615 The First $1B Accounting Firm Rollup [What this means for small accounting firms]

Listen up, did you hear that Jason on Ferns is going on tour? Buckle up, it's the show you love, now with snacks and an open bar. The tour's halfway through, but we still need you. For tickets and more, head to Jason Staats. Jason on firms.com. Jason on firms.com. Now it's time we end the song. On to the show. Somebody's betting $1 billion on an accounting firm roll-up. Billion. And would you believe me if I told you that OpenAI, the company behind ChatGPT, even has an ownership stake in this group. Is this like yet another VC sort of let's figure out how to flip the multiple on some accounting firms, another one of those plays, or is it something that's here to stay because they are actually taking a different approach here? Also today on the podcast, we are taking, uh, a, a listener's firm who's doubling down on a specific niche and walking them through exactly how to build that niche. This will be a fun one if you've ever thought about serving a more specific type of client. And we're going to dig into a few listener questions. How do I get my clients to start, start working with my staff instead of me? AI tax prep has been a flop for a bunch of tax pros this year. And do I get paid by Claude? Tell us the truth, Jason Staats. Don't lie. Plenty to go through today. Let's hop on in. How do you do, fellow accountants? My name is Jason Staats. Welcome to the Jason on Firms podcast, where we talk all things accounting firms, accounting firm strategy, whether you own one, whether you work in one. This is a safe space for accounting firm maxers. Speaking of maxing, I think this is the biggest dollar number ever associated with an accounting firm roll-up. And specifically what I'm interested in is what does this mean for small accounting firms, for like 100-employee and under accounting firms? Is this good news? Is this bad news? Rollups are by no means a new thing, and most would argue have been pretty bad for like everyone involved, from the teams to the clients. Pretty much everybody but the partners who got bought out in the process. But let me tell you about this, this latest headline from the group Thrive Holdings, who has set aside $1 billion to modernize, to AI-ify, uh, ye olde accounting firm. They're doing it through a company they own called Current. Current has now done 48, uh, accounting firm acquisitions, fairly small firms. They only have 2,000 employees. In total, but they're doing it with a different approach than I think most have, have taken in the past, which is we're going to roll up all these firms and buy them at this multiple, recognizing that once we're beyond a certain size, it can now be sold at a larger multiple. And this is starting to happen. There is one example of sort of this second-level flipping. A big group got sold to Blackstone basically, and they did get a better multiple for this. But this whole generation of rollups that was built on this thesis, they're now getting to the stage where that next flip has to happen. And there are some cases where they're actively trying to do this and it's, it's not penciling out yet. People are beginning to ask the question of like, is this higher multiple, is this actually realistic? I have always had a problem with this. Um, in my accounting firm, we worked with dental and in dental is a huge trend of, uh, these independently owned dentists all rolling up into these group DSOs. And it's something that happened in, in medical like 20 years ago. And the whole promise is, is the same. Hey, you could go sell your dental practice for this multiple, or you can roll it up into a group and get a multiple that's 2 or 3 times as high. And I saw in the process of going through this, and we even for a time, we're like, oh, we could be like the DSO accounting firm. Like, you get all these dentists together, who's going to raise their hand and be like, hey, can I do the accounting in the back office? Nobody wants to do this. And so as a firm, we could come in and provide this service. But we saw like just how, uh, how, how many people had their fingers in this process and were trying to make money on the transaction. And you had these dentists who were great people and they would go into this with a bunch of friends and like do it. And we're, we're, we're very excited and bought into the process. And 12 months into it, they're like, this is the biggest mistake I've ever made in my life. Most of their staffs end up leaving. They're stuck there for a certain number of years, then they ultimately don't get that payoff. And this is not limited to dental. I mean, you could put your finger on a myriad of things that VC has ruined. Current here, this, this whole $1 billion thing, they're taking a different approach. They say that is not ultimately founded on the idea that I can buy all these firms at one multiple and sell them at a higher multiple. It is more like the Berkshire Hathaway model where they're planning to sit on them for, for a long time. And some of the ownership is, is still held by the person they're buying the firm from. And this, this is actually picking up. I've seen a number of folks taking this approach, almost like recapitalizing a small firm, not buying the entirety of it, but obviously they have to bring something to the table for this to work, right? It's not enough for them to just buy part of the firm at the market value of the firm and sit on it. The whole premise is that we can pump AI into these firms and make 'em, you know, vastly more profitable or higher output or something like that. I wanna read for you a, a bit of this article because I think the parallels to what small firms are doing right now already is, is really interesting in this. From the article, following the acquisition, this person, they, they held a meeting with the junior level staff to tell them that Thrive Holdings would be building and deploying new software called Tax AI to automate many parts of their job. She wanted to have an open conversation. The room became quiet and they said, well, is Tax AI going to mean we don't have a job? This person recalled, the AI's first task was to prove it could handle one significant accounting workflow, the mind-numbing work of looking at disparate client documentation and inputting numbers into 1040 and 1041 tax returns. 1041, that's kind of interesting. This tedious area was one where its accounting practices had previously experimented with using offshore operation centers with disastrous results. Long story short, they rolled out some new AI. On average, the software yielded a 31% time savings for accountants who were processing tax returns. And impressively, TaxAI was up to 98% accurate in data entry. Does that mean that in all of tax season it didn't nail a single one? You know how that feels. You're like, you're like, one of these days I'm going to get a project through the reviewer with no notes and then it just never happens. Sounds like that may have been the case for the AI. It was up to 98% accurate in data entry, eclipsing the 10 to 15% manual error rate typical of human preparers. That feels a little bit high. And then here's the last sort of feel-good quote here from a member of the team. They told me, "When we made the decision to go into the platform, I was really skeptical. I thought, 'I'm not sure,' but looking back, it was absolutely the right decision and I'm so glad we did it." What does this sound like to you? I mean, to me, this just sounds like tax workflow software, which many of us are now employing, right? The thing about this is OpenAI has skin in the game. That OpenAI, you know, end of the world OpenAI, creators of ChatGPT, The demise of civilization, maybe, or maybe just funny AI cat videos. Let me tell you about this, this OpenAI deal. It was announced in December of last year. OpenAI didn't have to put up any cash. Their ownership stake can grow with