[00:00:03] Matt: I wanted to get it right. I wanted to have all the answers. I wanted to be out of the gate with a perfect business plan, 25 years of entrepreneur. I don’t have a complete plan. I don’t know how to do everything. It’s much better to just go have some conversations, try some things, and iterate a few times, trying to do everything ahead of time and plan everything before you start.
[00:00:26] Intro: Welcome to Experience Matters by Hiver, a podcast where we keep it real about customer service. Every episode features industry experts who share what really goes into creating unforgettable customer moments. No boring stuff. No fluff. Just honest conversations. Stay tuned, and we promise you’ll walk away with insights you can actually use.
[00:00:50] Niraj: Welcome, Matt, to the Experience Matters podcast.
[00:00:52] Matt: Thank you for having me.
[00:00:54] Niraj: So, let’s get started. The first thing that I would love to learn about is your journey with CapForge, how you started, right? I noticed that you started the company 25 years back. You have been running it for such a long time, right? So, I’d love to understand what was your inspiration behind starting the company, and why this business and not anything else?
[00:01:13] Matt: I always knew I wanted to have my own business. Even as a little kid, I knew that going to a regular job and having a boss and getting a paycheck was not for me. I just had no idea how to actually turn that desire into something. So, I ended up working in restaurants and went to college. After college, I worked in restaurants again. I still didn’t have any idea of what I wanted to start or how I wanted to do it, but there was an MBA program in San Diego, where I live, with an entrepreneurship track. So I thought, okay. Great. I’ll go get an MBA. I’ll focus on entrepreneurship. This will be the gateway to finally having my own business. So I did that. I went through the program. I graduated, and I still didn’t have a clear path. So I got hired at a consulting firm that was working with small business owners, helping them write business plans, do financial projections, raise capital, and I worked there for about six months, and then I got laid off because this firm had been venture capital backed, and they’d added .com to their name like everyone else back then, and that didn’t materialize into a real business model. So, I got laid off. But I thought, you know, there are still small business owners out there who need help with this kind of service, so maybe I’ll just do it on my own as a consultant, and I’ll try it for a few months. And if it works out, great. And if it doesn’t, well, I’ll go get another job at the start of the year. So, fortunately, it worked out. I was able to find one client and another client and another client, and continue to be able to bring revenue in, pay my bills and build a little bit of a reputation. And from there, I realized I really didn’t like consulting. Each consulting project was finite, and I oftentimes didn’t necessarily agree with the outcomes that I was being asked to produce. And so I said, “Okay. Let me pivot, and I’ll create some software to help people write their own business plans into their own financial projections. And then whatever they put in, I won’t be responsible for. I’ll just give them the tools to do it.” So, I did that for a while, and that went really well. But I could see already that having all my eggs in that basket was gonna be a challenge, so I diversified: I bought a catering business. Because I had experience in restaurants, I thought, Oh, buy a catering business, it’ll be mine, I’ll run it the way I want, and that was a good experience. I grew it. I ended up selling it 4 years later for about double what I bought it for, and then I thought, “Ah, okay. I’ll be an entrepreneur who acquires businesses. That’ll be my path.” So I got my business broker license, and I thought I’d represent businesses, I’ll buy the ones I like, and I’ll sell the ones I don’t, and it’ll be great. I did that for 4 years. I sold 36 businesses, and I never found one that I wanted to buy. There was always some flaw in each one that I found. I thought, “Ah, this isn’t for me.” But what I noticed along the way in that 4 years was that almost every business had a problem with its bookkeeping. It was behind. It wasn’t professional. It was inaccurate. It was just messy. So I thought, ah, maybe the opportunity is to get into accounting and do a really good job, but also have really good customer service and do it as a fixed fee instead of an hourly rate, which nobody was really doing back then. And it’s recurring revenue, and there’s add on services, and I can do it. I’m not geographically limited. I could do it for the whole U.S. So, that’s what I started in 2012, and that’s what I’ve stayed with ever since the last 13 years, I’ve been focused on doing accounting for small businesses. It started with me by myself in a spare bedroom. Now we’re up to 90 employees, got clients in all 50 states. It’s been a tremendous run for us, and we continue to grow. We continue to do more and more. We’ve added tax. We’ve added advisory and other things. So finally finding my niche after, you know, 12 years of trying this, trying that, trying the other thing, I finally kinda landed on, okay, this is what I think is really gonna work, and so far, so good.
