359: Connor Turland: Pioneering the Future of Bookkeeping with Ceedar.ai
Download MP3Hey. I'm Albert and welcome to the Bootstrap Founder. Today, I'm talking to Connor Turland. He is building SEDAR, ceedar.io. It's a software business that tries to replace bookkeepers, tries to get rid of them completely.
Arvid:Connor is an expert in all things accounting and he's gonna teach me a couple things about accounting. First and foremost, that it's not boring and that it's actually quite enjoyable. So it's gonna be a conversation all about the financials of businesses, how he's building a business to help others, what he's choosing as his target market, where he may or may not want to go with the business, how integrations work, all of these things. It's gonna be very insightful. This episode is sponsored by paddle.com, also a company that helps you get rid of one thing with regards to financials that you may or may not be very interested in, that is taxes, all those things reporting taxes.
Arvid:If you're interested in doing the actual work in your business instead of dealing with taxes, you might wanna look into Paddle as the payment gateway of your choice. That's paddle.com. Now let's talk to Connor about all things accounting. Welcome to the show. You have a wonderful SaaS business called SEDAR, and you're aiming to replace tools like QuickBooks and Dex for start ups.
Arvid:I really like this the the headline of your website, and I really, really think it's a very aspirational goal to replace QuickBooks. Love this. It's ambitious. Right? And I wonder how does one come up with the idea to change this very slow moving industry, accounting?
Connor:Well, the fact that it is slow moving in some ways, like, is a hindrance, but also can help you because it makes, like, that fruit more ripe, in a way. Right? Because a field where there's already people pushing all kinds of things on the cutting edge in a way, is is gonna be even that much harder to compete. So, yes, it is ambitious because QuickBooks is owned by Intuit. It's a massive business.
Connor:They have infinite resources, you know. But I heard, like, again and again that you can get started and you'll be shocked at how not quickly, they can move and and how beholden to certain, old ways of doing things they are, which creates the opportunity for us. But why was accounting specifically, I think, was really through our direct experience, of, like, building an agency, before this. This is me and my cofounder of SEER. We, who's my wife.
Connor:We built this, agency before this, And that's when we were growing the business and, and started to need bookkeeping and first time filing our taxes and going through these things. And then that's when we kinda realized that like so many things, especially in the Canadian and kind of American tax systems, it's highly complex, but it's also made to be highly complex. Like, there's a little bit of, like, you know, there's this huge consulting industry that's built up around it, and you get to feel that it's a bit of unnecessary complexity meant to put certain people, maybe founders, in that in that sense at a disadvantage or getting the the short end of the stick. And I think that struck that little sense of, like, this isn't right. How can we take a step back and reevaluate whether, which which parts of all this complexity are just fabricated, and which parts are are real.
Connor:And so if we can trim away all the all the fabricated stuff, we can just get left with actually something that that can be simple and yeah. So we just started we are kind of crazy, and I think that that just became like, wow. There's this, big challenge, this big opportunity. Let's, like, dive into it and start seeing what happens.
Arvid:So what I hear is that you're you're trying to compete with QuickBooks on a level where you try to fulfill the same needs that your audience has, but you have a different, much more specific audience here as well. Right? Like, we you you're talking about founders and startups.
Connor:Yeah. Exactly. Yeah. They they try to be everything to everybody, and end up doing none of it well. And so, like, for example, they have all these features that are technically there from a sort of a check box standpoint, but basically, they just do that literally to fill a check box on a feature list.
Connor:And then, one clarification to make too is that we're going through something kind of a a redevelopment of the website and and also kind of a repositioning of the business to to clarify something that I think we always had in mind, but, have kind of gone back and forth on in terms of how to how to position it, which is, you know, one of the questions for entrepreneurs is, like, who are you stealing dollars from in terms of where's the market share come from that you're that you wanna take? And for a long time, you know, software competes with software, but now we're going through this phase shift where software is competing with services. And by services, I mean people, what people do. And that's where we want to play is, we want to actually replace bookkeepers and bookkeeping and fully sort of turn the corner into, you know bookkeeping has been around and being done kind of the same way for, like, 500 years. So maybe, this is, like, the time when it could, go through a change, and something that that always seemed like the type of thing that should be automated can be can be automated without applying all the the old school thinking of, like, oh, we do it this way.
