Episode 84: Low Risk & High Reward: It's Worth Taking The Risk
Taking risks is how a lot of great business owners start. You can't be an entrepreneur without taking a couple of risks along the way. Those risks will have rewards and those rewards can get pretty high. Low risks and high rewards are something every business owner should take note of. Amy Vetter brings in Mike Whitmire, co-founder and CEO of FloQast, to share how taking risks has figured in his entrepreneurial journey. Mike has been in the accounting business for a long time. Learn what risks he had to take throughout various points in his life to be where he is today.
We are honored that Floqast sponsored this episode. Learn more here - https://floqast.com/
Nor is there a callout on the blog page - up front - We are honored that Floqast sponsored this episode.
Floqast is a provider of close management software created by accountants for accountants to help them close faster
Learn more here- https://floqast.com/
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Low Risk & High Reward: It's Worth Taking The Risk
Welcome to this episode of Breaking Beliefs where I interview Mike Whitmire who is the CEO and Cofounder of FloQast, a provider of closed management software created by accountants for accountants to help them close faster and more accurately. Prior to founding FloQast, Mike was a part of the accounting and finance team at the rapidly growing Cornerstone OnDemand. He helped prepare for their IPO. It was the Los Angeles company where Mike came up with the idea that would become FloQast. Mike began his career in Audit at Ernst & Young where his focus was on media and entertainment. During his time at EY, he performed public company audits, opening balance sheet audits, cash to gap restatements and more.
He graduated from Syracuse University with a Bachelor's Degree in Accounting. During my interview with Mike, we talked about his background growing up with entrepreneurial parents and an entrepreneurial grandmother that affected his own drive and risk tolerance to be an entrepreneur himself one day. Learn about his journey from being a senior accountant in audit to entering the accounting technology world and how he gained the experience that he needed to begin and grow a SaaS company. This episode is something that will help you learn where you have your limits as far as taking risks and how to evaluate those risks and decide whether to go for it or to pull back. I hope you enjoy Mike's story.
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I'm here with Mike Whitmire from FloQast. Mike, thanks for being here. I'd love to have you introduce yourself to the readers.
My pleasure, Amy, thank you for having me on. I'll do a quick overview and we can dig in from there. I’m Mike Whitmire. I live in Los Angeles, California. I was born and raised here in LA. I went to college at Syracuse University, met my wife and Cofounder of my business as well. I convinced both of them to move out to LA after school. I started my career in an audit, I was there for about 3.5 years at EY and then worked at a corporate accounting department at a pre-IPO software company called Cornerstone OnDemand.
Taking Risks: What's fun is solving problems for your clients and building cool software that does it in a way that means something to them.
That led to me founding FloQast. I'm the CEO and Cofounder of FloQast and we are accounting workflow automation. I'm an accountant. We were created by accountants for accountants and we help with the close and reconciliation process. I’ve been working on this for a few years. It's been a fun journey. One of my cofounders I met at Syracuse. We took accounting classes together. In years, we had 1,300 clients on FloQast and it's been quite a ride here.
I’m excited to hear more about that. We're going to start from the beginning. Tell us a little bit about your family and where you grew up.
Both of my parents are entrepreneurs. They started their careers working. My dad was a lawyer, specifically a tax attorney. He ended up as the Managing Director of the firm in Los Angeles. My mom started in the real estate world and she has some wild stories of running around various states trying to collect rent from people. They had guns. There was a point I may have never been born if one thing had turned in the wrong direction with my mom back in the day. That was her start.
She ended up becoming president of her company as well. When I came along, hardworking parents, both of them spend a lot of time at the office. When I was five, they ended up getting divorced. My dad started working on a series of tax textbooks, learning stuff. My dad has written the book on partnership taxation and that's taught at law schools. Spending time with him in that dynamic, I'm sure it's something you could imagine would in an odd way.
My mom ended up supporting the family and had more flexibility after my parents had gotten divorced. She started her own business consulting firm with her sister. That's called K&K Business Solutions. They're in Los Angeles and still running to this day. I respect the heck out of a profitable business where my mom and aunt were able to then do things they wanted to do with their time like never missed a baseball game, dance recital and all that good stuff.
It was cool growing up watching both of my parents as entrepreneurs and have that flexibility to do things they enjoyed. After the divorce, my dad moved to Florida. I would spend a month during the summer in Florida and then the rest of my time here in Los Angeles with my mom. I live with my grandmother where she was a huge influence on me growing up. She was born during the Great Depression and had a different outlook on life as a result of that. I have a younger brother and a younger sister as well. There’s a lot to unpack with an accounting, CPA and tax family.
Start with your grandmother. I'm assuming that was your mom's mom.
She was born in Detroit. When she was two years old in 1930, her family packed up and moved to Los Angeles.
Where was she from? Was she an immigrant?
No, they had been here previously a couple of generations in the United States already of Irish descent if we want to go back that far. Dolores Kelly was her name. They moved out here. My grandmother grew up here. Her father passed away when she was rather young. She was raised by her mom and had that influence growing up. When my grandmother got married and had my mom and my aunt, she was also divorced. She was a working single mom bringing up her two daughters in Hollywood in the 1950s and 1960s when being divorced was not all that common. It’s a weird environment and having a single working mother is not a standard.
