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Revenue and Expense Importing Made Easy (Save Hours — Get Accurate!)
Jamie McDonald is the CEO at A2X, a company that provides e-commerce accounting without the fuss for Shopify, Amazon, Walmart, eBay, and Etsy businesses. Prior to his time with A2X, Jamie was the Executive GM of Product, Accounting, and Global Services for Xerox. He was also the Co-founder and Co-CEO of Hubdoc, an automated document collaboration platform for accountants and small businesses, and the Founder and CEO of Sparkroom, a SaaS company for higher education.
Here’s a glimpse of what you’ll learn:
- [03:25] Jamie McDonald talks about building his software business and selling it to Xero in 2018
- [08:33] How to balance your energy and business growth as an entrepreneur
- [10:17] Jamie details the focus of A2X: clean, accurate, and repeatable financials
- [17:46] Meeting the demands of an e-commerce marketplace through financial automation
- [21:35] Jamie discusses the future of A2X and how the company helps brands achieve accurate cost accounting
- [27:15] Why a strong customer support team is crucial for brand success
- [31:45] What is on the horizon for A2X?
In this episode…
When you are getting ready to sell your brand, the biggest mistake you can make is not having a journal of your finances. So, is there software that can provide accurate revenue and cost accounting for your e-commerce brand?
The value of a brand is measured by its sales and profitability — and a clean, accurate, and repeatable accounting approach is crucial for that success. Jamie McDonald and his team of experts at A2X know e-commerce sellers need more support than pen and paper, which is why they provide a digital bookkeeping platform. Through their automated tools, you can effectively and quickly document the transactions of your brand.
In this episode of the Quiet Light Podcast, Joe Valley and Pat Yates sit down with Jamie McDonald, the CEO of A2X, to discuss automated accounting for e-commerce brands. Jamie talks about creating clean and repeatable financials, why accurate cost accounting is necessary for your brand, and how A2X is helping leaders achieve their business goals.
Resources Mentioned in this episode
- Jamie McDonald on LinkedIn
- Jamie McDonald on Twitter
- Jamie’s email: [email protected]
- The Ecommerce Back-office Facebook group
- Quiet Light
- Quiet Light on YouTube
- Joe Valley
- Mark Daoust
- Pat Yates
- Chuck Mullins
- Quiet Light Podcast email: [email protected]
- The EXITpreneur’s Playbook: How to Sell Your Online Business for Top Dollar by Reverse Engineering Your Pathway to Success by Joe Valley
- Sumana Sanjeeva on the Quiet Light Podcast
- Prosper Show
- Jamie Shulman on LinkedIn
- Paul Grey on LinkedIn
- Ashley Schroder on LinkedIn
- Tyler Jefcoat on LinkedIn
Sponsor for this episode
This episode is brought to you by Quiet Light, a brokerage firm that wants to help you successfully sell your online business.
There is no wrong reason for selling your business. However, there is a right time and a right way. The team of leading entrepreneurs at Quiet Light wants to help you discover the right time and strategy for selling your business. By providing trustworthy advice, effective strategies, and honest valuations, your Quiet Light advisor isn’t your every-day broker—they’re your partner and friend through every phase of the exit planning process.
If you’re new to the prospect of buying and selling, Quiet Light is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.
Not sure what your business is really worth? No worries. Quiet Light offers a free valuation and marketplace-ready assessment on their website. That’s right—this quick, easy, and free valuation has no strings attached. Knowing the true value of your business has never been easier!
What are you waiting for? Quiet Light is offering the best experience, strategies, and advice to make your exit successful. To learn more, go to quietlight.com, email [email protected], or call 800.746.5034 today.
Hi folks. It’s the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals.
Joe Valley 0:29
Hey folks, Joe Valley here. Thanks for joining me on a another episode of the Quiet Light Podcast today. I’ve got my co host with me, Mr. Pat Yates. Pat, thank you. I think this is the third time you’ve co hosted with me.
Pat Yates 0:41
Yeah, third, fourth, I love doing it. I’m excited about today. I’m excited. You’re all about this.