Connor:The accounting industry is like, we do it this way because it's always been done this way. And I was like, well, that's exactly what we don't want. We want to do it because it makes sense to do it, in this particular way. So just classic, like, just first principles, thinking, trying to bring first principles to the bookkeeping space, which is kind of absurd. But
Arvid:Well, I love it. And as a as a founder myself, I really dislike the process. Right? I don't like keeping track of things that are not, like, variables in code or anything like it. I'm too technical, I guess, for this to to enjoy that, that number crunching that has no code equivalent.
Arvid:But, honestly, I I probably have a couple things that I personally believe that are not true about accounting and bookkeeping, but I try to stay away from it as much as I can. So anything to help me automate this in a way that I can understand and replace the person that I need to talk to that doesn't get me or that I don't understand is very helpful. So how are you gonna approach this? What's what's the the the novelty of the business in terms of automating away that bookkeeper and these accountants? What's happening there?
Connor:Well, first of all, I like that you said that, you don't want to do the work, but also you want to have comprehension and control. Like and that's that's what we saw was kind of missing was that, there's this power asymmetry that's existed between, like, accountants, and bookkeepers, versus, versus founders where founders are kind of left in the dark, and then it's not often the case that they actually become enlightened through the process. They're kind of kept in the dark, and there's a there's a bit of an advantage to that over time to it sort of being that way. So that's, like, the gatekeeping thing and and the power asymmetry. And, and that's what we want to sort of reverse.
Connor:So we want founders to have, not to have any of the make work aspects, but to feel all the control and the enlightenment, especially about their finances and, overall, just control over the process too. Like, for example, one of the ways that this gets resolved, in terms of, like, bank feeds getting connected, so there's automation. But, one of the things that happens is, like, sometimes they won't say that they do this, but then they'll ask for your bank login. The bookkeeper account will ask for your bank login because they're trying to save you work so that they don't have to ask you for bank statements that you download and then email to them. So you can see there's kind of a reason why.
Connor:This is also relates to gatekeeping on the bank's part of, like, financial information, especially here in Canada, but that's changing. So you have that happening, but founders don't really you know, they'll do it because they're desperate not to have the make work of, like, downloading financial statements and and emailing them. However, they definitely have expressed to us many times over, like, the discomfort in handing over their their banking logins, and stuff to their bookkeepers. So if you can break down those and there is a bit of a vector there for abuse that has happened. Not to give bookkeepers, generally speaking, a bad name, the that's not that's not fair and not right.
Arvid:I mean, it's very unprofessional. Right? That's the thing. Like, giving somebody your credentials instead of giving them an authorization token or giving them some kind of symbol of being able to access on your behalf. That's just that's just the unprofessional layer there.
Connor:Right? Yeah. Exactly. Exactly. And, and if they don't do that technique, then they'll have to kind of be chasing you and hounding you and asking you for things.
Connor:So it's a bit of a double bind on their part, but also one that can actually especially, like, as we move, it's, like, 2024, 2025. There's changes in our in our ecosystem, in our banking ecosystem, bringing more of this sort of the token the token methods, the authorization methods a lot. These things are, like, being forced on the Canadian the big five, banks, through open banking. And, yeah, it is great. It's gonna be great when we're kind of have that that ability to to break that down.
Connor:So there's a bit of a good timing thing for Cedar there as well Mhmm. Where where, the time has been the the time to automate has been kind of constrained that a lot of, businesses have actually left Canada in terms of trying to serve Canada because of, like, the ecosystem. Bench used to operate in Canada. They don't operate in Canada anymore, this this type of thing. So yeah.
Connor:So the options have been limited, particularly in the Canadian market, and that's the first kind of market that we're, like, addressing.
Arvid:I do wanna talk to you about, like, your your local, limitation of being in Canada being being a good thing and a bad thing, maybe. Who knows? Right? I I wanna explore this with you. But before we do this, I think I'm also one of those people who started an American business, operating out of Canada, though, because, it is so much easier to deal with Mercury as a banking provider than having your account locally at a, I don't know, TD or BMO or whatever other Canadian bank exists.
Arvid:Like, the fact that I can go on their website, they have a REST API. They have a really a great app that actually works. And then I have my local bank, like, my small town bank that has no understanding of what a software business is and no understanding of me wanting to fetch my information digitally, but giving me some weird PDF with, like, read and write protection, password protection, that kind of stuff. It's so bizarre to see this, particularly as I'm a German. I come from from Europe where all of this is regulated more.
