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Ben Taylor, a CPA-turned-tech-entrepreneur and founder of SoftLedger, sits down with Stuart to share his company's origin story, the landscape of a mid-market GL solution, how to enable accountants to 'do more with less', and the saving grace of having your best friend as your co-founder.
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: 00:00:06.229 [music] Hi. I'm Stuart McLeod, CEO and cofounder of Karbon. Welcome to the Accounting Leaders Podcast, the show where I go behind the scenes with the world's top accounting leaders. Today, I'm joined by Ben Taylor, the CEO and cofounder of SoftLedger, which is a real-time cloud accounting software that helps businesses access their financial data faster. Ben is a CPA with over 10 years of public and private accounting experience, and he came up with the idea for SoftLedger in 2015 while working as an accounting manager for a public company. Today, his accounting tech startup has customers in over 20 countries and various industries including crypto, fintech, and private equity. It is my pleasure to welcome to the Accounting Leaders Podcast, Ben Taylor.
Ben: 00:00:53.153 Thanks for having me on.
Stuart: 00:00:54.088 No worries.
Ben: 00:00:55.136 It's good to be here. [laughter]
Stuart: 00:00:56.207 We share an affinity for building software for accountants. Some people would call us mad, huh?
Ben: 00:01:02.111 Yeah. That's what got us into this. [laughter] I was doing accounting, and then decided that we could have better software. And so that was about a little over seven years ago, and here we are today. Yeah.
Stuart: 00:01:15.032 So tell me, well, let's start with the journey. What got you into accounting in the first place?
Ben: 00:01:19.485 Sure. So yeah, it was a surprise to me at the time, but in my undergrad, I was interested in business, and I didn't know specifically what major I wanted to choose within business, and accounting just kind of clicked. It made sense. And if you understand the accounting behind a business, everything goes into that. Everything that has financial impact at all has to go into the company's financial statements. So you kind of cover everything. And so yeah, that was something that was interesting to me. And so I decided to major in accounting, got my CPA after I graduated, started off in public accounting. And yeah, that was my career up until starting SoftLedger.
Stuart: 00:01:59.513 And which accountants did you work for? How was your career postgrad?
Ben: 00:02:06.831 So I started off at Ernst & Young doing financial audits. Did that for a few years, then went to Fannie Mae and did financial reporting, and was there for a few years as well. And then--
Stuart: 00:02:19.389 You weren't there in 2008, were you? [laughter]
Ben: 00:02:21.989 No, no. A few years later.
Stuart: 00:02:23.450 That would've been an exciting time.
Ben: 00:02:25.518 Yeah. We dealt with the aftermath. Yeah, it was definitely an interesting time to be there and learn about how-- it's a very specific thing that
Fannie Mae and Freddie Mac do that's kind of a little bit different and esoteric really to-- and anyway, that was-- learned a lot there, and it was a good transition from public accounting because you're doing similar things like reviewing what all the departments are providing and making sure it's right before it goes to the financials. From there, I went and did-- the job that I was at right before
starting SoftLedger was corporate accounting in an accounting department for a public company.
Stuart: 00:03:02.914 Right. And speaking as a dumb Aussie, how did Freddie Mae and Finnie-- no. Freddie Mac and Fannie Mae even come about? Because they're government-owned or something now, aren't they?
Ben: 00:03:14.241 They're government-sponsored entities. So if you see the acronym GSE, that's them. And so I think it was in the '30s, Fannie Mae was chartered, and I think Freddie was a little bit later. And it was to provide liquidity to the mortgage market and to stabilize it and be an active participant in the mortgage market so that you can do things like have 30-year fixed-rate mortgages and all that. And for
the vast majority of its life, it was profitable and then, yeah, we know what happened in 2008. [laughter]
Stuart: 00:03:50.670 Yeah. They bailed them out, didn't they? I mean, if they went under, the whole country would have just disappeared.
