Modular Finance That Works for Multi-Entity CFOs with Michael Wood

Speaker A: My health collapsed literally. Not quite literally the day, but within a week or two of stopping, I think speaks to the pressure that I think all entrepreneurs and founders and early teams and exec teams and I think many people listening to this probably would nod along of knowing about it and my health still hasn't recovered. That's eight years ago now. Uh, I found ways of managing, I found ways of improving it and I hope one day it will sort of fully recover.

Speaker B: Welcome back to the new F Word podcast where we talk finances in business. I'm your host Colin Hewitt, founder and CEO at Float. We're so glad to be back for season three and this season we've got some great guests that are going to bring a ton of value. We'll be diving further into how fractional CFOs add value, what financial clarity actually looks like, and what systems and apps are leading the way. New guests, sharper conversations. Let's get into it. Hey, welcome back to the new F Word. Today I'm speaking with Michael Wood, a true pioneer in accounting technology who's built his second major software company after co founding Receipt bank, which many of you will know evolved into Dext and transformed how we handle data capture in accounting software. Will explore Michael's journey from startup to scale up to successful exit and what he's doing now in applying those hard won lessons to his new venture, Translucent. With Translucent, Michael is tackling one of the most persistent challenges that force businesses to migrate to larger mid market or enterprise erps, spending hundreds of thousands often. And he wants to change this, helping multi entity businesses to scale using platforms they love like QuickBooks and Xerox. In this conversation we explore both the business and personal sides of his entrepreneurial journey. Michael opens up about the toll of his first company and the tick on his health and the importance of recovery. Before starting again, we also dig into the specific market gaps Translucent is addressing, from consolidated reporting to solving the surprising impact of duplicate accounts payable. What I appreciate about Michael's approach is how he's building solutions based on deeply understanding client needs rather than following industry trends. A perspective that from being a second time founder with the luxury of experience, if you've not come across Translucent, I highly recommend checking this out. Uh, backstory. I have a feeling this is very much the way the market is headed. So let's get into it. Michael, it's great to have you on the show. Welcome.

Speaker A: Thank you. Delighted to be here.

Speaker B: We've known each other for well over a decade I imagine, and I think I met you originally you came up to our office when I was running an agency and you were talking to us about Receipt bank which is this company that you just bought and you were up meeting free Agent. I don't know if you remember that. I remember you coming in and I don't even know why we maybe we started working on float.

Speaker A: You had start on float so you were effectively add on number one for free Agent. This term not even used nowadays app number one on top of free Agent and I guess we were in the northern hemisphere app number one on top of zero. We definitely weren't number app number one globally but I'm trying to think if there's anyone else in the northern hemisphere that was before us. I can't think of anyone.

Speaker B: So it was early days and I think it'd be great for people who don't know you just to hear about that journey. I don't want to spend the whole time on it because we know we could do. But it'd be great to get this kind of whistle stop tour of a Receipt bank and how it became dexed and this new one now.

Speaker A: Sure, happy to. As often in these things there's quite a bit of serendipity along the way and it all starts with I was running basically my own personal service company so having a limited company in the UK for my fractional cmo, uh, Chief Marketing Officer work. Of course the term fractional wasn't so much then, it's just, you know, but that's effectively what I was and I was using MYOB which was marketing itself in the UK around sort of circa 2006, 2007 as the easiest to use most user friendly accounting software in the market. I adopted it, got to the year end, uh, handed over the file to my accountant and she actually very pleasantly. But she did say to me oh Michael, normally for year end we charge £2,000 a year but you've made such a mess of your account we're going to have to charge you £3,000. So that was my sort of first lesson in trying to self drive my accounts and how I huh, should never be allowed to do that. And just for sort of background, obviously I'm not an accountant or anything like that but she also said look, why don't you try this? So this is 2007 she said why don't you try this? And she put me onto cashflow, cashflow spelled with a K which was the first UK cloud accounting product. And at the time that sort of 2007 to 2010 there was more than this. But the three leading players in the UK were cashflow and Free Agent and a New Zealand entrant called Xerox. And Those were the three cloud accounting participants. And so from 2007 to 2010 I had three years of using cloud accounting. So one of the very first businesses to be a cloud accounting client around the world. And that was a huge bit of serendipity. So in 2010 I had this experience and part of the experience for me was all these receipts and invoices. It used to be really obvious what to do with them because my accountant had the accounting file. So of course I've got to go in with the Tesco carrier bag or the shoebox or whatever. But now that we have a single ledger in the cloud, it's ambiguous as to whose responsibility this data entry is and it ends up being mine. And I don't think that is how I or most clients will want it to be. And so that was the genesis of Receipt bank. And it was Receipt bank from 2010 to Nova 2019, 2020 it was rebranded as Dext. And so we were the number one add on or app on Xero around the world doing the, for those that don't know, scanning the receipts, scanning the invoices and getting them into the accounting software that was the background.