Arvid:And and germ and, like, Europe has FinTS, like, this this kind of banking API interface, which is really, really cool and really, really accessible. So coming coming to Canada, seeing how crazy old school it is and then trying to build a business there, obviously, this this can displace a lot of people, and it does. Right? Because even in the states, some some banks offer that, some don't, but the ones that do, the more digitalized banks, they get a lot of the entrepreneurial crowd. So I really hope that there is change in there in the making.
Arvid:But let's let's talk a little bit about, Canada as a choice. Is it convenience for you, or are you trying to to fixate on a particular market that is not the United States at this moment?
Connor:Well, one, we saw a little bit more of, like, a sense of the founder market fit in this market just off the bat where we're like, this is a system that we're familiar with. We're already kind of, we're working our way into the accounting and bookkeeping space from backgrounds outside of it. And so it's it's already kind of an uphill battle that way. So finding familiar parts to kind of complement the unfamiliar parts that we're, like, we've deeply trained ourselves in and and and learning. There there's so much, there's so much knowledge to acquire, and, and at some point, that's gonna be knowledge that we can hire in as expertise as well.
Connor:We do actually do some of that as well. But, but let's say for going into the US market, it's like being able to bring on some of the expertise that we would need to to go in and, solve this similar problems or whatever problems exist, kind of in that market. So so yeah. And then also we know that there's just this big gap here. And so there's a little bit of hunger and a little bit of, like, just appetite, in people for, you know, something that even, like, excitement to get something first.
Connor:Yeah. You know? Oh, if this could come here first, that's really cool and exciting. And, so, yeah, just just building building traction, building, building an audience, and and working with what we know. So some of those are some of the factors in, like, addressing this market.
Connor:You know?
Arvid:I think it's a pretty smart move. And I I say this as a Canadian, obviously, biased, wanting you to to build a cool Canadian centric and a Canadian serving start up. That's that's wonderful. But I I just from my own experience, I got a lot of, messages over time for PodScan, my my podcast scanning platform for people from France or from Germany or from Japan asking me when their language would be integrated into the platform. Right?
Arvid:Which is always a, hey. You started in the English speaking market. Now it's time for these other markets. Don't you think? Right?
Arvid:That's the the kind of message that you get. And almost always, I said, no. That's not gonna happen. Like, I first off, I wanna be in control of of the the language of the market that I'm in, which is pretty much what you're saying. I wanna have the local expertise.
Arvid:I want to understand what's going on. And I also wanna see the numbers. I wanna wanna see the the transcripts that I generate and be able to read them so I can see if they're right or wrong. Right? I couldn't do that with Japanese.
Arvid:I certainly could do it with German, but, you know, like, it's it's it starts becoming a problem once you try to extrapolate it to too many other markets. So I think it's a it's a good way to start in your local market.
Connor:Yeah. Well, out of curiosity, like, that's partially, you tend to want to operate the business, like, I don't know. Is it as a solopreneur or is it, like, almost solopreneur? Like, it's essentially like you in the company?
Arvid:Yeah. It's that that's what it is for me. Like, solopreneur with an asterisk of of people helping me out on the site on a contractor basis. Ideally, this will last me solo as long as I can, but I'm also not completely in in opposition to hiring people to do the job for me. It's just like, in in your case, you have a lot of, like, legal expertise that you need to either hire in or build yourself.
Arvid:And then there's there's this whole thing about, being responsible for providing correct information. Right? You're you have to be insured and you have to deal with the potential pitfalls of that. Particularly, we're gonna be talking about AI. This is this is a whole other thing in that field, right, because it's not clear who is the agent that actually takes an action.
Arvid:Is it the builder of the AI or the AI itself? But even for me, like, I don't have that much responsibility toward factualness and accuracy of the the podcast. That's kinda with the people actually producing the podcast. I just transcribe them. So for me, it's it's fine to stay in a in a smaller company without too many cooks, I guess.
Arvid:But I I would love to see it grow. I mean, that's always a thing for a business is to grow to a point where it's actually beneficial for others to join, right, in so many ways. How about you? Does you you're a couple, a founder couple, and I've been part of a founder couple, which has probably been the best experience that I ever had in entrepreneurship. Do you wanna grow the family, so to say?
