The Zero Day Close - Stephen Hedlund of Rillet

0:00 It's actually really interesting is we've seen when customers buy real and get on board their AI adoption actually increases and that's both in in our platform right now we're seeing like our internal AI agent use increase 70% month over month but then we're also seeing folks use claw and chatgbt and those tools more and that's partially because really connects with both like read and write access to these tools and makes it really seamless for you to do it right it makes it really easy for you to interact with them. But also because real is structured in this very AI native way, it enables you to build tools that previously weren't possible.

0:35 So we've had customers build entire forecast modules on top of real with with cloud code. We've had them build entire excuse me like commission calculators, entire CPQ tools. We've seen built by different customers. One customer had this very complex billing kind of metering problem, built his own metering solution for it to pull everything out of his AWS instance and calculate, you know, the invoices. Like we've seen some really incredible things built genuinely by controllers and and CFOs doing it frankly themselves.

1:12 >> Welcome back everyone to the Bora Bruce podcast. We're continuing our accounting tech series right now and with us today we have Relet and from representing Willlet we have head of finance Stefan over there who's also basically the head of marketing from like if you follow him on LinkedIn. How are you doing Stefan? Welcome Adam. Thanks for having me. >> Yeah. So like question like have they ever tried to change your title to like head of marketing too because I feel like you're solo building all that content on LinkedIn.

1:40 >> thank you. no they have not graciously. there's there's a lot more people doing it than than just me, a big team behind it. But it's it's funny, man. I I had all my most aggressive I guess like conflicts in business is always with marketers, right? Like >> I was going to tell them, hey, stop spending so much money where like why are you wasting money on brand? Why are we spending 50k on this conference? And now I'm the one saying, "Hey, let's go spend 50k on this conference." And thankfully I can just approve it because I also lead finance. But it's a it's a very different conversation now.

2:11 >> Yeah. because I've seen you guys's buses all across SF. The billboards are there. Like I feel like the marketing has been really good. The way the company has been positioned is really well and the way you are working with like other accounting firms in the ERP space and the implementation has been great as well as you guys have moved up market from like your journey not long ago. >> Yeah, thank you man. No, I'm I'm our buses.

2:34 Gerard on our team as our brand designer and did a phenomenal job with the buses and I still get texts about them where someone sent me a screenshot. They saw the real bus and I I've been really surprised at how well they've done. It's very hard to measure ROI on things like that. But I I do a general thumbmetric about how many texts do I get about a billboard or a bus and I've gotten a lot about the buses.

2:56 >> Okay. Amazing. Okay. So, as you know, the podcast is about talking about like the founders behind the companies and like the people behind running these companies. talk a little bit about your background, what brought you on to relate and like the way that you've been working with the team and the founding team to like scale where you guys are and also congratulations on the recent funding now. Congratulations on being the unicorn in the space. >> Thank you very much. Yeah, we we announced our series C led by Iconic this week. So 100 million out of a 1 billion valuation. It's nuts honestly.

3:26 So I I joined real when we were 12 employees. We're now over over 200 over 600 customers today. They have customers across 60 countries, public companies, companies doing even two billion in revenue like the the the amount of scale real is now operating at and even to do so quickly. It has genuinely shocked even me from from the inside. So I I joined really because I've I've seen all the other systems is I I started my career at Walmart on SAP and I grew up using very sexy I think I can say grew up using very sexy fintech products like Robin Hood and Vinmo and naturally I naively expected that when I would come into the corporate world especially Walmart of the largest companies in the world like they must have incredible technology and the opposite was the case right like we were literally faxing our bankers to move money around and in a very outdated did ERP and then I joined my first startup in Silicon Valley a few years later and expected oh I'm at a startup and of course we'll have good tech and we were on QuickBooks and then we moved to Netswuite and it was supposed to take 12 months it took 18 just a really horrible process and it was very clear as a user of these systems like someone is going to fix this right I don't know who or how or when but but someone is going to fix this and then I I met Nick our founder a few years later and basically like true story I like begged him to join they weren't really hiring at the time, but I'm like this is this is the future.