performance. CurrentGig gets access to a bunch of OpenAI engineers and basically folks that will come in and, and do labor for this group. But importantly, OpenAI gets the data. How's an AI company gonna get their hands on a whole bunch of tax returns and actual accounting firm work? You gotta own an accounting firm, right? In exchange for this, uh, OpenAI embeds research, product, and engineering teams inside the portfolio companies to boost speed, accuracy, and cost efficiency. And it all sounds great on a slide deck, doesn't it? Right? Oh yeah. Accounting firms. Why are those still a thing? Let's AI it. And I'd like to think there's more thought that was put into it than that. But the extent to which I care about this story boils down to how should we feel about this in small accounting firms? Is this like, are we all about to get rich? Are we literally mining gold by creating firms that these very wealthy funds will, will now come and gobble up because they're pretty sure they can 10x the output, 100x the output? Or is this just more, I don't know, VC bros burning cash on something that's not going to work? I got 3 thoughts here, like putting my small firm owner hat on. Number one is very obviously this is an M&A opportunity, right? Never has it been easier or never have you had more options than you do today to sell an accounting firm of almost any size. I mean, you get over— you probably got to get over $500,000 for things to get interesting. Over $2 million, things get very interesting. That is revenue per year. And for a lot of folks, this is like reason enough to try to build an accounting firm. Now, I always had like a real sort of block on the victory state, like the best thing I can do in my accounting firm being selling it because, and maybe I've seen more of these stories than, than most, but the reality of selling an accounting firm is almost always burning the clients and burning the staff that are involved. And for me to like take all the people that are most bought into my vision and get them on the bus and, and be the rah-rah guy and get them all swimming in the same direction. For me to then do the rug pull and be like, hey, I just sold y'all to this other thing. I hope it goes well. Didn't feel— that was a tough one for me. Didn't feel great about it. If you actually believe that selling The Firm to some other group will be a win and will go really well, cool. Like maybe you can get excited about that. But boy, examples of that actually happening, I don't know, are incredibly rare. Do you have positive examples of that? I mean, the most interesting versions of M&A right now to me are more like peer acquisitions. Like, you know, someone that runs a firm that's very similar to your own. You're using the same practice management systems, you're selling more or less the same thing. That sort of merger can make a ton of sense, and there's a world where that is a better firm on the other side of it. But selling your firm to a regional like that, we know that never goes well. And so this was a, a hard path for me to get excited about. Now, there's a growing number of different like roll-up kind of vehicles. And this does make more sense to me than just the multiple flipping version of this, which I've, I've never been a fan of buying a bunch of firms at a multiple to eventually sell them 3 years later at a higher multiple. I'm not really interested in that. You better believe in what I do. We've talked about this before. What would a Jason on Firms roll-up look like? After all, I already have Realize, an online community with almost 800 accounting firms in it that represents almost $500 million a year in annual revenue across those firms. The logical progression of that is some sort of holding company, some sort of more hands-on version of the community. And that could be very light to a proper roll-up, taking full ownership of firms. And I'm not like, I'm not convinced that there isn't a version of that that could work someday, but I am convinced that nobody's found it yet, that we don't have a version that right now looks to be crushing and looks to be totally validated. So first thought is, and maybe this goes without saying, there is an abundance of options when it comes to selling your firm, and that is good news for us at the end of the day. But second thought is this is a great opportunity for the rest of us who are not participating in that to go out and find some great clients and some great staff. I'm not saying that you should do this, but I am. The next time one of these announcements comes through your feed. Take note. Who's being acquired? And how do you think everybody in that firm feels in that moment? Probably not great. Probably a lot of fear, a lot of concern. I can tell you, I got many of my very best staff people from this sort of acquisition. Again, I'm not saying you should do this, but take note of who those firms are. It has never been easier than it is now to go out to LinkedIn and find the people that work for these firms. And maybe this is the harder part. Do you have something you can offer them? And I'm not just talking about money. Is your firm set up in a way where they're like, that is an appealing firm to come and work for? If so, you're probably going to have pretty decent luck not only pulling staff, but some clients that may follow as well. As I read this ad, I am feasting my eyes upon talented accountants that you could literally, literally book an interview with right now. Like Ruru, a CPA, a tax pro, $3,500 $500 a month. He's got experience with CCH Access— bless your heart— CCH Engagement, QuickBooks Online. Gang, he is one of many accounting pros that you can peruse at the Cloud Accountant Staffing portal. We'll link it down in the show notes. It is a veritable smorgasbord of accounting talent, folks that they have pre-vetted, where you can go in, you can see, see their experience, you can literally see an intro video that they've recorded, and you can book an interview with them without ever even having to hop on a call with Cloud Accountant Staffing amazing. We got tax pros, bookkeepers, auditors, executive assistants. Oh my gosh, I got a lot of people in here right now. 45 candidates. Because I know you need that next dream hire. You really do. What do you got to lose? Okay, go check out the portal, book an interview. Feels like a win-win, right? You're only going to move forward if you find somebody you love. Cloud Accountant Staffing, run by folks that used to run an accounting firm. They make it as easy as possible for you. To learn more, check out the link down in the show Hey, if you're done licking your wounds from tax season, if you run more than a few hundred 1040s a year, you gotta look at this episode sponsor, Sorban. One of my leaders in tax workflow automation can save you a tremendous amount of time right now, specifically on the intake part of 1040 workflows, but they're also working on connecting to your tax software automatically, like pushing data in there. They're working on automating the delivery of the tax return, but this is like the first fastest growing category in tax tech. If you're a US tax firm, you absolutely need to have a good tax workflow solution nailed down. We did about 1,800 1040s a year in my accounting firm. This would have saved us so much chasing clients for documents and just tedious organizing of all these PDFs. Oh my gosh, can't say enough about Sortman. We actually did a full demo of their platform on my YouTube channel not so long ago if you want to see it. But to learn more about Sortman, check out the link link down in the show notes. Third thought here, and this one's interesting to me, is as we see different versions of these rollups happening, there's a, a growing, I would say, body of proof that there's probably an opportunity for you yourself to do your own version of this. Like, can you think of what an interesting version of a rollup for you might look like? There's