Connor:Yeah. We, we're super keen to, like, build the business, into a team and, to bring together interdisciplinary talent. That's been a passion for both of us and I think what, predisposed us to entrepreneurship in the first place is that we both really are kind of out of the box, like, interdisciplinary kind of thinkers who value bringing together people with unique perspectives and and ideas, and and, talents to create new things. So, we're we're really excited about kind of getting to that stage of the business. And so far so far, it's been the 2 of us.
Connor:Although when we ran the agency before this, we actually had some, some folks who worked for us, in the agency. And so, we got to build a little bit of experience with team building and, yeah. But, yeah, it's really interesting kind of, you know, it's an interesting fending off the idea in a way, talking to people that this is like a family business. Like, there's a there's a tendency to kind of gravitate towards that, to the assumption that it would might be something of that, variety. But, but we see ourselves or the ambition is to build a really big business with a large team and, and to build something that really goes well beyond just the 2 of us.
Arvid:That makes sense to me. It it makes sense to me because the the field that you're going to be serving with every new customer, maybe not every single new customer, but every new variety of customer, every new kind of business that you have to support, every new industry that you get recommended into. Right? It becomes it becomes complicated because what you said, like, the the legal groundwork, the legal foundation is also complicated to to the fault. Right?
Arvid:Complicated because it's supposed to be complicated. And and it makes perfect sense that you would then also grow the business to be able to support all of this. I think that that makes a lot of sense.
Connor:Yeah. And our our product ultimately is essentially, like, peace of mind for founders. Yes. I love that. That's, like, the heart of, you know, what we should be be able to bring.
Connor:And so we need to actually have every, capacity and thing, internally that we need to be able to guarantee people that.
Arvid:Yeah. I think it's such an important realization what you just said that, so many businesses that are peace of mind often don't understand that they are exactly this. They they they the founders of these businesses are very technical, and they think, oh, I'm building a cool product. I'm building a solution to a problem. But the solution problem cycle that happens when people use the product, right, they have a problem, they use it, and then it's solved and then it's good.
Arvid:That is just a technical perspective. Often people buy this so they don't even have to think about the potential complexity of stuff. That's what peace of mind is. And I I really like that you describe it as such because that also allows you to position it as as that.
Connor:Yeah. This was our this was our big mistake in a way was, was not sort of going more cleanly and clearly, into making that offer in terms of, yeah, essentially, like, we were facing this this sort of dilemma of where to sell. A lot of people would say, well, you should be selling to bookkeepers and accountants. And we really always push back on that, notion because we're like, well, that defeats, you know, our role, sort of. Right.
Connor:Like, I can see why you would say that from a from a business, just from a pure business point of view. Or, like, maybe, like, you'll have an easy time, like, you know, getting your first, your your first, revenue. But sometimes you gotta say, like, hey. This is the hill we're climbing. Like and, we do actually have our reasons and there is actually a business case for this, but it is more of a long game.
Connor:And one should, as an entrepreneur, be aware whether they're playing the long game or the short game and, make sure that you sort of come to terms with and are are non naive about, like, about which one of those you're you're playing so that you can come to acceptance and finds the best process along the way of, like, okay. Wow. This the hill is pretty steep right here. You know, but I remember I put on my climbing shoes so that I could, like, climb this this part of the the hill, like, this is what I this is the the choice that I made. And and, actually, I can keep my eye on the big the big picture.
Connor:And
Arvid:That's the founder's way. Right? That's that's, it's ambitious, but you're prepared and you're willing to do it because you wanna change something meaningfully. And I think you mentioned you mentioned it earlier. You you see too many gatekeepers in the field.
Arvid:You see all these companies that exist purely to exist because the law was made to allow these companies to even come up in the first place. And it it would be almost a betrayal of your own idea to sell to these companies to perpetuate their position as gatekeeper, even becoming a new gatekeeper in the line of gatekeepers along the way. Right? That that just wouldn't feel right.
Connor:Yeah. No. Exactly. And it's amazing how often sort of there's some type of a line of conventional business wisdom that steers you towards things that, may be moneymakers, but, but don't necessarily have all of the the groundwork of, like, what inspires you to do this? Like, why are you going to be willing to get up every day and, and get back to work on building the business?
Connor:And, yeah. So so just to finish where we were, the sort of the peace of mind, and then there's, the fact that what we've really gone into now is we deliver the bookkeeping fully. So, so it's done for you bookkeeping, and that wasn't the original offer. It was it was mostly done for you bookkeeping. But, unfortunately, mostly done for you bookkeeping, it's not at all what founders want.
