104: Mark Bartels

‘The Shopify for Accountants’

South African-born, Mark Bartels, has gained a wealth of experience from Silicon Valley to Sydney, now CFO at Practice Ignition, specialising in software to simplify business processes for their clients and ensure they receive payments.

CIARAN RYAN: Today’s podcast is sponsored by Draftworx, which provides automated drafting and working paper financial software to more than 8000 accounting and auditing firms and corporations. CFO Talks is a brand of the South African Institute of Business Accountants. Today what a pleasure it is to be joined by Mark Bartels, who is CFO at Practice Ignition and is a South African, but he’s based out of Sydney, Australia. Now, Practice Ignition is a software package providing engagement and proposal management software for accountants. It also allows accounting professionals within minutes to create and send clients an impressive proposal and a compliant engagement letter that they can read and sign. This overcomes the problems that accountants experience with scope of work creep and fragmented correspondence with clients that can easily get lost in the system. As I mentioned, though based in Australia, Mark is South African-educated and he has been working outside of South Africa for many years, 15 of those being spent in Silicon Valley. First of all, welcome Mark, and what’s the weather in Sydney, Australia, like at the moment because we’re having a lot of rain in Johannesburg here.

MARK BARTELS: Thank you for having me on, it’s great to connect, back to South Africa. The weather here, it’s been a very wet summer. I would say if you’ve spent a lot of time in the Eastern Cape, probably between Port Elizabeth and Kenton-on- Sea or East London, we’re entering into that humid time of the summer here. Thankfully we’ve had a lot of rain, we had some awful bushfires last year after a very dry summer, I think everybody here welcomes the rain. I think we have had the La Niña weather pattern that’s been hitting Sydney. So overall I definitely can’t complain, it’s been a good start to the year. Things are similar to South Africa where January is a typically slow start as people wrap up the holidays and watch a test match of cricket and then get back to work probably end of January, going into February.

CIARAN RYAN: I guess the obvious second question, and thanks for the weather report, what was it that took you to Silicon Valley? You were there for 15 years and now you end up in Australia. Give us the background there.

MARK BARTELS: I went to school in Port Elizabeth and then went to the University of Cape Town and I ended up doing my accounting articles at Deloitte & Touche back then, and I ended up heading over to the US, to San Francisco, to help out with their busy season. It’s actually a wonderful programme for South African accountants to get some international experience, and you get to work their busy season. That was in 2002, 2003 and I ended up loving it in San Francisco. I did a bit of work in the UK but ended up coming back to the States with Deloitte, did some work up in Seattle. I was actually fortunate enough to work on Microsoft and Boeing. While I was working on those engagements, I started to do some more merger and acquisition work, and that really started to open my eyes up to software, and software as a service, people call it SAS, it was still a very new concept back then. You didn’t really bill for software on a monthly basis, you would buy a package or you’d even buy a CD-ROM and you’d pay for the licensing software and off you’d go. So it was still very new and I started to open my eyes to this type of business model. I ended up staying at Deloitte in San Francisco and then went over to a company called StumbleUpon, which was a content discovery engine, you click a button and you get a great piece of content. Ciaran, if you know that name, you’re probably dating yourself but it was actually around the same time that Facebook and Twitter and Tumbler and Myspace, and a lot of these other social media companies were starting to birth in San Francisco and Los Angeles, where it was the first time that users were starting to generate content. The hard part was trying to find that content. I was CFO at StumbleUpon and then became the CEO. After a seven-year stint at StumbleUpon, Invoice2go, which is a product for small to medium-sized businesses that create invoices and estimates and helps more businesses get paid. That was still in San Francisco but the interesting connection here was it was founded in Australia and so I started spending a lot more time in Australia, in Sydney, with the team. We also had a team in Redwood City, which is just out of San Francisco, down the peninsula. Then in 2019 the company asked me to come out to Sydney to help the team with payments and  some of our lending products that we were experimenting with for small businesses. So we uprooted in 2019 and moved out to Sydney. I moved out with my family and we settled here in Sydney and then Covid hit obviously, which was crazy and which nobody could see coming, and, we battened down the hatches and dug in here. Then I was fortunate to meet Guy Pearson, the CEO of Practice Ignition. Guy and I had a cup of coffee and I started to understand how Practice Ignition operated and the work it was doing for these accounting practices and these bookkeeping practices, which is very similar to what Invoice2go did. I ended up joining Practice Ignition as CFO back in August of 2020 and it’s been about six or seven months now. We are very happy in Sydney right now, we still miss our friends in California and we have a lot of family back there but for now we are happily ensconced in Sydney.

