If You Build It…

• November 1, 2017
• Denny Schleper

CEO Denny Schleper takes all types of questions from our CLA team in Northern California’s Walnut Creek office. Hear about his time in San Francisco, his thoughts on CLA’s Global outlook and even learn about his favorite movie and why.

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Transcript

CEO Denny Schleper takes all types of questions from our CLA team in Northern California’s Walnut Creek office. Hear about his time in San Francisco, his thoughts on CLA’s Global outlook and even learn about his favorite movie and why.

[00:00:05]

announcer: Welcome to “Own the Promise,” a CLA podcast created to share what guides every decision we make and every relationship we cultivate.

Denny: Hello, CLA family. This is Denny Schleper once again coming to you with my monthly podcast, and I’ve had the opportunity to visit a lot of offices, as many of you know, and today I have the pleasure to be out in the Walnut Creek area.

[00:00:36]

It’s a wonderful, beautiful office. We have around 27, 30 people in this location. Just a little bit about the office itself, through September, the revenue for this office is sitting at around $6 million of revenue, and the expectation is that we’ll finish the year probably around 7 1/2 million.

[00:00:56]

The really wonderful thing is through September, that $6 million of revenue is putting the office a million dollars-plus over budget for the year, so that’s obviously fantastic news, and a lot of growth, and I think I heard that growth compared to last year is sitting at around 20% growth for the location, so on my behalf and for all of the people at CLA, congratulations to the office.

[00:01:23]

Thank you for all of the efforts that you’ve put in, especially as most of you know as part of the CLA family, this office has only been with the firm for the last 11 months, and so that means they’ve produce that growth percentage and that over budget amount in a time of terrific transition, but when I look across the room and the faces, it looks like everybody still stayed healthy and are still smiling, so we wanted to thank them for their efforts as well.

[00:01:50]

We also just wanted to open it up to questions they might have or anything that might help us continue to move the firm forward, the CLA promise forward, not only in the what we do, which that is we help our clients, and not only the how, and that is by getting to know them extremely well and building relationships, but probably the most critical piece, and that is the why, and that is to create opportunities both for our clients and for all of us here at CLA. So we’ll turn it over to Russ first.

Russ: Hey, Denny. Just since you’re visiting the Bay Area, just want to know what’s your favorite place to visit?

[00:02:30]

Denny: So, you know, many times what happens with my visits across the country is I do spend most of the time at offices or actually with the people or the leaders from those offices, so many times people ask me, “What have you done?” and the answer’s pretty boring, and that is, “I went from the airport here, and I went from here back to the airport.” However, this trip my wife and I came out last Saturday, so today being a Wednesday, it’s given us a few days to not only meet with offices but also to spend some free time in the Bay Area.

[00:03:05]

So what did we do? Probably my favorite thing was actually yesterday we visited Alcatraz, and what was really nice is I put my wife in the cell and just imagined. That wasn’t very nice. She got kind of weirded out though. She said the minute we got on the Rock, she said she felt this incredible weight come on her chest, and she just–she freaked out a little bit, so when I put her in the solitary confinement cell, that did not go so well, but we saw really tremendous part–amounts of the city.

[00:03:38]

We went on the big bus tour, actually, went across Golden Gate, did all those types of things, and I’m not a great person with heights. In fact, I’m horrible with heights. I’m okay on airplanes, but you put me on something like that, going across that bridge got my attention, but it’s been a wonderful experience.

man: What service lines are we looking to grow, particularly in the southwest region?

[00:04:03]

Denny: You know, on the service lines, we’ll also add the industries to that question if I could, the interesting thing about since January 1st–and we obviously don’t like talking about Legacy too much ’cause we are all one firm, and everybody has heard me say across CLA that we’ve all been acquired in one way or another, but the reality here is we’ve had a lot of new offices, including yours, join CLA, and that experience in the last 11 months has been incredibly unique in that the years prior to that, growth has always been a little bit difficult.

