What's the historical context of bookkeeping startups and tech-enabled finance back-office services, and how have these companies evolved?

What we all believed internally at Pilot, and what the founders told us all, even though there wasn't a ton of first-hand information was, you could divide this market up. 

First, there were the main street bookkeepers—just regular people who do books for companies, people who do the books for themselves. Typically, if you're talking about startups, we've found that the founders do the bookkeeping until it's just too much time doing this. Then, it becomes a third of someone's job at a lot of companies, where you don't have a bookkeeper. That distinction's important because you're not paying somebody full-time just to do only this, but it's one of three hats that they wear.

Second, there were the bigger companies that went, "We do this for lots of people." Pilot acquired a company like that which got us a large number of new customers. 

Third, there are these tech startups in a few different categories. One category is almost purely just labor arbitrage. It looks like you're buying tech, but you're really just getting a bookkeeper in the Philippines. They're able to make money on the delta there. 

Then, there's another category of tech companies that claim they've built the AI fancy technology that does all this, “Don't you want to get in on this because the AI is great?” It's the new hot technology. 

We felt like we were one of the only companies where our value prop was heavily centered around quality. You actually get better bookkeeping results if you have a tech-enabled company doing it, because computers are better at a lot of this than humans. That was a big part of Pilot's value problem.

There's technology that you want to get as the customer—something you can log into and see your books for the past and get some kind of analysis—and my understanding was more or less that's where bookkeeping becomes accounting. That’s when you start to have analysis. It's not just categorization and pure reporting. And that's really what we were trying to do—start with bookkeeping and then grow out from that as a base. 

We thought that we were just totally unlike anybody else; that everybody who claimed they had the technology were just lying. Most of the reason why we were automating things under the hood was for our own margins because that was the business we wanted to run. It was because of that value prop that you'll get better results as a customer. It'll be more accurate.

I didn't realize this when I joined, but accuracy is a really big thing. It's not a black and white question. It's not “yes” or “no.” It's a spectrum.