obviously an abundance of capital that people want to pour into making these things happen. How would you do it? Because if we look, I mean, this news story, which obviously is very simplified and kind of written for normies, if you look into what they are doing here, it's not rocket surgery, right? So they are deploying automation tech, which is something we're all already doing, right? And I would say historically, in-house automation tech has never won out over the off-the-shelf stuff. It just hasn't. I mean, the number of the hundreds of millions of dollars that big 4 and regional firms have burned on building their own tech that goes absolutely nowhere, only to eventually use something off the shelf. Will that change now? I don't know, but still feels unlikely. And I mean, this is, this is maybe an argument that a big roll-up group could make, right? What's something they could do that you could not do? Well, they could build their own custom software that's way better than anything that we can do. I mean, correct me if I'm wrong here, I believe this has never happened in the past. Like all these big, uh, all these big firms, they're not all sitting on proprietary software that is unlocking some huge opportunity for them. Uh, they are certainly investing in trying to build that stuff oftentimes and even acquiring software companies and being like, hey, you're just gonna build this stuff for us in-house right now. But that stuff usually goes absolutely nowhere. And so I don't see them having this big competitive advantage that you don't have. If anything, I think folks in small firms are more in tune to the reality of what clients want, which is a relationship. And that is just an inherently hard thing to scale. Like, that is honestly a great thing about small accounting firms. It's, it's a frustrating aspect of building and growing and scaling an accounting firm. That's even one of the questions we're gonna get to later in the episode. How do you scale an accounting firm when it all boils down to sort of relationship management? That's the whole reason that all this stuff hasn't been hoovered up into some mega accounting firm already. Is the circle of life in this industry is you build a successful firm on these relationships. Somebody acquires that firm, those relationships are broken, and then all of those clients trickle back down to small firms again and the cycle repeats. In my head, I'm thinking of like the visualization in the textbook of water evaporating and going up and making clouds and rain coming back down, which never made a lot of sense to me. If you think about that, if so, that's like some super dirty rain. If that's really how that works, sun shines on ocean, sun shines on dirty New York City puddle, water go up, water make cloud, cloud make rain. And then my child in the backyard stands with their mouth open up at the sky. I— that can't be how that works. There's gotta be some other way of getting water up there. So if you look at Current, this group that's doing this roll-up, what are they gonna struggle with? Like you put your coach hat on, you know exactly what the problems are gonna be. They're gonna struggle with the, the maintaining the client relationships, right? They're gonna struggle with finding, uh, accountants that can make those clients feel understood and taken care of and all that because it's a very difficult thing to scale, especially if the transaction itself breaks those relationships. And that may be one thing they're doing different here is that the transaction doesn't necessarily mean that the previous ownership group is leaving. In fact, I think they want to keep them around. And so maybe this is, I mean, I think this is, there's a stronger argument for this working than the traditional full buyout of an owner and they work for a couple of years before they go away. And so what's gonna make this hard? Well, like it is scaling a really high level of service. And so what it, when you think of companies that have done this well, where the people that work for them are extremely kind and like feel like they are a cut above the rest, like what are examples of this you can think of? I, I'm, I don't know. It's kind of hard. I know Trader Joe's, Costco, Disney. If you think of people that like Disney parks, maybe Apple. Maybe not Apple, I don't know. But all of these things, I would still argue they have like a novel offering behind them. Disneyland, uh, bougie food, Costco, um, uh, Puma sweatpants for less than you have to pay to Puma to get them. But either way, like they have, they have like a company culture with a certain type of person that comes. Maybe they're putting more thought or training into how those individuals represent the brand. And that would have to become a core part of how to scale an accounting firm, right? And so what would it look like for you to scale this kind of service model? Well, today I would say the struggle for accounting firms is, is both finding those people that can make the client feel heard and understood, but also it's still, it's still the doing of the work. It is the actual production. It's a huge amount of effort. But I think most of us can agree that's not going away, but probably going to be significantly shrunk in the near term. But that is the reality of running a firm today is it's a relationship management problem. It's a production problem. It is not a leads problem by any means. Modern philosopher Alex Hormozi talks about how anytime you're getting into a new type of business, you, you're like paying down an ignorance debt and ultimately learning what are you actually in the business of once you learn how that business works. He shared an example of somebody he worked with who like bought a cleaning company with the idea of like building a better sales engine around the cleaning company. What they learned is the biggest struggle for the cleaning company was to find reliable people who would show up and work and were trustworthy. Like there's a, there's a theft concern there too. And so the, the flywheel for the business became how do we build a machine that can attract and retain those people, not find more customers. That wasn't the hard part. It was finding the people. And if you're in an accounting firm, it is a people thing. It is not a leads thing. But in the future, as AI gets more capable and it will automate more of the work, it probably just almost certainly becomes more of a people thing, more of a service culture thing, because the doing of the work gets more straightforward and it's the conversation with the clients. It's the strategy that becomes a bigger percentage of what it is that we're selling. Now, you can make an argument right now that clients don't really care how the work gets done behind the scenes anyway. And that, that really is the business now is how we show up with clients and interact with them. A client doesn't care if it took you 20 hours to get a job done or 2 hours to get a job done. They have their own notion of what that work is worth. And will decide how much they like you based on how they perceived that whole experience to be. But for us, the operators of the firm, I think we can all agree that the future looks like much more like strategy and people time and much less production time. Much fewer people that are back of house just cranking on production. More people who are front of house, more like a sort of hospitality-minded, hopefully more like domain experts too. Folks with, with very specific expertise trying to help a client that is deep, deep in that domain. And it's the people who can figure out how to build that business that I think most realistically could see a path to what would it look like to build like a hyperscale accounting firm. And to be clear, what we're talking about that is left over in an accounting firm is, I mean, it's always been the hardest thing to scale, the human thing. But if you're seeing all this capital