[00:04:43]

Now, if I go back ten years ago, growth was just simply getting out of bed in this industry. You could get 10% to 15% growth easily. Really, since the recession, so let’s just go from 2007 beyond, growth has been much, much more difficult, and what has happened now with the previous GALLINA folks that joined us, all of you, is that we looked and said, you know, Larry and all of the partners from GALLINA clearly promised that we would have tremendous growth, but the reality is, is I heard that before, and fool me once, shame on you, right?

[00:05:22]

But so I have heard that many, many times. What has happened in 2017 is not only what they said but, really, even more.

[00:05:31]

Where I think the CLA power came from is all of those additional services and opportunities with your current client base, so I think here locally, part of your 20% growth is the fact that you brought some of those additional services to those clients producing that growth. What’s actually happened here is what we hoped would happen. The reality is it’s happened even better than we had hoped.

[00:05:57]

The growth has been tremendous for all of those previous locations, and that goes credit, again, to all of you and all the great people that joined CLA as of January 1st. What it also added was a tremendous opportunity going beyond this because you will always be strong in construction, and I think have this for our CLA people, right? This office, Walnut Creek, is about 90% or so construction, so clearly we’re gonna continue to grow the construction industry, but you think about every other industry that would make sense in your geographic location.

[00:06:35]

Which ones could really make sense here? For instance, healthcare. From an industry perspective, that healthcare should definitely be looked at in the future at the right time as you start to bring these industries. I think also because of all the high-tech companies and so forth you have in this area, professional service industry could be another tremendous one. Being that you’re on a coast, being on a coast always means that transportation and logistics should be part.

[00:07:05]

That could be looked at from an industry. That would be another opportunity, so for the young people that are here and you’re thinking about, “Where do I take my career?” so again, the why of CLA, creating opportunities for all of you, one of you could raise your hand say, just like Stephen here did with the high-tech and say, “I will take that, and I’ll run with that industry going forward.” That’ll be an option for any of you and will be into the future.

[00:07:32]

One of the areas that we’re very good at is industry and service people helping our local offices throughout the country whenever they have a need, so if somebody raises their hand, you’re not out there on your own. There’s always a huge group of people that are willing to help you. On the service area, clearly what we have here is the outsourcing opportunity because that is really an opportunity everyplace.

[00:07:58]

Biz ops is an area that the firm is putting a tremendous amount of resources in to say we would like every office to find somebody to raise their hand and say, “I will lead that biz ops effort.” Today we are sitting at around 15% growth in that area with the full expectation that we should be 20-plus percent growth in that biz ops on an annual basis. What service do we provide where we could expect that kind of growth?

[00:08:29]

Your office getting 20% growth is extremely unique. You should know that, and you should feel extremely proud about that. As a firm providing more of the traditional CPA-related services, we’ll never get to 20% growth. The only way we’ll reach our growth targets, which generally are gonna be 7% and beyond is our growth targets, is to bri–by providing those other services, the outsourcing-related services.

[00:08:59]

Wealth advisory, clearly, especially with your construction clients ’cause those are obviously owners or privately-held businesses. They have all sorts of wealth advisory needs. Think of a client right now, any client that you might think is the best client you work on. With that client in your mind, if I asked you, “How are you satisfying their assurance needs?” you would all know. You would say, “Well, we do the audit ’cause the bonding company requires it,” or maybe it’s a review.

[00:09:28]

You could give me that answer very quickly, and then if I asked you, “How do you satisfy their tax needs?” again, you would answer that very quickly, but now let me ask you the final question. How do you satisfy their wealth advisory needs? My guess is that all of you would pause on that third question, and you would not be able to answer that very readily for me. That’s where the firm is generally in total. You’re not unique in that way, but just think if–what if we could answer that question? What if we could say, “We’re working through the previous owners or the current owners looking to transition the business.”