Connor:Definitely not. Because there's the question of, like, what do you mean it's mostly done? Like, I still need to hire a bookkeeper to review it, or else I need to acquire the knowledge. Like, you're make it still work for me. Like, and so there just wasn't product market fit for that.
Connor:And it's been incredible how big of a shift it is to say, hey. It's done for you bookkeeping. It's total peace of mind. It's reviewed by, you know, everything after after the AI sort of gets done with it and all that stuff. It's reviewed by a professional, human because we need to have those checks and balances, those controls, still just like self driving.
Connor:You know? However, like, self driving has been a good metaphor because it's incredibly you know, it's also heavily regulated, and there's tons of compliance, and you need to run sort of the safe experiments in terms of, like, deploying it and, and putting it putting it out on the roads. So we're kind of doing the same thing, right now with with AI bookkeeping.
Arvid:That that's super interesting to me. Like, AI anything is super interesting to me, but AI bookkeeping in particular, that's my dream. My dream is just, like, have the agent. Right? The the AI agent deal with all this stuff, and then I get something that a person has actually validated and checked.
Connor:Yeah. Exactly.
Arvid:That to me is the the pinnacle right now at least of how AI should be used. Right? Do the work do the work mostly right, hopefully super right, but at least mostly super right. And then have a person with, a sane, calculated, and experienced approach figure out if it's right or wrong. Tell me about how you how you did this.
Arvid:How right. It doesn't have to be, like, super technical and and a detailed implementation, but what is your approach to setting up a business that relies on what I assume to be agents of AI?
Connor:Yeah. Well, it's evolved even in the last year because, like, there's been so much, there's been so much movement from just, like, you know, AI prompts, chat completions, into, like, the assistance APIs, and stuff like that that that are that are built on top. And then so there's been changes just in the last year, the 1st year of building, this technology. And, of course, like like any, I think, of the AI building, like, evals are really important. Evals being where you've got, like, a a a dataset which show what the correct sort of classifier because some of it's a classifying problem, obviously, for for categorizing transactions.
Connor:That's one. That's a task that you can define quite, well, cleanly and say, in fact, this is like, how can we leverage LLMs and and this for the classifier problem that is, that is, like, categorizing transactions. And then you have the fact that a lot of, that there are these back and forth between bookkeepers and and business owners, and the point of that back and forth is to gather context, to establish context, both high level context about the business. So, like, what industry are you in and those types of things, and then to gather narrow or detailed context like, what was this transaction for? And, the fact that that communication, has been done in, like, email inboxes and, has had to just be kind of, like, chains email chains or, so one of the big pain points is, like, that that founders get these, like, emailed, like, Excel spreadsheets or Google Sheets of, like, outstanding items.
Connor:And then, maybe you have to go through and provide responses that way, and these end up getting backlogged in founders' inboxes. And so, I mean, one of the reasons why that happens is I think because of because it's like a staff, because it's human labor, there's a real, they say, like, we'll close your books, meaning we'll kind of do at the end of the month. And, realistically, maybe it happens a couple weeks into the next month after the month has ended. And so by the time that email comes in, you know, in a founder's world, years have already passed in, like, a couple of weeks. And so it's the email, and it's like, what these things were and what those things were, and you have to go and dig back through.
Connor:So you're you've already kind of it pulls you out of your flow. It pulls you out of your focus, and you've you've lost, it becomes a little a small a small mountain. And, yeah. So I think that there's there's opportunities with real time automations and real time, classifications where you're like, oh, we can do this really. We can process information really quickly.
Connor:And one of the opportunities there is that you end up with, like, if there's anything unclear or any information that's missing regarding, like, a transaction or something that can be chased or followed up very quickly relative to when it happened, which makes it really easy to respond to the to the query or the the the inquiry, just because it's, like, fresh. It's top of mind, not hard to answer, and, and it doesn't create, like, an email in your inbox with with the amount of stuff to do. So it just fits more casually into your workflow. So that's an example. And that's just like we don't you know, we will have, like, an agent that you can chat to and, have kind of the full back and forth that you might kind of expect.
Connor:That's something that we're we're in the process of building out. But I actually think that it's been overstated what the, what the utility of that is. They're kind of just chat for chat sake. So I don't think that's I don't think it's all about that. I think a lot of it is about strategic or surgical, use of AI in these places that, make it quick and intuitive to get some job done that previously couldn't get done and question everything.
