Hari Vasudevan (00:02.24) Welcome to a new episode of From Boots to Boardroom. I'm your host Hari Vasudevan, founder and CEO of KYRO AI. Previously, I was the founder and CEO of ThinkPower Solutions. Not every leader sits in a corner office. This guy today, I guess, he certainly does. I mean, look at the background in his office, corner office. From Boots to Boardroom shares the journey of those who power America. From the job site to the boardroom, leading with grit, tenacity, empathy, and vision. Hope you'll find the show to be educational, entertaining, eye-opening, and entrepreneurial. I really think today's show will be all of the above. Presenting sponsor for the show is KYRO AI. Digitize work and maximize profits. For more information, visit KYRO.ai. Today's guest is Jeremy Dubow, one of the best, if not the best CPAs in the country. Jeremy Dubow is Prosperity Partners CEO. Jeremy began his career at Arthur Anderson before co-founding Prosperity in 2003. As a tax expert, He provides sophisticated tax planning and consulting services to entrepreneurs and their companies in tax planning, equity compensation, partnership taxation, estate planning, state and local taxation. Jeremy also leads Prosperity's &A practice, mergers and acquisitions, advising business owners throughout the sale process of their business. Jeremy Dubov. Welcome to the show my friend. Jeremy Dubow (02:00.543) All right, thanks for having me. You know, I'm listening to the description and I was like, yeah, I'm basically an accountant is what I do. But at its core, I'm a CPA. More broadly, of course, I'm the founder and CEO of Prosperity Partners, which last year was the number two fastest growing accounting firm in the country according to Accounting Today. if it's from Accounting Today, it must be correct and accurate. But my job, of course, today is is much bigger than providing advice to clients. Though of course, I don't forget where I came from. I like talking to people. I like talking to my clients. I like being a strong advisor to them, focused on tax and related planning. But my day job today is to be the CEO of Prosperity Partners, be the strategic leader, hopefully the right person to lead our business into this next phase of what's happening in a very busy. interesting accounting industry today. So nonetheless thanks for having me. Hari Vasudevan (03:04.958) Yeah. Yes. Thank you so much for being on the show. So, you know, let me start off with this question. I was kind of doing some research about you, Jeremy, and I'm very curious. Why did you leave Arthur Anderson at the age of 25 to go and climb Mount Aconcagua in Argentina? Right. Was it a quarter life crisis? Did you want to find yourself a little bit? Why did you do that? Jeremy Dubow (03:33.023) Yeah, mean, to start. Far back in my history, so hurry up and press. You've certainly done some research. So look, I was 25 years old. I was on the verge of making manager at Arthur Anderson, which was part of the big five, which of course today is the big four or final four, depending on your point of view of the largest public accounting firms in the country. And I started my career at Arthur Anderson as an intern in 97. And then I began my career a year later. as essentially a staff associate in the tax department in Chicago. And I spent the next four or five years building my skills, both technically and interpersonal. So a lot of soft skills you learn at a place like Anderson or any of the big fours for what it's worth. And then what of course was happening in the late 90s to the early 2000s, well, that was the tech bubble. But at the time I took my sabbatical, of course, the bubble had burst. So in 2002, the big firms were doing everything they could to retain their best people. And hopefully I was one of them, but I was 25 years old and a young person over there, so I'm not quite sure they felt that way about me. The industry was going through this crisis. All of their, well, big percentage of their technology clients were gone. A lot of these firms at the time were exchanging fees for investments in these technology companies. The big four was doing that so long as they didn't have a conflict and they weren't doing an audit of the business. And so there was a huge economic loss when that tech bubble burst, but it was still an industry focused on people. And if you didn't have the best people, Hari Vasudevan (05:06.84) Really? Jeremy Dubow (05:22.648) You couldn't be the best company and so what what Anderson did and I can't speak to what the other four firms did but Anderson offered a sabbatical to all of the people in well just focus on tax for a moment all the 1200 or so people in the tax department in the Chicago office of Anderson and they said here's what we're gonna do We are going to pay your health insurance and will give you 50 % of your compensation If you just go away for a six weeks to a couple months because we need to cut payroll, we need to reduce costs, but we don't want to lose you entirely because we do think the world is going to change. And so what I did is I looked around and I said, they're offering me this opportunity to take a sabbatical and I was 25 and interested in life. And so I raised my hand. I said, awesome, you're giving this to me. And the problem was I looked left, I looked right and no else was raising their hand. And then I behind me and I looked in front of me and then of the 1200 people-ish in the Anderson tax group, I was the only person to raise my hand and take a sabbatical. And so I did this and my, you know, some of my managers and partners, they're, basically like, hey, you're, crazy. What are you, what are you possibly thinking? And of course I'm 25. I'm like, what do mean? They asked me to do this. Hari Vasudevan (06:25.262) Hmph. Hari Vasudevan (06:40.014) See you. Jeremy Dubow (06:52.458) they said, Jeremy, why don't you go away for a couple weeks, a couple months? And so nonetheless, I went through with it, raised my hand, took the offer, and I went to climb a mountain in South America between Chile and Argentina. It's called Mount Aconcagua. Once you climb it, you figure out how to pronounce it. So it's not easy to do, but it's Aconcagua. And it is the tallest mountain in the Western Hemisphere. Hari Vasudevan (07:16.589) in Kagawa. Jeremy Dubow (07:22.328) than what was previously called Denali and then recently it's been changed to McKinley formally. I think that was one of the pronouncements from the White House sometime earlier this year. And so it's a 22,800 foot mountain. And while on that mountain, Arthur Anderson imploded. Enron became the story. So. Hari Vasudevan (07:30.424) McKinley. Hari Vasudevan (07:46.414) Cheese! Jeremy Dubow (07:49.597) I was at 20,000 feet or whatever it is when the company that I worked for imploded. So I come down this mountain eventually. I'm watching TV in Santiago, right? I'm in Santiago, Chile before I go back to the States. My Spanish is at the time good, not great. Took a lot of years in high school and college. And so I'm watching this and I see my company on TV on the news because it was like international news, this whole. Hari Vasudevan (08:18.766) That is crazy, Jeremy Dubow (08:19.48) I come back to the States and I'm like, what just happened? And by the way, my sabbatical. Hari Vasudevan (08:25.794) Yeah Jeremy Dubow (08:28.726) that everybody had warned me was going to be a career killer for me. I was the least interesting thing that was happening in the entire company. No one cared where I went, what I do, what I did. Everyone was focused on their jobs and what the next steps was going to be for the company. So it turned out to be, you know, on the one hand, just fine timing because it didn't