There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Isaac Heller: Hey, everyone, this is Isaac. I'm CEO at Trulia. And today on AI, accounting, intelligence. We'll be talking with real people about real things related to AI and the impact on the accounting industry. Stay tuned. All right. Welcome to Accounting Intelligence. I'm excited to talk to everyone. Today is Isaac [00:00:30] again CEO founder of Trulia. And I'm really excited because we've got someone that I feel like Jason I feel like we're kindred spirits. Okay, I know we're new friends, but I feel like there's a lot of kind of similar overlap. So today I'm talking with Jason Berwanger, CEO and co-founder at Cubify. So Jason, good to have you.

Jason Berwanger: Yeah, thanks for having me, Isaac. And agree, definitely kindred spirits. And, uh, we share that passion of trying to help accounting and finance folks [00:01:00] solve some some pretty deep problems. So, uh, yeah, we got a lot to talk about.

Isaac Heller: Awesome. And you're you're an Ohio guy, right?

Jason Berwanger: That's right. Columbus, Ohio.

Isaac Heller: Yeah. And so I'm a Texas guy, and I know that that seems far away, but I feel like people in the middle, the middle of America, you know, non-coastal something like that. Uh, you know, we got we can get on. So, um, look, I, I think for, for us today, we're going to talk about something interesting because usually you find, you know, me and our guests [00:01:30] were getting into AI, right? That's what everyone wants to talk about today. But what Jason has, you know, kind of enlightened me on and many others, you know, at his world is how sometimes it needs AI and sometimes it needs automation. Right? Ai is not going to solve everything, especially in the accounting world. So we're going to get into that. But before we do, you know, Jason, you're living the dream right now, building an accounting company. How did you get there. Where did it all start?

Jason Berwanger: Yeah. Great. Great intro [00:02:00] question. So you know, for for me, I, I've spent, uh, a disproportionate of my career really on one, one side or the other from a technology or an accounting perspective. So, uh, I started off as a practitioner from an accounting perspective and corporate accounting roles for a lot of startups, folks that are doing high volume, um, transactions, like a lot of three PL freight companies where you're just dealing with millions of transactions, uh, a week and you're trying to help reconcile those things. So I got a chance to cut my teeth pretty early on. Um, for [00:02:30] a company that then got acquired by Cardinal Health here in Columbus, Ohio. Um, which is huge. Yeah. It was it was a great experience.

Isaac Heller: Yeah. Companies in the world.

Jason Berwanger: Yeah, yeah. Um, but ultimately, uh, you know, I, I, you know, went on to, to really, you know, cut my teeth into the more of the corporate accounting and less of the high transaction type of stuff and let an accounting team, um, spend a number of years in, in some executive vice president roles, um, serving private companies, again, mostly around these like high volume type of [00:03:00] transactional companies that are serving both a little bit of plg but a little bit of SLG transaction models. Um, and then from there, I pivoted more on the technology side of the house, and I led all things financial systems and data for root insurance for their IPO in 2020. Amazing experience, because really got into the nuances and a lot of the challenges of, uh, you know, some of the specifics of insurance accounting and also like subscription type of accounting. So revenue over time, but also for like the app stores, because they were obviously root was an app, you know, drive on your [00:03:30] phone, you know, get better underwriting data, get better rates. So I got to work a lot with folks that are doing iOS publishing and on Google. Um, and then from there worked at a number of other fintech startups and really was like, hey, there's a need in this space here. Uh, we had NetSuite at root, and the CFO at the time was like, we're good, we have an ERP.

Jason Berwanger: And then it turned out like we needed to prep for an IPO. And it was the accounting team and I were stuck in between a lot of internally developed systems and subscription management, and Braintree and Stripe and PayPal. [00:04:00] And then we had to then actually automate and put all that data into one place to get it into NetSuite. So we really didn't get the ERP experience and a lot of work to be able to, you know, be done to get that IPO prep. So, um, that was a big enough problem and a gap for me where I saw an opportunity in the market where, you know, for folks that are going the best in breed and have almost like this hybrid Plg SLG model, there's a there's an opportunity in the market to help serve those folks for the need that I wished existed when I was at root, where we didn't have to build a ton of a [00:04:30] ton of, uh, you know, internally built technology with our engineers. They could have been focusing on customer innovations. Um, and so we we took that to, to market a few years ago with Shopify. And then you have grown and, um, you have had the chance to serve quite a few high volume, uh, consumer based plg customer bases like Strava and Alltrails healthy are are some of our, our customers that that we serve at HubSpot. Just for context.

Isaac Heller: That's awesome. So and I want to unpack Cubify and a few of these things. But I, I do think it's, it's just [00:05:00] kind of fun because, uh, you know, as I may have mentioned before on this, on this podcast, like, you know, my entry point into accounting, I was also kind of a tech, you know, person, I guess you could call it, you know, whereas Jason in Ohio was doing this pre-IPO with a consumer company. Right. It looks like kind of 2020 about.

Jason Berwanger: 2020, late 2020.

Isaac Heller: Yeah. So I in the in the 2015 time, right, I was doing a pre-IPO with um, a B2B [00:05:30] technology company. And whereas, you know, Jason's talking about a lot of systems and consumer and high volume transactions, I was doing it with contracts and, you know, it was a private equity backed company that had rolled up a bunch of contracts. But we were we were both, you know, on the practitioner side, dealing with with challenges. Sometimes it was the unstructured data, right? The contracts and the performance obligations. And in Jason's case, it was these massively disparate, you know, accounting systems. [00:06:00] But I think I think the common thread for sure was that the ERP wasn't really doing much about it. Is that fair to say? I mean, we had SAP and precisely. Yeah. Okay. So we were we were both outside of ERP, so I can I can see that. Saas. Now you talk about, um, finance and data and you see if you, if you look Jason up at rising, you know, the latter in both finance and data finance and data finance and data accounting and data. What do you think you are as a person percentage wise? What percentage [00:06:30] of of you is a finance accounting person and what percentage is a is a data and technology person?

