What Intuit’s quarterly results say about its battle against Xero, how high growth accounting firms are eating the world, why blockchain won’t eliminate accounting, and more

Show Notes

Intuit Reports First Quarter Revenue Increased 12 Percent Led by 42 Percent Growth in Small Business Online Ecosystem Revenue — Intuit Investor Relations — The company announced financial results for the first quarter of fiscal 2019, which ended Oct. 31.

Charts from Intuit’s investor deck:

QBConnect 2018 - the review no-one else will write — Matt Paff on LinkedIn — Intuit’s theme for QuickBooks Connect was “Anything is Possible” but Matt thinks it should have been “Legacy.”

Blink and it’s a Bank: Intuit Blurs Boundaries of Accounting Software — Digital First — Sholto Macpherson highlights Intuit’s not-so-secret plan to disrupt traditional lending with its new releases announced at QuickBooks Connect.

38 Percent of Employees Don’t Want Management Dictating the Tech They Use for Work — SmallBizTrends — According to a new report from NexPlane, 38% of employees don’t want management dictating the tech they use for work. And more than half have pushed back on IT or management when they tried to dictate the technology they use.

Will Waiting For Pay Day Soon Be A Thing Of The Past? — PYMNTS — According to a CareerBuilder report, 75 percent of consumers reported living paycheck to paycheck in 2017. That’s why an increasing number of firms embracing instant payments as an option for workers, and as a tool to both recruit and retain employees.

The Best Day For Payday — NPR — Most Americans get paid biweekly. One of The Indicator's listeners wanted to know why. So they looked into it.

2018 High Growth Study - Hinge Marketing - Check out this survey of over 1,000 professional services firms from across the globe. 

Hinge Marketing’s 2018 High Growth Study: Accounting & Financial Services Edition

Blockchain Promise to Revolutionize Accounting Hits Reality Wall — Bloomberg Tax — Blockchain a year ago seemed poised to revolutionize accounting. Now, it doesn’t quite seem so hot.

A leaky database of SMS text messages exposed password resets and two-factor codes — Tech Crunch — A security lapse has exposed a massive database containing tens of millions of text messages, including password reset links, two-factor codes, shipping notifications and more.

Microsoft details the causes of its recent multi-factor authentication meltdown — ZDNet — Microsoft has posted a root cause analysis of the multifactor authentication issue which hit a number of its customers worldwide last week. Here's what happened.


Cloud Accounting Podcast E47: What Intuit's quarterly results say about its battle against Xero and plans for world domination, how high growth accounting firms are eating the world, why blockchain wont revolutionize accounting anytime soon, and more (transcribed by Sonix)

Blake Oliver: Remember I said about 23 percent of firms are considered high- growth? [cross talk] average ... The median growth rate of the high-growth firms is 56.4 percent.

David Leary: Wow.

Blake Oliver: Yeah. Welcome to The Cloud Accounting Podcast. I'm Blake Oliver-

David Leary: And I'm David Leary.

Blake Oliver: David, you are back from Mexico. You did Thanksgiving in Mexico. How was that?

David Leary: Thanksgiving in Mexico is the best, because it's ... You're sitting on a beach; you even get real turkey dinner; you get gringo Thanksgiving, which is nice. You just check out. It's the way to go. The accounting news, though, it was nice, because I time; I got caught up on all my news. I have no more articles in my backlog.

Blake Oliver: Yeah, you have like 12 things that we've gotta talk about, so we'd better jump into this, if we're gonna get through it all.

David Leary: Yeah, absolutely. This'll be a test, because I think we've gotten some feedback through social media ... Some people say, "Hey, you guys should do more articles." Some people are like, "No, keep it tight at 20 minutes." Right now, it's 50/50. I think I'm gonna put out a real-deal survey this week, so we get a better quantitative number here, on Twitter, but, as of right now, we have a lot to go through, so let's jump in.

Blake Oliver: Let's do it. We're gonna compromise; we're just gonna pack an hour of stuff into 20 minutes. Go.

David Leary: Yes. Today, we are, for sure. I think big news last week was Intuit released their earnings.

Blake Oliver: Mm-hmm.

David Leary: The big highlights from that were, I think, that we really care about, or like to watch are the QB Online subscriber growth. They're now at 3.6 million subscribers, Intuit is. It grew by another 41 percent, if you can believe that. I feel like it's been growing at 41 percent, every quarter now, for maybe three years.

