Leaving Corporate America

A few years ago, I left my job at Ernst & Young. I didn’t know exactly where I was going but I did know I wasn’t happy there and that I had big ideas and could find enough service work to get by for as long as I needed to. So, Trimtab Business Technology was born. The idea was that I had some great product ideas and I could provide technology and accounting-related consulting services for as long as necessary in the interim until I could find the time and resources to build one of them. I did a lot independent consulting in college so this was no stretch, just picked up where I left off except with much more experience behind me. It was a nice theory, all except everything changed very quickly. Just a couple months after I got started, two of my ex-coworkers approached me asking if I would be interested in joining them to start our own accounting firm. They are fantastic people and I agreed to roll Trimtab into a partnership we would start and just like that… Linford & Company LLP was born.

The rise of Linford & Company

L&C did good for awhile, then absolutely killed it for awhile, then had a rough patch, and is now really rolling again (more on that later). Starting L&C has tied working for my dad’s retail store when I was 15 years old for the best professional experience of my life. I learned extraordinarily important lessons about having partners, needing sales, building a team, and following your passion all in an extremely short period (I am convinced you couldn’t learn the same lessons I learned in two years working for someone else, like E&Y, in twenty years).

A short time after starting L&C, we decided to do something we knew the market needed. As professional auditors we had been intrigued by the idea of creating a better way for doing audit confirmations. Performing confirmation procedures is this crazy, “old school” process of sending out paper letters to various third party entities to verify certain account balances as part of a financial statement audit. We started down that road and found that thanks to the unique combination of our team’s intimate knowledge of the audit process and my background in technology and software, we could easily pull this off.

In December of 2008, we did exactly that and launched AuditConfirmations, which provides web-based software for doing audit confirmations electronically on a per-transaction fee basis. AuditConfirmations was an overwhelming success both in terms of building a successful internet-based company and (more importantly) building extraordinarily well engineered software in an agile and resource-constrained environment. We discovered, that with the right team, we could build things that likely took less than one tenth of the time and financial resources that it takes other, larger companies to do similar things.

The (re)birth of iTickmark

A more important side-effect of AuditConfirmations was that I remembered I had left my corporate job to build products… I had left my job to engineer and architect things that would someday take the pain out of what I experienced in my early post-college years, things that were real, things I could tell people “I make this”. So, in mid-2009, I reached an agreement with my partners to MOSTLY leave day-to-day client service. I retained a partnership interest in Linford & Company LLP so that I could keep in touch with public accounting practice and client service, but moved mostly into a position to build software.

As a result of this decision, we rolled Trimtab out of the practice along with me. Trimtab was back in business and was now able to focus specifically on building software for professional accountants. This is our niche in the world, but unfortunately the name “Trimtab Business Technology” means nothing to anyone in the world of professional accounting. So we decided to change the name… and iTickmark LLC was born.

Where we go from here

iTickmark is quickly growing up into a fabulous little company. We are still launching new features on AuditConfirmations that I believe will it in time to being the premier product for electronic confirmation services. We are also on the verge of the launch of workpapers.com, which will be hands down (at least in my opinion) the best, most productive software on the market for working paper and project management for risk and control based audits. Most importantly, we have a small team of great people located all around the world that are starting to making things really click.

Finally, what becomes of Linford & Company? We re-focused from broad service lines to what we really do best and we are absolutely KILLING it lately. This is thanks mostly to my business partner Newel who is driving our growth, particularly in the area of SAS70 audits. He is the driving force for the company day-to-day as Managing Partner and I am helping him as necessary. You would have to ask Newel, but I think we make an extraordinarily effective team under this arrangement.

iTickmark’s future

And that brings us to tomorrow… we build software for professional accountants (auditconfirmations.com and workpapers.com), produce content on the professional accounting and software industries (eatinghours.com and simplicityrevolution.com), and provide limited professional services. I am very proud of our progress, excited about where we are going in the immediate future, and the team we have supporting us at our young age.

The other main frustrations I endure at the airport are the painful security screening line and trying to get on and off the plane when 300 people are trying to stuff their suitcase in the overhead compartment. So we have three essential problems here: 1) people are bringing bomb parts onto a plane in a CARRY-ON BAG, 2) going through the security line is a nightmare because Grandma Mildrid hasn’t flown since 1967 and doesn’t know you can’t put liquids in a CARRY-ON BAG, and 3) the big fat guy in the aisle won’t sit down because he can’t find a place in the overhead for his CARRY-ON BAG.

So, I know this is complicated, but why don’t we solve three problems very quickly and just ban carry-on bags? Require people to check all bags. Much easier to find bomb parts in security screening, much faster to get through security screening, and much more pleasant airplane cabin. Done. Good solutions are always beautifully simple.