4:48 Like what do you need? Took a pay cut, had a baby on the way, already had one baby, but could see very clearly like this is the future. Like I have to try this, right? Maybe I burn out, maybe it burns out, maybe it explodes, right? I don't know. >> Why the risk on your side? What did you see over there that you're like, "All right, please let me join you guys. I'll take a pick at whatever."

5:06 >> Yeah. the the the two convincing pieces for me was one the the market itself and two is the team behind it is so I had joined a couple different startups before this and one of them the market was too small is I didn't even realize this at at the time and this has changed how I think about the companies that I I join and and and invest in is like what's the potential outcome here one of the early startups I was with the entire global market size was maybe5 billion right if you're you know liberal with it like there's not a lot of upside there right whereas really is the ERP the foundation is there is a $500 billion market cap here and if you add services into that like this is a $2 trillion market that we're operating in like the the upside is enormous you also as the ERP get to be that core system of record system of context that everything else gets built around like there's enormous value in the ERP itself right so incredibly hard to build but like if you do it there's a ton of value to capture and to build there so that was one thing for me is like the potential outcome here is is literally like really can be a hundred billion dollar company someday, right? Like that's that's the that's the potential here. So one was the the upside and two was the team is the head of product that had already been there. She was a prior controller from EY. She was the core kind of brain behind the product is like this was not some just product person or an engineer, a business person kind of building the product like this was an accountant who was building a software that she wanted in her prior role, right? And then being able to work with with Nick, our founder, just incredibly smart and intelligent, incredible intuition, but also very intense while also not being a jerk, which is pretty rare, right? This this has been true even of this has been true even of its culture to this day is the culture is very intense. People want to win. They're hungry and yet the company's very humble and kind. Like if it's not a rude culture and usually those things go together, right? So I could see even from the beginning Nick our founder very intensive very kind and said like this this is someone who can actually build this because it's a it's a very hard thing to do.

7:10 >> Yeah. So then so you guys got started one of your early partnerships with with were with Armenino and specifically with Dean at Armenino. I I talked to him about this but I want to hear the story of like how you guys got connected. What has that partnership looked like and evolved over time for you guys? >> Dean is awesome. I I love working with Dean. We met a little bit over a year ago now and we met at a dinner in New York for accounting leaders and what was wild is my my founder texted me literally the night before. It was about 9:00 p.m. I said hey can you go to New York tomorrow this life and she was like what? So literally that night I bought a flight. I flew up to New York and I ended up sitting by Dean at this accounting dinner and we we obviously talked a bit about accounting and real Armanino and kind of the the future of finance and accounting, but we spent more time actually at the dinner talking about our kids and what it meant to be a dad. And Dean shared how when he's home, he puts his phone away and and is able to, you know, be with his family and he's a a very obviously very senior partner and like a big name in the accounting world, right? like I was really struck by it and that's actually what led to us becoming partners was kind of this relationship built around I guess really authentic connection and then we just built now an incredible business partnership together and work with I don't even know how many clients we have together now but it's been amazing to see kind of the the partnership grow and us work together and it's it's really been a blueprint as well for how we now work with other accounting firms as well.

8:35 >> Yeah. And then talking about that like I see you guys are like with almost all of the bigger accounting firms like EY is a partner, KPMG is a partner as you guys have grown and those partnerships have come into play. How has that impacted and changed? Like what and what have you guys learned as you guys have grown into those roles and you're seeing that side of the market now? >> Yeah. No, this has been key for us from the the very early days. What's interesting but not surprising to anyone about building an RP building about building an ERP is one of the reasons why ERP has not been reinvented in a long time is one it's very hard but two there's a deep level of trust with these legacy systems even if you hate using them bad UIUX experience whatever you know your financials will at least be right and you can't take the risk as a CFO or controller one of the reasons we've partnered so intentionally with the big four like EY KPMG and and worked with other firms, Armanino and has been to one like improve the product and make it really good and take their feedback and build it into the product and also show that hey we we are here for the industry right we are not just here to kind of build some software and be gone right we want to build an enduring company and we want to work with the leaders in the field and the folks you trust right to be your auditors to be your partners your tax partners right we want to work closely with them to build and improve the product and make it really exceptional and and kind of build with these these parters parters and build that trust. And then so like as you said that you're moving into like now you have some of the larger public accounting companies sorry no public companies on board as like one of your clients you have expanding exponentially and so for example if you get like a new you're like trying to pitch this to a controller or CEO and a CFO at a public company saying like hey you have your own old legacy system we have this rel we've like tried and tested it now but they're still like a hesitant because there's like a lot of risk mitigation is part of their jobs because if the implementation doesn't go well then like system records go down their financials won't be released on time then it's like audits won't go. How do you like go in those conversations and what do you tell them like what are you seeing and what is your pitch like when you're trying to convince them a public company to go over these like old trusted solutions into like something as new as relatives.