Joe Valley 0:45
And you’ve been a guest as well. So I appreciate it. I wanted you to come on specifically because of your incredible Amazon background with by Happy Feet and discussed the fact that you’re not actually using the accounting software that Jamie is going to talk about in a minute. Our guest today, folks is Jamie McDonald. He’s a serial entrepreneur. Incredible business entrepreneur and growing SAS businesses lifetime as an entrepreneur, Duke fan, as well as much to Pat’s demise and disappointed had almost hung up and left because Jamie’s a Duke fan, but he’s gonna stick around anyway, as a courtesy to Quiet Light me and the rest of the team here. So. But Jamie is also now not the founder, but the CEO of A2X accounting software, which is something that I think almost you know, I don’t know, Jamie will give us the percentages, but a lot of you should be using if you’re not using it already, just to simplify your life. So Jamie, welcome to the Quiet Light Podcast. Thanks for having you here.
Jamie McDonald 1:48
Yeah, excited to be on the show. Great. Looking forward to our conversation, guys.
Joe Valley 1:53
So give us a little bit of background on your own entrepreneurial journey. I know that A2X is your current venture as CEO, but then you’ve done a lot of stuff before that, can you give us a little highlight?
Jamie McDonald 2:05
For sure. Like I was, I feel like I was part of the internet dot one dot o era, I was I was stumbling on to the first browser and I was working for my family’s business in the electrical mechanical contracting space. And I was more excited about the internet than I was about. About each back I guess. And, and so I ended up going back to school and and trying to get a job in Seattle or San Francisco, which is where the internet was apparently happening at the time. And I got really fortunate and I joined Expedia when it was part of Microsoft in 1998. And I spent seven years there and just really learned the software business and, and the power of scale. And that business, you know, exploded when I was there from you know, selling 3000 airplane tickets a day when I got there to 30,000 When I left and has obviously gotten much bigger since then. And so that experience, I thought I was a startup guy. Of course, I wasn’t you know, we put a job post up. And, you know, people came in and you interviewed and you picked amazing candidates. And away you went. But
Joe Valley 3:19
you got one eye level of vice president of I forget which division they’re at. Yeah, I
Jamie McDonald 3:25
was I was running a business that sold things to people in the destination. And so if you think about like checking out in a grocery store, once you bought your plane ticket or your hotel room, if you’re going to Orlando, we’d sell you just need tickets or going to New York, we’d sell you a Broadway show tickets, or even just arriving from the airport and grew that business, from zero to something pretty substantial. And then my wife and I started having kids and we want to be near our families. And so we moved from Seattle back to Toronto, kind of 2005. And that’s when I was like God, I want to start a software company. And of course, I didn’t know anything. And I done a lot of media buying when I was at Expedia and and so my business partner, Jamie Schulman, who I’ll talk about a lot today came back from San Francisco to similar time. And we started our first company which basically, you know, evaluated the effectiveness of media buyers for lead generation buyers, and that was effectively mortgages at the time, which of course we started a company selling software to mortgage companies in 2007. That didn’t go well but we were able to transition and two different verticals did okay there and ended up selling that business and coming out of there my partner was like our back office was so analog like all paper and, you know, our bookkeeper sent us a binder with checks to sign and put in the mail and we’re like, we’ve got to figure out a way to make that analog and, and so we started a company called Hubdoc And came launched in 2014. And, and the core premise was like, how do you make? Like, how do you automate Accounts Payable basically, so invoices, receipts, you know, take a picture, dump it into your general ledger, QuickBooks or Xero, and have it kind of automatically reconcile. And that company wasn’t working until we figured out that CI that the thing that we were doing for accountants made their life a lot better. And so we figured out distribution through accountants, and started that kind of selling through accounts in 2015. And then the business kind of exploded over the next three years. And we ended up selling it to Xero in 2018. I mean, I
Joe Valley 5:47
Yeah, which was, which is you initiate that sale? Or did they come find you?
Jamie McDonald 5:51
Well, it’s funny, like the first time we met the founder of Xero, accounting Rajouri, was at like one of their user shows called Xero Con. And, you know, they came by our stand, and he did a demo. And then at the end of the show, he’s like, you know, we should, with a kiwi accent, we should think about doing something together. And, you know, that was 2015. And three years later, we worked closely with them. And the way we built that relationship was effectively build in product that solves problems for their, for their, for their customers, and made life better for them and kind of drove the accounting automation story. And, you know, the relationship got deeper, we’re doing more and and eventually, they came to us and said, you know, we’d love to be to be part of our team.
Joe Valley 6:33
And did you like the offer they made initially? Or did you have to haggle back and forth a lot? And did? And more importantly, did you roll equity.