[00:10:08]

“We understand what their legacy plans are, and we have the estate planning set up,” and maybe they’ve even went to private equity and so, “And we took those dollars, and we reinvested those dollars through CLAWA,” whatever the plan actually is, and then think about, “Here’s the younger generation,” because most of your clients have generation issues, right?

[00:10:28]

And so, “Now here’s how we’re working with the younger generation to meet their needs that they have from a wealth advisory perspective.” So the cool thing about what we’ve pulled off here is that all of these new locations for CLA, the industry and service opportunities for all of us are really endless, so when we came together, let’s just say all the offices that joined us as of January 1st in the southwest was about 55 million or so of revenue.

[00:11:01]

Here’s the reality. That 55 million should turn into 150 million truly easily if we just develop those industries and services. What else is on your mind today?

Stephen: Does CLA have any interest in expanding outside the United States, and probably more importantly, why or why not?

Denny: So what that touches on, Stephen, is really, what is the global strategy?

[00:11:32]

As I was able to tell this group earlier, you know, being out here for the Nexia National Conference, you get an opportunity to get a little bit more familiar with what that global strategy is and why we do what we do with our international affiliation. Clearly, within that we have both inbound and outbound opportunities for our clients, so it could be a client from another part of the world looking to do business in the United States, so that’s the inbound work.

[00:12:02]

It could be your current clients looking to do business outside of the United States, being outbound. Most of the work that we find CLA clients needing from us is inbound type of work, so in other words, these are really clients from outside of the U.S. looking to do business in the U.S, so one of the things that we established is related to biz ops in a way, more related to outsourcing, is we created our global concierge service.

[00:12:32]

If a company wants to do business in the States, we will help them do everything. Think of it like a concierge. We will help them find a bank. We’ll help them find a law firm. We might help them find the real estate that they need to lease. We’ll obviously do all of the accounting-related needs and the tax needs that they have, so we started looking and said, “That’s a fantastic opportunity that fits our service lines as well.”

[00:13:00]

But right now the affiliation of the network of Nexia has satisfied all of our clients’ needs, either new clients from outside of the country or our clients internally, that there’s never been that strong need, so to your question as to why we have not at this point done something like that.

Steve: This is Steve Schulz. Yeah, I just had a follow-up question. You talked about other industries, say for example healthcare, and, you know, historically being so much involved in construction and real estate, you know, the people we’ve kind of gone after from recruiting and things have tended to have that kind of background.

[00:13:38]

How do we get people with a healthcare, say, specialization to come to us?

Denny: You won’t find in a CLA culture, Larry necessarily, as the chief practice officer, even Denny as the CEO, coming to Julian and say, “Julian, okay, here’s your checklist. Here’s the industries you have to have established 12 months from now.”

[00:14:00]

That’s not very entrepreneurial, and it’s probably not even very smart because how does Denny even know what industries would work best in your geographic location? I might have an idea. Your office led by Julian are the people that would know the answers to those questions, so from an entrepreneurial standpoint, you have to decide. Larry’s job, along with Denny’s job, would make sure that you have the resources available to pull that off, so to your question comes those resources.

[00:14:32]

This is the way that it’s generally happened. When the office has raised their hand, let’s use healthcare as an example, and said, “We think healthcare would be a tremendous opportunity,” one of the things Larry then would think about is to say, “All right, well, we have other offices around the Bay Area, right? Maybe there’s an opportunity where we could combine a healthcare strategy and go after it from a geographic standpoint more than just an office location,” but still somebody has to lead that, so for this discussion, let’s just say Walnut Creek will say, “We’re gonna lead that healthcare effort.”

[00:15:09]

Well, then the issue’s you have to get to the industry leader for healthcare, so today we have the chief industry officer, Jeff Vrieze. Your first call would be to Jeff and say, “Jeff, our plan in this part of the country,” let’s just call it your office for now, “We want to establish healthcare, and we’re gonna put the resource behind it to help us do that. We need your help.”