10:53 >> Yep. It's funny, there's this the adage we know now of you never get fired for buying Netswuite. And it's funny because that wasn't true 20 years ago, even even 15 years ago was you never got fired for buying SAP. And Netswuite had to prove themselves in the market, right? And and we're in the same place today is the the adage is you never get fired for buying Netswuite. But like that will flip. In some ways, it's already changing. We actually had unfortunately had a prospect come in who their CFO was let go because they tried implementing Netswuite and it went so poorly. So that that is like that narrative is changing especially now with with AI what is like possible for finance teams what finance and accounting teams are capable of is changing now I was talking with a CFO actually a couple oh was this a couple months back we were talking about kind of AI and the tools and vibe coding and he he said to me he said I don't need to learn those things like I I already made my money like I don't need to learn that and well I like I I understood where he was coming from I'm like man you are holding your team back you're holding your entire company back and even not doing the kind of fiduciary duty to your investors by not doing these things, right? Like your team and your company will not adapt if you as the leader are not kind of leading from the front. So where whereas like right now historically the the trend has been like you don't get fired for buying the legacy tools like that is changing right where like the the companies that adopt an AI native way of working AI native structure AI native tools and vendors like those are the companies that will move forward and move quickly and kind of lead the charge and we're already seeing this you know with with companies building this way that's that's really what the future is going to look >> so all right so the future and then as part of that you guys have your CFO summit every single year where you organize and you bring in and you do a lot of work with CFOs what has like some of the use cases you guys seen them like are these two are you guys seeing CFOs adopt white coding and like building their own tools internally real fast >> we no we definitely are it's actually really interesting is we've seen when customers buy real and get on board their AI adoption actually increases and that's both in in our platform right now we're seeing like our internal AI agent use increase 70% month over month but then we're also seeing folks use claw and chatgbt in those tools more and that's partially because really it connects with both like read and write access to these tools and makes it really seamless for you to do it right it makes it really easy for you to interact with them but also because real structured in this very AI native way it enables you to build tools that previously were possible so we've had customers build entire forecast modules on top of real with with cloud co we've had them build entire excuse me like commission calculators entire CPQ tools we've seen built by different customers One customer had this very complex billing kind of metering problem, built his own metering solution for it to pull everything out of his AWS instance and calculate, you know, the invoices. Like we've seen some really incredible things built genuinely by controllers and and CFOs doing it frankly themselves.

13:50 >> Yeah. Yeah. And then with all of that and like a tool like Reddit, I've I've seen also the push that like teams get leaner and startups specifically in like those early stage start startups and that get to like a let's say $100 million run rate. They've grown really fast, but the teams are still very lean and I'm assuming it's also because like the new ERP systems enables them to be really lean. You don't need such a big like a whole department running the financials anymore.

14:17 >> Yep. Know exactly what we see and it's it's interesting. I was talking about this with Nick yesterday is we we don't see any of our customers firing their teams. Like it's it's not the folks are getting let go. It's rather like they're rethinking how the work gets done and rethinking how they scale the organization. And I I think this is kind of what we'll see in the future even especially over the next 6 to 12 months because we saw the same thing in engineering right we actually don't need less engineers you need more engineers like you're able to build more things now with AI and vibe coding. So you actually need more people doing that not less. I think the same thing will happen with accounting is we'll need more people doing it, but the the job is going to look very different. It's it's honestly wild right now that we have often like some of the most intelligent people at the company, these these controllers and leaders who have like really have to spend their time doing very menial manual tasks and really like below what their potential is. And it's it's because of the systems, right? It's because they're kind of held back there and like they could be doing really value add work to the business but but really can't because the way the systems are are built. So that's that's where we kind of see the future going is like the the role completely changing for these folks.

