The $3.8M NBA Fraud, AI's Dirty Secret & The Dodgers as a Tech Startup

John Siegel: You're not going to want to miss this episode of Fintech Flow. On this episode, we talk about the circular funding powering the looming AI tech bubble, a wild NBA accounting scandal, and the parallels between the Los Angeles Dodgers and many successful tech startups. Let's get into it. You didn't know I was an idiot beforehand? You're about to find out.

Mike Whitmire: Sick.

John Siegel: Um, May 1, 2012. Does that date have any significance to you?

Mike Whitmire: No. 2012? I was at Cornerstone. No, what else?

John Siegel: It's when Guggenheim baseball management finalized their deal to acquire the Los Angeles Dodgers. Uh.

Mike Whitmire: Oh, What a day.

John Siegel: $2.1 billion.

Mike Whitmire: What a day. That's a great day.

John Siegel: We'll get to that in a second. Hi, everyone. My name is John Siegel, senior content marketing manager here at floqast, uh, and the de facto head of communications. And today, first episode of FinTech Flow in a while, I'm joined by this

Mike Whitmire: guy, Mike Whitmire, co founder, CEO of flowcast, inactive CPA and FLOQAST Certified accountant as well.

John Siegel: Ca. You can say it M. Uh, before we get started on this rebooted version of the show, we're gonna do an unboxing. Does Harper watch unboxing videos?

Mike Whitmire: Does she watch boxing videos? No. Unboxing boxing videos? No. I don't want her watching unboxing videos either.

John Siegel: Not even like the kids stuff or anything like that. Okay, well, we're gonna unbox today. We got this. It says Cody's.

Mike Whitmire: Yep.

John Siegel: I'm sure you know about it already. It's pretty heavy and got delivered earlier.

Mike Whitmire: Oh, yeah. It's got some weight to it.

John Siegel: Let me get this.

Mike Whitmire: Oh, yeah, nice.

John Siegel: Flowcast is officially named the best fintech solution by the Codys. Uh, for flowcast. Transform.

Mike Whitmire: Let's go.

John Siegel: So I'm going to put this right here.

Mike Whitmire: That's awesome. Something we should be very proud of.

John Siegel: Absolutely. And it's for flowcast. Transform. Uh, before we get started on the podcast, can you just talk about what Transform is briefly and then we could get ahead with the interesting stuff?

Mike Whitmire: Totally. So, Transform. We announced it at our user conference at Take Control earlier in the year. It's a platform that lives inside of flowcast that allows accountants to build agents to automate their own workflows. And what I love about it, personally, as a former accountant, is that it's a solution that will be owned by the accounting department so they can build their own automation tools, manage those as well, and then it will hopefully shift the role of the accountant. And we talk about this a lot. Elevate them from a preparer into a reviewer and kind of change what work looks like. Um, but keep accountants in, in the driver's seat there with using technology. So I love Transform. It's uh, a part of the Flowcast platform now and very cool to be recognized for it.

John Siegel: That's all a natural language too, right? So don't have to get any sort of. Well, you should get certifications but uh, you could pretty much prompt it on your own.

Mike Whitmire: Yeah, you don't. To be a software engineer. To use uh, to use Flowcast. Transform.

John Siegel: Exactly. For our first topic today, I want to talk about something near and dear to both our hearts. Probably in an annoying way to most, but not to us. The Los Angeles Dodgers, the 2025 World Series champion Los Angeles Dodgers, back to back. Um, we're not going to talk about them winning this season. Uh, we are going to be talking about how they were built because you are a CEO of a tech company. They have been sort of built since the Acquisition 2012 as, as a tech company. Uh, I want to go on it, take it step by step. But um, the big point right now is earlier this season the Dodgers announced or the MLB announced or somebody announced, um, that the Dodgers were going to hit $200 million in annual uh, sponsorships. And that obviously wasn't counting ticket sales or anything like that. Um, as the co founder and CEO of a tech company, not uh, the same as an MLB team or anything like that, but you could speak to uh, the initial cash burn and how that impacts long term value, long term valuation. Um, and I wanted to get your. How do you think about that and how to in the 10 plus years that you've run floqast, um, what's the reasoning behind that?

Mike Whitmire: So uh, can we talk about at least one part of the season which I think everyone will agree on, which is how awesome the World Series was. Yes, it was just an incredible World Series. And game six or game seven were both amazing. Objectively, like just object if you're a baseball fan. It was an amazing World Series. So I won't brag on the Dodgers but like the games were so good and it was so, it was so awesome. It was so awesome. Um, so then, okay, back to the, the Dodgers, like the way, the way I think about it, how the Dodgers operate versus other baseball teams is um, if I compare it to the business world, it's like public companies versus VC backed private companies. And the mentality of a public company is quarterly earnings, short term thinking, optimizing profitability, maximizing that, making your shareholders happy. That's how a lot of baseball teams and sports franchises in general are run today. It's like about maximizing cash flow, not, not necessarily investing in the long term. And it's more about making your investors happy. For a lot of people, which is one family ownership or like one family owner or a smaller group of people who own a franchise, maybe some private equity, like in the Houston Astros example, uh, you got some private equity, uh, people over there. So it's really short term thinking and maximizing annual profitability. When the Guggenheim group came in, they clearly had more of a let's invest in the foundation of the team, which was we traded for a lot of very expensive players. Right. Like early was like Adrian Gonzalez, I think Josh Beckett, Carl Crawford were in that deal too. They're all really expensive and it was a salary dump. We were happy to take them on from the Red Sox because like we had the money and they were better than what we had at the time. So the team improved, got better playoffs. It was awesome to watch. Um, but like we were willing by, we, I always say, we Guggenheim the Guggenheim. We, the Dodgers, uh, were willing to spend a bunch of money to invest in the team, make the team better, that gets the fans to come out, that allows you to sell a huge TV rights deal as you get more viewers and everything. So that foundational investment was really important. And then beyond the players, they also just invest in like every aspect of the organization, uh, as well. Right. I don't think a lot of people talk about this too much, but we're one of the early ones of investing in our, um, minor league franchises and not having 19 year old kids eating McDonald's on buses between games that are road trip like it's just not a good way to come up through the ranks and try to be your best, you know, live up to your potential. So we invest heavily in things like making sure they're eating right and have good travel schedules and things like that. Coaches are all paid extremely well. Like no matter what your role in the organization, we pay people really well to make sure we have top quality talent. Just all over the organization. Um, our stadium continues to improve every single year. Like Dodger Stadium today versus when I was in my 20s, going and sitting out in the pavilion and having fun. It's so different now than it was before. The fan experience is way improved. Like one of the really interesting things, you go to a, you go to a Dodger game, you'll be at like a big game, maybe even A playoff game. If you look up in the reserve seats, like there's there. There are a lot of open seats and you'd think like, oh, they didn't even sell out the stadium. But no, they did. But it's just some people buy a cheap ticket and they don't even think of it that way, and they go hang out. You know those two bars they have behind the bullpens? Yeah, those places are slammed all game long. People bought tickets somewhere else.

