The Rise of the Virtual Office HQ — a 2020 Legacy?

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Welcome to my bimonthly news roundup at the intersection of accounting and technology. Subscribe here so you never miss an issue!

Highlights:

  • Virtual HQs take remote working out of Slack and Zoom and into a top-down gamified world. A year ago it would have seemed incredibly depressing, but it’s now bringing a much-needed reminder of pre-COVID normality.

  • A lawsuit filed by news organizations against the SBA made PPP data public. Over 50% of the $522 billion fund went to just 5% of claimants. In other government embarrassments, the Pentagon has failed its audit for the third consecutive year.

  • Expensify had a good 2020 despite the lack of typical expenses and CEO David Barrett’s controversial email. The expense software company made $100 million in annual revenue for the first time — but will customers come back in 2021?

  • Two other companies feeling optimistic going into 2021 are Intuit, which is introducing a live full tax service, and Stripe, which introduced an API to make adding banking features to an app easy for developers.

For this and more of my top stories you may have missed, keep on reading. Also, thanks to my new sponsor, Freshbooks, for making this newsletter possible! Please check out their new accountant partner program to learn how you can work better together with clients.

🙅 The Pentagon still can’t pass an audit

Accountants don’t often get to exercise bragging rights over the military. But while the people who work in the Pentagon might be adept at such important tasks as maintaining American military dominance and avoiding World War III, there is one mission they have yet to master: audits. The Pentagon has failed its 2020 audit, its third consecutive failure since its first audit in 2018.

The bottom line: According to Reuters, the Pentagon has $3 trillion in assets, which makes it both more understandable — and more infuriating — that it can’t figure out exactly where all that money has gone. Undersecretary of Defense and Chief Financial Officer Thomas Harker (aka the comptroller)  estimates that it will take the Pentagon around 10 years to pass a complete audit, putting that magical date somewhere around 2027.

💰 More data shows where PPP loans went

Time had no meaning in 2020, so you could be forgiven for thinking you’ve read this story before. But no, there is actually new data demonstrating that the PPP loans were poorly managed and often given to large companies instead of small businesses. 

A lawsuit filed by various news organizations forced the SBA to release records on who got what. As the Washington Post reports, while 87% of loans were for $150,000 or less, a tiny proportion of applicants — 5% — received over 50% of the $522 billion PPP fund. Companies are now being named and shamed (rightly or wrongly), for example by the Oregonian, which has breakdowns by industry. 

Meanwhile, payroll software company Gusto hired actual data scientists to look at the impact PPP loans had on its clients’ employment practices. It found that when the money ran out, active employment dropped by 0.43%. If extrapolated out to hypothetically include all the companies that received PPP, that amounts to about 230,000 jobs that PPP loans theoretically maintained while the money lasted. That’s a lot of jobs when you think about every individual who lost a paycheck: but considering the enormous cost of the program, it’s not exactly high value.  

The bottom line: The rollout of the PPP loans was rushed, which is somewhat understandable given the enormous need, but is no less frustrating at this point. There’s no doubt that the money helped some businesses survive — and keep paying employees — that otherwise would have shuttered for good. But the more data that comes out, the more cracks become obvious, and the clearer it is that that $522 billion could have stimulated the economy more effectively if it had been funneled elsewhere. 

🏢 See you at the virtual watercooler

The switch to remote work during the pandemic has been a boom for apps like Zoom and Slack. But some employees have decided that connecting to coworkers via a webcam or conversation thread isn’t enough to reproduce the feeling of actually working in an office. So like ordering food, home security, finding a date and shouting into the void, the office experience has moved online, in the form of virtual HQs. 

An article from TechCrunch reported on three: Branch, Gather and Huddle (which is still in stealth mode.) Picture an old-school Pokemon game, but instead of battling Jigglypuffs and buttering up a coffee-deprived old man, your pixelated avatar can wander in and out of meeting rooms, sit at its desk, share links and documents and greet colleagues (who may or may not be coffee-deprived) via chat or webcam.

At the moment, millennials are at the helms of these virtual worlds — which may explain the top-down throwback graphics. But Generation Z, the first generation to grow up entirely in the internet age, is used to having an online life that merges seamlessly with their 3D worlds —  and building it themselves in Minecraft and Roblox. To them, these virtual interactions are normal. Look out for young tech entrepreneurs building these nascent virtual worlds into bigger projects in the future.

The bottom line: There’s a reason The Office is one of the most popular sitcoms of all time. As much as we may complain about our noisy, messy co-workers, nearly a year into remote work becoming the norm, it’s clear that many employees get more from an office environment than free coffee and a desk to store junk. When your physical world has been limited to your home, having a little avatar who can walk from its desk to the kitchen or into a meeting room to find coworkers is a little glimpse of normality.

🎧 Gifts for the remote worker in your life

One thing didn’t change about Christmas in 2020: we all wanted to get the people on our nice lists presents they’ll actually enjoy. To help, the New York Times’ Wirecutter produced a gift guide specifically catering to people who are working from home.

The list includes technological aids like the Jabra Evolve 75 headset, so you can actually hear all your Zoom meetings, and a high quality webcam so everyone can see just how many sleepless nights you’ve tossed and turned through this year.

There are also comfortingly analogue options, including a retro “On Air” light to prevent interruptions during meetings, a work-anywhere lap desk for those who get their best work done from the couch, and a mug that promises to last a lifetime. Given that 2020 lasted about 173 years, this might be your best option.