CIARAN RYAN: Is Practice Ignition headquartered in Sydney?

MARK BARTELS: It is, the HQ is here, we have an engineering team and a product team in Sydney, we have our leadership team here. But we have a pretty big footprint in Canada, UK, US and now even in South Africa.  That’s one of the benefits and one of the things I really enjoy is when you’re working for a multinational company like Invoice2go, we had a leadership team split between Sydney and San Francisco and the time zones can get really tough because… it’s actually the time zone between California and Australia, it was actually okay, it’s just a day apart. There’s just a lot lost in translation and I think it’s been great for me to be on a leadership team who are all in the same place because you are just a lot more in sync in terms of making decisions on the day without waiting for a delay. So that’s actually been a big lifestyle improvement for me, having the team in one room.

 

‘I think what we found in 2020 with Covid is that accountants have really become therapists.’

 

CIARAN RYAN: Tell us a bit more about Practice Ignition, it’s a name that we’re not unfamiliar with in the accounting profession, but tell us a bit about the product and what is its compelling or unique selling point, if you can just highlight that.

MARK BARTELS: The thing I’ve learnt about small business owners and entrepreneurs who are running their own businesses, whether you’re an accountant or a bookkeeper or, funnily enough, a plumber or electrician, you tend to want to work in your business, you don’t have the time to work on your business, that’s a very important distinction. I saw this at Invoice2go and I see this at Practice Ignition. What Practice Ignition does is it essentially becomes the front door for your business and helps operationalise and automate a lot of that heavy lifting that you do upfront with drafting an engagement letter, from working through the rates, from thinking how are you going to get this over to the client, how are you going to get this signed? Then the most important part is how am I going to get paid because for small businesses, the movement of money and getting paid is probably one of the most important things to small business owners because they have people to pay as well. What Practice Ignition helps you do is not only set up your engagement letters and proposals, quotes and estimates, it also then helps you with the Ts & Cs, and then allows you to get paid, whether it’s on a variable rate or whether it’s through a retainer. The pattern that I’m seeing in the industry, not just the accounting industry, is essentially un-bundling of Word or the unbundling of Excel, where traditionally this would have been done on Word, before that it was done with pen and paper or Excel and what’s happening is Practice Ignition now is essentially letting you manage that part of your practice through software. You then roll it over and you bring these clients on and then you continue through the next year and you continue to do work. I think what we found in 2020 with Covid is that accountants have really become therapists, they have become more than just someone who you hand your set of accounts to at the end of the year and say, go do my taxes. It’s been an incredibly stressful year for small business owners, and accountants have been there to help,  whether it’s stimulus for Main Street in the States, the PPP loans, which is the Payroll Protection Programme, which helped to provide stimulus to small businesses. In Australia we had a programme

called JobKeeper. Accountants have been sitting in the middle there, trying to help these small businesses to operate. I think any type of software that helps you run your business more efficiently has been a godsend to these practices. So that’s where Practice Ignition really kicks in. I’ve sometimes heard it called the Shopify for accountants, and that’s essentially the offering here, it’s the front door and it’s the software that helps you run your business.

CIARAN RYAN: Is it only for the accounting community or does it expand beyond that?

