062 Should We Wait For AI To Buy New Software?

Should we be parking the bus on.

Software decisions with all this AI stuff that's going on right now? A lot's changing.

It's changing really fast. Should we just wait? That's a good question. Let's talk through, like, kind of my.

Framework for what that looks like.

But it's Q and A Wednesday, so we're gonna cover a whole bunch, whole pile of stuff. Come on in. It's Jason Daly.

This is a great, great question. I think a lot of us are struggling with this right now as we don't exactly know how AI is going to impact the things that we do. So how do we make a buying decision on software right now while all this stuff is in flux? Somebody posted this on a. On a YouTube comment. They said, I love the potential with all of this. Lots of reasons to hold off on major software conversions. For the moment, though, I won't call out the person specifically because I think I'm gonna add some, like, seasoning to this and kind of where my. Where my head is at on whether we should be waiting or still buying software as we usually do. I've referenced the iPhone analogy before and that there seemingly is never a good time to buy an iPhone, but also the answer isn't to never buy an iPhone, right? So you kind of have that paradox of when's the right time to jump in. But let's add some seasoning to that, because the iPhone buying decision in the.

Last five years has gotten way easier, right?

Like there was a time when it was painful to buy a smartphone because there was so much evolving so fast. You inevitably felt like you were getting hosed.

But that anecdote, the more I've thought.

About it, almost feels old fashioned now, right?

Because what generation you have anymore isn't.

As big of a deal. Like, you may get a camera bumpy, may get a battery bump year over year, but that's kind of about it right now. But to me, what that shows is the picking the right time to jump in is kind of impacted by the rate of change. And to. To build on the iPhone analogy, it's actually like maybe the opposite of what is intuitive in the case of the iPhone. When things were moving slowly, I'm slower to buy and slower to change. But when things were moving quickly, I was actually faster to buy and faster to change because there were features there that I wanted and I seemingly had more to gain by buying more frequently. So since things are changing quickly right now, to be honest, where I'm at is I don't know that I'M like, I would be slowing down to make software decisions because ultimately like there would never be a theoretically good time. Now if, if stuff's going to change for like a year and then plateau and not change after that, then sure, maybe we give it a year. But honestly I like, I don't see that happening. The AI stuff we've talked about this, the AI stuff we've gotten so far, what folks are building into the practice management systems or have shipped so far, very elementary on the grand scheme of what the tech we have today will enable. Mainly embeddings and vector search, which we talked about in the fully automated bookkeeping episode a couple of Fridays ago, and how that opens up access to all of our context documentation files, organizational email projects, meeting transcripts, all of those things. Like those are the really meaningful long term improvements that we're going to get when a meeting transcript will resolve an outstanding client request. Like really cool stuff. Like that generative email getting way better and being informed by the files in your file system and the meeting transcript when a colleague talked to that client a week ago on Zoom. Like those are the really cool applications and we are not even scratching the surface of that stuff yet. So I don't think there's like, I don't think we're going to like plateau in the next 12 months on how quickly this stuff is developing.

The thing I'm really excited for after.

That that we've talked about is AI agents. Like somebody ships an agent for a practice management system that will go out to your QuickBooks file and perform tasks in QuickBooks. When you assign a task to that agent, like that's a next 24 month sort of thing. We already saw the example of Pixie of the agent. They're working on that when it received an email asking for net income and sales figures for a client, it was like a banker request. That agent went out to Xero's API, pulled those numbers, pulled the supporting documentation and then like drafted an email response that had all that stuff in it already. So those agents and what they will do and how helpful they will be, these will be things that are making big steps for years to come that will make us way, way more productive. And like the easy example to think about there is accounting ledgers today because we're already seeing some examples of it. But for tax folks, agents that will like actually work your tax software and like perform functions and go out and look things up there, like that stuff's going to be unbelievable. And so I don't see that slowing down. Like if we were going to get to a threshold where it plateaued, then yes, maybe we wait for the plateau.

You may have seen some discussions about.

Language models plateauing, and there's probably going to be a degree of that where the quality of what language models are capable of. Like it just went like this.

It's probably not going to keep going like that. But what will continue to like grow.

Exponentially is the amazing things we can build on top of what we already have. Like, that stuff's gonna keep getting better and better. So is it time to like pump the brakes on making software decisions?

I can tell you selectively I would.

Not buy software from someone who hasn't demonstrated to me that they're leaning into AI in a really meaningful way. Like that's something somebody that I fundamentally like would not buy from. I don't want to generalize, but that could be like more of the established mature companies. But I think for me right now, the only scenario where I fundamentally wouldn't buy a piece of software is if there's something that I would otherwise buy but haven't demonstrated any aptitude or interest in developing for the new AI tech of the last 12 months that I wouldn't buy otherwise. Man, I'm probably like, I'm probably full steam ahead. Like we've seen already seen some AI stuff that was shipped that is like going to create some really awesome time savings within a firm.

