Is the CPA Worth it in 2019, 2020, 2021…? Also, H&R Block Acquires Wave and Xero Appoints Jamie McDonald to Lead Accounting & Global Services

Blake is back from the annual AICPA Engage conference with lots of questions about the future value of the CPA. Meanwhile, H&R Block announced that they are acquiring Wave Financial, a provider of accounting software to millions of small businesses. Looks like H&R Block will be competing with QuickBooks Live? In other app news, Xero has appointedHubdoc co-founder Jamie McDonald to lead Accounting and Global Services. We’ll find out what that means for the future of Xero soon at Xerocon in San Diego.


Show Notes

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Blake Oliver: Welcome [00:00:30] to The Cloud Accounting Podcast. I'm Blake Oliver-
David Leary: And I'm David Leary. Blake, you're on the road ... Are you home now? On the road? 
Blake Oliver: I am back in Los Angeles. I was at AICPA Engage, briefly, this week; drove out on Monday morning early and then drove back Tuesday late, which was nice because there was no traffic, and I was able to get back home really fast, under four hours.
David Leary: That's a four-hour drive then, L.A. to Vegas.
Blake Oliver: Yeah, depending [00:01:00] on traffic. It can be anywhere from three-and-a-half to five-and-a-half hours, depending on traffic, like everything in Los Angeles.
David Leary: All right.
Blake Oliver: I drove because I didn't know how long I would be staying at the conference. Unfortunately, this podcast is not my full time gig, and I do have a day job at FloQast. We were exhibiting at Engage, but it's not a big conference for us, so I wasn't doing any speaking. I didn't have any real reason to be there because we did have account managers who were going to [00:01:30] be there at the booth, but I went to record a bunch of podcast interviews, live, using our new mobile podcast studio rig, which actually worked. This was sort of a practice for Xerocon and also a chance to interview a bunch of really great folks in the profession. I caught up with Ryan Lazanis, and Megan Lewczyk; also, Rachel Fisch, and Liz Mason, and Byron Patrick and Jason DeShayes, so managed to wrangle that all together, and those [00:02:00] interviews will be dropping shortly.
David Leary: I'm excited to see the new rig and the quality differences because, obviously, next week I'm heading to Scaling New Heights in the beginning of the week, and then I leave to race to Xerocon. We have lots of interviews scheduled those weeks, but I don't have the rig, so it's going to be interesting. Listeners will be able to detect like, oh, here's the interviews David did without the new rig and the ones we do together with the new rig, so.
Blake Oliver: It was really fun, great to see everybody. I wish I could have stayed for Wednesday, which is [00:02:30] the big keynotes and all that` stuff, so I'll just have to read about it online, unfortunately. Follow the hashtag on Twitter #AICPAEngage if you want to check that out as well.
Blake Oliver: Fortunately, they actually have an online option. You can watch online, or you can register for AICPA Engage and attend online, and I tried to do that. I thought when I got back, because I was registered as a onsite attendee, I could just go and watch the live stream, but apparently, I couldn't figure how to do that. I guess you have to choose one or the other.
David Leary: Maybe you have to sign up [00:03:00] again, register again, and pay.
Blake Oliver: Right. Obviously, I didn't want to do that, so I missed the keynotes. The beauty of the internet is I can just follow along on social media and all the accounting publications are there, of course, so ...
David Leary: Yeah, you just get the three or four tweets of that keynote and you got it nailed down. You don't have to attend. 
Blake Oliver: Yeah. It's nice, too, because a lot of times you'll take a keynote with one big thing and, of course, the event organizers will stretch it out to fill an hour, but this way you can just read, you see that one tweet, "Oh, here's the big news." Actually, [00:03:30] David, you spotted some of that news, which I missed while I was at the event because I was in the podcast booth. There was some news made at Engage.
David Leary: Yeah, I think the piece I saw is the AICPA is going to, I'm going to use the word own, manage, distribute. There's lots of ways to frame this. There's top level domains, so this would like .com, .info, .gov ...  [00:04:00] Over the last few years, the governing body of internet domains, ICANN, has created ... They've allowed, like, 1,200 specialized domains to get created, so you could get .kpmg, .nyc, so there's tons and tons of these domains out there. Well, apparently, in 2014, the AICPA started working with ICANN to get a .cpa top level domain, so you'd have [00:04:30]
Blake Oliver: Oh, I like the sound of that.
David Leary: What caught my eye, A) I was surprised because I did not know this was coming, and now it's really, truly coming, but what caught my eye about it is I'm not sure, and I browsed the list of these top level domain names, and I don't really see any other professional organizations. The American Association of Dentists is not owning the .dentist domain.
Blake Oliver: Oh, yeah, so you were surprised because you didn't know this was possible, that a professional organization could just [00:05:00] own distributing out all the subdomains on a top level domain.
David Leary: Yeah.
Blake Oliver: I should say domain names on a top level domain.
David Leary: Yeah, so clarify this for me. The AICPA doesn't issue you your CPA, your state does, is that correct?
Blake Oliver: States license CPAs, and the AICPA is a national professional organization where you have to be a CPA to be a member, well they have different member types, but to be a full member, you have to be a licensed [00:05:30] CPA, I believe. I should know this.
