Ed Kless on thriving as a business iconoclast, his Libertarian politics, and the lie of timesheets

Ed Kless

Ed Kless [LinkedIn] joins the podcast to talk about how he's managed to thrive as a "business iconoclast" in a corporate environment, why he is a Libertarian, why timesheets are a total scam, and how his musical theater background has helped him succeed both on and off stage.

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      Cloud Accounting Podcast E24: Ed Kless on thriving as a business iconoclast, his Libertarian politics, and the lie of timesheets

      Welcome to The Cloud Accounting Podcast, a show for accountants using technology to make their jobs more strategic, and impactful. I'm Blake Oliver —

      And I'm David Leary.

      Joining us today, for a special bonus episode of the podcast, is Ed Kless, senior director at Sage Accountant Solutions, senior fellow at the VeraSage Institute, and a cohost of the popular radio talk show, The Soul of Enterprise, which can be heard live on Fridays at 1:00 p.m. Pacific, on VoiceAmerica. Ed, thanks for joining us today.

      My pleasure, guys.

      Ed, you describe yourself as a business iconoclast. What does that mean to you?

      Yeah, you know, I forget where I came up with the iconoclast language. At first, I had corporate iconoclast, and then, I changed it, I think, within the last six months, or a year, to business iconoclast. An iconoclast is a breaker of icons, a breaker of the things that are sometimes held sacred.

      I like to think of myself as someone who seeks those out in business, and tries to go about creating new ways of thinking, because I think, unfortunately, for a lot of businesses, there's far too much group-think around certain things. It's not really just business, it's just about everything. The status quo disturbs me, and I like to disturb it back.

      I'm picturing you in the temple, just storming through, and throwing down all of the idols onto the ground, and smashing them.

      Yes, yes, absolutely. The idols of the time-sheet, ROI, efficiency, Lean Six Sigma - all of those. Those are the things I'm taking out.

      It's funny that Ed describes it that way, because, in my head, I actually made a note. I was like, "I wanna ask Ed how you became a nonconformist?" I think, for me, I can look at a very specific thing that happened. It was almost like a George-Costanza-type moment, when George becomes the anti-George. Is this something you were just born with, or did some event in your career kind of open your eyes to where you're like, "Hey, I'm gonna start thinking differently about stuff. I'm gonna attack the world differently"?

      There was definitely not a moment that I can think of, off the top of my head. Maybe if I gave it a little bit more thought, I could, but, no. I don't think I was always this way. I think I was much more of a conformist through, say, high school, even into college, to a certain extent.

      Then, things just started to strike me as wrong. I guess meeting Ron Baker, who is the cohost on The Soul of Enterprise with me, that clearly had a piece of it, but it was even before then.

      My mentor was a guy by the name of Howard Hanson, who ... It was at Great Plains, before it was even Microsoft, a long, long time ago. He is still my greatest business mentor, and he's really the one who I think influenced me on thinking about things differently about stuff. There wasn't a moment, but it was more of a growth, based on people that I had met, and a self-transformation, over time.

      Got it. How was this navigated with your career? Has it affected your career goals? [inaudible] managers are like, "That Ed's a outta-control guy. I can't control him. How has being this nonconformist affected you, career-wise?

      That's an interesting question, because it started at Sage, in a very weird way. Let me quick back up a second, and say I owned a business that was reselling, and implementing accounting software for 15 years, or so. I sold my interest in that business in December of 2001.

      Then, for about 18 months, I did some various other projects. I did some work for Microsoft, because they had acquired Great Plains, and I was mostly a Great Plains partner, at the time. I did some consulting work from them, then I did some consulting work for Sage.

      Then, I was hired - this is ironically - by Taylor MacDonald, who is now at Sage Intacct, of course. I was hired by him. In fact, I am at Sage 15 years, and nine days.

      Wow, congratulations.

      Thank you. All right, so you think how does a corporate iconoclast, or a business iconoclast last for 15 years, right? That's your question. It's because I worked for Taylor, and Taylor had ... For a number of years, he just protected me. He was like my rabbi. He would just make sure that the stuff that I was doing was well-received by people, but also made people think. He gave me the ability to just go do that.