have any impact on the way anyone viewed me. On the other hand, I always joke that our head part who ended up being one of the highest ranking persons at Deloitte, a guy that led our group named Carl Allegretti, who was just a fantastic professional, a great people person, an unbelievable leader of people. I remember one day he looked at me and said, hey, look, you can't ever go climb a mountain again. This is what happens when you go out of the country. And so I laughed at that. when I do see Carl these days, I do joke around about that a little bit. Hari Vasudevan (09:27.084) Yeah, wow! What a story! I did not know the backstory. But you know, let me focus on the fact that you're the only one to raise your hand. Was it because you're confident in yourself, in your skills, your ability to be on your own, be entrepreneurial, all of the above? I mean, why is it that you think looking back, hindsight 2020, right? Why is it that you raise your hand and the other... people deny. Jeremy Dubow (09:58.059) Yeah, I think looking back on it, it's probably easier to give you an explanation. I'd love to say that, you at the time, you know, I was a risk taker and a difference maker. And it's the same reason that nine months after moving to Deloitte when Enron blew up Anderson, I left to be an entrepreneur and form Prosperity with two of my friends from Anderson and Deloitte. And, you know, now looking at it, you know, 22 years plus later, you know, was the best decision I could have made. I learned a lot about myself. I became an entrepreneur. I became a leader. I developed skills that I didn't think I had. And so I'd like to say that in 2002, when I took that risk, all of that was inside of me. I just didn't necessarily know it or I couldn't have articulated it. But there was an element of confidence to know that, hey, I can take a risk. I've got the right set of skills to come back from this and come back with a story and a life experience. you know, again, you didn't exactly know what you were digging into with your question, but it is a great part of kind of what makes me me. Yeah, you know, I'm this accountant who went and took this sabbatical and climbed the tallest mountain in the Western Hemisphere. And the company he worked for blew up when he was up at 20,000 feet and left that formed Prospect. and have had a great story and a great run of it ever since that happened. So a little bit of entrepreneurial spirit, a little bit of risk taking. At the same time, I loved, you know, at 25 years old at the time, I'm not exactly sure I knew exactly what I was doing other than seem like an adventure. Hari Vasudevan (11:47.458) Yeah, I it means a great story. Did you always think you wanted to always be an entrepreneur? Because I can tell you that from very young age, I knew I wanted to be on my own, right? Although I didn't exactly know what that meant, I kind of knew that I wanted to be an entrepreneur, right? Was it similar to that for you or was it an evolution for you having worked for big businesses like Arthur Andersen, Deloitte, and then figuring out, you know what, I'm good, I'm confident. Let me do it on my own. How did that thing come about here? Jeremy Dubow (12:19.028) Yeah. You know, it's funny, I don't think that I would have told you in college that my goal was to be an entrepreneur, but I would tell you very clearly and succinctly, my goal was always to be the best. So while I maybe didn't understand that in order to sometimes be the best, you have to take the risk and being an entrepreneur allows you to think about the world differently and build a business in a different way, I would have told you from my college days that as a competitive person and I was I was a college cross country and track runner and you know cry I always tell people cross country is the Toughest sport out there because you do a race with 200 people and only one person wins What fun is that to do a you know do a sporting event where your odds of winning are not? Very good because there's a whole lot of other people in this in this race And there's other ways to win you can win the team competition, but individually it's it's a single person wins and so I was always a a very competitive, competitive person. I wanted to get the best out of myself. Even if I wasn't going to be the best and I wasn't going to win that race, I wanted to always do everything in my power to get the very best out of me. And that's what I was going for when I went to work for Arthur Anderson in the first place. It had a great reputation in Chicago. It was known as the best nationally and internationally. We certainly felt we were the best. Whether everyone else felt that is certainly up for grabs. And so when I left ultimately Deloitte after Anderson, I knew that I wanted to be the best at what I did. And I hope, you know, to this day, the people that work with me both internally and externally, look at me and look at us and say, yeah, these people work hard, do the right things, are really good at what they do and care a whole lot about what the outcomes are for their clients. Jeremy Dubow (14:19.576) That hasn't changed in the 22 years, though of course as a person I've evolved and changed a whole lot. Hari Vasudevan (14:26.389) I can tell you as a customer who's worked on some complex transactions with you, you and your firm absolutely retain the DNA for sure, 100%. You guys are the best, honestly, right? let's kind of dive into, you know, prosperity, what you guys do. You kind of briefly touched on that, right? Jeremy Dubow (14:38.902) Appreciate that. Hari Vasudevan (14:55.47) But you know, let's kind of dive deep into it. Entrepreneurs, you know, I remember how I set up my business, right? It's like I went to the Texas Secretary of State website, got the company name, ThinkPower Solutions, and then, you know, chose an LLC taxed as an S-Corp, you know, figured out some operating agreement online, I guess, right? And ran with it. And you know, It worked because I never really in a million years imagined ThinkPower would be so successful as it turned out to be. And as it turned out, my second company, KYRO AI is following the same path. But really, the question I'm asking is at the time of transaction, when I sold or recapped ThinkPower, Scott Craig, who you know well with Latem and Watkins, he was like, set up the company, right? Because it made his job harder, right? On the back end. What are the things that an entrepreneur needs to think through at the front end so that operating the business is seamless, less hard, mean operating a business hard but less harder and eventually when you sell the business believe it or not every business is formed to be sold eventually, right? So what are the things that they need to think through. Long question, so let me repeat it in a succinct way. What are the things an entrepreneur needs to think through in setting up a business so that taxation standpoint easy to operate and eventually easy to sell? Jeremy Dubow (16:26.901) Yeah. Jeremy Dubow (16:35.71) Yeah, so a lot there and I think about it in several different phases of the business. So first off, Prosperity at its face is an accounting firm. We do tax work, client accounting services, valuation, quality of earnings, forensic accounting, litigation support, dispute resolution, and some audit and a test work. So at its face, it's an accounting firm. And so because we formed an accounting As a tax expert, was uniquely positioned to figure out what the structure of the business should look like. You even though I was 25, we had done enough work at the time that we kind of understood how we should organize the business legally. Now, what's funny is as much as we knew that part of it, the