John Siegel: That's where I saw Kershaw being pulled for the. The. In his final start at the stadium. Um, it was really cool. They were able to see like, the bolt, the guys warming up the bullpen. Then all of a sudden they opened the gate and he saw Dave Roberts walking out to, to go pick him up. And then he was, you know, waving to the bullpen. Everybody is. It's so cool. Like I was just about to say, like, I would buy a standing room ticket only. It's a really expensive sports bar effectively, but I would absolutely do that. You got to pay for parking and everything like that, but I wouldn't mind doing it.

Mike Whitmire: So we're selling. Like, I, I do wonder if they started selling standing room only seats. Like they probably. They probably do. Yeah. We'd probably sell out all 56,000 actual seats and then sell another. Whatever. A couple thousand standing room only seats. So, uh, I think San Diego sells those. Right. Like, San Diego does pretty well.

John Siegel: Park.

Mike Whitmire: Yeah, the grass area in the back, like in center field.

John Siegel: I don't like the Padres, but I love that stadium.

Mike Whitmire: Stadium's awesome.

John Siegel: Stadium's unbelievable. Um, going back to your point, uh, about investing in infrastructure, and you talked about this a little bit as the Dodgers were able to pick up those. Those contracts that the Red Sox a couple times were trying to get rid of. Um, whether it was for luxury tax purposes or they just wanted more liquidity for the ownership group. Um, Gemini told me this could be considered M M and a slash tax arbitrage.

Mike Whitmire: What's.

John Siegel: What's the corporate parallel for using cash to buy a competitor's tax problem by

Mike Whitmire: a competitor's tax problem? Um, I don't know if it could,

John Siegel: I guess luxury tax. Maybe a better against it.

Mike Whitmire: Maybe a better way to think about it is a go to market challenge.

John Siegel: Yeah.

Mike Whitmire: Like there's some companies that have really good products and you could make a. A player akin to a product.

John Siegel: An aqua.

Mike Whitmire: But maybe you're not as good at. Ah, yeah. Putting all the pieces together to have be a successful team that goes out there. And wins. Like, we're happy to take on your pieces and plug them into the machine that is the Dodger dynasty and have

John Siegel: them perform well in that first trade with Crawford and Beckett and Gonzalez. That was a short term solution for them. Right. They needed to be competitive early on in the ownership cycle as they're able to invest in the stadium and player development. And even if you think about it, getting rid of Dodgertown or Dodgerville or whatever it was in Florida and moving that out to Arizona, building the facility there, um, they needed competitive team on the, on the field to be able to get.

Mike Whitmire: And we were already solid. Like we had good players on the team already. It was. Those guys were paired with a good roster that we already had. So all of a sudden, yeah, really good. Really good team.

John Siegel: Absolutely. Um, I want to talk about R and D. Um, I guess you could consider this R and D. But, uh, again, going back to scouting and player development, um, a huge part of the Dodgers success is their ability to identify undervalued assets. A couple of examples are Max Muncie and Evan Phillips, but you could find three or four examples every season, usually in the bullpen. Um, it turns out that when they actually invest in bullpen pieces, it doesn't work out. But when they find guys on the.

Mike Whitmire: Really good point.

John Siegel: Yeah, when they find, when they find pieces on the waiver wire, which is effectively teams just being like, you want this guy? And then they have to work out some sort of a trade, but it's usually cash considerations. Um, they're able to identify these players using proprietary metrics and analytics and scouting systems and a lot of technology. Um, I'm curious what your take is on, on that in particular, because ultimately that gives you liquidity for something we're going to talk about after this question.

Mike Whitmire: Yeah, that's where you are getting the most bang for your buck. Presumably. That's another area we invested in heavily up front, where all those different things and then also the coaching staff to be able to act on that.

John Siegel: Right.

Mike Whitmire: If you want to make changes to somebody, you need good coaches to help them get there. Like, Roki Sasaki was a good example. Not to get too in the weeds on this, but my understanding is he was a little resistant to some of the coaching changes up front, but it's like now they're really good and they have a rep. The Dodgers have a reputation of helping guys turn it around. And sure enough, rookie went from throwing 92 and not being good at the beginning of the year too. Being our bullpen Throwing a hundred again.

John Siegel: It's uh, funny that he was resistance resistant to that because I know as part of the pitch recruiting process he had all the teams doing a, uh, homework assignment and that was to basically do all this work to identify why his velocity dropped last season in Japan. And turns out the Dodgers had the best answer, but it didn't stop it from happening, but they're able to remedy it. Uh, so he's already proactive about it, but for some reason during the season he's like, I don't want to do this. And they're like, well, your fastball is coming around in around 94 and that's not going to cut it in the MLB.

Mike Whitmire: I hadn't heard that he. I didn't know that pitch story. That's fascinating. Yeah, that doesn't make much sense, but I'm glad he ultimately listened and changes wind up and now he's throwing 100 again.

John Siegel: Yeah, we'll take it. It stays out of the bullpen, so we'll see if it's sustainable. But, um, yeah, I'm curious about floqast or from your perspective as a CEO. You mentioned investing so heavily in R and D early on. Obviously it's what the Dodgers did too, both at the, at the pro level, scouting and player development. And then also identifying, you know, college seniors that typically would have gone undrafted. Maybe they have one specific trait that the Dodgers really liked and thought that they could maximize and that all of a sudden turns them into a real. And they're giving them like $1,000 bonus. So they go out, give more draft bonuses to or allocate more draft bonuses for the higher value prospects and stuff like that. So you're maxing out your draft, uh, pool. Um, can you talk about, uh, building out R and D at Flocast and what that was like?