Speaker B: It was kind of impressive to see the rise of. You know, I remember going to Australia and seeing, just spending a bit of time in the office there when we sort of landed in Australia, just being really impressed. It was a machine in terms of sales organization and um, when you went to events, you know, there were 50. It felt like 100 people in orange T shirts walking around and then the pre parties and you guys just really nailed that acquisition channel and owned it in a way that we all aspired to. It is impressive to watch. I imagine it must have been exciting to be on that uh, rocket ship.

Speaker A: In a way it was exciting, but it's not really those bits that I remember. The bits I remember were almost the more dicey bits. So I think many people listening or watching to this will have empathy with this story. But we started Receipt bank in August 2010. We were able to accept payments by 2011 because of course this is pre stripes, you had to get apply for merchant accounts, et cetera. And I think it was 2012 where I had had a tip off about the zero roadshow that was happening in Australia and the number of accounting firms, they were present at this. And the numbers were forget a single magnitude. There's several orders of Magnitude bigger attending that than anything that was happening in UK. Account text didn't happen then in the UK. 0 Ah, call in the UK was a fraction of the size of a single date of the Sydney Roadshow. And I remember the board meeting at Receipt bank at the time and going saying, we need to open in Australia. And that didn't get a particularly positive response. I understood why I didn't get a particularly positive response because our monthly revenue at the time was £3,000. So we had monthly revenue of £3,000. And in comes the youngest member of the board by about 10 to 15 years saying, oh, the thing we all need to do is to open an entity in Australia on the other side of the world. That would be a smart thing to do. And of course everyone else was like, what are you talking about? You know, surely we need to conquer some other phrase, the UK first before we think about Australia. And my argument was like, no, no, this cloud game is different. You've got to go to where the game is being played. And it happened to be Australia. But if Argentina was where cloud accounting was at its hottest, I would have made the argument for Argentina. I do appreciate the compliment of the machine that Receipt bank bec and is. But the bits I remember those sort of pretty dicey decisions of like, this feels like the right thing to do. And there were many others. I remember we were sort of very early with an iPhone app to take a photo of receipts and that was one of the first things we brought to, uh, cloud accounting. The idea of take a photo with your smartphone and you know, that goes straight into Xero. Again, a controversial thing to invest in. A time when BlackBerry was dominant, the iPhone, the App Store was brand new. It wasn't the behemoth and the feature of everyday lives that it is now. It wasn't that then. So there was a sort of series of decisions sort of in my head. I look back and think, oof. Those were interesting to go through. That facilitated the machine.

Speaker B: Absolutely. I'm sure there's hundreds of stories we get into, but I want to skip forward a little bit to there's a time when, you know, I would have picked up the phone to you and you would have given us. We would have given talk through some of the things we were facing at float. And then after the sale, I think, where's Michael gone? He disappeared for a bit. And so tell us about that. You sold and then you took some time off. Love to hear a bit about that.