MARK BARTELS: Right now that’s our focus but what we do find is that other types of professional services are starting to use the product as well. This is easily migratable into legal practice or any practice where you have to put a detailed proposal together, and you can customise your terms and conditions and get it over to a client and get paid. But right now, the majority of our customer base are bookkeepers and accountants because it’s customised, the terms and conditions and the way that accountants work, it’s customised for them.

CIARAN RYAN: Tell us how business has been going, particularly with Covid and the lockdown. Are you finding things tough or has it been good for business?

MARK BARTELS: It’s a tough question, for Practice Ignition business has been good. Sometimes you hear it said that is the software you sell a vitamin, and it doesn’t make you feel good or is it a painkiller? Practice Ignition is definitely a painkiller, it’s not the first thing that you stop using if things slow down because it’s an intricate part of your business. When you connect payments, and we help facilitate payments, it’s not typically the thing you’re going to cancel. So if anything, accountants and our customers have hugged the platform even closer during this time. The other thing we’ve seen is, and this is especially in the US, the Americans use cheques a lot as a form of payment, cheques and cash, and with Covid what’s happened is you’ve started to see an acceleration towards digital payments. So people are using credit cards more, people are using EFTs, electronic funds transfers. They call it an ACH in the US. That’s actually been great for business because that’s how Practice Ignition can really help you, is to digitise your payments, to get the payment coming through the Practice Ignition system. We help you reconcile the payment, we help you to follow up on payments, we help you to keep track of who owes you cash. That’s been really great for the business because there’s been a huge migration over to digital payments. I think the other side here, and that we’re very aware of, is there’s just a ton of uncertainty for our customers’ clients over the last year. Back in. February of 2020, nobody knew what was going to happen and there was a ton of uncertainty, and I still don’t think we quite know what the economic landscape is going to look like once a lot of this government stimulus starts to stop. But as a business we’ve seen really good growth in 2020 and continue to see it coming into 2021 now. So overall Covid has been good for us but you hear about this K-shaped recovery, so some people have done very well in Covid and I think other types of businesses, whether you’re in retail or restaurants or anything that’s been affected by the lockdowns, I think has been a very tough year for 2020. So we’ve been quite cognizant of that and we’re watching it closely because the health of our customers is determined by the health of their customers. So we’re all connected in this.

‘I think South African-trained chartered accountants still have a very good reputation.’

 

CIARAN RYAN: I agree with your point earlier that accountants are becoming therapists. I think that’s a good way to put it. You’ve got quite a bit of international experience having worked in Silicon Valley, Australia and around the place. Give us a sense of the difference that you found having been trained as an accountant in South Africa, then working abroad that obviously lifted your game a bit because you were exposed to a much bigger business landscape, but what about the standards and the quality of accounting. You’re probably going by memory but how does South Africa stack up with the rest of the world? Is my question.

MARK BARTELS: Well, look, I think South African-trained chartered accountants still have a very good reputation for quality and for just training, right, whether you’ve trained at one of the accounting firms or you’ve gone to one of the universities in South Africa, South African chartered accountants still have an excellent reputation abroad. So that’s definitely not a problem. What I found is that South Africa tended to follow more of a framework-based accounting system, it was definitely already starting to adopt the IFRS standards. Then I got to the US and I found United States GAAP to be very prescriptive, it wasn’t really a framework-based rules approach, it was a prescriptive approach. But at the end of the day, there’s not really a big difference between the two and I find that they are actually becoming more and more similar. But what really helped me was a solid grounding in going through our university system, going through three years of articles, which is really just an extension of university, and then actually getting into industry. I think the hardest thing for any chartered accountant is moving from public accounting, and by public accounting I mean, working in auditing at one of the accounting firms, to actually working in industry, that’s the biggest shift because you move from a very academic-based environment to the real world very quickly, and you’ve got to adapt if you’re going to succeed in an industry, as opposed to public accounting, it’s a very different type of environment. That was my biggest learning curve. Once I left the academic environment at Deloitte & Touche and moved into industry and moved into Silicon Valley, where you’re working with young founders, you’re working with technologists who are not familiar with accounting, and are looking to do things where you have to help empower them, you have to deploy capital, you have to raise capital. But at the same time report to your investors, report to your shareholders. That was the biggest challenge for me.