Mike Whitmire: Yeah, so building R and D, if you liken that to kind of like in the baseball world, lower level players are drafting out of the gate. Like it's really important for building the great foundation for a company and that's ultimately your where your product's gonna, what your product's gonna be and how your, well you're gonna be able to sell in the market. So hyper important to get that right early on and not like waste a lot of that money. Dodgers have a little more luxury given the amount of money they have to do that. But you know, even at FLO cast we raise money early on so it meant we could make mistakes here and there and maybe not hit the mark on a certain Product or whatever, but we'd be able to recover from that, maybe hire some more engineers or, you know, move on to the next product line and just like do what's right. And so having more money does allow for more mistakes to be made, for sure. Uh, and still be successful. But regardless, you gotta be investing in that area to be, to have a great product, which the product is the team. And in baseball, in software, the product is the software that you're, you're building. So starting with that, that foundation is super important. And even like in baseball, the last dynasty, I think you could say, if you agree the Dodgers are dynasty, which K.K. hernandez said that, uh, at the parade that were dynasty. Tough to disagree. Um, last one was the Yankees, right? They won three in a row in the 90s and almost, almost four in a row. One Luis Gonzalez, you know.

John Siegel: Oh, yeah, bloop single.

Mike Whitmire: We bloop single up the middle off Mariano Rivera to hold that back.

John Siegel: Beautiful day.

Mike Whitmire: Um, like that. That team was not, I remember at the time, everyone complaining about how much money they were spending and really like they signed a Rod and then Jason Giami and then Mark Teiro, like, oh, they're getting all these guys. But people forget it was an incredible foundation of guys who came up through the Miners. Like Derek Jeter was awesome. Paul o', Neill, Jorge Posada, Mariano Rivera, like they were the foundation of that team. And then they added all the big money guys on top of it. You look at the Dodgers, very similar concept and a lot of people forget that like that 2017, 2018 timeframe. Most, uh, of that talent was homegrown Kemp, Ethier Loney, like Russell Martin, like the Chad Billings, like Clayton Kershaw. Like those were the clutch guys at the time. And we had drafted and developed all of them. And then we had the money all of a sudden with the Guggenheim group to go ahead and supplement that with some really expensive free agents. And that's how you kind of end up where we are today.

John Siegel: You could even argue Justin Turner, who is a precursor to Max Muncie because he was what, non tendered by the Mets and the Dodgers, signed into a minor league contract and turned it. All of a sudden he had a pretty awesome major league career after that.

Mike Whitmire: Uh, it's, it's amazing. I have a unnamed, uh, I have a source in another baseball organization who talks about the Dodgers coaching style and he's just like, they're not afraid to make radical change with players. And players are open to hearing out that radical change because of how Successful. The Dodgers have been doing it with other players. And so it's this like compounding effect where you open up a baseball player's mind. Like, you know, they've been doing something the same way for 15 years. Maybe they're not all that flexible to changing it. But, uh, it's the Dodgers telling me to do that and they help this guy become a. Someone who got DFA to being an all Star all of a sudden. Like, uh, ah, maybe they can help me out too. So you get the reputation and people are more open to it and that success is going to kind of build upon itself.

John Siegel: I mean, if we, if this hasn't been clear enough, the Dodgers being run like a tech company, um, but a, a privately backed tech company, um, in the way that they're doing that, the radical changes, they're acting like a startup, right? They're like, we have this concept. We, there's. It's. We have a good idea that we have a good, we believe it has a good chance of working. Let's move fast on it and if it doesn't work, pull the plug on it and go back to what we had beforehand.

Mike Whitmire: I'd love to see there, there's like a rumor that there's a strategy memo from when they bought the team. And it's like this very thoughtful kind of five to ten year plan around what they're going to do. And I'm assuming part of that was expanding their market as well. So we don't talk. Like a lot of the complaining in baseball around salary caps is, oh, how do small market teams compete with big market teams? And salary cap is what ends up being discussed. I would argue an alternative is small market teams could also expand their market. It's just that the Dodgers did that by signing Shohei and Yamamoto and now Sasaki and just completely taking over Japan. And all of a sudden our market is one of the biggest cities in the United States with Los Angeles, plus people all over the country who now like the Dodgers because we're good and they like our players. And Shohei is likable, Freddie is likable, Mookie's likable. Like all these guys are very likable. And then all of Japan loves us too. Like we, yeah, it's a little bit of an unfair advantage, but we also worked hard and invested the money with those three players. We spent, as everyone loves to talk about, we spent a billion dollars on those three guys from Japan. But we also got a market which happens to be the fifth largest economy in the world as well. So we expanded our market. And yeah, I would argue that kind of good strategy, man.

John Siegel: I would argue that that investment in Japan started two ownership groups beforehand with a guy named Hideo Nomo.

Mike Whitmire: Yeah.

John Siegel: Because he laid the foundation for coming over. He literally had to retire to get out of his contract. And the Japanese, the n. What? Nbl.

Mike Whitmire: Uh, npb.

John Siegel: Npb. Um, they called his bet and they're like, you're going to retire at 22 or whatever. Fine. Have fun, kid. He retired and without knowing. And I'm missing some of the pieces here, but there was, like, a short documentary on it. Uh, there's like a. It's like a 30 for 30 short. Uh, it was. It was very good. And obviously that opened the door to signing the mlb, and the owners realized they were duped and tried to fight back. But, um, he took the MLB by storm. It was a good pitcher for a really long time. And Ohtani may have been too young to see him and these guys too young to see him, but he's still a legend in Japan when they were growing up and they knew his name. So ultimately they saw that Dodgers hat, the Dodgers jersey, and that investment really paid off because it definitely influenced their signing with the Dodgers.

Mike Whitmire: Yeah, it definitely made Nomo. And then Ichiro, uh, for the Mariners, it made like. It seems like Dodgers and Mariners are destination franchises for. For a lot of those guys. That's a good point. Did you see, uh, no more throughout the first pitch at one of the World Series games.

John Siegel: Yeah, it was a game. Was a game five.

Mike Whitmire: I think it was game. Yeah, four or five or five. No, no, no, it was, uh, game three.

John Siegel: Oh, it was game three.