15:25 >> Yeah. And as you guys have like worked with like companies where people have adopted and saved like now they're more efficient, they don't need as much time for clothes. Where are they putting those resources? What are some of the use cases you guys are already seeing in the market? >> Yes. No, definitely. So see like is able to just like we said run with kind of leaner teams because of what what it takes care of. There's also like we see projects that typically like folks wouldn't be able to do, right? Just always get left to the side like, "Hey, I'll do this next month. I'll do this next month." We have one customer, Emily, at Smart Car. They had like both a cache forecast as well as like some DSO optimization that she had wanted to get to and was just always on the back burner and then implemented real and was able to like now reduce her clothes from 20 days down to just a couple of days a month and now had all this extra capacity to do these projects that she putting off forever. Yeah. And that's that's really like that's that's what's incredible about this, right? Is like one like get kind of the nights and weekends back, but then also just be able to to put your kind of productivity on on the things you want to do rather than the stuff you have to, >> right? And then as we talk about this, I want to like also understand like in the space like on the audit side of the company like GL, GL auditing and ERP auditing was like one of the biggest steps like companies have taken, right?

16:42 What about the audit trail when it comes from that aspect and companies have to like the accounting firms have to come in and do the auditing? How does relet make their lives easier? What has really like done to stand behind that aspect of the business? >> The I think this is like part of the unique value prop of real as opposed to like kind of a legacy ERP is there's there's two narratives here for the future, right? There's there's the bet we're making at reallette where the underlying ERP matters significantly and how the data is architected, how it's built, the the AI native approach. The the other kind of narrative that that you can drive is that the underlying ERP doesn't matter is you can build enough tools and optimizations around it that you know whether the the tool or not is a native is is fine, right? The underlying ERP doesn't matter.

17:27 Obviously, the bet we're making is the former. And one reason I think about this is is with audit trail for example. So we have agents built within real that carry full audit trail so you can see exactly how the calculations were done how the journal entry was approached where the agent sourced the data from initially and you're able to show this tune auditor right so if if you say used claude to you know kind of built your journal entry there's no audit trail there right like Netswuite can tell you sure that claude is the one that booked the entry or some API booked this entry but it can't tell you how any of it was calculated or how the work was done whereas really Yeah, that's that's kind of one example of when something is built in an AI native way versus kind of layered on top. Well, the outcome is different, but then the the kind of statement of work looks very different.

18:14 >> Yeah. And then Yeah. Because like in the audit space, what I hear like more my contemporaries with the use of AI, they're not like now saying like we're going to do a sample. They're like saying we're going to test all of it and everything was going to be that's what they're positioning and that's how the audit quality is getting higher. If you see the latest PCB like a report that got released, UI has significantly improved what they've been able to do in the past in terms of the audit quality.

18:40 So that should be supplemented by something like where the audit trail is there and they can fully audit the entire system. >> Yep. Exactly. That's that's definitely the future we see. >> Yeah. Talk to me about like the zero day close. I know that really talks about like how close are to achieving that zero day close. We so we we do legitimately have customers that close their books on the first day. Like we we've gotten texts from customers at at 1:30 like, "Hey, I just closed my books, you know, on the first day of the month.

19:06 Like, I'm headed to Costco to get a pizza. You want anything?" You know, like like that it's true like true story. The the the reality is that it's it's one it's it's a bit like the zero day close. It's one a bit aspirational, right? And two, like it is both a process and technological change. It is it is not just one and the other. And it it comes with things like say on the stockbased compensation for example, do you need to do the adjustments for that every single month or can you do it quarterly, right? Like do are are there tasks you can do to make your clothes move faster from a process standpoint?

19:38 The answer to that is yes, right? But it's also technology problem. The the way that really is architected, take our prepaid module for example, literally touchless is really will pull in the PDF from your AP system and let's say it's like a prepaid bill for example. The AI will read the service period on that PDF, input that service period into real and then create all the journal entries associated with that transaction. Like let's say it's a, you know, annual contract, it will do for the next 12 months, all of it just done, right?

