The entrepreneurial path is for the risk-taker, and if you want to succeed, you need to have the will and focus not to get distracted along the way. In this episode, Amy Vetter interviews Brian Fox, VP of Strategic Partnerships for Thomson Reuters and founder of Confirmation that was acquired by Thomson Reuters in 2019. Here, Brian shares his entrepreneurial story from starting Confirmation in his grandmother's garage from a life insurance policy to 20 years later, creating a global company and catching millions in fraud. He lets us in on what they do with bank confirmation and how they help eliminate or reduce mutual fraud and protect investors. At the heart of it is the saying, “happiness is positive cash flow.” He explains to us why this is so and how you too can hit cash flow positive in your business. Join Brian and Amy in this conversation as they dive deep into the balance between being the conservative accountant and risk-taking entrepreneur and more.

Sponsored by Thomson Reuters - check out their whitepaper here - https://drive.google.com/file/d/1dHu1AHgXb0zdiw8vTR5JYBZ6mYoWHED0/view?usp=sharing

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Happiness Is Positive Cash Flow: Don't Get Distracted Along The Way With Brian Fox

Welcome to this episode where I interview Brian Fox, the Vice President of Strategic Partnerships at Thomson Reuters and the Founder of Confirmation, the trusted global provider of digital confirmations that sold the Thomson Reuters in 2019. He is recognized as the creator of electronic confirmations and holds several patents on electronic audit confirmations. Brian is an industry thought leader, a frequent speaker on accounting and fraud issues. He has been named four times as one of the Top 100 Most Influential People in Accounting. He's a five-time winner of the accounting profession’s Top 40 Under 40 and was named as Entrepreneur of the Year in Nashville. During this episode, Brian shares his entrepreneurial story from starting Confirmation.com from a life insurance policy from his father's death and working on it in his grandmother's garage to many years later, creating a global company and catching millions in fraud.

This episode is sponsored by Thomson Reuters. In November 2020, Thomson Reuters held the largest tax and accounting virtual event of the year with over 5,000 professionals at the annual Synergy Conference. One of the most critical things coming out of this event is how cloud accounting has come front and center for the profession in 2020. Thomson Reuters has published a new white paper, answering your questions and addressing common myths. It covers how cloud technology is applied to audit tax and accounting firm management. What does cloud accounting include, not include, and covers language and terminology you are likely to encounter as you determine the cloud-based technology needs of your own firm.

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I'm with my friend, Brian Fox. Brian, do you want to give a little brief introduction to yourself before we get started?

I'm Brian Fox, the Founder of Confirmation.com and CPA by background. I started my career with Ernst &Young in the Dallas office in audit and then was with PricewaterhouseCoopers also in Dallas on the mergers and acquisitions team. Went back to business school at Vanderbilt from Nashville and I first built Confirmation.com many years ago. In summer 2019 we were acquired by Thomson Reuters.

We'd love to start with your background where you grew up, what your parents did and how you began your belief systems.

As I look at my family, I feel like there are a bunch of entrepreneurs, which I felt like I always wanted to do when I was growing up. One of my grandfathers had a construction business that my dad and his brothers went into. My grandmother had a candy shop that I used to work every summer. She pays me a big chunk of caramel at the end of the day. She taught the classes and made the candy. I worked the cash register and did the inventory.

On my mom's side, my grandfather had a manufacturing plant in Nashville in Chattanooga, which was in New York. My grandfather passed away before I was born. I've just heard stories about him and my grandmother got remarried, but she started a dress shop. My step-grandfather, who was in real estate. I have absorbed that as well. Between my family members, it was entrepreneurial. I take a lot of my background for Confirmation.com from what she did. She was in the first class of female police officers in Nashville. There were six of them who went through patrol school.

She was 1 of 6. My brother and I always used to run around the backyard, chasing the bad guys, wearing her police uniform with baton stick and riding our bikes. He ended up becoming a police officer. I always tell our team, what we do is we help a good cast catch the bad guy. The Confirmation.com, that's how I help the good guys catch the bad guys in that way. That's a little bit of background. I had an entrepreneurial business that I did that eliminated stands and had a driveway sealing company when I was in college with a friend of mine. I always felt like I wanted to do something entrepreneurial when I grew up.

Your mom being one of the first officers doing that. What personality or traits did you see in her that something that might have stuck with you?

She's small and short. She went to Vanderbilt for college and when she graduated, she went right into the police force. At that time the bad guys didn't realize that there weren't women in the police force. After patrol school, she went into the vice squad. She was undercover. She would go in, buy the drugs, and do these things because the criminals didn't realize that she could be a police officer. She was telling us about the stakeouts and going into places with the team of police officers with the shotguns and go arrest people. She tells some wild stories. She tells us that they didn't make women's uniforms. They gave all the women a large men's shirt and they had to go in and made police in women's dresses. It was those things. You figure out how to make it happen.

I can only imagine your imagination running wild with stories like that. Did it scare you at all, having your mom do that kind of work?

She did it for about six years or so. She went back to law school at night school and became an attorney. She ended up working for the health and human services department taking abused children away from families. I knew about being a police officer, she stopped doing that when my brother was born or shortly thereafter, but seeing pictures of me and her have been court, those things. We always had kids that were staying in our house too who were from abused homes that she was trying to help. My grandfather, father, and uncles were building a home. That’s why she became a real estate agent.