David Leary: I think cloud accounting, in general ... I think Xero's been growing at the same clip, as well. Cloud accounting, itself, is growing at 40 percent a year, I think it's safe to say. Anyway, they're up at 3.6 million subscribers. also talked about their US numbers, as well. US subscribers is at 2.7 million, and international subscribers grew at 61 percent, is now approaching ... It's now at 880,000.

Blake Oliver: Wow.

David Leary: I thought was interesting because I think I've sent you the picture in your chat, but they have all the US numbers. It's interesting to look at those, versus Xero's numbers. We talked about Xero's last podcast, because Xero had that mid-year report out.

David Leary: If you look side by side, Xero had ... They hit 1.6 million worldwide, and their North America, what we reported, is 178,000. Intuit's was ... I just lost it.

Blake Oliver: Well, it's 2.7 million US subscribers. Internationally, QuickBooks is at 880,000.

David Leary: Yeah, and I think it gets ... It's interesting that we both report it, because Xero's just says 'rest of the world,' but Intuit has their numbers broken out by some deeper regions, like France, and India. I thought the interesting number was in the UK. Xero and QuickBooks are pretty much equal. I think Xero reported 350,000 in the UK. QBO's now at 305,000. It's almost 50-percent equal number of subscribers in the UK.

Blake Oliver: Wow.

David Leary: Australia, definitely ... Australia, and New Zealand, for sure, Xero's still winning that market. In the North America, QBO by far is destroying Xero in that market, but rest of the world's pretty equal, outside of those Their two original markets, if you wanna think of it that way. They're dominating the original markets, but then, outside of that, it's 50/50.

Blake Oliver: There were a couple of articles that came out that were written as a follow-up to QuickBooks Connect that are a great tie-in to this, which is Matt Paff wrote an article ... He always writes the article that nobody else will write.

David Leary: Yep, it's always a good one.

Blake Oliver: Sholto MacPherson also had a great summary. They had some great takeaways that we, to be honest, we kinda missed, especially when it comes to where Intuit is headed, in terms of new products, or whatever their direction is, right?

David Leary: One thing I totally missed, or we missed, is QuickBooks Online is kind of the legacy brand. It used to be you'd have Intuit QuickBooks, and the word 'Online' in the logo. Now, it's just QuickBooks. It's just Intuit QuickBooks, and that, it's QuickBooks Online, right?

Blake Oliver: Right.

David Leary: Desktop gets the lower billing. Intuit QuickBooks has a sub-brand, Desktop, now.

Blake Oliver: They've changed the logo ... They've changed the logos now. Now, it's just plain old QuickBooks; that means Online. QuickBooks Desktop means the ... That's now the legacy product.

David Leary: Exactly, right? There's this hand-off, and a lot of Matt's article is all about legacy, and hand-off, which we've talked about a little bit, before. There's parts we've talked about with Brad Smith, and Sasan, but ultimately, the things we missed is we missed the logo. That was really interesting. Then, the other big one [cross talk]

Blake Oliver: -they didn't make a big deal about that. Intuit just sort of did it.

David Leary: Yeah, exactly, but Matt picked up on it-.

Blake Oliver: Yeah, Matt noticed.

David Leary: Thinking about legacy ... We talked about these things, real time, that day; Matt took two weeks to write his article here, so he had a lot more time to digest a little bit.

Blake Oliver: That's our excuse.

David Leary: One thing I think Matt starts to lay the theory of, and then, we can talk about it a little bit more in the next article ... Matt kind of makes the theory of QBO could just be a loss leader on Intuit's journey to become a bank.

Blake Oliver: Right, with all of the announcements about QuickBooks Capital, and some other ... Same-day payroll, same-day invoice factoring. What are they calling that? I forget the name. They're not calling it factoring-.

David Leary: Same-day payments.

Blake Oliver: Same-day payments, where they take one percent. Intuit has kind of always done this, that the QuickBooks subscription. or license fee is really cheap, really affordable, and they make their money on add-ons, which, in the Desktop world, was primarily payroll, and merchant services. You might pay a few hundred dollars for QuickBooks, but you could pay thousands of dollars for payroll, and merchant services, as a small business. Now, that is expanding in the Online world into loans.