Funny thing is that El Al (widely regarded as the most secure airline on Earth), I discovered, already beat me to this idea. Figures though since they are also the only airline to discover that profiling passengers in screening is also a good way to identify security threats. That one may not be real politically correct but I really can’t remember the last time I heard a 14 year old suburban white girl from Jersey tried to blow up a plane.

The question I ponder today however is does it make sense to expend resources and bad press to conduct an investigation into the shootout? Apparently some folks saw the getaway car on the news and thought maybe the police were a bit overzealous with their gun fire. I saw that car myself, in person, and it was seriously shot up. But, according to police, they were fired on first when attempting to pull the bank robbers over and then fired further once actually stopping the car. In such a situation, is there such thing as too much fire? They were in the middle of town. But what do you do? Establish a precedent that if you rob a bank and then snap off a few shots at the cops, they will just let you go?

I think many cops (particularly younger, white, male ones as a gross generalization), abuse their power and think they are much hotter shit than they actually they are. I make no secret of that. But I think in this case, it was probably time for society to stand up a say we aren’t going to put up with this shit in our neighborhood.

Both cops were at least grazed, they were obviously under fire and their lives were endangered. The bystanders nearby needed to flat take cover. Bad stuff happens, this is the time to get the hell out of the way. And in the aftermath when the officers are asked why the car was so full of bullet holes and why there was that level of gun fire… I am inclined to tell them to answer “because that is how much ammunition I had”. Well done Westminster PD.

Fair-value accounting rules require financial companies to record the value of certain securities (like the “toxic assets” we hear so much about) on their books at their current market value. Seems straight-forward enough, except the accounting standards setters think this means the price a third party would pay whereas the bankers feel this is the price managers and regulators would like them to get for them. I think you can see the gap between these two stances. So really the question is, are the bankers being treated unfairly because the accountants make them take losses to write down these assets to “fair market value” when (the bankers claim) from a long term perspective they are actually worth much more?

Well if you put lipstick on a pig, is it still a pig? Also, wasn’t it the bankers perspective on pricing these assets that got us in this mess in the first f$#%ing place?

I may not be the brightest accountant on the block, but I think I have a handle on this one. When I was in third grade and wanted to trade Bo Jackson’s rookie card to the flea market, the Beckett price guide said it was worth $5. However, the man at the flea market only offered me a $1.50 on trade. I was outraged… then my father explained to me a simple concept I would call FAIR MARKET VALUE.

“The card, just like anything else, is worth exactly what someone will pay for it” he told me. How the hell can you argue with that? The price guide could say it was worth $10,000… still gonna get that whopping $1.50 for it.

So to you whiny excuses for businessmen (and yes it is men I see doing all of the whining)… THE VALUE OF THOSE ASSETS IS EXACTLY WHAT SOMEONE WILL PAY FOR THEM. If no one will pay any money for them, that means the value is (you guessed it)… ZERO! This is not complicated to understand, yet you would think it is given the fact that legislators ARE ACTUALLY GOING FOR IT. So to all of the financial-genius lawyers in congress who think that letting banks assign values to these assets out of thin air (and who are asking the standard setters to make that possible) will make the economic problems go away… GUESS WHAT, IT WON’T. In fact, pricing outside of reality was the whole problem in the first place.

That brings me to my final quandary on this topic before I move on to my next rant… if fair value is higher than what someone will pay for these assets and the value is therefore written up on the bank’s books, where does this money actually come from? It clearly is not cash that can be loaned out to generate additional revenue is it? If it is in fact just “vapor money” (fake money written on a piece of paper somewhere) how does that help the bank stay solvent?

Quit playing accounting games and go to work on solving the damn problem please. The alternative is to go ahead and go bankrupt which, believe me, I am also fine with. Accountants are the messenger, the voice of reason in the madness… so don’t shoot the messenger, shoot the banker.

Overall though, a good experience. Turns out my presentation skills are really bad, but it was good to realize that hear and see it on video so I can make adjustments for next time. The crowd was helpful and at least reasonably interested given they were a technology focused audience listening to a presentation on accounting stuff. The biggest realization for me… I was much better at answering questions than presenting. Need to get better at just talking than presenting.

Anyway, the Rocky Radar wrote up this nice article on the event and a YouTube video of our presentation is below. Let me know what you think!

Heidi is the proprietor of a bar in Detroit . In order to increase
sales, she decides to allow her loyal customers – most of whom are
unemployed alcoholics – to drink now but pay later. She keeps track of
the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi’s drink now pay later marketing strategy
and as a result, increasing numbers of customers flood into Heidi’s bar

and soon she has the largest sale volume for any bar in Detroit .

