What is an ASO? | Should you be offering an ASO and how to start one

So what's your deal, man? You were firing shots at a PEO online today. You know I own a PEO, Mark. What is your deal?

I figured I'd fire you up a little bit right before our meeting.

How are you doing today, sir?

I'm good, thank you.

Good. So Mark, you guys, in our conversations that we've had, you've talked a lot about ASO and the growth that your company has had. By starting an ASO. What do you attribute that to? How do you guys define an ASO and who are you working with?

Yeah, so Matt, the ASO in our world is somewhat evolving every day. As I mentioned to you before, we started off in the brokerage space, which is kind of a unique place to go to, you know, from brokerage into payroll. It doesn't happen a lot. You know, payroll and brokerage are very different. And I talk to a lot of payroll people that are scared to death of brokerage. They just don't want to get into that space. They don't understand it. You know, we were blessed that we had the brokerage background, so we're scared to death of payroll, you know, that same kind of mental thought. But we're in a good spot from the perspective that the technology that we were running as a benefits broker the Ben Admin systems. Now that all the technology that is out there seems to be going to a single sign-on with Ben Admin onboarding and offboarding and other modules every day that are being added to that chassis. You know, we took those, those, those people on our team and we shifted them over into the payroll side. And then payroll just became for us really the engine that, that was going to to be so important to the success of the, of the model. That technology binds everything together and, and that's really where we've seen our growth.

Awesome. I'm gonna go into, so, so we started, we started as an ASO. Maybe one of the bigger mistakes we've made in the company sort of growth model is that, you know, we offered everything to everybody right from the start, right? We came out of the gates firing without all the right systems, without all the right expertise, going super wide. Wide as far as the offering, super wide as far as the types of companies we'd serve. And to this day, I maintain it was probably the biggest thing that slowed us down was by being so broad so early. But I want to say, I've got pulled up over here, I, I thought about it before we started this. What does the kind of world define an ASO as? Because we're hearing more and more people starting to go into this space really out of demand because we're at, you know, we're getting more requests from clients. If you're a payroll service bureau around you know, managed service type offering. My payroll department just left or my payroll person just left or the person that handles payroll. So what can you guys do to actually fully outsource this whole thing? And I'm looking at, ironically, a definition on BambooHR's website. It's one of the first ones that came up, which is very interesting to tuck away because they don't currently offer an ASO at BambooHR. But obviously for ASO or for SEO purposes, they want to rank high for this term. So that's interesting. But They have it listed as administrative services only, which is not the right acronym. Offering is where we go with it typically, right? You use the O as offering, right? Administrative services outsourcing offering of a couple different organizations.

Administrative organization.

All right. Is a type of business arrangement used by employers who hire an outside company to administer certain employee health benefits. It's not really our— that's part of ours. The vendor provides administrative services only, not the benefit itself. Administrative services only is used by employers who self-fund employee. Yeah, so this is like a whole different thing altogether. Like, my definition of it, so without going too far off the cuff, is like, yo, we're a turnkey payroll and HR department. When I try to simplify it down for a small business, that's how we do it, and that is our target audience. We're working more in that 10 to 50 space, and we're saying, hey, look, we're going to do the payroll, we're going to do the HR, we're going to actually do some of that administrative work for you so that you guys can, you know, it's, it's not like an ADP where you, you just call in for support. We're going to actually do some of that work. We're going to help we're gonna help if your employees have questions related to onboarding or benefits management or what have you. How are you guys defining that when you go out to the client? Like what is the, you know, and I don't know about you, but we don't use the term ASO with our clients. We have a product name for it, but I know you're pretty big on, I see you touting ASO online a lot. But so are you defining it, how so are you defining it internally and externally as it relates to the ASO?

Yeah, again, Matt, changing by the week. The space is so wild, wild west right now. I don't think anybody has really coined what an ASO is. I think PEO's got a little bit more traction of actually what it does. You see things, HRIS systems, you see HCM out there. There's a bunch of H's that people have acronyms. So what we did is this. Again, we were a benefits broker on one side, and then we were a payroll company, HCM company on the other side. And we literally sat in the boardroom and had this all-out war with our leadership and said, you know, what are we going to do here? Because what happened is our payroll business started getting bigger than our benefits business. But our pedigree was benefits. I mean, we were brokers. We had people that had customers and they were account executives and they were getting commissions and it was like, we had to make a choice, and the choice was this: we either had to take the benefits part of our company and separate it from the HCM part of our company and call them two distinctly different companies. Because what was happening was, because the names were the same, Simcoe and Simcoe, people automatically thought that if, if you were doing something over here because it had an impact over here, that those two things were connecting. And it wasn't always the case, but it put us almost at a risk where we were like, you know something, I understand how they could think that if we were doing this for them, that it would, we would change deductions and payroll if we were doing their benefits. You know, that made sense because we were the same company, but we were siloed. We were completely separate. And so maybe, I guess maybe 12 months ago, we made a decision to turn off our brokerage. And what we did is we turned off brokerage and we tucked it under the HCM side. And so we have HCM on top, which is again, onboarding, offboarding, payroll, then admin. And then we have our strategic services underneath, which is benefits, risk management, HR. And those policies and those advisory services, they all go through payroll. So it's crazy, but we will not take a benefits-only customer going forward. They have to have payroll with Symco in order for us to do the work that we do as an ASO. So HCM plus strategic, we're coining that as— that is what we call ASO, Administrative Service Organization.