Mike Whitmire: Yeah. I was in the Flowcast seats for. For that one, so.

John Siegel: Okay.

Mike Whitmire: It was cool. I was a little disappointed by the pitch, I gotta say. And he didn't do the full turn. Oh, that's turn all the way. Yeah. Uh, yeah, he's all not as nimble as he used. Maybe not as flexible.

John Siegel: Yeah, full cast, has Dodger seats. It's pretty cool.

Mike Whitmire: That's fair. They're awesome.

John Siegel: Got to tell the people.

Mike Whitmire: And they're even better for next year.

John Siegel: Yeah, it'll be great. Um, I think we've talked a lot about the Dodgers here.

Mike Whitmire: I'm happy to talk baseball all day, though.

John Siegel: Yeah, me too. We could save that for the, uh, the. The kitchen area, though.

Mike Whitmire: There we go.

John Siegel: Let's get on to the second topic. Uh, and I'm going to do a really poor job with this one because it doesn't Make a whole lot of sense to me even though I work here at flowcast. Um, the AI industry is kind of defined by these circular deals as best evidenced by Nvidia investing in OpenAI which then buys chips from Nvidia. This uh, has drawn a lot of comparisons to something that all accountants should know a lot about. It's Enron with smart to market accounting. Um, can you talk about this and kind of your outlook on the industry uh, as well as what looks to be pretty clearly some sort of a bubble?

Mike Whitmire: Yeah, there's um, so Enron slightly different. Like we've given presentations about Enron and it's funny, but not funny. There are I believe it's seven common types of fraud that companies can commit. And when you go down what Enron was doing, they work. They committed all seven forms of fraud that could happen within a company. Um, I haven't given that presentation in a while but I remember being off. That's a, that's a crazy stat. Like yeah, ah, Enron just did all of them. Um, Mark to market was one of the really really big ones and really shady one. I guess what was different is like what they were doing, they were hiding it. What's happening in AI land right now, you might not be able to like call it technical fraud but it's definitely these, these deals are very sketchy. The circular reference deals where it's like um, OpenAI commits x billions of dollars to whatever company, the valuation of that company goes up and then it's like this, the revenue circular reference and the other one that's really shady to me is when um, percentages of equity are given out as part of these deals as well. Because like there was a deal with AMD recently where yeah just the value of AMD went up by enough to cover of OpenAI went off up enough to cover the expense that would have come out of amd. And so everyone was like net positive around all of it. But the gist is it's a bunch of future promises around all these sales that are going to ultimately occur. Like the Amazon one that was just, just a $300 billion data center warehouse build out and so they'll buy all the chips for that. There's still a lot of things that have to go right for that revenue to actually materialize. Like for example the data centers have to be approved to be built by these various states. And we actually just had last night was election night in Virginia. One of the Democratic candidate won last night and they were running on an anti data center platform. Interesting part of what they're running on because I think people in general are going to get really pissed off about their electric bill and it's going up because of these data centers being built. And so let's say there's a mass revolt and all the voters decide they don't want data centers in their states, they don't want to pay more for electricity. These data centers get shut down, they're not built. What's going to power the AI and then all of a sudden all of these deals fall apart and there's no future revenue to be had. And what happens to the price of all these AI companies? If that comes true, they're going to come crashing down. So like even Sam Altman himself admits we're in a bubble. A lot of these people know that we're in a bubble. We are absolutely in an AI bubble. Not financial advice. I have no idea when it will crash or not. I don't know. Um, but like there's, there's no, there's no debating that we are in a bubble with these tech prices.

John Siegel: I think Indiana has something similar to that too. I could be wrong, but basically just the people rising up and voting against having some sort of data center out there. We're not even talking about the natural resources it would take. Even just the land that it would take up.

Mike Whitmire: Yeah, I'm just talking power. There's also what, there are also water implications for a lot of it. I think North Carolina also shut down a data center build and it's like these tech companies are coming in, dude. Uh, the structure of some of these contracts are so messed up as well. Like for. There are many states where if your utility has to do capital improvements, the cost of that capital improvement is passed on to the utility payer in the form of. There's some line item on there around that and like there's this notion that there was a uh, Facebook deal that was being done. Facebook would pass along the cost of the data center build out to the utility payers in the future. And it's just like all these tax advantageous deals are being given to tech companies by the states to build out the data centers. And to me it's like a short term boost to the economy. Some jobs are going to be created to build the data centers out, but then those jobs are going to go away when the data centers are built and it'll be a much smaller group of people running these data centers. So I don't know if the job creation promises are going to be there on um, the data center front. So that's another thing I get worried about is like how much of our economy now is being propped up by some of these data center buildouts. Not just the valuations of tech companies, but like job creation and things like that. How much of it's propped up by what will ultimately be like a temporary build out that then normalizes with a much lower number of permanent jobs?

John Siegel: Because I'm a meathead and a little slow too, I see a direct parallel to sports with building new stadiums and passing off the expenses to the municipalities that are the stadiums will be built in even though they are owned by the actual sports teams. And it seems like every team needs a new stadium or massive improvements to their stadiums every 10 years. Which seems kind of ridiculous to me because I went to a lot of games at Wrigley Field before they made a bunch of improvements and it was just fine.

Mike Whitmire: Yeah, it was fine.

John Siegel: A fantastic experience.

Mike Whitmire: You can do it without taxpayer money. It's very possible. Another good comparison is to the Internet boom is how much money was spent laying ethernet lines and all that good stuff to power the Internet across the country. You know, some of that was taxpayer funded, some of it was private. But there were a lot of jobs created to do the build out and then not necessarily as many were remaining to do the maintenance on. That just sort of how I see the data center world playing out.

John Siegel: Yeah, and I mean that's a great point about the Internet, but there, I mean that the, the path to ROI on that had to have been pretty murky. Right. They're taking a pretty big bet on that. If you're looking at something as simple as a stadium employing, you know, 300 seasonal workers or something like that, it's creating a couple hundred jobs and everything. But it's really not benefiting, I guess you could say it benefits the. Let's take bad example with Dodger, uh, stadium or uh, how about uh, one of the stadiums in Las Vegas where it's creating those jobs. It's creating, uh, it's helping the tourism industry. But if you're in Vegas, you don't really need that boost. Tourism industry, um, so it just seems pretty murky to me. But at least the Internet one paid off because I mean, what would we be doing without the Internet?