regulatory environment in accounting is unbelievably complicated. While a lot of people say we're a multi-member organization, We want flexibility. Let's structure this thing as an LLC that's taxed as a partnership. You had mentioned ThinkPower was taxed as an S corporation. At the time, we formed our business to be taxable as a partnership. But as it turned out, if you want to do business in certain states and offer certain types of services, an LLC actually doesn't work. You have to be structured as an LLP in order to qualify for, to do business in certain states under the regulatory body. And so now we had to figure out, how do we go from an LLC to an LLP? And do we want both of those? And what about states in which we're not conducting a test services or compilations that fall under certain standards? And so as much as I am a tax expert, man man is it a maze, a spider web of trying to figure out how to be organized in these different organizations. So all the other accounting firms out there that's looking at this, wow, you better have a good regulatory attorney that can help decipher all of this stuff. But putting aside the less exciting stuff and the regulatory stuff, when we first started our business, what were we? We were doers, right? Because we were young and all we knew how to do was do work. Hari Vasudevan (18:42.094) you Jeremy Dubow (18:58.484) We didn't know how to hire people. We didn't know how to fire people. We barely knew what it meant to have a tech stack. We had to make some choices, which you make without a whole lot of forethought. I mean, dig in. And I'd like to say that we spent the first 10 years of our business. And we started with three of us and, of course, added other employees over time. Lawson employees added some. You know how it goes with new businesses. You evolve over time. But we spent the first 10 years. Hari Vasudevan (19:22.872) Yes. Jeremy Dubow (19:28.408) One, being aggressive in the marketplace because we had a choice. Either you succeed, land clients, do good work, or you go back to your ex-colleagues and say, will you please hire me again? And so because of that, and because our choice was relatively stark, it was either we make it or we don't, we ended up aggressive in the marketplace, saying yes to things that other people in our positions might have said no. Hari Vasudevan (19:43.118) You Jeremy Dubow (19:58.291) know to because we figured we could figure it out. We knew how to do what we did when we left. But man, man, did we expand our knowledge base intently. And over the first 10 years, my focus was being a great tax advisor, expanding my client list, punching above my weight, generating wins when someone else maybe would say you have no business winning those engagements. And once we got through the first 10 years and had made all of the mistakes that you can make in your business. We're certainly continuing to make some these days, but wow, in the first 10 years, you make plenty of them, whether it's people, technology, space, HR, you name it, you find your way. Correct. Hari Vasudevan (20:42.318) You don't know what you don't know, right? The first business you start. And actually that's a blessing too, because a lot of times what happens is I'm finding myself doing this in my second company, KYRO AI. I think I just know too much and maybe I'm pulling myself back from doing things that I would have otherwise done in my first company, right? There's pros and cons to that at the end of the day, right? I know you work with multiple serial entrepreneurs, but there's pros and cons to it, but you're right. First company you start, you really don't know anything. You do work and you learn everything at such a rapid clip. You drink through a fire hose. Keep going on your story. Beautiful story there. Jeremy Dubow (21:25.098) Yeah, you're exactly right. It'd be interesting with another company to see how I would approach it. And I know with your success of your first company, you went through the same trajectory that I did. You made all the mistakes, you learned from all of them, and now you're going into the second business and you're well into it and you're saying to yourself, well look, I can't afford to make those mistakes again. But at the same time, you also, to your point, feel probably a bit more constrained because you're not willing to take some of the risk that you might have done the first time around. And so look, the first time through, we made the mistakes, but we built our expertise. We started to grow into ourselves, right? 10 years later, I was 35 instead of 25. You start to get comfortable with where you fit in in the ecosystem. You you now go into market and you used to think, well, I'm 25 years old. How am I going to beat my ex colleagues at Deloitte formally from Andrew? or I know all the key players in the industry, how am I going to be as good as them? Well, after 10 years of not having someone tell you that you're never going to be as good as them, you go into the marketplace and you say, you know what? I know what works for me. I know where my skills lie. I'm going to go into the marketplace and I'm going to beat them. And I'm going to be confident. And I'm going to win more times than I lose. And so we spent the first 10 years doing that, being aggressive, taking risks. And then what happened? is you start to figure it out and you actually now look at you, know, 10 years in you actually have a business, not just a handful of people that are doing work. And you've started to create people underneath you who are your next-gen leaders and you've taught them what you know. And you know what the best part about that is? When you're 25 to 30 and 35, you have all the time in the world to teach the next generation how to be very good at this job. Today, know, know 15 years on from that I don't have as much time to do that as anymore I can't find the diamond in the rough or the person that's going to be a star and spend as much time mentoring them as I could back then But so after our ten years all the sudden we had a strong client list We had the next generation of leaders We built our business with a leveraged model that we learned at Anderson and Deloitte Which is the goal in order to be successful? Jeremy Dubow (23:54.601) is to create people that are as smart or hopefully smarter than you. Have the right values, be a people first organization, take care of your people, take care of your clients. In that next 10 years from the first 10, so we took off, our people started to be successful. We had more success with our clients. We started to win more engagements. And then we started to think of course about the more, aspects of running our business. Technology. How do you change your tech stack to be at the forefront rather than behind? We started looking at our people and how do we bring in people who fill in gaps in expertise. And then of course our journey took a turn in 2023 as the accounting industry was just at the infant stage of private equity investment. We decided that it would be a great move for us, allow us to be entrepreneurs again, take big risk. And we ultimately found our private equity financial sponsor and Unity Partners out of Dallas where you hang out, Harry. And it changed our business once again. So the first phase was the first 10. The next 10 was really getting good at it and being successful. And now we're two and a half years into our third phase with private equity and our business looks incredible. Hari Vasudevan (25:12.599) Yeah. Jeremy Dubow (25:24.344) incredibly different than it did even while we were running a successful accounting firm a few years ago. Hari Vasudevan (25:29.068) No, no, I can attest to that. So let me go back, I've