Since it receives transaction data year-round, Stamped alleviates the year-end pressure of closing and provides steady revenue throughout the year.
Stamped currently operates in Canada, but Simon is working on getting CPA designation in the US so he can continue expanding Stamped’s presence across North America. Simon believes Stamped could produce 70% of the financial statements from the region.
Simon Langlois learned his best lessons not from his experience in audit at PwC, but on the football field. A Quebecois who played American football for 10 years, Simon had to give up the game after two shoulder surgeries. Still, he credits football with much of his personal and professional development.
“I definitely learned more on the football field than I did in school,” Simon says. “I think playing competitive sport is what prepares you the most for the business world… I learned everything from grit, to commitment, to discipline.”
After PwC, Simon went on to become the first Director of Finance at the SaaS startup Poka, Inc. There, he helped the company raise $6.5 million over two funding rounds. But eventually, Simon felt he’d plateaued in terms of personal growth.
“I realized that I was not the kind of CPA that was enjoying doing payroll every two weeks and monthly reporting updates for the investors. It was kind of getting redundant. My learning curve was stopping,” Simon recalls.
After a brief return to PwC, Simon co-founded Stamped Technologies, a tech-enabled accounting firm. His goal: to have AI take over the lower-level functions of accounting, and by doing so, relieve some of the pressures of the CPA shortage and let accountants do their best work.
In a conversation with Karbon CEO and host Stuart McLeod on episode 35 of the Accounting Leaders Podcast, Simon shares his challenges as an accounting tech firm founder, the problems Stamped is solving, and where he hopes to see Stamped go in the future.
When Simon returned to PwC after Poka, he was surprised to find how much work was still being done in Excel. Some technologies had moved forward during his two-year absence, but a lot of energy was still spent reconciling different systems and checking individual invoices. This was Simon’s first spark of inspiration for finding a way to automate these tedious jobs.
“I was like, ‘Okay, is it necessary to use CPAs and MBA grads to do this type of job?’ Sorry for other CPAs who may listen, but it's a job that a well-trained monkey can do,” Simon tells Stuart on the podcast.
Simon and Stuart also discuss some of the factors contributing to the CPA shortage, like the long slog it takes to become partner in a firm.
In audit specifically, an accountant generally does three years of grunt work before becoming senior enough to supervise an audit. From there, the corporate ladder continues with a chance of becoming partner maybe 15 to 20 years later. It’s a long-term commitment that many people aren’t interested in—and anyway, Simon points out, partners can still be involved in the grunt work.
“Once you reach that holy grail of being a partner at a Big Four firm, the pyramid is kind of flattened out. Associates and senior leadership aren’t willing to work 80 hours per week anymore. If you want to meet the deliverables deadline, partners and senior management need to be involved again,” Simon explains.
Then there’s the customer side of the equation. Customers from small and medium-sized businesses (SMBs) are accustomed to having all of their accounting and finance systems work together seamlessly. But at year-end, Simon often observed that auditors or CPAs were asking for Excel files instead of being able to work within those systems.
The need to solve the CPA shortage and bridge the gap between what CPAs and technology can do got Simon’s gears turning, looking for a solution.
Founded in 2017, Stamped aims to serve smaller bookkeeping or accounting firms without a CPA. It provides the CPA oversight needed for more advanced functions like tax returns and calculation engagements.
Stamped operates as a new kind of accounting firm—one that’s tech-enabled but still relies on the CPAs on staff for review. In its team of 27, about half of the staff are CPAs, while the other half are software engineers.
Stamped’s main benefit is making accounting work more evenly distributed over time so that accountants aren’t slammed at year-end, as they otherwise would be. It also gives firms more steady cash flow.
“[Firms] will trade a once-off 50 hours for four hours per month, because it is predictable, and scalable. The problem with year-end services is that right now [firms] have zero visibility in this part of the accounting life cycle,” Simon says of the trade-off.
Receiving data year-round also makes the AI improve. Eventually, Simon hopes to scale Stamped with audit and review, but needs more time and data for the AI to get smarter.
Simon and Stuart talk through Simon’s greatest challenges as a tech accounting firm founder. For one, growth doesn’t always come at the desired pace—but Simon embraces it with the philosophy he learned on the football field.
“It's one inch at a time,” Simon says. “Some plays, you can throw a home run and score a touchdown on one try. But sometimes you'll just move the ball. … It's slowly but surely moving, getting momentum.”
Another challenge, according to Simon, is getting access to data. With AI and machine learning, data is a must for optimal functionality. Simon takes a clever approach to gaining access.
“Being a tech-enabled service company allows us to actually get the data in the context where the client wants to provide it, [so they can] certify this financial statement and prepare [their] corporate tax return,” he explains. “Whereas if we were not providing the service, I’m not sure if SMBs would be willing to share the data just to allow us to build models.”
In essence, Stamped uses the year-round data input on the accounting side to refine the AI. This gives continual access to data, rather than saving up all new information inputs for year-end tax work. In this way, the AI can learn and improve throughout the year.
So what’s the next play for Stamped? Simon is happy to announce that he’s working on getting CPA designation to operate Stamped in the US, and expects to finish by the end of Q2 2022. Fortunately, he doesn’t anticipate many competitors, which leads him to believe that Stamped could produce up to 70% of the financial statements in North America.
When asked if he has a vision for an exit, Simon notes how much the accounting industry has changed in recent years.
“We never know where the acquisition can come from,” he says. One recent example that comes to Simon’s mind: H&R Block’s acquisition of Wave Financial, which expanded H&R Block from a tax service company to a broader bookkeeping service.
“The acquisition might come from a Big Four firm that wants to productize their SMB services,” Simon speculates. But he’s ultimately not very concerned about what kind of company might be interested in Stamped.
“There are multiple paths, but I'm just really focused on relieving bookkeepers and accountants from the pressure of year-ends, and then we'll see where it gets us.”
If a buyer is looking for disruption and innovation in accounting, almost anyone could benefit from Stamped’s promise of less stressful year-ends. Simon’s laser focus on each layer of Stamped’s growth will surely continue to draw in new clients.
At the end of the day, Simon won’t rest until he’s satisfied that each part is done right. In keeping with his sports metaphors, Simon closes the interview by quoting the late Kobe Bryant: “Job’s not finished.”