She works hard in real estate and construction. It's cyclical. My dad never wanted my brother and I to go into the business because it was it's a tough business and cyclical with the economy. My parents ended up going bankrupt when I was a sophomore in college and it was because of the downturn in the real estate market. My dad had six properties that he was building in the real estate market turned, and they've done a lot of builders from out of state in Tennessee who would come in and built huge subdivisions and then left the keys on the counter. That negatively impacted the local builders who were here. The families were here and my dad started to call loans. It was a tough time in the real estate market. This would have been in the late ‘80s and early ‘90s.

My mom owned construction cleanup. That business went out of business during that time as well, because all the construction loans defaulted and she didn't get paid. It's interesting how both are affected by that in some way or the other. Did that guide you into your decision of becoming an accountant or how did you decide? It doesn't sound like there were any accountants in your family.

There were no accounts. What happened was I knew that I wanted to own my business at some point. I would go around, interview businesses, and ask them about their business. One of the questions I always asked them was, “What would you have done differently?” Almost universally, the different business owners said that they would have taken more accounting courses in college because that would help them.

I was always looking at it. I think accounting is the foreign language of business. At that point, even though I honestly didn't enjoy counting, I was going to be a Finance major like the rest of my friends. I was at SMU in Dallas. I figured, “I'll go ahead. I'm one of those guys. I wouldn't eat the peas on my plate so I can enjoy the rest of this.” I took all these accounting classes to knock them out and realize I was closer to an Accounting degree than a Finance degree. I thought, “That'll set me apart if I get an Accounting degree, it'll give me a little something different. It’ll set me apart from all my Finance major friends.”

I ended up pursuing an Accounting degree, which was harder than the Financial degree. I ask people, “What do you do with an Accounting degree?” They said, “Go work for big six firms, get all the experience that you can.” I did that. That's when I looked and it was fortunate. It came down for me between entrepreneurial and Arthur Andersen. I liked the people at both firms, but I had some friends from SBU or Andersen. It's fortuitous that I didn't end up there because unfortunately, all the students coming out of school these days, take Andersen with their firm and in fact they were the best firm.

I had a friend who was there and he was a year older. He said, “They just beat the Jesus out of you.” If you can make it through the golf lift, then you get to wear the green jacket, go back to the back room or store room. I was like, “My intent was to be an entrepreneur, I don't tend to become a partner in an accounting firm. I want to enjoy the people I work within my daily job.” There are people in Ernst & Young that I knew who love the job and love what they were doing with people. I went over there for two years and I love the people I work with.

It was a lot more fun. I've talked to a lot of professors and one of the things they always tell me, which creates the image is when they're doing case studies, they always use the Andersen case studies because they're trying to get their students hired by the other firms. They don't want to have case studies that make the current firms upset or look bad. All the professors use all the Ernst in case studies to make them look bad because they're not looking to hire anybody. The students get a bad image of Andersen, even though they were the biggest investment. Fortunate for me that I worked in Ernst & Young.

It's interesting how similar we are because I did the same exact thing. My mom had made service and serve the construction industry. She was in the Property Management Association. I would go with her to those events and meet all these other property managers and builders. I would always ask them the same question of, “What degree would you get?” They always said accounting. It's funny now I talk about that and say, “There's something wrong with that.” That means they're not getting help from their accountant that they should have if they feel like they need to know it themselves.

It is a foreign language. All that credits and T accounts and all these crazy rules and estimates. If you understand, it can read the foreign language, it can read the financial statements and read your own financial statements, you know the health of a business. If you don't know how to read that foreign language of business, the numbers, then you're reliant on an interpreter and your interpretation is only as good as they are or as good as they want to tell you. In some cases, that's when some of the frauds happen. If you want to understand this, you need to understand the numbers.

It brings together both your sides, the catching fraud and bad guys. You started in audit and I'm assuming you didn't love it.

I can’t say that I enjoyed the audit. The first year, I was happy to do whatever they told me to do for the most part, statements, accounting, fax, supply closet and find a box of tick marks. We all look for the box of tick marks for half an hour until someone tells you there's no box. You create your own tick marks or if somebody tells you to go look for the GSR, which was the Green Squiggly Ruler. They play fun games. In all honesty, I was a little frustrated because I was like, “This job is boring.” I was licking stamps, stuffing envelopes, chasing paper with confirmations, bringing the supplies to the office. We went around like the printer to go, which is fine. Everybody's got to do the groundwork.

When my grandmother started the dress shop, she would always tell me, “As long as they're paying your paycheck, you show up with a smile on your face and you work harder than the boy that grown with you next.” That's what I did. I did that for two years. I watched it go through moving from paper to electronic work papers with the exception of confirmations in the field. That was where I came up with the idea that the second year, I felt like I was going to learn some new stuff, at least I found the sheet and our largest client Trammell Crow was short-staffed. The intern got pulled, staff one back home, and I was stuck with the conference again.

I was like, “This is terrible.” My senior who's a great guy made with Ernst &Young. He said, “You're the low-cost employee. You got to do this.” I did it and I wasn't really happy about it. In the end, he said, “Your attitude is like this condition. I know South Wales, a lot more efficient.” Two years in, I sat there and I said, “I can't believe that Ernst & Young was paying me this much to fold paper, stuff envelopes, lick stamps.” I've got a good time. Staple and fold 5 to 6 pieces of paper and the grease was still good. You can stop and use the little thing with the water in it.