David Leary: Essentially, they're not going to let anybody get this domain unless you're in the association, I imagine.
Blake Oliver: Yes. I think it would be smart. If they want more members, then you'd have to be a dues-paying member to get one of these domains.
David Leary: Then, as soon as your dues expire, do they just turn off your website? I just find it ... It feels interesting, because I haven't seen an organization like this control a top level domain. If there's an example out there, please, [00:06:00] somebody let me know. I tried to tweet about it, nobody responded where this is at. They're trying to catch worldwide. They're going to catch-
Blake Oliver: All the CPAs, yeah.
David Leary: -yeah, all the CPAs worldwide on this. How do you feel? Is this something, going back to when you had your practice, is this something you'd want to take advantage of? Do you want to have your email address be Blake@?
Blake Oliver: I'll say this, if there is going to be a .cpa top level domain, then, yes, somebody needs to manage it and make sure that only CPAs are [00:06:30] using it, otherwise it's super confusing to consumers and prospects. I'm glad that the AICPA is doing this and taking this on. I think it's fantastic, and it's actually an example of value created by having your CPA license, you get one of these really cool top level domains. To me, it's even better than .com because it shows your license and your designation. You have these letters you worked really hard to get credibility.
David Leary: Is [00:07:00] this something that accountants and the AICPA think is valuable, or do they really think consumers and small businesses are like, "Oh, it's a .cpa domain, they must be qualified"?
Blake Oliver: I don't know. We do know that the CPA has incredible brand name recognition, so if you have it, it is important to show it off and make sure that people know you are one, so I think it's good. It actually ties [00:07:30] into a theme of the conference, at least for me personally, I can't speak to everybody else. I was just there, and it's a huge conference with 7,000 people.
One of the things that I was thinking about a lot when I was at Engage was the value of the CPA license. Listeners of the show may know that I started out my career in accounting as a bookkeeper, built a practice without being a CPA while I was in school, got kind of delayed in that whole journey because I was building a business and then I got a job. I got a job at a big firm. I [00:08:00] got to the point where I was a manager at a top 25 firm and I didn't have my CPA, and I was sort of thinking to myself, "Do I even need this? Is it even worth going through all the trouble of sitting for the exams?"
David Leary: If you wanted a website that had .cpa, you have no choice now.
Blake Oliver: For me, the decision of whether or not to get it was hard because I'm not in tax or audit. I'm a tech guy. That's why this is The Cloud Accounting Podcast at the intersection of technology and accounting, and the CPA is traditionally for folks who start their careers, at least, in audit or tax. I [00:08:30] was thinking, while I was at Engage, because it was my first year at Engage, and I haven't been actually a CPA for all that long, what do I think now about the value of the license? Part of the reason I was thinking about this is because I've been getting a few emails recently from listeners, readers asking, "I'm a tech-focused accountant. I'm on the client accounting services side, the bookkeeping side," these are younger folks.
This one guy, in particular, his name's Jonathan, and [00:09:00] he emailed me last week and said, "Thank you for sharing your story and insightful opinions. I currently work in the accounting team of a company, and I also run a virtual bookkeeping company on the side. I resonate with your story as I consider myself to be a growing financial technologist. I have a bachelor's in finance, yet all my experience is in accounting, don't have the CPA license, and I started my bookkeeping earlier this year for the exact reasons you did, to disrupt the model of traditional firms, CPAs included, with [00:09:30] enhanced culture and current technologies." 
He says, "As I grow in knowledge and skill in the accounting, finance, and technology space, I'd love to ask, knowing what you know now, especially with the advancement of technology, would you still get your CPA license today if you didn't have it? If so, would you go about obtaining the license today differently than you did initially? I imagine technologists would take more away from licensed CPAs than unlicensed accountants." That's the email I got, and I [00:10:00] responded, and I said I didn't have a lot of time, so I wrote a few sentences and I said-
David Leary: Listen to the podcast.
Blake Oliver: ... I said to him, "In retrospect, I would do it again because I think that having CPA after my name has given me credibility with other accountants, in general, with the accounting community, and it was worth it, I guess, from that perspective, but it was a lot of time and effort and money." I happen to have the time [00:10:30] to do it because I had sold my business, so I had both the time and the resources to take time off and just get it done. Actually, I don't know, if that hadn't happened to me though, I'm not sure I would have done it because you don't need it and this to me is-
David Leary: And you've talked about this in the past about the CMA.
Blake Oliver: Right.
David Leary: People doing that because they make more money.
Blake Oliver: Right. The CMA designation is [00:11:00] growing, and it has a big advantage over the CPA. So, CMA, Certified Management Accountant. CPA, Certified Public Accountant. The CMAs tend to work in industry. It's a nationally licensed or it's nationally, I don't know if license is the right word. It's a national organization. It's not done on a state-by-state level. 
The exam, because it's national, it means that the exam is much easier for them to change and modify as technology advances. It's much easier for folks who are international to take it because you can take it in your [00:11:30] own language. They do it outside the U.S., so it's a lot more flexible. The CMA has been growing, whereas the CPA has pretty much stagnated in terms of growth over the last 10 years or so. You can actually see this. I'll put this in the show notes - It's a chart of the number of CPA exam candidates by year that Accounting Today put together from NASBA data that just shows the numbers kind of varying between 900,000 and 100,000 about and [00:12:00] not really changing all that much from 2012 to 2017. And, yet, all these baby boomers are retiring who are CPAs and we don't have enough to replace them.