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A bit about this lately. The dialogue, like how to cut through what the tech vendors are telling us to understand. Are they actually working on cool AI stuff or not? And I've kind of cautioned if your tech vendors response is oh yeah, we've always been an AI company. We've been working on AI for the last decade. That's good, but it's not good if it's like we've been an AI company for a decade, full stop. Like what I want to hear right now is what about what's changed in the last 12 months? Are you excited about building on top of because the AI from the last year, last two years, like this is not something that anybody saw coming. It was not on people's radar that generative text applications would be this good. And so if they're still relying on past models, like they're not leaning into the really exciting new stuff. Like we talked about embeddings getting way better and that just shipped this January. So if they're leaning on old AI tech, that's not a good signal.

No problem.

If They've always been an AI company, but I specifically want to hear like, of the new stuff that's out there. Like, what are you pumped about? Like, show me what you're working on. Those are the companies I'm gonna hitch my wagon to when I'm making tech decisions. And the ones that can't show me that, that I'm at. I'm definitely gonna hit pause on question I got via dm, so I'll keep it anonymous. By the way, like, if there's something, if you've got like very personal or specific to you questions where you don't want yourself to be identified, just shoot me a DM and I'll keep it anonymous. What's your take on how the AI question kind of intersects with conversations around outsourced contractors slash employees. Is there a risk that AI will actually just increase the amount of clients that employees are expected to service with no additional benefit or reduction in work hours? Definitely a risk. So like, let's say AI makes us way more productive and that just means, like, employees are doing more than they ever did before. Is that a bad thing? Is that a good thing?

Ultimately, really? Probably.

Like assuming that you have butts and chairs for the same amount of time and nothing else changes and people are just more productive ultimately. Who does that benefit? Like, that really just goes to the bottom line. That goes to the business owner. I will say, in the paradigm of like output based compensation, it's another example where I think output based compensation solves for some of those issues. Unless there's a situation where like there's this deflationary period and our prices don't increase or maybe our prices even go down, which I don't think that will happen. This is a bigger conversation than accounting. But like, there's, there's definitely some talk around, like whether this will have a deflationary impact on certain industries as types of work are commoditized. I have a hard time seeing that happening to us, especially with how the last few years have been and rates just increasing astronomically. But if that did happen, let's say there was deflationary pressure on our fees, but our employees were capable of more output. You would want to be mindful of how that output based compensation was set up.

May not be a problem if it's.

Revenue based, maybe it would take all of that into account. But yeah, like, there's absolutely a risk that AI will just increase the number of clients that an employee is responsible for handling without that person necessarily being compensated anymore. Other examples in the past like you know, we're always on this kind of slow march of increasing productivity. But what have been the big step changes in the past? Because at its best, like AI offers this sort of step change in productive output. You know, like the personal computer and like the say tax prep going to, going to tax prep software rather than being manual cloud accounting software and bank feeds. Like those were step changes and what we could do I think. And in hindsight it all looks very compressed, as if it happened quickly. Reality is like those things changed over years. But in those situations, were employees ever given permission to work half the time because they just got that, you know, 2x impact on their output?

Not really.

So I don't know. I'm curious what Yalls take is on this. If anything could be an argument, like one more argument for being in control of your own destiny and working for yourself rather than working for somebody else. Because at its worst, like the firms where those people. It's just like an output mill. It's tax returns, it's month end closes. Like where you are just a cog in a machine. Yep. You're going to be an even bigger cog in the machine because you can do more than ever before now like that's absolutely how it's going to be. Big four isn't going to let people not work on Fridays because AI just made them more productive. The firm's doing interesting things that are much more mindful of how they treat their people.

Could be different. It's probably gonna be a little bit of column A, a little bit of column B.

People will be more productive, they'll make more money for the company. But like it shouldn't be full stop there. Like I think employees could also be incentivized, you know, like we talk about with output based compensation so that ultimately they benefit as well.

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Notes to learn more thing I've been.