Speaker A: It's actually not that happy a story. So what happened was it was in 2017 and we were in the middle of the Series B process and that was the first time there was going to be the opportunity of a secondary sale of shares. The opportunity to actually make some money having built this business for seven years, but that seven years as much as from the outside looked like a success. I as an individual didn't own a car, didn't own a house, had credit card debts, all these things. As much as one ostensibly could say, oh, there's Michael, he's got this high personal balance sheet or asset value or can't think of the right phrase actually it didn't feel like that at all. And so we had the Series B. There was going to be a chance of some serious secondary that would enable me to buy a house for the first time in my life. That was exciting. And we're going through that process and suddenly an uh, acquisition offer was made for the whole company. And it was a very odd moment to live through. The phone call was made to me, let's say sort of 5:00 in the afternoon, so saying, oh, Michael, verbally, we'd like to buy the company for the X. And okay, so communicated with Alexis, my co founder, communicated with the board, you know, this has happened. Went to bed and woke up and realized I was exhausted. And it was that thing of I was 100% happy that uh, 24 hours before I was 100% happy to proceed with a Series B, Series C, keep building, keep building, keep building. But the fact that someone had phoned me and said, actually this pressure, this conveyor belt, it can stop, made me realize how emotionally tired I was. And so I went back to the board. So whether we accept the acquisition offer or accept the series, I don't mind, but I can't be part of the pitch for the Series B because I realized I need to stop. And so we did do the Series B rather than the acquisition. And I worked till the next six months, you know, to sort of slowly off board things and stopped at Christmas. But then my health collapsed, but within a week or two of stopping. So that I think speaks to the pressure that I think all entrepreneurs and founders and early teams and exec teams and I think many people listening to this probably would nod along of knowing about it and uh, my health still hasn't recovered. That's eight years ago now. I found ways of managing, I found ways of improving it and I hope one day it will fully recover. But there's obviously something about the stress of that journey that absolutely Took a toll. So I would love to say in those years away I was on safari or I was learning to surf or went back to uni and studied PPE or something like that, but that really isn't the truth. There was quite a lot visiting doctors and it wasn't all bad. I wasn't completely sort of bedbound or anything, but it wasn't sort of fun and games.

Speaker B: Thanks for sharing. I didn't realize it was that, uh, serious. And I've heard other people go through similar things. The pressure and the uh, the exhaustion is real.

Speaker A: It is brutal. And I think what founders bring and founding teams often bring is energy more than anything, obviously direction as well. But energy is such a big part of it. And it's the emotional energy that's the brutal part. Physical energy is quite easy to manufacture, but the emotional energy is harder.

Speaker B: So with that context then the fact that here you are going again like an idiot, that's obviously a huge decision coming out of knowing what you know and what it's going to take. I think you were living in was it when, when you first started translucent. And we get to hear about how that came about. And um, you saw the need.

Speaker A: Sure. In Building Receipt bank. Now Dext. We were eight entities around the world. You know, obviously we had companies in the uk, Australia, South Africa, France, America, et cetera. So we were so eight entities around the world. There was eight Zeros and one qbo, because QBO at the time's in France for our French entity and Zero is not. We were this multi entity business and this was for 2015. I saw firsthand the problems of trying to run a multi entity business, a group business, across multiple copies of, let's say, Zero. And what we did was obviously we knew that netsuite was some natural progression, but that wasn't a project that anyone wanted. And in some ways it wasn't software anyone particularly wanted, but it really was the project. So we spent two years putting it off and that was using a lot of different apps, it was using different hacks and things like that and doing what we could. And I was spending a lot of time speaking to other prominent UK startups that are in the same boat. Now. How did you stay on Zero longer? How did you stay on QBO longer? Uh, but after two years, in the end we had to make the move to netsuite. And again, that was an interesting project to watch because of course you're not just changing your accounting software, you have to change all the ecosystem of apps that's around it uh, you normally have to make some changes within the finance team to have people that driven NetSuite before, et cetera. So I became very aware then of what I call the 0netsuite gap. And obviously there are mid market vendors out uh, there sort of Sage, Intacct, iplicit, accountiq, various other people. But I feel the market is now best described as this zero NetSuite gap. And so we went from zero to NetSuite. And so ever since then I've been fascinated at ah, this opportunity and sometimes different entrepreneurs would come and say uh, oh Michael, you've got any good ideas? You know and I'd be oh well if you want to build a huge company, build for the 0netsuite gap. And the reason I'm saying that is because the Xero API is so good now and the QBO API is good and Penny Lane in France, API is good and exact in the Netherlands the API is good. It means that there's the ability to build the mid market functionalities on top of the SMB accounting software. So therefore you don't need to migrate, you don't need to go through that big project to leave, you don't need to incur the extra costs. I've been aware of this for a long time and then after several years my health got a bit better. I thought, you know what, I'm going to solve that. That was founding Translucent about two years ago and Translucent is exactly what I've described. It is a number of apps in one and all the apps are aimed at the same client, that business that's operating a multi entity setup, but doesn't need to go to a NetSuite or something above, you know. So our apps are things like consolidation, intercompany, automation, prepayments, deferred revenue, cash management, etc. And so we're launching more and more apps. There's a huge long list we want to build because we think it's really interesting to have many of these apps all on one platform so they all work together but also sitting on top of the accounting software that does a really good job. There's no need to move away. So that's why we're building up Translucent.

