Anytime someone is writing about us and uses the term “firm,” I tend to strike it and ask that they call us a company. I also don’t care for the terms “client” or “professional services.” I think they’re unfriendly and outmoded.
Instead, we’re a growth company. We’re founded by two CPAs (one being myself) and provide tax, accounting, bookkeeping, reporting, and HR and payroll offerings. We’re tackling the same problems and helping the same customers, but are locked in a radical rethinking of how we achieve those outcomes. That means more tech, more help, and more freedom for our founders who no longer have to think about the back office.
Today, I’d like to share why I object to some of these old, peeling industry labels, how this mindset has helped us capture unserved markets (like high-net-worth Twitch streamers), and why it has unlocked otherwise impossible growth — and how we built it on Gusto.
“Client” implies patronage and, frankly, a lack of curiosity
Let’s start with some etymology. “Client” comes from a 13th-century anglicized French word meaning “one who lives under the patronage of another.” It implies a lord-and-vassal relationship that I think most modern accountants wouldn’t appreciate, though many seem to live it out in reverse, chained to their desks during busy season.
Instead, we’re trying to build a culture where we have customers who we value as people. That value is mutually beneficial and so much bigger than what’s strictly dictated by the monetary exchange. That is our culture — we’re people helping others do what it takes to grow. We’re curious about how they work, and we defend this position on almost every call with prospective customers because it’s a big switch from the classical world of accounting.
I was an auditor for 10 years, and I can say the only thing I truly enjoyed about it were the moments where I interfaced with CEOs and CFOs who were thrilled about their work. My co-founder Jim was a tax guy. We both arrived at the conclusion: This industry values conformity over curiosity and regimentation over innovation. The tax, accounting, and auditing work all seemed commoditized and the thinking unchanged since at least the 1970s.
As Jim and I toyed with starting our own business, we looked around and realized tens of thousands of others were offering the same exact “professional services,” and that felt suffocating. These offerings didn’t seem to add all that much value to companies, and most of the firms we saw for sale were hyper-localized and incapable of expanding beyond their ZIP code.
We thought, yes, this seems like a great deal for all these retiring owners who want to be bought out, but we want to build wealth too. How do we do that?
We set out to build a lifestyle business
When Jim and I left our jobs, we looked around and saw other younger folks building tech businesses just to live a good lifestyle. We thought, let’s do that. I started selling our accounting services and Jim did the lion’s share of the tax and consulting work. And that’s all it was ever going to be — work six months, relax six months. But business can be something of an addiction and we both have that entrepreneurial spirit that didn’t allow us to settle there.
Jim and I just couldn’t stop thinking about how to make it better. We took on work with companies that excited us in ecosystems like software, video games, and early-stage tech startups from upstate New York universities. Exposure to startups quickly taught us two things: One, the traditional accounting world was not serving these companies how they needed. (Just try convincing a busy Twitch streamer to sign and return physical paperwork.) And two, there was a lot these startups were doing differently that we could learn from.
Those small companies gave us a shot at doing their taxes and let us try some really innovative stuff. In turn, we borrowed the philosophies and language of software product management, Agile, and user experience research, and applied it to accounting. We worked hard, some of those customers were really successful, and when they suddenly sprang onto the national scene, so did we.
Disentangling headcount and growth
Virtually overnight, we were working with companies all over the country. While it started out as tax and accounting work, it very quickly grew to include outsourced financial services and being an advisor to the business owners who wanted to make sure their blindspots were covered as they grew their business. It became about how to truly help the businesses we served, with cloud-based financial reporting and virtual CFO services. And this is where we found Gusto.
Customers asked us to run payroll, and we thought, great, we’ll just assume their existing operations. But soon we were working with 18 different payroll companies and most were brutally reliant on paper and unwilling to innovate.
When I say brutal, I mean brutal. Payroll providers would ask for physical signatures, and every new customer created an endless stream of backend duties — deductions, labor law compliance, multi-state compliance, and more. The paperwork and legacy systems forced us to copy things by hand, which introduced the compounding potential for human error. It got to where we could no longer envision this offering scaling with us. It violated what we stood for.
As just one example, a customer kept signing payroll documents in different digital ways, like on his iPad. We’d forward a copy to a big payroll provider and they’d say, “Sorry, he needs to physically print, sign, and scan it.” The incredible thing is the way they were catching it was, rather than building e-signature into their product, they built a tool for catching people e-signing things. Then they’d block it. It was so counterproductive.
Then we found Gusto.
To bring you into the room, we now saw ourselves as building a growth company just like our customers. Our “tech stack” was built out of many vendors’ software, the core of which we called hilineOS. Gusto fit it perfectly. Their messaging around being a “people platform” and wanting to create a world where “work empowers a better life” was precisely the experience we wanted our customers and their employees to have. Gusto submits forms to state agencies for you. It’s completely paperless. It’s easy to maintain at scale. It’s user friendly for the business owners and their employees. Gusto means that rather than hiring exponentially more headcount to manage the ballooning risk that payroll creates, we use Gusto’s service to scale our offering.
With that in our stack, there’s no more concern about our HR and payroll offering “breaking” at a certain number of customers. As long as Gusto scales, so do we. If a new customer uses something different, we help them switch.
I think we’ve cracked the people code
As I write this, I feel we’ve come close to establishing what tech companies call “product-market fit.” That’s when you arrive at such a tight interlock between what buyers want and what you offer that it feels like it sells itself. Jim and I initially built the company on our names alone, and that’s a certain kind of success. But it’s also a plateau. That growth was regional, and nobody knew us outside of New York. So we built the hiline brand and hilineOS to allow us to quadruple that number of customers to 300 and beyond.
What’s most exciting is we did not steal most of these new customers from a competitor. We converted them from “the way it’s always been done” to our way. People are amazed to learn they can get better service, better tools, better flexibility, better technology, and better support for a fraction of the price they used to pay a team of bookkeepers, controllers, and outsourced CFOs. The bar should be higher. Customers should expect more.
We aren’t seeing many other “firms” taking this approach, and that gets us excited. Just as our technology customers are reinventing ‘business as usual,’ we’re reinventing accounting.
That’s why we prefer not to be called a firm, and why we insist on not calling our customers “clients.”