David Leary: Yeah, and I think it falls along the logic I've always argued about whoever owns the customers is gonna win the heart, and the mind share. The best example I could give is American Express and Costco.

David Leary: American Express used to be the official credit card for Costco. They thought customers loved American Express. The contract was up. Costco and American Express played hardball with each other. Costco bet that people loved Costco. Millions of people, including myself. stopped using an AMEX card, and switched to the Visa card, because now that's the official card of Costco.

David Leary: It's kind of that same thing, I think with Intuit's play, here, is the customers love QuickBooks, and they love Intuit more than they love the banks. It's very easy to market to them ... This is also Sholto's point, when we go the next article - it's very easy to market to them, and just get them to be loyal to your other product offerings.

Blake Oliver: Right. When it comes to lending, that is a traditionally terrible, inefficient process that requires business owners putting together all sorts of reports, exporting information from their accounting system, which they may not even have. It's not good. It's not a good experience.

Blake Oliver: A lot of business owners get denied, but Intuit has access to all of this really, really valuable general-ledger information, sales information, that they can use to make loans automatically. They can automate that entire process, and pre-qualify their customers for lines of credit, and whatnot.

David Leary: Then, flipping over to Sholto's article, he really kind of takes a thought that Matt had in his article, and really lays out a case with real numbers, and real calculations. Talks about different parts of the funnel, the pain awareness. Then, Intuit has the ability to put promotions right in front of people. Then the middle of the funnel ...

David Leary: We can look at they're ... Intuit can look at the data, and then market based on the data in the file, and then, already have them pre-approved at the bottom of the funnel. When somebody's actually finally ready to make a purchase decision, the answer's already there. Intuit knows the answer before the customer asks.

David Leary: He really ties this back to guess who's a trillion-dollar company that does this really well? Amazon, with one-click ordering. To some extent, all these financial services could turn into one-click, because of Intuit. I think he makes a really good argument in this article, and everybody should read it; both these articles, actually, are really, really good.

Blake Oliver: All right, we'll post those in the show notes. Thank you, Matt, and Sholto.

David Leary: Before we jump to something else, though, one thing that was Intuit's earnings, which I just thought was staggering to look at, has nothing to do with cloud accounting, but it's really the TurboTax space, and just the US tax-industry landscape.

David Leary: This is the last decade of the tax industry. Overall, there's 143 people that had to file tax returns 10 years ago. Now there's about a 152 million, so it's grown by 10 million, the number of taxpayers.

David Leary: The interesting thing, if you look at these numbers, TurboTax used to only do 22 million of the tax returns in the country. Now, TurboTax is doing 41 million. The manual taxpayers was at 15 percent, or 15 million, and now it's down to 4 million. About every two years, it drops by another million. Manual, in six years, is gonna be gone. There will be nobody doing manual tax returns.

David Leary: The weird side ... The really interesting number that, if you look at the tax stores, their market share is just shrinking astronomically, as people that do it themselves, either through TurboTax, or other DIY software, they're just crushing the tax stores. Even the CPAs are still growing, because the number of taxpayers ... The number of all tax returns is going up, so the CPA firms, and professionals are growing, but the tax stores are getting slaughtered. They may not make it across the board.

Blake Oliver: Wow, TurboTax has grown so fast, from 22 million to 41 million over 10 years, from 2008 to 2018.

David Leary: The interesting thing'll be is where does this ... Six years from now, when manual stops, then, based on the decline for stores, what happens when TurboTax takes away all what's left of the tax stores? Will it ever start dipping into the CPAs, and the professionals, or will some balance finally form here? For last 10 years, it's been a machine.

Blake Oliver: The more sophisticated that TurboTax can become, the more at risk the professional shops are, that the accounting firms are. Great examples of that are the individual returns that go along with the business returns.

Blake Oliver: I think that CPAs are protected, because a business owner isn't that price-sensitive, when it comes to their tax work. They're more interested in quality. Are they going to take that individual return, and go fill out their own TurboTax? I doubt it. Not likely to happen.

David Leary: I think I remember Brad Smith saying this years ago ... There's always business talk about the one-minute tax return, or tax-form reinvention. There's always been talk about this, about simplifying the tax process, et cetera. He was always saying chances are, if they ever ... If it ever truly got too simple, everybody would do it themselves.

