Industry Forward – Don Loberg
In 1999 Don Loberg, managing principal of higher education, set about changing the minds of early CLA clients who weren’t initially our biggest fans, and the rest is history. Listen as Don provides insightful stories about the way true industry specialization and creating opportunities for our clients can only help and grow CLA our brand.
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Transcript
[00:00:03]
John Langan: When Don was tasked with leading CLA’s Higher Ed practice way back in 1999, we had all of three clients, who quite frankly did not even like the firm. They said we didn’t know their industry, we didn’t know them, and our audit work was purely technical. Don set about changing that, and the rest is, as they say, history.
You’ll love his funny and insightful stories about how to build true industry specialization through a commitment to knowing and helping our clients and how in higher ed, it has built a national $20 million practice that continues to provide opportunities for our clients and our people.
[00:00:54]
John Richter: Welcome, CLA family. This is the next edition of “Industry Forward,” a podcast designed to tell stories behind the CLA promise. The focus of “Industry Forward” is of course industry specialization, one of our core beliefs, strategic advantages, and drivers of our business. Today, I have with me Don Loberg, who leads our higher ed practice. Looking forward to hearing his story. Before we do that, let’s just some quick reminders about industry specialization.
[00:01:24]
It’s not about doing our work and specializing in the industry; it’s about immersing ourselves in the industry. I know that’s the story you’re gonna hear here, and it’s a belief that if we specialize, we’ll be better equipped to fulfill the CLA promise, create more opportunities, because we’ll know our clients better and naturally help them. So, without further ado, I want to introduce to you Don and allow him to tell his story. Why don’t we just start at the beginning, and why don’t you tell us a little bit about yourself?
[00:01:54]
Don Loberg: Sure. Well, I graduated from the University of Minnesota with an accounting degree. And I started off thinking, you know, going into SEC was the way to go. That’s how you made your money. And when we were in college, that’s what the professors told you. So when I left, I was looking for that firm. I landed at a national firm, and they picked me up. And they did some SEC, but they did pretty much everything. So when I started, I’m tellin’ ya, it was crazy.
[00:02:24]
In the first year I counted up, I did audits of 15 different industries. Unfortunately, the work that we did just was not good. I mean, I–and I could tell just from what we were doing. Just everybody was doing everything. And unfortunately for me, two years into my career, that firm ceased to exist. Why? They got sued because they didn’t do their job. They didn’t know–they didn’t know the industries.
[00:02:52]
So I left that firm. I was lucky enough my father was a CPA as well, so I’m a second generation CPA. And he picked me up in a small firm, and he gave me a small taste of what non-profit auditing could be. But I was still doing for-profits and ESOPS and all sorts of things. But I kinda gravitated towards the non-profit world a little bit and enjoyed it.
[00:03:16]
Flash forward, my father was retiring, and he asked if I wanted to take the firm, and I said, “I’m not ready for this. I’m not partner material.”
[00:03:23]
John: How many years of experience did you have at that point?
[00:03:26]
Don: I had five years’ experience. So I’m sitting here with five years’ experience, and my father is saying, “I’ll give you the business.” And I said, “I’m–I’m not ready. I don’t even know if I want to do this my whole life.” And we found LarsonAllen, now a CLA, emerged in. So we merged in, and they asked, “Can you do some for-profit stuff, and can you do some non-profit stuff?” And I said, “Sure, I’ll do my best.” And I really–over a period of a year or two, I really gravitated to almost all non-profit work.
I still did a mall down in Des Moines, Iowa, which was weird, because I never went to Des Moines. And then I got–I got lucky in my career. I mean, I was bouncing around. Everybody does that at some point. They’re bouncing around to figure out, you know, where are they and what’s their path. And I was actually ready to leave, because I wasn’t having fun. And then I got a taste, a small taste, of a college.