By providing her customers’ freedom from immediate payment demands,
Heidi gets no resistance when she substantially increases her prices
for wine and beer, the most consumed beverages. Her sales volume
increases massively.

A young and dynamic vice-president at the local bank recognizes these
customer debts as valuable future assets and increases Heidi’s
borrowing limit. He sees no reason for undue concern since he has the
debts of the alcoholics as collateral. At the bank’s corporate
headquarters, expert traders transform these customer loans into
DRINKBONDS, ALKIBONDS and PUKEBONDS.

These securities are then traded on security markets worldwide. Naive
investors don’t really understand the securities being sold to them as
AAA secured bonds are really the debts of unemployed alcoholics.
Nevertheless, their prices continuously climb, and the securities
become the top-selling items for some of the nation’s leading brokerage
houses.

One day, although the bond prices are still climbing, a risk manager at
the bank (subsequently fired due his negativity), decides that the time
has come to demand payment on the debts incurred by the drinkers at
Heidi’s. Heidi demands payment from her alcoholic patrons, but being
unemployed they cannot pay back their drinking debts. Therefore, Heidi
cannot fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs better,
stabilizing in price after dropping by 80 %. The decreased bond asset
value destroys the banks liquidity and prevents it from issuing new
loans.

The suppliers of Heidi’s bar, having granted her generous payment
extensions and having invested in the securities are faced with writing
off her debt and losing over 80% on her bonds. Her wine supplier claims
bankruptcy, her beer supplier is taken over by a competitor, who
immediately closes the local plant and lays off 50 workers.

The bank and brokerage houses are saved by the Government following
dramatic round-the-clock negotiations by leaders from both political
parties. The funds required for this bailout are obtained by a tax
levied on employed middle-class non-drinkers.

Finally an explanation we can all understand …..

What we as an economy do instead of investing in the details is make things bigger. We are bloody obsessed with bigger (and similarly more complex), like that is the key to economic success. And, in the age of Wal-Mart, maybe it is… but I really don’t think so, and even if it is I don’t care. One of the two most genius people I have ever had the distinct pleasure to learn about, Albert Einstein, was famous for saying:

“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius – and a lot of courage – to move in the opposite direction.”

The other of these two most genius people, Buckminster Fuller, famously stated:

“When I am working on a problem I never think about beauty. I only think about how to solve the problem. But when I have finished, if the solution is not beautiful, I know it is wrong.”

Beauty comes from robust simplicity and robust simplicity comes from excruciating attention to detail. This all goes back to my recent about about the lack of craftsmen in the modern economy as well but if you take any pride in your work, why don’t you take the time to invest in the details that set you apart? And if that is not the case, why don’t you find a new line of work where you feel devoting time to detail is worthwhile?

As a nation, we have spent billions and billions of dollar “fighting the drug war” (over $40 billion per year to be precise, which doesn’t even include the additional billions enforcing drug laws at the local level and incarcerating offenders). So, all included, lets say it amounts to a very conservative $120 billion/year… you could send every adult in America $600 for their contribution to the “drug war”. In other nations, thousands of police, soldiers, and innocent bystanders die fighting over illegal drug enforcement.

All of this is well and good, except that it has done no good. We have increased this spending level every year for the last 30-40 years, yet it is generally recognized that drug use has not changed, at all, over that same period. What the enforcement efforts do lead to are crazy price levels, a lack of tax revenues from not being able to tax the sale of these drugs, and the most dangerous among us as a human race controlling the overall economic trade of a major piece of the global economy.

The bottom line is that just like prohibition all those years ago, the drug war has failed miserably. Let me say that again… the DATA says that the drug war has failed miserably. It is the political jargon that continues to succeed. So to quote an excellent article in The Economist (of all places) that agrees with me, legalisation is clearly the least bad solution. With legalization, we as a society will be much more able to control dangers, eliminate the huge profits realized by the worst among us, create the opportunity to realize tax revenues on sales, and create economic opportunities in our country rather than the areas of Asia (opium), South America (cocaine), and Central America (canibus) that currently realize all of the benefits.

My overall stance… quit doing your thinking based on societal, religious, and parental rhetoric and consider the benefits of legalization. Logical thinking indicates your children will be safer and your country more prosperous while at the same time removing a major infringement on your personal liberties. Please think it over critically before reacting to this post.

On top of of wonderful new, fast, small Linux laptop… I found a nice software client for quick blog post publishing called Drivel. I think I am geared up now for frequent publishing. Watch out.