That experience put this work ethic in my grandmother, my mom and my aunt that it's pretty unparalleled. Watching them work is something else. They are Type A nut jobs who get stuff done in the best way. Type A nut jobs are great. I love it. You can tell watching grammy work that hard definitely instilled them and set an example for them. Me, watching them work as an entrepreneur, it’s done the same. I look at their work ethic and how they hustle, it’s what you have to do to be successful.
What did your grandmother do?
It’s odd. They owned a duplex in Hollywood where they had rented out half of it. They were landlords in the halftime and my mom has these stories of painting the thing, replacing the roofing and all these kinds of crazy stories. During the day and at night, she worked at a mortuary. She was the receptionist at a mortuary and my mom and aunt had wild stories of hanging out around there with some stuff. It’s an odd combination.
She ultimately started being the administrator for this tax conference that my parents started putting on together, even nerdier, it’s called the National Institute of Tax Professionals. She was then managing another charity for the National Football League alumni as well. She ended up getting into this project management around hosting and event coordination. That was her thing. I have memories of her growing up with an active database and grammy was up on tax. She uses an iPod or an iPad, which is from 1990 to 1991. I was fortunate to get to grow up with her. She's tough, no-nonsense and hypercritical. There's no problem telling you things like it was. She was a huge influence on me spending much time together growing up.
I'm guessing then the property management for your mom and her sister came from being around their mom.
Exactly. They had experience in that area. It came up through those ranks.
Were they passionate about that? Was that an area that had the experience?
They had the experience and they got into it. Once they got to a larger real estate company and were working, maybe they lost the passion for that but learned how to run a business and how things work from the inside. That's their real passion. Out of necessity, after my parents got divorced, that was when they started their firm. That was the best thing that's ever happened to them because they started working together. They enjoyed working together. They're great people. They're great at what they do.
Building the firm has been a referral-based business because they’re good at what they do. They enjoy it. They go in. They enjoy solving problems, helping companies get better, providing the CEOs and the Founders with advice on how to improve processes, finance, accounting and all kinds of good stuff. They found their true passion, which is general business operations and getting better, not necessarily real-estate-specific clients.
That’s important. You've probably seen it as well and maybe even gone through it, I know I did. You start getting away from why you were excited about what you were doing. When I started my advisory practice, I loved solving problems with the clients and then as it grew and the business grew, I have more employees doing the work and I was putting out the fires. The business wasn't as fun as when it was. One day, I stepped back and I missed the client-work.
It's resonating a lot. I went through that as a founder, entrepreneur and was feeling worn down. We had this new product strategy. I was like, “What excites me is a product. I'm going to product manage this next product that we have coming out,” and it has given me new life. I feel happy doing this. You originally start a software company to build a product and solve a problem then dealing with things like operations and HR issues as you've scaled and investors. It’s not what's fun. What's fun is solving problems for your clients and building cool software that does it in a way that means something to them. I could not agree more. As you scale, it's important to recentering yourself for all of this and think, “Why did I do this in the first place?”
What were your crossroads with that? What made you step back and want to recenter? How did you do it?
When COVID hit, as an entrepreneur, that was a difficult time. No one knew what the world was going to be like in the business world and the software world. People forget that this was the original reaction because things have gone well for software companies in the last few months. At first, it was doom-and-gloom stuff. I had a board member like, “This is going to be worse than the Great Depression. You need to lay off 40% of the company. What are you doing?” I didn't want to do any of that.
I’m like, “I don't think we do.” It was the first time I've ever had pressure to be doing something like that. I vehemently disagreed with it. When you have investors who have given you a lot of money, it's tough to sit there and stand up for yourself like that. It ended up being a stressful year overall. One of the things that happened as a result of COVID is we realized that our clients were using our product in a way that it was not intended to be used for.
It was solving the pain points around the remote work with their collaboration and helping work together with more workflows. We started meeting with more of them. We realized this makes a lot of sense. We should probably start to turn these into formal products and solve the pain point in a good way. We've shifted our product strategy pretty aggressively as a result of COVID. There's a new roadmap where all these cool things we’re going to build and what we are building happens to be in my wheelhouse from the accounting days as well. It was that full thing.
All of a sudden, I find myself pitching the sales team at sales kickoff, the company and investors, I’m getting more and more excited. I'm like, “I am going to do this.” That's how it's been going. We have assembled a great team that's helping me get this done. I get to be super involved and hands-on with building out this product. That's literally given me new life. I feel much more energy than 2020 which has been draining, to say the least.
I love that because a lot of times, we have to step back. Going through COVID as an entrepreneur too, in the beginning you didn't know which way it was going to go. There was a moment where I was like, “I’m just working to work. I don’t even know what I'm working toward.” Sometimes you have to pause and go, “It's okay to take a moment and reset,” because then you're on the hamster wheel and you don't know why you're on it. You're getting more stressed and not having as much fun, which is important.
As entrepreneurs, we had a lot at stake as well. Honestly, when this thing hit, I'm sitting there like, “Have I flushed seven years of my life and my career down the drain? Is this going to implode and nothing is going to come about from it? It's going to be a fire sale with private equity,” or something. It's a big moment. I have 150 people relying on me to get through this, things you don't expect to deal with as an entrepreneur and it's stressful. I personally need an event because I'm not good at sitting down and being quiet or anything like that. It took a major event to allow me to get back in this position.