floating around and you're like, wow, man, what would my version of this be in an age of AI? I think it's just that. How do you build a really unique culture? I think if you can build it around a specific thing, it gets much easier. Like a generalist small business accounting firm, that's very hard. But if you're building an accounting firm around a specific industry, a specific interest, then attracting the clients in that domain gets easier. But also attracting the staff who are lit up by that domain, that gets really interesting as well. So now your advisors are the cheerleaders for the people in that space. They have that interest. And for a client to come and have that experience, that's really cool. That's really novel. Is that a rollup at that point, or is that just like building a cool big accounting firm? I don't know. Let me know your thoughts down below. Things have never been spicier in the domain of rollups than they are today. But to that end of like, what would it look like to build a more specific type of service model? We got a question from a listener recently. Asking us to kind of roast their niche. Is this a niche that would make sense for an accounting firm? And if so, how would you build it? Let's dig into how to make this happen. Niche of the Week. Niche of the Week. Let's talk about the Niche of the Week. Here's the listener question. I serve the indie author niche. This is independent authors, folks writing books. I don't know if this means they always self-publish. Anyways, I have a new YouTube channel, a new school community. I speak at conferences. Is it just a matter of putting in the reps until the path starts to become clear? What should I do next? Real hard thing when you are like fully bought into building a niche client base. It's very hard not to do all of the things because there are so many things that you can do to get out in front of people, like social media, YouTube, stuff like that. Right. And it is— maybe this goes without saying, but it's worth considering like, What are the best things to do? What are gonna be the highest impact things? Because some things require years, other things can get you results right away. Showing up at an event and making, making a connection, meeting somebody at a bar, at a, a post-event social thing. One conversation can lead to a client, to a connection, something like that. That's the sort of thing that's a good example of what can get me immediate results versus what is an investment that I'm making for the future. And when you're starting out, I do think you have to optimize for conversations for like a tighter feedback loop that oftentimes social media and YouTube won't provide you with. Because in the beginning, we are still doing a bit of feeling out, is this going to make sense for us long-term? And a trap here can be areas of work that are like bottomless, that, that can have no end. I, it's this framing I've been thinking of, and I actually first heard it from, from Tim Ferriss. I think it was his 4-Hour Body book, which it's been so long since I've read that. But one thing he said is like, when it comes to eating food, he won't eat things that you can just eat forever, like a bag of chips. Somewhere inside of your body is a stomach that can fit an infinite number of chips. And there's a lot of foods like that. And if a food is that way, then it means we should probably avoid it. There are a lot of ways to spend our time that are bottomless. And if we're not careful, we can throw away so many hours a day on these things that, that are bottomless and oftentimes a regrettable way to spend time. Social media is probably the biggest offender here, right? You fire up that app to do something quick and before you know it, you just burn 20 minutes. I myself have never touched TikTok for that reason. Like, it just feels like the entire purpose is to kill time. And so I try to be really vigilant of things like that in my life that are inherently bottomless in nature and will soak up a ton of time if I let them. In business, you have some of the same things where there's— I mean, there's literally an infinite amount of time you could spend on social media. Both creating and consuming, creating YouTube videos, stuff like that. At this stage in building a niche, that's a risky investment to make. It might still be worth doing to some level, but you kind of got to put boundaries around it because your time is so, so important. The 4 things I stress with folks that are trying to build a niche in their firm. Number 1, where are the choke points? Like, where are the points where everyone coming through this process have to collect? A really good example. A past firm we talked about. They work with the franchisees of a specific grocery chain. So the people that own these local grocery stores. But in order for a franchisee to be able to own one of these stores, they have to go through this mandatory training from the franchisor at, at their headquarters. And one of those courses is a tax and accounting course. Two times a year, this firm owner is flown out to this franchisor's HQ where they do this training. They run this class for the, for the new franchisees, and they get 80% of the people in the room. That is a dreamlike collection point for people coming into a very specific type of business. Some businesses have better versions of this than others, but these are huge opportunities to find where people collect. So find those collection points, find the live events. Nothing cuts through the noise like showing up at live events. Find the software vendors because they have the most money to amplify anyone. They're just trying to get in front of eyeballs. And if they're the same eyeballs you want to get in front of, you can use their budget to get you exposure. And then fourth, who are the influencers in a space? Influencers, people like me, the internet grifters of the world. They're putting all their money and efforts into building the audience, getting more reach, getting more eyeballs. What a thing for you to be able to hijack, to commandeer. How can you support that person? How can you become a resource to them and potentially get in front of their audience? These are all things that AI is a tremendous help with. And so I don't really know all that much about indie authors, but just in some basic AI prompting to kind of run through all 4 of these very quickly, got to some really cool ideas. Hey, I know you love Cloud Cowork as much as I do, but have you heard the news? About Canopy coworker. Subtle is a new AI assistant they launched inside of Canopy, one of this episode's sponsors. Canopy, a practice management system that is a feature nerd's dream. They're trying to cover as much of everything you need in an accounting firm in a single place. But as we talk about on this podcast often, it is much easier to roll out an AI agent inside of a closed system than it is to roll out an AI agent that works across like all of my systems, right? That's the trade-off. I want the AI that works across all my systems, but we're struggling now with like, what's the most secure way to do that? The AI agent that works inside my all-in-one system, buddy, that is easy. Flip the switch, count me in, strap in, buckle up, I want it. Canopy is so convinced that you're gonna love what they got to show you, they're gonna cut you a check for 75 big ones. They'll give you a $75 gift card. Gift card to Bed Bath Beyond. What's that? Okay, I'm, I'm not sure where, where the gift card is for, but if you book a demo with Canopy via getcanopy.com/Jason, I'll put that link down in the show notes. They give you a $75 gift card just for coming and, and demoing. Do it. What do you got to lose? Hey, real quick, the most important question accounting firms are asking right now in 2026 is how do I use AI securely in my production workflows? I've said this many times, don't take security advice from a YouTuber. What you need is