Jamie McDonald 6:45
So the story of the acquisitions, interesting that came to us, and we also had an offer to, to raise a bunch of money from one of the best venture capitalists, SAS venture capitalists, and kind of take a big swing. And so our decision was between those two alternatives. And, you know, we looked at it and we thought, you know, this, this technology, the product is going to be built into the general ledger over time, and we thought it was best to build it inside of Xero. The, the offer was a cash offer and a stock offer. So we both we took some cash off, and then we all rolled in into zero stock as part of the transaction.
Joe Valley 7:29
Okay. Just out of curiosity, and for those that are listening, instead of watching on YouTube, or on the Quiet Light Podcast, all three people here have some gray on their chin, actually, Jamie as well shaven, but it’s on the top of his head. So I say that I say that on purpose. The venture cap money and blowing it up seems like such an emotional, you know, an exciting idea. But what I’ve said to people 1000 times over the years is make sure you don’t promote yourself to your own level of incompetence. Did any of that come into play saying you know what? This is not the life I want to live? Or? Or was it a combination of maybe that and more of you figured that this was going to be built into the software like Xero and QuickBooks eventually anyway,
Jamie McDonald 8:20
I think it’s a really personal decision at the end of the day that founders go through and certainly your audience and what you guys do, it’s all the same set of emotions, right. And so I’ve got a an expression, that founders energy is a finite resource, right. And at a certain point, like that volcanic core that exists inside you, you run out of energy, and I don’t think we were there with Hubdoc. But you know, you’re running extremely hard between travel and 24/7. And especially in a in a venture driven business, like all that matters is your ability to grow revenue quickly. Which is, it’s kind of a nice transition to A2X where when Jamie and I exited Hubdoc, we we took six months off and did nothing and tried to kind of recharge the batteries. And we thought about, you know, what we loved about the experience and what we might change and and I think that the premise was, is there any chance we can own a really high quality software business with an amazing product and incredible service to the customers that’s growing quickly and also generating cash and and so the the idea that, you know, we could raise venture money against this particular company, if we find a marketing channel that we can acquire customers at economically and scale it right. But it’s also fine to accept slightly slower growth and to build something that generates cash and there’s just a different ethos in running that type of business. It’s just way less stressful. You don’t have to be on the fundraising. training every 12 to 18 months.
Joe Valley 10:02
That’s a that’s a great segue. You’re absolutely right. So so for for Pat, because he doesn’t use A2X and he should Sorry, bad and everybody else in the audience as well I understand it fully at this point, it just give us a two minute overview of what A2X does. I think
Jamie McDonald 10:22
like automated automating your e-commerce accounting, and doing it accurately and repeatedly every time, right. So if you sell on Shopify or Amazon, you know that every week or every two weeks, a bank deposit shows up in your bank account. And, you know, lots of people just treat that and do cash accounting, and that’s their revenue. Well, well, of course, it’s not your revenue, that’s a net number, Amazon’s taken out their advertising fees, their FBA fees or merchant fees, there might have been sales tax on top of all that, and and so we’re going to X does is we reconcile that transaction, you kind of connect to Amazon or Shopify, you connect to QuickBooks or Xero, we allow you to map those key categories back. And every time a transaction comes in, we reconcile it accurately and so that that repeatability of that is also important, right? Because if I went to do a journal entry, and then tried to replicate it two weeks later, I’m not going to remember exactly what I did. And I might code them differently. And so the beauty of our software is, you set it up and and that journal is done. Basically exactly the same every time you do and that’s the why kind of the leading e-commerce accountants in the world have all adopted the software and, and you know, we’re, we’re early in the journey and convention all the merchants out there, like Pat to start using software.
Joe Valley 11:52
This is exactly what I didn’t do. Pat, earlier, you know, I, I used to just record my deposits as my revenue, which understated my revenue, of course, and understated my cost of goods sold. That Pat, are you doing? Are you doing that same thing? Are you getting all that detail in a very manual basis?