David Leary: It's kind of the opposite. Everybody would use TurboTax to do it themselves, if it was super-simple, because then nobody would justify spending ... 69 million people that go to a CPA, or a professional, would not do that anymore, if it got simple. It's kind of the opposite theory of Intuit wants it complicated. Really, Intuit would want it simplified, because they would steal another 69 million returns from that part of the market.

David Leary: Enough about Intuit, though; enough about Intuit. Let's talk about important things like employees. I think I have a couple employee articles, here.

Blake Oliver: Yeah, let's see what you got here.

David Leary: Interesting one about tech. 38 percent of employees do not want management dictating the tech they use for work. I know I have been on that kick, myself. I hate using any tech IT wants. I've always thought my laptop ... I grew up doing construction, and my dad ... You'd bring your own saw, and your own hammer to the job site. Nobody told you to use this hammer. It's kinda that same thing, and I think you're on that page, right? You wanna use your own tech, correct?

Blake Oliver: Yeah. One of the really attractive things about going to work for FloQast was that they said I could use whatever I wanted. I could use a Mac. I could use PC. I could install my own apps. Such a magnificent change, after being forced into one platform in my last accounting gig.

David Leary: It's interesting that that affected you getting hired there, because the article talks about that.

Blake Oliver: I probably would've been okay ... I don't think I would've turned down the job, but I also think that if we didn't have that policy in our team, that we would have trouble attracting people. Overall, I think it just represents a different approach to employees; not dictating what tools they're gonna use. We'd be a different company, if we didn't have that philosophy. It's not just about the tech - the specific computer I use, right? Does that make sense?

David Leary: Yeah. Ultimately, I think this is the best. The key is for businesses looking to keep their workforce happy, and productive. If you do that, you're gonna have to give up some IT control, and let people have some freedom with that.

David Leary: I think there's a couple interesting takeaways. I saw this happen at Intuit, back in the day. Intuit was only IBM PCs, Lenovo ... When Apple iPhone came out, and people really started having that brand loyalty to Apple, people would just start ... They'd bypass IT, and start getting MacBook Pros. Then, eventually, now, MacBook Pro is the official computer of Intuit, I think; if I remember correctly. It's kinda funny how the employees drove the tech adoption.

David Leary: Dave Barrett has a great blog post about this, from ... Dave Barrett is the CEO of Expensify. I think for the last eight years, that's been Expensify's business model is just get the employees. I think I've even heard stories of TSheets, where employees will go to a new company, and they'll demand TSheets, because they used it at a different company.

Blake Oliver: Just to give everyone a little context, this stat that ... The stat is that 38 percent of employees don't want management dictating the tech they use for work. They wanna choose it for themselves. It's from a report by Nextplane, called The Fight to Collaborate – A Growing Rift Between IT and Teams.

Blake Oliver: I agree. Expensify's entire business model, at least for the early years, was built on this grassroots type of IT approach, where one person, or a small group of people in a corporation would hate the way they were doing expense reports. Maybe they were forced to use some legacy system. Maybe there wasn't even a system, and they had to create an Excel sheet, and tape receipts, and fax them in, that sort of thing.

Blake Oliver: Expensify said, "Okay, well, you don't have to get IT approval to use our software. You can just start using it for free, and you can make a beautiful expense report that you can then email to your accountants at your company." What happens is that enough people start doing this that the accountants are like, "Oh, shit, this is amazing. We should we should do this." Then accounting, and IT all get on board, and they buy it. It's totally from-the-bottom-up type of approach, and-

David Leary: I think I saw it even with some sharing utilities, like Dropbox [cross talk]

Blake Oliver: Yeah, Dropbox is a great example.

David Leary: I wouldn't be surprised if some of our bookkeeping, and firms are going to start seeing this, where their employees are like, "I only wanna use the cloud software, because the bank feeds are better. I don't wanna use some desktop app that you have our clients on."

David Leary: Actually, I know this, for a fact, has happened with an accounting firm, where they have a mix of desktop ... QuickBooks Desktop customers, a mix of clients that are on QuickBooks Online, and they discovered the employees were ... All the bookkeepers in the firm were kind of neglecting the Desktop customers, because they hated working in it.

David Leary: This is already happening, from the accounting standpoint, as well. Obviously, if you let people pick technology, you can retain your employees, right? You don't have that hammer over their head.

