Navigating the Future of Accounting with Zach Gordon, CEO of Red Five

In this episode we speak with Zach Gordon, CEO of Red Five about his WHY, WHAT and HOW of getting it right when it comes to business decisions and accounting.

Zach shares his journey in accounting, focusing on emerging industries like crypto and cannabis. He discusses the evolving role of CPAs, the impact of AI and automation, and the enduring importance of human expertise in strategic decision-making. Learn how to prepare for the future of accounting.

Key Words

• Accounting
• CPA
• Zach Gordon
• Red Five
• Crypto
• Cannabis
• Emerging industries
• AI in accounting
• Automation
• Strategic decision-making
• Trusted advisor
• Future of accounting
• Data-driven decisions
• Networking
• Continuous education

Transcript

Hello and welcome to another episode of Banking on Information. Today my guest is Zach Gordon, founder of Red 5. Welcome to the podcast, Zach. Thanks so much for having me. Now, as we discussed, I always start with the first question based on the book by Simon Sinek. Start with why. So that is my first question to you, Zach. Why do you do what you do? That's an awesome question. Honestly, I wish more people asked questions like that because it's very it allows you to be a little introspective. And honestly, I think the answer changes over time. If we're being honest, back in college, it's, you know, back in Wouldn't I declare probably 2006 or so, it's all right, the economy is starting to head towards a place and you always need an accountant.

It's always called a safe profession, that sort of thing. So let's dive in and let's do this and let's make sure that I'm employed for the long-term here. But honestly, it really has evolved over time. You sort of get into fun with numbers and being able to put together those puzzles, but then honestly, it's sort of evolved even further into people. As corny and cliche as that sounds, but being able to get involved with some of the best and brightest out there, it's a great reason to get up in the morning. Right. So you like helping people. You thought it was a safe place to go into, but you now actually also really enjoy helping people when it comes to accounting and numbers. So tell me, what do you do and how do you help your customers?

Yeah. So what is a day-to-day sort of thing that evolves? Not to keep pounding on that word, but it really does change depending on what time of year. Obviously, you have tax filing deadlines. You have financial reporting deadlines. So the answer is a little bit there. It's let's get the numbers in. Let's get them right. Let's solve some of those problems in the more immediate term. But from a bigger sense, it's honestly helping to be a trusted advisor, to be a strategic advisor. To solve problems either that we know exist today or that maybe you know you're an owner operator you don't necessarily see immediately and just rolling up your sleeves a little bit and and diving in there uh and again that can mean a lot of things depending on the industry so I do a lot of work in crypto, cannabis some of these more uh emerging markets and industries where there's not necessarily that uh that long history of

data points to work off of there's not a ton of guidance to follow so being able to solve some of these problems quickly and efficiently and honestly having that seat at the table and helping to make strategic decisions on let's make this acquisition or let's not let's take a look at the data points to see what what products are selling let's take a look at the regulatory framework to make sense of this sort of product development is compliant or viable etc. etc so it's not just filling a few boxes out on a form and submitting it to the government. It's much, much deeper than that. Yeah. And the industries that you mentioned, obviously, that also tells me a little bit about your why that you want to help people that are in a new area, right?

That isn't sort of settled completely and it's just checking the boxes. You really want to go push the envelope and help them understand how that works. That's exactly right. And especially in those sort of emerging industries. You can have all the success in the world doing something else, but jumping into something that you've either never done before, you don't have a lot of experience. That's a whole different ballgame. Yeah. So how do your customers get value from working with you? You described a little bit kind of what you do, but tell me a little bit like when they describe that back to you to sort of say, hey, this was really valuable. This is how you really helped me generate value. What does that look like? Again, another great question.

And I think that's especially as CPAs, we don't always have the best ability to articulate that properly. And just in my experience, I think the most direct answer to that is really the best owners, operators, leaders I've seen surround themselves with people who know things that they don't. And so it's filling in that gap. So again, whether that's from a tax or regulatory perspective, it's- oh, well, to use cannabis as a great example. So there's this, I'll save this tax dissertation. I'll leave it to a cool 20 minutes to explain it. But there are some very specific tax situation scenarios planning that you have to do for that industry. And that's very specialized knowledge. It's coming in there and giving the owners, the operators, et cetera, the confidence that things are being done the right way.

So that's a lot of the value. It's being able to take some of that stress, some of the uncertainty, or at least as much as we can, given some of the things we're talking about, off of them and letting them know that all these things are going to get done. Let's not just be historians here, since at CPAs, a lot of times we're looking backwards. So financial statements from the past, taxes from the past, et cetera. We want to look forward. We want to be able to anticipate things, give as much knowledge, make as many data-driven decisions as possible. And if we're talking about value, you're trying to run a business, having that much clarity, that much flexibility, that much understanding, that's a ton of value right there. Yeah. Yeah.