Pat Yates 12:13
It’s a great question. And I think that the way that I’ve done books in the past, I think like, most people, they at least go down to the level of deposit. That’s when that comes in. Unless they put something accrual for the month before your your numbers are all slightly if it comes in on the third of the month that should have been posted in the previous one. So I posted against those deposits. But I really want to make sure the expenses are there, too, or our accountant does. But it is interesting, because Jamie, I guess the biggest question that I have on this is there are so many things that you can do with accounting. And when you look at QuickBooks and Xero integrations, you know, there’s app stores for each of these people, how did you pare down what you want to do attack in this business? And to be able to differentiate yourself from other accounting software that might marry QuickBooks or Xero? How did you find the segment you wanted to be? And that’s what I’m really curious about?
Jamie McDonald 12:56
Well, I think two things, I can’t take credit for it, because I got to know the founders, that business, and they were kind enough to, to, to allow me to join. And so Paul, nationally, are the founders of the company. And Paul was an Amazon seller. And he said to Ashley, his software developers, like, you know, this monthly accounting is annoying, can can you take care of it, knowing that the software developer would work on automating it. And I think, where we’re different then, than many of the other integrations between between Amazon and QuickBooks, or we’re Xero is, we take the approach of like creating a journal to match that bank deposit as opposed to pushing every order over where if you’ve got any order volume, and Amazon, nobody wants that in the GL. It’s just noise. Right. And so our point of differences is to focus on on the reconciliation and, and the benefit of that is kind of clean, accurate, repeatable financials. And like you said, we get the revenue counting right, we get the cogs accounting, right. And hopefully that enables better decision making a better understanding of cash flow. You know, you mentioned the tricky thing about deposit that comes in on the fifth of the month, it’s going to have sales, you know, for the month of February and the month of March. And so our software smart enough to figure that out, create double journals to match the bank deposit, and you’re off to the races.
Pat Yates 14:26
But Jamie let me this question, so let’s let’s take a two week period, Amazon assume someone’s on that two week period, let that deposit comes in and your system kicks in? Does it go back? And actually does that revenue on a daily basis of a total gross number or by transaction? How does it post it? Or is it is it still just one transaction and reconciled against that or does it go back and put it on the day you actually sold it?
Jamie McDonald 14:47
It’s a journal entry that would have both month’s revenue and both months cost attributed properly. So we don’t we’re not out there posting a daily summary and reconciling we’re focused on the bank deposit and reconciling to that with the proper journal entry.
Pat Yates 15:03
So split marks will be one entry of the journal entry for the month, the left portion and the other there’ll be a secondary one for the second portion that
Jamie McDonald 15:11
Joe Valley 15:14
so incredibly useful. And you mentioned previously that you know, the the leading e-commerce bookkeepers in the world are recommending and using a A2X often I think we we actually talked about Tyler Jeff coded seller accountant and and and that work i i think i first heard about A2X through Tyler. But is that what they’re recommending? Because that’s accurate importing of the details, and they don’t have to worry about, you know, the importing of the revenue, and they’re just working on the rest of the expenses, and so on so forth.
Jamie McDonald 15:45
Yeah, I mean, I think if you’re, if you’re an accountant, bookkeepers focused, specialize in an e-commerce which toddlers, one of the leading ones. A lot of these firms, the way they price now is fixed pricing. And so they look at your business and they say, you know, for 2500 a month, I can do your monthly bookkeeping, you’ll get inventory, you’ll get whatever. And so once the accountants have all moved from kind of an hourly model to a fixed price model, you can imagine what their incentives are, which is, how do I drive automation and process efficiency across my business? Right. And so I think Tyler would say that our that our Amazon integration is kind of integral and a must for every single one of the Amazon businesses that they serve, right. And so the way we figure out how to make our software better is by talking to merchants, and by smart accountants like him, it’s like, how do we actually improve it? What are the modules, we need to kind of add or adjacencies that can drive value for your firm so that you can serve your clients better and scale your business because, you know, if you’re many of the empty accounting businesses, like, if you’re just scaling labor, you run into problems. And so what you’re trying to do is shrink the number of hours each month that it takes to do the work. And you’re also trying to, you know, drive quality of the books, right, which is a big part of what we deliver to our customers.
Joe Valley 17:13
So for those out there listening, that are not using an e-commerce bookkeeper, shame on you, you’ve heard me preach about this, you should be hiring, you know, seller accounting, cap, forge, and so on and so forth. But if you’re doing it on your own, a to x is simply going to save you a ton of time, hassle and get your books accurate, at least above the gross profit line. Pat, I sorry to interrupt you there so that you’re gonna ask the question.