Jason Berwanger: Yeah, I uh, I'll probably buck the question in some sense that I, I, I have a strong opinion that, uh, I'm 100% finance and finance by nature is 80% data. And so I, I think I follow the same track where, um, I'm a big fan of having, you know, the the pivot from this growth of all costs to more of a sustainable type of long term growth. A lot [00:07:00] of with that has come the maturity of rolling a data teams and data governance under finance. And I'm a big proponent of that. Um, that really then means the rest of the business is getting actually blessed governance, finance, data. And then, you know, a lot of product teams and customer service teams make a lot better decisions. So I brought a lot of that finance rigor to the data roles that I had and that paid big dividends. Um, and then as a finance practitioner, I never I never wasn't, wasn't working in data. Even if I wasn't automating it, I was still working in data. So I'm going with the 180 [00:07:30] answer just because I think they're coupled.

Isaac Heller: I think it's great. And, you know, you didn't you didn't buck the question. You illuminated something that I think we should be aware of. Like, you know, especially if you cut your teeth the past, you know, ten, 20 years, um, data and technology skills were just pretty much expected. Right. And I think, you know, it's kind of it's kind of refreshing to remind ourselves that, you know, our passion is finance. So we should be 100% finance or, you know, 100% [00:08:00] supply chain or whatever we really love. Um, but every it's ubiquitous. Like everyone has to understand how to work with the data. Everyone has to understand that the technology is going to be the underlying source of giving you your financial data. So kind of it kind of reminded me of what's really happened, uh, over the years and is happening more and more in the past few years. So I think, um, you know, what's interesting to me is that there's, it's it's really a small community in terms of who's [00:08:30] been in an accounting or finance role and then became a founder. Right. I always, you know, there's some like, for example, sales and marketing software, like, I can't tell you how many friends I have that were in sales or within marketing and they became founders or these companies.

Jason Berwanger: The next CRM. Yep.

Isaac Heller: Exactly. Next CRM, next lead gen tool, whatever. By the way, great for them. There's some cool stuff out there, but there's there's there's a smaller group of of people, I think. I think it's growing, but I think that [00:09:00] worked in accounting or finance and actually did it did what you're doing at HubSpot and, and started a company. Do you feel that too? I mean, what what was it about you that maybe was different than some of your finance or accounting peers in terms of going and starting your own thing?

Jason Berwanger: Yeah, I feel like there's a couple themes going on. One. Yeah. I think from the, uh, data point you mentioned, I totally see the same thing. There are not a tremendous of folks that were practitioners that then went on to then actually innovate on behalf of [00:09:30] kind of their former selves. Um, frankly, that's one of the reasons I think, that you and I have developed a relationship is because you went through that same path, and there's a level of credibility to and like long term success for those, those founders and therefore their founders businesses. That happens. Um, and I think what had happened a lot with accounting innovation in the past was you took some non practitioners that were maybe great engineers but didn't have that finance or accounting background and that, you know, um, it was like, oh, we're going to treat this like a workflow problem. But then it's like, yeah, but did you think about controls [00:10:00] and reconciliations? And it's like you solve this myopic part of the problem really well, but it didn't actually solve the broader problem because you never lived at it as experience. Um, and so, yeah, I, I think the other theme to that stands out is, um, the sales and marketing stuff is easy because it's like, hey, we're gonna get the CRM and it's going to increase revenue by 20% because it's going to help us manage leads, just like accountants.

Jason Berwanger: When you're on the corporate side trying to justify, like making an investment, you're now talking about back of house investment, which is 2 or 3 levels [00:10:30] unrelated to revenue generation, and who's picking up the phone. And therefore it's a it's a harder argument to make, which is partially, I think, why, you know, it's more challenging for folks to make that pivot because it's a harder problem to monetize than the next CRM, which promises, you know, X, y, z, at least in the short term. I think in the long term, because I think you and I both have thought more of. It'll be in the long term solve customers, and you're not going to see the growth curve like you do for an open AI or the next CRM, etc. but I think building long term, sustainable businesses that solve [00:11:00] a real problem of accounting is not going away. It doesn't mean you're going to have 100 x growth in a year though. Um, which is the difference between a new CRM and accounting tech that will be here in ten years.

Isaac Heller: Right. No. Or a consumer app or maybe, you know, like a video app or something like that. So let's let's riff on that a little bit because I'm inspired by, you know, this transition of working in accounting and finance and then becoming an entrepreneur. And I mentioned that it's, you know, it's picking up. Um, I spoke with, um, a [00:11:30] friend, a mutual friend recently, and they had an internal audit background, and they were really energized to go build an AI for internal audit tool. And I've seen a few of these in internal audit, and I definitely had not heard of many internal auditors that that wanted to to be an entrepreneur. So you could almost imagine this, you know, long tail of CPAs, whether it's big for internal controllers, finance professionals, internal auditors who are seeing this AI boom, I could I could build apps quickly. [00:12:00] I've got a lot of manual processes and they're thinking like, you know, maybe, maybe I should do it, but I guess, or or maybe like what? What advice would you give them to get started? Because you were in the systems, you were in the problems. Like what advice would you give them to to get started? And then I have another question on the the growth equation. Yeah.