      He encouraged me to think in that capacity. He wanted someone who was disturbing the status quo. Just one person. Then, he got let go. Long story behind that, but he got let go. Then, I think the powers that be, who I've taken over from, or who took over Taylor's role, and all that, were just like, "Well, we don't know about this Ed guy, but the partners, and accountants seem to really like him, and we're not sure what would happen if we fired him." [crosstalk] Like, "If he's this crazy, and he still works for us, what would happen if he didn't work for us?"

      It's that fear of not embracing your conformity.

      Exactly. They'd be like, "Oh, my god ..." That's probably just what's built up in my head, but really, kudos to Taylor for allowing me to do that. One of the great stories that I've often told about this is I have strategy in my title.

      The reason why I do is because there was a year, back in the day at Sage, when it was one of these corporate, "Hey, we didn't make our numbers, so therefore there's only cost-of-living adjustments across the board. Nobody's getting any merit pay increases." I said "Fine, Taylor, I understand that. That's how corporations sometimes work. That's the way things are gonna be," but I did say, "there's one thing that you can do for me, and that is to add the word 'and strategy' to the end of my title." He's like, "Okay, I can make that happen."

      I'm like, "Great." I said, "Because here's why ... Because when you have strategy in your title, it means that you get paid to think, and you get paid to tell other people what you think. They don't have to like what you think. They don't have to do what you think, but you get to tell them what you think, because that's what having strategy in your title means." He's like, "Okay."

      That's the kind of relationship that we had always had. Now, this is hand-to-God true story, every subsequent boss that I have had at Sage, I have had that exact conversation with. When they came in, and said, "Hey, you're reporting to me, Ed," I said, "Okay, great. There's one thing that you need to know about me, and that is this strategy in my title, and what that means."

      It's kind of like your 007 license, right? Once you had it, you'd just inform the next manager ... "Hey, I have this title, already. You can't take it away. This is what I'm gonna go do."

      Yep, and they're like, "Oh, okay."

      Ed, you are not only outspoken about your opinions in business, but also politics. In getting to know you, over the last few years, I've had the privilege of friending you on Facebook. I wanna thank you for diversifying my Facebook feed.

      I come from somewhat of a liberal bubble, although I have a conservative family, but I'm kind of only used to hearing those two points of view. You, as a Libertarian, provide a different point of view that I very much appreciate.

      I found out, in doing some research for this, that you, in 2010, and 2012 ran for the Texas State Senate as a Libertarian, and in 2013, you sought the Libertarian Party of Texas nomination for lieutenant governor. I wanted to ask was there anything in particular that inspired you to become a Libertarian, and run for political office?

      There was no road-to-Damascus moment for me on that, either. That was really more of a transformation over time. Yes I did run for both Texas State Senate, and very short-lived, by the way, for lieutenant governor. I dipped my toe in the water, and then quickly got out of that for a number of different reasons.

      Did you have yard signs? Did you get to that point? [crosstalk].

      For State Senate, yes, and still do; I still have them. I was smart enough to create the yard signs without a year on 'em, so I can reuse 'em in the future [crosstalk] yeah, if I ever decide to run again.

      That was a real joy to be able to do that; to, first of all, be able to represent the Libertarian Party, especially in Texas, was fun, but it was also great to go to these ... They don't do debates. They do what are called candidate forums.

      For me to go, and talk with all of these politicians, who are genuinely seeking the office, because one of the great things about being a Libertarian is you have zero chance of winning. I have like zero desire to actually serve in the Texas Senate. Can you imagine how awful that must be? What a lousy job, right? It'd just be horrible to sit there for days on end, debating whether or not so-and-so should be the ice cream parlor of Texas, or whatever.

      Because of that, I was able to say stuff, and get people to think. It's exactly what I do in business, which is to try to get people to think about things differently. A lot of the conversations that I had during these candidate forums, when something like this ...

      They would ask a question about, I don't know, "What are we gonna do about the water supply?" I said, "I object to the premise of your question, because the premise of your question implies that government needs to do something, and I don't think that the government is a very good solution in this particular case, and that it would be better ..."