Mike Whitmire: Yeah, it just took in terms of the stock market, it took 15 years longer than people anticipated to pay out. Because during the build out was when we had the bubble and then the crash, we continued to build out the infrastructure, but stock companies that were Supposed to benefit from that build out. Their stock prices crashed. In the meantime, we continued the build out and then ultimately the promise was executed on. And that was then shown in the form of valuations of companies like Amazon, Facebook. All the good ones come around and then they, they blow up and do really well. So that's probably how AI shakes out. Like the ones that are probably going to become the most valuable companies might not exist yet in the AI world. Some of them are going to be hypervaluable. Like you could see OpenAI remaining to be really valuable. Or alternatively, what OpenAI does becomes commoditized and that goes away in their valuation. Today, you know, you look back on it in 15 years, you're like, that was insane that that company was valued at that much. When Google was throwing off models, Facebook's throwing out, like everyone's throwing off models. No problem. Why? What they were doing maybe isn't that special. And so I don't know. Lot to predict, man. But speaking of Petco is a good. Sorry, back to your, uh, the economy, uh, driving economics. I think one of the best arguments is if you put your stadium in the middle of your city, like with Petco, then you can start to make the argument like, oh, all the bars around the stadium and restaurants, they benefit from having it there. And you do see that like you go to a game in San Francisco and before the game the bars and restaurants down the street are all slammed before the game starts. And so you could start. Not Dodger Stadium. Nothing's close enough to the stadium.

John Siegel: Actually when we went, we went to those games because my gym is downtown. Anyway, I would just Uber over to the shortstop, which is about like a seven minute walk from the entrance. Closest to the seats. Yeah, Um, I was, I mean I've known about them before, but I never realized how close they were to the stadium. And you walk through a cool little neighborhood with these old Craftsman houses, but it's, it's not close enough for. It's not like San Diego or San Francisco where you walk right out and there's bars and restaurants and things to do and tourist attractions.

Mike Whitmire: You said was a seven minute walk

John Siegel: to the stadium from, from the Short Stop, which is the closest bar? Actually, I think, uh, yeah, that's the closest bar.

Mike Whitmire: That's awesome. Nice little walk through Griffith park and beautiful houses and everything.

John Siegel: Yeah, I don't know what you would. I think it's Echo. It's Echo Park.

Mike Whitmire: Right, okay. You don't get to go through the actual park.

John Siegel: No, no, no, no.

Mike Whitmire: We're too deep in Dodgers right now.

John Siegel: Yeah, you do have to, like, cut through this neighborhood, and there aren't many lights. Uh, and I wouldn't do that closer to Echo Park. It's a little scary. Um, speaking of AI, uh, the Chartered Professional Accountants of Canada, uh, Go habs, um, are urging the Canadian government to establish stronger guardrails around AI. So a couple of the points that they made. Independent, uh, assurance, uh, human oversight, strengthening governance, economic competitiveness, and AI literacy. I think AI literacy is probably a good place to start, because at this point in time, I'd be curious to see how many people haven't used some form of AI, even if it's ChatGPT or Gemini. Um, but we're talking at a much bigger level, using it at Flocast or something like that, um, using it to do accounting work, that sort of stuff. So I'm curious what you. What your thoughts are there. I don't think that there's going to be a ton of pushback, considering how much we talk about this, but the people of Canada have spoken.

Mike Whitmire: It's, uh, funny you should say that. Just last night, I found out my wife has not used any Chat GPT or anything like that. And so far. So she's. She's staying out, uh, of this world. I don't know.

John Siegel: Sounds like me. What the heck?

Mike Whitmire: Really? She's like, yeah, I've never used ChatGPT. I'm like, all right. Um, and even Harper knows what chat GPT is, um, because of the World Series commercials.

John Siegel: Oh, really?

Mike Whitmire: It actually worked? She said, yeah, yeah, yeah. Um, but I think so. My general take is I agree with Canada. I think they're onto something. I think there need to be pretty strict guidelines around this. Like, AI literacy is the starting point. But my concern about AI literacy is, like, you can know all about it, but you still don't know how the models work or why they did what they did. And I go back to, like, man, I went deep on how these things are trained and how it actually occurs. And there are billions of parameters that go into. And the parameters are just weightings around, like, different decisions that are being made and how you're going to predict things. And if you don't know how the predictions are being made, you're not going to be able to audit it. And the people who are building these products don't know how the parameters are being tweaked. The model tweaks the parameters on its own, and it's just like, no one knows how these things really work. The way they work. And so AI literacy is cool and all, but it's just simply not possible at the detail level that you need it to like, say you're comfortable with numbers that are being produced by an AI agent, for example. Um, so literacy is definitely there, but there needs to be other guardrails where we're like recreating some work or redoing it. We're checking work that's being done. Human in the loop is a clear, obvious one to me. Um, so it seems like they're onto a rather well rounded approach to it. And I think I agree with it probably more than what some of the US based thinking is right now.

John Siegel: This may be just me having one of those shower thought moments, like 20 years after people have really realized it. But this is totally redefining what professionally skeptical is. Right. Because you absolutely cannot trust what you're putting into something not specifically built AI powered products. Um, if you're running a spreadsheet through Gemini, it's going to hallucinate from time to time.

Mike Whitmire: Yeah, it's an extension of professional skepticism. Yeah, that's really well said because in, because professional skepticism is basically saying that you're, you don't. And I mean this in the most professional way possible because it's professional skeptic. You don't trust the work that's being done by the humans in the accounting department. That's your job either. Because honest mistakes are made that, that happens in the real world. Like honest mistakes are made. AI, we call those hallucinations. Humans, we call those mistakes. Um, and then there's fraud that occurs. Like legit, actual fraud. People fudging numbers or stealing money or whatever. Um, so with that, yeah, professional skepticism generally, we haven't had to extend that into technology. That's where it's like, no, the software works as tested. And so I feel good about it. So I trust that that's done properly over and over again. This is one where it's going to be technology that, yeah, we do need to be professionally skeptical about and probably have to retest some of its work and make sure we trust what it's doing.