Jason Berwanger: Yeah. My my advice is boring. It's uh, [00:12:30] it's don't focus on the solution at all. Be really problem obsessed initially. Uh, not just in terms of the how would you solve said problem and thinking about the solution for the problem, but also like what value is solving this problem for the organization? Um, and one of the, one of the things that I, I had talked to in my journey of folks some some big for folks, it was like, hey, we developed a lot of really cool technology that's going to do so much automation for the audit side. The problem is, is that they make all their money on a per hour basis, [00:13:00] consulting and the billable hours. And that was, you know, in direct conflict with this. And, and there was almost a cannibalism type of impact where they didn't get the full value. And so part of that was, hey, as we think about solving this problem, it's like, who and how are you using this to solve the problem? Because if you're you're doing something for internal audit, well, those efficiencies go back to the business. And that that feels to me like a very valuable problem to solve versus like and it doesn't uh, it doesn't misalign with some of the existing incentive structures, [00:13:30] which you can't really ignore in accounting.

Jason Berwanger: Right? Like you can't say, hey, the big four doesn't exist, that business model doesn't exist. You have to play in, in at least the sandbox that's here today, as much as we want to influence it for the best. Um, but I think doing that is like being problem obsessed and impact of solving the problem Obsessed. And to me, that's 6,070% of actually going about figuring out the right problem to solve. And then then it becomes, how do I approach the problem solving? Um, and, you know, to your point, I think the barriers to entry for, uh, at [00:14:00] least iterating on solutions for some of those problems is incredibly low. Um, now, I still think there's a scale problem that, you know, we've both experienced where it's like, yeah, going from 0 to 1, it's never been faster or easier to test technology and solutions there. But then it's still, if not more challenging to go from the 10 to 50, from building the scalable technology that you know, hundreds of customers can rely on is a much different problem to solve.

Isaac Heller: Yeah. Interesting. And I guess, you know, so so, you know, number one, be problem obsessed. [00:14:30] And I think your, your average accountant or finance person is going to think about long term durability. The nature of their job is more obsessing over what could go wrong than what could go right. Right. And so I think you know, what you're saying is interesting, Jason, which is like, hey, you got to build for long term durability. Now the there there does need to be it seems like there does need to be a technology consideration of building for not just 0 to 1 or 1 to 10, but [00:15:00] maybe even beyond. Um, but then like really go to market and distribution, I feel like changes, you know, from 0 to 1 and 1 to 10, I'm guessing. I'm guessing you are on a bunch of these customer calls. You're very hands on with these customers. Is that fair to say? I don't want to blow your cover if I'm wrong.

Jason Berwanger: No, I, uh, as you would expect, I am, uh, we have we've matured a bit this year, and we've we've brought on some, some folks. And so, uh, that's becoming less and less. There's calls that [00:15:30] I'm actually not on, which is really refreshing. Uh, and those customers, I think, are probably relieved if they had a comparison between the two.

Isaac Heller: So you're paranoid. You're paranoid. I know the feeling. Right? I shouldn't speak for you, but I'll speak for myself. Um. And I'm very hands on. I love it, especially if it's especially if you're involved with the problem. You said be focused on problems. So you almost become obsessed of hearing about the problems. Right. And and it's almost like you're a doctor that wants to help people. Because I can diagnose that because the technology can help. But [00:16:00] there's a few things you need to understand about the problem set or the changes you need to go through. So but it's funny, you know, um, once, once you get those first few people, it is hard. It is hard to let go a little bit, you know, but obviously you have to, um, at some point that's a good sign. So, yeah, I mean, be problem obsessed. Uh, that's a good one. Build for scale, not just 0 to 1. Stay hands on as much as you can. Now, you mentioned this idea of grove all costs and I'll, I'll kind of dovetail into [00:16:30] venture capital because I do think there's this equation where and you guys are is that have you raised recently or is that something that's public information.

Jason Berwanger: Yeah. We we we did raise a round last summer though. Again probably you can contrast that from a typical VC type of back. Company. We did some things a little bit differently, but we did we did. Take capital for you know, sake of building and innovating more quickly.

Isaac Heller: Amazing. So I saw that online on Crunchbase. And congratulations to you guys because it's very, very hard to raise capital no matter [00:17:00] how easy it looks on LinkedIn. And, um, it's also a big stamp of validation, right? When you have product market fit and you know, these these VCs or investors will call your customers and they're they're looking for passion and enthusiasm, which you have to have if they're going to write a check. But you mentioned kind of this idea of growth of all at all costs. Do you view accounting software as a good market for venture capital? Right. I know it seems obvious [00:17:30] to to these accounting companies that are raising a bunch of money. Um, again, you know, there's a lot of capital to be allocated. Now, that's something that came out of the past few years of interest rates and stuff. But what do you think? Like, is this a VC market or are we all fooling ourselves?

Jason Berwanger: I it depends on what you mean. If. If what you mean by VC market is that therefore you have to do growth at all costs. And it's either, you know, ten x every few months or bust, then no, I don't think [00:18:00] it's the right approach. Um, and really it's out of protection and, you know, knowing the customer and what they care about. It's it's out of, you know, thinking of them and being able to be honest and upfront with the customer about what they're getting into. I can't say as sitting in my seat from an accounting perspective, that I would have looked at a startup even if it did a great job at solving my problem. I would have said, you know what? Yeah, they may be out of months to 16 months, and that's okay. I want to make an investment in this. Like I'm just not going to do that. Right. Part of my job was managing risk. You [00:18:30] said it earlier. The accounting folks are thinking this as risk managers first. And like, how do we make sure that we're understanding that risk and mitigating it. So why would they want to do that? Um, that That said, I think there's probably two approaches you can still have, you know, outsider venture capital to potentially help with. One is like part of the approach that we took, which is capital, does help us, but we still maintain control. And we we grow thoughtfully and we grow long term. And like, for example, we'll cash flow this month and so like but [00:19:00] we also may still take on, you know, additional VC capital later this year just because we think it'll allow us to hire the right talent and to better serve our customers.