[00:05:09] Niraj: Great to hear that, Matt. I’ve had a shorter, but similar journey as an entrepreneur. So I totally agree, that really resonates with how I think a lot of the journeys pan out, right? Really remarkable that you changed course, changed directions, and, you know, sort of pivoted probably three times and ultimately found something that we like doing, which is, you know, something that you can grow and enjoy doing, right? So you’ve done this thrice. And one thing that I would think about as a common pattern in all of these is that you’d always have had to hunt your first few customers. For a consulting business, for your business selling businesses, and for your current business, CapForge, right? How did you land your first few customers? You know, you have done it so many times, so many learnings there.
[00:05:51] Matt: It’s really just leaning on your personal network of people you know, and then you kind of look and see, okay, in this kind of business, where do other people find their customers? And in the very early days of accounting, we used to advertise on Craigslist and Nextdoor and, you know, some other local media for people who are just looking for a bookkeeper. Or sometimes I would respond to people who had an ad where they were looking to hire a bookkeeper, and I’d say, “Well, I’m not looking to be an employee, but I might be able to help you with your bookkeeping situation.” And so it was really just one at a time going out and trying to have a conversation and see if we could be a fit. And then it’s very much a word-of-mouth business, as we did a good job, as people were happy, they would introduce us to, you know, I have another friend who runs a business who’s looking for somebody, and they knew somebody, and they knew somebody, and on it would go. And you really get kind of a network effect, and it would scale from there. But it’s very much just kind of going out and trying it and having those conversations, which I think is the hard part. If you’ve never done it at all, it’s hard to just go and talk to somebody about something brand new that you’re doing with no real track record, no real credibility except your own sales pitch that you’re giving. But having done it, as you said, a few times already, I knew, okay, this is just the process. You go out, and you sell as if you’re a 90-person company even though it’s only you, a spare bedroom and a computer. You sell it like it’s a whole organization, and you’re gonna deliver great work. And then you do deliver great work, and then people say, “Oh, okay. Glad I picked you, and here are some friends I know you should talk to.” But that’s it. You just kinda put yourself out there. There’s no secret sauce to it. It’s just the effort.
[00:07:36] Niraj: I think that makes sense. I mean, it’s so important to be, you know, as you said, put yourself out there. Be in the thick of things, be authentic, and, you know, just essentially go for it.
[00:07:45] Matt: Yes.
[00:07:46] Niraj: And then, of course, as you scale, right, of course, your first few customers were always, for the lack of a better word, right? I mean, so much hassle, right? I mean, you’re doing so much going after people, going after ads. But then I’m sure you found a process, you found a method, and you found, you know, so to say, a flywheel which kept getting you customers. So, what ultimately started working for you, and then what was or what is the most efficient, effective way for you to get new customers?
[00:08:09] Matt: So, I would say actively soliciting referrals has been the best thing that we can do. So one, doing a good job, right? There’s no better marketing for your firm than providing an effective solution to your customer’s problem that they find value in. You can be the best marketer in the world, but if your product isn’t very good, right, you’re gonna be losing people as quickly as you get them in. So, doing a good job is the first step in good marketing, right? You want people to be able to comfortably say, “Oh, yeah. I work with Matt and his company, and they did a great job. I would recommend them.” Because if you’re not getting that, then you’re fighting a real uphill battle. But then the second part of it is to proactively say, “Hey, Jim, we did your catch-up project, and now you’re signed up for ongoing, and you’re signed up for taxes and we really enjoy working with you. Can you think of anyone else that you know that might be somebody that we should talk to?” And if you’re proactive about it, a lot of times they go, “yeah, I was just talking to my friend Mike the other day, and he was mentioning his CPA retired, or his bookkeeper had quit or this or that. Let me get you his number.” If you don’t ask, they may know that, but they don’t put that together and think of giving you the referral. So, we’ve tried to be very intentional about asking for referrals from each satisfied customer. Then the other thing that we started to get into more was partnering with complementary service providers. So, other CPAs that didn’t do bookkeeping, insurance providers, attorneys, some of the people who make platform software, software that small businesses use as their POS system or their CRM system that integrates with QuickBooks. And we say, “Oh, we’d love to work with you on you know, with your customers or having trouble integrating with QuickBooks or having trouble doing their bookkeeping with your platform for your Pilates studio or your HVAC company or whatever.” And they go, “Oh, great. We’ve been looking for somebody who could help our customers. It’s not what we do, but they need help, and we don’t want them coming to us for customer service issues that relate to accounting or something.” So, partnerships are kind of the other big driver for us of good warm referrals.