A lot of this could be because of the 150-hour requirement that now you have to basically do five years of education in order to sit for the CPA exam. That doesn't help, especially, when you don't have to do that for a competing designation or a competing license. Again, the exam has not yet adapted in [00:12:30] terms of the curriculum to prep for it or the actual exam itself to address technology which is growing. It's growing, the tech consulting side of accounting is growing really fast, whereas audit and tax is shrinking due to that same technology. You just don't need as many CPAs or accountants to do the work anymore.
I've been thinking a lot about this and, if you want to read a great discussion of [00:13:00] how much is the CPA exam worth in 2019, there's an article on Accounting Today with exactly that title that's a summary of a roundtable hosted by Surgent, which is a CPA exam prep course company. There's a lot of great input from folks who attended the roundtable from both tech companies and big firms and smaller firms talking about what do they think. Susan Crosson, Director at the Center [00:13:30] for Advancing Accounting Education said, "I wonder sometimes if the CPA exam is sometimes viewed more narrowly because its original scope was to prepare people for the audit profession, and maybe that could be one reason why less students are taking the exam," which is completely obvious to me. This is not a major revelation, right?
David Leary: Yeah.
Blake Oliver: That's what I was saying earlier, that CPA is traditionally oriented toward audit and tax and, yeah, if you're not in that anymore, then why would you do it? Especially [00:14:00] if firms need your talent and they're going to drop their requirement that you have one. Some more quotes here, Mark Mayberry, Strategic Initiatives Director for the Assurance Office of Tomorrow at BDO said, "When I took the exam, it was a rite of passage. Unless they're going into public accounting and auditing, maybe there isn't enough incentive to really pursue the CPA anymore. It used to be the thing to get, and I don't think it is anymore." That's a pretty brutal statement coming from a Director at BDO, top [00:14:30] 10 firm. Rick David, Chairman of top 100 firm, UHY International said, "Back in the old days you wanted to work your way to partner. These days, college graduates come into the firm, not with the partner expectation or desire. They want a different approach to their careers, and we need to adapt to that."
David Leary: Something's striking me. You're reading these quotes from people in the profession from a panel talk.
Blake Oliver: Yeah.
David Leary: I'm kind of thinking, has nobody built an Excel spreadsheet [00:15:00] yet where you can just put in what you want to do, what you need to do, your current salary, your education level, and it'll just pump out an answer at the bottom of the spreadsheet that says, "Yes, you should get your CPA or, no, it's a waste of your time"?
Blake Oliver: Now you've given me a good idea, David. We should do that. Let's quantify this.
David Leary: Well, at some level, I think this is a numbers decision for numbers people to make. Somebody has had to have already built a spreadsheet like this on their own personal level.
Blake Oliver: It does dramatically [00:15:30] increase your earning potential to have the CPA, but the CMA also increases your earning potential, and of course having both does even more. The question is, coming out of school, is it better to go get that job working in tech and accounting and just not get your CPA? Maybe you'd be better off accelerating your career that way rather than doing an extra year in school and then having to take the exams, which is a huge pain in the butt. Interestingly, there was not this kind of panel discussion at Engage, of [00:16:00] course, because it's an AICPA event and I wouldn't expect to see the AICPA questioning the value of its own license, right? But there were some hints of this in the coverage of the event. 
Accounting Today wrote an article covering Susan Coffey's session on Sunday, which I missed that because I came out on Monday, but I did get to read this very detailed article about it with some quotes from her. Susan Coffey is the Executive Vice President of the AICPA. She did a session [00:16:30] about how trust in the accounting profession has the potential to create value and opportunity in audit and assurance services, so this is about the future of assurance of audit.
She started out by saying that, "Accountants are the most trusted professionals in the country after doctors," which I think a lot of us realize and know and that's one of the great reasons to get your CPA, but that, "We aren't doing enough when it comes to using technology in audit," according [00:17:00] to a KPMG and Forbes report that she cited, "Seventy-eight percent say that auditors should be using more sophisticated technologies for data gathering and analytics. Ninety-four percent of executives feel that advanced technologies promote the quality of the audit. Forty-seven percent say that auditors should perform an even deeper analysis." The point of her presentation, it appears, was that data analytics can enhance traditional audit procedures.
She said something really interesting that was kind of buried in the middle [00:17:30] of this article, she said that, "Analytics has the capacity to one day eliminate the need for human verified audits," which goes exactly to the point that audit and tax are shrinking because the more automation you have in this traditionally very manual job of verifying information, the less need you have for CPAs to be doing it.
What's amazing is that she said that we have to change in order to prevent this decline in [00:18:00] audit. The recommendation is to adopt technology and to enable this sort of learning, become experts in tech, but here we are with the CPA exam where there is almost no technology in the exam and most accounting curriculum is completely technology as just an afterthought.
David Leary: It sounds like a little of that was the typical conference talk, right? "Oh, adopt [00:18:30] technology. Become an expert." It feels just not very concrete of what steps the profession should be doing.
Blake Oliver: Right, yeah.
David Leary: I don't know if you and I can solve that. I do think, at some level, this question's going to continually be here.