been kind of jotting notes, right, as you've been saying a lot of things. So 25 is child-affirmed, right? Young, you know, it's not uncommon in the tech space, not very common in the accounting space unless I'm missing something, right? How did you convince your customers, right? An entrepreneur like me comes and talks to you, Jeremy Dubow (25:49.175) You're not at all. Hari Vasudevan (25:58.808) two years back, I'm like, I'm gonna look for somebody who's seasoned, right? How did you convince that person that, no, I got this, right, at 25? Jeremy Dubow (26:09.45) Yeah, and You know, it's a great question. You we left at 25. I was 25. My partners were about 24, 23, 24, and 32. And so we had a young group and we took no clients. We all had covenants not to compete. We didn't take any clients. We had to go into the marketplace and tell the world, hey, we do tax and accounting work. And you're exactly right. The story that I always tell, and it's because it's true, is that when I was 25, 26, 30 years old, if I went into a multi-generational family business and said, hey, I'm really good at this. We can be better than your existing providers. I would pretty much get laughed out of the room. And that just wasn't going to happen at that time. But what was happening when we left, right, the tech bubble had burst and all of a sudden within the next couple of years, you started to see tech entrepreneurs start to go back Obviously, the financial crisis happened in 2008 and that changed the dynamic. But after 2008, technology started to take off. now, know, so call that five years later, I was 30 and I'm talking to these technology entrepreneurs and guess what? They're 30 and they're 35 or they're younger and they're looking for accountants who get it and can understand what they're trying to do. And what happened of course over the next 15 years after 2008, those people started to rule the world. Their businesses started to explode. The unicorn businesses, when you hear about a unicorn business, it's nearly always a technology company. And we started working with them when Jeremy Dubow (28:00.649) when they were at their early stages, at the same time we were at their early stages. And then when you fast forward 10 to 15 years, what do you know? Our clients are doing &A. You mentioned it early on. know, businesses are set up to eventually have some sort of transaction. And these businesses were raising capital through private equity. They were selling businesses to strategic partners. They were going through all sorts complicated &A transactions, of course, coincidentally, Hari, is how you and I met in the first place through a complex &A transaction. And by the time you found us, you know, we were grisly and seasoned &A tax advisors. And so, you know, we were able to provide a ton of advice to you and your family on both deal structure and post acquisition structure based on rollover, state tax planning, etc. And all of that was learned and honed as we met and worked with these entrepreneurs who had never sold businesses before. Yeah, there were some in the late 90s before the tech bubble burst, but most of our clients were early entrepreneurs. And what happened over time? Next thing you know, I'm working with billion dollar valuation tech companies. We're doing the works for the companies. We're doing the work for the entrepreneurs. transactions, they're selling businesses, raising capital, private equity is getting involved. And all of a sudden, on the other side of that, we've got many super high net worth owners who are now setting up family offices and are looking for tax planning and estate planning. And so all of a sudden, our focus on technology really turned into a great business. And so what I say a lot of times is timing is everything in life. There's no doubt you got to be good at Hari Vasudevan (29:58.328) percent. Jeremy Dubow (30:00.305) And let's be clear, our clients that ended up going from, you know, two or three people and a small business and a billionaire valuations, if we weren't good enough, regardless of how much they liked us and what they thought of us, if we weren't capable of working with them through all of these rounds of growth and capital infusion and ultimately &A transactions, we would have been gone. And so we were able to hone our skills at the right time. And all of sudden, a lot of these business owners became incredibly successful and we were well positioned to be strong advisors. Sometimes you're lucky, sometimes you make your own luck, but at same time you've got to capitalize on the opportunities there. Hari Vasudevan (30:39.032) Yeah. Hari Vasudevan (30:43.438) Yeah, I know, obviously timing a lot of things. I've read stories about how Steve Jobs and the Oracle CEO Larry Ellison and Bill Gates, were all born around the same time, right, within a few months or maybe a couple of years of each other. So anyway, I think I read it in one of these Malcolm Gladwell books, a lot of things as a function of timing. But you got to be good at what you do. right? But once you are in that era and if you're willing to work really hard, you learn a lot and then over time you've been really good. The 10,000 hour rule and then over time you just become the best in the business, I guess, right? So, beautiful, beautiful story there. So, know, the working relationship between an entrepreneur and an accountant Jeremy Dubow (31:13.013) Yeah. Hari Vasudevan (31:42.794) at the early stages is super important, right? Because you know, I didn't have a CFO until the transaction. So my CFO is literally the accountant, right? What are the key aspects of that relationship that can help an entrepreneur drive immense value and sleep well at night, right? Because the last thing you want, I mean, people do this mistake all the time. They think they made a lot of money. They don't plan for the quarterly payments next year because you know, you have a silent partner in the IRS where you have to, there are laws, you have to follow the law in the US and you have to pay taxes and things like that. Otherwise they're going to come after you and it's not going to be, life is going to be miserable. Right? So how can an entrepreneur leverage and develop a relationship first and then leverage a relationship to build a really valuable business and hence, you know, set it up right for success, exit down the road. Jeremy Dubow (32:48.756) Yeah, so, you know, to start with for the advertisement for CPAs for what it's worth, you know, having a great CPA ultimately can save many millions of dollars in a transaction. Maybe it's millions, maybe it's tens of millions, maybe it's just tens of thousands of dollars when the dust settles, but a good CPA really can help a business owner. But taking a step back from there, look, where does it always start? It's the same thing that I thought about on day one of starting my business when I was 25. years old or 26 when I eventually started it is trust. My clients trust me to be a couple things. One, really good at what I do so that they know that if we're giving them advice they're getting the best possible advice. Secondly, they know that we'll go to bat for our clients. Our clients want to think that if I were in their shoes or my team was in the shoes that I would be doing exactly this same things. In other words, I should be giving them the advice that I would give to myself. Better yet, maybe I'm advising them to do things that I've already done because I think it's good planning. Three, you know, I think it's helpful to be likable. You know, I get along with my clients. I mean, Hari, we're having a, you know, nice chat on your fantastic podcast because you like talking to me. You know, I'm going to hopefully... Hari