not really existent. And we could probably throw MySpace in there for social media as well.
Dan Gertrudes (06:01):
And Friendster and file cabinet.
Matt Tait (06:02):
Oh, there we go. We can go way back. We can keep going.
Dan Gertrudes (06:05):
This business actually had a Rolodex, believe it or not.
Matt Tait (06:07):
I may or may not have had one until a few years ago. I don't think I wrote anything on it, but I would keep cards. So one of the things that I find to be very interesting about all of this too is you also built this at a really good time and a change in the industry. And you and I are talking at a major change in the industry today, but one of the byproducts of you having built in the oh eight to 14 range was accounting had moved to the cloud. Now, did accounting firms move at the pace they should have to get onto the cloud? We can have that argument later. The answer is no, but we can argue if you want to, but you had the ability to operate more remotely and to build a team that didn't have to be present in these clients. So timing was also a big part of that, wasn't it?
Dan Gertrudes (06:53):
It was, if I take one more step back in late 2013, 2014, I came across an individual here in the Rhode Island area who had just started his journey around building a cloud accounting firm. Now, I spent 15 years in very large companies where you just don't spin up emails, you just don't go to Google Apps, you just don't hire somebody off of Craigslist. Everything was very structured and you had to go kiss the ring along the way to get what you needed for the business. And so jumping into the world of entrepreneurship, I was amazed to see how quickly people spun up domains, emails. You didn't have a fax machine and you didn't even have an office in many cases. And so when I realized that after hanging around the hoop for two or three months, I realized, okay, I think I can do this. It's not that scary.
(07:49):
I just wanted to do it faster with an acquisition, partly because the acquisition, obviously it comes with revenue and then it spits off cash and then et cetera, et cetera. And so the first bookkeeping business we bought was actually all literally 95% desktop. It must've been 60 file cabinets in that office. But ironically, the employees, the way they service customers is it was sort of a dislocated workforce where they would go to customer sites. So this notion of being a remote was almost like, yeah, this is normal for us. The question became how do we move people away from going to customer sites one and two, what technology can we leverage? And guess what happened in 2015? QuickBooks Accountant came out, it wasn't beautiful. I remember old friends like Valerie and Todd Robinson, they came to our office in Fall River to teach the team, Hey, QuickBooks Online, the cloud, it's the future. I embraced it as did my shareholders and others, but to get that change management, that transformation, that change in thinking, that was probably a good three year process. So yeah, you're right. Kind of stumbled into this right at the cusp of cloud migration.
Matt Tait (09:14):
One of the things I also find interesting is you came at this from the advisory role and built down and out, and now today, GrowthLab is more than just financial advising. It's more than just the bookkeeping and operational support. But you've built out that kind of advisory and help umbrella into much, much more. Talk about that real quick too.
Dan Gertrudes (09:39):
It's not about ego in the statement. We actually became very intentional about our business strategy a year or two in, and we began to see that this acquisition of accounting bookkeeping was valuable because back then we saw it as the hub and the spokes, the accounting was the lifeline, the heartbeat of customers, and it allowed us to keep our finger on the pulse of what is actually happening at these customers. The spokes on the other hand were we didn't build it all right away. It took us, I don't know, eight years to start offering HR services. It took COVID, April 2020 for us to actually do an acquihire to build out a tax practice tax business inside. But things that were near and dear to us and things that we had experience in like FP&A, CFO advisory, those were one of the first things that we built.
(10:38):
And ironically, I always say, and this was a challenge with anybody trying to provide advisory, is it's very ad hoc. I'm not saying everybody right, but generally speaking, if you're a fractional CFO, outside of the one or two meetings that you may have, the board meeting, the management, it's very ad hoc. It's like a lawyer, it's like a CPA, you're sort of sitting by the phone, the big right phone and you're waiting for it to ring. So one of the things that my management team started back in 2016 is in order for us to grow the business, me and my shareholders needed to get out of the work, the day-to-day work.
Matt Tait (11:16):
Got to run it as a business.
Dan Gertrudes (11:17):
Got to run it as a business. That was always like our motto, our mindset. And so as we began to build out the spokes, we began to standardize at least 80% of what we do and how we do it for every customer, regardless of the customer, that 20% of what the customer was paying went to 80% of what we did, which was standard, and then 80% of what the customer paid went to what they really need, which is that advisory work. And so from there we began to standardize and kind of got ourselves out of a lot of the work.