CIARAN RYAN: Let’s talk about the role of the CFO. Now, this is quite something different

because I think a lot of the competencies and skills that are required for the CFO post, they’re not taught in the colleges and the universities. This is something that you have to learn on the go, on the fly, right? Are there some skills that you find that you can only gain from experience having been presented with a challenge that you have to solve that you’re not going to find it in academic textbook. The things like leadership and HR and team leadership and strategy, all these kinds of things, that’s something that you have to pick up by experience. Would you agree?

MARK BARTELS: Absolutely, a lot depends on luck based on who you get to work with. If you get to work with a great CEO or great CFO that’s an incredible gift because you have a guide and a mentor. I’ve been lucky along the way to work with some people who have sometimes taken a chance on me and underwritten me and hired me and given me the opportunity to step into a role because that’s half the battle is getting into these roles. I think one of the things you’ve got to learn as a CFO in working in industry is you’ve got to unlearn some of the risk management that you’ve picked up while working in auditing or working at one of these big firms because, this is very similar to how attorneys operate as well, auditors are classically trained, and they are meant to look for risk.

So when you look at a problem, you tend to look at what can go wrong, as opposed to where the opportunity is. I come from a family of attorneys and I love them to death, and they’ve done wonderful things, but at the same time, sometimes when you pose a problem to them, the first thing they look at is, okay, well, have you considered what could go wrong. Accountants tend to do that as well. Now on the flip side, I will say that accountants and attorneys make excellent entrepreneurs and investors because the accountants and attorneys who actually make the jump tend to be able to negotiate with you and think about what they want to do, but at the same time in the back of their head, they’re thinking about how are they going to write the contract, they’re thinking about how they’re going to finance it, and they’re doing that at the same time. So they can actually become excellent entrepreneurs and investors. So there’s definitely some benefits to it coming out of practice but I think that the hardest thing for me, the most difficult thing for me probably was learning to be comfortable in the grey.

CIARAN RYAN: What do you mean by that, in the grey?

MARK BARTELS: In the grey, exactly, so things are never black and white in industry. I’m not talking about ethics and legality, that’s and easier line actually, ethically there are certain standards, you have a fiduciary duty to your shareholders and to your employees and so on. That’s not what I am talking about. What I’m talking about is making decisions with incomplete information and actually executing on that decision. It’s easy as a young CFO or as an inexperienced CFO or as an auditor to say to your client, well, you need to be doing it this way, and actually not following through and actually executing on it. Then you get into the real world and someone says, well, you’re doing this wrong, but you’ve got your VP of engineering saying, well, guess what, I’ve already built it and I’ve shipped it and we’re selling it to customers. You then have to come up with a solution that is going to work for the accounting side of the business, so that you’re reflecting exactly what’s going on, but at the same time, you’re actually letting your team, whether it’s the VP of product or the CEO or the design team continue to execute, and CFOs who are not comfortable in those environments, don’t tend to succeed. Especially in Silicon Valley because nobody can tell you what’s going to happen in six months most of the time. So if you’re going to be a partner to the CEO or which I think is more challenging, a partner to a young CEO/founder who is brilliant and is moving at a hundred miles an hour and you want to keep a seat at the table, then you’ve got to learn how to come up with solutions as opposed to just saying no to everything. So that’s been my biggest learning because if you have a seat at the table as the CFO, then you’re no longer back office reporting on numbers, which anyone can do, you’re actually on the front end, helping the business innovate and helping the CEO think about how to deploy capital that’s where the fun is, and if you can get into that role as a CFO, I think it becomes really interesting.

 

‘I like to say sometimes that you can be a CFO, or you can be a CFO plus.’