Vasudevan (34:01.133) Yeah. Hari Vasudevan (34:15.406) When you come to Dallas to meet with Unity, we had coffee. I mean, honestly, it's important to have a good rapport with the CPA at the end of the day. Jeremy Dubow (34:19.562) That's right. Jeremy Dubow (34:25.108) without a doubt and so you have to like people, you want to talk to them, know, have to, you know, look, obviously our profession has worked incredibly hard for a lot of years. That's one of the challenges for what it's worth in the profession, why a lot of people stopped going into it because they were sick of working all these deadline seasons and long hours and so, you know, there's no doubt that accountants work hard, but that's just the beginning. It's one thing to work hard, it's another thing to make sure that the advice I give you is top tier. that you can trust me implicitly, that you know I'm going to go to the mat for you and do whatever it takes to get the best possible outcome, that I care about the outcome. And when you start a business, you care because you know what? No one else is going to care. So I certainly cared a whole lot about what happened to my clients, but also about what happens to my people. And then more broadly, as your business gets more sophisticated, yes, lots of CPAs and accountants can provide you the They can prepare tax returns. They can help with your accounting. They can help with estimated taxes. Fine. All of that stuff is the nuts and bolts hitting singles. But in this world, once in a while there's opportunities to hit triples in home runs. And when you have that opportunity, you need the best people by you. And obviously when there's a big transaction where the dollars are significant enough, that's one of those times where having good people by your side who you trust makes a massive difference and you know that's just where you know we pitch our services no one just Hari Vasudevan (36:05.07) Yeah, you know, that's actually a really good segue into something I want to dive into. You know, when advising entrepreneurs when selling a business, right, when they sell their business, when this triple or home run or even a grand slam opportunity arises, right? How can prosperity help them? How can a good CPA help them? What are some of the common mistakes that you see entrepreneurs make? Let's start out with that. What are some of the mistakes that entrepreneurs make that you generally see? And then how can having really good trusted advisors by them help them out? Jeremy Dubow (36:38.07) Yeah. Jeremy Dubow (36:45.866) Yeah, I know you're not going to believe this because of the way you approach your transactions and the way you conduct business, but the biggest mistake that business owners make is they talk to people like me after they've closed on their transaction. They'll occasionally come to me and say, hey, great, for our clients, that's not the case. But other times where we're taking on new clients, they'll say, hey, great, we sold our business for, pick your number, whether it's 10 million, million or a billion dollars, now what can you do to help me with tax planning?" And I'm like, I assume you were talking to your tax advisor or the attorneys you were working with, you know, the tax attorneys there. Hari Vasudevan (37:29.064) So let me pause you there. If they do that, then the answer to them, I guess, is, I'll prepare your tax returns. You owe them whatever, 20%. Jeremy Dubow (37:40.289) course. But there are things you can do after the fact and there's a lot of really interesting tax planning that's happening on the investment advisory side these days, you know, with some really interesting portfolios that are constructed in certain ways that follow indexes but generate losses. You've read about them in the Wall Street Journal. You've read about them in Bloomberg. But look, that's still after the fact. And the biggest mistake people make is they don't reach out to to competent &A tax advisors prior to doing their deal. And not to make an advertisement for what we do, but the reality of it is the deal structure, the form of the deal has a massive impact on the tax outcome. And the attorneys that you've hired, which are often best in class, they often work for the business. While the owner may also be the person who thinks that they're getting the best advice from legal counsel. Legal counsel's fiduciary obligation is to all of the stakeholders of the business. And so there may be different benefits to having separate counsel for the business owner if the dollars are large enough. And as you know, from personal experience, and not to focus on you, but the way you structure a deal has massive tax implications. And you can talk to us after an LOI, because an LOI or a letter of intent oftentimes doesn't have too many issues on the tax side or you're not typically structuring the tax component. Hari Vasudevan (39:23.414) It's non-binding. Yeah. Jeremy Dubow (39:24.564) Yeah, but once you get your LOI in place, make sure you talk to us. Make sure that you're focusing so that we can be instrumental in structuring the deal so it's optimized. And that's where we spend a lot of time. And then more granularly, as client accounting service professionals as well, we help with things like networking, capital, closing balance sheets. You know, the deal may require your financial savings to be in gap and you keep your books on a gap basis. And so you're asking us to help schedule out the differences or even negotiate certain aspects of indebtedness. And so we spend a lot of time with our clients on all of those issues. know, Hari, you've got to talk to a great person who's seen all of that and experienced all of that. And it is a huge difference. makes a huge difference. Hari Vasudevan (40:13.39) I've seen everything you just mentioned there, Jeremy. So glad you put that. Networking capital, people don't realize it, that that is such an important piece of the puzzle. Having been on both sides of the transaction, I can tell you that when you're buying a company, always have that, you know that you have that as a tool. So you make a higher offer, knowing fully well that you can capture a little bit of it back on the backend through networking capital. That's a tool that you know, buyers play obviously, right? The cash basis to gap basis. I went through that suffering literally, right? When I sold my first business ThinkPower Solutions. Now, what did I do on KYRO AI? Well, day one, gap basis, your good friend Bronswick, of financial audit from year one, right? And because you know it adds value. on the back end, having clean financials, gap financials, knowing what the networking capital is. We track our networking capital every month on KYRO and every now, right? Because it's such an important piece of the puzzle so that when it comes to transaction, people can say that, you know what? We think this is your networking capital, things like that, right? So such an important piece of the puzzle. Keep going there, Jeremy, please. Jeremy Dubow (41:23.958) Of course. Jeremy Dubow (41:39.799) No, I think you said it right. look, at the end of the day, the best thing that I can say is that many of our clients today have sold businesses, started new ones, worked with us throughout that process, as well as the &A readiness process. You know, talk about, hey, what do we have to do with our books? Do we want a quality of earnings beforehand? How do we think about valuation of our business? So all of that goes into the process. And so the advice that I can give to a business owner is, look, it would be great if you started your business and organized it perfectly from day one. But the reality is most people are entrepreneurs that are starting