Jason Berwanger: But I won't compromise long term integrity of the company because I've made long term commitments and contracts to be able to serve these customers. And I plan on keeping that. Um, now, I think there's other parts of the problem, let's say more on like fintech or finance or operationally where there's, um, there's folks that are willing to take higher risk because, you know, the cost is low and want to try out this new order to cash. [00:19:30] I'm going to try a new billing thing because it's a little bit more affordable than Stripe or Stripe plus a Salesforce. And I think then the risk tolerance can go up. And there's there's still a place for fintech VC growth at all costs investments, because there is a market for folks that are the early adopters that want to take that risk. I just don't think a lot of those folks are the accounting folks. That's more of the finance ops and rev ops type of investments. But some obviously consider that to be still finance technology in that sense. So, um, the short answer, the long answer was that. But the short answer is it [00:20:00] depends on you know, we're talking accounting compliance tech. Are we talking like finance operational tech. And it depends on what type of VC investment. We're talking where, you know, the venture capital is on the board. And if they don't get the growth that they want, then, you know, they they kick the founders out like, no, I don't think that's a good that's probably not a long term sustainable approach for accounting compliance tech.

Isaac Heller: Right. Okay. So this is a great discussion by the way. If you're you know I don't think people can get, you know, sound bites like this on ChatGPT. You know like Jason and I have [00:20:30] been in the room. Okay. Um, just to kind of frame it, you know, if you're an accountant, you're an accounting person. Entrepreneur. You got the itch. You know, you're maybe senior controller. You're working. Maybe you're head of internal audit and you want to start your company. There's all these levels when it comes to raising money. You know, seed A, B, c right. And they look good on the surface. But I guess this is just a friendly reminder. But they they each come [00:21:00] with different strings attached. And the you know Jason, in my experience the fewest strings attached is that early seed capital, right. That someone who's giving you money, they're not taking any sort of control position, which you mentioned. Right. Control can start to accumulate at series B series C right. And you know, in a in a board you might have three people to start. And it's two one the two co-founders and one investor. And then it might add [00:21:30] another investor. So it goes to five. But the three are owned by the founders and the two are the investors. So these are things that people don't think about. But ultimately, if you take the venture path, you can, you know, kind of kind of lose control. But what I think, I think what's interesting about what you're saying is, like each each situation should be judged independently of the other, right? And so if you feel like taking capital will help you accelerate [00:22:00] through development, and you have a clear path to whether it's cash flow or IRR, that's a good time to take capital. But just remember like if you if you take too much, you might get stuck trying to grow into that valuation. And I'm guessing, Jason, you were you're thinking about like like billing systems that are more FinOps, whereas accounting software is more like clothes and consolidation and rev rec. Is that fair to say?

Jason Berwanger: Yeah, I think the risk profile or the tolerance is clearly different [00:22:30] between the two of those those things where, you know, if you have a broken billing process, it's it's a lot less to ask someone to say, hey, try this new billing startup that you know at least can do 70% of what your old process did, and then probably some other things quite a bit better versus saying, hey, I'm going to rely on this third party for the most key part of our our compliance financial reporting, then that feels like a losing proposition. If I'm worried about the viability of a company in 16 months from now.

Isaac Heller: Yeah, absolutely. And I think, [00:23:00] you know, Jason, you you work with revenue leaders. And when I say revenue, not the cross the revenue accounting leaders. And, you know, the expectation is extremely high, right? Gaap compliance is nothing that someone wants to take a chance on. And if you're investing in Rev, you're at a certain level of maturity. Um, so yeah. Absolutely. So. So again for for our, our, you know, budding founders, financial operations, people may take a chance. It might there might be some better [00:23:30] opportunities for venture capital and growth models, especially if you're selling to SaaS companies. So just so everyone's aware there's a whole world of SaaS to SaaS. And if you want to get on a venture capital wheel, let's call it sell SaaS to SaaS. I'm not saying it's a bad idea, I'm just saying there's a rise and fall story to be had there. If you want to focus on accounting and accounting compliance, things like rev rec and close and consolidation, um, that's [00:24:00] an area where you want to be a little bit more conservative. Right. I'm not saying don't take venture capital but a little bit more thoughtful. Because to Jason's point, people want to know that there's continuity in the business, right? That's not something you want to be dealing with again after five years.

Isaac Heller: So that's awesome. Now, there was another thing that caught my attention, because I think in the era of of AI, I've heard a lot of potential founders, accounting founders talking about the equation. You mentioned the big four, [00:24:30] right? They talk about this equation of, you know, I'm going to solve a problem as you talked about it, or make the business more efficient. But in reality, what the business today is doing is they're spending it on people. Maybe people are cobbling together the systems, right? Maybe they're they're spending it on a consultant who's helping them figure out, I don't know or or what order to cash, whatever it is, maybe they're paying it through the audit because the [00:25:00] audit hours, the expenses of the audit is going to revenue reperformance or fixing 6 or 6 issues. How do you think about that equation of they're there because automation helps with the people equation. The people get repurposed as the job dynamic change like it's $1 million topic or $1 billion topic right now.

Jason Berwanger: Yeah, totally. Yeah. And that comes across in Reddit threads of like, AI is going to replace accounting jobs and automation is going to replace accounting jobs. And uh, [00:25:30] our anecdotal but real world experience is, um, it's a it's an absolute strategic and massively beneficial repurposing of that time in our last five implementations. And every one of those cases, what someone was compiling these transactions and the control reconciliations and then getting them into the ledger, etc., etc. when they did that for the revenue team, there's always a story to be told about. Well, because we used to do that process, we never really [00:26:00] looked into this thing. And now that we have the data, because we're not compiling the data and trying to build trust in the data, we just have data we trust. Well, now there's these revenue leakage pucks, profitability like sales tax that actually should be called back because of that. And bad debt write offs that nobody ever looked into. And there's always six and seven figure opportunities that these folks then stumbled across across because they moved from, you know, managing and compiling the data and more transactional into this strategic role. Everybody loves to say that as like a great [00:26:30] marketing ploy, but in reality, the best folks in the business at saying the operational performance translated into financials. That's the that's the accounting folks. And so you give them that great data instead of them having to compile that, they find opportunities for your business. And and frankly, I think that's what what folks love to do and gets them excited to get out of bed in the morning is to make that impact.

