In our fifth episode, we visit Kreston's North American business arm with two brand new guests to share some personal client experience, insights into the interpreneurial mindset in practice, and the pitfalls to look out for when starting your global expansion. Part 2 coming out next week!
Link to the full Kreston Global report can be found here: https://bit.ly/3RAdWhV
Written, hosted, edited & produced by Infinite Global: https://infiniteglobal.com/
Kreston Ep 5 Part 1
Hannah Robinson: [00:00:00] Hello. And welcome to Kreston Global's, the International Interpreneurreneur Podcast.
I'm Hannah, your host, and we are back with two new incredible guests. To continue our discussions around the Interpreneurreneurial mindset today, we're traveling up the continent to North America to get their take on the Kreston Global Preneur report. If you've just joined us as a new listener, I'd recommend listening to episode one, part one for some general housekeeping on how this podcast works.
But in short, we'll be speaking with our guests for two [00:01:00] episodes where the discussion will be split over a part one and part two, part two being released next week to keep these sessions easily digestible. For busy listeners, I'm thrilled to have our episode five Interpreneurreneurs here today representing the US arm of Kreston Global.
Would you both like to introduce yourselves to the listeners and maybe give little background on how you both got into accounting respectively in the first place?
Gary Klintworth: Sure. Yeah. I'm Gary Linworth. I'm actually currently a senior managing director of the Cibis Arc Group, which is in San Francisco. And, um, I started my own business 16 years ago with the idea and thought of sitting in between the, uh, audit team and the client in order to kind of help them navigate.
From series A investment, essentially all the way through some kind of liquidity event. So, um, I primarily work on technology and software, um, health tech and FinTech companies. But previously, uh, I was, I was at Arthur. I started Arthur Anderson. Um, I [00:02:00] left when they imploded and, uh, took most of my client base to Grant Thornton.
So I was there for about a couple years, started our bus business risk consulting practice. Um, and then, uh, went into industry for a year and a half to a public, publicly traded software company that was actually trying to get into international business at the time. Um, and sort of failed a little bit.
Um, and then they were sold and I started my own business. Um, joined Civas, uh, through an acquisition about two years ago. And, uh, that's kind of been my, my journey. So,
Dan Johnson: I'm Dan Johnson. I'm a managing director with Cbis in the Tampa Bay, Florida practice. Um, like Gary, I started my career with Arthur Anderson and was there until it imploded as well, uh, spending most of my time in the Tampa practice, but also in early days in Chicago.
Um, from there I joined what was a, uh, one office, local firm in the Tampa Bay area, and was part of that practice for about [00:03:00] 10 years until we sold that to cbi. In 2010. So we've been, uh, part of Cbis for about 12 years now. Um, I, uh, overall about 30 years in public accounting. Uh, all of that in the audit practice.
I was an audit partner for, for many years, signing audit reports, both public and private companies. Um, and about, uh, five or six years ago, I switched to a role where I managed large client relationships and focus on finding new business for Cbis. Uh, but no longer signing audit reports. So I get a unique perspective in that I get to work with more clients than I would have in my previous role.
Um, and also get to work with more, uh, groups within CBIS as opposed to just our business unit in Tampa. I get to work with Gary. I get to work with our private equity advisory, our risk advisory services, our valuation practice. So, um, [00:04:00] much more well rounded and, and for that matter, some of the other employer services businesses that CBUS offers in employee benefits and, um, uh, other risk management services.
Hannah Robinson: Now we usually do a brief warmup question just to get you as guests in the flow, as well as allow the listeners a little more insights into you as people. So if you wouldn't mind humoring us, if you could have dinner with anyone in the world past or present, who would it be and why?
Dan Johnson: So for me, um, it would be my parents.
Um, they've just meant so much to me in my life overall, um, in my career, um, helping me to start my own family, uh, um, I get to have, uh, dinner with my dad on a regular basis. My mother passed so many years ago. Uh, but uh, uh, if I could sit down with the two of them at any given time, I would, uh, I would gladly do it.