businesses and they're running fast. And some of these aspects of the financial world and tax world are secondary. But if you're thinking about doing a transaction down the road, make sure that you understand where the skeletons in the closet lie. Because what happens is when you have a sophisticated buyer, They're going to uncover all of those things, so you're better off addressing them long before you go through the diligence process in an &A transaction. Hari Vasudevan (42:49.944) Clean up your books before you decide to go for a transaction. And if you're getting a lot of inbound offers, that means your business is going to be valuable. Maybe it's at that time you clean up your books, Get your financials audited, right? Know what your Q of E is. Maybe you're not making as much money as you think you're making. Maybe your business is not as valuable as you thought it was. Maybe it's... Jeremy Dubow (42:55.274) Yes. Jeremy Dubow (43:05.866) Yeah, of course. Hari Vasudevan (43:18.262) way more valuable than what it actually you thought it was right it could be any of the above but having clean financials on top of great marketing and sales and a phenomenal product is the recipe for a great company would you not agree on that Jeremy? Jeremy Dubow (43:38.901) I absolutely agree. mean, there's a lot of different aspects of what it takes to be successful. Obviously, you have to have the right entrepreneur, the right business, the right timing, the right leadership management team. But within all of that, if you don't have solid finance and solid accounting, you're going to struggle to get to the next steps. That's the beauty of running an accounting firm. Everybody needs that level of support and sophistication Obviously larger businesses need things like financial statement audits and FP &A and you often times they'll have controllers and CFOs but many of the startup companies don't because it just doesn't make sense to have those people on payroll and that's of course where we can come in and provide some advice and help the business get ready for their you know next phase of their chapter and or the next chapter of their lives next phase of their business absolutely. Hari Vasudevan (44:34.466) Yeah, yeah, no, I agree with you on that. So that's great. you know, let's focus a little bit on another one of your super key offerings in something that you're really skilled at is rewarding key employees. It is just a week or two ago, I actually reached out to you about, you know, one of the hires I was trying to make and how do you structure the deal that way it's a win-win for everybody involved. What are some of the key tools, different tools out there? There's equity, non-equity, cash, bonus. What are some of the tools out there that entrepreneurs can lean on as they build out their management team? Now, let me pause there and say something very important. Entrepreneurs are really good at building businesses, but they're not really good at building a management team around them. And your business becomes that much more valuable once you build it. team around you, right? It actually allows you to focus on doing what you're really good at, right? In my case, it was probably sales. And once I had a great CFO, a great CHRO, a great COO, I could focus on the sales aspect of the business, right? So what are the different tools that are out there at an entrepreneur's disposal that way they can surround themselves with brilliant people so that the value of the company keeps going up? Jeremy Dubow (45:59.403) Yeah, so first and foremost, let me pitch prosperity. We have got what we call an employee purpose plan, which essentially is an equity compensation plan where every single person in our organization shares in the equity upside of our business. So you asked what helps. It's an incredibly powerful tool to know that the people that work for my organization are compensated at market rates additionally are issued either actual equity in the form of incentive units or essentially phantom units depending on what their level is so that when there's another change in control event or a sale to a financial sponsor or otherwise a strategic buyer, every single person in my organization participates in that liquidity event. And when... Hari Vasudevan (46:53.056) You know, can I I pass you there, Jeremy, because I want to emphasize how important that is. It really ties all employees towards that common one mission, if you will. Right. They're not divisions. There's no politics. It's like, hey, what is the goal? We have a single goal of serving customers and thereby increasing the value of the company. So when there is enough demand out there in the market for my company, somebody buys the company, I get rewarded for it. And we did the same exact same thing at KYRO AI. Every single employee is issued an option. You know that because you've seen the plan. And I think, Power, I believe about 10 % of the employees give or take, right, have... have equities taken, but I cannot emphasize how important that piece of the puzzle is. Jeremy Dubow (47:50.635) Yeah, we think it is the driver of future growth and success. We know it is important and critical for employees. It's something that they ask me about. It's something that we talk about at town halls. Everyone wants to know, hey, what's our stock price today? When is the liquidity event going to happen? When do I get to share in that? And it's an important retention tool. It also shows that we believe in our people, and likewise, they believe in us. highest level in equity compensation vehicle, obviously originated from all the tech businesses on the West Coast. They got really good at that, but you don't historically see that in an accounting firm, right? That's just not the way accounting firms. Hari Vasudevan (48:36.152) There's one owner, maybe two, maybe three. Jeremy Dubow (48:38.122) That's right, but that's not the case with us and I think that's starting to get adopted more and more across the country in accounting firms. So first and foremost, equity compensation. Then, if you kind of start digging into the weeds a little bit more, there's different types of equity compensation. Harri, you mentioned that for your business and a technology company, which is often structured as a C corporation, stock options are a great tool and they certainly are. And of course, since we're talking about it, you can dig even deeper than stock options. But you can separate between incentive stock options and non-qualified stock options, which of course have different tax attributes. And then of course you can get into things like restricted stock units or RSUs, which you see in a public company. And then in private companies you'll often use restricted stock, where you might have a key employee who buys some stock that's restricted. based on time and potentially performance and the company may even loan some of the dollars for the employee to buy the units. And so when it comes to equity compensation, there are a lot of different flavors. Certainly on the West Coast, stock options is what you understand and you hear about most, but some of the challenges with stock options is when there's a future liquidity event, if those options haven't been exercised, which most of the time they're not, the income is going to be compensatory and taxable at ordinary income rates. When you start getting more creative with partnerships and do things like incentive units or profits interest is the technical term, you can start converting some of that ordinary income into capital gains. And we don't need to dig in too far into the weeds, but the point is your equity compensation structure can look very different from the business right