John Siegel: Yeah, because if we're asking for its judgments, it will be wrong from time to time. And you, you simply cannot trust those judgments all the time. You got to test them. Yeah, uh, it's a good, good thing that you brought up fraud because our next story actually involves quite a bit of fraud. Um, the senior VP of FP and a for an NBA basketball team. I won't name who you could easily Google it. Um, was charged NBA.

Mike Whitmire: Man, they can't get anything right right now.

John Siegel: No, they cannot. Um, they were charged with embezzling $3.8 million, almost $3.8 million. Um, see here. He was charged with, with wire fraud for allegedly embezzling nearly $3.8 million over several years. Uh, from 2017 to 2025. Uh, he charged millions in personal expenses which included, but weren't limited, uh, to luxury travel, a Porsche, Louis Vuitton products, and random gifts to corporate credit cards which he controlled. Submitting. Doctored. He submitted doctored or entirely fabricated expense reimbursement requests, including one for 230,000 DOL. Allegedly for a hotel stay that never happened. Um, and he covered it up by altering an Amazon or, sorry, an American Express email to make the invoice look legitimate. This goes deep. This is pretty crazy. I mean there's a, there's a lot of ways we could go in here. Um, but the alleged fraud was uncovered by the team back internal audit, which I thought was interesting, but it's their job to do that. Right. Um, he was forced to resign and now faces a federal wire charge, wire fraud charge, and potential prison time. Probably should face prison time. Right? Yeah. I, um, want to talk to you about segregation of duties around this one. Can you get into that?

Mike Whitmire: Um, yeah. So in this example, you should have someone, you know, one person's making the purchases, a second person is reviewing the expenses and approving the reimbursements. Clearly they weren't doing it detailed enough either. There was no segregation of duties and this VP of finance was approving their own expense reports and it was just getting pushed through. Or if there was someone reviewing them, they weren't looking at them closely enough and seeing doctored, uh, this doctored information. So that is the purpose of having auditors out there, like internal audit and auditors. It's to catch things like that. So good job by the audit team. That's good work, well done. That's what you're paid to do. And that's awesome that you executed on it. Um, but you have segregation of duties very important. And if you're the one doing the reviewing, taking that job seriously is very important. I've. It's far too common to just sign off on something as a reviewer and like trust that it was done properly and not actually spend time critically reviewing work. Um, that is an important thing. And this reminds you that like, if you are part of a segregation of duties process, you're the reviewer of it. Like take it seriously. Actually do the review work, Review these things, look at them. Um, consider, is it reasonable that somebody might have spent close to a quarter million dollars on a hotel stay? No, no. Common sense tells you that's not all that reasonable. So let me dig in a little bit more on this. Like a little baseline judgment and common sense probably could have avoided this issue. But here we are getting caught by the auditors.

John Siegel: Can we look at it from a compliance angle too? Can there be. Obviously they're going to have to start putting in some sort of controls around this.

Mike Whitmire: Um, so since they're a private company, they can choose what controls they want to have in place.

John Siegel: Compliance is our middle name. Um, this, this one is a little complicated, so you're going to have to stay with me here. Um, good news and bad news when it comes to new CPAs. Bad, uh, news is, uh, not a lot of new, new ones coming out. Good news is more people seem to be taking the CPA than in the last couple of years. Um, this all comes down to the CPA evolution, AKA the Core and discipline licensure model. Are you familiar with that?

Mike Whitmire: Core and Discipline, no.

John Siegel: Licensure model, yeah. Um, so in 2023, they basically updated uh, the CPA exam. Uh, they were getting rid of the business environment and concepts portion of the exam, which I'm told was considered to be easier than other parts.

Mike Whitmire: It was the easiest one.

John Siegel: Okay. So people were obviously concerned about it. Um, and there was a rush from a bunch of people to take the exam that year because it would still count. They didn't have to take the four new, um, what do they call them, the new disciplines, which, ah, if you don't know what the new disciplines are, they're business analysis and reporting, information systems and controls, tax compliance and planning. Um, and so there was a cliff the year after BEC was removed from it because one, schools weren't teaching these new disciplines yet. Um, firms weren't pushing their accountants, auditors to take the CPA because they weren't even sure what it would be like and cost a lot of money to fail the exam, I have to imagine.

Mike Whitmire: Yeah. Um, and the study places probably hadn't even put out courses like Becker hadn't put out courses on all of those. So.

John Siegel: Exactly.

Mike Whitmire: Interesting.

John Siegel: So that was 2024 when there was, when it was, it wasn't an all time low, but it was extremely low because people, they were taking a wait and see approach. Um, but as people kind of understood what these new disciplines were and obviously the study materials and schools started teaching this stuff. Um, more people took the CPA exam. More people started to take the CPA exam, uh, than beforehand. So there was kind of a backlog of people, and they all rushed to take the cpa, if that makes sense.

Mike Whitmire: It does. I'm trying to. I'm thinking about the story behind the numbers here. So it doesn't. That does not necessarily mean more people entered the accounting profession. You still have the same number of people graduating. They just. There's more of a crunch in one year to pass a CPA versus a prior year because there was uncertainty. Yeah, well, it'd be nice to have more CPAs, I guess. For starters, I think it's a really smart move. Like, yeah, BEC was the easy one and in many ways felt like common sense. And then having one of those four disciplines is a lot more impactful for your career and allows you to, like, differentiate yourself, interviewing and all that good stuff. So that's awesome to hear.

John Siegel: Um, but, yeah, objectively, those new disciplines seem like they make a lot of sense.

Mike Whitmire: They make a lot of sense. I can sit there and be like, okay, I understand any direction you want to take your career in with, like, all the career pathing opportunities for accountants.

John Siegel: You.

Mike Whitmire: Yeah, you want to become good at systems. That's awesome. You can do that. You want to be a tax expert, you can do that. You want to do planning. You want to be more on the FP and A side, you can do that via planning. And then what was the fourth option?

John Siegel: Uh, it was business analysis and reporting, information systems and controls, and tax compliance and planning.

Mike Whitmire: Yeah, there you go. So that covers, like, the career pathing opportunities for accountants. That's very smart.

John Siegel: Selfishly, I kind of want to talk about FCA here.

Mike Whitmire: Okay.

John Siegel: The full cost certified accountancy program or accountant program. Um, we're talking about these. These new. These new disciplines. They're a couple of years old at this point in time, and how they just simply make sense. Uh, we launched the FCA program at Take Control this year. Um, we've since had quite a few, uh, people get their FCAs. Um, Dan Callahan, um, who's on the next episode of Blood, Sweat and Balance Sheets. Heads up. Great interview. Um, he recently got his fca.