Ben: 00:03:56.175 Yeah. I mean, that's a key part of providing those long-term mortgages. And at some point-- I don't know if when I was there or it was after I left, they had actually paid back, I think, everything that they had lost during that stretch. And so it does-- it's a key component within that. Obviously, the housing market's been nothing but interesting this year. [laughter] So I don't know-- yeah.
Stuart: 00:04:20.322 Yeah. Well, it's sort of doubled in a year in some places. And where we are, second-home areas are always interesting, right? Across the world in the property market. They're subject to so many other influences than primary-home areas.
Ben: 00:04:37.717 Yeah, yeah, that's true. Yeah, I didn't think about that. But yeah, there's a lot that were run up, yeah, double in such a short time. It's interesting to see, yeah, how it'll shake out now with rates on the rise and, I guess, capacity a question mark. Some places, it's not enough maybe. There's all these dynamics that, it's tough to figure out what will actually happen.
Stuart: 00:05:03.526 I mean, the prices have certainly come off their peak, haven't they? And rising interest rates will certainly soften demand. I mean, I think it's already up to sort of six, seven percent or something in some places. But yeah, I mean, across the country, across the world, interest rates are going up. When countries invade other countries, that doesn't help macroeconomic conditions or supply chains or energy promises. [laughter]
Ben: 00:05:29.164 Yeah, that doesn't increase efficiency. Yeah.
Stuart: 00:05:33.494 So tell me about the genesis of SoftLedger and how all that came about.
Ben: 00:05:37.780 Yeah. So at that company that I was working at in the corporate account department. It's actually based in Chicago. They've since been acquired. The company's called Mattersight, acquired by NICE Corporation a couple years ago. It took forever to get the financials every month. That just seemed like we were doing this clunky process. It seemed like it was a problem that could be solved with software. And so I called up Geoff Ostrega, who's my longtime friend, and when I went to the accounting route, he went to computer science route. He's been building applications since he was in high school. And we looked at the problem, the whole process, and determined, okay, the general ledger, this clunky thing in the middle, that really needs to be rebuilt. Otherwise, this process can only be so fast. If you really want to speed things up, you need to go right to the middle of that. And so we got to building a mid-market general ledger system. And so we were doing that nights and weekends for a while, and then February of 2017, we got our first investment from Mucker Capital in Santa Monica, and that's what brought us out to the West Coast. And yeah, we've been steadily growing over the past several years and serving corporate controllers and CFOs, helping them get financial data faster.
Stuart: 00:06:59.864 And when you looked at the-- I mean, obviously, QuickBooks and Xero serve the lower end of the market. When you looked at the mid-market competitors, what was the landscape like? And has it changed very much since you started?
Ben: 00:07:12.726 Nope. I mean, the two major ones we come up against are NetSuite and Intacct, usually. And the vast majority of the time, it's somebody coming off of QuickBooks. Sometimes it's Xero, but it's almost always QuickBooks for us.
Stuart: 00:07:28.175 Yeah. Xero's penetration in the US is still relatively small. So what did you see or what was missing in Intacct or NetSuite that you thought you could solve for that you sought out to solve for?
Ben: 00:07:43.019 It really just comes down to time. It just takes too long to get data in and out so that you can use it to run your company. That's it. And a lot of that is due to them building their software in the late '90s. That's when both of those companies were founded. And if you build it-- when we started building it, you can do a lot of things that-- you can make decisions like building it on cloud-native architecture, using microservices, having the whole thing be easily programmable via API, REST API. It all just means that you can connect more easily to other systems, make it easier to use. It's more flexible. These aren't things that they aren't saying too, but we view that as kind of like the next iteration of that first-generation cloud accounting software platform.
Stuart: 00:08:36.820 No, that makes sense. I mean, they are both very old platforms. There's no doubt that starting afresh gives you an advantage, gives you a fresh set of eyes to look at the issues, right? And what type of customers, typical clients of yours now?