Pat Yates 17:38
I guess the question I have to Jamie, tell us about the verticals, you’ve had the most success. And I would tend to think that a lot of people come in looking to have that Amazon integration. But But tell us about Shopify, how can people gain by, you know, utilizing software for their own direct site to? Well, it’s,
Jamie McDonald 17:54
it’s it’s exactly the same problem. So the business was built by Paul and Ashley to solve the problem for Amazon. And it they didn’t really add Shopify until me, you know, maybe a couple years ago. And since then, we’ve added Etsy and Walmart and eBay as well. And we’ll we’ll add integrations as our as our customers demand it, but we think the future of e-commerce is you’re going to be selling on marketplaces like Amazon, and you’re going to have a branded experience that you largely power from a place like Shopify, and then you know, there’s going to be a ton of other places where e-commerce merchants can distribute their products, right. And so, in that multi channel world, what we’re trying to do is, is make it really easy to do your back office and automate the back office and, and deliver accurate data into your general ledger so that you don’t have to think about it at the close of every month, and it just happens automatically. And so for Shopify, you know, it’s, it’s it’s consistently been the fastest growing part of our business since we launched it, which is no surprise because it feels like every Amazon merchant is starting a Shopify store and obviously COVID accelerated the transition to e-commerce globally. And, you know, so many more merchants coming online that you know, both of them are that Shopify and Amazon have the lion’s share of our of our customer base right now, but all segments of it are growing quickly. So
Joe Valley 19:31
is it is it kind of like choosing to focus only on Google ads and saying, Well, being only represents a certain percentage, you’re not you’re not thinking about WooCommerce or anything else like that at this point? It
Jamie McDonald 19:44
I you know, what, like, we have a lot of inbound from different platforms. So you know, we’ve and it comes from all places it comes from e-commerce accounts, it comes from merchants, it comes from QuickBooks and Xero like There’s the e-commerce market in Southeast Asia, this is exploding. A lot of us people sell on Shopify. It’s a question of like, how many businesses are there? Does it make sense to build the automation? We ask ourselves when we’re making these decisions, it’s like how many merchants sell on the platform? And can we do an amazing job of solving the problem there? Because there’s, some of the platforms are harder, right? Where, you know, a beautiful part of Shopify is that almost all of the merchants use shop pay. And so on many of the other merchant platforms, there isn’t that single payment processor that has such a big share, right? And so reconcile into five different payment processors. It just makes the problem harder, which is both a good thing and a bad thing
Joe Valley 20:45
for us. So what’s the future look like for A2X? Are you talking with it? Was it Paul and Ashley, the original founders? Yeah, is it is an eventual exit in the cards at some point, since you’ve been through it a couple of times.
Jamie McDonald 21:02
You know, what? When Jamie and I got involved with Paul and Ashley, it was on the premise that like, Wouldn’t it be great to own a high quality growing profitable software business? I’ve known it forever. And you know, that’s the plan today, do we do we would we talk to potential acquirers if it made sense? Like you’re always open to a conversation and I’d say to every entrepreneur out there, it’s like, you know, build relationships with people and solve problems for them. And you never know what might happen, right? But the plan today is to, we think, our product still early days, and penetration in the category is still early days. We think we’ve got you know, a bunch of great advocacies from people like Tyler and the other leading me comm accountants. e-commerce, as a percentage of all retail is going to increase so big tailwinds in the market, I think there’s tons of opportunities to grow big, meaningful business. And then the obvious questions like I’m a product guy is like, Hey, we’ve got all these merchants on our platform. One of the things we talk about in in our Facebook group, which we call the e-commerce back office is like, what are the adjacent products that we could, that we could help make to solve problems for our customers, and we’re still early days on that. But like, I’ll give one simple example, which is like, think about the report you use most on Amazon or Shopify. To get a sense of profitability by SKU by channel, whatever it is, and it’s like, Okay, now, imagine a world where your multi channel merchant, having that reporting available across channels is just not available, right. But because of the position that we’re in, and we’ve seen all that order flow across multiple channels, we think we have a unique view into the data that powers many of these e-commerce merchants. And so you know, there’s a there’s a play to start building out adjacent products to do what we do now to see if we can help build out kind of that ecommerce back office. So if you think about the typical e-commerce merchant, they, they spent so much time thinking about product advertising, customers revenue generation, and so little time on like, how to actually run the best possible business. And I think if you look at what Klaviyo has done in that kind of front office space in the Shopify ecosystem, we think there’s a similar scale of opportunity to build a big meaningful company that helps the helps run the e-commerce back office.