Blake Oliver: This is a podcast about accounting and technology, the intersection of those two things. That's why it's called The Cloud Accounting Podcast. To me, it's crazy that the exam, after 10 years or more of Cloud, 10 [00:19:00] years ago it got really good, but we could argue that it's been possible for 20 years now, that the exam still has very little tech focus. It's still audit, it's still regulation, which is just another word for tax. It's still financial, which is GAAP accounting, and then we've got BEC Business Environment, which is general business law and all that stuff. 
There's no technology section, and it's going to be impossible to create one because the CPA is licensed on a state-by-state basis. You'd [00:19:30] have to get every single state to agree to change the sections in the exam because a lot of times that's written into law in those states, so that's just legislatively impossible. But I do have a little bit of good news in this front.
David Leary: Okay.
Blake Oliver: The Journal of Accountancy reports that the AICPA and NASBA, the National Association of State Boards of Accountancy, have started to seek feedback from the profession and its stakeholders as they consider ways to evolve [00:20:00] the model for initial CPA licensure to support a growing need for new skills amid rapid technological advancement.
This just happened. On Wednesday, the NASBA and AICPA issued a request for input to website called, and they're looking for feedback from people in the profession and stakeholders as to how should we change the initial licensure model, which pretty much means the CPA exam is a big [00:20:30] part of that. If you want to share your thoughts, you can go to and you can put in your thoughts. Hopefully, this is the beginning of a significant change that needs to happen for CPA licensure to ensure that tech gets in there.
If you go down to the Frequently Asked Questions, there's a lot about that. I'll just read this one here. Question: Why does CPA licensure need to evolve? Answer: The environment in which CPAs operate is changing at a [00:21:00] rapid pace. Innovations in artificial intelligence, automation, and data analytics are creating new opportunities for CPAs, both in terms of the types of services they perform and in how those services are delivered.
At the same time, clients and organizations are demanding services that require expertise in technical areas such as information technology, cybersecurity, system, and organization controls reporting, also known as SOC, IT governance and data analytics. The profession must embrace these changes to maintain its strength and be prepared to support evolving [00:21:30] business needs while continuing to serve the public interest. That's why NASBA and the AICPA are working to evolve licensure requirements for new CPAs: so the profession can continue to effectively meet the needs of organizations, employers, and the public. So, they know there's a problem. I'm glad that feedback is happening, although I am somewhat pessimistic about the amount of time this might take to actually happen, knowing that the hurdles that the AICPA has to overcome in order to make substantial [00:22:00] change in the exam.
David Leary: I imagine by the time they gather this feedback, process feedback, come up with a plan, implement the plan, will be a decade later and there will be a whole new set of problems that we've never even thought, you and I aren't even thinking of so far. The industry is going to be different in a decade, and this discussion will just start over.
Blake Oliver: In terms of next steps, the feedback gathering is going to happen throughout the summer. Then there's going to be discussion panels at [00:22:30] major meetings and conferences, committee meetings, state boards of accountancy are going to meet and be asked for input, CPA societies will be asked for input, and then at the NASBA Annual Meeting and AICPA Fall Council in October, that's when the two groups will present what they heard along with recommended next steps.
David Leary: Ultimately, going back to the question, do you need your CPA, or do you want your CPA?
Blake Oliver: Yeah.
David Leary: If you have your CPA, you probably don't care about that question because eventually the supply of CPAs [00:23:00] is going to keep shrinking, which, in theory, should drive your value up and your demand up.
Blake Oliver: Only if the CPA continues to hold perceived value among the general public, investors, stakeholders, other accountants. Part of the reason the CPA is so important is because it has been so dominant for so long. I don't know if that's really a good thing. Sometimes, what may seem to be good for me as an individual [00:23:30] isn't good for the license, overall. I would rather see more CPAs. There was a golden age when everybody in accounting, that was the path they took. You went to school, you sat for the CPA exam, you got your job, hopefully at a Big Four, and that was it. That was the path, and that path has been disrupted. 
There's this whole broader discussion about perhaps even the whole model of how the Big Four work and that whole pathway is falling apart because [00:24:00] of automation and AI taking away the need for these junior roles where you're basically a glorified intern doing a lot of manual work and learning how things work in an audit as you do that really basic pulling the document out of the folder, verifying it against the transaction ledger.
David Leary: Push comes to shove at the end, right? The financials have to be signed off by a CPA, but all the work involved doesn't have to [00:24:30] be done by any CPA.
Blake Oliver: Yes.
David Leary: Is that correct?
Blake Oliver: Well, there's different rules.
David Leary: You could actually have a lot less CPAs. You could just have a teeny amount of CPAs signing off everybody's financials, and that's all they do, you sign off.
Blake Oliver: Part of the reason everybody got their CPA is because if you want to make partner, you had to be a CPA, which is still the case in a lot of states, right, you can't be a partner, but that has loosened up. I could actually be a partner in a firm in California without being a CPA, as long as there's enough CPAs. I think it's, gosh [00:25:00] don't quote me on this, but 51 percent of the firm partners, so you can have a certain percent that aren't. It's just a matter of them being willing.
David Leary: States aren’t loosening up and the states are the same ... I know Arizona just signed something that if you're a hairstylist and you're licensed, you're a lawyer, you're a CPA, if you move to Arizona, you don't have to get re-licensed. They're going to honor your license, just like they honor my driver's license if I come in from a different state.