Gary Klintworth: I don't know. This might sound, sound, sound a little bit strange, but, um, [00:05:00] I, I would love to have, uh, lunch with Jesus. Like I, I have this fascination with just sort of history and just like everything and, and. You know, I, I feel like that, um, I, I'm, I'm the kind of person that'll take a meeting with anybody and as a result, like I, I sit back and I ask questions and I learn stuff.
Um, and, and there's a lot of people that I would love, love to do that with. But that was the first thing that came to mind for me. Like just, um, just, just of interest. So
Hannah Robinson: now I know you are both busy people, so let's get straight. What were your thoughts on the findings in the white paper overall? Did you think there were any big surprises or was it all generally what you'd expect to see?
For the most part?
Gary Klintworth: Yeah. I mean, I think that, um, you know, I wasn't surprised by a lot of the things that were in the white paper, but the thing that I was a, a little bit, uh, surprised about was just that there's, there seemed to be more reasons to [00:06:00] expand international. For various businesses in different industries, more than just, you know, tax advantages, cheaper labor, um, and then also accessing markets for, for other customers.
Um, as we know right now, like the supply chain is, is, um, is very interesting. Um, and, and I feel like that in some cases I've seen companies that are at certain stages. It could be early on or it could be a little bit later stage. Um, They're looking for tax advantages and that's the only thing that they're looking for.
And they go and, and they sort of, you know, fail miserably in terms of, um, only thinking of it sort of on a one track mind basis. Um, because the opportunities that exist, I think are, are not only on um, you know, labor market, supply chain tax advantages, um, but then also understanding and, and accessing, you know, international customer.
Um, I've worked on probably 45 public [00:07:00] offerings in the last seven years, and, um, you know, a lot of times the story that they're telling and the filing, um, the S one registration statement filing is that they've, they've mastered the market here in the United States and, um, you know, their growth is gonna come from international expansion.
Um, but a lot of times it, it's, it's not proven yet. Um, but they haven't actually, um, you know, really done their homework in some of those markets. And, um, and really putting together financial forecasts and, and betting on, on future, future growth internationally. Um, it takes a lot of strategic thought and, and a lot of time and, and effort.
And so, um, you know, there's, there's certain things that I think companies can do a little bit better, um, and a little bit earlier. But then also in a thoughtful manner. Um, and I think partnering with somebody who has either been there, done that before is a good idea. And, and also advisors like us where, where we've seen what makes or helps businesses succeed and fail, um, [00:08:00] in sort of, you know, expansion either international or, or, or otherwise.
Dan Johnson: So I think the study is very interesting in that, um, you know, I've had an opportunity to work with lots of international clients over time, and one thing I have found is that those that have international operations conduct it just like any other part of their business, um, they don't think too much about, oh, it's international versus it's domestic.
Um, whereas those that are considering going into being international, there's this level of fear that exists of, oh gosh, if I do that, what mistakes am I gonna make? How, how will problems be out there and, and how will I deal with them when they come up? Um, so it was interesting to see some of the sort of barriers that, uh, folks consider as they look at international expansion, um, and taking that, uh, what I call leap of faith, which is making the first.
Um, to, to become an international company, and whether that's, uh, looking for, uh, better [00:09:00] suppliers or looking to grow your customer base, or both? I think the, the most successful companies do both. Um, uh, the, the study really gives some interesting insights into what, uh, what companies are considering, um, in making that, uh, first step toward international.
And I think, uh, Gary's right that, uh, having the right advisors in. Um, that they can count on and go to, um, to do their research, but also once they've made that, uh, made that jump that uh, they know that they've got, uh, the ability to be supported in, in, in their growth plans.
Hannah Robinson: And what were your thoughts on the findings, more specifically in relation to your region and the countries where you work most?
Any key take ways you think the listeners should really pay attention to?
Dan Johnson: So I'll start on that one. Um, for me, I think, um, one of the key findings was that, um, in other parts of the world, um, uh, Interpreneurreneurs, which is a great term that I had [00:10:00] not heard before, um, are more likely to consider international expansion, I believe, than, than um, US Interpreneurreneurs or Interpreneurreneurs.
Um, it, uh, it, it seems more of a, um, matter of course for, um, businesses, uh, particularly in in China and India, uh, as I read this survey. Um, to, to expand internationally. Uh, I think in the US there's um, uh, maybe a little more thoughtfulness behind it, meaning there has to be a very compelling reason to, um, to make that jump.