The bottom line: As much as no one wants to be reminded of the life-upending changes 2020 wrought upon us, these items hopefully ease some of the pain of the transition.

 

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🌐 Accounting firms rush to grab .cpa domains

November 5 was the first day licensed accounting firms were able to activate websites with the brand new domain ending “.cpa,” after applying via the AICPA. That date also saw the modern day equivalent of a land rush, with thousands of CPA firms trying to secure exactly the right website address. 

Unlike in historical land rushes, the only entity that experienced bodily harm was the server running the AICPA’s website. So many firms applied that day that the site crashed, although order was restored in less than 24 hours (another difference from historical land rushes.)

The bottom line: As much fun as one could have buying obscure “.cpa” domains, as mentioned, only licensed accounting firms were able to get their hands on this initial offering, and they’re not known for their domain-based humor. But on January 15, 2021, individual licensed CPAs will have the chance to claim a domain for themselves. Set a reminder on your calendar and you could be the very first owner of “worldsbestaccountant.cpa.”

📒 Intuit launches full service tax prep

Tax season just got easier for TurboTax customers — and a little more competitive. For the 2021 tax filing season, Intuit is launching TurboTax Live Full Service. As the name suggests, it’s the next stage of TurboTax Live. In this iteration, a CPA or tax expert doesn’t just check the filer’s work: they’ll complete the whole filing process on their behalf.

The bottom line: If uptake is high — and why wouldn’t it be? — this is a big step up for Intuit, but if anyone has the resources to do tax preparation on this scale, Intuit should. The incentive is there: margins for this type of work are small in small companies, but increase the number of clients and you’re looking at a tidy sum. Retail tax shops should be concerned.

🛑 Watch out for this convincing QuickBooks phishing email

Email scams have grown up since the days of long-lost wealthy relatives and dodgy-looking “PayPal” emails. SC Media is warning about a phishing campaign mimicking QuickBooks that’s so convincing the creators even bothered to put in a warning about clicking on unverified links. It starts with an email that looks like a regular QuickBooks invoice, with a link that takes you to a payment page that looks, again, a lot like QuickBooks. The scammers even time the email to arrive on the date it claims the invoice is due, in the hopes of scaring you into acting before verifying.

The bottom line: Sussing out scams is easy when they come from suspicious email addresses with too many capitalized letters and misspelled words in the subject line, and badly rendered logos. But when the grifters have put effort and planning into catching you out, all you can really do to avoid the trap is check that the invoice is related to a real bill you’ve been expecting, and have someone else double check your process.

🤔 Delete your cybersecurity PowerPoint and make it fun instead

Nothing makes people focus on a task quite like locking them in a room until they’ve mastered it. But, you know, in a fun way.

Now you can use this psychological tactic to train staff in cybersecurity. A company called Living Security offers virtual escape rooms specifically to make cybersecurity training engaging and active, so that it actually sinks in. Employees are put through a virtual simulation in which someone at the fictional company is committing fraud, and they have to figure out who it is before that person steals from the company payroll.

The bottom line: The embezzling funds angle makes this an especially relevant premise for accounting/finance teams. And designing cybersecurity training as a challenge rather than a chore may be the longed-for key to finally making Barbara from payroll understand why opening an email with the subject line “Congratulations on Your Big Cruise Win!!!” is a bad idea.

🧾 Expensify hits $100 million ARR in 2020

Just over a decade since its founding in 2008, Expensify has announced that 2020 will be the year it hits $100 million in annual revenue. Even more impressive, as reported in Business Wire, the expenses software company has only 130 employees worldwide, which means it’s made more than $750,000 in revenue per employee. 

It seems surprising that expenses software raked in so much money in a year in which business travel and meetings — main sources of expenses — ground almost to a halt. Then again, employees were still filing expenses for work-from-home equipment and costs. Expensify charges a subscription fee, so even if a business has only a tiny trickle of requests coming in, they’re still paying. Whether companies will be willing to re-up the service next year, while the state of business travel still looks uncertain, is a question we don’t need a crystal ball for: just a little patience. 

The bottom line: In addition to being the typical financial brag we expect in December, this news seems timed to prove to doubters that Expensify CEO David Barrett’s open letter endorsing Joe Biden for President did not damage his company’s figures. Skeptics will point out that the figure could have been even higher if he’d chosen to be apolitical (I made this argument), but without a working crystal ball, we’ll never know if that’s true.

🏦 Stripe Treasury helps every app become a bank

Stripe has already made it easy for developers to build payment tools into a website or platform, now the company is set to change how we store and transfer money online. Stripe Treasury enables apps to easily embed financial services, including expense management, money transferring, bill payment and fund storage. Stripe has partnered with Goldman Sachs, Barclays, Citibank and Evolve Bank & Trust for the banking side. And for mutual good publicity, Stripe has formed a partnership with Shopify, creating Shopify Balance, which allows merchants on Shopify to host the financial services listed above, rather than transferring their users’ money to a bank account.

The bottom line: Just as processing payments as a platform or website used to involve navigating many different components, Stripe Treasury cuts out the need to form relationships with multiple banks by becoming the middleman. Which is why the banks that missed out on this are going to be keeping a close and green eye on how it progresses. It could mean that every app one day offers users the option to hold money with them instead of sending it to the bank.

 

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The Rise of the Virtual Office HQ — a 2020 Legacy?