I'm going to go off on a tangent. This isn't meant at you. This is a HCM for the record. For those of you out there that think your customers know what the term HCM means, they do not. The term is industry. So in 2008, we were trying to proliferate that term amongst clients and the industry at large. And still the only people that recognize that are us payroll bureaus. Like there's never been a customer who's ever Googled online. I can't, you know, I'm really feverishly looking for my next HCM system. I love the term, but it's just a funny little industry thing that it's like, yo, you make sure you're not spending too much time trying to overindex for that term.

But Couple of questions for you. That's why we decided not to— that's why we're really going after ASO. Yeah. Because we felt the same thing that yes, in the industry, HCM, you know, had some relevance, but in the marketplace it didn't. And so a full system that's functioning as a solve for small to mid-sized companies, again, PEO is doing that theoretically in that, you know, that outsource kind of play. But if you don't have to have a co-employment relationship and you're not going to go in that direction, we think that we can kind of make ASO that solution, that outsourced solution where you don't have a co-employment relationship, you're managing your systems internally. We're working with businesses on making systems better so that the systemic risk that they have within certain parts of the model can get, can get better over time, which we think is the solve in the space.

And it's okay, you can rail on PEOs, man. I was just busting your chops. I railed on them for years. I literally had to turn around to a client we just signed up last year and be like, I was telling them why they shouldn't go with a PEO and how terrible they are. And then January 1st, we rolled ours out and it was like, oh, those ones are bad, not ours. No, but so, and I'll probably be another episode altogether about the PEO side. Haven't really talked about it too much on here, but the It, you know, from our side, we did something similar to what you did though, and that we will no longer— so we did the thing early on, we went the opposite way. We started as a payroll and HR company, started as an ASO full-service offering, but then said, oh man, we're doing so much ben-admin work, so much of the legwork, we should become a licensed agency and we're going to make all this money by becoming a licensed agency. Then the reality came in, came in that our average client's 15 employees. Most of them are pretty happy with their brokers and they just still want us to do all the admin work. And we've only got X number of groups. It's not a ton of revenue. It's actually just a huge headache and all the stuff we've got to keep up with. So, so we will no longer take groups on the health side unless they're in the PEO. So we're similar to what you're doing, but we're just like, look, we got these 9 plans, man. Like, we're going to know these 9 plans inside and out. We're going to know the process inside and out. We're going to know our Ben Admin system inside and out. But we're not trying to learn, you know, Employee Navigator one day, Beacon the next. EASE, the next, like we're out on that game. So definitely understand where you're coming from there. You mentioned one thing earlier I want to dig on, risk management. So that kind of goes back to a question I dropped in there earlier. What industries, what size companies, what's your typical sort of target market?

Yeah. So from a demographic perspective, you know, under 200 is our space. Anything over 200, we don't have, you know, we don't have the value that we have in the under 200 space. And so, Risk management is our BOPs, it's our workers' comp, it's our paygo. You know, again, it is the fastest growing part of our business. The market is really getting hard right now. It's getting expensive for insurance. And so when you can put workers' comp and bundle those together with other policies, there's a significant savings to the customer. And again, what we're realizing more and more is the value is not the policy. You know, I mean, the, in the small market, I mean, there's, there's some anomalies out there, but the small market, most of this stuff is algorithmic based, and the companies are popping out premium, you know, premium numbers. And so there's not a true underwriting. Um, so it's very simple underwriting. And again, customers, what we're finding, they want a single point of contact. So before, when we had, we had brokers over here on our, on our benefit side, and then we had a business partner here on our payroll side, they were going to two different people, and it was really confusing. And like I said, it was the most difficult decision that we made. But when we turned off brokerage and tucked it under and made the single point of contact a business partner in our space— and they average about 40 customers is what they can handle— everything goes through the business partner. So if they have to run payroll, goes through. If they have a question about their benefits, it goes through. If they have a question about their workers' comp policy, and then they ticket it And then they, they make sure that it gets to the correct verticals and then the verticals execute. And so, you know, from that perspective, we, we, you know, we do what the customer would traditionally have to know, you know, where does it, where do these things affect? And they don't know because we've never met. We have literally never met a customer that does any of this stuff right. And so that's what we do. And again, so for the cost, very, very low cost compared to a PEO. You know, we're charging $15 to $20 per employee per month on average, where a PEO is usually 2 or 3 times that cost because we have the revenue coming in through brokerage. PEOs traditionally don't have revenue coming in on the brokerage side. And so because of that, they have to charge a lot of, you know, a lot of per head fee or a per, per person per month fee. And, and that's, um, and that's where we think we win.