Thinking about Sidebar we attract a very specific type of person to this content, both on the employer side and on the employee side. Whole bunch of employers listening to this right now who I have to imagine would be like the employee out there who this type of content resonates with. Would love to get my hands on an employee like that. Like, you're coming in from day one with a really interesting level of alignment. Right now. I don't feel like I'm doing enough to connect the people in my audience, the employees who are looking for a new opportunity and the employers for whom that person could be a great fit because you have this common ground, this way of thinking about what firm running looks like. I don't feel like I'm doing enough to connect those people right now and I'm not sure what that would look like. Like A like a job board or something like that to me seems kind of boring. But as like we keep investing in this content and like the folks that engage with this and the numbers of people that get excited about this stuff grow because it's still such early days. There's got to be a way, a better way to connect those like minded people to get you all working together. And I don't know, that seems like it could be a really interesting byproduct of everything reporting into the show. A good comment from Interesting comment from Jackie Meyer on YouTube video. I think this was on like the worst case scenario for an accounting practice with AI video, she said. I think given the caveat that we don't know in regards to AI, but it's important to consider predictions, a chatbot that put together a list of like questionable items that are in the accounting like, like clothing purchases and stuff like that and works through that with the client would be gold. She said she's excited for like near term AI applications that will actually perform tasks rather than just handle like these kind of high level interactions. I got excited about that because you know what I would love is to not have to be the guy to tell the client, hey, I just chucked all this stuff in your distributions. Like for a client to be able to work through that with the language model, that would be really interesting. I love like, I love that application for them that back and forth to be like supported by authoritative tax stuff and the client can kind of go through some of that stuff as sort of an initial stuff stage of reviewing what's there before it came to the pro, I think that's really cool. I think that's interesting. I think that. I also think the marriage of ledgers with tax legislation is an interesting possibility. It does. It's not really a thing right now. But for a ledger that is looking to go super deep in a certain market, the intersection of like how all the stuff that hits the ledger interacts with tax law is interesting and I think there's a more interesting version of that than simply classifying stuff according to, you know, like grouping accounts according to what you see on a Schedule C or something like that, I think there's a cooler, more nuanced version of that that could be built. One interesting comment from Melanie Willis on the when we talked about delivering financials and tax returns over video, she said she just completed a couple of larger projects that included training. My initial proposal included an additional fee for video recording of the training. Both clients opted out, but she said I'M now going to include that in the package since they forget everything that I train them to do anyway and it ends up costing them more for additional training. And I couldn't agree more.

This is why where I've gotten with.

Video deliveries is actually that it isn't it for me. It wasn't an optional thing. I was like, this is better for you. And that's why I'm going to deliver it this way. Like, I think if we give them the option, we create a bunch of complication for ourselves because then we're doing it differently for every single client. And I like the purity of just saying this is how we do it, this is how we deliver it because we think long term, this is actually best for you. And that's that. And like Melanie's comment here, I think is a great example of, of just that where no client is probably asking for that. Maybe some are, but that doesn't mean that they don't need it. Right. Got a question and in DMs about where to start in the accounting profession. Just graduated with a finance degree. Thinking about getting into accounting. Not sure if public accounting is the route I want to go. So unsure about whether to do a CPA designation, EA designation. I have a passion for helping clients face complex problems and coming up with strategies and solutions for them. That's a great question. It's one of those things where I think you got to optimize for getting exposed to different types of experience to see what you enjoy.

And there are like, what. What's appealing to me is the small.

Firm space because you have more control over systems, over how you work with clients. You're not like part of a machine.

But there are a lot of people.

That enjoy working in larger firms too. And getting a little bit of a taste of both might be helpful. So like doing a stint at a regional firm just to see how you like that. Unless they're gonna drop you into audit. Like audit to me is like the most distant thing from getting meaningful time with business owners to advise them. So I would say stick with like accounting, CFO type stuff or tax or a combination of the three. But in the beginning, I think sometimes we too soon put all of our eggs in a specific basket until we've gotten some experience to know like, what's the thing that we most enjoy. Ultimately I don't know that you know what that is until you've gotten to get a taste for it. So like hop around, even do some contract stuff if that's an option. Like doing Some contract work with small firm to like, be able to kind of get into a specific type of work. Maybe that's hard when you're first coming out of school because you don't have the experience, but I would say expose yourself. Like, spend a few years exposing yourself to a bunch of stuff and that's going to inform like decades into the future of what you love and increase the likelihood that you will be headed down the best path for you that you'll most enjoy. Gang, man, I gotten really good feedback on the Monday video about how to be lucky. If you haven't checked that out, highly recommend. I'm pretty hot on that right now. Like, optimizing what you do for creating cool opportunities because you cannot possibly guess. Like, the best things in life just happen to you. Not because you like made them happen. They just happen to you. So how do you optimize your day to day for serendipity?

Speaking of serendipity, Gang, I'm going to.

Be at Zero Con in Australia this August to be an amazing opportunity. Going with my wife, going to the Women's World cup final a couple days before that. Are you hecking me?

Like 0con, 4000 people in person, conference.

Always been like a dream of mine to go to Zero Con Australia. And it's like just such another example of like, I was making videos with spongebob jokes a couple years ago and like, you just put yourself out there and a bunch of things connect and like, you could never imagine the cool stuff that will present itself the more you just put yourself out there. Like, that's gonna be so much fun.

Gonna be at Scaling new heights in.

St. Louis next week if you're gonna be there.

I'm trying to put together like a meet and greet event while I'm there.

I'll have some more details as we get closer though. It is getting very close. Just so at least I have like a dedicated space where I can be like, hey, if you're there, come hang here at this specific time and let's have some fun. But that's it for Q and A Wednesday.

Got any other cues? Check them in the comments.

We'll. We'll circle back to them next week. Thanks for coming and hanging.