actual, like, proper IT help, like this episode sponsor, Farodil. If I had to shoot from the hip, uh, with what I've seen from folks, Farodil might be the fastest growing IT solution for small accounting firms. I say small, I mean that like 100 employees and under. You need an IT group that just works with accounting professionals. Otherwise, you are paying this IT group to learn accounting firm things. Like, I had a local IT guy that I once brought over and spent 2 days watching him learn CCH engagement, like how the, like, database worked on my server. Oh my gosh, please don't do that. Work with an IT group that only supports accounting firms, particularly right now, as it is so important that we are beginning to implement AI effectively inside of our firms. You want to do that responsibly too, right? You need better help with this stuff. Look no further than Verito. They do hosting. They'll be your entire IT group. They'll do your whis. Can't recommend them enough. Check out the link down in the show notes to learn more. So some ideas for the collection points where indie authors are coming through. Uh, stumbled into Author Nation, which is the largest event globally for independent authors. Happens every year in Las Vegas. Author Nation, it has a finance track around the business of all of this stuff. And at least this year's programming has nothing on accounting, nothing on tax. What a place to show up. The NINC. I can't figure out what it stands for. It's something to do with novelists, but it's a membership organization for professional novelists that requires $3,000+ in earnings per novel. So the people within this organization are like making money from their books. This, this, this organization puts on all sorts of stuff, even puts out content. What a great group to partner with. The Alliance of Independent Authors. They've got a whole like directory of partners. And in that directory, not a single bookkeeper, not a single tax professional. Now, just on some quick riffing with Claude, it pulled a number of really good live events. Only one of them mentioned having a speaker on the agenda that has anything to do with finance or tax. It's interesting. It actually pulled up a podcast as well and said, hey, here's a really strong signal. This podcast interviewed a tax professional who's actually a listener to this podcast. So we got some pretty decent collection points for these people, an abundance of live events. When it comes to the software vendors in the space, we've got BookFunnel, which is like the de facto tool for sales of independent novels, ebooks, audiobooks. They're massive. They put out a bunch of content. They've got a podcast, totally a company that you could work with as an accountant because, I mean, this— a big part of this platform is the business of selling books, right? Draft2Digital does something similar, a little bit different, but they also have their own content. Interestingly, Kickstarter, so the platform that's for crowdfunding all sorts of stuff, they've got a whole publishing arm just for authors. I guess this is pretty common with independent authors that they will do a presale. Now they've got a whole like annual guide that's literally called Give This to Your Accountant at the End of the Year. But nothing specific for authors. It's kind of a general guide that Kickstarter uses for anyone that's using the crowdfunding platform. Last, Ream, R-E-A-M. This is a subscription platform. People say Patreon for authors. So readers like pay a monthly subscription to the author. It has 15,000+ authors on it. The whole idea is it's helping authors build this recurring monthly income. They've got a podcast, they do webinars, they've got a community forum. All this around like supporting authors and, and running the business of being an independent author. One thing that's just given me more confidence in what it looks like to actually run a niche accounting firm is just doing a bit of research, like going down the rabbit hole. You just, there's, as with all things in the world, right? When you're not into a thing, you don't know all the complexity on all the nuance that's there. And so you think of one small, very specific thing, like we did a whole episode one time on like, this medical repair equipment certification. What was it like a BMEC or something like that? And there's like 40,000 of these people just in the US who have this certification and are authorized to work on medical equipment inside of hospitals and retirement homes and all this stuff. And there's this whole process that they have to go through, the certification process, but then there's all these conferences all, all around. There's all these different players in the ecosystem that all are doing different roles just in the act of repairing equipment, medical equipment. And any one of these little, like, parts of the ecosystem, you could build an entire practice around. And so it's very easy to sit back and in the abstract, think about these things like, oh, I just drove by a Subway, like a sub, sub sandwich, like $5 footlong sub sandwich restaurant. Well, I could be the Subway accounting firm. Like, we do this, like, surface deep analysis oftentimes with just thinking about niches in the abstract. If you just do a little bit of research, like riff on this for 30 minutes, 60 minutes with Claude, just to see how much depth is out there, you'll see, oh man, every space has weird industry influencers like me. Every space has live events, has these masterminds, has these membership organizations. So many entry points for you to be able to become the person for X, and that is ultimately the goal. Is you want to become the default, the de facto solutions provider for a very specific person. And this does not have to be a big group. In fact, the smaller and the more niche you go, the easier it will be to become that de facto person. And once you are there, like, there is no comparison to you, right? You can command higher fees because you're the guru. You are the person in that space. And that is a much, much easier business to run than when the client is comparing what you do to the guy across the street because they don't know the difference. If you got a niche you're thinking about going into, drop in the comments, shoot me a message, tell me what you're thinking about. I would love to build like a little one-page website tool for this where you just pop a niche in and it does this analysis for you. Like, what are the choke points? Where are the live events? Who are the big software vendors and who are the influencers? I've got a number of prompts that I kind of use for this when I'm thinking about niche stuff. But when you see the results, it just, it makes it feel so much more accessible because you're like, oh my gosh, there's all these different things that I could try that feel honestly much more immediate and easier to step into than like, oh, I guess I have to be a social media celebrity now and write a LinkedIn post every day, which can really be a slog. If you're thinking about it, do it. Give it a try. Last, we got some listener questions to get through. Let's head over to the mailbag. Mailbag! Mailbag! This segment is called Mailbag! Questions are submitted via email. My email, it's jason@jasononfirms.com. Via podcast comments, social media DMs, my phone number. It's 1-516-980-4968. First question. Hi, I'm curious how you would recommend getting clients to work with my staff instead of me. The age-old question. You're bringing in all the biz and then you hit capacity and you're like, how do I get these people off my back? I keep sending them to my clients or to my staff and they just keep coming straight back to me. Let me tell you the best 3 things I ever did to get clients moved off of me and onto my team. Number 1 is I made myself slower to reach. You got to think about the, the service system that we've designed. If a client can call you and get an immediate answer, but