[00:15:32]

Jeff’s reaction would be this, “First of all, great. We will help you as an industry get that established. One of the ways that we could do that is we could look to say is it possible that we could find somebody to relocated to your area?” and again, hopefully it would be your office. We do that a tremendous amount throughout the firm. I could name off–well, I couldn’t.

[00:15:57]

If I had the list, I could name off probably 50 to 100 people that have made those moves over the years for the organization, for that specific reason, “I will lead that industry effort in that location.” Once you have somebody that’s willing to do that, then it’s no different than the high-tech here right now, is you just start to build it along with the support from the entire industry across the firm. It literally can happen in a very short period of time.

[00:16:30]

What’s really cool is in Denny’s long years with the firm, I’ve seen this happen over and over and over again, and some of our locations, I can look back maybe 15 years ago and say, “Remember when we did,” exactly what I just described, “and today that healthcare practice is a $10 million practice in that location just because we did all of those things?” So it can work, and I’m always so proud of this firm and the way our industries and services, again, react to those opportunities.

[00:17:04]

Suhrab: Hey, CLA family, this is Suhrab Hatef from the Walnut Creek office. I had a question for Denny. So in the Walnut Creek office we have a Mount Rushmore game, which is essentially a polling system of your top four of a given topic, and this week’s to–or this topic that’s currently going on is karaoke songs, and so what are your Mount Rushmore top four karaoke songs?

[00:17:31]

I have a follow-up question also.

Denny: We on–I’m sorry, we only allow one question ’cause what I’ve learned over my lifetime is that you never worry about the first question. You worry about the second question, so we’ll see if we let the second question go. Is–the one thing I’m terrible at is actually the names of songs.

woman: You can sing it.

[00:17:51]

Denny: Okay, I’ll give you one, but I love John Hiatt, so for me it goes way back, and I don’t know if any of you even know John Hiatt, but he wrote a lot of the songs that you are familiar with, and for me, a song that I always like singing with our family, we do it for fun, is “A Perfectly Good Guitar,” and so that’s always been our favorite, and then we also, because of my son, my son brought into the family along with my wife, Sam Cooke, which also goes way, way back for anybody listening to this, but most of you would know a Sam Cooke song. You just didn’t know that it was a Sam Cooke song, and that would be “On the River,” so those are the two as a family we generally tend to break out in song to.

[00:18:34]

Okay, I’ll allow the follow-up question.

Suhrab: What is your favorite movie, what is the last movie you cried to, and what is a movie that you like but you’re ashamed to admit?

Denny: This is perfect. Remind me never to visit a southwestern office again. Do you know what? This is–this is very truthful. It’s not a cop out. The answer to all three questions is the same movie.

[00:19:04]

So–and truly, it really is to all three, and it’s “Field of Dreams.” That is by far–I’ve watched that movie–I don’t want to exaggerate. I probably have watched it from beginning to end 25 times, and the reason that I always likes it, which gets into your second question of why did I cry to it, because you’re making me tear up right now, is I came from a baseball family, and my father actually played on a–what back then they called it, in the Midwest they called them farm teams, which basically meant these small, rural places in the Midwest which, basically, the industry was farming, right?

[00:19:43]

They would create baseball teams, and they would play one another, and they would do this as the weekend event. Nice baseball diamonds, they would travel. It was quite a big thing back then, and my father came from a large family, and so at one point they had enough brothers and people to field the entire nine-person diamond, and so it was all Schlepers that were playing.

[00:20:09]

This last year, this last summer they dedicated the field that my dad and his brothers played at, and they did a little fundraiser because they wanted to put lights on the field so they could play at night, and they reached out to the family members, and they said, “We’ll give the naming rights of the field to the family that can raise the most money.”

