00:12:03 · Steve Stagner, Miguel Armaza
But if you look at it as something that's just going to take away what you do, I just feel like you're looking at it the wrong way. I think we've got to, I think we all as a society have to look at how we can leverage it to create more value and do more valuable things. [00:12:21] S1: So let's bring it specifically to Crete, right? Yeah, sure. That is the segment that you are at least initially focusing on and that's accounting firms, right? Have been the quickest wins that you've identified that you're starting to transform?
00:12:38 · Steve Stagner
[00:12:38] S0: Yeah, so if you zoom out, if you think about the framework, what we're trying to do is go in and look at actual technologies and systems that they're already using and then go in and see if we can accelerate the mundane activities inside those activities versus just creating like an AI agent necessarily just to do all the work. So we're trying to make the existing tools more productive. And so one way, like take for example, you could take the trial balance. So we could go into a business and we've developed tools that can go into a business to take messy messy data and a trial balance and normalize that data which becomes the foundation for doing the business tax returns and doing the adjustments. It comes to the foundation for doing audit testing and then opens up the door for the advisory work. So if you think about it, if we map the messy data in such a way that we could probably save 30 to 50% of their time and some of our early tests are showing exactly that 30 to 50% time savings on mapping that data and normalize it so that they're focusing on, okay, this is all accurate, this makes sense and they're focusing on the intuition and the quality of it. Then when we get into the audit testing, now you can pull that data in there very, very quickly which audit testing is pretty straightforward. So to do the substantive testing that is required, that can be done in a very fast way, probably save 25 to 30% of time so that the human can do the evaluations on what is not accurate or not or is different. And then when we go into the tax software, once we've got the audit testing done, can, as you know, much of what's filled out on a tax return is very, very straightforward. So we can just pull that data in there, automate that, and then the tax professional can even, I think the next game changer is to work with AI to look for and spot based off of tax law and based off of other business insights and look for areas to advise the client in a clever way as a thought partner. Of course, you would never do that without validating and verifying because you don't wanna rely on it 100%. I don't think it's there yet. But if it can save you time on all of that mundane work, I think it does a lot of things.
00:15:10 · Steve Stagner, Miguel Armaza
It frees you up to do the work that's more important And it opens up capacity, which is really what we're trying to do is open up capacity so that we can grow. And so anyways, I think that's kind of the more detailed work that we're doing at Crete right now. To do all that, I'm super excited because we have partnered with Thrive Capital. They have given us, Thrive Capital, if you're not aware, or maybe in the audience, they've invested well over $1,000,000,000 directly with OpenAI. And so they're like one of the top leading investors in OpenAI. So we have kind of a direct relationship. And it's really nice to have them because there's a pioneer tax in technology, you know, just the pioneer tax of learning technologies. And to have some of the leading engineers in OpenAI on our team gives us potentially a disproportionate advantage to go over this pioneer tax that we're all pioneering through as a society and as companies. And so we're super excited about those. They've given us we have I call them the Fab Five. I have five engineers that are working with me directly to walk into firms and provide real life solutions for their real life problems. [00:16:30] S1: You mentioned, obviously, there's a lot of advancements and efficiencies that you're finding, but you still need a human in the loop. What are, if any, what are some of the things that you've identified that AI is not there yet?
00:16:30 · Miguel Armaza, Steve Stagner
[00:16:30] S1: You mentioned, obviously, there's a lot of advancements and efficiencies that you're finding, but you still need a human in the loop. What are, if any, what are some of the things that you've identified that AI is not there yet? [00:16:46] S0: Look, mean, I don't think that at this point, you could rely on AI to, you know, sign off on an audit or a tax return fully. I think where we're focused is we're focused on using AI to just do the mundane task. That's where we're starting. Maybe in a year from now we can talk about doing more advanced stuff but we're focused on just how can we take transactional data that's very mundane and take the human largely out of it so that we can free up time for more valuable activities. [00:17:25] S1: Does growth become your most important KPI or maybe share a little bit about the KPIs that you're tracking and maybe some of these are not so obvious to outsiders.
00:17:36 · Steve Stagner
[00:17:36] S0: Look, our mission at Crete is we wake up every day to accelerate growth. When I think about that growth, I don't think about it in terms of just revenue growth or EBITDA growth. I think of growth more broadly in terms of human growth and client growth and firm growth. So when I think about growth, I feel like Crete, if you think about us, we're kind of like the Intel inside. So So if you think about a brand, you know, we have all these different firms that we partner with and those are their own unique brands and we honor and preserve those local cultures. Crete is an Intel Inside, kind of like a processor of Dell computer that makes it go faster. And so the metaphor there is very important because the investments that we're making is to help unlock that growth. My most important metric that I think about are what I call the triad which is client success, employee success and firm success. And that's the triangle that I look at. And I look at it as a triangle because if we're getting more clients and growing our and deepening our relationship with them and our satisfaction with them, that's a good thing. If we're growing our individuals and developing them, that's a good thing. And the satisfaction is high, that's a good thing. And then if our financial metrics are, I look at the financial metrics as a lagging indicator with the leading indicator being the client and that the team. And if those two things are moving in a north easterly direction, then I believe the financials will follow. And it always has. In my past, I invested 10,000,000 a year in learning and development for our employees. Two hundred hours per employee in training. It's public knowledge that we did that on selling mattresses, which is the most boring thing you could ever do. And you certainly don't need $10,000,000 worth of mattress training. So what we did is we spent training on learning and development. And what was the net effect? Well, we had a 30% higher store average than the average company that we bought. And so we had the same access to the same customers, the same access to the same market and the same manufacturers but yet we had a 30% higher shore average. So why is that? Well I say it's because we invested in the people.
00:19:55 · Steve Stagner, Miguel Armaza
And I think that what's going happen here is in this industry is we have an opportunity to really invest in our people and the technology and the combination is going to be what really helps unlock the growth, which is our mission. [00:20:10] S1: Speaking of customers, which is one of the three legs of that stool you just mentioned, are customers also demanding for better tech? You just mentioned you as an example. You work with one of the top 10 accounting firms and you still demand for better tech because you know it's out there, but at the same time, you're the CEO of a company that is injecting AI across your company. Right? So you're right there at the tip of the spear. Do you find that the expectations of customers have also shifted? Yeah, I think