Pat Yates 23:38
You know, interestingly enough, Jamie, a lot of people that come in and so businesses through Quiet Light, they have two very good books, and we dive into a pretty, you know, pretty deep, but there are small things that sometimes, like the timing of that deposit that could get missed, because if someone, let’s say, in their last month of a calculation, their deposit for Amazon comes in four or five days later, they don’t think the actual as that month’s inventory, it could actually lower their seller discretionary earnings. So I love the fact that it’s posting it both ways. But I noticed you also have different plans that would include FBA, inventory, management and cost of goods. Can you explain a little bit how you do that? Because I think some people are very fearful of how their cogs are calculated, just because it’s some people it’s a foreign thing to them to understand accrual versus cash. So maybe you could explain if this helps them as they’re building towards selling their company.
Jamie McDonald 24:21
Yeah, I mean, I think he obviously if you’re thinking of selling your business, you need accurate costs and accurate revenue. And so the the revenue account inside of posting that journal is easier to explain. But the cogs side, it’s the same thing, right, which is we sync data, your SKU level data from from Amazon or Shopify, and then it’s on you or your accounting team as a merchant or, or whoever’s doing the books to to maintain the cogs inside of A2X and if you do that, then we’re able to post To journals that reflect cogs accurately. And so, like Tyler would say that that’s a big piece of what he’s using to drive the automation. So you’re getting accurate revenue and accurate cost accounting. And yeah,
Joe Valley 25:12
that’s the biggest thing I say, Pat, don’t you? Businesses is inaccurate cost of goods sold, it’s done on a cash basis instead of accrual. And then when we try to have them flip it, it’s they’re ready to sell now, but the answer they get from Tyler, somebody else might be, yeah, it’s gonna take a month to get this right. And by the way, you need to give me a lot of information do a lot of work. Those
Jamie McDonald 25:36
obviously like cogs account in the hardest part about e-commerce counting getting it right. And it’s obviously not just the cost on the purchase order, but
Joe Valley 25:44
the landed cost down trade. Thank you for saying that. In today’s supply
Jamie McDonald 25:48
chain world. It’s like, Oh, my God, I and then if you’re using cash accounting, it’s like, oh, I, I’ve made a $200,000 order in December, and I’m selling that product over the next six months. And then, you know, what, am I landed costs associated with that 200,000? Or dollar order? How am I going to kind of accurately spread it over those sales over the over the lifetime of that inventory? You know, if you don’t get that right, or have a repeatable process to do it and do it in an accrual style, then you really don’t understand your business.
Joe Valley 26:19
And A2X is going to help with all that. All of it. Yeah, all of it. So that’s critical right there, folks. If you want to sell your business for maximum value, just talk to Pat anytime about it. The reality is that if you don’t have a accurate books and be really accurate cost of goods sold on an accrual basis, you’re either going to undersell your business, or the deal that you went under loi for is going to fall apart and due diligence because your your cogs are undervalued, and therefore your discretionary earnings are wrong and actually overvalued, that look like you’re about to say something there. Sorry to interrupt.
Pat Yates 26:51
Yeah, I just I think that when I look at this, obviously, Jamie do you have when you guys are selling people on this? Obviously, it’s a time saving things. It’s a transparency thing. It’s an accuracy thing. All of those things come into it. Are there other things that people need to understand? I mean, on the surface, it looks fantastic that people can automate most of that process to make sure that their books are right. But are there other things that A2X does that they should know?
Jamie McDonald 27:13
I mean, I think like the one of the things we’re proudest about is I believe that the brands I want to interact with now, and the companies I want to interact with are human, and they actually support their product. And so I couldn’t be more proud of, of our customer support and Customer Success organization, which, you know, when we’re talking directly to merchants who don’t often understand accounting perfectly, and it’s like, okay, we’re going to set up a chart of accounts, here’s a clearing account, like, our support team, will walk you through all of those steps and get you set up accurately. And then once it’s up and running, and it’s just that repeatability of the process. And so for whatever the cost per month is, which you know, we go from 19 bucks to 2000s Depending on your order volume and all the places you’re selling at. You know, we’ll get you set up and then it’s up and running. And and there’s a time savings component, which which I think is important. But the the repeatability, I think is actually more important which you do it the same way every single month, every single deposit, you account for it accurately. And at the end of the day. You look at your financials and you’ve got an accurate view on revenue and cost and confidence. That’s right every time so when I’m talking to merchants and and e-commerce accounts and bookkeepers, those are the things we talk about.