[00:20:33]

So our family, fortunately which is a large family, raised the most money, and so now if you go to this little rural part of Minnesota, you’ll see a baseball diamond with kind of the “Field of Dream” lights, and it’s called Schleper Brothers Field. And then I also, with my daughter–and this one I might have to turn away from, but my daughter, the first time I watched “Field of Dreams–” raise your hand if you’ve seen the movie, at least. Okay, so everybody’s seen it.

[00:20:59]

So the part at the end which gets everybody, when he finally asks for a catch, right, with his dad, if he can have a catch. Before my daughter and I watched, [inaudible] she was quite young, but we’re watching this movie. The day before I had asked her if she wanted to go have a catch, and she said no. So when she saw this movie, she started bawling, and she came to me and started hugging me and apologizing, and so what did we go do?

[00:21:29]

We went and had a catch, so–and–but most people–I’m never embarrassed, so your third question is probably not right on, but most people would not guess, so I’ve been to the field, and–again, every time I get an opportunity, and I’ve read all the information about it, how they had to paint the grass because there was a drought the year in Iowa when they were filming, so they had to paint the grass green, and at the very end, I thought this was cool, if you remember the end of the movie, it shows, you know, if we build it, they’ll come, right?

[00:21:59]

They show all the cars coming to the field. Well, the cars weren’t moving, actually, because they couldn’t get them to all move in unison like that, so they were actually flicking their lights off and on to make it look like they were actually traveling, but they were just sitting still. So when it comes to trivia with “Field of Dreams,” I think I’m gonna win. From Doc Graham to Chisholm, Minnesota to all the different things, but back to the farm–if you remember the movie, when Doc Graham goes back as a young kid, and he gets picked up in the van, and he tells the story about, “I heard of these places where you can just live with people and then on the weekends play baseball?”

[00:22:42]

If you remember that part of the movie, that’s what those farm league teams actually were and what he was referring to. That was a great follow-up question, by the way. Anything else today before we wrap up? Yes, Dana?

Dana: I just have a lighthearted question, what’s your favorite Halloween candy?

[00:23:04]

Denny: Halloween candy? So–I laugh about this because I’m gonna tell you a little story related to Halloween, and it gets to my favorite candy. I’ve said this before, but I have my son, 31, my daughter’s 28, and they’re completely, completely different. My son is like my wife.

[00:23:21]

My daughter’s unfortunately more like me, and she–I suffer a little bit, and I–it’s not terrible, but I suffer from a little bit of OCD, and so she’s got that going on in her life as well, unfortunately, and we saw a picture the other day from a Halloween when we lived in St. Louis Missouri, actually, and she’s sitting there in her costume after the Halloween night, and they showed it to me, and they said, “God, look at all this candy. Remember that evening we went out? It was a beautiful night in Missouri, duh-duh-duh,” and went on and on, and I said, “Oh, I remember that night.”

[00:23:57]

I said, “But you guys are missing something in the picture,” and they said, “What?” and I said, “Do you realize that all the candy is organized by the type of candy on the table?” and she was, I don’t know, seven, eight years old, so the OCD had kicked in even at that point, but I just found that absolutely amazing, but, you know, I actually–everybody hates candy corn that I know of, but when you mix candy corn with salted peanuts, it is phenomenal, so my favorite, it tastes like a good old nut goodie, if you’ve ever had one of those, so if you hate the candy corn, I agree, but mix it with some salted peanuts.

[00:24:38]

You won’t be able to put them down. Well, Walnut Creek, I want to finish up and just thank you so much again for the transition and all the things that you’ve been through and the tremendous results. Again, results are just simply results of doing all the things that you’re supposed to be doing, so that’s obviously, I believe here, living that promise, bringing those additional services to your clients, looking for those new client opportunities.

[00:25:06]

So Julian is leading all of this. I can’t thank you enough. I know this role wasn’t exactly well explained to you if at all, but I thank you for taking it on and making this such a successful location, one of many that joined us January 1st, so thank you.

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