Ben: 00:08:52.675 It's the same type of systems that we serve. If I listed off every end of our clients, there's large swath of industries, but investment management's been a big one for us. So private equity firms, family offices, venture capital firms, and a big reason for that is we handle consolidation for multiple entities easily, including multiple currencies as well. Another big niche that we have is any companies that have crypto assets in their operations. We have a unique set of functionality around those, so that's been a big one for us too. But, I mean, it really is-- it's a general-purpose system. We have inventory management, sales order management, every core component of a mid-market accounting system.
Stuart: 00:09:34.110 And the company is operating wholly remote. Where is everybody?
Ben: 00:09:39.815 Kind of spread out throughout the continental United States. There's no real central focal point.
Stuart: 00:09:47.174 And how did COVID impact SoftLedger?
Ben: 00:09:50.433 I think it netted to probably being the same or better than it would have otherwise been in the end. I mean, obviously, there were some businesses we were talking to that were hit pretty hard, and that changed their plans. But in some ways, it pushes companies to be more automated, be more open to knowing that they need to prepare for their people being everywhere, and easily accessing their application, their books and records from any web browser. And not just that, but not thinking about having to VPN into some central network or anything like-- ours is kind of built to just-- you sign in on the open internet, and we're built to do that securely and be comfortable, manager your whole company that way. And what COVID pushed kind of lends itself to our type of software being a good solution.
Stuart: 00:10:42.712 And what about, I noticed that the solution can be headless. Have you had a lot of-- what's the take-up of a headless ledger?
Ben: 00:10:52.199 Some. Yeah. So we've had some traction with that so far. It's interesting because accounting touches so many different types of applications that there's often an accounting impact component to a software application, especially B2B software, that you wouldn't necessarily think was the case. You start to touch on, as soon as you start building your customers and accepting cash, whatever great vertical software solution you have ultimately is integrating with an accounting system. More you build in that interface with your customers, you're realizing, "Okay, am I creating invoicing? Do I need to build journal entries? Do I need to--?" And so that's where the headless piece comes up a lot of the time. And then we do have customers that have built their own integrations and are using our UI. I'd say that's more common, actually.
Stuart: 00:11:41.041 And so yeah, I see. So their systems are sort of integrated for transactions, and then they access them through the UI. And investment-wise, how's the sort of investment landscape look for you?
Ben: 00:11:55.589 We raised our seed round in May of last year. That was led by Naples Technology Ventures. Naples, Florida. And yeah, we're still good on that. We're kind of operating with an eye towards efficiency and not having to be beholden to that next round of capital. How we've been growing today has been pretty efficient, and so that helps to do that.
Stuart: 00:12:20.197 And how many staff across the U.S. at the moment?
Ben: 00:12:23.225 There's 10 of us full-time.
Stuart: 00:12:25.127 Oh, cool. That's a great size and obviously interesting times. Where would you like to take this?
Ben: 00:12:30.760 Continue to grow this and provide corporate controllers and CFOs with a great product-focused accounting system. A good option that allows them to get off their small business system quicker and not have to get a giant accounting system when they don't need it. [laughter] So just right in that sweet spot. And then for these types of companies, they won't outgrow it. If they do outgrow it, it's maybe to an Oracle- or SAP-level, big product at some point, but maybe not. And it's not a winner-take-all thing for a large company. Most large companies have-- maybe every ERP that you could list is somewhere in there [laughter] in their [inaudible].
Stuart: 00:13:12.175 Yeah, yeah, yeah. And it's somebody's job to bring all the numbers together every month, right?
Ben: 00:13:17.047 Yeah.
Stuart: 00:13:17.475 No, that certainly makes sense. Sort of like a lower-- there's plenty of lower- and mid-markets is I guess what you're saying. Sort of above QuickBooks Enterprise and below a different solution to NetSuite. I mean, I don't know. I get hassled by the NetSuite SDR team once a year or something. But it's sort of three-to-six-month implementation, couple-hundred-grand kind of areas, isn't it?