Jason Berwanger: So, um, yeah, I think in many ways that, um, if folks talk a lot about like the, uh, the lack of accounting in the CPA credits [00:27:00] and, you know, the potential, uh, you know, not having enough accountants in the next five years because of a lack of folks being interested. Well, I think a lot of that automation and a lot of those repurposing and having folks make a bigger impact on the business is actually what's missing. And we've seen a lot of those folks, you know, stay in accounting and be excited about their job for the first time because they got to get out of compiling information and then taking all this personal risk as well to saying, I did the calc, I did the data compilation, relying on my work only. Well, if it's wrong, then that's a huge personal [00:27:30] risk to take on, and there's a lot of stress that comes with that. And, you know, you allow people to uplevel and become more strategic and impact bottom line business tax strategy, you know, cash flows, etc.. I mean, isn't that ultimately what folks want to do if you're working in a business is to help improve that business, and who better to do it than the accounting folks in terms of translating that performance into actual hey, what can we do better or differently with our numbers?

Isaac Heller: Yeah. That's awesome. And I really hope, um, you know, people are hanging on these words because when, when Jason, [00:28:00] when you're saying it like it's coming from experience, like I get it, we've, we've we've seen the LinkedIn scrolling ad from, you know, PwC that says upskill the next generation, whatever it is. Right. There's there's a veneer. There's a, you know, just a lot of fodder. Makes you more strategic, makes you more strategic. What does that mean? But I mean, we're seeing it every day. It truly in as well. Right. Do you think that do you feel like accounting and finance are even more uniquely positioned in the [00:28:30] era of automation. I because you mentioned they have this sort of oversight of the business, right? Like, so, you know, in, uh, in, in, in implementing AI, all these new tools, like if you implement it in, let's say, customer success to answer all the support tickets, well, that could literally end up with one less customer support person. I would hope not. Right? I would hope we would just improve our customer support, um, with accounting and finance. I mean, you mentioned finding leakage and [00:29:00] cost savings and those are across the areas. Like do you think accounting and finance have like a more unique position because they get oversight of the business? Um, does that potentially lend itself to a new type of accounting or finance professional because they have trust and access on the business, or should we still focus on the operational accounting? Um, that's that's being automated right now.

Jason Berwanger: I think you have to start with the obviously the foundation of the [00:29:30] pyramid is that operational accounting. And then once you get that done. But there's context to that getting operational accounting done on a ten day close, having only aggregate numbers, that doesn't give management or fpna or your team the ability to see what's going on actually doesn't build you the foundation that just gets you the foundation of the compliance, you know, little baby pyramid, but not the big one that we all want to build into to add that value. Um, and so I think it's right that you have to solve that first. It's just a question of like, how well do you solve that? Are you on a daily close [00:30:00] or a, you know, once every 45 days, you know, what happened last month? And that's a big impact to running a business with arguably the most important data in the business. Um, happens to be also the least refreshed data in the business because of the nuances. Um, so solving that problem feels like a, a pretty big impact to folks, not just on the accounting side, but also on the broader business side. And I absolutely do think where the customer service is really like, hey, it's the number of tickets, inputs, outputs.

Jason Berwanger: Yeah. We we're we really seeing a we asked accounting [00:30:30] and finance to do more because of the decentralization of the ERP. I saw that personally with root. Whereas like if that was an ERP when you had orders and fulfillments and billings and cash like the accounting was done and there was a set of reports that was just done out there and you had what you needed. But most business models don't fit into that ERP mold. And you have a, hey, my customers come in here to a subscription or contract management, my CRM, my billing tool. And so because of that, you know, we put a strain on our accounting and finance resources. And they became, you know, the folks [00:31:00] that are holding together what is, you know, poorly built data bridges that don't translate finance to ops data. Or they were just literally the bridges themselves compiling that data. And so, you know, I think we're in a, in a, an underinvestment scenario which then manifested with profit leakage. If you look at the the PCAOB, 25% of of audits have deficiencies and a disproportionate amount of those are around revenue. If that isn't a smoking gun, I don't know what is. Like that's.

Isaac Heller: Number [00:31:30] one.

Jason Berwanger: Number one.

Isaac Heller: Number 2 or 1 or two. You know those. Those two. That's, uh. That's interesting. Yeah. Um, and we could talk about the pcob another day, but, uh, I, you know, I think, okay. So I'll try to. I pulled up a little, um, visual here because you mentioned the word pyramid, and I just kind of want to I want to hold this here for a second. And if you're if you're watching. Great. I think most people listen, um, so if you're listening, try to picture it. If you read a, [00:32:00] you know, investment bank article about finance technology like office of the CFO technology, I'm looking at at Andreessen Horowitz, office of the CFO article. Right now you'll see this pyramid, and it looks like one of those food pyramids. Right. But it's a pyramid. It's the pyramid of finance systems. And the bottom of the pyramid is transactions. Right. And then it goes to record keeping, you know. And then it goes to something called reporting and compliance. And then [00:32:30] it goes to financial planning. And then it goes to strategic finance. Right. So just to oversimplify the bottom is transactions. The middle is reporting compliance. And the top is strategic finance. And when you look at that visually you think that strategic finance uses the data from the bottom of the pyramid to kind of beautifully rise to the top of that pyramid. Um, in reality, and this was kind of Jason's point, I think it's very interesting. That is not how the [00:33:00] flow works, right? The top of the pyramid cobbles together, whatever they have to do, their fpna and their strategic finance and then accounting cobbles together, whatever they can and have to do their accounting. And so that creates two pyramids, or it looks like something where the middle of that pyramid is almost like a Jenga peg pulled out and the whole thing is, is wobbly or it just looks like a funky pyramid, right? And I [00:33:30] don't think people understand that.