That comes to the topic of fear. Fear can start making you make bad decisions or stepping back and getting calm to see through the clouds. When you talk about your mom, what she went through and then seeing the change in both your parents’ businesses and so forth, they went through that same moment of fear, probably as their lives and finances were changing. Did you draw upon any of that during that time or thinking through it?
Definitely. The adaptability of my mom says a lot. To dig in a little bit deeper on growing up, I was born in a super ritzy neighborhood in Los Angeles called Brentwood. Brentwood is absurd. You have people in the hills who are the entertainment people and the bankers. Those houses are legitimately starting point $6 million up to $30 million at this point. You then go down towards the apartment areas with the nice restaurants and everyone and that's generally the kids who graduated from UCLA or USC and their parents are paying the rent for them to live there and everything. It’s a ritzy area.
What was odd was when I grew up there, I was the little rich kid up in the hills but I went to the public elementary school. Back then in the ‘80s, Brentwood wasn't quite as nice off. The apartments were the people who had immigrated to Los Angeles at that time. I had this weird dynamic where I was a spoiled rich kid in elementary school. I had no white friends. All my friends were of various ethnicities and a lot of them came here as illegal immigrants. They had parents who were working hard and they were in apartments credit.
I got this interesting perspective and this realization of like, “I was born into a much better situation than a lot of people out there.” For some reason, I was exposed to diversity despite all of that. When my parents got divorced, my mom being an only parent, one of her big fears is she couldn't afford for us to live there anymore and didn't want us to have to switch our childhood. I remember selling the home was an emotional thing because we did get to the point where we couldn't live there anymore.
We packed up and we moved and we went to a suburb of LA called Simi Valley, which is an interesting place. All of a sudden, I was surrounded by 100% white people and a somewhat rural area. That was quite a culture shock for me heading over to Simi Valley and growing up in that world. This is hilarious. The table is turning. My parents ended up sending me to a school in The Valley here in LA called Chaminade, a private school in The Valley.
Simi Valley is looked down upon by people who live in The Valley. All of a sudden, I’m commuting to the valley and I'm the poor kid with all these rich private school kids. “What is going on?” I get ripped on for being a redneck white trash from Simi Valley, commuting over the hill and all this stuff. This weird shift of level of income and class status and everything across the place. It’s weird. I'm not complaining about anything. I'm super privileged with everything that's been the situation I was born into and everything that's been handed to me but a weird dynamic and different perspectives as a result of that.
Going through that time period of crossing many different paths with different ethnicities and different classes of people, how did you see yourself?
That's what drove a lot of self-awareness because I go to my friend, who moved here from Japan. I’m at his apartment. It's five people in a two-bedroom apartment. We're hanging out. It's a different experience culturally. then drive home and go to my nice fancy house up in the hills. It puts everything in perspective for you. I have it good and not everyone is like this. It's hard to not understand your privilege when you're seeing how your friends are living and you're then the rich kid going back to your house. Different people respond differently to those types of situations. There can be that elitist mentality or whatever. For some reason, I didn't respond that way. Maybe it has something to do with the later Simi Valley experience where I felt that as well. For some reason, I never had that. When you're a kid, you grow up like that, that’s what's normal but seeing the contrast is stark and obvious even as a 5 or 6-year-old.
Even shifting as “rich people” versus where you're struggling a little more, did that change anything in how you felt about yourself or changed what you saw, your outlook of how you had to work to make friends or to achieve?
It puts things in perspective and made me grateful for what I had. The big area is appreciating and respecting what you're born into. It's the experience socially. What I ended up doing in around elementary school and middle school when I moved out there and in high school, as well, in Chaminade. I withdrew. I did my own thing and was one of the nerds. I was quiet and was happy to get through school, move on with my life and go in that direction. I responded oddly. I'm a different person now than I was in high school which is a good thing. It may be not the best way to respond to that situation but that’s how I dealt with it.
When you're under stress you've probably, even what you were talking about before, come back to that where you have to isolate yourself and withdraw in order to figure out the path.
I'm one of those people who needed my alone time. I enjoyed golfing. I like woodworking and stuff like that. I do it by myself. I'm one of the weirdos. I'd rather go golf by myself. I enjoy golfing with other people, don't get me wrong but I love a good round by me, myself and I, in the quiet and doing that. That's my version of meditation. A couple of hours on the course.
How did you end up choosing Accounting?
I went to school and I hacked my way into Syracuse. I was not qualified based on GPA, SAT or anything but I got in. I wanted to originally major in Film and TV.
That's a big difference. Why did you want to do that?
It was what I was interested in high school. I had a buddy of mine. We would make random films on the side. I discovered iMovie. That was brand new back then. I enjoyed the creative process. Having your ideas and doing whatever you wanted with that. I wanted to go to school for that. Syracuse has a stellar program for that. That's why I applied to the school but you need a great GPA, SAT score, all that stuff. I hacked my way in by applying to the nursing program.
I was going to transfer my way over to the communication school, which is where that program is. Medical people, my freshman year from that program, it was like, “I don't think this is for me. This is maybe not my personality and not the right fit.” I enjoyed business a lot and what goes into that. I took a couple of business classes. I remember talking to my dad and he was like, “What about entrepreneurship? Do you want to check out that major?” I was like, “I don't know, it seems common sense.” It felt bad. I was like, “I’d rather have something where I could get a job after school.” It came down to that.