Mike Whitmire: Our very own Chief Accounting Officer.

John Siegel: Yes. Sorry, Dan, Podcast cio. Um, got it. Do you mind talking about the fca? FCA program?

Mike Whitmire: I'm. I'm really excited about it. So I think if you compare it to the cpa, it's like that discipline you'd want to take is the information systems 1. And then flowcast Certified Accountant program would be a very natural extension of that. And then you build out your resume where all of a sudden it's like, okay, I'm a cpa, my discipline is around financial systems. And then I'm a Flowcast Certified accountant. That's like a really good resume builder for becoming an industry accountant who's owning flowcast and is what the future of accounting looks like. So I think that's really cool. Um, the FCA program, it's awesome to see how many people have already gone through it and completed it. It's also just the feedback I've gotten from people as I talk to them about it. I was at Sweetworld, uh, in Vegas about a month ago at this point and just everyone I talked to who had heard of the program loved it and they were in process of doing it or had already completed it and just love what we're doing. And it's really the, the fact that flowcast is by accounts for accounts and then putting our money where our mouth is about the future of the industry and saying like, we're building a platform that we want accounts to own and we're investing in an upscaling program to make sure you're successful in the future of accounting is really compelling. It means a lot to people. So it's been really cool to see the, just like the anecdotal reaction to it and then the numbers of people going through it has been awesome. Also, I love fca. I think it's, I think it's huge. I think it's like really cool. It's work I would have enjoyed doing as well if I were still an accountant. I would like being an FCA and be in the Flowcast admin and doing the transform work like that all is very interesting to me. Um, so selfishly I would have liked it. And then I feel really good that we're able to do it and put it out to the market.

John Siegel: All sorts of accountants have gotten their FCA at this point in time. But I think it's really exciting to see the more junior level ones taking it and being proactive because they're going to be the controllers and the CIOs and the CFOs in five, 10 years.

Mike Whitmire: Yeah.

John Siegel: So and being that proactive and getting out in front of it, um, it's, it's obviously it's ah, it's a level

Mike Whitmire: up from Dan and I talked about this a little bit like um, it became table stakes to put proficient in Excel on your resume under skills within accounting and people have varying degrees of Excel skills. When they put that, when they put that on their resume, you're going to start in the way that people were like, do you know how to use Excel? You would say, yes. People are going to be like, do you know how to use AI as part of your interview? And it's going to be yes. If it's just on the bottom of your resume under skills putting proficient in AI, it's probably not as good as saying Flowcast certified accountant who has used AI in practice and have done XYZ things with it. So that's the idea is we want FCA to be something that goes on your resume and is a differentiator and is a compelling enough reason for a job to pick you as the person to hire instead of somebody who just put proficient in AI on their resume. That's, that's like where I see this going. And I think what the power can be in terms of everyone's selfish career journey is that is hopefully, and I believe it will be a leg up for looking at your next job.

John Siegel: I was looking at Reddit, um, for work, I promise. Our next, our next session is a section is have you read it? But before we get there, someone asked fellow, uh, Redditors to roast their resume. And at the top of the, at the top of the resume, it showed that the systems they'd used and they, they mentioned Flowcast. No FCA yet, but it was cool to see.

Mike Whitmire: That's sweet. Did it get roasted?

John Siegel: Not the, the resume. It did. I can't remember. It was. I can't remember exactly. I should have, I should have added it to this, this, uh, this section, uh, have you read it? Which is a fun one. Um, but it didn't make the cut.

Mike Whitmire: That's cool. I remember talking about that really early on and being like, it's going to be a cool day when Flo Cast starts going on LinkedIn profiles and resumes. And yeah, we're seeing it.

John Siegel: I think it was like the first, the first thing under the name and phone number and address and everything.

Mike Whitmire: That's pretty awesome. That's pretty awesome.

John Siegel: Um, this first one here, uh, you don't have your laptop, so I'm gonna have to explain it to you, but the people will be able to see it. Um, the title is. The title is AI is giving the new graduate experience, which I didn't really understand until I looked at this. Um, it's a screenshot from ChatGPT5. Um, and the prompt is a question. It says, did you make up these numbers. ChatGPT responded, Good catch. I wasn't actually able to open and parse your CSV file yet. We talked a little bit earlier about quote unquote, hallucinations. Um, this is an hallucination. This is. To your point, it's wrong. Like, it's aggressively wrong. Like, I didn't ask you to make up numbers. I actually tell me you can't do it. Don't just do it by.

Mike Whitmire: Yeah, it's like this is why you need Human in the Loop reviews. It's super. So it's a great productivity tool oftentimes. But it's enough times where it's just wrong that you can't, you can't have it do accounting. You can't go to an agent and say, do accounting for me. Yeah, yeah, but, yeah, maybe that's the future. But it's gotta be used responsibly in the meantime. And that's, that's terrifying for me.

John Siegel: Yeah. Again, we're talking about. This is. This is something as generic as it gets. ChatGPT 5. But we're talking. This is, we're talking about this compared to purpose built solutions. Um, those are built for these examples where you're actually adding a spreadsheet and prompting it to do something. Where you have much more confidence that this is literally what it was built to do versus ChatGPT5 where it's clearly not.

Mike Whitmire: Yeah, yeah, yeah. The more, the more purpose built something is for that task, the more effective it's going to be. That's. Yeah, that's what I'm, I'm banking on for sure.

John Siegel: Agreed. Next, uh, story. I title it Accountants in Love. And I have to pull up the PDF here. Um, this is, this was given out to the guests at a wedding. Uh, it's titled Disclosures. And uh, I'll read it here. Uh, the names are redacted so I'll just refer to them as CPAs. But two CPAs got married a couple weeks ago. Uh, October 25th, to be, uh, just to be uh, specific. Um, and it goes like this. The union between CPA1 and CPA. Collectively, the couple represents a strategic merger effective October 25, 2025. The relationship has been accounted for using, using the purchase method under ASC 805 Business Combinations. With all emotional assets and liabilities fully consolidated as of the date of the marriage. The couple anticipates long term synergistic returns, including but not limited to shared fiscal responsibilities, optimized tax filings, mfj and in compound compounding Emotional equity. Intangible assets such as humor and loyalty have been capitalized are not subject to amortization. No substantial doubt exists regarding the couple's ability to live, laugh, love and budget jointly. Forward looking statements are subject to inherent risks and uncertainties, including but not limited to disagreements over the thermostat settings, dishwasher loading methodology and Netflix content selection. Guests investors are invited to witness this merger cake dividends will be distributed.