20:08 There's no run buttons. There's no journal entries to enter. like none of that. It's just done and the full context is kept within real. So you had the PDF there, you had the background, you have the agent auditor, like all of that is within real completely touchless, right? So this is like a simple example, but we have this all throughout the platform. But what I think is interesting is the the future is less of like agents people build themselves and more agents that just work, right? Where you don't even know it's it's working for you. It just it just does it in the background. Yeah.

20:38 And that's that's what we have like with this prepaid module, for example. You don't have to go tell Relet, hey, go book my prepaids for me, or hey, can you go pull this bill in and read the service period and do this? Like, really just does it for you. You can obviously set the thresholds you want and review and approve it and keep that human in the loop as as needed. But that's really how we get to that zero day close or the effective zero day close is by providing those automations where the close becomes genuinely touchless. And that's the exciting part to me is it it really moves the human we say like up the stack where instead of doing the entries instead you're reviewing and approving that like you're exercising the the judgment. The what what happens is is the the end state we want to get to is where humans just handle the exceptions and if you handle the same exception twice the AI has failed right you want to show the exception once and then we as will it learn that exception and apply it forever and just raise up the new exceptions and that's that's the end state we're working towards. Okay. So, let's talk about now talk about like your personal day-to-day as head of finance. So, now you're running finance at a company. You see the problem firsthand. You guys are implementing it.

21:44 You're basically like a really good test case for like everything you guys are seeing because your company has just keeps on tripling in like you triple the valuation, the revenue is growing exponentially. So, how has like really made like your personal like use cases what what have you seen over there? Yeah, the the the best part about working for a company like this is I am able to give feedback directly on the product and see it implemented. and it's it's been cool to see how that has changed and developed over time in and and what I mean by that is initially when I started like I literally my first week had a long list of product feedback probably probably too much for the team, right? But I've been able to see that build itself into the product. We also have we we hire a ridiculous number of CPAs at really and we think it's really important to the core of the product. So all of our customer success managers are are CPAs half of our implementation team, our prior CPAs and we think it's really critical to the business to keep that DNA there. And the reason that works so well is is what we have now is our AI team internally developed this agent we call Boba. And what anyone can do at the company now is if you're in your reallet instance and you have feedback on the product, you can now click on what you want in real, you can tell Boba agent exactly what you want to change. It will write the code for how to change it and then send that to an engineer to review and approve it and then ship it straight to production. So now when I have feedback on reallet, I don't even submit a ticket to the engineers. I just tell Boba what I want to change and assuming it's a good change, right? They're not all good changes, but assuming it's something good that should get changed, it gets reviewed and approved and shipped to production. And this this has been amazing for customers is we we legit have had customers give us feedback and within hours, one of our customer success managers is able to turn it around with with Bob with these agents.

23:35 >> Okay, that seems like magic because as like someone that came in from the world like sometimes my I would give feedback or like they said, "Oh, we have to take it back to the engineers." And you wouldn't hear back for 12 months. >> Yep. Yep. Exactly. Right. It just gets lost in this, you know, this this dark dark black hole. >> Correct. Yes. Let's talk about like you said like zero day close is becoming a reality. Almost there. What about your time at Relet quarterly close? How close are you for a zero day for yourself?

24:03 >> We we close on zero days every month. Absolutely. We like we I I think we have to otherwise what are we doing here, you know? >> All right. What was the first time like at doing the closing of the books? >> Man, I don't even remember now. We we definitely did not start on zero day. Okay. >> It's been a process to get there. We we also had our we recently hired a controller about five months ago. It's been awesome. So helpful. So so many things we ignored in the accounting and finance that we we've now been able to do. Obviously for for any company, hire a controller when when the time is right. But I cannot recommend enough hiring a really strong controller.