So being a trusted advisor, helping people navigate uncharted waters and helping them do it right, I can totally see that that can be very valuable. I myself am not a CPA. Greatly appreciate anyone in that area helping. I could totally see how your customers get lots of value out of that. You mentioned doing it right. That's tricky. Even if you're a regular small business, even if you're just publicly traded, anywhere in between, getting it right is a very tricky thing because that right is always changing. Being able to stay a step ahead is a really big deal. Yeah, no, that is very clear and very valuable for your customers. Now, I like to do this thing called future-stinking, where neither of us knows what the future is going to bring tomorrow or even further out.

But what I like to do is think about what a possible future could look like. And I actually like to go 10 years out. So, 2034, imagine the year 2034 and think about what does the world look like? From an accounting, tax, legal perspective, can you paint a picture of a possible future for me? Of course, I think we're already starting to see that evolution a little bit where there's a lot of consolidation going on, there's a lot of private equity, a lot of money coming in, and a lot of very quick change happening, which is not something that accounting is known for-you know, we're not exactly the most agile or adaptive of of industries around, but that is starting to happen; that velocity is starting to become more and more important.

So I think you're going to see a lot more automation for things like personal tax returns. It's already in motion at the governmental level, and for us at the industry level, where maybe about 80% or so of tax returns are completely automated-where you're just going to receive an invoice in the mail, basically, whether you owe taxes or you're getting a refund, and go to this portal to challenge it or whatever the case. That seems like an absolute certainty, uh, hopefully he'll be there in 10 years, but you know we'll, we'll see on that front, uh. But at a broader industry level again, you know automation is going to be a really big deal, uh. The services that we deliver, uh, will be a little bit different as well, uh.

And I have the utmost confidence in, in all of this just because of seeing the the trends moving forward, but things like, again, tax returns financial statements-if we're being honest, they are sort of commoditized at this point. So where we come in, I don't think AI is going to push us out by any stretch. I think it's going to be a useful tool for us. But, you know, it's a tool. You still need a human to drive the ship. But that ship is going to look a little bit different. And I think bringing that value, bringing some of the intangibles that we do, that's going to be the bigger deal. Really provide sort of the outsource, that specialized service, that's going to be a really big deal.

And that's going to be a huge part of the industry. I think when you're looking at accounting in 10 years, it's going to be less about, let's knock out these financial statements. It's going to be more about, all right, so we had our backend put together the financials. Now, what does that mean? How do we apply it? How do we utilize that seat at the table to make strategic decisions with our clients? That's in my mind where things go. Honestly, long overdue. Yeah. Now that makes a lot of sense that we're going to see with the AI getting into everything, we're going to see a lot of automation and obviously lots of big documents in accounting and in the legal field in general as well, right?

Like lots of heavy documents that AI can plow through really quickly. But I would agree with you, there's going to be this human in the loop. That really is the expert that can still help interpret what this all means. I just want to add on to that because I know myself, I've seen it, and I know a few lawyers, other professionals as well have seen it, where you have clients go to ChatGPT, for example, and they'll plug in whichever scenario like, oh, well, I went to ChatGPT or whomever, and it gave me this answer, which is just not. Not to be insulting to anybody, but it's not correct. You plug in a scenario and it'll give you the answer you want if you're careful at massaging based on the prompts.

You still need us there to validate, to handle the decision-making, things like that. We're not pushed out the door yet. Yep. So what do people need to do today to get ready? If that possible future that you painted is going to be there 10 years from now, what are things you can do today to get ready for that future? A lot of it's education. So learn as much as you can. I don't think you can hide from things like AI, some of the other tools that are out there. Obviously, networking is a big deal. So just, man, as cliché as it is, get involved, learn as much as you can, set up various alerts for yourself. So if there's a specific subject that's very interesting, take as much in as you can and just keep learning.

I think that's the biggest deal. And get involved as well. That's the other area. So I'm fortunate in that I've had the opportunity to get involved at the board level for the New York State Society CPAs. I also worked at the AICPA level on a committee. Being able to get at the ground floor on some organizations that really do dictate the direction of the industry is a really, really big deal. Now, that's a great point. And it actually sort of takes us back to the original point, like you want to get it right. So AI is going to be there to help educate yourself, but don't trust fully on what ChatGPT is telling you. Make sure that you get an expert in the loop. A human still needs to be in the loop to make sure that you make the right decisions. Perfectly said. Great. Well, that's a great point to wrap it up. Thank you very much, Zach, for being on the podcast and for providing all your insights. If you want to know more about Zach or myself, you can reach out to us on LinkedIn. And until next time, choose to be curious. Thanks, Zach, for being on the podcast. Thanks so much for having me.