I took the Accounting class. I had that weird moment where the balance sheet balanced after some journal entries and I enjoyed it. It was a good feeling when you fit the puzzle together and everything works. I enjoyed it. I like understanding rules, processes, procedures and all that stuff. It's not about numbers as much as people say. In my opinion, it's more about solving a puzzle and doing things correctly. I like that a lot. I ended up continuing to do it. I then ended up at EY.
You were doing an audit in EY. Is that right?
I moved back to Los Angeles after school and I ended up in the media and entertainment group at EY. If you're in LA, you might as well do it. It was fascinating heading in because the rumor mill at EY was you don't want to be in the entertainment group. They work crazy hours. It's terrible. You don’t want to go over there. In my first job, I got assigned to entertainment and not only that but the client with the worst reputation in the entertainment group. I was like, “Sweet. Here we go.”
I did it and it was interesting because you're auditing TV budgets, films and stuff. You're like, “That's how much this actor made. That's the percentages they get on the back end.” You get to dig into stuff that's more interesting than a real estate company, for example. It was a lot of hours. There's definitely a lot of work. I enjoyed it. I also love the people I worked with and my manager gave me a great opportunity to learn different things. She wouldn't put me on the same account for multiple years in a row. I could pop around on the balance sheet, learned everything about Lionsgate that there was to learn. She ended up pulling me to a bunch of different engagements. I stayed in the entertainment space.
That's another important lesson is that you might have not gone into the Media and Entertainment degree but you can take something that you're good at like accounting but focus on that niche and still feel as fun because you like the industry.
What I ended up realizing is looking at production budgets. It was one of my favorite things. They are spending money and I realized that what I enjoy about the film was the act of making it happen and getting it done. Not as much the, “Let’s pan from this angle for this part. Put this color effect on it.” It was more like, if I had gone into that world, I’d be a producer or an executive producer and not in all the nitty-gritty stuff. It's like, “Let's make a movie. Here's the idea and go make it happen.” We'll figure out the launch, their release, the sales and marketing budget, all that stuff afterward. I realized that I would have been more in tune with the business side of that world than the true, artsy, creative sound, color and all that stuff.
It's a great way to meld the two. How did you end up in technology? What was the transition?
I decided to leave EY. One of the things I wanted to do was be part of an IPO. You got to get in the tech world to be part of an IPO these days, for the most part. Our tech scene in LA is mostly around advertising technology but I somehow got hooked up with a recruiter who was hiring at this Software as a Service company called Cornerstone. I liked the team. They were a year out from the IPO when I was there. I was the fifth person they hired.
The idea of number five, scale this up and see how it goes was appealing to me. I did not know anything about SaaS, Software as a Service or anything like that. I got one of the journal entries wrong during the interview process. They still hired me for some reason. I remember putting together my first billing schedule for them. It was the projected billing schedule. I'm looking at the contracts. I'm putting this workbook together and I fell in love with the business model immediately.
You pile up recurring revenue. It's all predictable. You can build a business in an intelligent way. I'm glad I joined this company. We ended up going public in 2010. We were selling in 2009, right after the crash in 2008 but Cornerstone sells talent management software. That helps companies manage their workforces more efficiently, which meant that they did well in a down economy. We grew quickly, had a great IPO in 2010 and scaled aggressively from there, which was the headache of the experience that led me to found FloQast with some of the challenges we had.
What was it that you wanted to solve?
Taking Risks: In accounting, you have a goal, which is hitting a deadline, and you have a bunch of people working individually to all come together and hit that goal.
The big one for me is accounting is fascinating because it's a lot of different people working together. There are a lot of moving parts around. There's almost no transparency or visibility into what other people are doing. I’m a pain-in-the-ass Millennial because I like to know where I fit into the big picture of all this stuff. Despite being a senior accountant, I would love to go to our all-hands meetings where the CEO would talk about the competitive landscape and this is what we're going to do. This is how we're going to win. This is where the market is going and taking over.
I, as a senior accountant, don’t affect what's going on there. It got me fired up to understand this is what's happening within the organization. I'm going to do my palette layers up, how it all layers up. The reality is the work I do, if it's not done, people would struggle with the business without it. I might as well embrace that. We scaled for up to 50 people by the time I left. When you’re adding a lot of folks, you're having to operate in a newly public company mode. You're getting SOX-compliant. You're doing more rigid SEC reporting. You're adding more people. It all becomes more complicated. You then add hard deadlines into the equation. You end up working a lot.
There are a lot of status update meetings. That controller can answer that simple question that the CFO has of when are we going to be closed. The CFO is going, “When are we going to be closed?” That would result in hours of work for our controller because all of a sudden, she's asking everybody where they stand, putting this together, updating a manual checklist and all this stuff. It feels like a pretty fundamental question that should be answered quickly through a dashboard. Part of my inspiration was I was a revenue accountant. That was my focus.
We used Salesforce internally. I would log into Salesforce. There's a decent comparison here, like in a sales team, your goal is hitting a number as a company and all of the individuals within that sales team contribute to that company-wide goal. In accounting, you have a goal, which is hitting a deadline and you have a bunch of people working individually to all come together and hit that goal. Why don't we have a collaboration and workflow tool like a Salesforce but for accountants and then let's automate some of those annoying and simple tasks, like the tie-out and reconciliation process? These are big ones that help you be better as an organization and be more accurate.
Go back to what excited you was the whole thing about getting it done and making it happen. How do you build that into your product strategy?