David Leary: Another interesting thing that's kind of bubbled up is paying your employees the same day. I have two links we'll get in there. One is there's a podcast from NPR's Daily Indicator. It kinda gives a history of payday; why paydays used to be ... When people were harvesting oil from whales, it used to be you got paid every two years, when you returned with the boat, to people were getting paid, for a while, every Saturday. As taxes came in, it kinda went to a biweekly payroll; super-super popular, right?

David Leary: There's an NPR podcast I already listened to, which is really good. Then, recently just announced, ADP ... Well, QuickBooks talked about it's coming, same-day payroll, but apparently ADP has released it.

David Leary: One of the customers was talking about that, most of all ... First, I think employees-wise, one thing that [inaudible] 70 percent of the people surveyed want shorter pay cycles. The vast majority of employees wanna be paid much sooner than every two weeks.

Blake Oliver: Yeah, two weeks is a long time. Usually, by the time you get that direct deposit, it's even longer. You've got the two weeks are up, and then you have to wait another week for your actual pay.

David Leary: This is a hotel company, they have some hotels, and some museums, or something, but they're reporting that since they've switched to daily payments, they are able to recruit employees easier, and have higher retention rates.

David Leary: We could be getting to a point, where, at the end of every day, you'll have that direct deposit in your bank account. It's weird. It's definitely gonna be here. Those are just two quick ones worth people checking out. I think you had a survey about high-performing firms, right?

Blake Oliver: Yeah. I came across this really interesting survey by Hinge Marketing. It's a 2018 survey, so, this year. It's called the 2018 High Growth Study. Hinge is a marketing agency, a small marketing agency that serves just professional service firms. They did a really nice job with this report, so check it out. I'll put the link in the notes, as always.

Blake Oliver: Some items that are just really interesting to call out ... By the way, over 1,000 firms participated in this study - accounting firms and consulting firms - with 176 billion in combined revenues, and over 1 million full-time employees. They, together, have over 20 billion in marketing budgets. Not a small survey.

Blake Oliver: What was really interesting to me was the growth rates. If you compare accounting and finance to other professional-services areas, like tech consulting, architecture, legal, accounting has the lowest growth rate of all, at 6.1 percent. That's the median growth rate for 2017 - 6.1 percent. Even legal is growing faster than at 8.3 percent. Then, tech is at 11.4 percent, of course. Good time to be a professional services person in tech.

Blake Oliver: Accounting is not growing all that fast, compared to other professional services; not shoddy, but not fast. What's interesting is, if you break that down into different firms, and you look at, well, inside of accounting and finance as an overall industry, who's growing, about 23 percent of firms are considered high-growth, meaning that they are experiencing over 20 percent growth annually. That's really, really fast.

Blake Oliver: A little less than a quarter of firms are high-growth. 60 percent of firms are average growth, which means they are growing less than 20 percent, but they're still growing. Then, about 17 percent of firms are not growing at all. They're either not growing, or they're shrinking.

David Leary: If the market's not expanding very fast, if somebody's growing ... If firms are growing at 20-percent-plus a year, they're stealing clients from other people. I mean, stealing's not the right word, but, I kinda used that same, when I was talking about the TurboTax numbers, before. They're eating the lunch of the other people, and they're just taking the [cross talk] and I guess the A&B clients, as well.

Blake Oliver: Here's what's interesting, actually. You would think that, but the data doesn't support that. I think what's happening is that the vast majority of firms are growing very slowly, or not at all - like three-quarters of firms - or shrinking, and that one-quarter of firms that is growing is taking all the new customers.

David Leary: Oh, okay.

Blake Oliver: Remember I said about 23 percent of firms are considered high-growth [cross talk] average ... The median growth rate of the high-growth firms is 56.4 percent.

David Leary: Wow.

Blake Oliver: Yeah. High-growth firms, the minority of firms that are growing fast are growing at an average of 56.4 percent annually, which totally makes sense to me. I was part of that in my own small firm, just being in the right place at the right time, with Xero, with cloud accounting. It's hard not to grow, when you're the only ... The second bookkeeper in the country that's using Xero, right? That was that was my particular situation, so I got lucky.