Connor:This is something where it just said, like, why should this be done manually? Every time you kinda go and build in an edge case, think about how can we make the system smarter, capture more breadth. What context is it missing that meant that it was unable to, to answer this question or to understand this this piece of the business? And then focus on building more context about the business so that so that you can have this broader intelligence and and apply it in the bookkeeping process. So that's kind of the the philosophy.
Connor:And then I don't know. I've read some really fun stuff that excites me about the future from, Toby that Toby tweeted out, Toby Loop preferred in Shopify. He also spoke about in his keynote, about, like, reasoning loops and that kind of thing. So I can see that there could be, some really interesting stuff there where you could actually do more analysis. You could set it loose on a bit of analysis or, that type of thing that that could deliver higher higher level insights.
Connor:But for now, bookkeeping is the main goal. And so just getting really good at that job to be done.
Arvid:Yeah. For sure. And it's an important one. Right? Because it's it's just a regulation thing.
Arvid:Can't avoid it. Like, every founder has this problem no matter what business they're building. And I I think that's that's a that's a really smart industry to be in because it's all industries, but just that one segment of it, that one layer. And the the the that's that's something that I see in in building AI classifiers or AI automations in in my own work. There is something about having a lot of data from a lot of different businesses and seeing how they potentially could interact and benefit each other.
Arvid:That's the great thing. Right? Like, when you start out for a particular industry, a particular kind of startup, you will now train an AI to be really, really good for that startup, for that particular startup, but also for other similar startups in the same industry. And all of a sudden, your classifier now understands what Stripe is or it understands like what Mercury is an example. I use that for my business itself.
Arvid:And the the people that do my bookkeeping, they're always asking me what these weird little credits are that I sometimes get on
Connor:every about that.
Arvid:Every single payment. And That's right. And these are just
Connor:Like Dropbox.
Arvid:Yeah. They didn't really what is it? Dropbox? What is this again? I mean, that's a bad example.
Arvid:But some services, they don't get the the idea that they have a cashback system in Mercury. They don't understand what are these credits. Like, you know, just cash cashback. That's every single transaction. That's, like, 5%.
Arvid:And then you have to explain it to them. Obviously, once you explain it to an AI once, right, once the AI understands, okay, this happens with this bank, this happens with this vendor, that that knowledge can be extrapolated to every single other application of the same agent Absolutely. On a different business.
Connor:Yeah. Absolutely. So collectivize sort of learning without, like, completely anonymous to any of the content of of the data or cross pollination or, you know, that's like with the without any of that, you can still, safely apply benefits of learnings from one business to another. It's a really great, that's a really great insight. And the fact that you could save so many founder hours of, like, time spent answering those types of questions is, like, that's the true calling, I think, for Cedar is to, I don't know, let founders cook.
Connor:You know? Let founders, reconcentrate, find their focus, put their time and money on to the hard problems in the growth, in the growth side of their business. That's where that's where all founders really, I think, tend to, want to focus as just, you know, revenue is the revenue is the exciting part. It's important to, to keep an eye on your expenses, and that's part of, building a healthy business. But I think, like, the passion comes from comes from Robin Yurim.
Arvid:It's certainly amplified by it. I think that for for lots of founders, there's this technical aspect to solving a problem that other people have never solved before in this particular way, or there's the social aspect of the impact that this business has for then you probably feel the same way for people who have yet to be supported in this particular area. Right? Like, you you you see people using it. They love it.
Arvid:They get, like, 20% more done, and you're responsible for it. Obviously, that's more exciting than getting your books in order to a lot of people. But I think that's that's a kind of a self limiting belief because it can be exciting to do things right. Right? Like, I I I wonder maybe maybe you can dive a little bit into this.
Arvid:As a founder who personally, I consider myself not capable or at least not very skilled at that particular side of the business, the financials. Can you help me take a couple quick maybe or just impactful steps towards becoming more confident, to becoming better in that particular field and looking at financials, looking at numbers, maybe in a more benign, more positive light, what should I do?