Matt Tait (11:51):
So one of the things that I find interesting here, and you and I come from the same angle, which is how do we get out of the day-to-day work and how do we just get a work on the business? It's very easy for me because I'm incapable of doing any type of finance and accounting work, so I started at a much better place. You on the other hand, are capable of actually being an expert. I'm more of a business advisor, but you talked about standardization and a lot of times when I talk to smaller firm owners and I talk about standardization and how important that is, they think, well, my clients aren't going to like it that I'm standardized. And I try to tell them, just because you're standardizing doesn't mean you don't make them feel special. What you're giving them is an output. What you're doing behind the scenes is standardization. You don't need to show them how the sausage is made, just give it to them. Talk about how you've navigated that process and that difference because I think that's a crucial component that we don't talk enough about.
Dan Gertrudes (12:53):
No, you're right. I mean, I had an old boss mentor. He would say there are essentially two ways to make money in this world. You can leverage capital or you leverage people. The issue with leveraging people is control quality control one and two, the inherent risk that people bring to the table. You'll hear me say de-risking people quite a bit and the way you de-risk people and control quality standard operating procedures, processes, systems, technology. And so if you're looking to leverage people to drive bottom line revenue, because really what you're doing is increasing your margin contribution, that's all you're really doing. Maybe not in the beginning when you hire somebody that's a big chop in cost, but you're trying to create that leverage so that you can either go do higher value work for customers if that's your stick, right? You're not looking to scale to a $5 million, $10 million firm.
(13:52):
You're like, I'm happy with 800 to a million dollars in revenue, great, but guess what? You're actually going to make more as you bring on lower-level, entry-level people. The way to control what these folks do for you in order to de-risk them and make more money is that standard operating procedures, systems and so on. I think I came at this just for a little clarification when I jumped into this through the acquisition. Imagine 15 employees, man, maybe five years ago you'd be high fiving people walking by their desks, Hey, what are you doing? How's it going? How's your family? That wasn't the case 12 years ago. I barely ever saw any of these employees and what kept me up at night was, what are they actually doing for our customers? A lot of complaints, your employee is eating at the desk and breadcrumbs are getting into my keyboard. Literally, this was the types of complaints we would get 12 years ago. And so for us, priority number one was get everybody back to the office or into their home office. Two, figure out the technology and three, let's get the workflow which you think Rolodexes have been. The workflow was actually in blue binders. There was exactly 122-125 blue binders that represented the workflow and to boot, the first page in the blue binder was actually a printout of MapQuest showing you how you got from the office to the customer's office. That's the third one.
Matt Tait (15:27):
We get Craigslist, we got MySpace, we'll throw MapQuest on there, we're going to play bingo with old shit.
Dan Gertrudes (15:34):
But that was the reality. And so me and my shareholders and we had to, it wasn't to be fixed, it was how do we level this up so that one, we're not playing the labor arbitrage game, which was I charge I pay you $25 an hour and I bill you out at 45. Two, how do we manage quality in order to and how do we ensure scope creep as we're moving to fixed price? And so one of the first things we did is we got to get out of these blue binders and go into, at the time we went to Jetpack, it was like a lifesaver workflow was now in the cloud and it didn't ensure quality control. We still use people for quality control, but at least for the first time, it created visibility and transparency as to what we're supposed to be doing. It doesn't mean you're not going to clean the cat litter from the customer's office. I'm not joking either.
Matt Tait (16:27):
That's fun.
Dan Gertrudes (16:28):
I'm going to say I'm not joking.
Matt Tait (16:30):
Really? By the way my mind keeps going to. Alright. One of the things we work on at Decimal is how do we minimize switching costs? And we do that with technology. What's going through my head is you know what a really big switching cost is? Having an employee that needs to drive from an office to a client. That is a massive switching cost and how glad am I that doesn't exist!
Dan Gertrudes (16:50):
Amen.
Matt Tait (16:51):
I mean, holy smokes and crumbs on the desk.
Dan Gertrudes (16:54):
Yeah, it was a heavy lift for customer relationship management, customer success.