I got efficient and I thought, “There are about two years out of college.” All I'm doing is add up, counts, and numbers and stuff on a piece of paper. I can't believe that somebody hadn't fixed this. I was frustrated with the process and that's when I was like, “Somebody not only can create a more efficient process,” but as I sat there and did it my second year and understood what I was doing I said, “I know how I would circumvent the process to commit financial fraud.” I would suspect its fraudsters intent to commit fraud, have already circumvented the honors processes, and then I've been researching and found that good case. I said, “I can commit fraud on Ernst & Young.”

Positive Cash Flow: Accounting is the foreign language of business.

I ended up going to PWC, got out of audit, went to mergers and acquisitions. We got pulled onto some audits while I was there. The M&A side was fun. I enjoyed that. They treat you a lot nicer in the M&A space. They put you in a glass fishbowl and the CEO greets you at the door, but it's monitored. That’s why they had the same issues. I said, “If I could circumvent both Ernst & Young and PWC audit confirmation procedures to commit financial fraud, it looks like a problem with the way they're be done professionally.” That was the brainchild of Confirmation I found.

I remember thinking that about confirmations, that it was such a waste of time and I couldn't believe what they were paying to have us sit there and do it. I talked to a group of accounting students and I had to talk them through like, “Your first jobs are going to be horrible and you don't give up. On accounting, you have to go through it. That's what gets you the base foundation.” Unless you're in that industry, you wouldn't know there was a business opportunity doing that. You had to have done that work to find the business opportunity.

You don't even know they exist. I forgot all the stuff on the CPA exam about tax and tax people don't even realize Confirmation exists anymore.

Even when they explain it in school.

Those people assume that the accounting profession has been around for 100 years. “These people have all been in the profession for 20 or 30 years. They’re a heck of a lot smarter than I am.” I didn't even pass the CPA exam at that point. I’m like, “I think I could commit fraud on these guys, but I'll do what they tell me to do.” That was where I said there's a real opportunity here to help our profession, which I think is a very honorable admirable profession is important. I said, “People were pulling the wool over our eyes if we can do better.” At that time, I start with Ernst &Young in ‘96, I finished with PWC in ‘99, went back to graduate school, and wrote the business plan that year in ‘99.

The internet was three years old at that point. I was saying, “We could use this new technology called the internet to create a secure clearinghouse, make the process more efficient near real-time from a 4 or 6 or 8-week process, but also eliminate or reduce the opportunity for mutual fraud to occur and help protect investors in the public or accounting office.” Fortunately, for me, my professor in graduate school had been an accountant and he was like, “You want to go do that.” That’s encouraged me to pursue it.

Between Confirmation and when you get out of school and audit where you have to ask the controller whether they committed fraud.

Give me one fraudster that's going to go, “This first year out of college, yes, I did it. Arrest me.”

It's first-year auditors that are like, “I have no idea what to look for or ask about.”

These fraudsters are gregarious and smart. The frauds that I talk about are not the somebody stealing a $100 out of petty cash. I'm talking about when the CEO and CFO get together and make the fraud investors, and then the banks lend money and they're stealing millions or billions. They're sophisticated actors. They are good actors. The fraud may not be sophisticated, but the people are sophisticated. They're going to scare the heck out of my first-year staff auditor.

To your point, the business owner not understanding how to track internal controls or financials and they're regenerating petty cash and taking a lot of money out of the company. Having the technology or experts around that in your business, like you're an expert in what you do, but you do have to pay for the right expertise to catch the bad guys. You don't want to think you have bad guys, but it’s possible. You wrote this business plan, but you don't have a technology background.

I can't read a line of code. At that time, I had no money either. When that professor told me that I started the business, I was interviewing with other dot-com startups to go to be an intern there between my first year of business school. My father was killed in a hiking accident. My mom, brother and I used my dad's life insurance policy as the seed capital in the business. That was the only way I had the initial capital to start the business. You couldn't have started a business that had worked on. I know people talk about it now with COVID in the economy, but I would tell you that it was at least as bad if not worse.

When I started my business because you had the dot-com bust and then I graduated in May of 2001. I hit the ground running to try and take good business off the ground and then 9/11 happened. The entire global economy shut down at that point and we didn't know what in the world is going to happen. We moved the business into my grandmother's garage. I had three other people who joined me to start the business. I paid them in stock. For two years, nobody took salaries. I had $92,000 of student loan debt from business school at Vandy that I kept deferring and running up the interest rates as long as they let me. Fortunately, we had good things happen in the business. I was taking truly $500, $1,000, and $5,000 from every aunt, uncle, cousin, high school friend, college roommate, parents, or friends, whoever would feel sorry enough to give me some money to help me keep the business going.

We did that for about two years. I never had more than 30 or 45-days’ worth of cash, very stressful time. Fortunately, at the end of that two-year period, the market opened up and we were able to raise our first real round of outside funding that gave us about twelve months’ worth of capital and it was a crazy exciting time, but stressful. Family life like that at the same time. My wife and I had our first child, the week that we both went back to graduate school at Vandy. We had our first daughter a week before business school started and she was getting her Master's in Early Childhood Special Education. We found out we were expecting our second child the week we were graduating. The summer, about a month later, we ended up adopting her half-brother who was fourteen. Here I was the 26-year-old CEO of dot-com business right after the internet bust, 9/11 happened. We have a 1.5-year-old, one due in December and we've adopted a fourteen-year-old. We've got no revenue and barely any money to fund a business. It was crazy.