Well, you should, because that's rock bottom low for an ASO. Um, just to put it in perspective, and I know people out there are listening are going to want to hear numbers, right? If I'm a bureau owner and I'm listening to this right now and I'm going like, all right, what's the opportunity here? Do I want to go from a payroll provider to adding this ASO level? What do I do? Who do I need to have on my team from a structure perspective? I don't have in-house knowledge of HR today, or maybe I do. Do I You know, I've seen a lot of different billing models. I've seen people layer HR in a bunch of different ways. Oh, hey, you get X number of hours per month, you know, for Y amount of dollars, or you get the team approach. I'll lay out ours and you've already started to lay out some years. We compare some notes here. So we're much higher on the price scale on the ASO side. And we find that similar to you, like we don't get a lot of cost. Either people go, hey, this is a no-brainer. Like, are you kidding me? This is a fraction of a part-time person or the equivalent of a part-time person. Or they're going, man, this is way too expensive, would never do this. And so there's, there's like no in-between on this thing. They either get the value, they're looking at the ROI and saying like they're anchoring it. We almost always try to anchor versus a hire, even though, you know, I'd still tell them like, hey, this isn't going to replace a human. We just had a group yesterday, a 25 Live group, where it's like Yeah, we still need the liaison site from your managers at each location, but they don't need to become HR people. We can become force multipliers for them and like they just, they just need to understand the workflows. But so, so we separate our team into, we have an HR business partner and to your point, HR business partner will handle, handle 25 to 50 accounts depending on complexity and size and then payroll specialists and then HR assistant and tax specialist. So we work them in pods so that there's a little bit of cross overlap for each person and then And you know, we charge, we charge 69 PEPM for the base of like, I think it's the first 25 employees or 69 PEPM, then it goes down to 59 PEPM, then it goes down to 49 PEPM and they kind of hit it at tiers based on how large they are.

So what's your average, you know, recurring revenue per customer? You know, it's interesting when you put Ben Admin benefits on, you put risk management on, They pay, they're paying a flat fee. So for our HR product, which is again, that's our handbook, that's going to be some compliance stuff. It's access to some, some SHRM certified people. We're looking at about $4,500 to $5,000. Now we're pretty static on that number because it's, we, what we've realized is that it doesn't really matter the size of your company. The work that needs to get done is a certain number of hours unless it gets really complicated or multi-state or multi-location. You know, we've made that really affordable because we know what the cost of handbooks and the work that needs to get done. And then on the administrative side, you know, we are, you know, we are again between $15 to $20 per employee per month. But when you add all those pieces together, payroll, we're at retail. We don't discount. We, I mean, we very rarely discount payroll, which is amazing because every other payroll provider out there that's a volume play payroll provider, They're just giving away payroll for free for 4 or 5 months and it's just a war out there. You know, the nationals just don't get it. They run those companies like a venture capital firm, 300 to 1 relationship with customers. And it is, it's just, it's actually sad. It's bad. It's a bad business model. It should go away. You know, we're averaging $30,000 worth of recurring revenue per customer.

That's awesome.

Which is almost 4 times what most payroll vendors are doing. So again, we have almost 100% retention rate over the last 10 years. We're not a volume play. We, we, we, we do work. We, we love the relationship. We're working with these, these, these partners of ours every day doing multiple things, making sure that they're thinking about every angle that they have to deal with. And when we go out head to head with any competitors, 75% of the time we're winning.

That's great, man. What did you say? So the $4,500 to $5,000, what is that and what does that build over?

So that's the— we charge $4,500. So again, we have verticals right inside the verticals. We have a benefits vertical, a risk management vertical, and then an HR vertical. And inside those verticals, we don't break them apart because it doesn't work. We did it. Those were— that's when we had the two companies side by side. We had brokerage over here and we had HCM over here. Right. ABC. Every vertical has to do ABC: administration, brokerage, compliance. Each vertical has to do that, but they have to know how they're doing it together, almost as a team, to make it actually work correctly. So our administration people work with our brokerage people because it all ties into the Ben Admin systems, right? So ABC, each vertical. On the HR side, because we're not making commissions over here, we charge a fee. That fee is around $4,500 to $5,000. $3,000 of that is handbook. The other $2,000 of that is the time that we do to go through their policies, their I-9, their, you know, their file compliance. You know, anything that they have that they're looking for, we work in that space. But we've put it into a static number because what we realized is that most customers only use a certain amount. And so we used to scale it based on number of employees. But we realized how expensive that got. And so what we realized is that it was a time commitment more than it was the number of employees, and we were able to ratchet that down to make it affordable to more companies.

That's great. Yeah. And our process is— and once again, I think that the spirit here is that I remember going back to— are you a member of the IPPA? I'm not doing any recruiting on this call, but I've got to ask just out of curiosity. Yes.

You know, I've heard you mention that a couple of times.

You have I'm on the board now, so now I'm going to recruit every guest and plug it during every podcast. Now it's a whole— No, I only say it to bring up a point that I've got in a moment, but you're not currently a member is where you're going with that. Sorry, I didn't mean to cut you off.

We are not yet.