[00:04:21]
Dick [indistinct] was my mentor at the time. Put me on a college, and it just hit. I mean, it was like, this is pretty cool stuff. One, I’m on campus, so I can feel young again. And two, it was challenging. And it wasn’t a box job–very sophisticated type of people that I was working with. And lo and behold, I was into higher ed, and that was just one job. And I had to fight to get on the other job, which was St. John’s University at the time, and that excited me even more.
[00:04:52]
So, Dick [indistinct] retires, and the firm comes to me and says, “Hey, we’re now into, or we’ve been into industry specialization, little pieces here and there. But we want you to take on the higher ed group. You’re gonna lead the higher ed group.” I thought, “That’s awesome. I’m gonna be a leader. I’m–what is now termed a managing principal of an industry. That’s fabulous.”
[00:05:17]
John: So what was–how many years of experience now?
[00:05:20]
Don: It was about eight years, nine years.
[00:05:23]
John: Yeah.
[00:05:23]
Don: Right in there, so 1999 was, uh…
[00:05:25]
John: How many clients did we have?
[00:05:27]
Don: We had three clients total.
[00:05:28]
John: Really. How much–how much in the form of revenue from those three clients?
[00:05:32]
Don: 90,000.
[00:05:34]
John: 90,000. Three clients. You’re big stuff.
[00:05:38]
Don: Yeah. 90,000. And I have to go further, because a realization for those three clients I think was 39%.
[00:05:46]
John: So how did you start? Three clients–how’d you get the next one? When did you get the next one?
[00:05:51]
Don: It wasn’t even “get the next one.” It was, how do we–how do I even know who these people are? ‘Cause I was working with two, but I–I was just kind of a hired gun to a certain extent. So I went and met with all three of the clients and just talked to ’em, and I said, “So, tell me about what your reaction is to our firm. Tell me what you think about it.” And all three of them hated us. They said, “You’re not providing impact. You don’t know the industry, and you don’t know us. You just do an audit and sign off.”
[00:06:24]
And I’ll tell you, when they came to me and said, “You’re the head of higher ed,” and I had those three interviews, I was terrified already to make that leap. But now I’m terrified because I think they’re–the firm’s really trying to get rid of me. [laughs]
[00:06:45]
John: So what do you do?
[00:06:46]
Don: It was, uh–you know, I still loved the clients. So I’m… I don’t know if I’m jumping all in at that point. I’m close, but I thought, “I got to take a swing. I got to see if I can make something work.” I still remember it. I did my first bid, and it was Luther Seminary locally here. And I went and pitched the client for the audit by myself, and it was the worst decision I could have ever made. ‘Cause my presentation was horrible, and I was terrified. I still remember. I think I sweat at least two gallons of water sitting in that room in front of board–you know, a board group and management.
[00:07:30]
John: So what happened?
[00:07:32]
Don: I kid you not, we won it. And we won it because they–
[00:07:35]
John: A horrible presentation, scared to death, and you still won the job.
[00:07:40]
Don: And they–I think they felt so sorry for me, they gave me the work. I really do. [laughs]
[00:07:46]
John: Hey, however it comes.
[00:07:47]
Don: Yeah, yeah, no, and we got it.
[00:07:49]
John: So now you have four clients.
[00:07:50]
Don: Right. Right. And–and, you know, I talked the firm into letting me go to a conference. So I go to a conference thinking maybe I can, you know, get our name out there, and met a person that did not like their audit firm and kinda liked talking to me. So I picked up another client in North Carolina. So I’m in North Carolina in the backwoods doing that audit, and I’m telling you, I felt really good about it, but, uh, it was–it was a stretch, you know? I was–it was myself and two people, two staff people, that I begged to be with me to help. And we did the work.
[00:08:30]
John: So early on, you listened to the clients, you focused on client service, you put yourself out there…
[00:08:38]
Don: Yep.
[00:08:39]
John: And you got on an airplane, and then you went to a conference and tried to get the name out there. So what was the result? Take us through the next three, four, five years. What–how did it build?