Blake Oliver: There's tons of other firms that have caught on to this that are now doing this, since QuickBooks Online got good; since Xero got good; since Sage Intacct became a viable option; since NetSuite really started taking off. I think the firms that are using cloud, and, of course, all of the add-ons - Expensify, Bill.com, TSheets ... It goes on, and, on, and on - they're the ones who are just eating up all the new customers.

David Leary: I think this covers a lot of marketing stuff. Does it talk about whether or not these high-growth firms, what technology stacks they're using? I think I've seen a survey, before - year and a half, two years ago - about firms that are 100-percent cloud were growing at 14 percent, and firms that had a mix of cloud , and desktop were growing at about four to six percent, and firms that only have desktop-clients only were losing more clients.

Blake Oliver: Yeah. This is just an executive summary. The actual report's like 500 bucks, and I just don't feel like spending that kinda money. If you're a listener, and you wanna donate to The Cloud Accounting Podcast, so we can get the full report [cross talk].

David Leary: Or, if you're at Hinge ... Is it Hinge Marketing?

Blake Oliver: Hinge Marketing, yeah. If Hinge Marketing would like to share their report with us, we can dig into that.

David Leary: Yeah, that'd be great to look at some more of that. Absolutely.

Blake Oliver: I don't have that information for you, but I can tell you that my suspicion is, yes, it's gotta be that way. The high-growth firms are the ones that are-

David Leary: I agree.

Blake Oliver: You can see this in the fact that average-growth firms, that 60 percent of firms that are just growing average, they're only growing seven percent. The no-growth firms are shrinking on average by almost two percent every year.

David Leary: Yeah, because going cloud, automating some of your workflows, and processes, by using other cloud apps, you can just take on more clients. It's simple math.

Blake Oliver: Yeah, and you can stay on desktop, but you are not gonna grow. I think a lot of partners, and firms, where they are desktop-based, and they are not moving to cloud are really just ... They just wanna pull in checks until they retire, and they're not interested in modernizing.

David Leary: Well, everybody doesn't know this is a high-growth firm, so, I think we're [cross talk]

Blake Oliver: -even if you're not ... Yeah, exactly. We can we can dish out on them, on the no-growth firms all day long, and nobody will get mad at us. One more chart from this report, and then I'll shut up.

Blake Oliver: Of the high-growth firms ... If you compare high-growth, and no-growth firms ... Actually, they don't talk about the particular technology being used, but they do say that the high-growth firms, 43 percent of them- actually, rather, 34 percent of them are offering specialized services, whereas only 24 percent of the no-growth firms are. High-growth firms are more likely to be industry specialists. They're much more likely to be able to serve a specific role, or organizational function, solve specific problems [cross talk] and interestingly-

David Leary: They're niche. They're solving niche things.

Blake Oliver: Interestingly, the high-growth firms are actually less likely to be using specific technology, which means to me that they're more likely to use a variety of tools.

David Leary: Which, full circle, goes right back to the article of keep your employees happy by utilizing whatever technology your employees wanna use. Maybe these high-growth firms are actually really ... They're technically able to use whatever technology their clients bring to the table.

Blake Oliver: Yeah, I think that's exactly it. They're willing to experiment, and make mistakes. This is why, when people ask me about the cost of moving to cloud, and how disruptive it is, I say, "Yeah, it's painful; it's expensive; you're gonna lose people, but the upside is so humongous."

Blake Oliver: Right here, I'm staring at this chart. I'm gonna paste it in the show notes. This is the reason why it's worth that risk, that 56-percent growth; on average, which means that ... I'm sure there's firms that are out there doubling every year. It's gotta be.

David Leary: This is pretty staggering. This is a great find, actually. It's dumbfounding, these numbers that are in this. We're coming up to a half hour. I don't know if we should go past this, per se. I'll just go rapidly through those two more articles, quickly.

David Leary: There's an article from Bloomberg Tax. Blockhains Promise to Revolutionizing ... Let's rewind the title here. Blockchain Promise to Revolutionize Accounting Hits Reality Wall. Some of the article is basically this; blockchain's not gonna change a lot of our workflows in our space for a decade. You can read the article, but that's the gist of it.