That's one of the things I could not stand as a controller. Your completeness is one of the big things in accounting, knowing when everything is complete. The only way things are complete is if you ask your team if they've done everything. We present a checklist where you see if everyone signed off on anything. You have a dashboard. You can filter through it and so you know when your progress bar hits 100%, you're done. You're complete then you can move on with your life. That's seemingly simple but something that's not out there in the market. It’s powerful for controllers to help them answer that question from the CFO.
Getting this started, you knew there was a problem that you're trying to solve. How did you go about getting tech started? You're not an engineer, product engineer, as far as I know.
I am not an engineer. I wish I had majored in Computer Science. Step one was finding a cofounder to do this. I was at Cornerstone where there are a lot of engineers but I decided to not try to hire an engineer or be bored with an engineer out of there because it would not have been good for my relationship with the founders. My logic was, “I'm going to need them to say nice things about me as we raise money and people reach out to them asking about me. I'm not going to poach talent from there.”
I haven't told the story in a while. You're not even going to believe it, there was a website called CoFoundersLab.com which is where you create a profile and you say what you're trying to do and what your idea is. You can then reach out to other people who are interested in founding companies and chat with them about that. I went on, posted my profile and I started. It is literally Match.com for founders.
We may be one of the few success stories to come out of this because the odds of meeting someone on something like that and working as a founder are pretty low. The way we got there, as I had reached out to, it filtered down for what mattered for us and tried to disqualify a lot of folks and ended up reaching out to 40 or 50 different CTO candidates through that site and set up introductory calls and had lunches. I had lunch with about 25 or so people.
There are varying degrees of commitment. One guy was a good relationship, a marriage counselor and was an author. He was like, “I can write code for eight hours a week.” I then met my guy who's Cullen Zandstra. He's one of the few engineers in LA who wanted to write code for a software as a service company. We're in LA. The other business development focus on founders like me is pitching cool ideas around entertainment and advertising and all this stuff.
I'm like, “Let's build accounting workflow, automation software.” It resonated with him for a pretty funny reason. He came out of MySpace and he saw how quickly a consumer business can absolutely crumble overnight. He was like, “I want to go somewhere where people are going to pay me for the software that I write. It's not going to crumble overnight.” I'm like, “This is the business model for you.” That's exactly the model.
People give us money for our software, they give us money every year, it's predictable and you're less likely to crash overnight. He and I got along on a personal level. He’s impressive. Technically, he's a smart guy overall, as well, probably the highest IQ in the company. We’re similar personalities, which is good in some respects but we can also butt heads in other respects. It was a while, learning how to work together. We got there. It's been great working with him. He's an impressive guy. I don't think we'd be here if I had gone with one or the other or maybe one of the other people we were speaking with.
When you say that you struggled in the partnership because many people do, where was the give and take? What did you have to shift in your belief systems in order to make this work?
It was always about speed because I'm like, “Let's do it faster.” Writing code is something that's difficult for a non-engineer to understand. I still don't get it to this day. I'll be like, “Can we change this button? Can we do this?” The stuff you think is simple is never simple. The things that seem hard are a piece of cake. It's the oddest thing. It's hard to know unless you're an engineer and me, not knowing, I talked about how I like visibility and transparency and not having that knowledge is frustrating for me.
When I'm told that things are going to take longer and then I'm stressed out because we're trying to raise money, we're trying to get a customer, there are things that are dependent on this. When I started pushing too hard with a personality like that and he pushes back which is good. We had to find that healthy balance of me, not pushing too hard and trusting that things are more complicated than I understand and give credit for. He's also responded with understanding how important speed is for the business and building things and pushing the team. We found that happy medium and it’s worked out well.
The other component is our third cofounder Chris Sluty, with who I went to college with. He is the opposite personality of us. He's the benevolent leader, a calm, a classic cofounder meeting with us is like a good lunch. For us, as Cullen and I argue about something for maybe the first 30 or 40 minutes and then Chris listens to it, he digests a lot of that and then we get to a conclusion because Chris is the mediator between. The founder dynamic is perfect. If it’s only Cullen and I, I don't know if we'd be working together anymore. If there were Chris and me on the tech side and we're hiring someone to do that. It's a perfect mix. I love working with them if I do say so myself, a great cofounder group.
What has been the biggest shift that you've had to make as a leader as your company has grown when you get more employees and more demands from investors? As an entrepreneur, I know myself, you can be visionary, you want to do and try things but people are not always ready and it’s not always the process they want to go through to get it done. What has been your transformation going through this?
I'm going to say this but I'm not saying I'm good at it, yet. I'm still working on all this stuff. To the readers, don't think I'm positioning as some expert in these areas. One is communicating. When we're smaller and we’re all working in the house together or at our dumpy, building on a venture together, you say something and everyone hears it and everyone's on the same page with it. As you get bigger and they're all-hands meetings and you have various executives, I have to communicate differently.
I have to do it to the whole company which means you have to think about how you say things a little bit differently. How does it resonate with certain team members versus others? Having to be clear about things like vernacular and expectations. Also understanding that and this is a weird feeling is simply by virtue of my title, everything I say is taken seriously and is taken as gospel. I'm used to this world where early on, we have a great dynamic where I would say something and it wasn't taken as gospel, it would get pushed back on a lot.