Matt Tait (17:00):
Oh, I'm sure you get used to that. You talk about fixed fee pricing and that's coming from the SaaS background. That was always a guarantee when we built Decimal. And so I've never fundamentally understood hourly billing in terms of a metric and the type of work that we do. If it's monthly and repetitive work, you want a price fixed for a lot of reasons, one of which is it allows you to create efficiencies and gain extra margin. You don't have to share that with a client. They're not sharing it with all of their customers. You don't need to share it with them. Sometimes when you reach massive leaps or pricing compression happens, you end up reworking that. But when you talk about standardization processes, I find that a lot of firms talk about it and you've solved two aspects and I want you to dive in.
(17:45):
One is actually getting a team to do it. Two is, and I think this is actually the most important. I think a lot of accountants and a lot of firms struggle on the sales side to not say yes to everything, but to actually sell in a way that allows for downstream standardization and not just say Yes. Actually, one of the things I've always trained salespeople on, especially at our team at Decimal is no is actually one of your most effective sales terms. Tell people no during a sales process, tell them why, but tell them no and it will build credibility. Yes, is one of the most damaging things to say frequently. And I find that's a struggle for a lot of bookkeeping and accounting firms is they may be standardized in terms of process, but they're not in terms of sales. And that creates friction, which always creates economic problems and usually people costs.
Dan Gertrudes (18:36):
So in this business it is people on both sides of the equation. It is employees and it is customers. They're all people. And when you're building a business, especially from scratch, you've got two major things that kind of keep you overnight. One, my employees leave at five o'clock every Friday and I hope to God they show back up on Monday at eight or nine. That's a real thing. And then the other piece is the customers. Are we taking care of them? Are we showing them love hospitality? Are we delivering what we said? And so one of the easiest ways to acquire new customers is to say, yes, yes, yes, yes, yes, we can do it, but you end up finding this rub and this friction, the way we solve for at least the customer side was getting Dan out of sales. I love revenue. I'm not going to hide it.
Matt Tait (19:35):
By the way, at Decimal, they call 'em the Matt Tait specials and our documentation system literally has MTS in parentheses next to a client name just so everybody knows.
Dan Gertrudes (19:45):
It's true. And only once I started to get out of the sales process and people were holding me accountable, and by the way, they would hold me accountable. It wasn't the healthiest way, but it's what we knew back then. That's where we started to like, Hey, stick to your strike zone. Don't sell what you don't make. This is what an old boss said used to be in sales 25 years ago. He would say, can you please stop selling what we don't make? I was like, yeah, but the customer wants that. Well, we don't make it and we're not going to make it. That's a hard truth to swallow. And I know there's a lot of talk about this in the accounting space, how standard operating procedures helped. How do we keep track of quality control? How do we know who's doing what today? I get it, but there's still a big leap of faith in this business.
(20:37):
None of us are perfect. We can talk that there are ways or we can show other. Ultimately there's a big leap of faith. You have to trust. You have to. I also believe that where we were as a company 12 years ago versus where we were as a company six years ago as opposed to where we are today, I believe that AI and the ability to scrape lots of calls and connect with general ledgers through APIs is going to help. We're already seeing it in our business. I'm just going to do a little bit of prior question. When we talked about the migration from on-premise to cloud-based, right? One of the things you said, well, I love fixed fee because when I move to cloud or I implement another off the shelf technology or I do this with another cloud app, it's going to create efficiencies and I get to keep the money that works. I believe that's not going to work in the world of AI.
Matt Tait (21:41):
I would agree with you.
Dan Gertrudes (21:42):
I think unlike the market was not the size it was 10 years ago, it was a very specific subsegment of the accounting space that would provide these services. And there were a very discreet pool of customers that even wanted these services and you probably had to be at their office if you really want as customers and businesses got more comfortable with this, we were able to expand our margins until COVID. COVID exponentially grew. This market exploded, exploded. But there's a lot more entrons that came in that just hung up shingles, oh, supply and demand skyrocketed, and here we are, the doorstep of, or at least AI is as one of my team members, Dan, stop saying that they're at our doorstep, they're in our house, they've already come in. That's going to create a whole other dynamic that we didn't experience that expansion of margins during the cloud revolution. The AI revolution is I think going to shrink margins for many of our peers.