You're going to have to explain that decision making that happened during this time. First off, what gave you the confidence that this was the right thing to do with all that’s going on?

I knew the business is needed in our profession. I validated that with other people, but I believe that we needed it. I also had enough people who were older, who said that this was a waste of time and cash is important. The first article drifted on us in Tennessee in the Nashville newspaper. The front page of the business section, the managing partner of KPMG said that auditing cash is one of the critical areas and this was pretty much a useless service. I was like, “Thanks for the help.” I have three total years of public accounting. He was the managing partner of the KPMG office. Clearly, he knows a lot more than I do, but I was like, “I think I can commit fraud on you guys.”

It's inefficient. People hate doing it so there's an opportunity to use the internet here. I had to put my head down and go into the headwinds. When I talked about entrepreneurship classes, I always tell them that it was too hard. If it had been my own money after 9/11 happened, I would've quit as people recommended, going to get a real job again, going back to work for one of the firm or something different. When I've taken my dad's life insurance policy, that was from my mom and brother and I. What I've taken investment from my grandparents, aunts, uncles, cousins, friends, high school friends, their parents, I knew I couldn't walk away from the business because it got hard.

My grandparents were in the real estate business and they would talk about how sometimes they were building triple net leases for restaurants and early on, the restaurant would just leave the keys on the counter and leave. They ended up saying, “No, we want that person.” They always make that person invest in the lane, in the building so that they had a vested interest and they would leave the keys on the counter with payments. The same thing, if it was my own money, it was too hard to get through from family and business, I would but I owed people money. I told people, my wife, and myself, “I've got to see this business either 100% success or 100% failure. Quitting is not an option because I'm already in this.”

I already spent their money. I got to either be able to look them in the eye and say, “I gave everything I had and it didn't work and the timing was bad.” We all knew that the internet bubble was going to pop. We expected it. We just didn't know when, but nobody expected 9/11. I couldn't be blamed for either one of those. It would have been easy to say I had a good idea just the wrong time, but since I'd taken them to people's money, I felt that I owed them everything I had. I was going to pay them back one way or the other, even if the business did fail. I knew exactly how much I owe them. I figured I better make this business work so I can pay them back.

That was a decision. I remember we had to pay our health insurance. We didn't pay anybody, but I always pay the100% health insurance. On a Friday, I went over to CarMax because they were advertising at that time that they'd buy your car. You didn't have to buy one of theirs. I had a Honda Accord from college and they gave us about 45 days’ worth of cash, at least 30 days. My wife was like, “What are you doing? It's only 30 days’ worth of cash.” I was like, “I know, but it's 30 days’ worth of cash. Some other good things can happen in that timeframe.”

I was going to have to sell it on Monday and we opened the mail at the office and an investor who had been pitching sent us a check. I go and said, “I decided to invest. I didn't have to sell my car.” Things like that happen. As an entrepreneur, you're always grasping on to the wins. As you look back, you realize how close to failure you teeter so often, and we're holding onto thin straws, but when you're the entrepreneur who is trying to make the things happen, those small wins, big wins loop of wind in your sails and give you the encouragement to keep going.

You took money from your mom, your brother, then you were in your grandmother's garage and none of them have been accountants or understand what confirmations are. How did they think this was a good idea?

I always tell people that, “Anybody who invested in your business to start with, they're investing in who you are, they're not investing in the business. Most of the time, they don't know what the business does in many cases. They're counting on you.” That was what happened with me. My grandmother, we always joke when we said she’s one of the boards. She'd always say, “It's tax season. You guys must be busy.” We'd laugh and say, “We are very busy.” It's because it's the first quarter. We call it the busy season, but it has nothing to do with taxes we work for an audit. She didn't know what we did. That's a lot of pressure, but those are the only people were going to invest until you get the business off the ground and then convince those Angel Investors who are aren't linked to invest in your business.

They were already risk takers themselves. I don't know about your brother, but as far as your mom and your grandmother, it sounds like they took a lot of risks to accomplish what they wanted.

I heard stories about my grandmother in a dress shop and how she'd have to go to people's houses. She'd do it on credit and she'd have to go knock on people's doors to try and collect her bills. I always heard some of those stories. She had a bumper sticker that we thought was funny. It said, “Happiness is positive cashflow.” As an accountant, we get that. Entrepreneur professors always told me that cash is king. It doesn't matter what your income statement says.

As far as that background in your family of taking risks, on your worst of days, how did that help?

Positive Cash Flow: Anybody who invested in your business, to start with, is investing in who you are, not investing in the business.

It's the opposite side of the CPA. I'm a CPA, which is conservative, but at the same time, I'm an entrepreneur and a risk-taker. Any entrepreneur has to be comfortable with uncertainty and taking a lot of risks in operating in that environment of the unknown. You're never going to have the perfect timing. There's never going to have clarity on all the inputs that you need to make decisions. You're going to have to go with the gut. You're going to have to be with instinct. You're going to have to go with 40% or 50% or 60% of the data, you got to make decisions, move quickly, see your business through you. You can't get all into analyzing data and trying to get the best data. You've got to go out there and run your business and try and grow as quickly as you can because you only have a limited timeframe. It depends on how much cash you have in the back.