Speaker B: I love it and it makes so much sense. And um, we haven't been through that journey of moving to netsuite. You know, we've stuck with zero. But I've heard so many people having horror stories of just how much it costs and then when they get there, the cost to maintain a platform like that or a System like that. And uh, that's like you say why you have these other ones, iplicit and Coins IQ that are seem to be growing as well. But like you say, what's the advantage of moving to one of those platforms when you get everything you need in Xero if you just have these extra parts that you're building out?

Speaker A: So I think the big innovator in this space was a company called Rippling, which, which many people listening to this will be familiar with. And Rippling created this concept of the compound startup but for HR software starting with payroll and onboarding software etc. And uh, there's various ways of describing what they do, but my favorite way now about thinking about it is actually they reinvented how you should buy mid market or enterprise software. If we think of how did you historically buy mid market software? It was like going for a Michelin starred meal. You pay a big price, you're £200 per head or whatever it is, and then you get all 12 courses and you will eat all 12 courses and you will sit there and have all 12 courses. Even if you just wanted something, you're going to have all 12 courses. Um, and what Rippling realized is yes, this person may want all 12 courses, but let's give it to them as a buffet so they can just buy the bit they want when they need it. Our experience of the market is most people do not want to leave zero, they want to stay. But they have a problem. Now that problem may be forecasting, it may be intercompany automation, it may be prepayments, it may be consolidated reporting, it may be working at AP dupes across the group. It can be all sorts of different things but normally they are running these multiple zeros, this multi entity setup and they have a burning problem. And what we try to do is to help them with that first problem. Obviously if it's an app we have then what we find is oh, I now also could be more efficient there, or now three months later, six months, I now have this problem. So what we try to do at Translucent is allow them just to buy the apps or the modules that they need at a very cost effective price so they can solve the problem they have there and then without having to get bogged down into a uh, project of oh, I've got to migrate my accounting software, I've got to rip up my ecosystem of other apps and user permissions, et cetera that I have, et cetera, et cetera. So that's why we think what Rippling did was incredibly innovative because they basically allowed you to. Well, yes, the business has this need, but that doesn't mean you need to rip up everything else you've got just to now scratch that itch. You can keep everything else in place and solve that problem.

Speaker B: Makes a lot of sense. And uh, if Translucent had been around at the time when you know you were making that shift from your current, your setup at Receipt bank is the product at the stage now where you could have said, hold on, let's use that, uh, 100%.

Speaker A: I think there's three great reasons people move to NetSuite. One is IPO is properly on the agenda and you need NetSuite or a system of that gravitas for credibility. You have a situation where a new CFO comes in and she and her team drive NetSuite. That's how they do it. And clearly if you've hired that person and that's her stack, of course you're going to respect that. You're not going to hire a CFO and then tell her to, no, no, no, you've got to do something else. And the third one is an auditor insists on it. They're saying, no, no, I don't like your current setup. And there's really good reasons to use NetSuite. But the number of times you see businesses, there might be a chain of 10 cafes or recruitment agency that started to do some M and A. So there's now four entities or software business that's in three countries, engineering studio and two sales offices or whatever it might be. The idea that Those businesses need NetSuite or something above is just not correct. And I would also argue that the need to make a full migration to intact or something like that, when as I say, normally the situation is just one or two very easily solvable problems is also incorrect.