Okay. So the first meeting I ever went to, and I went before I was a member, I just went to one of the conferences just to check it out. Holtz recruited me and I said, all right, I'm going to go out there and I'm going to check it out. And the thing that was so cool, and that's why I'm going to share more here in a moment, is just like everybody was really open with their numbers the same way you and I were, the first time you ever called me, you just started spilling numbers about everything about your business. And I was like, dang, I like this guy. New Yorker like me, sitting up there in Central New York, just riding the high of Cuse being 4-0 right now and just knowing that NC State— 5-0, sorry, 5-0— with NC State looming this weekend, not to date the podcast, but the thing that I always loved and still appreciate is like, yeah, I mean, literally people will just call and do the same thing all the time of like, hey, what are you charging? Why are you charging that? How's your team structure? What's your margin on it? And it's just like so open. And to your point, we're all kind of fighting the common enemy. And I know, ironic, you know, I get people in my DMs from ADP and Paychex that message me and are listening right now. Hi guys. Yep. And if you want to come work for a fun company to work for, uh, don't get tied into the golden handcuffs. The grass is greener. Come work for a real company. Uh, but the— we, we charge the way we do. So, so we do a lot of that upfront, like you're talking about. We've structured out, uh, our, our HR diagnosis process to go over the course of a month. And so what we've done is we've broken up, we used to just sit down for like a 3-hour interview with the client and go through everything from pre-hire to post-termination. We've got it blocked off in different sections, compensation, terminations, hiring, et cetera. And we would audit all that and then we would put an action plan in place and we'd sort of have, you know, hot, you know, warm and cold. And we'd get started on the hot stuff over the first 90 days and hit the warm stuff and then have recurring meetings. Over time. And really what happens is, you know, we offer up that monthly meeting to your point where it's like, hey, you can meet with your HR business partner every month. We have some that meet with them every 2 weeks and never got off the initial implementation train. Like they just will not let go of those biweekly meetings or weekly meetings sometimes. And then we have others that just never, you know, they just want the security of knowing, hey, like I got 10 people, I pay $690 a month. Like I know whenever I'm getting ready to hire or fire that person or that issue comes up where somebody comes in here talking smack or like, you know, the new handbook update comes up, like I'm paying for some sense of security, plus the administrative work, plus the updates. And so we do a lot of recurring, and that's part of the model. And to your point, we tried to stretch out some of that initial work over a longer period of time, just so it's not like such a massive burden on the upfront of like, you know, just because, because that can really bog your HR business partners down if you just do everything right out of the chutes, because there's so much to get done in the first 90 days. Um, so how do you guys, with your implementation team, do your support people also implement, or do you have implementation-dedicated folks right now?

Again, that's a great question. We are in the process of converting to ISALT. I think I told you that before. You know, we've done work with a, with a national firm here over the past 6 years. What we realized is that, you know, from the national firm's perspective, we're only as good as the service that a national firm can bring. Which isn't good. And so, um, we're constantly in a position where we're waiting for, for stuff that we could immediately get done for our customers. And so because of that, we made a decision, uh, 6, 8 months ago that we were going to move, um, getting more control over the payroll part of our business. So it's been full tilt. It's been an incredible experience so far. Tremendous amount of training. We actually go live with our first payroll middle of next month, which is insane. Because I mean, you would not believe the amount of work that has to be done for setup to build a service bureau. It is, I didn't realize it when I said yes and paid the dues, man. But it's been incredible. But we're super stoked about it. You know, again, I think from the perspective of adding value, you know, again, you have to add value or you have to be cheap, right? You either have to be cheap or you have to add value. And so our whole model is built around value. And, you know, we think we can do a great job of that going forward.

Who are the biggest competitors up there? Excuse me. In the— in upstate New York, you guys, you guys have Paychex right there in Rochester. You have obviously ADPs big everywhere. And I'm going to buy you a minute while you Um, Mark's got a coughing fit going, so I'll burn some eggs over here. Um, so yeah, sitting up there, he's sitting in prime payroll and HR country. You've got Rochester headquartered right there, you've got ADP not too far up the road in New Jersey, so gonna definitely be inundated with it. And what Mark was alluding to there a moment ago, just having some information from prior previous conversations, is that they were basically outsourcing all their payrolls to, to a national company, a payroll company, before, and kind providing the support on top, and now moving more into a traditional bureau model as the, the company continues to evolve. And so, uh, definitely we're talking here, Mark, about your— welcome back. I don't— I'm like talking to myself, like interviewing myself and answering for you here.

I told you that I was, I was fighting something.

Yeah, yeah, I'm glad you're feeling better. Um, is it— is Paychex just all over the place up there? Are they a ton of reps or more Same balance of ADP paychecks everywhere or what?

ADP paychecks. You know, there's the majors are definitely— well, we have some service bureaus that are doing, that are doing pretty well as, you know, well here in the local markets, which is great.

Yeah, we definitely have a couple of listeners from up that way. Some of my old Oswego fellow alum up that way as well. But the— so where do you guys— I mean, so you're making this transition now. You've obviously moved into more of an ASO focus. I mean, what's the long-term strategy? What do you hope to get out of this business? And what do you— what kind of impact do you hope to make?

Yeah, I mean, our whole model and mission is we want to help customers solve the problems of administrative kind of burden that they have. You know, small businesses are struggling and they had a hard time running payroll. So now you have these Ben Admin systems and onboarding and offboarding systems and they're going to have— they have to know how these things work. And so we're really seeing those businesses really stretched. To your point, you know, when they have someone who leaves their company, a payroll specialist, they're coming to us and saying, hey, Mark, can you guys do this for us? And the answer is yes, we can. And the technology is only going to allow that to become more and more over time. I equate it to the cloud computing, you know, where everybody had a server sitting in their home or in their business and nobody has a server anymore because it's all going to a more efficient, you know, model. It's the same thing with us. You know, it's a fractional HR play. It's a fractional administration play. We're in the systems every day. And so because of the frequency that we're in these systems, you know, some businesses might not use a module for 4 weeks or a month or 2 months. And then what happens is every time they call up and they say, oh, how do you, how do you do that again? You know, and because we're doing it every day, just that, just that frequency makes it so we can do it so much faster and so much more efficient than anybody in a small business could do it. And that's what I think is the future. I think it does not make sense to have certain aspects of the technology remain inside of these small business architectures because of the infrequent use of them. So by sheer, you know, movement of human capital costs, shifting those hourly things over to Symco, We can, we can actually solve the problem. And that's the part, you know, I've been to service bureaus, I've been to payroll companies. 89% of all service bureaus, even in the company that we're going to, are still only using payroll. So to think that Ben Admin and onboarding and offboarding, that there's still plus 90% migration to those systems. You know, we really think that that's the gigantic opportunity in the space. And, you know, as we get better and better at that and understand what customers need, you know, we, we were super excited about it.