Isaac Heller: And I always wondered, you know, it says strategic finance at the top of the pyramid. I always joke, why is there no strategic accounting? Why is it strategic finance and not strategic accounting? In fact, why did accounting and finance deviate right. Accounting. Accounting is the is accountants are the ones that got a CPA right a certified degree finance. It's like I went to business school or maybe I went to banking. Right. Again these are these are my buddies. Right. But I'm saying like like [00:34:00] accounting was this level of of prestige and craftsmanship and specialization to become a CPA. And then you ended up being secondary in terms of being able to get the data and get the investment and stuff like that. So I just wanted to capture that. Jason, what you are building at Cubify, and I think what a lot of us are trying to do is build that infrastructure, that transaction and that of that record keeping label better, because over time, that can actually build up to the strategic finance. And the strategic [00:34:30] finance can just be strategy and it can be finance or accounting. And, you know, if you if you do 606, right, with pricing and bundling, believe me, you could be a lot smarter on strategic finance. Right. And so I just I like to express that I like where you guys are going. And I like that whether it's accounting or finance, they should be operating on the most granular compliant layer all the way up to the top. So I don't know, Jason did that that resonate with you in my little pyramid.

Jason Berwanger: I love it. You took [00:35:00] a halfway thought out metaphor and you've been really specific and actionable and relatable. So yeah, I, I appreciate you playing translator there because you did a great job.

Isaac Heller: No, I just I had to riff because like, I get, you know, I I'll read every once in a while someone will send me like, here's our office of the CFO transaction report. And it's like Oracle at the bottom and you know, Anaplan at the top. I'm like, that's just not how it works. Okay. Or like Oracle. And then there's a closing consolidation and then Anaplan at [00:35:30] the top. I'm like, believe me, those two. That's like a fork in the road when it comes to data. So anyway, okay, there's there's a big topic we got to get to. Okay. And this is hot off the press. But everyone is gaga over AI. Nobody knows how to implement it. But in reality, you said something interesting to me. The past or past couple of conversations that there needs to be a clear difference between AI and automation when it comes to accounting and finance. [00:36:00] What do you mean by that?

Jason Berwanger: Yeah. Uh, yeah. I agree, the spotlight has been disproportionately AI and in some ways rightfully so, and other ways damaging to the perceptions of where to make investments. Uh, yeah. We talked earlier about the problem obsession. Same first principle applies here. There are problems and technologies that are paired with those problems that fit really well in 2025 and beyond that, aren't I? And I think the way to think about this is that what is the type of [00:36:30] solution that you need. If it's something that's a probabilistic outcome where, hey, I want to answer that can be accurate within a range. I won't have a lot of lineage, auditability or provenance of the data. I can't walk back how I got to that answer. I can't even walk back to the origin of the answer in an easy way or an auditable way. Um, so a lot of times those those a type of use cases could be great with a I want to test a scenario of what could happen and ask a question of a, a chat bot and say, well, I'm not going to give you the precise [00:37:00] right answer because there is no precise right answer. And that's okay. For this type of exercise, I would argue a disproportionate amount of the problems, um, that we see that are impacting finance accounting are actually more deterministic problems that you need to know precisely what the answer is, and you need to have the full data lineage and auditability and really the provenance to then walk back. Well, how did you come to this calculation at this point in time? And what's the source record that you based this calculation off of? And it feels like the, [00:37:30] the, the future in terms of how we're going to use those is it's a combination of the two.

Jason Berwanger: And just like the pyramid that we talked about, there's another theme which is um, a lot of that automation. Part of why it's more challenging for that finance type of automation, or fpna to be adopted, is to be able to train those models. You need clearly associated atomic and deterministic data underneath. That's the bottom of the pyramid for training AI models, which is really where automation is best served to help build the data set that you're going [00:38:00] to train AI on. Because if you're still in spreadsheets, if you still have multiple layers of systems and you're losing grain and relatability, um, well, then you can't ask questions of AI to say, well, hey, what's the highest probability of uncollectible from my customer base across product types? Well, if all you're doing is a Cecil bad debt estimate at a high level once every 45 days. You have no clearly associated data to train the model on. It can't help you. Um, and so I think that's honestly the theme that we're, we run into is that there's um, for [00:38:30] at least for the accounting and finance adoption perspective, there's a, there's a disproportionate amount of problems that need to be automated and clearly associated and deterministically from these source systems. So that way the the next wave of an automation actually can be used and beneficial, much like, again, like the pyramid of people, you know, there's a pyramid from a technology perspective of prerequisites. There's also a problem mismatch when you say, hey, you have an accountant and say, hey, I can mostly get this right for you, but I can't prove it. Uh, that's probably not the right type of technology [00:39:00] that they need to solve their problem.

Isaac Heller: Okay. This is this is interesting. And I suggest just connecting some dots. Like anyone who wants to be an accounting founder has to get this down. Okay. We've got deterministic and probabilistic. Correct. You were saying deterministic is you. You know the outcome you want. Whereas probabilistic is you want to see some potential outcomes. Correct. Did I get that? Yeah.

Jason Berwanger: There's a there's a range of outcomes. And [00:39:30] it's there's a range you're dealing with probabilities versus there's the truth.

Isaac Heller: Okay. Got it got it. And so some problems are deterministic. Again going back to problem obsessed. Some are deterministic problems and some are problem probabilistic problems. Problems prob problems. Okay.

Jason Berwanger: Props.