It took me a while to be like, “We've moved into a world where because I'm the CEO, people are scared and be like, ‘Let's do that.’” They are scared to push back. I've had to be way more measured about saying things because I know it's going to be taken seriously. Communication was a big one for me. The other one I’m focused on, the top of mind for me is letting go and not doing as much stuff like I'm doing too many things. It feels weird for me as a former accountant, to not be doing things, like not be in Excel and doing stuff.
I need to recognize that I've hired great people for this. We have executives over every function at this point and I can let go and I don't have to be worried about when are we promoting this business development rep into an account executive role like, “Stop, Mike. Go trust the team. Let them do their thing. It doesn't matter. You're not better than they are at this stuff.” That's learning but I'm getting better at it. For example, I drove our entire pricing exercise, which for a company of our size is not normal for the CEO to do the pricing exercise and go through it. I then handed it off to the team. They're like, “Who's going to do this and this?”
The expectation is I'm going to be doing that stuff because a lot of people I've worked with for a long time. I had to be clear like, “Heads up. I'm trying to grow as a CEO. I'm not doing anything from here on out. We have great leadership. Here's the pricing. You're welcome for doing this work so far. I'm going to rely on all of you for getting this rolled out and having it be effective, wiping my hands with this.” I'm done clearly stating things like that, going forward to try to reset the expectation of what I'm doing. Also then be clear about what I want to do and what I don't want to do because it's your time that gets gobbled up on calls as well.
Especially as a founder, you get more excited about things. This is your baby. You want to be a part of it. It's exciting. It's how to back out. What do you use for helping you learn to take on new skills and being more aware when you're going into old habits of trying to get involved in places you shouldn't get involved? The thing when you not trusting when you should trust and it's not maybe that you don't trust, it's that you want to be involved.
We, as founders, would do these Monday lunches. Whenever we would catch ourselves going in the weeds too much about something, we would say like, “In the weeds.” You have a little quick way of and we agreed on this upfront, it was like, “We need to figure out a way to not be jerks and shut each other down when we're in the weeds too much. We do need to adjust as founders and not care about certain detailed things.” Whenever one of us would go down the rabbit hole, it's like, “In the weeds too much. Let's focus on something bigger, more important and more impactful for the business.”
Having a safe phrase, I don't know how you find that or anything but that was helpful. As an individual, it's hard to recognize it at the moment, like oftentimes it's after the fact. It's retrospective and you try to be mindful about it going forward. A big thing for me is also mentors. Our board has some great operators on it. In particular, there's a gentleman named Rob Meinhardt who was the first institutional investor with us. He's a former CEO and founder and sold this company to Dell.
Working with him closely for the last few years at FloQast has been career-changing for me. I've learned much from him as a result of this. I’m trying to be a sponge. I was a senior accountant. I wasn't a CEO when I started all of this. Knowing I don't know a lot of things and being open to feedback and hearing that is important. At the same time, I do stand up for my beliefs if I'm doing something a certain way. It's for a reason. I like to push back occasionally but also be open to trying new things.
That's important. Where there's a line where you're talking about getting in the weeds but there's still a line from a CEO perspective where you have to skip levels and talk to staff. It's similar to your growing up with all different types of people, where you have to understand what they're going through on a daily basis to make sure that that's leveling up. Balancing that information with what leaders want to do and what your strategy is, how do you go about that?
That's an interesting point. One of the things that are important for me as a founder, as I came from a senior accountant role where you're younger, you're a little more maybe jaded about this stuff. You understand what it's like to be at those ranks, how those conversations go, the nuances and the details that you know. As a result of that, I do love getting feedback from people who are at the staff level, manager or senior level because that’s where the real dirt is. That's where things are going well or not. I remember all those happy hours as a CEO. “That person is such an idiot. Why are they doing that?”
It doesn’t mean they're not saying it if you're not hearing it.
Taking Risks: Stop being in the weeds of your business too much. Focus on something bigger, and more important, and more impactful for the business.
I know those happy hours on Fridays. It's like, “Why does Mike do that? That’s dumb.” The challenge is I don't know every detail that's going on at that level. I might be wanting to do something that's not effective for us. I have to ask those people directly because they're scared to say something to me proactively. I recognize the knowledge that's at the level of the company and I do enjoy the skip-down meeting concept and meeting with directors and working with people a little more closely who are not my direct reports.
How do you respond if they do give you feedback that maybe they don't understand all the reasons that you made a decision because they're not privy to that? How do you go about being transparent?
You explain the why. I'm super transparent around here. I'll tell you that we were having pricing. As part of this pricing exercise we went through, there are certain things that the sales team did not like. I had to be like, “The pricing exercise is not 100% meant for sales. It's a business exercise and there are broader considerations than your commission statements, how to write and sell upfront. We're trying to build a business for the long run here. I recognize those concerns. I could totally get it how you, as a rep, would be not like that. I'm trying to run a business and build something here and make our stock options worth a lot of money. This is what we need to do as a company. I hope you can get on board with it too.”
It’s interesting thinking about your beginnings of not wanting to be the rich kid with people of ethnicity or then being around rich kids and then not being the rich kid. I hear you a lot when you're talking about being a CEO that I'm a senior accountant at heart, that I'm not the CEO where you're seeing your head. How do you bring that all together to keep your head with all this because it seems like a stream of something that's repeated?