 

CIARAN RYAN: It’s quite interesting that this is getting a lot of attention I think in academia at the moment is the requirements for a CFO and I think you’ve touched on a few very, very good points. There are a couple of studies that have been done on this, one of them is out of Canada and it’s called from CA to CFO, and it just looks at these different competencies. The South African Institute of Business Accountants has a designation launched quite recently in the last few years called CFO SA and that really rewards people who’ve accumulated this kind of experience and acknowledges them for that kind of experience that they’ve gained through that journey because you can’t take a CA or somebody recently out of university and put them in a position of that much responsibility. You talk about sitting next to the CEO and getting into discussions about where are we going to deploy capital, what’s going to be the most efficient way to redirect the business, where is our most profitable branch going to be in the future. These are things that are learned through some pretty…you’ve got to get knocked around sometimes to get that kind of knowledge. Don’t you think?

MARK BARTELS: Absolutely, I think probably the most challenging, but most rewarding thing for me every day is you’re dealing with other humans. That’s the most unpredictable part of your day at the end of the day, when you’re managing a lot of people you never know what to expect on the people’s side, whether it’s resolving a dispute, whether it’s trying to make a hard decision or being a tie breaker, it’s always going to be a challenge. I think that goes beyond being a great CFO, as I was saying earlier, it comes back down to therapy. But I agree with you, I like to say sometimes that you can be a CFO, or you can be a CFO plus. A CFO plus is typically managing HR, legal, analytics, the monthly reporting, board meetings, and then at the same time sitting next to the CEO, and working through whether it’s raising money, raising capital, helping sell the business, helping buy another business. You’re wearing a lot of hats and it’s become I think a lot of venture capital backed  businesses now in Silicon Valley really require a great CFO by the time you’ve raised a certain amount of money or earning a certain amount of revenue because at that point I don’t think the company has credibility unless it has a great CFO sitting next to the CEO. So I would recommend to anyone if they want that type of experience is you’re not going to get it immediately, you’re not going to get promoted immediately to CFO, but get it in there and find a mentor, and get your hands dirty as early as possible. Whether it’s in South Africa, whether you’re in the UK or Australia, wherever it is, there’s no substitute for experience, but working at a high growth business too that’s unpredictable makes it even more fun because you don’t stop learning and you’ll make mistakes and someone else will pay for them. That’s the one benefit, unless it’s your own money, but that’s part of the deal, you will make mistakes, just make sure they’re not irreversible mistakes.

CIARAN RYAN: We’re running a little bit short of time here, a couple of quick questions. Tell us a bit more about yourself, you’re married, you said you studied in Port Elizabeth, what school was that?

MARK BARTELS: I went to Grey High School in Port Elizabeth, it’s a school in Mill Park and in Port Elizabeth. Then I was fortunate enough to go to University of Cape Town where I did a BCom and then did my PGDA, which is a post-graduate diploma in accounting, and then qualified as a chartered accountant while working in Cape Town for Deloitte & Touche, which was wonderful. Then headed out to San Francisco and, as I said earlier, I spent some time in Seattle and San Francisco and in the UK. I’m married to an American, who was born in Texas and then grew up in Colorado. We have two young boys who are now here in school in Sydney, and they definitely keep me busy.

CIARAN RYAN: Have they picked up the accent?

MARK BARTELS: No, they actually sound like my wife, they sound American, I am definitely the odd guy out yet. But I’ve found it very comfortable in Australia because it’s the sport is very similar and the culture here is very similar to South Africa, which I’ve enjoyed. But we loved it in California, it’s a lovely place to live. Just like Detroit is a company town for cars, um, San Francisco is a company town for technology. You learn through osmosis, I’m never the smartest person in the room in these meetings because sometimes you just keep your mouth shut and listen with all the ideas and and innovation that’s coming out of San Francisco. It was a wonderful opportunity to be there.

CIARAN RYAN: Final question here, any books that you’d recommend? This is a standard question, we want to know what tickles on the literary front?