[00:08:52]
Don: I became–I’ll tell you what it became, a tornado. I mean, it was fast and furious. I mean, at that point, I’m all in. I won two jobs. I’m like, “I’m king. I’ve got now 150,[000 worth of work, and I’m gonna lead this practice.” And I like doing it; I love the clients, and I love the industry. So I’m reading everything I can and trying to figure out, how can I immerse myself in the industry a little more and understand the pains and the problems and the celebrations the industry is going through?
[00:09:26]
And I spoke at a couple of conferences, or a couple of meetings. And suddenly, a couple people said, “You know, I like the way you talk. My other–my auditor or my consultant,” or whoever it was, “does not talk like you and actually understand what we’re about.” So then I picked up a couple more jobs, and that was cool. And then the next year, we picked up about six jobs, and now we’re out of control, right?
[00:09:56]
I’m up to, what, 350… 400,000 in work? And I feel the wheels are coming off the wagon. And I’m begging everybody in the world just to help. It wasn’t specialization, really. I was the specialized person, but there are people around helping. And then I–then we got an opportunity to bid on some of the big private colleges, and we hit on those, too, in the third year. So here we are about four years in, and things are just starting to roll. So that was awesome. It was a good experience.
[00:10:31]
John: So bring us to today. The early years, it’s growing quick, it’s fast, it’s furious. Along the way, the big merger that forms CLA gave it a big shot in the arm, because both firms had a higher ed practice. So what are we today?
[00:10:45]
Don: This year, in 2018, I’m projecting we’ll have $20 million in sales or revenue.
[00:10:51]
John: That’s a far cry from 90,[000.
[00:10:54]
Don: Absolutely.
[00:10:54]
John: So how many years from conception to now?
[00:10:57]
Don: It’ll be 19 years since we started to–it really started ’cause we had done, you know, a few colleges for a few–you know, for 20 years, but we really–it was just another audit, and we sent audit specialists out. So it really was a ramp-up, and when the two firms came together, we were matched so well, ’cause we were doing all the privates and the other firm was doing all the government stuff. So when we came together, it was like kids in a candy store.
[00:11:28]
John: CLA, we’re doing it all. Yeah. We’ve got all the capabilities, all the skills.
[00:11:33]
Don: And people.
[00:11:34]
John: Well, we had people, except there was a year we didn’t. And I recall just a few years ago, Don, that we had to build a team rather rapidly. Maybe a moment, if you would, and just share a little bit about building the team.
[00:11:46]
Don: Yeah, no, it was–it was a, almost a point of, uh, disappointment amongst ourselves, to be honest with you. Because we got to a point where we were growing and growing and really enjoying it, but the wheels–again, the wheels were coming off, because we had grown so much, and we didn’t have enough people to specialize and understand the industry, that our service was starting to wane.
[00:12:15]
And I–we took a step back, and we said, “We can’t grow. We’re just not gonna grow, because we’re not–we’re not providing the CLA promise.” That’s all there is to it. We weren’t getting to know them; we weren’t helping them. And when that happened, we had to stop. So we stopped, and we did an assessment of our needs. And that came from the executive committee really talking to us when I said, “We’re not gonna grow,” and they’re like, “Whoa, wait a second, you’re a machine. Keep going.” I said, “No, it isn’t right.”
And when we looked at it, we had–I think we about 12, 14 million in revenue. It was 14.7 million in revenue. And we had 24 people that were serving that [indistinct].
[00:12:56]
John: That were dedicated to it. We had more people serving, but 24 dedicated.
[00:13:00]
Don: Right. We had about 400 serving and 24 dedicated.
[00:13:03]
John: My recollection, we needed about 75 dedicated to handle things.
[00:13:08]
Don: Correct. So we had to–you had to connect quick, with offices and other industries and other parts and sell them.
[00:13:14]
Don: Yup, and build the team. So how many today?
[00:13:16]
Don: We’re at 64.
[00:13:17]
John: 64.