      "Here's what we'll do; let's let the price system determine the price of water, and if there's a need for water, if the price of water starts going up, you know what'll happen? Somebody will say, 'I should build a lake. I should build a reservoir, because I'm gonna make a lot of money doing it.'"

      That's a great point that you bring up, Ed, which is that we assume, I think, that government ... If there's a problem, the government should do something. It's just a given, right? You're saying, actually, maybe government shouldn't do something; maybe it doesn't always have the solution.

      Yeah. [crosstalk].

      -probably most of the time-.

      -don't just do something, stand there. That's the mantra of the of the Libertarian government, right? You might have seen this was a post, I think, that was earlier this week, maybe in the last week ... I said, "I hope Donald ..." The head of the EPA, this guy Pruitt is getting ousted for whatever reason, and the big thing is did he, or didn't he really get involved in this controversy? The Democrats now scream at the Republicans, and back and forth.

      My point was, and I think this is what you're getting at, with all my Facebook posts, is I hope Donald Trump takes the opportunity to get rid of the EPA. People are like, "Get rid of the EPA? Why would you do that?" Well, because the EPA does a lousy job at what it's supposed to do, that's why. Remember that thing in Utah, was it, where they opened up this cavern that had flooded, and put sulfur into the water supply?

      Who says that government policy is any better? I think that's what people mistake, that like why should we ... Michael Munger, who's been on my show, has a great way of describing this. He says governments are a lot like unicorns. People say, "Well, unicorns? What do you mean?"

      Imagine I had a transit system that is run on unicorn power, because, as you know, unicorns are strong, and they can carry a lot of weight. The great thing about unicorns, too, is that they poop strawberries, and their flatulence reduces global warming.

      You might say, "Well, Ed, this is a great plan, except for one thing: unicorns don't exist." I say, "Well, of course, they exist. If you and I close our eyes, and say, 'What is a unicorn?' we're both gonna conjure up a white horse with a horn, and probably rainbows around it. So, of course, they're real, because we can both imagine what they are." They said, "But they don't exist in reality." I said, "Okay, fine, neither does what you're proposing, in terms of the government solution."

      We idealize what we think government should be able to do, but it's not real. It can't do the things we ascribe it to. It can't poop strawberry-flavored ice cream, and its flatulence get rid of CO2.

      I think, taking you away from a unicorn for a second, and making this more real, right ... Because I think there's a good example that's a very teachable that you explain really well, and I think that's your opinion on ... When the hurricanes happened, and people were raising the prices of bottled water, and I loved the lesson, because I think you covered economics, you covered government policy, all in this one thing about the bottled water. The price gouging, that's what I was looking for. I'd love for you to explain your position on that.

      Yeah. It's a great tie-in, David, to the unicorn story is like it would be great if government could control prices in such a way that it would not affect, negatively, what it actually wants to affect the other way.

      Water's one thing, but let's take maybe a slightly easier example for people understand, and that would be the price of hotel rooms that are just outside the hurricane cone of destruction; so that, when people are fleeing, and on the road, and they're pulling into a motel, why shouldn't the ... I believe that the people who are running that motel should increase their price as much as they can, because say I have ... My wife and kids are with me, and we might be here for a while. What I'll do is ...

      If you have to ... If you are coerced by government fiat to keep the price of your room at $59, let's say, or $159, I'm gonna say, "You know what? I'm gonna be here awhile. Give me two rooms, because that way, we can spread out a little bit. My wife and I can still have a separate room. The kids can have a separate room. That's great." Well, that means that someone coming behind me, with, say, an elderly mother, or whatever, is not gonna get that room.

      Therefore, I think that it would be better, just from a human standpoint, if prices were able to fluctuate with that demand for the marketplace, and they end up charging me, say, $400 a room, or it's 375. I'm like, "I'm just gonna take the one room with the double beds, and my wife, and I, and the kids will be in it, and that's great." Now, there's another room that is potentially available to someone else coming after me.

      You say, "Well, what about poor people?" Well, okay, but this rolls ... It's not trickle down; I hate that term, but this means that, okay, fine, but that will still mean that there are rooms at some point, closer to the point of impact of the hurricane, at a cheaper price for the people who can't afford the 375 a night.