Blake Oliver: That's great.
David Leary: If states are starting to loosen up these requirements [00:25:30] a little bit, maybe the next step will be like, "Hey, you can become a partner and not be a CPA," so lots of news on that.
Blake Oliver: I think that's going to accelerate, or the number of non-CPAs is going to continue to grow. Rachel Fisch, while I was at Engage, she shared a great stat with us, and I'm going to try to find that right now. Yes, here it is. Rachel, last week or the week before, was [00:26:00] at the presentation and tweeted out a picture of a slide from an AICPA survey showing that at top 100 CPA firms, over the last eight years, firm hires with CPAs, that's increased four percent. That's in line with growth of a large firm, but non-CPA hires have increased over 10 percent, so over twice as much growth in hiring of non-CPAs at top 100 firms. And who are [00:26:30] these firms hiring? It appears to be data analysts and technicians.
David Leary: Even the firms themselves don't care. They don't want to hire CPAs.
Blake Oliver: I think they want to, but the people that have the skills that they need aren't CPAs, and this is going to continue because, and probably even for positions where you normally would want a CPA. Because according to the 2019 PCPS CPA Firm Top Issue Survey, which was also released at Engage 2019. Do [00:27:00] you want to guess what the top concern of every single firm with two or more professionals is?
David Leary: Based on previous stories you brought up, I'm going to guess something labor related, hiring.
Blake Oliver: It's finding qualified staff. It's the top concern of every single firm with two or more professionals, so everybody but sole practitioners and, of course, sole practitioners aren't worried about hiring because they're just working for themselves. This was also the top concern in 2017, finding qualified staff. It's [00:27:30] hard to find good people to work at your firm, you're going to start loosening up those requirements. You're not going to require the CPA. If the CPA is particularly hard to get, fewer people will get it. You're not going to be able to demand it. That's going to potentially put at risk, I think, the dominance of the CPA. I'm hopeful that the AICPA and NASBA will be able to turn things around.
I'm not hopeful that it will happen fast enough, and I think the demographic shifts are against us so, unfortunately, and I'm normally a pretty optimistic [00:28:00] person, but I'm concerned as a CPA who took all the time and put in the money and effort to get it, I am worried. I am concerned, so I'm going to fill out this survey at, and I encourage all of our listeners who have an opinion on this to also go do that because the AICPA needs to hear from people who are nontraditional, people who are focusing on technology. I know there's plenty of our listeners, Patty Scharf, [00:28:30] great example of somebody who has deliberately structured her firm to not be a CPA firm even though she's a CPA because of the hassles, and she doesn't need it to be a CPA firm in order to do what she does. I think that alone, it's anecdotal, but I think there's a lot of folks considering that, and that just shows that the license is not creating the value that it once did.
David Leary: I have a homework assignment for you this weekend. You can go buy the domain,, and you can spin out this spreadsheet on there, and [00:29:00] you can put a bunch of ads for The Cloud Accounting Podcast, and it'll be a good SEO driver.
Blake Oliver: I like it.
David Leary: I gave you an assignment this week. Well, yes, the demise of the CPA is news.
Blake Oliver: No, no, no, don't say demise of the CPA. I don't want to make news that way.
David Leary: Okay, well there was bigger news believe it or not. Super, super big news happened this week besides that.
Blake Oliver: Yeah.
David Leary: There's a Cloud Accounting product out there called Wave. I don't know if our listeners have heard about Wave. They're based out of Toronto. Wave was always kind of a ... Their [00:29:30] play was they were a free accounting software app that ran Google ads in your margin. They've been growing and chugging along for a decade, chipping away, chipping away, chipping away at this. They've literally, no pun intended, have been riding a wave. They've struggled, they've downsized, they grew again, they've added payroll, they've been up and down, and they've started to fiddle with tax a little bit. Well H&R Block acquired them this week, and that amount is-
Blake Oliver: $4 and $5 million, no less, which is nothing to [00:30:00] sneeze at considering that, correct me if I'm wrong, but Wave raised something like $80 million, so not a bad outcome.
David Leary: No, and it makes sense in this world of QuickBooks Live and TurboTax Live and people wanting a one stop shop to get their bookkeeping and tax, or pilots going to add tax, right, a lot of these startups we've talked about in the past, so it does make sense. H&R Block probably wants to offer both bookkeeping and [00:30:30] tax under one roof, all at once. Even we talked about this last week with ATAX. They're going after the Latinx community to do full service. If you go back to the first H&R Block ad ever ran, I think you could get your taxes and your business's bookkeeping all done for $7.33 a month or something. They've wanted to do that forever. They kind of got away from it, and now they bought an accounting package to get back to doing it.
Blake Oliver: Well, and we know that they've been thinking about this or trying to figure out how to do this for a long time because [00:31:00] H&R Block did create a partnership with Xero. Clearly, that didn't work out, or I don't know what they're planning to do.
David Leary: April 30th of 2014, so that's just over five years ago they announced that a partnership with Xero. Ultimately, a lot of it's the same talk that they have in the press releases about the acquisition here, so this leads to that bigger question now, and I kind of push it on you. You're the one who, four years ago, was heavily involved in Xero world, right, when that [00:31:30] was announced. My gut is it's culture, like the hot tech startup, the old H&R Block, and did the cultures ever fit? Then it makes me wonder is that going to happen again? Do the cultures fit?