they can also call your staff member and get an immediate answer, why would they ever call your staff member? There needs to be a cascading system of availability down the expertise spectrum in your firm. Your admin, they're the fastest person to get ahold of. They can get prior year tax returns, monthly financials, whatever. The staff, they're pretty available, but maybe not as available as the admin. You, you are the unicorn. You are the hardest person to get in touch with. Not hard in the grand scheme of things, but harder than the staff person and then the admin. Otherwise, why would they go to anybody but you? Second thing I did is any time we delivered a project, I had the staff person, the account manager on the client, deliver that project with a video, a short 3-minute video walking through the tax return, walking through the month-end close. This had such an impact on the connection the client felt they had with our team. It's weird, like, for them to see their face. That very naturally, surprisingly quickly made the client go to them instead of me because they're the last person that they saw. Third thing I had to change was to bring clients into the firm that my team could serve confidently, not just me. And an example of where I did this wrong. Was I started getting into the niche of software agencies, and I have a bit of a software background myself. And so I could riff with these people and it was interesting to me. They were super profitable. It was a fun type of client to work with, but nobody on my team had any of that background or any experience. So I would bring those people in and then send them to my team and they would come back to me so fast, actually way faster than a lot of our other clients that my team could more confidently serve. And that's because they were great clients for me. But not great clients for my team. And so if you're to the point where you're building a firm around your team, it very likely changes the client profile of what's gonna be great for the firm. Because if they can only be served by you, good freaking luck getting 'em to go to anybody else. Next question. This is an interesting one. AI tax prep has been a flop for a lot of tax pros this year. What are you seeing with providers that will actually make them usable in the future? So there are so many tax software vendors now doing like AI workflow stuff. There is a new landing page every day. It's Ridiculous. All of this came from Thomson Reuters $500— not $500— all of this came from Thomson Reuters $500 million acquisition of SafeSend. They spent $500 million cash on that sucker just to rip the team out and let it go to crap. Can we say that? We can say that. A lot of people not happy with SafeSend and all that since the acquisition. This is how, like, all Thomson acquisitions that I'm aware of have gone. That's not true. They acquired Materia. Materia is now Co-Counsel. Co-Counsel is maybe the coolest thing that Thomson's got. I digress. A lot of people are very underwhelmed with a lot of the AI tax products that have come out. And you know why that is? Because they're underwhelming. Because they suck. Not because they'll never get there, but because most of them are not there yet. Hence, people, my app recommendations, the number of people that will go out and use something that I don't recommend and be like, man, I'm just not into the AI stuff. And I'm like, what are you using? And they're like, a tool I don't recommend. And I'm like, well, yeah, because that tool sucks and it might get better. It will get better. Like, they'll keep working on it. But a, a, I mean, less than 10% of the quote unquote tax workflow tools available on the market right now are worth touching. It's the whole point of my app recommendations is to show you the folks who are doing the best, where firms are having actually the most success. Now, right now, the most successful tools are solving a specific problem.. And in most cases that is 1040 intake. I like all the other parts of the process. People are kind of trying to work on that, but they are much harder problems to solve than the automation of the 1040 intake process. Second easiest after that is probably automated delivery of the tax return. The people who are saying we have an end-to-end AI that handles the whole process, brother, they have got nothing. I can tell you right now, maybe in a year, 2 years, 3 years, 4 years, they will have an end-to-end AI. But that is just not a thing right now. What that is is an AI that's trying to do a whole bunch of jobs and does them all very poorly. That is just— I mean, that's not me like taking shots at anybody specific. That is just the state of AI and tax workflow right now. Nobody is doing the whole thing well. And if they're telling you they are, they're lying or they're only doing it for like— we've got a few providers in the space that just do this for like a few top 100 firms. They just build like custom tooling for those firms. Which is great, but that's not a product that you and I can then go buy and is useful to anybody. That is basically just a forward-deployed engineer. So to answer the question, what are you seeing with providers that will actually make them usable in the future? I mean, I'm— I'll say it. The problem is in how we're selecting our tech. Don't buy tech based on what a sales rep says. Never do that. Buy tech based on what your peers are having success with. It's why I don't recommend you rely on like the version 1 that your practice management system is promising that they're going to launch. That's why I don't recommend most firms are using like brand new stuff. I want to use the stuff that already has a proven track record with firms. By the way, those companies, they're also doing new stuff, but that is the way to buy software, not to hope that something works and then be disappointed when it doesn't. It's to buy the stuff that already works. Next up, do you get paid by Claude? And don't lie to us. I wish. Oh, I wish. You know the number of accounting firms that have spun up a ChatGPT or Claude subscription because of me. Man, if I was, you'd think I'd be sitting here recording a podcast still. I would, I probably would be. What else would I do? No, I don't get paid by Claude. I might someday. They actually, they're, they've got like an influencer program that is growing. At a live event 2 days ago, somebody was like, man, you dunk so hard on into it. You know, someday they're going to show up with a check and you're going to have to stop dunking so hard on into it. I'm like, you don't think that conversation's already been had with Intuit, with Thomson, with everybody that I dunk on? There's just a— there's an inherent distrust of anybody that puts out content online, and that's probably healthy. That's probably how it should be. I'm the same way. You just don't— you just— you almost just have to assume that their incentives are not there. And we've had comments to this end where they're like, I watched you for a bit and I just assumed that XYZ kind of was line in your pocket. And then I realized the more that you talked, you actually do know what you're saying and your recommendations are accurate. The way our recommendations work, we tell the same thing to software brands and we turn away probably 90% of the brands that reach out to us. And that is a lot of money. But we only do partnerships with brands who we recommend in my app recommendations. Anybody can go and use those. The process is we recommend a brand when we see people having success with it. And so I run Realize. It's now an 800 accounting firm Alliance, and I can search any platform's name inside of Realize and see tens, twenties, 30, 40+ firms and their actual experience with a platform. These are real users, by the way. You can do the same thing. This is the value of being a member in a community like this where you can get actual answers from peers in 20 seconds. And so the stuff that