Speaker B: I, uh, think that's powerful. Even one of the things I've heard from people scaling up is they're moving away because they need more tracking categories or something like that. First of all, I'm not sure like why zero have stuck with only giving two. And secondly, you know, you guys solve that problem as well, don't you? Add multiple.

Speaker A: So Craig Walker, who is the founding CTO of Xero, is on our board and I have chatted to him about his issue. That decision was obviously made a long, long time ago and you've got to have huge sympathy for the architectural decisions that were made 2006, 2007, 2008. They would be the first to admit themselves they weren't anticipating Cloud accounting to evolve in the way that it has evolved. So they made certain trade offs, certain decisions. I'm sure that the team in there today scratch pull their hair out and wish they could do more bed tracking. Categories are a great example where we saw again and again people leaving Xero because they're limited to two tracking categories per entity. So we created these things we call data dimensions. The ability to create six new effective tracking categories across the group to increase the scalability of the data model. But yeah, our job at Translucent is basically when any group is looking to leave zero and um, they think, oh, this is where it falls down, this is where it breaks, this would be a reason to move to a bigger solution. Those situations are all super interesting for us to hear. Those are problems we would like to solve.

Speaker B: It's also becoming a thing where people. The huge legacy issue in the UK of uh, people using something like Sage 50 desktop, but yet you can't, they don't want to migrate to Sage in the cloud because it's not quite there yet. Does this solve a problem for people actually going, you know, we can get off. Do you have many people coming from uh, legacy platforms like Sage 50?

Speaker A: We see a bit. To me the Sage 50 migration feels like a demographic event that's going to happen that hasn't happened yet. My feeling is obviously I'd not be Sage's CRM database, but my guess is there'll be two major constituents in that database. I think the minority will be people that have built certain things on top of it and therefore moving is a scary prospect. But I think the larger constituent of that database will be business owners that put it in two, three plus decades ago. It works for them. I think as they would see it, the siren song of cloud accounting is not seductive and they're not interested in moving. Now when the next generation take over that business or when they sell that business, that's the moment when a new wave come in and think, well actually no, no, these are the efficiencies that come with cloud and this is the change that comes. So we do see it, but I don't feel we're anywhere near the crest of that demographic wave, which is when most will move is my hypothesis.

Speaker B: That makes sense and obviously we're talking a lot about Xero, but are you seeing adoption from QuickBooks users as well? Are you focused on the UK or.

Speaker A: I am sometimes guilty of using Xero, uh, as a proxy for SMB accounting software. It shows sort of how much we worked with Xero in the Receipt bank days. I often do it. What do you see, Colin? You know you've built consolidated forecasting, so you must also be seeing this need, this multi entity need.

Speaker B: That was something that we were asked about from years ago. My background is not in finance, my background was running a small business. So thinking about multi entity at the time wasn't something I was even aware of until we opened our Australia office. And then all of a sudden I was like, oh, I get it now. You know, we've got in Australia, zero account on the uk, zero account in how we report our own cash flow, which we were using our own product for. It didn't work. So that was the first time we saw the need of it. I think a lot of the team were just like, we've got such a range of customers from, you know, much smaller businesses that are not doing that. But then also on the other end, all these companies coming saying, can you do consolidated cash flow? We had to say no. Um, and we just thought, well actually let's almost treat this as a different product. And the team were a bit reluctant to go down that route. And I said, look, I think cash flow is so complicated like that, just adding another layer where then you were start thinking about things like intercompany transfers or, you know, it just felt like we're opening the door into this, like you'll understand it, like this big world. And um, so what we decided to do was like a very, very basic consolidation where we just, you run an individual cash flow separately like you would do with different accounting platforms. And then we just pull in the balance of those and let you view them all on one dashboard together and let you plot your multiple different scenarios across those. So, um, it's one of those features where it's just been pulled out of us by the users. But now we're having people coming to us only for that consolidation. They're just like I heard you did consolidation. And we're here and really exciting to see. Got it now. And it's kind of, there's so many other things we want to do in the meantime that it's almost like that one ticked off, the next one for us is vat GST that we get asked a lot about as well, which

Speaker A: is another big beast, what specifically VAT or gst.