Matt Tait (22:46):
Let's unpack that. I agree. I actually think we're in a, let's call it two to four year period of it's going to be the golden years where those of us that are using integrated technology AI as much as humanly possible, we won't have to shrink top line, but our bottom line will continue to grow. But I do think at some point in that two to four year mark, you're going to see pricing compression happen. And I think that's what you're talking about is the problem. And the way that I phrase it to people is the age of doing and accounting is ending. We need to move all of our staff to advising those high margin. We need to teach and train them. And by the way, we all have staff that are not capable of that today. They are not trained to be able to do that yet.
(23:34):
We need to be able to make that easy for them and train them to do it. But the age of actually having people do work, I think it's ended to me in my business model, and I think in a lot of business models in our space, it's already ended for the US staff, globalization pulled the doing of work away from US staffers and it put it into India, the Philippines, Central and South America, wherever you're using today. But that is going to quickly be replaced by more AI doing more integrated tooling and you're going to end up having US people need to be advisors, client relationships, do what people do best, trust, accountability and credibility. Period. And then globalization is going to continue to move up as well. And so that age of doing is what's ending.
Dan Gertrudes (24:22):
AI is going to compete with the international labor arbitrage a hundred percent. And so I agree with you. The two most important things accounting firms can do today is one, have an AI strategy and I would go as far as saying an AI orchestration strategy and two, getting your team members to use. We're not talking just ChatGPT like Matt. We build AI workflows and I go check the audit files every week during my streams L10 with my engineers and I call out the people that use it because ultimately the people that use it are the ones that are going to be here when this gets penetrated throughout the whole business and the people that are here that are comfortable with the realities. When we talked about this today, my job is not to make people comfortable. My job is to make people uncomfortable. They have to continue to embrace what we're building because within six months we will have task-based agents and within 12 months we will have role-based agents and therefore the second core competency for accounting firms is elevating your team to be advisors and relationship managers.
Matt Tait (25:44):
How do you continue to work with a team that's already been through two to three iterations of technology and moved too slow? So when I first was getting into this industry is 2019, and I brought my co-founder Jacob in and we're sitting at this really big accounting talk, couple hundred accountants. The whole purpose was somebody standing up there in 2019 telling us how the cloud is coming. Jacob, my co-founder looked at me and he's like, what the hell did you get me into the cloud was here 12 years ago.
Dan Gertrudes (26:12):
Salesforce.
Matt Tait (26:12):
And I looked at him and I said, this is where our opportunity is. He goes, do they realize what's coming? He was talking about what you and I are talking about today. I said, no, nobody has any concept of what's happening, but we're here now. How do you help teach and train people in an industry that moves notoriously slow to adopt that they can't go that slow again?
Dan Gertrudes (26:35):
So my Streams team, we revamped the website and there's probably more hearts in the word compassionate throughout that website, but I think it's a real thing. I think AI is here to augment the workforce and I think that as managers, we have to lean into this with compassion but with also accountability. In my town hall recently, I literally started the town hall with there is a tsunami of social anxiety that is crippling people, and I was referring to my team, but I think we can make the inference, it's beyond just growth.
Matt Tait (27:19):
Industry-wide.
Dan Gertrudes (27:20):
And I said the economic uncertainty, employment, security, the 900 pound gorilla is AI. And I'm like, you can either have these feelings and have your own perception of what the reality will look like AKA not have a job or you can alter your perception, lean into AI, start using the tools that the streams team that we're putting lots of money and resources to build this because it's going to happen with or without you. I get it. I'm here to give you all the space to talk about this and share your feelings, but ultimately my goal here is to alter our reality. This is not all bad.
Matt Tait (28:01):
So I agree with you and I think that's awesome. Speaking of your town hall conversation, I think that is number one. It sounds like you did in a very compassionate way, but it's also, it's kind of like the parent where you have to be both compassionate and determinative in helping your kids and helping your team and saying like, look, this is the way it is. My kids always joke when they look at me, I do this, that's dad's "I don't care" face. We've had a lot of that at Decimal lately where it's like, Hey, I know that you don't like this. I know that you don't love it, but I don't care and I do. It's more this is the way it is. I also see the industry really struggling. I noticed it a couple of weeks ago when I was at Scaling New Heights and I gave a couple of AI talks and they were packed and it was a bunch of people that you could just tell are scared.
(28:53):
And I think particularly small firm owners, you and I are lucky enough to have built big enough businesses that can have tech teams, that can have executive teams, that have people that can work on other stuff besides work, but so many small firms, they haven't had time to standardize services. They haven't had time to standardize pricing and packaging. They haven't had time to keep up with technology. And now AI is moving the pace of change exponentially faster. And I don't think it's just AI that's scaring people. I think I can't keep up today and things are getting worse. How am I going to do it tomorrow?