Ben: 00:13:41.256 Yeah, yeah, exactly. It's not just the size and complexity of the product. It's this whole thing that you have to deal with all of a sudden. And if you don't have a huge accounting department and you got to start assessing this big implementation that's fraught, that's got a very low success rate, [laughter] that's a--
Stuart: 00:13:59.886 Yeah. And people hate fucking using them, too. They're so ugly. [laughter]
Ben: 00:14:04.066 Yeah. And there's such good data in there. That's the thing. It's like, who's going into NetSuite to review things that's not an accountant? But that is where all of the receivables information where all the-- it should be the most accurate-- customer information, vendor payment information. All this stuff is in there, and it's locked because you can't access it. Ideally, anyone in the organization that should have access to data should be able to just get it when they need it. And in order to do that in a way that still has controls and everything, it's complicated, but making things machine-readable is the way to do that.
Stuart: 00:14:43.197 Yeah. And how do you see--? I mean, you're sort of selling into CRO-- CFOs, I should say, a little bit, and accountants obviously. How do you see the industry as a whole evolving over the next 3, 4, 5, 10 years?
Ben: 00:14:58.838 Yeah. So I think it's doing more with less or the same. As you automate more, there's a lot of potential problems that could get hidden. As transaction volume increases and your staff size remains the same for an accounting department, you need to think about being analytical more than checking every individual document. And you need to think about implementing systems more, and how the data structure needs to get together within your finance and accounting department from a technology perspective to make things work. And this all enables the accounting department to be more of that strategic advisor. So they get all that set up, and then you just analyze, "Okay, this happened. What about this?" Instead of just scrambling every month to just close the books, do the individual processes that are not even part of the monthly close. It's just a constant scramble. I think there's going to be less of that, especially for the companies that do this best.
Stuart: 00:15:54.405 Yeah. No, that makes sense. You founded the company with Geoff, your longtime friend. How is the relationship? Are you guys still married? You're all okay? [laughter]
Ben: 00:16:06.353 Yeah, that's a good question. Yeah, yeah. Being friends for a long time ensured that we did not kill each other [crosstalk]--
Stuart: 00:16:13.064 On the first day, yeah. [laughter]
Ben: 00:16:14.326 Yeah. That was really important. Things, they definitely get difficult at stretches, and being on the same page and really, really knowing the other person well is really helpful to navigate through that.
Stuart: 00:16:26.645 And what do you think the potential size of the TM is for you guys in that mid-market?
Ben: 00:16:34.264 It's huge. I mean, even if-- I think our TM is not just the mid-market. To start with the total market for accounting software and work our way backwards, it's-- every company on the planet needs to figure out what their-- every organization on the planet needs to figure out their financial position, their performance as fast as possible. And so really, by building a general-purpose system that-- it could apply to any organization. Obviously, we're not [inaudible] to every single organization, but we start whittling it out. Do we want to do complex manufacturing? Probably not those processes ever. But maybe the financial impact of that, you could integrate it and pull it out. So it's really tough to rule out any specific industry, and it's more about just choosing the ones we have traction with so far and functionality to go after as we continue to build out our product road map. There's endless things to build, of course, so.
Stuart: 00:17:30.068 Yeah, there's never any shortages there. What keeps you up at night? How's that? [laughter]
Ben: 00:17:35.656 I guess just making sure that we're on the right direction, that we're building the right things to both support our customers and keep our finger on the pulse of what's going to happen next, and doing all that while we don't run out of money. All the normal.
Stuart: 00:17:51.384 That's the hard bit, isn't it? Not running out of money. Okay. Well, that all sounds like you're on a good path and sort of knocking on the door of some of these mid-market ledgers that have been around forever and a day. I'm sure that the customer base appreciates the alternative. What are you excited about?
