Sandeep Shroff, the Co-Founder and CEO of myStartupCFO, grew his company from two employee and two clients in 2013 to nearly 100 employees and around 500 clients today without raising outside capital.
myStartupCFO is a provider of outsourced CFO and accounting services for startups and small businesses.
In this interview with Eversprint‘s Malcolm Lui, Sandeep shares how he and his team accelerated their high value sales by:
- Executing a “Be Nice” strategy across their entire platform, toward clients and employees alike.
- The Be Nice strategy has generated a large number of referrals that convert to clients, a flow that that has been more than enough grow their business rapidly.
- This same strategy is also why they provide a flexible remote work schedule for their employees: it allows them to show to their children that they too can have a satisfying career while raising a family at the same time.
: Malcolm Lui here. Welcome to Eversprint.com. Today we're speaking with Sandeep Shroff, the co-founder and CEO of MyStartupCFO, a fast growing provider of outsourced CFO and accounting services for startups and small businesses. Sandeep grew his company from two employees and two clients in 2013 to nearly 100 employees and around 500 clients today without raising outside capital. Welcome to the call Sandeep.
: Thank you Malcolm. Good to be here.
: So Sandeep, how did you do it? How did you grow your company from two employees and two clients to nearly 100 employees and around 500 clients today so quickly?
: Business Strategy number one. Believe it or not was to be nice you are nice to our clients. We are nice to our workers that we are operate vision mission everything is encapsulated in those two words working of any collaborative way with our clients. We are very tolerant of people who cannot pay or need some help from a campaign to get things done but don't have the ability to pay or they need content to step up to more than just bookkeeping. We will allies as we have the advertising and we have the full stacks the full service may provide the whole spectrum and we all from bookkeeping to CFO and we let our clients choose what services they use and what they don't.
: Now you mentioned they are really interesting you said you worked with clients who cannot pay. So how do you pay your bills working with clients like those
: Yes. So we are we are in the business of encouraging startups to succeed while we are very keen on that. I have a very focused vision and line of sight on that and we do have bank clients. Obviously if we did not raise any outside capital now so we do have lots of clients who are successful and who pay us. So the trick in the business is to manage the mix of being a nonpaying.
: So forth. So for the non-paying clients how do you get paid eventually do they just pay you a lump sum sometime in the future or do you have a cut of the equity or the cut up the revenue.
: So we've never taken equity in clients you know as such. And that leaves a lot of other disagreements once my equity works and what your services are worth. And then from a financial risk perspective I'm all staking my company's future on making revenue from you. I don't want to make. I don't want to stick more of my risk on your success in terms of taking equity.
: So Sandeep how do you recruit companies that can pay you
: We work with them. Obviously we have a mix of being a non-paying clients and the nonpaying ones the kind of limit the services we provide. Obviously the limit our financial exposure but we work with them on the hope that they will raise money and become clients someday. Number one number two even if they don't and they go away elsewhere as long as the company is successful that is enough of a pay out for us and we don't big. But again we run the company on very very non-financial metrics. Being nice to clients is one and feeling happy ourselves about making others successful is the other metric for
: Right now. Maji your the percentage of non-paying clients that you can work with must be quite low.
: Yes a day dies to be low otherwise you know I can sustain myself and I'd be doing this service to my pain clients I'll be doing this service to my employees and society at large if I decide to commit suicide by having a lot of non-paying ones
: Right. So so for the 500 clients or roughly 500 clients you're working with today how many of those are on the nonpaying how many of the 500 clients are working with today how many of those are in the nonpaying category.
: That would be about 10 percent of clients numerically speaking
: From that from and services point of view they consume less of less than that because they are generally smaller and couldn't colab simpler lines.
: Right. Okay. So for the paying clients can you share with me just briefly who they are what than what they can share me what criteria make up your ideal clients and how you're finding them.