we go on to recommend is the stuff that people are having the most success with in the wild. And then we will do outbound to those brands to say, do you want to sponsor any of the stuff that we do? Thankfully, for the last 2 years, we've had more people that wanted to sponsor the content than we could possibly let sponsor content. So we're not sitting here waiting for the next brand. What we're really doing is saying like, uh, what is like the most number of ads we could possibly run and not have people hate us? And then we just pull in advertisers to fill those slots. Kind of how it works, right? So we will run, you know, a single ad in a YouTube video. A couple weeks ago, I talked about how like ad load inside of podcasts works. There's kind of an accepted threshold for minutes of ads versus minutes of content. And we've always stayed on the very conservative end of that spectrum. And so we basically just say with the amount of content that we wanna make, who does it make sense for us to pull into these videos? And that's how we choose who sponsors content, but it has no impact on our recommendations. The majority of the platforms that we recommend don't do sponsorships with us. And we have taken platforms off our recommendations who we were actively doing sponsorships with and terminated sponsorships sponsorships. There are people we have done past feature videos on the YouTube channel on that are no longer in our recommendations because the platform just didn't keep growing and there became better alternatives. So I don't get paid by Claude, but shouldn't I? At, I mean, at this point? Ugh. Hey, real quick, I wanna invite you to my Super Excellent Weekly Newsletter. My newsletter was like the start of my Thought Leadership Journey. It's where I try to collect what I think are the most important things for you to see every single week, sent to you every Wednesday morning. Make sure you don't miss any of the good stuff, right? Increasingly, we're also building into that some like of the best evergreen thought leadership I've ever done. Kind of make that like the most action-packed, highest quality email you get to your inbox each week. Because listen, we're all busy, all right? You're not gonna see every single little thing that I put out. Goodness sakes, there's just too much. If you're not on my newsletter yet, check that out. Jasononfirms.com. I'll put a link to it down in the show notes. Hey, quick word from one of today's sponsors. Me. Me. Yes. I run a community, Realize, that is for accounting firm owners. And Realize is kind of the secret behind how I've done all of my content and been able to like financially turn thought leadership into a business. About 100 firm owners in there. Realize is a systematic way to build connections with other peer firm owners. It's not a framework for how to run a firm. It's a way to introduce you to other super cool firm owners. Right now we're putting together small groups so you can have a group of like 5, 6, 7 other firm owners just like you that you meet with every single month, run very similar firms. Having this for me totally transformed firm running. My north star, like my goal for you coming into this group is to make a new best friend, somebody that runs a firm because that was what I needed in my journey. The whole community is built around that. It's called Realize, link down in the show notes if you wanna learn more. Speaking of tech selection, practice management apps, Canopy and Carbon are the gold standard. What are they not doing that they should be doing? That's a great question, and I have a very clear answer. I think it's pretty obvious. MCP. So the connector from your AI assistant to your practice management system. The position that most companies are taking right now is they are building AI assistants inside their platform before they will allow your AI assistant to connect with it from the outside. And so a good MCP for Claude to connect to your practice management system would let you from Claude pull data from the PM and kind of query that data. It would also let you write data to that platform. So I could ask it for what are the tasks I need to do today? And it will look in the PM and pull the tasks you need to do today. And I could say, oh, this, this, and this are already complete. All of this inside of Claude, and it can push those updates to the PM. That's a really good MCP. That's not only a read MCP, but a read-write MCP. Over time, an increasing percentage of our tools will just be used via MCP. For example, I think the future of tax research is probably having a subscription to a tax research platform that has a good MCP., and as I'm working in Claude, anytime Claude needs an authoritative tax answer, it uses the MCP connector to that tax research platform to get an authoritative answer just in the course of it doing its work. To me, this feels now like the most likely future timeline is we're doing a lot of work out of these generalist AI assistants, but they still connect and use the other tools that we have via MCP. So to answer the question, what are most PMs not doing right now? I think they're not going hard enough. On MCP for good reason, because in this timeline that probably eliminates 80% of the logins that you do to that platform, right? And so people aren't doing this out of fear that their platform might be devalued in the eye of the user because you're not logging into it as much as you used to. So I can understand the concern. Is it worth getting an app like Whisperflow, or is the normal voice option on Claude good enough? So Whisperflow is a voice-to-text tool that lets you utter your hopes and dreams into your computer, and then it turns it into perfectly translated text. Translated? Dictated? I don't know. Some sort of tated. I've been preaching the value of tools like WhisperFlow, SuperWhisper on Mac for a number of years now. If you're still typing into your computer by pushing your little mandibles onto the keys, the letter keys and the number keys, You're doing it wrong. And I'm only kind of joking. These speech-to-text tools make it so easy to say a thing way faster than you can type it, and then it just drops it into whatever app you're using. Now, the question is, the Claude version of this good enough? Like, you can click the little microphone and it'll just listen to you and you can tell it to do a thing, and then it makes the text of the thing that you just said, and then off it goes. Why Claude is not enough for me here is that Claude only works inside of Claude, and anywhere you type, is an opportunity to speak instead of type, whether that's in your email app or browsing the web or hammering out an iMessages message from your computer. I think this is like a 100% necessary thing that everybody should have on their machine, a speech-to-text tool, because it is way faster than typing. Was arguably the biggest tech change of 2025 is people talking at their computers now instead of typing at their computers. And if this is the first you're hearing about this and you're like, where have I been? Is Jason losing it? Seriously, Google WhisperFlow. Try one of these tools. I'm saying WhisperFlow because from a security standpoint, it's got a decent reputation. Try one of these tools. You will be blown away. They come with cool features like, hey, if my email app is active, then put the text sort of in this style. Like you can actually customize the way it will reproduce what you said in text based on the app that you're using. So for example, if I'm in my email app, I have it like, create, you know, bullet lists commonly, like kind of lays things out differently. But the magic of these apps is it takes the raw text of what you said from your speech and then runs it through a large language model to clean it up. And in some cases, even customize it like I do with how I use my email app. Worth checking out. Next question. 