Speaker B: So just being able to forecast that into the, your payments when they come in. Our forecasting is because it's cash based, it's VAT inclusive. So we didn't want to get into other platforms out there that every time you're entering an amount M, you're saying like this category has this amount of VAT on it and a lot of our customers are just like, that's a level of complexity that I don't want to think about. I just know my rent is this on this day of the month. That's what I want to put out there. So anyway, we've a lot of people um, focus on short term forecasting and most people with VAT issues are doing it. They know what their VAT is going to be next month anyway because they've just submitted it and they've got another month and seven days and sometimes they're only looking that far out. So for us we sort of felt like it's not a huge problem. But now we're getting into these larger companies, they're wanting to do longer term forecasting and um, they need to know their VAT liability because it can be sizable. So that's the next big one off our list. What's on the roadmap? I know you've listed about four products. What are the big things you're eager to tick off?

Speaker A: I know one of the things the guys are working on just now, and this isn't one of the big things, but it is funny, I don't think everyone will realize it here of so each 0 file has a time zone and that time zone actually sets the FX rate it's used. And so one of the things I know the guys are working on just now, it can make translucent look inaccurate because it's like, well, you've pulled my four zeros together but your number seems to be different than 03 and 04 because we're operating on a single time zone now. Uh, and your four zeros are coming from different time zones. So one of the things they're doing is allowing people both to see which time zone each of their zeros are on, but also then to have the ability to say, well actually, do you really want this? Would you Prefer your Australian0 to be on the same time zone? Doesn't change the currency at the same time zone as your UK0 because then that way they'll use the same FX rates and things like that. Now for some people that's like, oh, I don't really care about that. That's a level of detail more than I need where other people are. No, no, this is the thing I need as I say all was working on is just what problems we have. The latest one that we've been getting some great feedback about is I Mentioned AP dupes. It's the first tool in our procurement app. It's a free tool, anyone can use it and what it allows you to is add your zeros or your qbos to translucent and we will show you the AP jups across the group. And it is amazing how many people have money they can recover. And we've seen many people have thousands, we've seen people have tens of thousands as a P and L effect and we've actually seen people have hundreds of thousands as a balance sheet effect. Like different types of business and obviously we've got businesses of all size but we're excited about that.

Speaker B: So AP dupes are uh, comparable duplicates. Why do those things exist?

Speaker A: It's really interesting. I think by far the most common case is some kind of error. So it's been the invoice has been sent once to one entity and maybe the statement has been sent to a second entity or a follow up has been sent to a second entity or if it wasn't on the supplier side it was somewhere in the finance team of it's been one copy of the invoice has been done once and then sometimes you can just see it might not be there's two copies the invoice sent. It can literally they'd be. You can see in the data it's been obviously processed on a Monday and then for whatever reason it's been processed again on a Tuesday and just it happened to probably be a different bookkeeper who's like, oh, this one should go here, not there. You definitely also do get fraud. There is definitely people deliberately testing a system of well, I'm going to send this invoice more than once and you know, we'll see what happens. So the various situations but the vast majority of groups have AP tubes and sometimes it can just be a small amount, a few hundred pounds in a year or something like that, but it is commonly thousands of pounds. Again, that is the kind of problem we want to be all over of. No, no. Whether you're running two zeros, 20 zeros or 200 zeros, we want you to be in a situation where you as the CFO or you as a fractional CFO effectively feel as though you've got a single system and not this fragmented system. And so AP dupes for something as very new off the ramp of just uh, the first users been getting in the last week or so. But that's the kind of thing we're just constantly what problems need to be solved to give the finance teams operating A multi entity setup, comfort, reassurance, efficiency.