next to you. It's important really from the get-go to set it up in the way that aligns best with your long-term goals and the goals of your employees. No doubt it's where you want to invest some time, effort, and probably some dollars to make sure you get it right. Hari Vasudevan (50:52.782) Yeah, no, no, I 100 % agree with you on that. So cash, bonus, market cash obviously, market comp, good bonus, plus equity compensation is a good way to structure it, right? So, you know, you worked with a lot of entrepreneurs, very successful ones, right? What is one surprising habit or mindset that you've seen that they share that has contributed to their success? Jeremy Dubow (51:01.365) Sure. Jeremy Dubow (51:22.688) Look, I think in a nutshell, it's this growth mindset. know, there's a, we talk about it a lot and I use the term there's lifestyle businesses. So lifestyle businesses are oftentimes for what it's worth, fantastic businesses. They generate positive cash flow. They often fund the cash flow for an entire family, maybe generations of a family. But oftentimes, they're not thinking about that business in terms of what an exit might look like or how do we grow the in such a way that we're getting the highest multiples of EBITDA in the industry or the demand is incredible from both strategic and financial buyers. What I find with my entrepreneurial clients is they're all focused on growth. Not at the exclusion of doing the wrong things, but focused on how do you build your business so that it grows the right way and when it's not growing, they pivot and they find some other way in which the business can continue to grow. And ultimately, if it can't, they look to do something else. So it's not this mindset of we're going to go do this for 40 years and whatever comes of it comes of it. No, it's this mindset of I'm going to build something great. I'm going to hire the best people and we're going to move fast, quickly, and we're going to grow it the right way. And I don't think I fully appreciated that coming from a professional service. background. In professional services, you try to grow 10 to 15 percent and that's what your aim is. In the technology world, 10 to 15 percent isn't even table stakes. You've got to grow at 100 percent and get multiples of revenue. And so I do believe that the entrepreneurs I work with come from it from just a different mindset than a lot of these professional service people that I spent the first part of my career working with and they're great people but man man they're always looking to change and adapt and modify in order to get the very best out of their company. Hari Vasudevan (53:33.359) Yeah, I know it's beautifully, beautifully, eloquently put, right? So you work with a lot of tech companies. Obviously, AI is out there and I've read a lot, you know this yourself, how AI is having a outsize impact on many jobs in, you honestly, accounting is one of them, right? One of the biggest impact AI is having is in your profession, right? Can you elaborate a little bit more on that? What do you? Jeremy Dubow (53:53.782) course. Hari Vasudevan (54:02.894) What do you see out there as a, know, everyday practice for young accountants coming from college? What's your take on that? Jeremy Dubow (54:12.286) Yeah, so when people hear me speak and I talk about what's the future of our industry, look, I think it's easy to say AI, but I also think that's short cutting what the real future is. It's automation, offshoring, and AI. The key in our world is to automate more of what you do. In the old days, people are used to handing their accountants documents. They take the documents and save them on their server, enter them in their system, and ultimately produce some output. Those days at this point are pretty long gone. There's still businesses that are doing that. But now we want to get documents, have an automation tool read it, either through OCR or AI, populate it in the right spot on financial statements or tax software and then use some offshoring to do most of the first and second review of the work. Now that first two steps with offshoring and automation makes a massive difference in what you do, especially in a labor-constrained environment like accounting where there's not enough accounts and you can't keep all your best people and more people are leaving the industry. AI weaves its way through all of that stuff and we're all trying to figure out what's the best use of AI. AI might read the data better than OCR. AI might allow us to accelerate our processes, but it's built into this concept of automation and having some leverage through offshore. Where AI is making a huge difference in our business just directly rather than being weaved in is things like tax research. You know, of course everyone has access to There are better tools and we just announced a partnership with a company called BlueJay or Ask BlueJay. It's one of the best high-end AI based tax research tools where you can use plain language to ask it a question and its database of course is built off of ChatGPT but it's also built off of a closed-end Jeremy Dubow (56:29.292) network, partners with things like tax notes and other really high level tax publications. So when we get answers, we know that the answers aren't one made up. Two, we can immediately go to the source. And three, it's changed the speed at which we do research. It doesn't eliminate the need for having experts because you have to be really good at prompting and you're really good at prompting when you sort of know the answer before you ask the question. But the speed at which tax research is happening using AI tools and your ability to communicate is mind numbing. How much better my people could be? In the old days, you might have a complex problem and you say, we need 15 hours to research it, write up a memo, look at all the source. With good AI tools, you might get to an answer in seven minutes and now you have to spend the other 53 site checking, reviewing it, prompting it in a different way. So it has really changed the way we think about tax research and providing advice. Hari Vasudevan (57:44.003) Yeah, with that Jeremy, that you know an accounting firm generally working on a time and material basis, not always right? I know you guys don't always do that but many companies do. Would that mean the business model will change, right? It's like hey I'm gonna bill you for the value that I add as opposed to the hours I work, right? Is that a mind shift gonna happen? What do you see? Jeremy Dubow (58:12.246) Look, it has to happen. It's not even will it happen. It's of course it'll happen. It's how quickly our business is going to adapt. You're seeing it already. You know, look, I think law firms eventually are going to adapt to that model too, right? They're the classic business of time and materials. Everything is on an hourly basis. You know, in the accounting firm world, you have a, you know, in the accounting firm world, you have other aspects of what you do. You prepare tax returns, issue financial statements, do a bunch of different things, and we have to adapt. We have to shift to a value-based billing. If we don't do that, we're going to fall behind. You know, one hour, you either that or you bill your hour at $4,000 an hour, which nobody wants to see, right? That doesn't make sense. And so, yeah, there is a whole shift. We're adopting, you know, we're adapting and adopting to that shift, of course. Hari Vasudevan (59:03.298) Ha ha ha. Hari Vasudevan (59:10.094) Yeah, now it's beautiful. So, you know, as we kind of wind down here, I want to ask something as to how, you know, entrepreneurs can benefit potentially from better tax policy. You and I have kind of exchanged some emails on this, right, previously. you know, I'm an entrepreneur at heart. I love entrepreneurs. I've seen the evolution of one of my companies, first company from entrepreneur led to private equity led and how, you know, once you become that scale, you have access to more sophisticated tax advisors, different strategies out there and all those kinds of things. Whereas entrepreneurs, know, hey, they start a business, they, whatever, 40, 50 % of the income they pay in taxes depending on where they live and how much they make and things like that. Right. in small businesses are the engines of the economy. 