Got this money from this investor that gave you twelve months. It sounds like that was a turning point for you.

We went out and raised a round of funding. We had a lead investor in Nashville who said he wouldn't lead the round, which is the only thing that lead investor. We had a whole bunch of others who said they would follow on. We did. We raised $750,000 debt round with loans attached. We increased that to $1.150 million, keep the $400,000. That gave us about a year's worth of capital. That was the longest time that we had to operate without having to raise money again. Everything else within 30 days increments, which is tough for a two-year period, but that gave us the ability to do some planning and some long-range planning and things. As a business, we continue to grow. We'd outsource technology development. You have to be creative as an entrepreneur to solve problems and do it quickly.

We had a group that was building our application. They wanted a dev shop. They were another business that had spare resources at the time. We utilize them. The gentleman served as our interim CTO and as our business grew, their business grew. About two years in, they needed their resources back and we needed more and it was a perfect time to raise another round of funding to raise a $3 million 30-day round of funding. That allowed us to internalize the technology team to bring on a CTO and the first internal developers. It gave us about 18 to 24 months’ worth of capital. We internalize the application, rewrote it. It was originally for the future. We wrote in dot-net and then continued to have success in the market.

We were growing. We had our first bank. It was Pinnacle Bank here in Nashville. First, we grow grandma’s investment. We had a network model and that grew from Nashville, middle Tennessee, Tennessee, Mississippi, Alabama, Southeast US, and then even outside of the US borders. It was fun to see that happening. We ended up raising $5.25 million round of funding for just pure growth capital. That was going to give us a three-year time when we raised that in 2006 the timeline to hit cashflow positive in 2009. Unfortunately, we stayed true to our mission and what we were trying to accomplish. We had a lot of customers at that time who were saying, “Can you build this? Can you make it do this? Can you add the service?” We said, “We will, when we get the cashflow positive,” and we hit cashflow positive.

What was the mission that you held true to?

Stay true to bank confirmation. We were going to own the bank confirmation market. We didn't necessarily jump into receivables, payables, and legal rep letters or all these other things. I had a legal rep letter. We didn't go build it. We had banks asking inquiries and reverse mortgage verifications and all these other things that they confirm for non-CPAs. We said, “We'll get to that, but we want to hit cashflow positive first.”

That is an important lesson. Being an entrepreneur, sometimes I compare it to gambling because it's like, “We'll hit tomorrow,” or getting that check, that surprise, but many different opportunities come your way and you're like, “That could be cool.”

You're an optimist. As an entrepreneur, you're like, “I can do anything.” That glass is not half empty. It's always half full. You had to be disciplined to say, “We're going to do our business and we're going to get the cashflow positive.” For us, what happened is we hit cashflow positive in 2009. The real estate market crashed. We had another downturn in the economy and we were cashflow positive. A lot of my entrepreneurial friends were having to take 50% haircuts on their previous valuations to stay in business. They became a buyer's market and not a seller's market. Fortunately, we have the ability to say, “No, thank you. We'll cashflow ourselves and grow with our own cash.” we pay dividends for the next couple of years and invested in our business, and grew it organically ourselves with our own cash. We never had to raise another dollar after that. It was a nice place to be. Is the ability to say no.

How did you learn that? Was that from you or from business school or was that something watching your grandparents?

My business mentor, Chris Schellhorn. I brought Chris in. He was one of the four of us in the garage. He was our chairman and CEO. I had the idea, the passion, and the youth. Chris had the wisdom and experience. He had the banking side compared to my accounting side. He'd been the CEO of Visa Interactive which was the piece of the credit card company. He ran everything they did online worldwide and then visa sold that through a company called Integrity on those was the first online banking platform. He ended up becoming the CEO of that business. It was owned by the largest eighteen banks in North America, IBM, and Visa. That was an interesting story. The banks were as a shared utility for online banking because they didn't know if this internet thing was for real.

When they realized it was, they all wanted to run it themselves. He spun the technology back to the banks individually to run it sold off a payment piece to a company out of Atlanta called CheckFree. He was consulting at the time when I talked to him. My attorney had also been his attorney, at this amended Integrity office. That was how we got connected. I always say, “I think Chris felt sorry for me like, ‘Here's this young 26-year-old kid who's in over his head, he has no idea about this and what he's doing.’” He's got a good idea. We hit it off.

Chris is my youngest daughter's godfather. We go on vacation with his sons. He always says that I'm not old enough to be one of his brothers or young enough to be one of his sons, but right in the middle. He's been my business mentor. The most influential person for my business career and family as well. When my father passed away, Chris has been a significant influence on me and helping me become a father, a husband, and do those things well. Finding a mentor was huge.

He was saying, “Stay that course.”

He said, “Let's make sure that we get the cashflow positive, we're going to stay true to this. We can take her head on the sand and look around, but let's not spread ourselves too thin.” That was wisdom. As an entrepreneur, whatever I can do, we'll be back to make a little bit more money. That was the wisdom and experience that he was teaching me. I'm in that spot now when I'm able to meet other entrepreneurs and help them stay focused on a mission to get to a point where they can have a choice instead of being forced to make certain decisions because they have to. Don't spread yourself too thin. Sometimes it's better not to have the big customer too early because they can then dominate your product development cycle and you can feel obligated because they’re paying you, but a lot of those components, function, or feature of things that you're going to be able to sell to others. You ended up looking like the customized shop a little bit, that gets you off course a little bit. You have to course correct. Along with those ways. I've learned a lot in the last many years.