      The model ... This is where it gets tricky for people is how could it possibly be better, even if you don't have a lotta money, if there is price gouging? It actually causes more efficient allocation of resources.

      Correct. Yep.

      In the end ... You kinda have to do the math to get to that point, unfortunately, but I think the example of the hotel room, or bottled water is ... Actually, a great example is surge pricing, for Uber and Lyft. People hate the surge pricing, but they put up with it.

      Well, my example, when I tell people why surge pricing is good, I say, "Imagine that your wife is about to give birth, and you need to get to the hospital, but your car isn't working. You go on Uber ... Even in a rainstorm, in New York City, you can get an Uber, thanks to surge pricing, where you can't get a taxi. You're gonna pay a hundred dollars to get to the hospital, or more, but you'd be happy to pay that, right?

      If it wasn't for that, then the people who really, really need it, desperately, would [crosstalk] be able to get it.

      I have a friend who's alive, because of that. He had a heart attack on the side of a road, and his wife had the prescience to call Uber, and not an ambulance.

      Wow. Yeah, it would, I imagine, come faster than a lot of places.

      In theory, everybody listening to this is, or most people listening to this are probably bookkeepers, accountants; maybe they have their own firms, maybe they're some sort of advisory-type roles. Thinking about for surge pricing, and demand-based pricing, if I have an accounting firm, if I use some sort of demand-based pricing, that would help me ... It would help me alleviate my load, when it gets to those tax deadlines, because people would probably file a little bit earlier, knowing they were gonna pay a ton more to come to my office on that last day.

      Absolutely. You're crazy to not have surge-based pricing around tax season. That's completely insane to me, to not have that.

      I feel like ... Ed, well, what's your experience? Most firms don't have it, right? I've rarely talked to a firm, where they change their price as ... Maybe they have a [inaudible] client price-

      Do you have it, Blake?

      Well, we had ... I don't even think we had it at HPC. We did have surge pricing, when it came to 1099s, or whatnot, like if you didn't get us your information by this date, we would double the price. That really worked, but we hadn't actually done it for the entire firm.

      It could be a very reasonable; if you get it to us by this date, it's this price; this date, this price; this date, this price ... I feel like most of the problems in accounting firms, around busy season, are because they aren't pricing properly.

      I would totally agree with that. It's incredible to me, because, let's face it, if you wanted to, you can delay probably the majority of tax returns by just saying, "Hey, if you want the cheapest price, we put you on extension ...".

      Yeah, no problem.

      Your taxes are not gonna be filed until what is it? October 15th? Is that the second, or is it September? I always forget. I know there's one that's corporate, and one of 'em is personal, right? The cheapest price is we just throw you on an extension; done, next. We're not gonna do your taxes during this crazy period between January, and April 15th. Then, I think the whole tax-season thing goes completely away.

      Yeah, or you're at least not compressing it all in three months, and you're spreading it out over nine months. By then, you've got another cycle. Really, you can even out this workload just by ... You don't even have to do crazy things like ... Well, crazy to some people, like get your time sheets. You just have to actually price appropriately.

      Yes, that's true. I would say, just in defense of getting rid of time sheets, because that's ... I'm a big believer in doing that. The problem is that, in keeping your time sheets, you will then think that all of the hours have equal value, and they don't.

      I'm just wondering ... I keep trying to figure this out in my head, like what is the barrier? What is the ... Maybe you have this answer, Ed: what is the one thing that causes accountants to be unable to drop the time sheets?

      The illusion of control.

      Meaning that I see the time sheets coming in, and I feel like, "Oh, now I can see what people are working on"?

      Yep, it's the illusion of control. It's not real control, because you don't have it. It's the illusion.

      It's a self-imposed delusion, in my opinion, because I spent one year as a manager in a large public accounting firm, and I had to review my staff's time sheets. I was kind of amazed at how, every month, they would come in on budget for a client, where if they were actually giving me their real hours, then they would have been ... There would have been much more variation, from month to month.