99.9 % of the companies in the US are small businesses. I believe they drive 44 % of the US GDP, employ 46 % of the workforce. I have an idea I want to ask you about this. What do you think about making taxes for people who work in small businesses half? Let's halve the taxes of those who work in small businesses. It's definitely, it's gonna come at a cost, right? It's about, I did the math, it's about 176 billion bucks, right? Based on some numbers. What's your take on Jeremy Dubow (01:00:42.952) Yeah, so the good news that I have is I don't write tax policy. I get to interpret it and help my clients save money on tax policy. So let me take a bit of a roundabout response. Then I'll get back to answering your question directly. So first off, in the One Big Beautiful Bill Act, the law that was passed on July 4th of 2025, it included some additional benefits for small businesses, including an expansion of the Qualified Small Business Stock Rules, QSBS. Hari Vasudevan (01:00:55.714) Yes. Jeremy Dubow (01:01:12.856) You've heard of it. Your readers and your listeners have heard of it. It provides opportunities to invest in a startup, hold it for a period of years, sell it and get a massive gain exclusion. And the new tax law provided opportunities for gain exclusions. If you're holding period is three, four or five years when it used to only be five years. It also increased the gain exclusion from $10 million to $15 million. So think about that. You can start a business, hold it for five years, sell it, and exclude 15 million dollars of gain from all taxes. Not every state conforms, but most do. Pretty powerful. Hari Vasudevan (01:01:57.923) but you have to structure your business properly. Jeremy Dubow (01:01:59.703) You've got to structure it right. And if you structure it the right way, you might even get multiples of $15 million. And then if you do some other planning with strong trust and estate advisors and tax advisors, maybe that 15 is 30, 45. Maybe it's more than that. You can convert from a partnership into a corporation when your value is high and get a quantum QSBX exclusion. So there's some elements that are currently built really well for entrepreneurs. specifically technology entrepreneurs. Aside from that, in other businesses, the existing law does allow for what's called the qualified business income deduction, which gives business owners a 20 % haircut on their tax rates for many businesses. Of course, mine, the accounting firm, doesn't qualify and the law firms don't qualify. Harry, nobody likes accounting, so that's true. Yeah. Hari Vasudevan (01:02:52.492) But when you mean haircut in a positive way, you said that, right? So essentially, they get a cut of, Jeremy Dubow (01:02:58.678) They get 20 % tax reduction for most businesses. And so there are existing provisions that are set up to allow business owners to get more tax advantages. That said, even with that, running a business and paying payroll taxes and hiring people is challenging. And yet, I would love to see additional incentives which reward people for employing others, taking So in other words, the reward should be less on the type of business that you have. In other words, what's the difference between an accounting firm, law firm, or maybe a technology business if we employ people, right? If you employ 100 people, to some extent, I personally struggle with the policy rationale for giving different tax benefits to different types of businesses. So I'm all for providing benefit and encouraging entrepreneurship if it's focused on employment. That's what we want in this country. Hari Vasudevan (01:04:03.758) 100%. That's what we want in this country. And honestly, to the contrary, maybe a firm like an accounting firm or an engineering firm or a law firm could or a construction firm could potentially employ more people than a technology firm, honestly. Right. So you want gainful employment. So that's a beautiful way. let's get into rapid fire. Are you ready? All right. Jeremy Dubow (01:04:22.23) Yeah. Jeremy Dubow (01:04:29.717) Let's do it. Hari Vasudevan (01:04:32.915) college sports are, you know, pro sports. Jeremy Dubow (01:04:37.27) Pro sports. Hari Vasudevan (01:04:38.862) Pro sports, what's your favorite team there? Jeremy Dubow (01:04:41.322) I'm in Chicago. I love the Cubs. going, I happen to be talking to you. There's the first playoff game for the Chicago Cubs in two hours. I love that. I'm going to the game and I'm probably leaving in half an hour. Hari Vasudevan (01:04:50.798) How do you like this, my friend? I kind of suspected that you're a Cubs fan, so I pulled my Cubs hat. I've been to one of the Cubs games at the rooftops. One of a kind experience, right? Jeremy Dubow (01:05:01.227) Love it. Jeremy Dubow (01:05:08.064) Totally. I'll be there in two hours, 2.08 start time, first playoff game against San Diego. So go Cubs. Hari Vasudevan (01:05:15.66) Yeah, awesome, awesome. So when the Cubs were going through that, what, 180-year drought? Was it right? 180 years? Yeah. Yeah. What were you guys thinking in Chicago? I what was the... Jeremy Dubow (01:05:22.07) Yeah, 100 and something like that. Yeah, 2016. Jeremy Dubow (01:05:29.64) Atmosphere was awesome. Everyone was a Cubs fan. Everyone loved it. I was fortunate enough to go to the pennant clinching game where they in at home where they made it to the World Series. So that was that was awesome. So you know the town is certainly a Bears town when the Bears win. Everyone is excited and this is what dominates talk radio. But when when the man when the Cubs are are hot and hopefully are about to start a big playoff run, people will be excited about it. Hari Vasudevan (01:05:58.072) Yeah, So we does do the Bears. Why do the Bears struggle with drafting quarterbacks? I know right now you've got Caleb Williams. Is it because you guys think that middle linebackers can actually play play quarterback? I what's your rationale on that? Jeremy Dubow (01:06:04.789) Ha! Jeremy Dubow (01:06:12.498) I am not qualified for that question. That is well above my pay grade, Hari. So I'm hoping Kayla Williams is a star. They've won two in a row. I'm talking you and the Bears are two and two. Had a nice win last weekend. It was a bit of a tough game, but they came out on top of the block field goal. So look, in the NFL, a win's a win, and hopefully we'll see some more of those. Hari Vasudevan (01:06:18.094) You Hari Vasudevan (01:06:37.506) Yes, no, awesome. My friend, Jeremy Dubow, it's been such an honor hosting you. Thank you so much for, you know, sharing so much of your wealth of knowledge for our listeners and viewers. Hopefully, people can learn a little bit about what prosperity can do, what you can do, what your firm can do, how they can structure the business so that they can benefit from that structure and also run a business where they can sleep well at night, right? That's the most important piece of the puzzle there. So thank you so much for being on the show, my friend. Jeremy Dubow (01:07:11.722) Harry, thanks for having me. I hope you invite me back. Hari Vasudevan (01:07:14.893) Yes, sir. Thank you.