[00:10:20] Niraj: To sum up, right, essentially, referrals and partnerships would really work for you. And then all referrals, you know, as you mentioned, right, being intentional about is really, really important. But you have been an entrepreneur for the last 25 years, and you know, so much has happened in the world in this period, right? So many economic shifts, so many tech changes, with AI being the most recent one, right? Looking back, right, what do you think might have been some strategic risks that you might have taken, which might have, in retrospect, large moves, something that worked and something that did not work? I’d be really interested to know.
[00:10:52] Matt: One of the things that was really helpful to our growth, we got involved with ecommerce at an early stage, and there weren’t a lot of other accounting firms that had much experience with ecommerce. We didn’t either, but we took the time to learn and take on some initial customers in that space. And then we were quickly able to become one of the go-to providers of accounting services for ecommerce sellers at a time when ecommerce was really taking off. So all things being equal, right, if you can be in a growth industry where the market’s continually expanding, you’re not trying to take customers away from other providers, right? The fields are just opening with customers who have no provider, and the providers in the space are inexperienced, and they’re not any newer or smarter than you are. So, being involved in a fast-growing industry, it was accidental. I can’t claim that we were prescient enough to get into that. We had a few requests from people who were in that space. And once we got in, we realized, wow, there’s really no one else that really knows this very well. And so we got lucky in being early there, but we took advantage of it. We recognized it was a good place to be, and we put a lot of resources into being really heavily invested in that space. So, that was one that worked out. Well, on the other hand, we dabbled a little bit in cannabis, which we thought sort of, not unlike ecommerce, would be this big growth industry with speciality rules and not a lot of providers, but it turned out that there were a lot of other people who also thought that was gonna be a tremendous opportunity. And the complexities and the hassles, frankly, of the regulation and everything else that went with that industry, ecommerce was complex, but not particularly unusual regulations, whereas cannabis was both complex and highly regulated. And there were a lot more competitors who thought that would be a great area to get into. We pretty quickly learned that we didn’t bring anything extra to that particular niche, but the headaches and hassles that went with it didn’t justify the effort to try and even get to the top of the heap there. So, that was one where, you know, I guess it wasn’t a fail in that we didn’t take a big loss or anything, but we realized it wasn’t gonna be a good area for us to compete. And so, as far as we’d gone into it, we decided to cut our losses and kinda walk away from that area. And in hindsight, that was also a good call because that industry did not take off the way that everybody had originally kinda predicted it would.
[00:13:24] Niraj: That made a lot of sense, right? So, essentially, two great examples with one really working out in your favor and one where you quickly learned. It was essentially a regulatory minefield. I understand, right? So, and then very, very difficult to operate it. When you were talking about CapForge in the beginning, you mentioned customer service as, you know, being an important aspect of what you do, and an important aspect of essentially differentiating yourself as a service. Would love to learn more. How do you look at customer service? How do you measure it? How do you balance it, especially the fact that it costs you money, against the benefits that you derive from it as a business? Right? So your entire perspective on customer service would be really interesting to know.
[00:14:06] Matt: Accounting is an interesting field in that it almost seems like there’s a bias against good customer service. Very few accounting firms seem to put customer service as one of their top deliverables, and it’s almost intrinsic in the industry that people sort of have this superiority complex. It seems like a lot of times, they have this degree, they have the certification, and so they don’t feel like they need to do much more to justify why a particular customer would wanna use a particular accounting firm. There’s just a certain sense of entitlement sometimes, it feels like, and I hear from a lot of business owners that this obviously doesn’t come across well. It doesn’t play well, but it seems to be so pervasive that they almost feel like this is just the way it has to be. So for us, it’s easy to differentiate by focusing on customer service and making sure that our clients not only get good service, but have a really good experience. And to us, that’s defined a few ways; one is speed of communication. So, it’s very typical in the accounting industry that a customer might send an email or call in and not get a response for up to five days, sometimes two weeks. And so for us, our standard of service is 24 hours or less and often same day. So, we hear over and over and over again from customers, “Wow. I was so surprised. I sent you an email at 10:00 in the morning, and I got a response at 10:45 AM. With my last accountant, I’d send a response on a Monday, and if I heard back the same week, I felt like, wow. They’re really going out of their way to get back to me.” So it was easy to set that as a goal and see the immediate benefits of having that speed of response be something that was noted by customers. The other thing is we try very hard to train all of our people, whether they’re CPAs or accountants or even just our admin staff, to communicate in a way that comes across as friendly and human and plain English, right? Because, again, accountants tend to speak in IRS codes and accounting lingo, and they’re not more stiff and more formal, and it doesn’t resonate very well with customers. So, we try very hard to make sure that we’re providing clear explanations in plain English, answering questions thoroughly, always ensuring that, you know, hey, if there’s anything I sent you didn’t understand, or have more questions about, please let us know. And again, I think our customers have demonstrated that they really appreciate that approach, and the extra time it takes, which is fairly nominal, really pays significant dividends in differentiating us from other people in this field. So, I think to the extent we’re not spending heavily directly in marketing and advertising, where we’re investing time and funds, so to speak, is by doing this extra above and beyond customer service in a rapid fashion in plain English. And while there is some cost to taking a little bit of extra time to do that, I think that is a big benefit to our being able to retain customers and generate positive referrals.