      This was for our monthly outsourced accounting clients. Then, actually, I had one senior accountant straight-up tell me that she had a secret spreadsheet that she kept, with her real hours, and then her ... She didn't report to me, and I think she felt comfortable that I wouldn't report her. What's anyone gonna do about it, right? She had a secret time budget, so she knew that she had so many hours every week that she had to hit for all these clients, so she would portion them out.

      I know. Well, look, this is not surprising. You guys probably have seen me do this, I call it the nuclear option; that is when I'm standing before a group of professionals, whether they're accountants, lawyers doesn't matter. I say, "Anyone who's ever filled out a time sheet, raise your hand," and, of course, every hand goes up, because it's presupposed. Then I say, "How many of you have ever not put down exactly what happened on the time sheet? Keep your hands up," and nobody puts their hands down..

      By the way, it's also ... They sometimes lower it, too. They actually work eight, but they put six. It's not that people are padding it, to go over all the time, it's that they're actually doing it under. My guess is that, in the long run, it's actually under more than anything.

      The reason is because you don't want your boss to think you're an idiot. You're like, "Okay, well, I know it took me eight hours, but I'm only gonna put six, because otherwise I'm gonna get reamed for it." They lie up, and down. Here's the thing, and this happens every single week, every time sheet is a lie. There's a least one lie on every time sheet, my guess would be.

      I will completely admit that, when filling out my time sheet, most of it was crap, because I don't have the discipline to fill out my time sheet, as I go, every day, every hour. I'm at the end of the day, making-

      Right!

      I'm like, "What did I do today?" Have you ever had that feeling, like you go home ... You're like, "What did I do today?" Try filling out a time sheet, then.

      I think it ripples. Obviously, there's a whole podcast people could listen to that's out there. I think Ed has one that's just about how unethical these time sheets are, and the death of the billable hour. I think it evolves even past time sheets. I think [inaudible] Net Promoter Scores, and how those are kind of in theory, but they're always coached.

      You go to work on your car, and at the end, the cashier is taking your money, and then she asks you to fill out the Net Promoter, and then you put a seven. She's like, "They're gonna get in trouble if you don't put an eight, or higher. Will you put an eight?" I'm like, "No I'm not gonna put an eight ..."

      Again, this is because of that nonconformist. Unless I've tweeted, or recommended it - I actually have done the recommendation - you don't get a nine or 10. I give everybody a seven. That's it. It's kinda that same thing is like people will just ... Because it's there, and it's a form, you'll just fill it out to appease the person who wants the data.

      There's a blog post I did a long time ago on this, and Ron, and I recently just uncovered it, and talked about it again. But this this whole idea of what you can measure, you can manage ... It's sometimes said the inverse, what you can't measure, you can't manage.

      First of all, it's attributed to Peter Drucker, and he never said it, never, never, ever said it. I've searched it. You cannot find any attribution. Now, Peter Drucker did say something similar, in that he said was, "What you measure, you will get."

      That's actually far more meaningful.

      Which is the stories that both of you guys just told. What I'm gonna get is I'm gonna get the number of hours that were budgeted. That's what I'm gonna get, right? I'm gonna get what people are encouraged to do on the Net Promoter Score, because they know that it's gonna be gamed, so, what we're gonna get. There you go, what you measure, you will get. That's what you're gonna get, because, guess what? We are human beings, and we're scams. We're scams.

      The worst scam we do is the one we do on ourselves.

      Yep. Lying to yourself is the greatest lie.

      That's what we're doing, as managers of accountants, when we look at these time sheets, and we think they're real. We're lying to ourselves.

      Before I had the nuclear option, one of the things that I would say to people, if you were in a management, or leadership position in a firm, I said is, "If I took your utilization reports away, would you still know who your good people are?" Every person says, everybody says, "Yeah, of course ...".

      Absolutely.

      Okay, because then, see, here's the thing is the time sheet is then is used as a weapon, and it's used as a weapon, either for, or against them. I can say you billed too many hours, or too few hours, and you're still screwed.

      Yep, it's like the annual performance review. Thank God, I only had to do one of those.

      Corporate ... That is Kabuki theater, as I like to call it.