Blake Oliver: Well here's what I am going to totally just predict, and guess is going to happen. I think that H&R Block sees an existential threat from Intuit TurboTax and TurboTax Live and now QuickBooks Live, and you've been talking about this, David. You called this out, right? That in [00:32:00] the stats, TurboTax Live is getting most of its new customers something like 70 percent of its new customers are coming from retail, traditional assisted prep, which is mostly places like H&R Block.
David Leary: Yeah, so instead of me getting my assistance, driving my car to a brick and mortar and get my assistance there, from the comfort of my living room and my couch, I can get assistance through my webcam.
Blake Oliver: So that's stealing business like crazy from H&R Block, obviously, and they need a [00:32:30] way to counter that, so they need their own way to create a funnel for tax. And they have their own assisted offering, but now QuickBooks Live is going to make that even harder. We haven't really even talked about this, but I see QuickBooks Live as being a huge driver into TurboTax Live. They're going to be using the same personnel. We've talked about how Intuit is hiring 500 more QuickBooks Live staffers. Most of those people are going to come from the existing TurboTax Live, and actually I was at Engage, David, [00:33:00] and I stopped by the booth. Intuit had a booth at Engage recruiting.
David Leary: I saw a picture of that on social media. We need to make sure we get that in the show notes so people can see this.
Blake Oliver: Send that to me. TurboTax Live was at Engage with a booth recruiting tax professionals, so I stopped by. I said who I was. They didn't know who I was, so thankfully we're not popular enough for them to not talk to me.
David Leary: They didn't know who The Cloud Accounting Podcast was?
Blake Oliver: They didn't know The Cloud Accounting Podcast. I said, "Hey, I'm [00:33:30] Blake Oliver. I'm a CPA, and I heard that you're hiring for TurboTax Live and-
David Leary: Well, it's not even heard. They had a sign, like a gigantic 8x8 banner that said-
Blake Oliver: A big sign that said, "We are hiring." I said, "You're hiring for TurboTax Live; I'm interested. Oh, and I also heard that you're hiring for bookkeeping, QuickBooks, because that's my specialty. I'm not a tax person, I'm a client accounting services person and I'm interested in making some extra money on the side," so I found out as many details as I could get. The [00:34:00] pay was something I was really interested in, and she couldn't tell me exactly the pay. The woman working at the booth couldn't tell me exactly the pay. She said it should be very similar to TurboTax Live, which in California, she told me, is $26 to $28 per hour.
 We can extrapolate and say well if it's these TurboTax live people that are going to be working for QuickBooks Live, it can't be that different because they're going to work during tax season at TurboTax Live, and then they're going to be looking for work the rest of the year and [00:34:30] that'll probably be QuickBooks Live. If they got paid too much different, it would be weird. Now we know what they're going to get paid, which is if you multiply that, you know, full time, it's what, less than $60,000 a year? So, as we expected, not too great for a full-time gig. 
Rich Preece said he doesn't expect people to be doing this full time. This is more supplementary income, like part time mover driving. So, anyway, that was my experience. Went there, and I actually [00:35:00] put in my name to get more information about QuickBooks Live when it does go live. Now that I've said this on the podcast, somebody from Intuit if they're listening will probably go and scrub my name from that list, but it was fun to go find out more information.
David Leary: I promise you we will find this picture. It was on LinkedIn. The recruiter put the picture of the Intuit booth on there, and they said they're hiring, and they listed - it was ProSeries, it was TurboTax, it was QuickBooks Live. [00:35:30] I actually asked you to pick me up some TurboTax Live sunglasses. Did you happen to do that for me or not?
Blake Oliver: Oh, no I didn't. I'm sorry.
David Leary: No? All right, all right, all right. That's how that's going to be.
Blake Oliver: You'll have to get those at Scaling New Heights.
David Leary: I don't think TurboTax Live will be there.
Blake Oliver: Oh.
David Leary: At Scaling New Heights. It's very QuickBooks focused. 
Blake Oliver: You think they'll be at Xerocon? I feel like they won't be there.
David Leary: Yeah, probably won't be there. If anyone from Intuit is listening and there's some TurboTax Live sunglasses laying around, I'd love to get a hold of those.
Blake Oliver: But we were talking about H&R Block and Wave, and I [00:36:00] feel like there's more to talk about there, maybe. Okay, here's how I see it happening.
David Leary: You didn't say your prediction. You laid this out, you set the table, what's the prediction?
Blake Oliver: Okay, so my prediction is that the reason ... Well, I don't know this because I wasn't involved in the whole H&R Block and Xero thing, but I think the reason it didn't work out is because they were, like you said, different cultures and also two very strong brands. What I think H&R Block really needs is their own bookkeeping app, [00:36:30] and I think they're going to take Wave and rebrand it and make it H&R Block bookkeeping or something like that, or maybe H&R Block Wave. It'll look like H&R Block, have all their color scheme, branding, and all that, and it'll be part of their site. That makes a lot of sense to me.
David Leary: Which they can do now because they own it. It's not a partnership.