Connor:Yeah. I love this subject. It's, brings to mind for me, like, a moment when I went through a moment of transformation, which was, when we were building the agency. And I went through this, experience, you know, because working with Pega, she, she's often been one to kind of take a critical look at some system, like the tax system or the or even the financial, statements and say, you know, this is this is something we don't understand, but it's important for us too. So that sometimes she drives that whereas, like, I would take a more classical, like, sort of let's just out.
Connor:Let's just hire someone to get this job done for us kind of thing. So she, kind of created this, like, impetus for us to prepare our own financial statements, at least just to kind of gather all of the information and stuff like this, make sure that we weren't paying someone for stuff that we could easily do ourselves. And the question was, was it gonna be easy or not easy? And so what okay. The the profit and loss, also known as the income statement, felt relatively easy because it was an outline of our income and our expenses, which are both relatively easy to to reason about.
Connor:You already have the mental models for that. But when you look at the balance sheet, it it it really implies this the whole framework of double entry accounting, which is what really, I think, scares people off. The like, that there's debits and credits and and double entry accounting, and there's all this jargon around it, and that the balance sheet is driven by this, like, fundamental, this fundamental accounting equation. I don't know. I've really enjoyed just even certain people who post things online, like, this, Twitter account called your CFO guy, and he creates these, like, visualizations.
Connor:Yeah. I I would recommend, like, people to look at his stuff because, he just it's like what was it? The the universe of, the universe of financial statements. And so it's like it's just these planets and how these visualizations that make it kind of fun and and I think easier to look at, what a balance sheet is. So his his information and, there's other ones.
Connor:Like, there's a book called The Joy of Accounting, and they've got a really simple framework for teaching these things. Not that I'm encouraging people to look into, you know, you don't you don't necessarily have to, go and read those documents, but I will say that it was it was transformative for me to spend time trying to balance the balance sheet, this time because, it forced me into that coders mindset of, like, there was something that didn't balance. So you got, like, you know, assets on one side and liabilities and, equity on the other side of the balance sheet. And so, assets has to equal, liabilities plus equity. And, there's something not balancing.
Connor:And then I was forced to kind of, like, go in and sort of, you know, use the debugging process, start to apply that mindset to it and say, say process of elimination. The problem's not over here. It's not over here. Must be over in this area. And, eventually, when balance sheet finally balanced, that was sort of a moment of, like, for me, a moment of, like, transformation where I I, I discovered this feeling that I can understand these things.
Connor:They're not, they're not magic. They're not, they're also not that complex, and accounting through its jargon has been made to feel more complex than it is. And, yeah, that there's there's words, and we do this in CEDAR, that you can just replace, like, accounts payable and accounts receivable. We just call that, you know, owed and owing instead of a fancy term.
Arvid:That's often it. Right? Yeah. It's it's it's often in in the intentionally complex legalese way of describing things. And also this, this the seriousness that people trying to teach it teach it with.
Arvid:That's my experience in this at least. Like, the joy of accounting sounds like a very refreshing approach to something that where where people, once they try to teach it, turn into this erudite professor who will tell you exactly what the reality is and don't question it kind of thing. Right? Like, it's Yeah. It should be something that is is an important part of the businesses and the life that we live.
Arvid:I mean, we have to account for all kinds of things on a personal level as well, not just in the businesses. And be being being willing, being able to understand it should be a joyful thing, not a chore.
Connor:Yeah. Here's one fun sort of fact about accounting, which, is that you have the profit and loss statement and you have the balance sheet. And, I think most people, including me, struggle to understand how the 2 are connected to each other. And there's this account called the retained earnings account, and that account has this unique little bit of importance, in that it is how, basically, your net profit, whatever, whatever is your net profit from your profit and loss, your net profit is what flows into your balance sheet, in terms of through the retained retained earnings account. And it somehow, to me, if you focus on, just learning a little bit about that one account, that retained earnings, and the fact that it connects the 2, financial statements, I found it was kind of like a lever to, to a larger understanding because you can see, right, of course, this is gonna be after a couple years into my business.
Connor:It's this retained earnings, which really helps me in my that's what gives me equity in my business after, you know, I've made some profit over a couple years. That's where my profit sits or that's where, that's where my assets are kind of, it's in the equity. It's it's in equity, is where it actually lives.
Arvid:Thanks for sharing. I appreciate this because it's also I've been wondering about the connection between these two. I mean, you you kind of almost, innately understand that there is a connection. Yeah. And, you know, you kinda feel it, but to give it a name and to give it a placement is is obviously beneficial.