Mike Whitmire: Damn it. I hate that I laughed at some of that.

John Siegel: I thought it was pretty good.

Mike Whitmire: It's well done.

John Siegel: That's. Yeah. Bravo to the couple and, uh, congratulations.

Mike Whitmire: Some of those tweaks are really good. Um, Netflix content selection.

John Siegel: This is the last one. Um, this is a chart. Um, it is from the accounting subreddit, which is fantastic. I've come to find. Um, and it shows the most regretted college majors. Uh, I'll read them to you and then give to you. Uh, the reason why this is on here. Um, running away is my major. Journalism, 87%.

Mike Whitmire: Oh my gosh, I'm sorry.

John Siegel: Do you want to see if you can guess some of these? That was the top one.

Mike Whitmire: I. Well, I'm going to. I don't know. It might come off as. Might not come off the right way. The ones. I guess.

John Siegel: Um, you have friends that have probably said this, so you, you, you listen to people.

Mike Whitmire: Uh, history.

John Siegel: Not specifically. No, not on here.

Mike Whitmire: Not specifically.

John Siegel: There are forms of history. Actually, there's.

Mike Whitmire: No, no, there's not no form of history in there. Uh, something. I mean, it's got to be something in the liberal arts world.

John Siegel: Yes, liberal. Liberal arts slash general studies is one.

Mike Whitmire: Okay. Yeah. There's no discipline underneath that. Okay. Um, I don't know. I could see other ones. Yeah, I think liberal arts, journalism, um,

John Siegel: all peripherally related to those and a few outliers.

Mike Whitmire: Okay. Yeah, I'm. I'm not sure.

John Siegel: Sociology, liberal arts, Communications, Education, Marketing, Management and research. Medical clinical assisting, which I thought was kind of interesting. Political science and government. Biology and English slash lit. Huh.

Mike Whitmire: Uh, yeah, I'm surprised by some of those.

John Siegel: And the reason why this is on the accounting subreddit was this, uh, person put. We did it, boys. We aren't on the list.

Mike Whitmire: That's awesome. That's great.

John Siegel: I like it that that brings us to the end.

Mike Whitmire: I am shocked. I definitely thought you were going to say accounting is one of them.

John Siegel: I thought so too. I had to read it three times because Glassman sent it to me and I was like, what? Don't. And then I was like, oh, I get It. They're happy that they're not on the list.

Mike Whitmire: That's awesome.

John Siegel: Finally we made it. Um, last one. And this is an Easter egg, so I'm actually gonna have to show you this. Um, the people will see it, but I need you to take a look and tell us what that is.

Mike Whitmire: Oh, that's Percy.

John Siegel: Can you tell people why. Why Flocast has a peacock slash peahen in front of its office from time to time?

Mike Whitmire: I. I don't even. So we moved in this office. Um, man, we've been here, what, eight, seven or eight years?

John Siegel: 2017.

Mike Whitmire: We just renewed the lease. I should know this. So. Yeah, we've been here for seven years. We just renewed the lease.

John Siegel: Um, I think it was longer than that because I started in 2018 and you guys were definitely here and it was October 8, 2018.

Mike Whitmire: Yeah, yeah. So we've been here. I guess our second lease term has already started. Now I'm. I'm delegating a whole lot of things these days, so I don't know. I don't know about renewal. Um, yeah, Percy, I think, has been here since we moved into the building. It's like the neighborhood peacock or peahen.

John Siegel: I don't know, I could be wrong, but I. I heard that his owner, uh, since passed away or moved or something, and he or she kind of lives on their own, which is crazy because I have to imagine there's coyotes in this neighborhood.

Mike Whitmire: They're definitely.

John Siegel: There are definitely coyotes in this neighborhood. And this, this peacock or peahen, we don't know, um, has been around that long and is still kicking, still squawking.

Mike Whitmire: That's pretty insane when you put it that way. Yeah. My understanding is it's just like a neighborhood.

John Siegel: Yeah.

Mike Whitmire: Peacock we have. Or peahen, whichever one it is. And it's probably eaten bugs and then fed by some people in the neighborhood, just randomly. But yeah, Slooty lives four blocks from here and he has like a coyote on his ring camera. There are definitely coyotes around here. That's super impressive. So survivor.

John Siegel: Maybe they're just in awe of Percy.

Mike Whitmire: Are they multiplying?

John Siegel: The coyotes or the peacocks? Yeah, I don't think so.

Mike Whitmire: Now this is just the one.

John Siegel: Yeah. What if it. What if. What if this is a different bird every time?

Mike Whitmire: Because how long do those things even live for?

John Siegel: I don't know.

Mike Whitmire: Probably a while. Some birds can live a shocking amount of time.

John Siegel: Yeah, they can.

Mike Whitmire: Mhm.

John Siegel: I don't know.

Mike Whitmire: Our neighborhood peacock. We love them. Do they have it? It has an Instagram account. As well, right?

John Siegel: Oh, I think it does. We'll have to get that. We'll put that in the description.

Mike Whitmire: Yeah, it's got his own Instagram account.

John Siegel: All right. With that. Um, thank you for tuning into this rebooted fintech Flow episode. My name is John Siegel. That's Mike Whitmire. M. If you listen to this episode without going to Flow Academy and getting your cpa, you should have. You can. I think. Can you. Yeah, go in there.

Mike Whitmire: Free open, anyone? Yeah, we want to encourage everyone from accounting to go.

John Siegel: Exactly. Go there, get your cpa. It's free. If you haven't signed up. It's Flowcademy. F, L, O, Q, A, D, M, M, D, E, M, Y. Uh, sign up. If you haven't get your free cpa. It's good stuff. Um, thank you for watching. Really appreciate it. And, um, Cody's.

Mike Whitmire: Go. Cody's. Go Dodgers.

John Siegel: Go Dodgers. Thanks, everyone.