Once you got to cashflow positive, how did you determine priorities as far as what other directions you went with the business?

We looked at what was most closely tangential to us, what we knew best. That was when we moved into things like receivable confirmations and some of those things. We did have some banks said, “We're not going to use your confirmation service until you build a commercial credit inquiry service.” Fortunately, we said, “We're going to hold off on building that right now.” We put them on a list of future potential and then we had a top ten bank in the US Citizens Bank said, “We're not coming on until you build it.” At that point, we had about twenty banks who had said they would come on if we built commercial credit inquiries, and Citizens bank was a top ten. You add that. All of a sudden, by building it, you could get all of those 27 banks on both platforms.

That gave you enough critical mass commercial credit inquiries to make it legitimate. At the same time, justify building it so that you could get them on your Confirmation.com platform. That was when we branched out to commercial credit or something that auditors and accountants had nothing to do with, but yet a lot of us to go out and those people on our sales team selling to banks had been to services to sell from the banks. It was an easier value proposition to a lot of those banks. We sold receivable confirmations and paper confirmations along with bank confirmations to the accounting firms. That expanded the breadth of what we were selling. We had those commercial credit inquiries on the bank side. That expanded that. We ended up acquiring a few businesses.

He had started that as an entrepreneur out of his parents' house. He was working as an accountant for a great accounting firm. I said, “Here's a kid with passion enthusiasm.” He's working hard nights and weekends as we need them on our team. We acquired his business and he's been running legal confirmations for us for a while now and then doing a great job with that. We've got over 6,000 law firms globally. I use that surface. It's been fun. We acquired some businesses to get into some of the markets overseas. Our first acquisition was in London that we established our European footprint. We bought a business over in India, so we bought several businesses along the way or opened them up to Novo, in order to expand our footprint.

There's one thing to be an entrepreneur startup, crazy creative, exciting ups and downs, but then once you start getting into critical mass and you're a leader, what shifted for you? What went well, what didn’t go well, what's something that you have had to learn in that process?

I was talking to an entrepreneur that I'm mentoring and I said, “There are stages in growing a business and it's like raising children.” When your business is young and when your children are young, you make all the decisions. You tell your kids when they're going to eat, what they're going to do and you plan out the whole schedule. You're doing it all. As an entrepreneur, when we were in our grandmother's garage and the four of us, we’re doing it all. We did everything. Product development, work with the technology team to sales, to accounting. We do the whole business. We enter the customer support fund. We did it all, empty the toilets.

It wasn't like come in and clean the toilets. Did the computer break? We had to take it over to Office Depot to get the thing fixed. We emptied the trash, you do it all. As your business grows, like your children, you need to allow it to grow. You bring in some people who early on are the Swiss army knives because you need people who can do a lot of different things as entrepreneurs. It was nice in those cases to be able to bring people on to do things I didn't like to do, like borrowing a controller, willing outside bookkeeper, you have the accounting. That was nice. I could focus on doing other things like product and sales. You have that stage where you're still involved, but you've got a bunch of people who Swiss army knives that everybody's still doing, almost everything, but there's some specialization.

Your children are that way. You're letting them make some decisions, but you're right there. When your kids are fifteen and they're learning how to drive a car, you're right in the car, but you're coaching them. If they're getting ready to go into the other lane and hit a car, you can reach over and grab that steering wheel and yank them back and try to save the card, like the business the same thing. As the business continued to grow and we ended up with fifteen offices globally, you want to put people in the right positions for success, but you also need to bring in the right people from the outside to help the business. You've been there and done it before. You need professional specialization.

You need people who are deep in their silos but have managed teams. You talk about the fact that some of the best coaches in sports weren't the best athletes and some of the best salespeople, aren't always your best sales managers or whatever the case may be. We found that to be true. We want to give people an opportunity to grow in spots, but in some cases that's not what they're the best at, it’s managing people. We ended up putting people in the right positions and also complementing our executive management team with talented people who had been there, had done it before to get us to that next level. What you're doing as an entrepreneur, as the person running the business is, you're trying to give them the tools and resources that they need to be successful, because now they're better at doing their job than you are, than technology, than sales, than marketing, than customer support and running those reputations as you ever worked.

They'll get to a point where they're smarter than you too. At that point, you're their mentor and coach. You'll get to that point that it's different. It's still a lot of fun. I miss going on sales calls. At that point, you're making sure that your executive team has got the resources they need and the strategic direction, the big level, long-range thinking, and planning is a lot of what you're doing. You expect them to operate and execute on the day-to-day. What happens is you expect them to solve their teams 80% of their problems and the 20% roll up to you.

If they're doing that with their team, their team solving 80% of the problems on their own, they come to the management team that the 20% of that stuff, your maintenance with team solves 80% of those internally, it brings you the 20% that they need help with. There's a lot of times you are not necessarily ready to answer, it's up to us to see the way. Those are the things you do. I always tell people when they ask me when we do that update with HR classes because ultimately, it's about people. You end up dealing with people, coaching, mentoring, working with people, and not as much in the individual functionalities of the different parts of the business. It changed from the garage, all the way to when we had a global business with fifteen offices, many years later. It was a fun transition all the way through. It’s stressful, tough, and wasn't always easy. That's for sure. Very worthwhile.