Blake Oliver: They owned it. It's not a partnership. They have full control. Honestly, criticize Wave all you want, and there are plenty of people doing that on Twitter saying that it's crappy, that it doesn't have all the tools accountants need. Well [00:37:00] that's because it was built for business owners, not for accountants, and business owners just need to do some really simple things and get what they need on a cash basis to file their taxes, and yeah, it's easy to do that and it's free and efficient, and honestly QuickBooks and Xero are hard.
That's the reason that you have a QuickBooks Live even existing is because it's too hard for most business owners to do on their own no matter how much Intuit likes to say that you can do it all on your own. That's why the whole ProAdvisor network exists is because it's too hard to do on your own. Whereas, with Wave, I [00:37:30] don't know how correct the books are, but most people don't need an advisor to help them use Wave or to use a similar product which is FreshBooks.
David Leary: I think, and we've talked about this before, there's a vast number of small businesses, and we can tell because that's what all these startup VC funded startups are chasing, a vast number of small businesses that just want their books done enough to get their tax returns done and that's it. They don't care about monthly financials, they're not doing quarterly reports, they could care less about somebody [00:38:00] advising them, they just want to make sure their taxes get pumped out properly, and the products like Wave allowed them to do that for free or cheap.
Blake Oliver: I couldn't have said it better. That's perfect.
David Leary: It'll be interesting. Back in your day when you were ... Because you said if people are new to the podcast, you were the very first Xero, I don't know what it's called but, essentially, the very first ProAdvisor for Xero in the United States.
Blake Oliver: Yeah, I was one of the first two. I say I'm not sure if I was. I think I was number two. That's what I say. Somebody in New York had [00:38:30] done it before me. I was the second person to get certified and listed on the website as a bookkeeper.
David Leary: Do you remember when H&R Block did go through the dating phase with Xero and announced its partnership?
Blake Oliver: Yeah, I remember that. I thought it was a really big deal at the time, but the problem H&R Block has is they're a franchise network, so to get all the individual franchises on board with this new software, it takes training, right? You've got to do, at least, an [00:39:00] all-day certification, and then after that you have to spend more time learning all the different features, and that's just a huge Herculean task, and I think is a barrier to entry. Same thing if they try to do it with Intuit or QuickBooks, right, it's still hard, whereas, with Wave it's not.
David Leary: The deals like this look great on paper, and then it's harder to execute.
Blake Oliver: Yeah.
David Leary: I remember going through that, my experience with Intuit on the payroll team. I think, at one time, there was a big deal with Bank of America. Yeah, it's great, Bank of America is going to sell the payroll product [00:39:30] or whatever. The reality was is that person at the counter at Bank of America might have 60 people come to the counter that day and 59 of them, if not all 60, are just consumers, they're not small businesses, so anything that person needs to know about small business offerings and products, they just don't pay attention to because they'd never need to use it. Even though, at some level, it's a great announcement, the execution's different. You're right, I could see where, because [00:40:00] they didn't own this, there's no vested interest in Xero, why maybe that partnership didn't work the way everybody hoped four years or five years ago.
Blake Oliver: Yeah, and it's an additional expense for the franchisees to roll it out because there's a subscription fee where now they own it. H&R Block corporate can just give this away for free to all their franchisees to grow this, so from a financial point of view it makes a lot of sense.
David Leary: Congratulations to the Wave founders. Instead of getting their CPA, they went and started an accounting software package.
Blake Oliver: Oh, is that really the story?
David Leary: No, I don't know. I just said that. They [00:40:30] had the option, right? They could have became CPAs, right? That option's always been on the table.
Blake Oliver: Something we didn't mention is they're based in Toronto, so this is a Canadian success story here.
David Leary: Hubdoc was based in Toronto, so maybe there's going to be a big raid. It's kind of like when Nirvana hit, and Pearl Jam hit, and all the Seattle bands got signed. 
Blake Oliver: Is FreshBooks, are they also in Toronto or are they some [crosstalk]. It's crazy. The two biggest small business accounting apps designed [00:41:00] for very small, some people will call them microbusinesses are out of Canada.
David Leary: There's a lot in Toronto. Toronto is a huge, huge, huge tech hub for sure. Let's play the prediction game, right?
Blake Oliver: Yes.
David Leary: We're going to Xerocon next week, and news has been quiet for QuickBooks and Xero to some extent. I do have an article about Xero, a news article. Actually, we'll [00:41:30] jump into that news article first, then we'll go there because you just mentioned Hubdoc.
Blake Oliver: Okay.
David Leary: Xero has appointed one of the Jamie's, so the Hubdoc co-founder, Jamie McDonald, is now going to lead Accounting and Global Services at Xero. Really, the focus is going to be on automation intelligence as a CORE focus of every Xero product, not just Hubdoc. So, all that experience he gained with Hubdoc with automation and intelligence, he's [00:42:00] kind of in charge of rolling that out across all of Xero's products. We're going to interview him next week when we're at Xerocon.
Blake Oliver: I am so excited to learn about that and what his plans are, and congratulations, Jamie.
David Leary: My question to you, though, is obviously QuickBooks Live's news, it's been one of the biggest stories of the year. This H&R Block Wave deal, which you say is a direct reaction to that. Do we see, maybe at Xerocon next week or maybe in the future, is Xero going to have to get in [00:42:30] bed at a high level with a tax product?