It's interesting because I was talking to some friends about this recently. So I started in this industry in 2008, one of the most interesting times ever to start in this industry because obviously the world was collapsing around us from an economical perspective. Economical, economic. But my messaging back then, the reason why I, you know, my first year at ADP, I won District Manager of the Year, Rookie of the Year, made— it was the only person in Raleigh to make President's Club out of a team that everybody on the team made President's Club the year before. And the reason why was because my messaging was different. I was talking about how you should outsource everything because there's no study, no nothing out there that would ever show you that is more economical— economically feasible to do these things in-house that are not your core competency than to outsource them to professionals. This was a time and age when the word outsourcing basically meant offshoring, right? As soon as you do it, like, those two were synonymous with each other. If you heard the word outsourcing, it was like a, you know, bad word. People weren't so into outsourcing back in 2008. It was not as popular as in vogue now. Whereas now, my small business owners, if I go into a 20 Life group and I go, hey, we can outsource all of your payroll and HR, they're like, oh dude, great, awesome, sign me up. How quick can we get started? Like, we want to outsource everything that is not core to our business. The messaging just hits different now and it's going to continue to hit different because we're in a very similar time to back in 2008 here as we— and who knows how long this is going to go on for as we sit here in October of '22 where, you know, people are going to be looking at how do I cut costs and how do I become more operationally efficient? And the pitch, it was interesting because we had this pitch talking about, you know, look, you can either have a capital operating expense of a human being being in the form of an HR payroll person that, you know, at one phase you're overserving your team And then once you grow, you're underserving your team. These solutions in a PAPA model scale with you, right? They continue to— you get more support the more you grow. And that pitch, y'all, is— it's been the same since 2008 and it still works. And you don't have to overcomplicate it. And if you've got a couple hundred payroll clients and you're not offering any form of ASO or HR stuff on top of it, you're really missing out on like a huge opportunity for you and your clients to take advantage of a way to better serve them. And to Mark's point, to really just help fulfill a need that they have. Of. So I think it's a critical opportunity and it's funny and I'll turn it back over to you here in just a second, but ADP Resource was the small business product. I don't know if that's what it's still called, but they used to, so that was their ASO for downmarket, 49 employees and under. And the number one gripe why these people could not sell, nobody could hit their quota with this product. Nobody could sell it. Nobody could hit their quota. Nobody, nowhere in the region was anybody killing it with this thing because it always came back to the small business owner or whoever always still had to log into the system and do this stuff. So every time they'd call their HR business partner and go, hey Mark, you know, like, I need some help with this, like, oh cool, just log into the, you know, ADP Resource site, and then you're gonna do this. Like, the fact that you and us and others listening are saying, like, it's okay for the HR business partner to log into the software and do something for them, it's okay for your payroll specialist to do something for them— as a matter of fact, it's a big part of the dang product and service— instead of, like, trying to railroad, and then you got a bunch of unhappy HR business partners, which was the other byproduct, is the HR business partners that worked on the So products at ADP were unhappy and I feel like we're really railing on ADP here. I normally don't mention them by name, but it's one of those days, Friday, baby. So, so, so yeah, so, so there's, there's a lot to this and a lot of opportunity, I think. And it's, it's only going to continue to be a growing opportunity and it's not an over— you know, I mean, look, it is complicated, but I'll say this. So Mark's rolling out a very big, broad, wide system that can do a lot of things. We serve downmarket. Our systems are not as complicated, nor do they need to be for our average 17-employee size company. So you don't have to have the massive tech stack to make it happen. All you have to do is nail the blocking and tackling and have the right experts in place to make sure that the clients get great support. What would you add to that, Mark?

Yeah, I mean, I think that those are the two things that are valuable within PEO and ASO. You know, the value is that we help businesses, you know, from an administrative perspective streamline. Both, both models do that. They just do it differently. Again, with PEO being a co-employment relationship for the benefit of some of the medical opportunities that they have and some, some of the risk things that they have with workers' compensation. But my only thing in my mind is I think that the game is going to change for health insurance. I don't think so, probably so much for workers' comp, but, but there's things that are happening in the workers' comp space as well. But I know in New York State, state, you know, the ICHRA and some of the different structures that are out there right now. If New York State comes in and says, listen, we're going to make the individual policy the same price as the community pool where there's not a 20% increase, which is currently the way that they, they do it, there could be some major changes to the way health insurance is purchased, you know. And if it happens in New York, it'll happen to most of your large, you know, metropolitan areas, and they'll go towards that. So the value that the PEO has. And we just had a PEO blow up here locally where, again, the risk got too high in their pool and they actually had to go back to the community pool. So, they had value. It was expensive. And they paid for it. They offset it, right? So, the savings that they had in the medical paid the $69 for the cost of the PEO, and that worked out. But what happens over time with PEOs traditionally or with any sort of culmination of risk is that if you are not super prudent about making sure you keep good risk in that block, they fall apart. And then it becomes a cycle. And then you go back to an ASO model and you go back to your own tax ID number and you got to figure out systemically, what do I have to do to keep my medical loss ratios lower? So it's kind of a soup bowl right now. And I think it's starting to churn and people are really starting to see what outsourcing is going to be. Um, but it will be interesting 10 years from now, you know, where it all ends up. If, if there's major changes to the healthcare industry and the increases that we're seeing on a year-over-year basis, I mean, there has to be something that changes in healthcare.