Pat Yates 28:41
There’s no price on your site that is so excessive, that it’s not going to find something for someone to save money on. If they decide to exit their business, they’ll easily recoup that kind of money. It’s not a high price piece of software. It’s really interesting. From a standpoint that it brings in that transparency. We talked about this a lot transparency of books and documentation. This will definitely help in that for any seller.
Joe Valley 29:02
Just out of curiosity, do you have a ballpark? percentage breakdown of entrepreneurs that subscribed versus bookkeepers? Or do bookkeepers? not subscribed at all, they recommend the entrepreneur do it.
Jamie McDonald 29:15
I mean, who pays for it doesn’t really matter. I mean, often it’s the e-commerce accountant or bookkeeper and often it’s merchant, but it’s like, I can say this. It’s like, roughly half of our business is connected to e-commerce, accountants and bookkeepers. And and those accounts are more valuable to us because they stay with us longer. And you can imagine why that is. It’s because they’re set up properly. And it just works. And it doesn’t matter if the merchants paying the monthly or the e-commerce account. And what we care about is that there’s a professional who’s tied to the account and so a big part of what we do in verses come to us directly is we just make it easy for them to get connected to an accountant or to invite their existing accountant to our office. form. And then you know, if it’s a new accountant getting used to our platform and we start automating this painful process, you can imagine that they might have more e-commerce, accountants, e-commerce clients who they might, who they might refer. So I think my experience at Hubdoc, like the best mix is to have kind of a direct mix and a channel mix. And we think of the channel as E commerce, accountants and bookkeepers, and they kind of it’s a positive flywheel where they you refer clients back and forth between the two audiences.
Pat Yates 30:33
Yeah, makes one question, Jamie, I actually do have the your Shopify plugin does that have the ability if someone takes on let’s say, a Shopify loan, or an Amazon lending loan, pull and parse out that information against that loan on a transactional basis? Or I don’t know if Shopify comes in on a daily sales number, where you apply that you understand what I’m asking if they have a capital loan, they take out part of that pre revenue, then it deposits to the bank that comes in as a deposit. It doesn’t have that and you have to repost it does yours do that for lending? So
Jamie McDonald 31:00
you know what, I don’t actually know the detail on that on on Shopify capital, and whether that’s part of the monthly journal, but my guess is, is that if there’s if, if there’s money coming to the journal entry and staying on the Shopify platform, that’s a reflection of a lending fee or repayment of principal or whatever, you can imagine that to make the journal balance and to get it correct. And to reconcile, we’re going to have to have a line item in the journal entry referring to that. So my guess would be we would support it. Yeah,
Pat Yates 31:33
that makes sense. So what is the next thing for you to actually you probably are thinking of new widgets. What’s what’s 6.0? If I thought I’m making 6.0, you might be on 18.0? I
Jamie McDonald 31:42
have no Yeah, I think like, going back to what we talked about earlier about Amazon, and Shopify as these two kind of immovable objects in the merchant world, like, the one thing we want to do is be the absolute best on those two integrations. And so we have a team of developers and designers at like interfacing with our customer team, to kind of iterate and make those better and better. So that’s the first and most important thing, which is just deliver the best product against what you do now. We have a bunch of customers, larger merchants who are beginning to push up to two different accounting systems. So outgrowing Xero, QuickBooks and pushing up to intact or sage or, you know, e-commerce specific GLS. And I think part of our future will be like developing an enterprise offering, that’s like, imagine a multi channel offering that pushes to NetSuite as an example, many of these aggregators that are buying the businesses, of your listeners, they start out with kind of a repeatable process on QuickBooks or Xero. And then they’re pushed as they scale, like through SEO, or whatever, to NetSuite or, or one of the cloud ERPs. And, you know, we want to be able to follow our customers as they grow. And you don’t want them to kind of outgrow your software. So you’ll see us thinking about supporting those platforms over time.