24:40 Britney has been amazing both to work with, but has genuinely fundamentally transformed really already. >> Okay. So a lot of like accounting firms are listen to this podcast and if you had to pitch to them as they're thinking about for their clientele if would be helpful to move them into a new ERP system that would be like implementation would go well it would like make everybody's lives easier. What would your pitch be to them? >> Yeah. No, definitely. We're seeing more and more accounting firms get on board with with the future. And it's it's especially the zero day close and continuous close mentality of accountants like I mean I don't know like you you you tell me, right? But every accountant I know hates the monthly close, right? It's the worst time of the month. You have long nights, late nights, the weekend's usually gone. Tons of pressure. The CEO's asking, "Hey, where are the numbers? They're not ready, right? The FBA team is trying to forecast us into the numbers." Like, it's the worst time of the month. and you do it over and over and it's this job you signed up for, right? And it's like why am I doing this? And it's it's become to the point where it just it's accepted and the kind of vision for real is like it doesn't have to be this way. That's that's what we're building here is a a reality where AI agents and humans work in tandem to complete the close where numbers are done in real time. So even on the 15th of the month you can get a view of the business on the 18th of the month and the 21st and the 31st and the 1st like it's the same view all the time, right?

26:01 the entire rest of the business runs in real time. But not finance. Finance is the only department that runs on this monthly cadence and it's just like it doesn't have to be that way anymore. That's that's the kind of vision that that really is is building and would love to have everyone on on board. >> And then over the next let's say 12 to 24 months, one thing like you're really excited about coming into the space and that would like really excited about for your customers as well.

26:26 >> Yes. Yeah. The most exciting piece for for reallet right now is what's very popular right now. Like we're we're seeing this with Stripe just bought open router. Ramp just launched router.com. We're seeing the office of the CFO get into the token path. What's what's interesting about this is everyone now like we spent what the last six months probably token maxing and now we're all wondering like how do we be efficient with the token spend of like wait I went over budget by how much? you spent how much on tokens right? Like now we're wondering how do we be efficient with it? And that's that's really where really it has an opportunity in the accounting and finance industry is if you kind of look back 12 months ago, everyone thought the chat GPT rappers were a joke, right? Like you're just the rapper. Now that narrative is flipped where the value is actually acrewing to the rapper because the rapper has the context and is able to route the model or route the question effectively. Real is that on steroids, right? We're like because we're the underlying ERP and we're built AI native, we process millions of transactions. And so it is going to be quite literally cheaper and more efficient to run your accounting and finance AI agents through and on real than it is going to be to do cloud on top of a legacy system. It's going to be way cheaper, fewer tokens, much faster, much more efficient because we have the context and the data. And that's really the future here. Like what's so exciting for me is that businesses will be able to operate in such a more efficient way and just lower cost period because of how road operates and that's like that to me is incredibly exciting.

27:54 >> Wait so okay so let me understand this path. So you said that so in the future like we were of the position that most people are going to move off like the UI and UXS and move on to like basically their chatbt and clouds where they can like run through MCPS and connect everything. You're saying that it might be more efficient to just have them run back to the UIUX and have them route the specific question and agents because you guys have all the context.

28:24 >> Yep. Exactly. And you can see this with so glean recently released a report where and this is this is their own report so I'll take it with some grain of salt but it was 3x cheaper to ask your questions around the analysis through glean than directly in cloud because glean had the context and glean had already structured the data. So like you do this for example now is we we have glean internally and I can use claude connected to MCP to slack and have claude read throughout my slack and find say something I'm looking for.

28:54 Glean already indexes slack. So it is incredibly faster like insanely faster for me to ask the question in glean than it is do it in cloud directly. It is both faster cheaper. It is literally more efficient to do it with something that is uniquely structured and built for it than it is to do with the model. That's like really great insights and I feel like that's really supposed to like change how like people have started thinking because we had like thought that everything is going to the SAS apocalypse would happen and then we would like shift all to these two super apps in the world and now we're seeing that shift back onto like the applications. Perfect. Exactly.

29:32 >> So thank you so much for being here today. And then I would like to say like if people need to reach out to you, where can they find you? Where they can find really go the best way possible. >> Yep. Yeah. So you can find me on LinkedIn just Stephen Hedland really head of finance on LinkedIn. I post quite a lot on there about the real journey being a dad especially in startups and the intensity there. So would love to see you there. You can also find me on real.com obviously. So please reach out.

29:57 >> Okay perfect. Well, thank you so much Stefan for being here today and like talking about your journey, talking about what the amazing thing Willlet's doing. Big fan. And thank you so much for our listeners for listening. And this is Adam signing off from Bizer Bruise. Take care. I am bruising. >>