Arvid:See, that's what I'm trying to say. Like, I I don't think I'm incapable of wanting to become more knowledgeable about this. Right? Or incapable of understanding the complexity of this. It's just you need somebody to to be to explain it to you on a level that you're that you're capable of, like, integrating it into the other 1,000 different things that you need to do as a founder.
Arvid:Yeah. Right? That's really what it is. There's so much so much nuance to this.
Connor:Just open your mind to it. Open your heart a little bit. Like, just like you have to do with other areas. Like, I had to open my mind, open my heart towards sales, where it's like I had all these predispositions about sales. You know?
Connor:Like, I just have these feelings about sales. I was like, it was a bit of an ick, actually. Like and at some point, until I, was able to tweak that sort of bit of attitude, that bit of inner feeling, I was I was not able to really step up, that that side of our business, the the sales side. And so it can be similar with accounting or, yeah. So I'm excited for you and other people, you know, and access like Investopedia and Chat2PD, like, especially something the more, like, reasoning models, like the o one, stuff like that.
Connor:I think, you know, you get a little more more credibility, using using those models than just 4 hour. There's a greater risk of it just making stuff up.
Arvid:Yeah. That's that's always the risk with AI system. But that's also the risk with people.
Connor:Yeah.
Arvid:I feel like there are also people who claim to be professionals, and then they just kinda resort to using crutches that they always use that may be outdated, that may not actually be correct or true. Right? Like, the you you always have to have the validation in there. And I think you you've been talking about how you validate it through people, how you have this final step of actual human in interference, I guess, in the process. Mhmm.
Arvid:I think it's very important too with any AI system. Like, the moment we have AGI, maybe different. But for for that, I guess, you also need a team. Right? Like, I I'm personally with my software, I try to automate every single thing.
Arvid:Data extraction, like, host guest data, like, the the topics people talk about, that can all be automated. I don't need to cross check it because it it is likely true. And if it's not, somebody could tell me and I can fix it.
Connor:You've got a low enough low stakes.
Arvid:That's right. Stakes are different for you.
Connor:Stakes for false positives or whatever.
Arvid:Yeah. That's pretty much what it is. Like, you don't wanna do this when you submit your your tax report or anything. You don't wanna have a, assumably false positive in there. You definitely wanna get those out.
Arvid:Man, this is exciting. I I think, first off, thank you for for talking so enthusiastically about balance sheets. I don't think I've talked to many people with this level of, genuine curiosity and a willingness to try and explain it to somebody like me. I really appreciate that. Also, thanks for sharing the the story and the ongoing journey of your business.
Arvid:I think it's really cool for you to have picked a business in a a market that is not the United States just yet. I think that might be in your future anyway, but Canada is a good place to start because people here really need it. And to to go into a market that is slow, more traditional, and incumbent heavy, that is is really cool. If people wanna follow you, see this journey unfold, and look into what your business has to offer, where do you want them to go? Yeah.
Connor:Check us out. Cedar dot ai is the website, and, and we've got an x account. That's Twitter. That that's cedarhq over there.
Arvid:Okay. Yeah. I'm gonna put those links in the show notes as well. That's that's really cool. I'm also in a kind of revelatory phase where I'm trying to understand, okay.
Arvid:Yeah. This is actually not that complicated. Just understanding this. It's it's really about phrasing. Moment of enlightenment.
Arvid:Yeah. It's it's what you said earlier with this this, accounts payable, accounts receivable, things that always confuse me, but you can't just translate it into something that you understand. You could just like, you you translated your process into the developer process of just debugging. You can translate all these weird complicated, legalese phrases into regular people language, and all of a sudden it becomes more accessible. That is really cool.
Arvid:Thank you so much for sharing this. Really appreciate it.
Connor:Thanks for having me, Arvid. It's, it's a pleasure to be here and and to talk with you and to see your curiosity and and enthusiasm.
Arvid:And that's it for today. Thank you so much for listening to the Bootstrap Founder. You can find me on Twitter at arbid k a h l. You also find my books and my Twitter course there. And I would really like if you could recommend this podcast to your friends.
Arvid:You've got to rate this podcast.com to submit a rating and a review. Really appreciate this. If you wanna help this show, please mention PodScan as a tool that helps people find mentions of their brands and businesses on podcasts through your friends. That's all I need. Thank you so much for listening.
Arvid:Have a wonderful day and bye bye.
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