[00:17:20] Niraj: Makes sense. Very interesting what you said there, Matt, you know? Essentially, to me, one thing that stands out here is that when it comes to measuring the impact of your customer service or improving it, it makes so much sense to focus on a few simple things than, you know, getting lost in data and graphs and plots, right? I mean, for you, these two simple things were simply the speed of response, right? And the second was tone than language, right? And then, probably just by getting these two right and maybe obsessing over these, you could actually significantly improve your customer service and keep it where it needs to be.
[00:17:52] Matt: Absolutely. I think, you know, there’s the basics of business, people tend to overlook a lot of the fundamentals, and yet that is where you get a lot of mileage and return on investment for making sure those things are right rather than trying to spend hours and hours and thousands of dollars optimizing an SEO strategy or designing a funnel from an ad campaign to ClickFunnels and down into a response or something. But then if the person who gets on the phone isn’t friendly and isn’t speaking in plain English and it’s kind of a turn off because they’re full of jargon or they take a week to get back to you, you’ve lost all the effort you’ve got invested in getting them to have a conversation with you is lost if the conversation doesn’t go well or it takes a week to happen. So I think, yes, the fundamentals of business, there’s always room for improvement there. There’s always value to be had in making sure those are as highly polished and operating at full capacity as possible. And then you can, if you’ve done all that right, then you can start to get a little fancier and explore a little bit more into the marketing, lead generation and other things. But if you don’t have your fundamentals right, I think, you know, a lot of the other effort is wasted.
[00:19:03] Niraj: Makes sense. There’s another thing that I wanted to talk to you about, which is simply the fact that, you know, you, as you mentioned, have a 90-person team, and we all obsess as businesses about the quality of service, the quality of customer service, and essentially doing a good job. But it’s also very important to balance all of it off with being empathetic towards our teams and making sure that they feel good doing what they do. So, how do you do this? Having built a great business, so many people scaling it, how do you also make sure that you’re empathetic as you do it?
[00:19:32] Matt: We try to have regular self assessment, and we have regular peer review, and we have regular management assessment to make sure that while not micromanaging the day to day, there is regular review so that people know that they will be held accountable for the quality of their work, the timeliness of their work, the accuracy of their work, and that they don’t let standard slide or take shortcuts or otherwise sort of compromise what we’re attempting to offer our clients. Because the truth is, right, our accounting clients generally are not the ones that find mistakes or realize there are problems because they hired us in the first place to do something they’re not familiar with, they’re not versed in, they’re not educated in. So they’re not gonna be the ones that spot mistakes or shortcuts or problems. Most often, it’s the internal reviews that are gonna catch those. And so if nobody’s holding people accountable, it can be easy to let standards slide or figure I’ll fix that next month, or I’ll get to that next month or next quarter, or what have you. We’ve worked hard to make sure we have an internal quality control system at several different layers to make sure that what we want going out the door is, in fact, what’s going out the door.
[00:20:48] Niraj: Another, you know, very important topic right now would be, you know, how you’re looking at AI, and you know, what have you done the last two, two and a half years or so utilizing AI to automate more stuff, including quality of services, etcetera. So, please tell us about that.
[00:21:02] Matt: AI is a hot topic in accounting, just like in so many industries, but as knowledge workers, right, we feel like we’re more subject to potential and the threat of AI on both sides. So, I attend an accounting conference every year. AI was probably 80% of the conversations that we had at the three-day accounting conference. What we have done as a firm, a few things, we’ve implemented AI into some of our quality checks. The software is now helping detect issues faster and more in-depth than human reviewers have time to do or may detect. So, that’s one area that it’s helped us. And we’re also now currently working on utilizing AI to help, so one of the things that accounting involves a lot of is gathering documents from clients, right? We need their bank statements, their payroll reports, their credit card statements, loans, etcetera, and we need to sort through them. What have they given us, and what are we still missing and then follow up, “Okay. Here’s what you gave us. Thank you. Here’s what we’re still missing.” This, to me, seems like a task that AI can absolutely be very helpful with, and so we’re working on building workflows that can incorporate AI that can help us cut down the human element of that, which takes hours and requires steady attention to detail from early in the morning all the way through the end of the day, right? You have to be very careful what you’re looking at, make sure it’s all there, highlight what’s missing, and let the client know. So, I think this is gonna be the next use case for us, where AI could really be helpful, is reviewing the documents gathered and sending the follow-up request list for the remaining items and then continuing to follow up until all items have been received. Otherwise, that is a very manual and time-consuming human process, but it needs to be done either way. So, that seems like the place that AI is next best gonna help us. I don’t think we are in a position where we’re gonna trust AI to start doing the actual accounting, even if it was 95% accurate. In accounting, 95% is not enough. But in document gathering and communication of having versus missing, I think AI can do an absolutely equivalent job at that.