: Sure. So who are the blind saw of clients mostly falling to zero to 50 employees. Zero to 10 million revenue. That's where we start to decline. We have lives outside of those bombs on the upper side. But they started with us when they were small and B and B what we bring is more strategic insight into the more strategic insight into the finance. We don't believe finance is just a back office function whose job it is to just do compliance and fight accident. We believe finance is a strategic function. It can enable a lot of decision making at the business level at a strategic level for the company. A small example. You know if you're a high tech company with lots of clients you're are SAS cloud provider which of her clients are profitable which are not which kind consuming more services and paying you less. All of this can be you know I'm not I'm not from the financial books. So those are the kind of insights to bring you know metrics that do your business whatever metrics matter. You know the beat customer business or number of footfalls if you're a retail store whatever metrics matter to you. So we are very heavy on non-financial metrics as well in addition to the financial ones so that we can enable management's strategic position.
: So how do you find these clients.
: So most if not all of our clients come to us through word of mouth. You know we we as much as we say we do finance and KPI and other things. Numbers. Our primary business is peace of mind and free time. That is what I am. That is the service I provide. I provide our clients with free time. They don't have to do the books themselves. I give them peace of mind. They know their books are in shape. They know that books are being hindered by competent people they know their books will give them the answers they want more when they need to make a strategic decision of one type of the other or the other. So that's what we are selling and you don't buy a piece of mind off advertisement in a paper on a banner in a stadium or that you buy a piece of mine from somebody who you know can deliver and that is the word of mouth thing. Large CEOs on our website and I get all my CEOs all my time see that you are my myself. If I'm doing good. Go tell others. If I'm doing bad. And give me feedback on fire.
: Ok yeah. Two questions for you. Let me give you the easy one first. OK so so you do great work with CEOs. How do you encourage them to make a referral. Give you a referral. Are you proactively reaching out for referrals or are you just letting them happen as they happen.
: Boat you know depends upon it depends upon who the CEO is. We actually proactively each are busy are saying you know we think you know if if we find some company somehow you know whether it's regional press or something we think that we can work with them. We'll look for connections to that prospect through known and then we'll ask for the full. But other than that we've been very blessed and fortunate I would say that our CEOs will proactively get for us to other others. In fact we got one client long back and he told us that we be a good client. And finally I said How did you find me is as you know we were having a VC submit they were funded by an other run outfit ever funded by VC and funding another client of mine and the VC was having this you know CEO get together and they have a monthly or quarterly CEO get together and then that get together. One of my current clients told this gentleman some glowing things about our service and he's as I have never heard a CEO or talk of their CFO at a company people in such glowing terms or over a social drink. The CFO is not a conversation topic that comes up with a beer or drinks. So he says I I thought I had reached out to see who is this guy about Mitch. You know somebody didn't talk even after he was drunk.
: So we'll have just a sidebar. So that's how the. So that's how we get outlines here. As I said in the beginning we are nice to our clients. We are understanding with their financial crunch situation and I believe people appreciate that simple get that.
: Ok so you say we take 10 new clients that use start working with. Of those 10 new clients. How many of them will make a referral for you.
: I'd like to say Ben but I know that's not reality but blackbear maybe one or two. But if
: I ask for them about it we'll make it a.
: I didn't mean the fact that this is I'm looking back I'm thinking back maybe over the last six months or so that would be the that would be above the percentage.
: Okay so from the 10 clients 10 new clients that you work with through both them volunteering voluntarily making referrals for you or you you and your team reaching out to them proactively you will get nine or 10 referrals to new potential clients.
: Yes. Over time. I mean this is not going to happen right away. You know
: We like over a six month period of maybe a 12 month period.
: Ok. And of the nine to 10 referrals that you receive are going to be warm referrals. How many of those will become your clients
: That's a good question. We have a good day. We have a good close rate. More than half. More like in the 60 70 percent referable the warm guys we close about 60 to 70 percent of the new.
: Ok. The other question I was going to ask you who is getting fired by your clients. But before we get that since we're talking about your retention rates and not meeting a marketing guy I'm really interested in these sort of things. You're closing 60 to 70 percent of the warm referrals. What's happened. What happens to the 30 to 40 percent who said no or not at this time.