And then once they do, uh, again, I think, uh, uh, folks understand that there could be. Challenges along the way, but um, but they're willing to deal with it, um, because, uh, because they see the benefits of, of expanding their markets or again, um, um, having the right suppliers in place. Yeah,
Gary Klintworth: I, I agree with Dan.
I mean, I think [00:11:00] that, um, I, I was surprised by that, that, that people, you know, in the US were sort of a little bit on, on, on the other end of the spectrum cuz I, I do see that. A lot of people in the United States, they, they want to expand internationally for various reasons. I think that a lot of the, the, the folks that are international, I mean there's, there's obviously, um, there's a great labor force.
There's, um, you know, I guess, you know, sort of cheaper, I guess, if you will, to, to, to do certain things. And, um, and then there's a big market here in, in the US and I feel like that the United States is, um, here domestic. Uh, you know, we sort of, we've sort of grown to expect, you know, um, cheaper, right? And, and we've kind of expected that and, and we expected it to be, um, you know, sort of, sort of real time and, um, you know, instant gratification in terms of, um, of, uh, things arriving in our doorstep.
[00:12:00] But, um, you know, it, it was a little bit surprising to hear kind of that, uh, that the internationally, they're, they're more willing. To expand here, here, domestically and, and probably for, just for nothing more than the markets really. What
Hannah Robinson: has been your personal experiences of working with Interpreneurreneurs who may just be starting out on their global expansion?
Do you have any personal experiences you can share with the listeners to maybe help those who are just on the cusp of making that business decision?
Gary Klintworth: Yeah, I mean, I can, I can, I can sort of give you, give you an example. You know, I've, I've only been in industry, I was only in industry for about a year and a half, uh, in my career.
And, um, you know, I spent probably half of my time unwinding a very complex structure, um, international structure that they had set up that, that really, they didn't think far enough in advance on. Um, and, and, and it, it related to, you know, tax structuring, it [00:13:00] related to, um, how the market would materialize for their products and services international.
Um, not really doing homework. Um, you know, like they should have on, on actually pricing in, in the international marketplace. Um, currency hedging. I mean, there was a lot of, there. There's, there's so many things that are involved with actually entering into a market. Um, and, and you know, they had set up a fairly complex legal entity structure, a complex tax structure, um, and.
Probably didn't have the, the perfect advisory in place. Um, but, but we spent a lot of time, a lot of time unwinding that because the transactions didn't materialize. And putting IP overseas probably wasn't the best idea and in a few other considerations. Um, but, but yeah, I, I, I see that a lot where people are, are sort of jumping in, um, and not, not really thinking critically about the impact and then also [00:14:00] the investment that needs to be.
Um, you know, there's, there's some interesting structuring that that happens in China just to be able to do business, um, and that's, uh, you know, most people are, are, are working through those, those, uh, issues as
Dan Johnson: well. Yeah. So from my perspective, when I've worked with international clients, it's been primarily on the compliance side and, um, this is an area where, especially those that are just getting started in the international arena, Have some real challenges.
Um, they don't, uh, spend the time up. To understand, um, the local requirements related to employees related to, uh, tax filings, statutory audit filings. Um, that can become big challenges when, um, those items are now due or, um, you know, employees aren't given the right amount of, uh, time off. Um, uh, basic things that if you're in that country, you know that they're required.
[00:15:00] But if you're just entering it, uh, You, um, you don't have, uh, all the information that you need. So I think it's really, um, again, getting the right advisors because, um, having an advisor that's in that country that you're expanding to, um, can, uh, can, can really make a big difference as companies are, um, uh, expanding.
Um, I think that's it on that
Gary Klintworth: topic. Yeah. And I think just to, just to your point though is, um, you know, There's always sort of this buy versus build, you know, concept in my mind. Like, and it, it, it deals with pretty much everything that I think a lot of businesses are, are, um, when they're trying to expand.