      Well, Ed, I would love to talk about this all day with you, and I hope to run into you again, at a conference soon. For our listeners who are interested in learning more about your philosophy, what you're up to, with The Soul of Enterprise, what's the best place for them to track you down online?

      I would love for them to visit TheSoulofEnterprise.com, and give a listen to one, or more of our radio shows out there. If you wanna connect with me, via Twitter, it's just @EdKless, E-D-K-L-E-S-S, as in Sam. I'm the only Ed Kless in the world. Yes, I do look at that every so often.

      Wow, that's amazing.

      I cannot recommend their podcast ... It's amazing.

      You mean you cannot recommend it enough?

      Freudian slip.

      Enough, yeah, sorry ...

      I just found this out; I didn't realize this, but we can listen to The Soul of Enterprise, live on Fridays at 1:00 p.m. Pacific, on VoiceAmerica, right?

      Yes, you can, and it's just TheSoulofEnterprise.com/live at 1:00 p.m. Pacific, 4:00 p.m. Eastern. Yes, you can listen to it live.

      David, where can people get in touch with you?

      Easiest way is on Twitter, just @DavidLeary, and obviously, this is a bonus episode, but usually, we're talking about what's going on in the accounting world, and cloud accounting technology. If you see a story you think Blake and I should discuss it, shoot it over.

      You can connect with me @BlakeTOliver. Thanks, everyone, for listening. Ed, thank you so much for your time. David, I'll see you next week.

      All right; bye, everybody. I would love for you guys just to talk about your little musical backgrounds, because I think, Ed, you ... I've seen you play a grand piano at a bar, and sing, and [crosstalk] of course, you know Blake has a very musical background. I would love to understand ... Blake said he thinks he saw you sing in a session you gave?

      I have a minor in musical theater, which explains a lot. The other concentrations that I had were in business administration, and information systems, but ask me which one I use on a more regular basis, and it's clearly the musical theater ... Just how to get up in front of an audience; how to pause; how to walk with a purpose, instead of just walking back, and forth on stage, pacing, making everybody seasick, especially if you're on camera. Some of those things have been so influential in my career.

      That's the background for it, and I view everything as a performance. I've got a reputation for, especially in the spring, and summer, wearing a seersucker suit, and it's a costume. That's what's on my LinkedIn picture ... I have that seersucker jacket on.

      I view everything as a performance. There's just been a couple of times, when the spirit has moved me, so to speak, and if I think of something, and it's connected in my mind, and I'm like, "Oh, that reminds me of a song ..." That's the experience behind it.

      Before we go, I've got one more question for you; really, it's two. What is your favorite musical, and what is your least favorite musical?

      All right, this is really interesting. My still favorite all-time musical, by a tiny little smidge, is West Side Story, for a couple of different reasons. 1) I think it was completely transformative in its day, introducing the concept of jazz into the Broadway theater. The whole notion of a story that was advanced by the music, not just added to. You actually ... The plot advances in the story of the music, and the genius of Leonard Bernstein, and Stephen Sondheim ... I will say that a very close second is now Hamilton, because it's done the same thing.

      I have yet to see that, of course, but, maybe when ... They seem to be implementing surge pricing quite well.

      Oh, yes, they are. They're doing a great job of it. In fact, I just had the opportunity to see it on Broadway, last week, on my vacation with my wife, and kids. We got tickets in the sixth row - long story - and it's absolutely amazing.

      It was the best non-original cast production on Broadway I've ever seen. For those of you who are into theater might understand that ... An original cast is usually so much better, mostly because they've usually worked it for two, or three years before they've gotten to Broadway, so it's down.

      Then, when new cast members take over, they're only doing it with four, to six weeks of rehearsal, so the they're never quite as good, because they don't have it as nailed. A lot of times, they change the music to fit the voices of the original star. What that does is it speaks to the strength of the show. It's just so unbelievably good.

      As far as my least favorite one, I would have to think on that. I am moved by a lot of music, so it can be a really crappy musical, and I'll try to find something that I like.

      Perfect. All right, we'll let's go on that one. Thanks again, Ed.

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      Blake Oliver

      Los Angeles, California, United States