3 to go here. I'm wrestling with whether I should get my CPA since bookkeeping will be wiped out by AI. I want to be able to do higher-level, high-ticket review and advisory work in addition to handling client books. I would argue as someone with a CPA that you don't achieve the ability to do that by getting your CPA. I think what people are most in the market for is specialized expertise, and that comes from experience working within a specialty. The CPA will give you a generalized expertise. It will let you do assurance work if that's what you wanna do, but it hardly makes you into a domain expert. And I would argue right now, book smarts have never been less valuable than they are today, and increasingly so in an era of AI. Somebody shared on the tour, a use case of putting a 100-page disclosure checklist from a Big Four firm into AI and now using that to basically write the disclosures of their financial statements. I mean, stuff like this is just becoming trivial at this point. And so the knowing of the rules has never been less important than it is now. I'm not anti-CPA, but I do steer folks in a different direction when they're like, okay, before I commit the next 2.5 years of my life to this, Should I get my CPA so it's easier to find clients? Nobody tells you when you're getting your CPA that you're entering the esteemed club of like over 600,000 active CPAs. That's hardly the level of specificity we're looking for and the level of specificity that will attract you a great client where you can do this high-level, really valuable advising for. It's not to say it can't help that CPA, but I don't know that AI actually changes the calculation that much. Maybe there's an argument that it maybe weakens the argument for the CPA a bit, but the North Star should be what's the shortest path for me to build specialized expertise within a domain that I enjoy working with so that I can go find some of those folks and liberate their businesses with my wisdom. Tutogo, have you found a thought leader in a completely different industry who resonates with you? That's an interesting question. I'll be totally honest, I don't consume much. I don't like— I'm not watching social media and podcasts really all that much. My dystopian take here is that most of society divides into either consumers or creators. And as much as none of us want to be creators, I prefer it to being a consumer. And so I'm just— I've just gotten real selective about how am I willing to spend my time, you know, AirPods, what am I willing to stick inside my brain and be my ride-along in any given moment in my life? You just, I think I've just been awakened more to like how much that programs you and the whole notion of like constant education and listening and all that stuff doesn't leave a lot of room for some things that are probably healthy for your brain to do from time to time, like just, just stew in silence and boredom. So I don't consume all that much. There is a channel, a couple of creators, Colin and Samir, that do a lot of content around like creator businesses, like entrepreneurs and businesses like mine. That stuff's interesting and helpful. Part of it could be a stage of life thing for me too, where like in my free time, I either enjoy doing yet another work thing, which makes it not free time because I super enjoy my work, or I go do kids stuff because I got a bunch of young kids. They're getting into sports now. So sweet. Kids sports. So, so much work. Camping chairs. Boof. I don't know how camping chairs are still bad when the expectation is that Parents go and spend 6 hours on a weekend sitting in a camping chair. You think accounting is bad for the body? Holy smokes. Camping chairs are like a bag that is held up by sticks and you pour yourself into it. And then, you know, later in the day you have to get out of it and your body's like, oh, we're doing this again. You still want me to have this bone structure and everything? Okay. When I grew up, camping chairs, it was those scratchy little woven straps, but at least it was a chair, people. Not a bag. The human body wasn't meant to sit in a bag. Am I saying bag right? Bag. Major. How do you communicate your use of AI to clients when it's clear you are leveraging it? Oh, I got a bunch of versions of this. Let me scroll down a bit. Here's another one. What is our responsibility to our clients to reveal that we use AI? Even the language there, to reveal. Ta-da! Aha! I'm using AI. I don't— doesn't this feel— isn't this out of date? Yet all of our tools are using AI. Look to your left, look to your right, that water bottle over there, your smartphone, everything has large language models behind it. This was a big controversy. Google, if you have Chrome on your phone, I don't know if this is just an Android device thing, they literally loaded a small large language model onto smartphones to like enable it to do some like local AI stuff. And everybody's like, whoa, dude, this is messed up. I didn't consent to this. It's like the, It's like the 2026 version of when Apple pushed that U2 album to everyone's phones or iTunes or something. Everybody's all mad about that. Do we have to ask permission to use AI? Have any of the apps that we use ask permission? Did QuickBooks ask permission when they rolled out Intuit Assist? I'm pretty sure we don't have to ask permission. Now, that doesn't mean be sneaky about it. Like if a client asks, I'm not going to be like, hmm, what are you asking for to use? Do you use AI with my information? We don't have to be sneaky about it, but like, I mean, literally Outlook, Gmail, like, show me where there isn't AI right now. You go to the Consumer Electronics Show, it'll have you convinced that in 2 years all of your kitchen appliances will be talking to each other. There was a time maybe 2 or 3 years ago where I think there was a stronger argument for this. These days, what doesn't use AI? I mean, I would say like if I am hiring an accounting firm, you know what clients should be doing right now is asking, how are you using AI to make you more efficient? Because should an SMB be working with an accounting firm that is not using AI right now? They probably shouldn't. I mean, we— if you go and work with a marketing agency or something like that and they don't use AI, that's a little concerning, isn't it? Even if you go and work with an attorney, obviously there's good and bad versions of using AI, but shouldn't they all be using AI in some form right now? So if you have a client that comes to you and is insistent on you shouldn't be using AI, that may just not be a great client to be working with. I don't know that they've got their eyes on the ball. There is for sure industries that are like super disrupted by AI, like creatives and all that stuff, and a very understandable level of hatred toward AI as a result. But let's remember what, what we all do here. Okay. Because you've got digital artists, you've got filmmakers, people that do amazing, incredible creative stuff. And people are like, yeah, don't let AI into that. And then you've got us. And we do tax returns and financial statements. And I would argue there's a beautiful art and craft to both of those things. But I don't think anybody else looks at what we do and thinks that. I think they're like, I hate AI. Don't let AI get into stuff except for medical, except for use— AI can help the doctors. Oh, AI can do my tax return? Oh, that's great news. I hate doing my taxes. Let's be realistic about like just what regard the average person holds the things we do in. I know there are days where you go home feeling like Michelangelo, but I don't know that the average person sees us that way. All right, gang, it was great to see you today. What I appreciate is that through thick and thin, if it's rainy outside, if it's windy, good day, bad day, you come here, you show up, and I appreciate that. Okay. You got any questions, thoughts? Pop that stuff down in the comments. Until we do this again, I'll see you in the next one.