[00:13:19]
Don: [indistinct]
[00:13:20]
John: Yeah. All right, so we talked about the successes, Don, but along the way, it couldn’t have all been easy. Go back to a moment here–’cause there’s individuals listening to this call, and they’re–this is larger than life. First proposal you present, you get the job. Next one, you get another one. They’re saying, “Well, that’s not realistic,” and in some regards, it’s not. So share with us some along-the-journey.
[00:13:41]
Don: Yeah. You know, besides the stopping of growing, you know, the practice because we were out of people, there were points of trying to figure out, how do we… [laughs] People were picking up business all over the place. And that meant we had a principal or a manager or–working in a different industry, picking up a college.
‘Cause they were using the backbone of what we had built, so suddenly we had people that were doing work that probably–I won’t say wasn’t qual–weren’t qualified for it, but probably not providing the impact that they could. So that was one hurdle we had to get over, was bringing everything into the group of individuals that could handle the jobs and provide impact.
[00:14:37]
What a difference-maker in the industry, in the CPA industry, when you can come to a client, talk to them in their language, and maybe even give them some snippets or solutions to some of their pain or problems without doing a lot of work. That’s a differentiator. And I can tell you, over and over again, we hear that when we serve our clients. And it’s all about passion.
[00:15:11]
We had a lot of people that didn’t have passion that were doing the work. And we had to come to grips with, yes, we have 24 dedicated people, or before that, it was 18, whatever the number was. But they really didn’t care. And we were begging to have people come on, but we weren’t finding the people with passion. And that–that passion drives the bus. And people on the bus with that passion just make it glow.
[00:15:39]
John: So let me ask you a question, ’cause there are many people listening to this podcast who are contemplating industry specialization. They’re at a place in their career where they’re sorting between a couple of different industries, or maybe they’re getting asked by the leader of their office to take on a particular industry, or they may be being recruited by an industry group: “come on in, let’s go.” What advice–think of yourself, the eight- or nine-year experienced Don Loberg who’s asked to take on the higher ed clients.
[00:16:15]
Put yourself in their–back there in their shoes. What advice do you have?
[00:16:21]
Don: You know, that’s a great question. When I think back to 1999 when I theoretically took over the group, the one thing I wish I wouldn’t have had going in was fear. Fear of failure. [laughs] I’ll tell you what, I tell our partners, our managers, all the time–go ahead and fail. Learn from it.
[00:16:49]
And I wish I would’ve had that in my head, that [laughs] we don’t win all the time. If I won 50% of our bids, we’d be at 40 million. So it’s okay to fail. And have no fear; jump in both feet. Because if you jump in both feet, the worst that’s gonna happen is you fail. And then you jump somewhere else, or someone helps you move on, which, you know–John, you and others would put your arm around my shoulders, when I was ready to–you know, I needed–I needed to go somewhere, and I needed to vent.
[00:17:25]
And you guys would stop me and go, “You’re doing all right. Don’t worry about it. We’ve all been through it.” So that’s–that’s the advice I would tell people. It’s okay to fail. And have–just jump in and try it, because once you get in and you do it, your life becomes so much better.
[00:17:45]
John: Don, I want to thank you for being part of this podcast. And I want to speak to everyone within the earshot of my voice, ’cause Don said some really impactful things. One of the things I wrote down was, he said he loves the work, he loves his clients, he loves the industry. And he spoke frequently about passion. If I have any advice after listening to you, Don, and all of you listening to my voice, pursue your passion. Be willing to fail, as Don said. Live the CLA promise.
‘Cause it creates the opportunities for you and for our clients that the promise demands. Thank you, Don, and thank you for listening, CLA family. Thank you.
John is chief industry officer for CLA, and firm-wide leader for the private industries. He is a passionate ambassador for the CLA Promise. CLA exists to create opportunities – for our CLA team, our clients, the industries we serve and our communities. CLA is successful when we fulfill the CLA Promise – we promise to know you and to help you. As a member of the leadership team, he is also an enthusiastic promoter of our position as a professional services firm delivering seamlessly integrated wealth advisory, outsourcing, and public accounting capabilities.
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