: So a lot of them really going to know that if we decide to hire. So I'll get the lost causes I'd lost lost case and not causing downward they will go to internal staff. Number one number two they will do a competitor's saying the price is lower now or they will go to a competitor saying I got it for them also to another see you and I have a you know I made a better rapport with this other which is just fine. You know I mean I'm not going to click on our company is not going to click with every every prospector that we see or we talk to
: Okay so how do you deal with people who say no or not right now. Do you have a system in place to keep in touch with them and follow up with them or you
: Are okay.
: Yes we do. So we use the CRM which is I'll make a plug for them it's called streak.
: It is a completely mail. So we are really we are originated based company. We use all legal tools and streak ending there's been Gmail completely. So that makes it easy for us to follow up with even the deal that we lose touch base with them six months a year out and see our goals. We don't win back most of the laws that are going on but we do have a record of you know Minimax some
: Right. So they don't hear from you for six months before you contact them again.
: Something like that. It could
: Be a depends upon where the conversation ended. They may say hey we're going to try and don't up our son for three months. Let's touch base in three months on them as I've gone with somebody else then they've gone be somebody else. It takes about six to nine months for us to go back to them saying hey how's it going with the other guy. Yet you still want to stick with them or do you want to try this out. It's
: Right. Have you thought about keeping in touch with them more regular regularly. You know once a week or twice a month. So they don't forget you because six
: Months from now
: You know
: You might
: A vague
: Yes. Yes I hear you. But that becomes like a spamming the best kind of things. I don't want to be. I personally don't want to be bad. I don't want a company to be seen as people who you know are a that spams people and just doesn't let go of you and will be after you
: We don't don't like doing that again that goes against the ethos of being nice.
: Sure. Well you know I would recommend that you call them every two weeks and make it a sales pitch right. It's more of a seeking more long lines of of reaching out to them staying in touch saying hey I thought you might be interested in this and what this may be might be perhaps for example a success story that one of your other clients of a Keith recently or a problem that they had that you helped them saw or something that might be relevant to the people who who said no or not right now to you at the time.
: So we don't do that proactively just on that time when we do or passively German will publish a blog or so on some topic that we think is of interest so we try to be a little bit more in on a provocative in this situation that may be dealing with topics that people don't talk of. You know I
: Bought my own webinars on controversial topics because I think those are not being addressed sufficiently
: Right. OK
: In the market. And these are value add topics to them in order to pander to business owners.
: Right. OK. So circling back a little bit you talked a little bit about getting fired by your clients. How often is that happened. You know you said you're working with five of your clients currently. How many. Over the past five years have you lost. And why did they go elsewhere.
: I don't know but offhand it is a handful. It is not a single digit maybe a very low double digit number. And the primary reason for getting fired is screwing up the books as much as me saying we are perfect nobody is and we are in the same boat of imperfection. We do have multiple levels of Q8 inside the company. We have an internal audit department that runs which is a cost to us but that's a value added to clients that you know we only audit their books on an ongoing basis in probational fashion. But despite me despite all the precautions you look everybody's going to screw up someday or the other whether you're in software engineering and that is bugs in years off in audio or in marketing and some of the marketing campaigns don't work out. Similarly we make a mistake once in a while and CEOs get founders or entrepreneurs get pissed off and they will fight for that. So that's the number one reason not the number one reason but that's the first reason we get fired. Secondly they will hire internal staff and they'll give we are either too big or our business is so complex that we rather have a inside person sitting here in the office and you know our phone logs as the thing so they will let us go
: In just
: Two days
: To get it. Just to add that to me or one of the things that you're very highly REMAUT company we are a virtual company we work remotely. Our employees are spread all over the world and so are our clients. And so if they want somebody to come into the office on a regular basis and they happen to be in a city where we don't have people then also they will be either a local or a company inside person or something.
: Right now why would a business want someone to come into the office right when it can be done virtually instead. What's their thought process behind that.