Speaker B: And you said 200 zeros. Do you have anybody with 200? I mean, that sounds like a huge amount.

Speaker A: It was interesting. So when I started translucent, I did some numbers and of estimating what the market size was and how many people would be out there running five plus zeros, ten plus zeros, et cetera. And I got all my numbers wrong by a huge margin. We have very large groups and the frequency that people are coming to us with 10 plus 20 plus, I thought they would be almost sort of unicorn. So I thought, oh my God, someone's come through the door with 20 zeros. That is not rare at all. And when people come to us, as they do every day, with groups of three or four or six or seven or eight or nine, that's all just a normal day. Those coming through the door with a hundred plus, that is more rare. You know, I can't claim they come through the door every day, but they're not super rare.

Speaker B: Um, and what are they doing if they're. Before they're using translucent, like they pulling things into Excel or it then gets

Speaker A: down to sort of which workflow are you talking about? You know, are you talking consolidation? Are you talking intercompany? Are you talking AP jups, are you talking FP and A, you know, what are you talking? And obviously the vast majority are using Excel in some ways. You see all sorts of interesting problems. Some workflows you can see, oh no, I can see you have been managing, but often you see situations where, oh no, this just hasn't been working. So intercompany is a classic example of. If you think of intercompany accounts in the chart of accounts, you would like to think that there is a, uh, coherent nomenclature used, naming convention is used that is coherent. The vast majority do not have that. And you see that actually what's happened is probably the business started out as a single entity and then let's say, say five years ago, a second entity was added. So whoever was running the finance team or whoever was in charge of the chart of accounts added something. Then let's say two years went by and two more entities were added. Someone different was doing it. Or if it's not displaced in time, it might be displaced by geography. So it might be actually one person or one accounting firm has set up the chart for accounts in Australia, whereas another person, another accounting firm has set up the charge for accounts in the UK entity. And so when someone comes in as a cfo, they're then confronted with this data set that's mangled so you definitely sitting in seat of translucent, you definitely see how being managed for some workflows but you see an awful lot of people that have to some degree it hasn't been working.

Speaker B: Wow. You must have a lot of happy relieved customers I imagine when they sort of get the view of what they can do.

Speaker A: It's why I talk about sort of reassurance sometimes. Like one of the first apps we actually put out there was the ability just to search across all the zeros and all the transactions at once. It's give the ability for people to see all their data. Ah. And it's interesting a lot of people think of consolidation as a month end process. Actually we're working for it to be a much more live process so you can see what's happening, you can see where things are going wrong. And particularly the multi entity setup. It is quite rare in a multi entity setup for just one team in some way to be doing all the bookkeeping. So as soon as the bookkeeping's a bit fragmented, different processes, different people, different preferences, different setups, instantly that's a recipe for things to begin to go awry. To be honest, we're super excited about the ability for, I keep using the term zero here but we're super excited the ability of SMB accounting software to get more and more sophisticated uh, and conquer the world. Because there's a really interesting debate one can have now about okay, is the next generation of accounting software UI based or API based? UI is exactly the accounting software. As you know, you log in, you use it personally and API based is how two software programs speak to each other. And when you look at what AI agents are going to do in this world, they are going to do a lot of the UI tasks and they're going to need the APIs. So it's absolutely fascinating about how does that look, how does it work? What will accounting software, what will Xero be in 5 years time? Will Xero still be something that people log into or will they be making their own AI agents or buying AI agents that how will they be operating it? And uh, no one really has the answer to that. But it's fascinating to think about.

Speaker B: So fascinating. I think my final question is probably going to be it's really interesting being a second time finder and that's the only people laid back as second time finders because they've been through the journey and they've seen, they've made their mistakes, they know what they're doing differently what are you going to do differently? Or what are you doing differently with Translucent? How are you approaching it? You know, obviously the world has changed. We're in the AI world. Are you planning to still scale in the same way? Are you going to ramp up the sales team? Are you going to. What are you going to do the same way you're going to do differently without giving away all your trade secrets?