It’s interesting but it’s hard. I genuinely wish people at all ranks were comfortable speaking up to me but it's recognizing that that's not how it works. Even, I walked into Cornerstone at 90 employees and was like, “It’s the CEO.” Thinking back when we had 90 employees, I knew everyone's name, knew about them. I would have spoken with any single person in the hallway or would have had a meeting with them or going out to lunch or whatever. Reflecting on me being a CEO, it’s different than what I thought it was all about as a senior accountant.
It's hard to communicate that but I try to be available for people to have meetings, take feedback, act on the feedback or explain why you're not going to act on the feedback. Don’t be like, “Thank you for that piece of advice. I appreciate it. I'll see you later. We’ll have more of a conversation about it.” It’s having to be proactive and it's a hard thing. The other problem that does start to happen is when you hit a certain scale and you don't have time for it. That is the cold-blooded reality and it sucks but you can do other things to compensate for it like doing CEO office hours or presenting differently at all hands to keep it more real.
We're talking through it but one way I'm trying to scale that is with brutal transparency for the company. We share numbers all the time. I share our goals for raising money. For example, we talked about the value of your stock options, how this affects this and this customer feedback, good and bad. When COVID hit and everything was happening in the summer of 2020, it was having to be transparent it's hard but it's way easier in the long run. It builds a better culture in my opinion.
There are many great things in there. As we come to a close, I like to ask you some rapid-fire questions. You can pick a category. Family or friends, money, spiritual or health.
Money seems like the obvious one for the accountant. Let's go money.
Things or actions that I don't have that I want with the money.
Discipline. I'm an accountant but I'll spend money on stupid stuff in my personal life. I don't track my budget or anything like that. I don't have a Quicken file setup for any of that stuff. I wish I had some more discipline but at the same time, I'm of the opinion of worrying about that stuff, stressing about it and optimizing my points on my credit card. Some people enjoy it. They get a kick out of that. It’s not for me. I don't want to worry about that stuff. I’m fortunate that I don’t have to do with my position but not detailed at all. Not tracking anything. It's pretty bad.
I think it's a visceral thing being an accountant. It's like, “I do this all day. I don't want to do it.”
It certainly is for me but I remember my old boss at Cornerstone, a Quicken file was loaded up. She was closing Cornerstone and then closing her own financials that night like wild and she had everything plotted down to the year and forecasts and all that stuff. I'm more of a, “Let's take a risk. Hopefully, this works out and there's a lot of money that comes out of the bottom of it.” I'm not going to have to freak out or anything like that. You all do it safely.
Things or actions that I do have that I want to keep as far as money.
I'm being generous with what we've been provided. Being cheap is something that would kill me if anyone ever called me cheap. For some reason, that's one of the worst things in the world. Little stuff like paying for dinners when you're with people or flights. I never want to be known as cheap. Being generous to me is something that will never, ever stop.
Things or actions that I don't have that I don't want as far as money.
I don't want to be a hoarder of it. That's a huge problem in our society. The notion of hoarding wealth and it's causing a lot of problems. I can go on a broader rant about that but I’m not being a hoarder. It plays into all of the gratitude, spreading the wealth, sharing stuff and recognizing that you're fortunate or have been put into a fortunate situation. The notion of hoarding wealth is against what America stands for in my opinion.
Last one, things or actions that I do have that I don't want.
Clutter, like the stuff you waste money on and then it goes in your garage or in the shed and nothing happens with it ever again. You feel bad about that.
Your wife probably has some things to say about that too.
She probably. It's the stuff you accumulate over the years and you've spent money on and I don’t know if it ever mattered. For some reason then, you can't get rid of it. You're ruining the environment and the earth because there is all this stuff. There you go. Those are the things I wish I didn't have.
Many lessons you've talked about. What is something that you want to make sure people leave this conversation with that maybe we haven't covered?
For accountants specifically, I like to give this advice. Unemployment in the accounting world is still incredibly low. You can get a job. There's great job security out there. If you have any inkling of taking a risk to do anything if you want to start your own business, if you want to do anything that requires you to take some time off, be okay with that. Save a little bit of money up. You'll be fine after that. This is exactly what I did. I knew I could get a job in accounting again if I wanted to. I'll be blunt, I quit Cornerstone and my wife was working. We're basically paycheck-to-paycheck and we had $12,000 in our bank account.
It was worth the risk. I got three months of payroll here or whatever. If it doesn't work out, I can go get another job in accounting. If you have any inkling to take a risk, go for it because the worst-case scenario is it doesn't work out. You burn some money but you can get another job in accounting. When I say that, it’s like a low-risk, high-reward proposition. People should take low-risk, high-reward propositions a lot. That's a good opportunity.
It's also important to know where your risk ends. What's your risk tolerance? When you would go back to get a job or whatever. As you said, “I have this much for payroll. If we lose all this, we're back any job.”
Mine was a few months. What it did was and this is something I've heard from other founders is there's a big difference between doing something as a night hustle versus quitting, doing it and having a deadline. I've never had a bigger kick in the ass than myself when I quit and was doing that. It's very scary but it does force you to make it happen if you don't want to get another job in accounting.
Thank you for your time and for sharing your story. There are many lessons for people to take away from this.
I hope it was interesting for people and helpful in some way. Thank you for having me, Amy. I appreciate it.