Dan Gertrudes (29:30):
I think one of the interesting businesses to sell to accounting firms is a fractional integrator service. I just had one of my shareholders who parted ways, he started his own fractional integrator business and it's smart because I just got off a call with a customer out in California. It's an accounting firm. They were looking for automations and she didn't know where to start. And I said, a good place to start is process mapping your current state and then what do you want your optimal future state to look like? What are the platforms, the systems, what are you measuring improvement with? And she's smart. And then I said, we can talk about AI, and I kind of talked a little bit about the AI maturity journey, rules-based automation, AI workflow, AI agents, orchestration, and you're not even here yet to get up to bat. You need somebody that's going to help you lay out some of the strategy.
Matt Tait (30:31):
Quite frankly. And you get to this, firms today aren't capable of implementing AI in very helpful ways because they're not structured in ways that AI can be helpful.
Dan Gertrudes (30:42):
Correct.
Matt Tait (30:42):
And I think that's a tough thing. I agree with you on the integrated part. In fact, it's one of the big reasons why decimal started franchising and we'll start franchising later this year, is it's just saying, look, you can't keep up today. Let us just keep up for you. You go focus on your clients, you go focus on the advising, you go focus on selling new business. We will do everything else so that you can be successful and it's us giving it to you in a box and creating the community around that because I find that very few people want to pay for the integrative services. Very few people can because the other side of this right now that you and I have working to our favor is when you've built a really good firm or company, you have good margins, which means you can pay people well, which means you have good outcomes for all parties involved.
(31:29):
The problem I find also with most small firms and having done acquisitions, you've seen this too. Most firm owners aren't making very much money and they could have a million dollar firm and they're making 120, maybe 150 grand, and that just shouldn't be the case. This is also about changing the personal economics. So when I talk to people about outcomes, I start with economic outcome first, process outcome second, here's what you have today. Here's what you're making. Where would you be happy? What is your ideal income? And oftentimes it's pushing them. They're like, I'd love to make 150 grand. And I'm like, what about three 50? They're like, well, that would be better. I'm like, absolutely. How do we build you to the economic outcome? And then how do we build the process and systems outcome to get you there? And I'd like to start with that because I feel like we have an industry that doesn't understand what it's capable of yet either. And one of the things that really good firms in the next generation are going to do is prove out the economics better. And I think that's going to prove out outcomes and that's going to really improve workforce. That's going to improve hiring, that's going to improve all throughout it, but right now, the economic outcomes don't align with good.
Dan Gertrudes (32:42):
I have this feeling by this time next year we're going to be talking about million dollar per employee revenue firms. I think the first AI centric, not native, but AI centric firms, those firms that either built from scratch and had endless cash or they were solid DI wires or they brought on engineers bringing the AI to the center of the business because up until recently, up until now, really what's been at the center of our businesses, people servicing people, I think with the AI at the center of our business and building a front around AI, you're right, the economics are going to change. I think you said something when we spoke a few weeks ago, kind of stuck in my head and I never articulated it this way and I thought it was smart. It's really hard to deploy. It's almost impossible to deploy AI without scale because you can pay my team to buy or rent depending if you want us to develop and we'll just hand over the keys to the kingdom. But it is very expensive not just to develop but to maintain. It's like you need an HR department for your AI agents.
Matt Tait (34:01):
I love that way of putting it. What's interesting here as you're talking is all of these firm owners, the economics are going to change, the outcomes are going to change. AI is going to change. We're at this precipice of what you and I see today is going to be very different, and I think you and I see the future very much similarly, which is I think is really, really cool. What I think will be interesting is how it happens. I mean, in today's world with very minimal native AI, I already have a firm with half million dollar per employee outcomes easily. And that's without advisory, add advisory to that, and it is skyrockets. So your idea on getting to a million dollar per employee outcomes I think is very, very possible. It's really not that far off.
Dan Gertrudes (34:49):
No, because if you actually go into your workflow system and the time capturing system and see what your team members are doing, and when you'll see that 60 to 70% of what we do is still click and buttons ticking and tying, I'm not saying it's not value added. What we actually do is non-value added to our customers. Our customers don't really care how many buttons you have to press to prepare financial statements and to review those financial statements. Our customers are paying us for outcomes.