: It's funny you ask that question because I like this question to myself many many times and I don't have a cut and dry answer because we may Find as a calming part of the house is completely paperless. Everything is electronic news and tools on the cloud. You know everything either is e-mail or other communication tools or other productivity tools on the web. We use all any and all of them and we made the office back office paperless which means it can be handled from anywhere. I think the insistence on somebody coming to the office is number one. They want to see the person who's doing the books that is this person competent enough or not. And number two there's a comfort factor just to build human comfort factor. You know we are human beings we are social animals we like to meet people you know we like to shake hands and you know look in the eye across the table
: Ok. Go back to your business and that you're doing with your clients. How do you maximize the business that you do with them at the very beginning. How do you figure out how you can deliver the maximum value and in turn generate the maximum revenue for your company. And then on an ongoing basis as you develop the relationship and you get to know their business better how are you increasing the revenue and business and value that you're providing to your clients.
: Interesting you asked the questions though. Bilu Exactly. So we do the maximizing value thing and I tell you how in a second. But on the revenue we do exactly the opposite in fact we actually actively look to decrease our revenue. Namely if there is efficiencies that come into the business into the backoffice we will pass on those savings back to the customer. We will actively invest in things which can automate or systematize things or to add Abduls doing so that according to Will MyStartupCFO part goes down in terms of effort not in terms of value but in terms of effort. People appreciate that we actively we have gone back to customers saying I think you're paying us too much as contrary as it sounds. It is good for business.
: It forces it forces me into more efficient functioning. It gets me more revenue
: Okay. So when
: And the
: You go back and say you're paying us too much like how much is that typically tumah 10 percent too much 15 percent too much.
: Gone anywhere from 10 15 to 50 percent.
: We will see a business and be 100 percent in value. In fact this recently happened. We're looking at the books and obviously we have access to the books and the numbers and all that we'll see the cash balance is dwindling. The net has been even a cash crunch worked for many years with them and we proactively tell them Look my bill will not kill. You know you get money for something even if my bill is very very small we'll say OK we will go on and the first thing they need is money my
: Well and again as I said as counterproductive as it sounds I make up for that in the raffle and these guys will give me because you're nice to them
: Right. Yeah people remember that when you do the Masalit they don't forget
: You know that I know you know as they say the most uncommon thing in the world is common sense. But the other very very absent thing in the commercial world is just outright niceness. We tell people we are losing our bill. They don't know how to react.
: Yeah I've never heard that before I don't think anyone's ever done that. For me it's
: Always prices
: Going up
: To go back we don't get me wrong at a time when we'll increase the bill. Obviously the company is growing and everything's increased revenue that way. But the whole goal is that I have to grow with you. I don't have to grow as a parasite on you. I have to grow again with
: Ok. So when a company is growing and their revenues going up you're able to charge more because there's more work for you to do. Is that
: The rationale. OK.
: Yes correct.
: Ok. So what are you finding your competitors are doing that you would say they're doing really well as well as very poorly
: Well that our competitors were larger than me older than me. You know they figured out their sales pitch. They figured out their delivery methodology. And they are doing pretty good with that. What our competitors are doing poorly is you know they're there. Some of them and I'm not going to name names or anybody but they are just simple and simple jerks to their clients. They will do the holy books. You didn't pay me the money. I give your books. If I have authority to yank money from your account. I yank the money even if you did not give me permission. And then you can keep suing me. So people do all sorts of nasty stuff. I mean on the delivery side there's a few things on the employee side I'm not bad and I'm sure you've heard your long business career and you know people being nasty employers employers thing that's been employed. Rule number one in not only be nice to live would be nice to each other. I'm quite.
: Right now. Are you saying to your best competitors some of your best competitors are doing these clearly non positive sort of things that you mentioned.
: Not all of them but look we all fall into some bad behavior once in a while. We are very conscious to no it out amongst ourselves and not do it. We we are a little bit caught above if I may. You know at my own back then most other people are being nice
: But how are your best competitors able to continue being the best competitors if they're doing the sort of negative behaviors toward their clients and employees.
: Don't get me wrong I'm not saying that they are doing this continuously. I'm not saying that they're doing it to everybody. You know once in a while they do it
: And it's nobody's OK. Look if you're bad what a very candid good enough time the market will drive you out of business.