Ben: 00:18:09.450 We're excited about the next 12 months of-- we have some pretty big updates in our product road map that we're really excited to get to. Some of these things were-- [laughter] we pulled out a few months ago for our-- I guess several months ago now for our offsite. We pulled out some initial screens that we mocked up for the product, and there's a couple things that were in the initial screens that we are finally getting to, and I'm really excited about that. But yeah, just growing, getting more customers, getting the things out that are important to our current customers. Those are the things that I'm really excited about in the near-term.
Stuart: 00:18:50.332 Well, if there's anything that we can do to help, I'd be more than happy to do so. How do you think about sort of the financial close market in corporate accounting teams like FloQast and BlackLine? How do they sort of fit into the whole picture do you think?
Ben: 00:19:10.019 Yeah. So they're very complimentary to what we do. There's always tasks that are happening within the month. There's accounting workflows that just don't sit in with an accounting system. They would never make sense to sit in there, and having a good system to handle that is really critical to having an efficient process. There's always going to be that aspect to it. We actually do have an integration with a company named PrepDD - that's P-R-E-P-D-D - that helps with that. And so yeah, that's something that obviously is big to our customers, especially the ones that have larger teams and a lot of people working in various places and various files and there's version control issues and all that. That's been pretty big.
Stuart: 00:19:52.852 Yeah. It's perhaps a little bit niche in that kind of solution. I can imagine how yours integrates well to a close offering. It sounds like you're sort of multicurrency from day one, yeah?
Ben: 00:20:07.389 Yeah, yeah. That was from day one. We knew that-- and it was largely due to how we grew is from SEO. Put the site up, SEO works, and if it works-- if people are searching the English terms that we rank high for or the translated terms that end up working, which sometimes works and others does not, we show up all over the world. And so very early, we needed to figure out multicurrency. And so yeah, we've got that and all the frustrations and complications that come with it being brought up.
Stuart: 00:20:40.480 Yeah. And look, something entirely different. You're a Commanders fan, and for that, I'm sorry. But it looks like you got the Packers this weekend. What do you think? How are your chances against it? The Packers aren't doing that great either.
Ben: 00:20:53.982 Well, yeah. I would love to be hopeful. I guess we got [laughter] a little hope last week, but I'm going to temper my expectations a bit.
Stuart: 00:21:03.932 If you keep your expectations low, you can't be disappointed, right?
Ben: 00:21:06.644 Exactly. Exactly. Yeah. As soon as they-- I think I've learned over the years, they'll get you excited a little bit and then-- just to make that blow all the worse.
Stuart: 00:21:18.049 Yeah, yeah. Well, they're kind of looking for a buyer, aren't they? Maybe you can sell SoftLedger and buy the Commanders. What do you think of that?
Ben: 00:21:27.653 [laughter] That sounds great. That's a plan.
Stuart: 00:21:29.694 You put them back on track.
Ben: 00:21:30.190 Well, not sell. IPO and then--
Stuart: 00:21:33.250 IPO. Yeah, yeah--
Ben: 00:21:34.120 It probably comes with bad memories.
Stuart: 00:21:34.406 Get the liquidity. Yeah, yeah.
Ben: 00:21:35.922 Yeah, yeah. And then we'll have the soft upper box there. [laughter] That sounds good.
Stuart: 00:21:39.545 There you go. Ben Taylor, hey, thank you so much for joining us on the Accounting Leaders Podcast. It's been great to have you.
Ben: 00:21:46.318 Thanks, yeah. I appreciate having you on. It's fun. [music]
Stuart: 00:21:55.797 Thanks for listening to this episode. If you found this discussion interesting, fun, you'll find lots more to help you run a successful accounting firm at Karbon Magazine. There are more than 1,000 free resources there, including guides, articles, templates, webinars, and more. Just head to karbonhq.com/resources. I'd also love it if you could leave us a five-star review wherever you listen to this podcast. Let us know you like this session. We'll be able to keep bringing you more guests for you to learn from and get inspired by. Thanks for joining, and see you on the next episode of the Accounting Leaders Podcast.