You know, sadly, we were having this same conversation in 2008, 2009, and the— and, and there's sadness and greatness in that, in the respect of saying like, okay, there are elements of what we do that aren't going anywhere, right? Like there's still going to be demand, I think, for ASO, PEO-type offerings over the next 10 years where we want— we know technology is not going to solve every one of our problems. We still need, you know, some administrative support. But I also think to your point, well, let me clarify one thing going back to the PEO. So, so, so we started a PEO this year, last year or something in there. But do— would I recommend starting a PEO? Absolutely not. It's definitely a whole new regulatory ballgame when it comes to getting a payroll company up and off the ground is probably too easy when it comes to like what your requirements are as a company that processes payroll. And I know there's a lot of legislation being looked at for that kind of stuff right now of who, you know, how to handle payments and things. But I would, you know, almost always recommend and I've said it on the podcast before of like if we could have started as Dentopayroll.com, only offered payroll to one market for as long as possible, Then layer in, you know, a couple other things. Once we have superior penetration, at least a few hundred accounts, which wouldn't even be superior penetration, I still don't even think you got to start to think through your attachment rates. People call us all the time for our white label HR software and they'll say, I got 100 payroll clients and I want to add HR software to it. I'm like, look, you're going to sell 10 accounts. Like, is it worth it to you to sell 10 accounts? Like, you might sell 20 if you are really aggressive, but I'm guessing you're not because you're a CPA and so you're not making outbound sales calls all the time. So what's that margin? On that. Do you want to do all this to roll out 10 accounts? And some it's really easy. Others, you start talking about an ASO, that's a whole other thing, man. You don't want to roll out an ASO to only book 10 of them. You got to have a long-term strategy in place. But I think you also hit on a point that it's an interesting, you know, maybe this is helpful to some out there that aren't as familiar with PEOs where, yeah, there's this, you know, we used to use sort of that same talk track of like, hey, you know, once the pool gets dirty, everybody gets screwed. In reality, every group inside is still— they're still getting priced this almost the same way they do in the open market, maybe actually just a little bit tighter. Um, but you know, it just happened with a Justworks client we got referred to us this week. They took a 34% increase because they just had some major claims independently, had nothing to do with the rest of the group. So like, you do get the economies of scale from the group when it comes to purchasing power, but if your group has bad claims, you— there's no hiding, man. Like, the market will find you and you will get exploited. And so, yeah, and to your point, like, as a So yeah, if everybody in your pool is having high claims across the board, then ultimately, I mean, it's not going to be sustainable because your people are just going to keep bouncing around and trying to find how do I cut costs by 10% for a year? And then they go over here and they try to cut costs by 10% for a year. But I love, to your point, the idea that, and my only hesitancy around ICHRA, QSEHRA, these types of offerings that allow people to be a little bit more flexible with how they put pre-tax dollars in people's hands is that Now all the carriers, now everybody's getting involved because they see the money there, they see the opportunity, and more hands are getting in the pot and they're going to screw it up. And so like what started as something that probably could have been really good for the consumer, really good for the employer, I can already see it. And I'll give you the kind of quick anecdote of our general agency told us for the first couple of years of ICHRAs that they were trash. And then as soon as there was a lot of commission attached to them, now they're marketing them all in our face and they're like, ICHRAs are the best thing since sliced bread. So all it takes is for all the commissions to start to find their way to the right people and how they're compensated, and that dictates what we end up with as consumers, which sucks.

Yeah, it is a big driver. You know, we, you know, we as a brokerage firm, we've been— we were huge with HRAs and really helping the businesses understand the risk. You know, as I've always been a huge believer in business, in the cycles of business, you know, the 401 is another big driver. You know, you have in a bit, you know, you know, you introduced me to this book called Traction. And I told you it was the worst day of my life because, you know, it book smacked me upside the head and actually called me what I was, which was really much more of a visionary person. But one of the things that I realized more and more is, you know, businesses who have great integrators, who have got great people running them that are integrator people, there's great Operators and there's not great operators. There's a life cycle to a business. There's a life cycle to an employee. You know, there's a reason why your population is overage. Usually those things are because they have poor retirement structures. You know, so when you really dive into a company and operators who want to run a great organization, not just for a one-generation scenario, but multi-generation, there are things that you can do to make it so that you have new people coming in and you can really make it so So you don't have these huge bubbles. And again, it's really fun to work in that space as a system, systemically, rather than just looking at benefits by itself or 401 by itself or payroll by itself, but actually looking how the operation actually works and helping people understand that it is their decisions, it is the way that they run it that create the result that happens. And again, I think that as we look as an ASO, We're not looking to be a vertical space where we're just taking a small piece of it and going wide. We want to help companies. We want companies to be successful. We love the experiment of business. And I think capitalism and things of that nature with stock markets and all that stuff are going to change. I think people who take care of their employees, take care of the people who built their businesses The future is going to change. I think it's going to skew more towards these businesses that keep it simple, stay private, take care of their employees, and understand actually how a great business survives and how great business works, because it's not rocket science. They've been doing it since the '30s. There's been very successful structural businesses. And one of the things about Traction is that's another component that we love to talk about with our customers. Because it helps that business make good decisions so that they can do things over time, you know, that make impact. And that— you asked earlier, what do we want to do? We don't want to run payroll. I don't want to be a benefits broker. You know, I have no interest in any of those, you know, things. I love working with businesses and solving problems and helping them become more effective and more efficient so that they can take care of the families that they have there working for them. And that's really our passion, our mission statement.