Joe Valley 33:07
And you can mention aggregators, without me saying that only 30% of our transactions in 2021 were sold to aggregators, and that if you’re selling an online business, that should be an indication that you should not go directly to an aggregator, but everybody knows this already on this podcast in this audience that, you know, you’re going to gain more value when you create a competitive market. Sumana this is a good time to announce it. Right. So a week, two weeks, two weeks from today, almost a little less. March 8. Actually, no, a week from today, a week from tomorrow. March 8 is going to be the launch of the next Quiet Light Podcast where Sumana Sanjeev sold her business and talks about it, where she was offered 2.2 million from an aggregator Jamie and the aggregator very confidently and convincingly said, Look, this is what we do. This is what we do we understand your business. This is honestly the best value the best price that you’re going to get. And for this reason, this reason, this reason in this reason, and honestly, all of those reasons were reflective of the business and somewhat accurate. But the reality is that Chuck on our team sold it for 5.5 million. So a little bit more than that aggregator who’s one of the top what’s called Top Five, right? Easily top five might even buy won’t give specific
Pat Yates 34:32
50% discount in normal.
Joe Valley 34:34
Yes, yes. Just avoid the broker fee. Just pay us you know, half what your business is worth and avoid the broker. Sorry, I’m a
Jamie McDonald 34:41
big fan of understanding incentives, right? And if it’s the aggregators job to acquire assets and to grow, right, and the second part of that is to do it on a on a basis that benefits them make economically right and so I read your book a couple weeks weekends ago. And, you know, I want to give it to my daughters. Because I think it’s a better better investment and a free ebook than undergraduate commerce degree or business degree. I just thought like, many of the concepts that you talked about in the book are so kind of, they’re just everlasting, right? And it’s so obvious, which is the particular example you’re talking about. It’s like, if you built a great asset, you want to try and get as many buyers as possible to that asset. And if you’re just talking to one aggregator because they were the ones who got through to your voicemail or your your email inbox, if you truly want to sell it, you need to see if there’s other buyers at the wicket, because you’ll get a better price. If there are, yeah, as
Joe Valley 35:48
you say, understanding what their goal is, the goal is to buy as many assets for as little as possible, regardless of their sales pitch. So yeah, I appreciate you saying that, after we’re done recording, let’s get your daughter’s names. And we’ll send them signed copies of the books. If that’s, that’s except how to be great. Good, good. Good. Patrick. Any, any last questions other than where do I sign up? Now, Jamie, I
Pat Yates 36:12
think it’s great. I’m definitely gonna go on to do that trial and see it. I think that people out there that are thinking about getting their business in a position to sell this is kind of transparent stuff that you need, obviously, lean on, Jamie, those guys are here to educate you on how it’s done. We love things like this because all it does is make our job that much easier when we come down to selling your company. So obviously, if you’re out there and you use QuickBooks or Xero, any of their things go give it a trial obviously looks great.
Joe Valley 36:36
And not only that know that the best e-commerce bookkeepers out there that we recommend are recommending the software as well. So if you don’t trust Pat, and I and Jamie then pay attention to what the likes of Tyler Jeffcoat XLR accountants got to say, so, Jenny, how do people reach out to you how do they find a 2x? And all that good stuff? Yeah,
Jamie McDonald 36:56
I mean, A2Xaccounting.com is where you can learn about our product. And you can find me at [email protected] or on Twitter at Jamie McDonald. And yeah, I love talking to customers. I love talking to merchants. I know. We’re headed to e-commerce fuel at the end of March and I’m looking forward to connecting with a bunch of merchants there in person.
Pat Yates 37:22
Or you know, you’re gonna be a prosper by chance. Aye,
Jamie McDonald 37:25
aye. I don’t plan to go to Prosper yet. But maybe for those that are attending
Joe Valley 37:31
Prosper, Pat, you’ll be there.
Pat Yates 37:32
Right. I will be there. You’re there combined. We’d love to see. Go find
Joe Valley 37:37
Pat and he’ll know where the best parties are, which
Pat Yates 37:39
is the best part of the process. Definitely know where all that is.
Joe Valley 37:43
And Jamie, I don’t know if I talked about it, but I’ll be I’ll be at e-commerce fuel in March. So we’ll see you there. All right. Looking forward to it. Alright, thanks for your time today, Jamie. Appreciate it.
Jamie McDonald 37:52
Cheers. Thanks, guys.
today’s podcast was produced by Rise25 and the Quiet Light content team. If you have a suggestion for a future podcast, subject or guest, email us at [email protected] Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram, and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.