Matt Tait (35:25):
I think the other thing where accountants are struggling today is they struggle with the, I spend so much time working on the accounting side, it has to be important. And the reality is to small businesses, they don't care. They care about the outcomes, they don't care about the accounting. That's not minimizing the importance of the accounting. The accounting is essential. As a sports guy growing up, played baseball, being able to field a grounder and throw it to first base was extremely important. But you know what? You got congratulated for the diving catch that you also got somebody out on. You don't get the easy grounder. Nobody claps at that. In accounting today, accounting is that easy. Grounder and what people want and what they need and what they care about are the diving plays are the outcomes, are the advising, are the helping people look forward and be successful. And we need to get out of the mindset that people care about the accounting. It's not minimizing its importance, it's just understanding what they truly care about.
Dan Gertrudes (36:26):
It's the outcomes, it's the conversations. It's knowing I can pick up the phone and talk to somebody.
Matt Tait (36:32):
I agree. The other piece of that too is that's what people do really, really well. People do relationships really, really well. So as AI is coming, the relationship, the outcome, the conversations, the trust, the advice, that's what will set people apart because that's what we do better than AI.
Dan Gertrudes (36:53):
And our job as managers, as owners, and having that compassion as we transition into this new sort of paradigm because none of us have, we don't really all know what's going to happen. We have a thesis on it and we understand the opportunities and the risks around this thesis. It's our job to help elevate our team to be successful in this new paradigm, and that's going to be the hardest for us. If you were to ask me what keeps me up at eye, what drives me insane? Well, I hit my head against a wall when I don't see the team embracing it for me, I have no fear in the development of the AI. You and I have engineers, hiring engineers to do this, working alongside them, blue skying, really trying to remove the constraints of our own imagination. But when I hand over these automations over to the team and I recognize later that they're not being leveraged, that's frustrating because that's going to be par for the course. It's going to be part for the course, not just at our company. I keep telling the team, this isn't just a GrowthLab thing. You may buy yourself an extra few years if you go somewhere else that's not investing in this, but ultimately email will be here, Google search will be here, not going anywhere.
Matt Tait (38:25):
How do you lead with compassion through that? I mean, we talked about the analogy of parenting and having a team, but part of it too is understanding that this is scary for people. Understanding it's scary for a team, for the industry, for the people that sat in the rooms scaling new heights, I find it very understandable that this is scary. How do you not do the doom and gloom and this is coming and you have to do it, which it is and it's true, but also in a compassionate and understanding way.
Dan Gertrudes (38:53):
Today, I closed out my leadership L10 with "this is about rising tides". We all recognize that there are parts of our job that we could go without when I enter the same numbers into the same spreadsheet just another week, it's like Groundhog Day, when I'm reconciling and troubleshooting a reconciliation for three or four hours because I can't figure out Stripe or I can't figure out this Amex credit card, which is notorious for double bank fees.
Matt Tait (39:26):
Always has been.
Dan Gertrudes (39:27):
It's like, aren't there parts of our job that we could just be like, oh my God, I wish the bots would just take over this. Of course there is. The question becomes, without that part of your job, how do you reinvent yourself for a new job, a new role? And that is the scary part for folks. And I said, one way we could do this is let's learn to give not just each other, but let's learn to give our customers just total unreasonable hospitality. Pick up the phone, stop the back and forth emails with the customer. Things are getting lost in translation. It's the softer skills. Talking to my HR manager this week, I said, I love the skills gap analysis, but something, can we stop? Can we stop doing this? Because ultimately you have a job here because you have the technical skills. And if you don't, that's quite all right. Because what's more important in the coming years, it's the softer skills, people skills, rambles, reverting back to a non-technical industry. And I know that's, I'm sure people will call me out on that.
Matt Tait (40:39):
I absolutely love it, but I'm glad you said it, not me. So that when we post about it, it's look at what Dan said.
Dan Gertrudes (40:45):
And training our great people to break out of that shell. And it is that sort of evolution from technician to more of softer people skills. I think a lot of my team members have it. A lot of my team members are uncomfortable with that, but they do it. The question becomes, are you going to be able to do it on a larger scale like this? Is renewable more, better or better?