MARK BARTELS: How long have you got? [Laughing] I love reading. There’s a book that I give to people, it’s Endurance: Shackleton’s Incredible Voyage by Alfred Lansing. It’s about a crew that sets sail for Antarctica and were then frozen in ice and their boat was frozen and they managed to survive. But it’s a perfect metaphor for running a company, from recruiting a team to keeping everybody alive and motivated. It’s a wonderful story, I highly recommend that.

CIARAN RYAN: Have you read the one that Ernest Shackleton wrote himself called South: The Story of Shackleton’s Last Expedition, 1914-1917?

MARK BARTELS: I think I’ve heard of this one, I’ve not read it.

 

‘You read these biographies and you realise that people have been nasty to each other for a long time.’

 

CIARAN RYAN: It’s fabulous, he’s a great writer, what is astonishing about that story, I know exactly what you’re talking about is this expedition that went down to Antarctica and they got trapped there for I think it was a couple of years and this was just before the start of the World War I, and so they were surviving on seal meat and that kind of thing. Then they had to make a run for it where they got a boat, so they put a sail on it and he sailed off to Georgia, which is an island off the coast of Argentina, to a whaling station there to get rescued, and they did, not a single person died.

MARK BARTELS: Well, this is the thing, it’s amazing, I recommend this story to people and people have never heard of it. So that’s a wonderful book. Then just quickly there is Shoe Dog: A Memoir by the Creator of Nike by Phil Knight, which I am sure you have heard of, if you’re an accountant and you want to get motivated it’s amazing because Phil Knight was originally an accountant, I think he worked at KPMG and then he founded Nike, and we know the story. That was great and then I’ve just finished reading Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear, which is all about our habits and how we operationalise them. Then I think just on the fun side, there’s a book by John Muir who was an environmentalist, very early environmentalist, probably before you called them environmentalists, but he wrote a book called My First Summer in the Sierra, which is all about Yosemite National Park in Sierra Nevada. It’s just a wonderful book about Northern California. I love all these biographies on John Adams and Truman and the American War of Independence. I’ve been trying to read every biography by David McCullough on American presidents because what it’s taught me is that you have a lot of people roll their eyes today and say, well, we’re living in such a tough time in terms of democracy, in terms of the way people talk to each other. But then you read these biographies and you realise that people have been nasty to each other for a long time and we keep coming through it and there’s a lot of history there and I think that’s really important. So I love those books, I highly recommend David McCullough, he’s written books about Washington and Adams and Truman and a ton of other people. So very interesting and highly recommended.

CIARAN RYAN: Fascinating, always good to read books about great leaders or leaders particularly who were challenged in some way. I recently read the book by Henry Stanley, the African Explorer, and the book is called How I Found Livingstone, it’s available free online. It’s a bit difficult to read because it’s done in old script. Again, he was a journalist, so he could write very, very well, but just talk about an age when people were prepared to do extraordinary things. Whatever you think about Henry Stanley, and you tend to colour these things in terms of modern political developments, but you shouldn’t, you should read it in the context of the time. A remarkable leader, a remarkable person who pushed through incredible barriers to get done what had to be done.

MARK BARTELS: Yes, and amazing to think he didn’t have an iPhone that he was flicking through either, he wasn’t checking Twitter as he was on his expedition, he was completely disconnected. That’s one of the things that blows my mind is the way that we operate today, versus people even 50 years ago operated. I think it’s incredible.

CIARAN RYAN: Great, Mark Bartels, we’re going to leave it there, a fascinating discussion. Thanks very much for coming on and talking to us at CFO Talks, please stay in touch, I really want to find out how things are going to go in the course of this year, and we’ll reach out to you in a few months and just see if we can please do another catch-up.

MARK BARTELS: Absolutely and thank you for having me on and have a good day in Johannesburg.

CIARAN RYAN: Thanks. That’s Mark Bartels, CFO at Practice Ignition.

 

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