Isaac Heller: Prop props. So going back to our pyramid, you may think about not just whether you're deterministic or probabilistic, because there's going to be questions [00:40:00] at any level of that pyramid. But to Jason, what I'm hearing is a lot of the strategic questions are more probabilistic, right. You're asking a question on your data. What's what's a, I don't know, a reasonably assured collection time frame based on industry comps or something like that. And the answer to that question, which is strategic in nature, is determined by how good your data is below down the pyramid [00:40:30] at the transactional layer. And the quality of the transactional data is based on deterministic automation. Is that right?

Jason Berwanger: Yep.

Isaac Heller: That's right. Okay. So um, so that's just automation, right? Spoiler alert. That's just really good automation. Did I get it right hub at its base. And I'm sure you've got some some special sauce is just amazing. Bulletproof 606 [00:41:00] Complex Automation. Am I getting that right so far?

Jason Berwanger: Yeah that's right. And the only context I would add is just understanding the nuances of those underlying systems or business models to be able to connect to that data and compile it. And at the end of the day, it is absolutely. It's it's modern intelligent automation, not workflow software automation, where, hey, I'm having a person have a checklist for the close and I'm doing the process. Okay. I know that the close is done on time or no, I'm actually just automating the close. I'm booking [00:41:30] revenue to cash daily. I have control reports and reconciliations that prove that I know I can trust it. Now I'm the top of the pyramid because I have this great data, and part of the point I'm making is that if you solve the automation part of that problem, well, now you're now elevating the people that are best at translating operational transactions into financial outcomes, which a lot of times are the accounting folks, that's what they're trained in. That's what the CPA does. Um, and 80% of that value is actually, hey, I don't need to ask probabilistic. I can just say like, [00:42:00] hey, where do we have the worst bad debt problem? Or where where do we have the lowest contribution margins? Um, you know, across our product lines, locations, etc. and a lot of those are really just because you've automated that transactional data, you can be strategic without having to get into the what ifs. The what ifs are really the gravy of that 1,015% on top, um, that you get to once you're operating your business the way that you want to be, which is a way of saying that because of this decentralization, we a lot of us aren't operating our businesses the way we'd want to [00:42:30] be because we don't have this foundation the way it needs to be.

Isaac Heller: Okay, awesome. So I want to, I want I, I like so I'll highlight a risk that you and I both see, which is with all the frenzy of AI, um, we risk implementing something at the top of the pyramid. That does not give us the intended outcome. So maybe maybe there's a accounting founder today, or maybe a lot of times it's not accounting. Right? So [00:43:00] you'll see Y Combinator is a popular incubator. Um, you'll see someone pop up with an accounting or an audit or a solution, and I'll go look at their LinkedIn. And it was like, oh, they did a year of FP and they're like, yeah, it was so hard. And then, you know, or maybe they're not even from the accounting industry, right. And they're like, can I have a friend? He's from Deloitte and I talk to him, you know, whatever it is. But the AI is so cool, right? And if you show the right demo or [00:43:30] you demo on the right data, it really gives some cool answers. And that's the top of the pyramid. Now, Jason and I, you know, going back to that, building a business and building a long term sustainable business, you're building you're starting with the bottom layer, right.

Isaac Heller: You're starting with the deterministic accurate layer of transactions. And then you can build up to all these complex questions that may become more and more probabilistic, but that simply don't work without the the good infrastructure. All right. [00:44:00] I just wanted to characterize that because, um, you know, I think, um, yeah, I think what you guys are doing is amazing. And, um, I hope if anyone's listening, you guys should check out what Jason's doing, because there's a lot of tourists in this industry that come and go in accounting software. You know, we're going we're going to AICPA, which is a we also audit firms at Truliant. Jason. And we're we're going in a couple of weeks in Las Vegas every year. It's a big conference. And, [00:44:30] um, I talked to someone last year and I said it was an audit from the pictures. And I said, why did you pick Trulia? Like we met at? I said, why did you pick Trulia? He goes, well, I saw you three years in a row.

Jason Berwanger: Absolutely. Exactly.

Isaac Heller: Yeah. And so, so there's like, I guess there's a joke. This is this is audit firms, but, um, startups pop up and they have a booth, right? And maybe they come back the second year, but, um, I think right now, with the cost and [00:45:00] ease to build tools and the showiness of AI, I think in the accounting world we need some sort of continuity. It doesn't have to be the 30 year old legacy solution. You've already highlighted how Oracle NetSuite SAP falls short, and that's why you and I have opportunities to be entrepreneurship. But I don't know, Jason. I feel like there's I feel like there's a middle ground, like people that have experienced it and lived it and breathed it and, and are solving stuff they've worked for kind of that. I don't know what you call it, but like [00:45:30] a vintage year of companies with a little bit of practical, practical experience, but then also the technical experience. So I don't know, do you see, do you see like a flurry of tourists coming in the industry or potentially on the horizon? I mean, you know, everyone has challenges, right?

Jason Berwanger: Yeah. I think you read there is exactly right. And I mean, we hit on this earlier in terms of the importance of like that long term sustainable thinking. That's what that firm was telling you is like, Isaac, [00:46:00] thank you for taking a long term sustainable bet on this and, and and building it in the right way. So that way we actually can trust that we can rely on you on the long term. Um, so and but you're absolutely right on. The risk is it's really hard to tell those apart because of the, what you call them, the tourists of of the industry. Like. Yeah, if you look at the founder and I think you you nailed it. Like, do they have a background actually helping solve this problem in a material way. And so therefore could contribute to real world complexity. Great way to look at it. Is it a, you know, [00:46:30] a venture backed growth at all cost, or is this someone that's going to be here for a long time and has proven that they can sustain for the long term, like those are great qualifiers. And then once you've done that qualification level, then it becomes, yeah, I'm not saying you have to be around for 30 years before I'll try a new innovative tech. Um, but I'm also not saying that you should go with something that, you know, was maybe founded by folks that were not real practitioners, that they got a lot of external capital. And but you're also realizing, okay, they've gotten 20 million in capital but only have ten customers. That might be a [00:47:00] recipe for disaster with them being at a cash flow in 12 months, which I think the industry is full of those folks right now. And it's a lot of risk to accounting folks. And frankly, we we talk to them on an almost weekly basis about becoming a long term partner, because that's what they hope to get before and and then backtracking with their management and their board saying, no, this is really the one. And because they lost some trust internally, which we hate to see.