Positive Cash Flow: Any entrepreneur has to be comfortable with uncertainty and take a lot of risks when operating in that unknown environment.

In those three stages, what do you think was your favorite, and what were you best at?

I don't know. They all had their positives and negatives. Early on, it's fine, exciting and everybody is doing everything, but we're the closest to failure at that point in time. It's stressful. As you get older, the business risk maybe goes down some, but the more people you have, the more HR issues, the more policies and procedures. You're not as stressed there, but you are more stressed on some of those HR issues. You feel like a lot of times you're referring or deciding between who's going to get the resources or making decisions. It's all fun, but it's also more stressful in its own way. I don't know which part of the best. I enjoy creativity. I don't mind the risk. I love helping entrepreneurs and get off the ground and put their business together and get to a point where their business is self-sustained.

Any story you want to share? I know you have a ton of them from your business, but that's one of your favorite stories that might be a great story, but, “What we created helped the world?”

The ability to help the good guys catch the bad guys. Every time we caught up on the HR fraud that was huge. We'd run around the office. A lot of times we couldn't tell people about it because we were under non-disclosures and confidentiality agreements. A lot of times, a lot of the frauds, like the Parenthood Financial Group Fraud or the Shepherd Major Play Fund Fraud, or some of the others that we caught. That was because those companies and clients announced it and became public knowledge. That was rewarding. I'd always say, if what we had done was to create efficiency, that would have been boring, but the fact that I truly felt that we were helping the good guys catch bad guys.

Russell Wasendorf Sr. of PFG stole over $200 million a year. He stole another $100 million, but he's in jail for the rest of his life. We stopped him from pillaging and taking advantage of people. To me, that was a mission. We were mission-driven in that. It was rewarding to be able to do that. Personally, in the business, one of the most special things, we built an incredible executive team that they were hitting on all cylinders. It wasn't like everybody got along at all points in time. Sometimes we felt like we refereed, but we built a great team.

One of the coolest things is that the four of us that were in my grandmother's garage, Janette Houser, who was my first employee, Chris Schellhorn, who was my mentor, and Dave Malone was our first sales guy. The four of us were in my grandma's garage, there went in the garage and we were there the day we sold it to Thompson. You don't see that the business people who were there in the garage. For me, that was awfully special to be able to go from start to finish with the same four people. That was the neatest part of it.

I like to end with some rapid-fire questions. You pick a category. Family and friends, money, spiritual, or health?

I’ll go with family and friends.

Things or actions that I don't have that I want.

More experiences. I'm big on risk-taking and I like experiences. I always make my kids do crazy things. I used to travel when my grandparent’s alive and much better than the Christmas presents or birthday presents where the experiences and the trips that they took me on. To me, more experiences with family and friends.

Things or actions that I do have that I want.

I've got kids that are good at risk-taking. I get them all certified to a scuba diver at the age of ten. My middle daughter, she held off for a couple of years, but a cool story about her, you don't see this often, on the same day she did her first scuba dive and her first skydive at the age of twelve. She went tandem, she jumped out of the plane at the age of twelve. She was exhausted from all the adrenaline rush. Before they turned sixteen, I take them on the climb of Kilimanjaro in Africa. They're adventuresome spirits. My oldest daughter is working on her rescue diver for scuba diving. They're all good.

Things or actions I don't have that I don't want.

What would be the most limiting to me would be a bad health and not have the ability to go out and do these things and to enjoy those experiences with my family. That's one of the things that I'm guarding against, is trying to ward off bad health.

Things or actions that I do have that I don't want.

Getting older. I have to get older and I don't want to. As you get older, you got to fight it. I do everything I can to fight it and get into new and different things. I always challenged myself. I don't play golf. I have too many kids, four of our own, plus one that we adopted plus a business to run to go to golf. My wife always lets me do crazy fun adventures. The one we adopted, when he turned eighteen, I started doing crazy things with him, like taking skydive, but we've gone to professional bull riding school and wrestled alligators, climb mountains. We did a lot of wild and crazy things. I would try to keep it interesting. I always do something a lot of times that scares me at some an athletic if I got to train for it. As you get older, when the floor's a little cold and it's a little cold outside, it's easy to stay in bed and not get up and exercise, or it's easy to eat that extra cookie during the holidays. If I've got something that I know I'm going to be embarrassed about it if I don't do it. Some race or something I've trained for, then that at least helps keep me motivated to keep eating better, decent exercise, to try and ward off that aging process.

Anything before we close out that we haven't covered or something that you want to make sure people learn from this conversation?

If you're passionate about something, go do it. There's never a right time for a lot of things and there's never the right time to start a business. There's never a right time to get married. There's never a right time to have kids. If you wait until the perfect time, you're going to miss the opportunity. That's one of the things that my grandfather taught me who he enlisted in the army during World War II. It's private and finished his career in the military as a one-star general. He always said, “Volunteer for everything that comes your way. You never know where that's going to lead you.” Some of the best opportunities had happened because he volunteered for different things that other people didn't want to do.

Positive Cash Flow: If you're passionate about something, go do it. There's never a right time to start a business. If you wait until the perfect time, you're going to miss the opportunity.