Speaker A: Second time Founders have lots of advantages because they've done it and seen it, etc. They also have disadvantages. And there's a newsletter I love called Stratecheri by a guy called Ben Thompson. He was writing today about Apple and he was basically saying, is Tim Cook in a really, really bad place with Apple? Because everything he did from 1997 to, let's say 2017, there were the right decisions to make. Are all now, uh, the wrong decisions because of the geopolitical stress between China and America, because of AI, because of these different things. And so Ben Thompson's article stratechri article today was almost. Is he absolutely the wrong person to lead? Because he needs to learn completely new lessons. And I think AI is so fundamental. Such a huge shift. I definitely wake up some days thinking I'm really glad I'm a second time founder. But there's definitely other days I think, oh, God, am um, I the worst person to do this? Because you really don't want a whole lot of old opinions and old biases because it is just so, so, so different. Like if I tried to build translucent in the way we built Receipt bank, we would just straight fail. I would just be a straight fail. I think for, you know, AI is just that, uh, such huge shift. And I have sympathy for those desktop software executives, how they must have felt in 08 to 10 or 08 to 12 about how do you make that shift? Especially if you're a bit long in the tooth like I am, I'm almost 50 now and just. Is it better to be a bit naive? Don't have a good answer, I'm afraid.

Speaker B: In terms of what about, you know, are you planning to hit all the events again using different strategy from an acquisition point of view?

Speaker A: So basically, for the last year, what I've been saying to team internally is reconnaissance. So it's like, let's go to certain events, let's try different things. And that's tried to just reflect, acknowledge the fact of, yes, I had a lot of success with different GTM strategies from 2010-20 until we only sold Receipt bank in December or Decks in December, the last bit of it. So we had a lot of success but I've got to work out again do those work now in 2025 and uh, onwards or not. So we've been doing a lot of reconnaissance and some things are pleasantly surprised, some things are negatively surprised. But we're still learning. We're definitely still learning.

Speaker B: I mean it's certainly one from our end. After we opened our Australia office just before COVID and the beginning of 2020 I think we went out and the plan of that was to be able to do those events and then obviously everything was cancelled and uh, since then we've just decided let's just pull back from events because of the energy required to tend to prepare and let's try other things like what would we do differently? Because we were figured that we weren't targeting primarily accountants at that point, we were more targeting CFOs. I think it's an interesting world and but I think people want, still want to go to events and maybe um, what we're thinking is maybe smaller, more targeted gatherings or invitation based parties or get togethers, that kind of thing. So maybe we'll have to do some float on Translucent.

Speaker A: Definitely up for that. Sounds good.

Speaker B: In terms of your health, I wish you all the best. Like hopefully you're able to go at it uh, in a pace that works and what strategies are you deploying to manage that.

Speaker A: And so definitely that was part the reason we started transition than a larger than normal team. So it wasn't me doing all the tasks in the way those first years in receipt bank. I'm sure the first years for you have float where basically you're just doing everything hits your desk. And definitely I was lucky enough to be in the position this time around to have a bit more of a team around me from the beginning so fewer things would hit my desk which definitely has made a difference I think.

Speaker B: I mean that's a huge one. Just delegation, having a COO or assistant and all the different things you can do. So letting go of a few things as well, not holding on so tightly,

Speaker A: letting go is always good.

Speaker B: Well Michael, really exciting. I mean it feels like I don't know how you do it but you've managed to land on another big problem space. It feels like just the right time and you know, really look forward to seeing Translucent unfolding and hopefully we can do more together there as well. So yeah, great to have you on and watch this space.

Speaker A: Thank you very much for having me.

Speaker B: Thank you. Thanks for tuning in to another episode of the new F word. I hope you enjoyed it. Remember, expert financial advice shouldn't be limited to those with just big budgets. You can access the same level of advice for a fraction of the costs thanks to this fractional revolution. I believe that every growing business needs to know how much a game changer this can be. So if you love this episode, please consider subscribing to the show. It'll help us keep doing what we're passionate about. And feel free to share this episode with others who might find it useful. Finally, we'd love to hear your thoughts. Feel free to connect with us on LinkedIn. See you in the next one.