And the one thing that I didn't see a whole lot of information on, um, here was just the inorganic versus organic sort of growth mindset, right? And, and to Dan's point, like having somebody locally on the ground that's kind of been there, done. And expanding internationally through an acquisition [00:16:00] versus, um, you know, just starting a legal entity and starting from scratch and, and in some cases that that can be riskier.
Um, but then in other cases it's, it's almost very necessary, um, in order to understand that market or have somebody that's been there and done that and be able to sort of have some level of immediate success in, in the. And, um, you know, I've seen several of my clients that are, that are in the, the detail or, um, you know, some kind of space where, um, they want to get into an international market and it, and, and they, they go and identify, uh, a company to acquire and then they have local boots on the ground immediately that have, have sort of, um, been there, done that.
Now it's, I do see that the. You know, sometimes the, you know, language barriers, um, and, and thinking about sort of reporting requirements from the statutory perspective, um, as well as just general systems and e [00:17:00] r p information and how that's going to work, whether the local. Company is going to continue to maintain their own accounting and just report back to us here in the, you know, domestically or, you know, the parent or if you know, it's that, you know, you go and you do a full blown international, you know, e r p rollout and, and we do that as well.
So we spend a lot of time with our clients figuring out how to get them on the right system, get the right information in a timely fashion in order to, in order to report and make decision. Yeah,
Dan Johnson: it's interesting, Gary, you know, Mistake that I've seen made is that companies just start operating in an international location.
They don't actually go through the process of setting up the right entities. And it's inevitable that the local authorities there will, um, will reach out and, um, ask why you haven't set up those entities and what you're going to do about it. And when you're in that situation that you are, [00:18:00] uh, you're now behind, it's much more difficult than if you do it right from the.
Hannah Robinson: What, from your perspective is the defining mindset of the Interpreneurreneurs that you've worked with and indeed successful Interpreneurreneurs? What, what makes people really good at that global expansion?
Gary Klintworth: I mean, I don't know. I mean, I think that from a mindset perspective, like the ability to define issues is, is super important.
Early on. You know, you can't define all those issues yourself. You have to surround yourself with the people that have either been there and done that before. Um, and then also just identifying the opportunities. Um, and, and there's, you know, there's always, there's always ways to, to solve, to solve issues, right?
And like, it may not be jumping into something right away, but from a timing perspective, that may be later. Um, and then I also feel like that super important in developing relationships, and it's not. , you know, people that have done done it before, but also developing relationships with, you know, internationally and, and [00:19:00] understanding that, and understanding that the world is a global economy.
Dan Johnson: Yeah, I think the, um, mindset of expanding internationally, it's no different than the mindset of starting a company, um, in the first place. That you have to have some grit and determination, belief in your product and service. Um, and. Would allow you to get things started, but as we've shared that, uh, doing at least a a, a minimal amount of research as you expand, um, just as you would as if you're starting a company, um, that that's critical.
And the idea is you wanna avoid the catastrophic mistakes that are gonna put you out of business or not allow you to operate in that country. While also being prepared that there will be more minor mistakes that will come up that are the, the learning experiences. Those are the things that allow you to pivot the company to, uh, uh, to become better, stronger, um, to grow quicker.
Um, and [00:20:00] again, having the right advisors, the right, um, local connections will allow, will allow those that are expanding internationally to, to accomplish. .
Gary Klintworth: Yeah. The thing that I love about just being in the role that I'm in is that I'm able to actually see what makes companies succeed and fail. And like that I just, it, it fascinates me in terms of the little details that they might not pay attention to that um, can have severe consequences.
But then also, um, you know, having leadership that's kind of been there and done that before and they've learned from prior mistakes as Dan said, which is, you know, we all learn from our mistakes. Um, You know, the best way is to, to have leadership that's kind of gone through those and, and now is able to, you know, or advisors that have gone through that with, with other companies and can bring sort of best practices to the table.
Hannah Robinson: I think we'll leave it there for this week. We've covered loads of great stuff, and I'm sure this is all invaluable to our listening Interpreneurreneurs and anyone who's interested in global business really. As [00:21:00] always, there's a link to the research report in the podcast description, and join us again next week to finish the conversation with Gary and Dan.
Lots more to come. Until then, have a great week and catch you next time. Bye.[00:22:00]