That's been true in my life too. Whether it was picking, auditing, and volunteering. When I was at Ernst &Young, one of the reasons I got frustrated in general was my entire star class in 42 people, we all got promoted to senior and five of us got an extra $1,000. There were four of us that had passed the CPA exam, the first go-round. You all know those people who play the games who hideout on Thursday and Friday afternoons because they don't want the weekend work. If you go volunteer, you pick up extra work. Go do those things, because it helped you. Volunteer, get involved, take risks, and be willing to put it out there, and never give up. My entrepreneurship professor always ended every email with, “Never give up.”

It’s true. People wait forever, plan and don't go after it and just do it. Having that risk streak, but also know where your boundaries are is helpful as well. Thank you for sharing your story. This has been great.

Thanks, everybody. This has been a lot of fun.

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For our mindful moments of this interview that I had with Brian that I thought was inspirational and there are many great tips from an entrepreneur that's been there and done that. Going back to a few points in this conversation that struck me is one, his mom, being one of the first police detectives. The complete inspiration she must have been to not have fear to do the things that she was doing and to show him that you can catch the bad guys and do good, how that was a thread throughout what he ended up doing with Confirmation.com, which is interesting. It's another twist to it but also shows how deep our belief systems go and where they begin and how we get inspired to do the things that we want to do.

The other inspiration that he had was all of his family being entrepreneurs as well and seeing the risks that they took and the wherewithal to make it through the ups and downs of business, especially through the types of business that they were in, in real estate and construction. I've always thought as an entrepreneur and others that maybe aren't entrepreneurs look at people that do run businesses and are thinking, how do they withstand it? How do they get up each morning when they got hit hard the day before? This is part of it. It is a way that you just have to be because if you get too down by something going wrong, then that negativity can affect the entire business and you have to brush it off and move forward.

Brian's story talks about having that belief that you are doing the right thing, that there's a gut feeling that the business is right. That is something that you can't teach. That is one of those things that you just have to feel it. When you only have 30 days of cash, like he was saying for so long, and are willing to sell your car so that you can go another 30 days, it just shows you the wherewithal you have to have in believing that your business can succeed. That it will grow, or it will do what it was intended to do. I think that more than anything is the definition of between a successful entrepreneur and a non-successful entrepreneur because that positive mindset is important. If you're not someone that naturally has that mindset or belief system, that you can take some hard hits and keep going, then you can do gratitude practices each day and trying to journal or note of the negative thoughts that might come into your mind or the self-talk that is getting in your way of success.

It's often I have found in the pause where you have to step back from the business and think about, “What can I do differently? What's working? What's not working and what should I do differently tomorrow or the next day?” When you only have 30 days of cash, you can't plan out for 12 and 24 months and five years. Brian had said in this that was important that there's a big difference between being an entrepreneur and going by your gut versus when you're in corporate. You spend a ton of time doing all this analysis, research, and looking at things from all different directions of whether you should do it or not. As an entrepreneur, you don't have time to do all that analysis. You have to go by what you are seeing and being completely aware of how the business is being affected.

If you push too hard against something that's not working, then it will get in your way of the business growing. If you are aware of what's not working, but you believe in it and you can get creative, pause and take those moments to work on the business and not in the business to think about what are some other ways you could try to accomplish the same thing, that's when the play happens in the business. That's the fun part of being an entrepreneur and trying to solve for there's got to be a way. If you believe it, that's one of those things. One of his biggest learnings from his business mentor that he talked about was that positive cashflow is what creates happiness.

As an entrepreneur, another thing that happens is you get so distracted about all the different things that you could tap into. Each day there's a new opportunity that somebody calls about or sees, “You could do that, or you could do this.” His mentor talking to them about not getting distracted like, “Where's your focus and what do we have to do to get to positive cashflow before we can entertain those other possibilities?” That is also a big difference between a successful entrepreneur and a non-successful entrepreneur is the distraction factor and knowing what you're trying to achieve.

For him, they were trying to win an electronic bank confirmation, and they knew they had to achieve that before they could walk into other service lines. That is important to that bigger value system or mission of helping the good guys catch the bad guys, which was something from when he was little of watching his mom, of playing with his brother in the woods to catch the bad guys that became a mission of the business. If they were aligned with that value system, they knew they were doing the right thing.

That’s important is that when you're trying to make decisions in a business and decide which way you're going to go, it's important to make sure that you have some value system. You've defined some mission that's beyond the money of what you're trying to accomplish. If that decision aligns with that value system, that mission, then you know you're on the right path. If it doesn't that tells you, you're not focused, you're going to get distracted and start moving away from what the purpose of your business was in the first place. Leaving you with some great nuggets here of understanding your mission and being mission-driven in your business, remembering to build a great team because at the end of the day, you're only as good as your people.

You can be the smartest person in the room, but if your people aren't happy, if they're not succeeding, if they're not understanding the mission and the value, you're going to have trouble moving the business forward. The other thing about being an entrepreneur, which I thought was important is that you need to do things that scare you, that you can't ever get too complacent or comfortable because that's when someone gets ahead of you. You always have to be thinking about, “What could I risk? What opportunities are out there that might scare me a little bit, but it's worth it for me to dive in?” Not wait for the opportunity to present itself that if you see the opportunity to go after it, to get involved, and to never give up.