Isaac Heller: Yeah. It hurts. It hurts everyone. Right. So you have to someone tried out a vendor for a couple of years, and then you have to convince them [00:47:30] to try out you. Exactly.

Jason Berwanger: Those are the hardest. And really help help them rebuild their internal credibility. I mean, I mean, for us, it's like, yeah, you're not going to hurt our feelings if you think you have a better solution, but I do. I do worry about their credibility of making the next investment, whether it's us or somebody else. After having gone with some of the fly by night tourists, and then their credibility in the organization sometimes doesn't recover. And that's partly what we, you know, educating folks around some of this and helping qualify, like you mentioned, is incredibly important in the age of, [00:48:00] hey, yeah, I'm the demo can show me everything that I want, but, um, the man or person behind the curtain is a dangerous game to play with some of these type of tools.

Isaac Heller: Oh, yeah. Yeah. And that's I mean, that's a reality. Like we as I think that anyone who goes on the founder journey is going to experience so many meetings where it's like so obvious to you that truly inner eye is the better solution. You've qualified their problem set. They've told you what they're doing, what they're spending, whatever it is, and they're like, oh, it's so obvious. And they don't. They don't choose you or they stay with [00:48:30] their existing solution and you brought it to life. Your choices between paying with a 30 year old solution and risk with a solution that may not be around in a couple of years. But anyway, we're not going to end on that note. We got a couple minutes left. Um, you know, you guys have gone on an amazing journey at Happify. Um, I hope we get to work together more, you know, in the future. Um, give us a little bit, maybe just the crystal ball. Um, you could talk about what's on the horizon for Happify and your your [00:49:00] team or your product. Talk about what you're seeing in automation versus AI or maybe technology overall. What are you what are you interested in these days?

Jason Berwanger: Yeah. I think, um, one one interesting bit that I'll call out is just the, the order to cash landscape, uh, particularly for plg or combination SLG plg companies seems to be shifting quite a bit. And there's a ton of new incumbents. So, um, you know, we had we have a lot of integrations and because we're solving at the end of the day, rev rec and order to cash accounting, [00:49:30] we have to keep up with the landscape of the order, order to cash actual operational systems. And, you know, whether it's Salesforce and a lot of like cpq migrations, whether it's new companies like tabs or, you know, folks that have a that are, you know, a little bit earlier but are still, you know, I would say incumbents in like subscription management, like really, uh, there has been a ton of investment from the, you know, incumbent folks and, you know, the new folk practitioners. And we're seeing a we're seeing a lot of choices out there [00:50:00] for like finance and the operational group of how do you build and collect and then manage your financials from all your customer transactions. And I'm you know, I was at the point six months ago, I thought I saw where this was going. And now I'm, I'm seeing a lot of thrash where folks that I thought would pick the, the legacy, you know, hey, we're more of a B2B business model.

Jason Berwanger: And so a Sage or a NetSuite actually still makes a lot of sense. They're they're taking a chance and going with something a bit more modern and then coming back to us to then bolt on and say, we [00:50:30] want to be able to build and collect in any way we want. We need to make sense of it all from the accounting perspective. And um, yeah, it seems like a a theme out there of folks who are willing to take, again, a bit more risk on the operational side. Um, and then thinking about some of the compliance aspects later mostly, although I think that's for customers that don't yet have like external financials, they're not on a path to IPO. Um, and so in other words, like because of, you know, the hyper investment, a lot of AI and technology companies, there's been both, uh, an [00:51:00] investment in the operational tools of how to bill and collect and usage based. But then you also have, uh, a ton of customers that have come in to market, that have a lot of needs, that are a little bit more risk averse because they're probably burning a lot of capital, they're taking lots of customers, and that's really accelerating the innovation of what we're seeing and working. And it's almost like, I mean, this is not disrespect, but it's not that they're guinea pigs in the sense that they're, you know, not in charge of their own destiny, but because they're taking such high risk.

Jason Berwanger: And they a lot of them may be tourists, a lot of them may be here a long time, but we're getting [00:51:30] a chance to see, like what tech can really scale well and not well on both the order to cash and the accounting side. And that's just a really interesting case study to be a part of and see, like who gets picked, what actually works. Like lots of marketing. Hey, we found a new customer and then you check back in at six months and they're like, well, we're still not live yet. Um, and, uh, yeah. So it's a fascinating time. And, um, if I was a practitioner, I would have no idea how to make a long term decision right now, if I'm being honest. Because if you look at the marketing and the case studies on the surface, you have no idea whether to differentiate [00:52:00] somebody that is completely like demo land behind the curtain and somebody that can actually help you. Um, I don't know what to do about that, other than being honest and giving advice like you did earlier, but that's what's most fascinating out there that I see in the in the landscape.

Isaac Heller: I love it. Well, my bet is on Happify and Jason and the team. Um, and then we'll maybe we could we could park that as a potential another day or another conversation on maybe your podcast. Just you opened up this idea of best of breed versus all in one type vendors, [00:52:30] right? And what you were saying a little bit is there's this best of breed trend of building plus fabric, as opposed to I'm going to get it all from Oracle or SAP. So we'll we'll see if that holds. You know everything's got to got to glue together. Well but look, Jason, I mean this was a fun conversation. I hope we, we, uh, you know, get to do it again. And everyone enjoyed it. So I really appreciate your time today and coming on.

Jason Berwanger: Yeah. Thanks for having me. Great convo and looking forward to the next one.

Isaac Heller: Likewise. Okay. See ya.