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Now for our Mindful Moments with this episode with Mike Whitmire from FloQast. I love where we started learning about his family of entrepreneurs and how his life shifted once his parents were divorced. Seeing how his mom was able to shift what she was doing in order to be able to start her own business and be available for her family at the same time. By watching her work ethic is something that drew his own as he started moving through his career and what he wanted for himself and his family. It's important for us to all step back and look at those lessons that help us to be that best part of ourselves. A lot of times, we think that that may be something as far as work ethic was born with but sometimes we're inspired by watching others whether that's a family member, it's friends or people that we see outside that we might not even know but watching their story and how they persevered through the ups and downs.
He also talked about his grandmother who also owned her own business, taught his mom and his aunt that business as well that they were able to take those lessons. Taking those lessons from generation to generation, as an entrepreneur, is so important as far as being able to draw pound something or experience when you are an entrepreneur yourself. You might see something and go, “I remember my mom or my grandmother going through that,” or stories that you've been told about those people going through.
They can help you in some of your hardest times. We talked about the struggles especially in 2020 as an entrepreneur. The advice that we're being told and how we measure that advice. This was a really important discussion about how he was getting pressured to lay off people. He didn't feel he had enough information to do that yet. He held off doing that until he could get a better view of the business. That is the hard part of being an entrepreneur because, at the end of the day, you can be very lonely in these decisions and you're never sure that you're making the right decision. What you want to know is what your value system is and what you're aligning to it.
For him, his people were not something he was willing to risk and fought for what he needed to fight for. That's another important lesson in this. There are some fights are not willing to fight for. There are other fights that if you don't, you start going away from your intuition, gut and you can start feeling really stressed out or misaligned with the work that you do if you are not sure that you're making a decision that aligns with your own value system. Defining that for yourself is important. We also touch upon his background as far as being an accountant and finding the industry that was exciting for him and not feels like work because he's doing the kind of work that is exciting for him.
Most entrepreneurs start with an idea. We're close to the customer and our staff. As we grow, it's harder to stick to the things that you love because you're pulled in other directions. It's important when you start feeling like you're losing joy and the business you're running or a department that you're in charge of. You step back and understand why you're not having as much fun anymore. It's that awareness that you're trying to get to, not necessarily that everything can be solved but it's important to be aware when you were getting off track so that you can make the little pivots that you need to. He started clearing space so that he can dive into product strategy again because that's what brought him joy. In order to do that, we have to learn how to trust the people around us, delegate things and not worry about every step they're taking to get their trust that they're smart so that you can create the space for the next best thing that you want to do.
Taking Risks: Unemployment in the accounting world is still incredibly low. You can get a job. There's great job security out there.
If you try to hold on to everything, what happens is you're only average at everything versus delegating and finding the gaps of arrogance that you don't want to work on. You don't get as much joy in or maybe you're not as good at and find the people that can step up in those areas so that you can create what you want to create. His background as far as childhood and how many shifts that he made with getting to know people, different types of ethnicities, classes and so forth. It's an important skillset that he was able to grow over time and build in as a leader as well. We might not recognize that that leadership capability of trying to learn other people's perspectives whether it's your staff, people or customers. It becomes such an important skill as a leader and drawing upon where we get that.
That creates an understanding that we can learn what it's like to walk in someone else's shoes doesn't necessarily mean we completely understand but that we're open and asking the questions. What he was talking about was so important in making sure that he spends time not being in the weeds. He talked about with his cofounders that anytime they saw each other going too deep in the weeds, they have this mantra or way to stop each other but also learning how to take time to meet with the people that are most important to the things that you want to accomplish as a leader. That doesn't always mean your direct reports. When he talks about having CEO office hours, the way he runs an all-hands to get feedback. Making sure that he's transparent with where they are as a company with the numbers, the operating stats and the business so that everybody understands what the company is trying to accomplish and how they layer up to it.
I would say to everyone that it's important to take the time and learn about these other technologies out there that can create the collaboration that you might be looking for and find the ways that you can add value in these processes that would create more space. As far as you getting out into the organization, learning more of the operational side of the accounting rather than spending a lot of time in non-value-added work like he was talking about that you're asking everyone where they are in their workload.
When you can use technology like FloQast to create a collaborative model, know exactly where everything is at. That you can have more time to be analyzing the numbers, getting out in the organization, being a proactive resource in your company or with your clients. I want to thank FloQast. If you have any suggestions on topics that you would like to see coming up on this show, feel free to go onto my website at AmyVetter.com and put in your suggestions for an upcoming episode or even guests. Thanks for reading and for your support. Like us or send this show to someone that you think might be able to help.
Important links:
Mike Whitmire – LinkedIn
Cullen Zandstra – LinkedIn
Chris Sluty – LinkedIn
Rob Meinhardt – LinkedIn
Quicken
About Mike Whitmire
Mike Whitmire, CPA*, is CEO and Co-founder of FloQast, a provider of close management software created by accountants for accountants to help them close faster and more accurately. Prior to founding FloQast, Mike was part of the accounting and finance team at the rapidly growing Cornerstone OnDemand. Helping prepare for their IPO, it was at the Los Angeles company where Mike came up with the idea that would become FloQast.
Mike began his career in audit at Ernst & Young, where his focus was on media and entertainment. During his time at EY, he performed public company audits, opening balance sheet audits, cash to GAAP restatements, compilation reviews, international reporting, merger and acquisition audits, and SOX compliance testing. Mike graduated from Syracuse University with a Bachelor’s degree in Accounting.