So you, you talked about EOS, you talked about Traction. Those of you not familiar, hopefully I don't ruin your life like I did Mark's when he started going into the Traction rabbit hole. So it's a book written by this guy. It's just like, it's an operational framework. There are several other like it out there. Scaling Up, I believe, is one. It's very similar sort of process cadence to it. Provides you things like, hey, here's a meeting flow that helps for solving problems. Like, you know, you should have your level 10 meetings, quarterly offsites. Here's a process for setting your rocks, which are your goals as a company, your vision, your mission, your core values. So if you don't have that fundamental stuff in place and you've got more than 5 people, I highly suggest getting started in this process. We probably started earlier than most and we'll continue to layer in more. I mean, we still don't use everything in the book or the process that you bastardize some of the things and make them your own. What have been some of the biggest things that you have kind of been exposed about your business as you guys have gone through this process and you've learned and you're adapting and changing over time?

Well, in particular to Traction, if that's what you're asking, which I'm not sure, but I'll tell you that for me, I have— there's operators out there that are visionaries. There are operators and they're successful people. For me, I'm off the charts visionary. So, I'm a super hardworking person. I love it. I mean, I work like mad like you do. I mean, we're constantly 12 o'clock at night pinging each other and just talking about things. And so, we're programmed that way. But what I realized is that my cadence, like for me, I'm so thinking about ideas that are 10 years down the road that my people, we got 35 employees now. And so, my people were like, they say in the book, light switch on, light switch off. It was just constant. And we kept pinging up to a— we kept getting to a ceiling. We kept— we did— kept, you know, they say that ceiling. And, and, you know, I was supposed to be at, you know, a little north of $3 million this year. Um, you know, we were a little bit underneath that number. COVID was a little bit of a disaster for us because we put a lot of money into, uh, sales, which we weren't able to go out and see customers and grow that part of our business. Um, but we really believe that our, you know, our 3-year, which from now is going to be $5 million, our 20-year opportunity— we— I'm sorry, our 10-year is $20 million. Um, you know, there's a lot of runway in this space. The nationals do such a poor job in service that there's such an opportunity in this space to grow and to actually help these businesses. But for me, for Traction, it was— and now I have a full team. I have, you know, I have a full integrator, I have a full person doing our sales and marketing, running that team, who's an integrator. I have an operations person who is an integrator. And so I actually don't, I don't run the business anymore, which is really weird, but it, it, it almost the second that we did it, the calmness, the consistency for our people, it literally changed overnight how, how our company, the, the humming of the company, the consistency, and people just, and it was, again, it was very emotional for me just because I realized that I was doing this As I went through the process of the book, I realized that I was one of the problems and it was really, it was powerful. But it also, in the weirdest way, I sit in this room, they got me locked in the back of the office now.

It looks like you're in the basement of a VFW, dog. I was going to call you out on that earlier. Like, what the heck is that space?

But I just sit back here and I do my thing with kind of the ideas of where we're going and the visionary part I've really embraced on that.. And then I will tell you, it's been awesome. It's really been a great experience for me.

So I love that they just locked your ass out and put you out there. The, no, and that's so, it is funny because, you know, while I don't like, I don't agree with everything inside of their philosophies and their process and whatever, but it's definitely important to, you know, that visionary versus integrator of just being true to thyself and understanding like, okay, what I perceived as a weakness is not a weakness, just not who I am, right? And just understanding that, like, I can't, I can't continue to try to be a great, you know, payroll specialist and implement it. You know, the fact that I struggled to, like, get those first things set up before I could get them handed off to other people, it's okay, right? I'm good at different things. Um, and yeah, we always joke, it's like, if you, you know, smell me around your payroll or around your, you know, actual, like, administration of your services, you call up of one of our competitors because, you know, I'm the last person you want handling any of that.

And yeah, I think a lot of entrepreneurs that are, that are, I mean, again, that are great integrators. I mean, I know a lot of entrepreneurs that are integrators. And there is an interesting thing when you have a visionary, a real true strong visionary and a real true strong integrator. You know, they talk about the rocket fuel model. Those two things can be very powerful because you have someone who's really looking in the future and understanding. And I'm talking to service my whole day. I'm talking to service bureaus. I'm talking to people that are leaders out there. What are they seeing coming down the pipeline? You know, kind of really digesting that in my mind. And again, I don't do that with my integrator because he's focused on the cadence of the day and the work that's being done in the organization. But we get together for our visionary integrator meetings and we talk about these things and we, you know, we have a blast doing it just because it's like, yeah, man, there are so many pieces that need help.

