how big money could change everything.
by seth fineberg
at large
here is some truth, at least that i believe, accountants need to know: accountants in practice today, particularly firm owners, should be more afraid of venture capital entering the profession than ai or any like form of automation. a bold statement, i know but stay with me and see if you agree.
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at the core of this viewpoint is how i believe the two will, respectively, impact the profession at large. the major difference, to me, is that one has the potential to help the profession move forward while the other could change its dynamic for the worse.
while many heads are buried in the swelling sands of tax season, you’ve likely raised them long enough to know that tools like chatgpt and other forms of so-called artificial intelligence are making waves in accounting. more so, by the day.
at the same time, you may also be aware that venture capital money and private equity, in general, have become interested in accounting as firms are looking to grow or otherwise expand in other ways. so, what does this all mean?
“change” has been associated with the accounting profession for a good decade or so, mostly stemming from evolving client needs and pace of business, but also the general dynamics and makeup of public accounting needing a bit of a reboot.
whether it’s the old guard aging out or firms needing new levels of relevancy and diversity, change has been in the air. and while accountants are accustomed to change (as one need look no further than what they have to deal with regularly with the ever-expanding internal revenue code), they don’t necessarily like it.
moreover, when the specter of change comes from largely outside of the profession, as with ai and vc, that fear does loom larger. but as i said at the outset, laid side by side, venture capital’s influence on the profession is far more worrisome than what promises to be yet another level of automation found in ai.
in my 20-plus years following the profession, i’ve seen accountants struggle with new technology, often with fears that it would replace their core work and make them less valuable. that has yet to happen.
it didn’t happen when accountants moved from paper to dos, from dos to windows, or from windows to cloud. and i do not suspect with what ai has to offer in terms of automating time-consuming tasks, in a way all of the aforementioned have yet to do, that it will be to the profession’s detriment.
in short, all chatgpt and the rest of the “bots” out there offer is another level of automation that will still need the professional human to reap its full benefits. this is all despite the potential for things to go wrong (as with any technology), but not to the degree that venture capital and private equity will.
before i covered accounting, i spent several years knee-deep in the venture capital world. i interviewed the likes of mark benioff (salesforce), jeff bezos (amazon), and kevin o’connor (doubleclick) among the many then start-up entrepreneurs of the day. my job was to dive into how vcs think about their investments, why they make them, and their ultimate role in a company’s future.
while vcs have done some good in helping shape the face of business as we know it, i’ve also seen it wreak havoc on a business’s dreams and the economy as a whole. we need to look no further than the “bubble” that burst in the first dot-com era, aka “the dot-bomb,” which many of us that covered it saw coming a long way off based on the very thing accountants should be concerned about when taking vc money.
in private equity, they ultimately are about return on investment, which means control. they often sit on a company’s board or enter the c-suite of a business to help control its path, its decisions, and its future. to me, this is something that the accounting profession has seen little of over the years, and with good reason.
is this something that will truly benefit the accounting profession or change its face negatively for the foreseeable future? i welcome new levels of automation but not control based on money.
mind you. i’m not saying chatgpt and ai don’t have a downside or causes for concern or that vc and private equity can’t help firms that may need it. but longer term, i’d be far more worried about money’s influence than control over automation.
2 responses to “why vc is a bigger threat than ai”
john sanchez
interesting thoughts frank. i would say the impact will be mixed. as many accounting firms suffer the ailment of change resistance (technology, ux, service offerings), vc can bring monumental change there… but my feeling is the bulk of those practices are not likely vc targets… the practices that will attract vc attention are probably already somewhat forward/progressive thinking.. and there is always the challenge of ‘how to scale a personal service business’. i won’t categorically say it’s impossible, but it nearly is. as the driving force behind the “product sold’ is human expertise driven..
frank stitely
remember the roll-ups from people like amex? the vc-funded rollups will fail for the same reason – the roi in accounting is on human capital not monetary capital. there’s not enough return to monetary capital. a much bigger problem is losing $300k people from the profession. vcs won’t fix that.