David Leary: A year ago, everybody was like, "This is gonna change everything in six months." As people are really starting to have serious conversations about blockchain in the accounting industry, people are starting to come to the consensus that this is way far off. We might never have to talk about blockchain again, for a decade [cross talk]

Blake Oliver: I'm so glad that this is finally ... People are realizing that blockchain is not in it. It's just ... I've been saying this. I don't understand. How is blockchain gonna change audit? Tell me, in the next five years, what ... Are people suddenly gonna start using it, and we're not gonna be using banks anymore? No, it's not gonna happen. It's gonna take a long time. It's gonna make the audit more complex, actually. The auditors I talked to say no, blockchain gets ... It makes the audit more difficult, because now, you have to audit the actual technology, too.

David Leary: Yeah, and some of the arguments is companies are not likely to share their general ledger with another company [cross talk]

Blake Oliver: -public information. How do you ...

David Leary: I think it's worth reading. It's actually a really good article, and it brings some sanity to this that we've been having. Then, I don't know if [cross talk].

Blake Oliver: I would like you to say ... If you're at a conference, and somebody gets up there, and starts talking about how blockchain is gonna automate the audit, just walk out; just stop listening to them immediately, because they have no idea what they're talking about.

David Leary: Even Sean Stein, who we had-.

Blake Oliver: We had him on the podcast.

David Leary: There's a quote from him in this article, so we can use this as our quote, right? "I am fully confident that 10 years from now, blockchain is not going to be some new, radical idea. It's gonna be part of how business is conducted." It's good that even he, who is crazy in love with bitcoin, and blockchain, has a 10-year perspective on this.

Blake Oliver: Meanwhile, Bitcoin hit a new low today.

David Leary: I saw that.

Blake Oliver: Let's see, Bitcoin ... What's the current price of Bitcoin? It is now at $3,640 to the Bitcoin, down from a $20,000 high, something like that, earlier this year.

David Leary: I wrote my January predictions, and Bitcoin was in one of those, the Bitcoin collapse. I'm feeling really good now that I'm gonna make it out to the end of the year with a huge ... My prediction was people are gonna lose their ass, and they did.

Blake Oliver: Yeah.

David Leary: Bad, bad, bad, bad. The other thing is there was some multi-factor news that we could just put the links in; we don't have to discuss much, but a lotta people do multi-factor authentication, when they sign into websites, and they get a text back. Apparently, there's some security issues, some leaks in that. Maybe that makes you kind of second guess, like are you doing the right thing, security-wise?

David Leary: Then, Microsoft had a 14-hour outage with their multi-factor authentication. On one hand, more people are becoming dependent on the security stuff, but even some of those higher security levels that we're taking has its own headaches.

Blake Oliver: The big takeaway for me from these articles ... The TechCrunch one about the leaky database of SMS text messages, that is bad. If your app, or you're using an app that is still sending you a text message as a way of multi-factor authentication, you put in the code, that is actually no longer considered to be secure, because it's too easy for hackers to intercept those text messages, since ... Text messages are a lot like email; they go through multiple servers, and it's hard to know if somebody didn't intercept that. They could spoof your phone number and get it; they can steal your phone number, get the text message, log in as you. That's good.

Blake Oliver: People really should be using stuff like Google Authenticator LastPass Authenticator, those types of multi-factor, where it's just a randomly generated code or an algorithmically generated code on your phone that you enter. Hopefully, folks will switch over to that eventually, but ... This whole everybody getting locked out of all their Microsoft accounts for eight hours or something? That's just an unfortunate consequence of being secure. Sometimes, your security gets the best you.

David Leary: And, on that note-.

Blake Oliver: It's worth it. It's worth it.

David Leary: On that note, assuming I can log into Twitter this week, or you can log in to Twitter - there's no security issues - how would somebody tweet with you, and track you down?

Blake Oliver: My username is @BlakeTOliver, and you, David?

David Leary: @DavidLeary.

Blake Oliver: We'll look forward to hearing from you. We hope you enjoyed this Thanksgiving-sized podcast episode.

David Leary: Ah, good perspective; it's the Thanksgiving-sized episode. Way to go. I'm caught up. I'm all caught up. There's no more articles.

Blake Oliver: You are, now? Do you feel a sense of satisfaction, and completion, now that you've digested all of your articles?

David Leary: We'll see. We'll see what happens this week in cloud accounting.

Blake Oliver: Or, you, like me to start having regret about how much you ate?

David Leary: Oh, had I need to go run, right now, so, on that note, we'll go hit the gym.

Blake Oliver: All right. Enjoy your run.

David Leary: All right, Blake.

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