Blake Oliver: Oh, I thought you were going to ask are they going to get into bookkeeping, and no.
David Leary: Or even that, right? Are they going to have to react to ... These are major announcements happening.
Blake Oliver: Yeah, I went over and chatted with my buddies at the Xero booth, Alicia, in particular.
David Leary: Oh, that's right because they were at Engage.
Blake Oliver: Yeah, they were there, and I brought up that idea. I said, "David says that Xero is going to get into bookkeeping services like [00:43:00] QuickBooks Live, eventually, it's inevitable." And Alicia made a good point, which is that where Xero comes from in Australia and New Zealand, the channel by which they reach small businesses is almost entirely through accountants, so it would be insane for them to disrupt that. Whereas Intuit has a completely different model where they sell direct to small businesses, they always have. 
They started out selling QuickBooks as a way to do your own accounting, so you don't [00:43:30] have to hire your accounting firm to do it, and that's why you see QuickBooks at Office Depot on the shelf there, so the very different model. I don't see that ever happening. I do think that it would be crazy if they didn't get into the tax prep game just thinking back to our episode with Lorilyn Wilson, she talked about how amazing the integration is between QuickBooks Online and the Intuit tax product she uses. I think it's one of the ProConnect products and how that saves her hours and hours every tax return. That is the sort of thing that will get accountants in the U.S. [00:44:00] who are mainly focused on tax in the small business space into using Xero, so I think that has to happen.
David Leary: I think Xero understands that because Xero owns Workpapers in Australia, and I think it's a huge competitive advantage for Xero in Australia.
Blake Oliver: I think we have to ask about that. When is Xero going to either build a partnership with a tax product that makes it seamless or buy something or do their own? We may not get answers, but we've got to ask. 
David Leary: Yeah, I've always thought, too, especially when I was at Intuit, and Intuit's an [00:44:30] open platform. I always thought one day maybe Xero ties into ProTax, into the whole Intuit's tax ecosystem.
Blake Oliver: That would be amazing. Hard to picture that happening.
David Leary: It is but think about this. Hubdoc is in QuickBooks Online App store. Actually, in my QuickBooks Online, Hubdoc was on my home page inside of QuickBooks Online. That's a company owned by Xero and is on the home page of my QuickBooks online, and T-Sheets, who is owned by Intuit, is on Xero's website, so I don't think it's as far-fetched as you could imagine. If five years ago, if you would have [00:45:00] said Intuit would be working closely with ADP and [crosstalk] at the same time, you would have said no way.
Blake Oliver: Yeah, and I think that's a great perspective, David. As you say very often, as you remind us all, the total addressable market is gigantic for Cloud Accounting and QuickBooks Desktop [00:45:30] never even got to a significant percentage of all the businesses in the U.S., so to think of this as two companies fighting for the market is not true. It's that you can compete, and you can grow the whole total market together, and you said even if Xero completely failed to disrupt Intuit and only got 10 percent of the global market, they'd still be bigger than Intuit ever was in the day of QuickBooks Desktop.
David Leary: Yep, absolutely. [00:46:00]
Blake Oliver: So plenty of room for many, many, many competitors, which is what we want in a global economy. We don't want just one company building all the software or there's no innovation. It sucks for the consumer, it sucks for the accountant, it sucks for the developers who have only one company to work for. I would love to see 10 really good small business general ledgers. That would be awesome, and then there would be a real need for The Cloud Accounting Podcast to keep it all straight.
David Leary: That's you [00:46:30] saying that not as somebody in practice right now.
Blake Oliver: No.
David Leary: Could you imagine if you had 10 clients and 10 different GLs? You'd be losing your mind.
Blake Oliver: We do have that, actually, in specialized solutions like in the mid-market. There's so many different ERP systems for every industry. Maybe that's what we'll see is these specialized general ledger applications for small businesses in different areas, and you have your finger on the pulse of that, David.
David Leary: We're doing a Facebook Live with BQE CORE, [00:47:00] and CORE is kind of niche app, engineers, architecture firms, things like that like professional services. They have a GL built into their app, so they connect to QuickBooks and Xero and they do all that and they have a GL in their app. When we release that podcast, people can hear more about that, but GLs are popping up everywhere.
Blake Oliver: That's awesome.
David Leary: It's the commodity now. GLs are a commodity.
Blake Oliver: Well so much food for thought in this episode. I think we've reached our limit. If people want to connect with you, David, where's the best place for them to do that?
David Leary: Twitter [00:47:30] is the easiest. I'm @DavidLeary.
Blake Oliver: I'm @BlakeTOliver. If you're going to be at Xerocon, look us up and tweet at us. We want to say hi.
David Leary: I'll be at Scaling New Heights, so next week everybody on the QuickBooks world can find me, and at Xero's going to be able to find us, so we should have a fun next seven or eight days. Are you driving there or flying, or how are you getting to?
Blake Oliver: San Diego's only two-and-half hours away, so I'm definitely driving. 
David Leary: Oh, easy-peasy.
Blake Oliver: It's a beautiful drive, too. Yeah, I'll see you there.
David Leary: I will see you there as well. Bye, everybody.
Blake Oliver: Bye. [00:48:00]

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