[00:23:18] Niraj: Makes sense. Now, essentially, what you said is that you want to use AI for the grunt work, stuff that requires a lot of repetitive, you know, almost manual work that no one really likes doing.
[00:23:28] Matt: Yes. But is nonetheless essential to the project.
[00:23:33] Niraj: A lot of things, you know, that stuff is as important, if not more important than the other stuff that you do.
[00:23:37] Matt: Yes.
[00:23:38] Niraj: Absolutely. Great, great point, Matt. Last question for you, right? I mean, you have been an entrepreneur for the last more than 20 years, right? Anything that you know now that you wish you knew earlier, maybe you have a list to kind of cover up.
[00:23:51] Matt: I think as far as my initial fear of even starting my own business was based around, I think, and in hindsight, I wanted to get it right. I wanted to have all the answers. I wanted to be out of the gate with a perfect business plan that was foolproof, and then considered all the possibilities. And, of course, as you say that now, and think about 25 years of experience in entrepreneur, even now, I don’t have a complete plan. I don’t have all the answers. I don’t know how to do everything, right? So my expectation of perfection out of the gate, day one, was completely unrealistic. It’s much better to just go have some conversations, try some things, and iterate a few times to get to a point where now you have a viable business, and you can build on it. But trying to do everything ahead of time and plan everything before you start, I think, is an impossible goal. And it’s really holding you back, or is holding me back from just starting and just figuring out on the fly and learning as you go, and I think a lot of times you envision a product or service that you think would be amazing, but then you go talk to the customers, and it turns out they don’t really want that. They want some maybe version of that, but they don’t want half of what you thought would be great, and they want some things that you hadn’t even thought to include. And so you can’t build in a vacuum. You have to go out and interact with customers and get real feedback and get real data points, and then you can see if there’s something there that you can now build on. But I think that’s a lesson that, you know, I learned over time, but I wish somebody had told me in a way that I could have internalized back when I was starting, and I would have started a lot sooner.
[00:25:32] Niraj: Hey, Matt. That essentially goes back to the first thing that we talked about, right, which is so important to put yourself out there. And although Matt, you mentioned it as something that you wish you knew, I think you did exactly that. You essentially ended up doing that. It’s just that no one told you that you need to do it.
[00:25:48] Matt: Right. I learned it on my own just by doing it, but it felt scarier at the time than it probably should’ve if I just realized I’m not gonna be perfect. I’m gonna figure this out as I go. I could’ve dove in a lot sooner. But looking back, alright, I’ve had a great twenty-five-year run. I expect to be around for quite a while, still doing more fun things. But it’s all a learning process, and there’s always more to learn, more to do, more to improve.
[00:26:13] Niraj: Absolutely, Matt. That makes complete sense. Great conversation, Matt. I really enjoyed it. Before we end this, I would love to quickly summarize the great things that we talked about. Number one, of course, you know, let me repeat that again. So important for us as entrepreneurs to put ourselves out there. Instead of being on this constant hunt for perfection, you just need to go out there, right? Great learning there. The second was that, you know, your point about actively seeking referrals. Referrals do come the way of good businesses, but, you know, actively seeking them and being proactive about it can make a whole lot of difference, right? And probably not something that everyone does. Probably, we also don’t do it very, very well in our business right now. So great to hear that. And the third point about being in a growth industry, right, I think that just takes away so much friction that you’d otherwise have to encounter while you try to grow. And the last point, of course, was, you know, how focusing on a few key metrics might be the way to go, not just with customer service, but for so many other aspects of our businesses rather than, you know, going really deep into a lot of data and getting lost and be stuck, you know, analysis analysis.
[00:27:17] Matt: Absolutely. Good summary.
[00:27:20] Niraj: I almost feel like AI note taker sometimes, but, yeah, while I’m still doing it myself. Great. Thanks, Matt, and look forward to seeing you again.
[00:27:29] Matt: Likewise. Thanks for having me.
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