Matt Tait (41:12):
It's interesting because my first career, I'm a recovering attorney. The law has very much become a people game. The days of Betty, the bookkeeper, sitting in a back office crunching numbers, and the only person that talked to her was the CEO or COO, that's done. It's a hundred percent done. I thought one of the most fascinating things was when Ramp came out with their announcement on their big raise, and I think one of the things we could talk more about we don't have time today, is how to find the right tools that your clients use to leverage that are also leveraging AI. It's not just what we're building and using internally, but it's finding the right tech stack for our clients, our shared usage that is also leveraging AI because we're death by a thousand paper cuts. So if you can remove a bunch of 'em, we need to do that.
(42:01):
But Ramp came out with what they think the structure of an accounting department in a big enterprise business will look like in the next five years. It is unbelievably different than what it looks like today. And I saw a lot of people talking about it online. One of the things that my questions to everybody was what if he's right? What does it look like if you have groups of employees that are orchestrating AI? I like your AI, HR department, but you have multiple HR departments there we go that are working and orchestrating specific jobs and specific functions and integrating them together. And then you're moving people into the orchestration and advisor. And to me that's its interrogation, interrogating AI the right way. It's orchestration and it's advising. That's what people are going to be working their jobs towards, all of which really become people-oriented roles. And I think that's the biggest skillset. If you were to ask me today, the single biggest skillset that you could start to give accountants today, it would be people skills.
Dan Gertrudes (43:07):
I'll add one other thing around the AI journey for advisory accounting firms. It's picking and choosing where you're going to lean into. Awesome, because you brought up Ramp, whether it's Ramp, whether it's QuickBooks, you have to be careful where you begin to develop your AI strategy and thinking about it through a little bit of constraints. What are my bookmarks? Am I going to build a general invoicing AI agent to connect to QuickBooks? I may or may not because you also have to have some sort of view of what these platforms that like a QuickBooks or whatever, have some sort of view of how far and how deep are they going to go with their strategy. And nobody has a crystal ball. We all go to these conferences and we hear people on stage and especially Intuit Connect, even Zero, they're really great at giving us, I just came back from Karbon a few months ago giving us perspective, and what I get out of going to some of these conferences is, okay, I'm beginning to see what the bookends look like for how deep you want to go into my processes because then from there I can plan out where do we start and stop?
(44:29):
Is Karbon ever going to create an AI agent? Maybe they will after they hear this, but Karbon, is there going to be some sort of off the shelf AI agent that pulls all the pieces of work and the recipes of the workflow and pulls that into an agent that does the bookkeeping for you? Maybe not, but is that something we're working on? Yeah, because if we can plug into the recipe, we can actually stop orchestrating some of the task-based agents.
Matt Tait (44:57):
Well, and that's where I'd also say looking at some of these AI native tools, we use Puzzle quite a bit and we've implemented real IT internally where some of those are also coming in and doing a lot of the work for us. And when we are looking to build our own transaction agents, we're looking more at the how do we do it for our QuickBooks space? But then the question becomes, alright, if QuickBooks isn't going to do it and we have to build on top of it, how quickly can we get them to real it or to puzzle? And so I agree with you on looking at the landscape of technology and look, the biggest thing that I think you and I have talked about is when we look at the scope of where firms are going and getting past that first million is going to be harder and easier in some ways than it ever was before.
(45:45):
Easier if you do it exactly the right way, harder if you struggle, and we are in an industry where I think it's probably going to be like a 99 and one for a while where 99% are going to struggle and 1% are just going to grow. And there are a lot of ways to do it becoming more people oriented, just understanding change. But to me it's been really cool listening to you talk today on how you think about the future, how you think about the past, and also just generally how you help people in their own firms to grow. So Dan, as we wrap up today, where can people learn more about you and your company and maybe follow you and get some insights? Where can people learn more about you?
Dan Gertrudes (46:28):
So I'm on LinkedIn, it's probably the easiest place. I think it's Dan or Daniel Gertrudes and dan@growthlabfinancial.com. Enjoy this.
Matt Tait (46:36):
Well, Dan, I really appreciate you coming on and I hope that as people watch this, they don't see that this has been a very technologically glitchy recording for both of us. And a little like the old conference calls where you couldn't see where people were talking and what was going on, but it's been an awesome conversation. I really appreciate you joining and look forward to talking soon.
Dan Gertrudes (46:55):
Yeah, thanks Matt. Appreciate it, buddy.