: Right. Exactly.
: So that is going to be bad to all the people all the time.
: Will be driven out. So
: I'm not accusing anybody of being bad. And then the people who were bad. They're gone and all over either. Those companies have ceased to exist.
: Right. OK. So where do you see my sort of CFO heading going over next five years.
: That's an excellent question. As much as I'd like to tell you I have a grand plan in mind. I don't know it you be a bigger company than today. I mean we're looking at you know we are we are a 100 percent company as I said today we've come from do 200 in five years you know from here. And I mean a 500 person company person company and we know what's a stretchable what's a realistic goal. I don't know. I'm more focused on what they can do on this question for a sec. We are more focused on employee wellness and you know employ you know family of employees. Because we do not mention we are heavily focused on women working from home. These are women are all bad kids are about to have kids. They're basically qualified accountants controllers CFOs but they've taken voluntary time off of the family. So my mighty personal experience and from my going to be five plus years of nonprofit work literacy is that if a mother is educated so is the family we've seen these educated mothers date time off and see their professional skills atrophy. It is very sad to me. And I think it's a disservice to society and their families. You know like like my one of my first employees said I was a great controller but I became a good cook and a good diaper change.
: And she was my. I have no problem cooking and I forget these are my kids I love to bring them up but I need my professional identity back
: To some extent so we are bringing that back to life. We allow for very very flexible work hours we allow but flexible location flexible time by the floor you can work morning day night. I'm I know we look at a back office you know if I did Brigham's I look down at 4:00 in the afternoon or midnight it doesn't really matter as long as I get it done by the end of the month I'm OK. So we are all with all those flexibilities SATs that reveal more to the job around your family life as opposed to the other way the and that is part of being nice. That is part of being you know allowing women to continue to have a profession have a earning source and b that they know like one of the other employees told me I want to be a mom that my children are proud of so we are bringing that opportunity to our employees and say as a business model that is all we've been to are not going to be Dalat to our clients upfront and we tell them that it being the mode of being you know had Beaird hours of the day is a problem. But please don't work with us that's just fine. And you don't think of loss of customers a lot of the losses of the hey I want somebody to come in. I want somebody exactly between 9 advice. And look I know I can buy my employees down that way because that's not the ethos of the company. So we are making sure that they have this and the employees have earning potential and they keep their professional fighters alive because we believe that working mother is a you know is teaching that many more skills than just you know school for example or what I believe are bad as good skill to have. But I've been on a board meeting how to negotiate with a vendor. All these soft skills she has to continue to exercise and keep them alive so that he can pass them on to the kids
: Right. It's very important to us to ask questions for you Sundeep. Can you recap again who your ideal clients are and share what's the best way for those listening out there who are your ideal clients who are interested in contacting your firm.
: So we work with small you know small and medium sized businesses. We work with startups. We start with them at the zero to 50 million zero to 50 employees zero or 10 million revenue bracket. These are startups are businesses who want more from their books than just simple books you want strategic insight to come from the books one finance to be a part of fool enabling function for the rest of the business. We bring that insight into why we are not just bookkeepers. We are much more than that. So if you are looking for insight from your finances talk to us. Best way to get to us is you know send me an email personally. Sundeep at MyStartupCFO. That is and E.P. Sundeep at MyStartupCFO. That's too long. I just send an email to info at my startups here for the com. I am Knaffl that's the best way to get indoctrinates somebody will get back to you. And yes I was going the other part of the you know how
: I know you answered it. Who. Who. Yeah. Who your ideal clients are and the
: Way for them to get in touch with you. Thanks for joining us today Sandeep and sharing how you grew your company so fast.
: Thank you very much for the opportunity. Good good good. Half an hour for me and hopefully people will listen and if not anything else. Be nice to others.
: Yeah that's a good model.
: All right thanks Michael.
: We've been speaking with Sandeep Shroff, the co-founder and CEO of MyStartupCFO, about his company's rapid growth. For interviews with other fast growing companies or to learn how we can increase your firm's high ticket sales through automation, visit eversprint.com