There are—

there literally are so many things that we can do. We're talking about user interfaces and, you know, building some software and technology that doesn't just have payroll, but it has all your benefits and the renewals and the things that you have to do for risk management. There's nothing out there that gives the game plan for a small business to run. And if a company doesn't know what to do, which none of them know what to do, how do they know? How do they ever figure it out. And so that when they meet with Simcoe as an ASO or a PEO, they're like, I've never even heard of these things that you're telling me I need to do before. And of course they wouldn't know it because they were doing something in a different industry, completely different than what they're doing before they were hired. And so again, there's your mission, right? Solving problems for small to mid-sized companies, making the administrative nightmare of these large metropolitan areas. And they put such an onus on these businesses from from a compliance perspective, but it's— there's only 17 things. And as long as you knock those 17 things down and you do them well, you're in great shape. So, you know, that is— that has been our real epiphany for us is how much value we can offer, how well we can do it, package it in a system. They can't be siloed. They have to work together. They have to be integrated. And, you know, I think, you know, we talk about it at our company that it's just the warm-up stage. You know, we really haven't gotten even into the— into the first or second quarter of this business because because it's— because there's just— the evolution is going to be amazing over the next 10 years.

Getting the warm-ups in, man. I remember playing at the Carrier— my wife hasn't heard me tell her 50 times I played in States at the Carrier Dome, baby. The, uh, Christian Brothers Academy beat us. What did you play? Um, football. Uh, yeah, John O'Brien High School. Shout out to all my Upstate New York folks. Um, but so I'm gonna take this meta for you you and for others listening, and then we'll close this thing up. So here's another like minor epiphany we had. So if you study Traction and it's always like, I can always turn right here to the left because it's always right at my desk, right? And you look at what they built as a company in this EOS process. So they've spun this up into an app, coaches, a bunch of systems, like franchises, basically all these different things. But, but they have this system and this process, this cadence for administering what they do. As an ASO, you can basically copy how they administer EOS to their clients for how you administer HR to your clients. What is our cadence going to be for meeting with them? What is our process called for this? Like they give a blueprint, like how your marketing can look like a one-pager with the blueprint like they have on theirs. And just like it is a very, very very similar business model to what we're doing in ASO, what the Traction, you know, I don't know what their parent company is called, EOS, but it's a very similar thing. And so when we started looking at, I was looking at my book and going, well, geez, like, I'm like a couple of like graphics and one-pagers away from the Ping Pong Is Not a Strategy guru method being very similar to the EOS method. And like, so that's what we've done is we've said, all right, hey, what are the things that we know move the And like, that's what they've done in this thing with the OS. They've said, hey, if you, if you, what is the 7 components of the business or 6? I don't know. If you, if you master these 7 things, you'll be great. Like we know on the HR side, like if we can take care of these 9 things, they're gonna be golden. Right. And so we, we go through and we look at it from that perspective. And that, that really unlocked a lot of things for us too, is like looking to other business models that are important to us for inspiration on how we're gonna serve our clients.

Yeah. Yeah. You know, one thing too, just throw in there. For the folks that are listening. Teams is huge. We built the whole EOS system in Teams. We actually have our whole phone system now. Everything is through Teams for us. It's really, I will tell you, one of the best decisions I've ever made. I didn't even know that Teams, you could do phone, like our true phone system actually goes through Teams now. It's really incredible. We built out all the task structures, all of the IDS and the VTO, all those structures are in Teams. So everything that we have is a centrally organized kind of model. The one thing I will tell you guys, as far as business is concerned, is consistency. I am not a consistent person. I, as ADHD as possible, you mean just absolutely blown the doors off of, off of the ADHD thing. Um, but one thing I will tell you, consistency. Find people, find people that can be consistent. Everything that I see, and again, visionary, non-visionary entrepreneur, if you want to run a successful organization, you have to have great operators. Operators. And those operators have to be— they have to— you— it again, this goes to Traction, GWC. You've got to make sure you have the right people. You have to make sure that they are doing the job that needs to happen. But if you want to be super successful, you got to have a team of people who are organized, who are disciplined, who are consistent, who are honest, ethical, all those things of values. But I will tell you, one of the things that I have— and I've watched it right in front of my eyes, never thought it was true, but the second that you get consistency in your organization and you create process, that will immediately create the results that you're looking for. And it will happen in front of your eyes. It will happen overnight. It'll blow your mind away. Know what you are, know what you're good at. If you're a visionary, become a visionary. If you're an integrator, be an integrator. Um, but you as a business owner, if you own the company, you gotta find the right people. And the faster you find the right people who can do that consistent type of work, that is the— that is absolutely the golden gem that I have found in the last, you know, maybe 3 years. And it's absolutely elevated my business.

It's the same advice if you were an HR provider, you would give to your clients, right? Like, you should only hire A-players, you should vet them out there, you know, all this stuff. Like, we tend to not eat our own dog food, as they say in the tech world. And so And, and you just know that difference once you get an A player in a seat versus when you've had a B or a C there. And you go, oh, like, this is what that's supposed to look like. Golly, I had no clue. So that's fantastic, Mark. Thank you so much. Um, any parting thoughts? Anything you want to leave the good folks with today?

I would just say, um, ASO is the way to go.

And so is the way to go. I love it, man. This has been a great episode. Uh, hopefully if y'all have any other questions, you want to connect with Mark or I, I'll put links to bios in the description. Um, don't hesitate to reach out. Like I said, rising tide lifts all boats. We love continuing to help other bureau owners. You heard Mark talk about it. He's on the phone with folks all day. It's the greatest joy of my world is doing— having conversations like this. So much appreciated, sir. Always a pleasure. Appreciate your time today.

See you, Matt. Thanks, bud. Thanks.