Matt Tait (00:47:00) I don't know about you, but I really enjoyed the conversation with Dan Gertrudes and I wanted to take a second to give you my five key takeaways. Number one, embrace the unexpected journeys. No path to entrepreneurship and success is straight and linear.
Matt Tait (00:47:15) It's gonna have its peaks and valleys. But Dan's is kind of particularly interesting like me, he's not a true accountant running a very large accounting business. Dan's story really shows that career paths can be unpredictable and, and I think interesting. From corporate restructuring back in the oh eight financial crisis to founding and starting Growth Labs, Dan's journey reminds us that success can come from unexpected places.
Matt Tait (00:47:42) So embrace change and be open to new opportunities when they arise. I think that's a good piece of advice for not just entrepreneurs, but I think people in general. Number two, standardization is key to scaling, particularly in professional services businesses. Figuring out how to standardize things behind the scenes, how to standardize pricing and packaging.
Matt Tait (00:48:04) All of that is what leads to true scalability. Dan talks about how important it was when he finally decided to start standardizing processes at Growth Labs, and that's what enabled his firm to scale so effectively. And it's been a cool journey. Having known Dan for a few years, it's really cool to see how much his firm and his company has grown and how that standardization has really helped.
Matt Tait (00:48:26) Plus this focus on creating repeatable and efficient systems really helps you. In the accounting industry in particular, transform from traditional kind of bookkeeping to really being that advisor, that helper, that consultant. So the takeaway is create more strong systems now. Create that solid foundation of processes, and that's what will help you grow sustainably in the future.
Matt Tait (00:48:51) I know it's hard to do, but taking the time to really think through and build out processes is really, really important. Another thing, the third thing that I thought Dan focused on that was really important, and this is kind of the looking out to the future and that is AI is, is really gonna start shaping our industry.
Matt Tait (00:49:10) I still think and, and I think Dan agrees that we're kind of in that first TV segment of time where you should never buy the first new tv. Wait for the, wait for the second one to come out. It's gonna have half the cost and double the features. But both Dan and I explored how artificial intelligence is gonna continue to transform accounting, moving firms towards a more advisory role.
Matt Tait (00:49:31) The doing age of accounting is going to be ending really, really quickly. And Dan highlighted the importance of. As you think this through, it's, it's not a just go do everything, go do anything mentality, but it's actually like, take some time, sit there, think, develop an AI strategy for yourself, for your firm so that you can stay ahead.
Matt Tait (00:49:52) The future of accounting is going to require firms and people to really embrace technology even more so than they have today. But it's also about knowing how to balance technology with the right human expertise. We as people are better at accountability and credibility and trust. That's what we need to lean on going forward.
Matt Tait (00:50:14) The next thing. Number four is people skills matter. It's a tech world, but like I just said, trust, accountability, those are the things that we can focus on as people. These. Innately human skills are what's gonna set us apart in an era where AI is going to continue to become more and more prevalent. Dan emphasized the ongoing importance of these people skills, and I thought that was really cool because we focus so much on the other side, the ai, the technical side, we don't focus on really, really.
Matt Tait (00:50:46) Cultivating those people skills. Technology can automate the tasks. It can do a lot of the work and it's gonna keep doing more. But building strong relationships with clients and your team is really, really what's essential in the future. Firms that master both the tech side and the people side, the relationship side, I think that's gonna be the recipe for success.
Matt Tait (00:51:09) Finally, number five, aligning economic outcomes with your firm's growth is really, really important. We talked about this a lot, Dan and I, where we talked about how you have to align those two things with the right approach. AI driven firms and firms today can really achieve, I think, significant revenue per employee.
Matt Tait (00:51:30) That's a really good metric to start to look at. Really analyze costs, understand costs. Keep your focus on how to drive better growth, not just growth. Understand where your leverage points are and build upon those.
Matt Tait (00:51:45) So as you move forward in your business, think about how can you embrace change, scale smarter, and leverage technology, all while keeping people and relationships at the center of your business.
Matt Tait (00:51:58) That's what's important. Catch you in the next episode.
Matt Tait (00:52:02) Thanks so much for listening. After the First Million is presented by Decimal. To listen to more episodes and find tips to help make running a business easier, visit decimal. com slash AFM. Want to join the conversation? Reach out to me on LinkedIn and let's explore the messy middle.