Alex Loewenstein of Paro On 5 Things You Need To Succeed In The Modern World Of Finance & Fintech

An Interview With Jason Hartman

Things are changing, so make sure you’re a part of the change. If you don’t think innovatively, you’ll get lost. As a broader example within tech innovation, I was recently watching the ‘Blackberry’ movie and it was amazing to relive the ‘stagnant’ ways of Blackberry versus the innovative and ‘upstart’ iPhone. It goes to show, if you don’t innovate, you will die!

As part of my series about the “How to Navigate and Succeed in the Modern World of Finance”, I had the pleasure of interviewing Alex Loewenstein.

Alex Loewenstein has been with Paro since the company’s founding in 2016, helping lead business development efforts and managing Paro’s relationships with CPA firms nationwide. Alex currently leads strategy and execution for Paro for CPA Firms as General Manager after launching the business unit in 2019. In this role, Alex directs client and partner acquisition and management, along with talent acquisition and matching. In leading Paro for CPA Firms, Alex oversees the support of CPA firms with staff augmentation services in the Tax, Audit, and Client Accounting Service (CAS) service lines.

Prior to joining Paro, Alex was a business development specialist at Groupon where he spearheaded the development, testing, and implementation of Groupon’s Card Linked Offers/Groupon+ product offering.

Alex graduated from The University of Michigan’s Stephen M. Ross School of Business with a Bachelor of Business Administration, Strategy and Marketing.

Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

Before coming to Paro, I had been working at another marketplace, Groupon. I think marketplaces and the economics behind supply and demand and the exchange of goods and services via a marketplace is really interesting. At the time, about 10 years ago, marketplaces were really starting to take off, but labor marketplaces were still fairly new. The early labor marketplaces were more blue collar — think Uber, Lyft, and Wag!, etc. I figured, just as Paro’s founder did, that at some point, this type of labor model would shift from blue collar into more white collar jobs. This shift to white collar labor marketplaces would involve a lot more money and require more services, on top of completely changing the way an industry operates.

The finance and accounting industries were old school and hadn’t changed much in hundreds of years, making them ripe for transformation and innovative disruption. The concept of freelance or fractional talent within these industries was not a thing. Together with the founder of Paro, the thought of being at the forefront of changing an industry that had been stagnant for decades was really appealing, which brought me into this adventure.

As I navigated further through this new marketplace model at Paro, and in particular the CPA firm specific business unit, it was the big accounting firms that were especially good targets for change. There was a certain perception and stigma around these big firms and the ability to transform and innovate an industry that has been, and will continue to be around for a long time, was really enticing. If we can help think about these industries in a different light that will carry forward into how businesses conduct these finance and accounting services, it would be really impactful. There’s a large supply of people who want to be doing work on their own terms and there’s a large demand of organizations that need good talent. So helping to bridge that gap has created a pretty valuable offering. It’s been really rewarding to help accounting firms along with the thousands and millions of clients they serve.

It’s been pretty gratifying to take a step back and see how Paro has been helping to drive the shift in the way these industries conduct work.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?

In 2018, when still building Paro, at the time, we viewed accounting firms as competitors because we offer similar services. Then one day, I got an email from a Managing Partner at a large local accounting firm saying he knew about Paro and wanted to meet for breakfast. Initially reading that email, I was paralyzed with this fear that we’d somehow upset the firm and automatically thought the worst. So I ended up meeting him for breakfast and, getting right down to business, he asked me if Paro had ever thought about partnering with accounting firms rather than competing with them. Immediately, the light bulb went off that we could expand our thinking and the perspective of our model. Accounting firms are often in dire need of staff and have trouble hiring people, and this managing partner aptly pointed out that Paro is set up to change the way that’s all done by serving as an innovative resource for accounting firms. That meeting was a valuable lesson of the idea that you never know where a conversation might lead you. It changed my perspective on business into one where sometimes it’s better to say yes and deal with consequences than to say no and not see what opportunities lie ahead.

If we never said yes to that meeting, these last four years would have been different and would’ve changed the trajectory of Paro. It allowed us to realize a totally new service to offer in a fragmented market that was ripe for the taking and which Paro now leads. It goes to show, especially for an early stage business, that you never know what avenues are available to you and what relationships might exist.

Are you working on any exciting new projects now? How do you think that will help people?

Not only has Paro started to work with large, recognizable names, but we’re now partnering with companies that are operating in similar spaces, but to do specific services that they might not offer. Whether they’re publicly traded companies, large brands, established and recognizable organizations where we have similar clients, we’re able to work together and supplement their services where it’s not competitive. So we can hitch our wagon to organizations that have great clients and Paro can assist them in helping their clients so everyone wins. It’s an interesting value chain connection that’s exciting for Paro to work on bigger scale opportunities, even if we’re behind the scenes powering the outputs that these organizations produce.

From an expert freelancer standpoint, they have the opportunity to work with a major company with thousands of customers to help them with certain services, along with the recognition of working with a company of a certain stature to make an impact.

From the partnering company perspective, they get great resourcing and value-added service from Paro by outsourcing and supplementing their service offerings. It helps change the way organizations go to market to ultimately better serve their customers. The benefit value chain carries all the way through.

Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started what was its WHY, its purpose?

Purpose-driven companies help create a north star that guides your business. Understanding your mission helps a company stay aligned and make better decisions. When you continue to emphasize not only the “what,” but the “why” behind your purpose and the impact you can have, then you start to BE about it rather than just talk about it and business decisions come more naturally.

When Paro started, the mission was to empower freelance experts to pursue meaningful work and achieve long-term success. Paro was founded to give business professionals a different, better way to work. We aim to provide great opportunities for people who are leaving their jobs to have more flexibility and connect with businesses that are better aligned to that purpose. We took a people-first approach to give these professionals the freedom of knowing that Paro can help them find their next job. Having a freelancer-oriented purpose allows Paro to empower these experts to achieve their goals. Being able to facilitate their needs helps Paro grow the marketplace and foster good relationships between our experts and the businesses with which we work.

Do you have a “number one principle” that guides you through the ups and downs of running a business?

To me, the number one principle in business is genuinely asking for feedback. You can’t build anything useful without eliciting feedback from the people utilizing your services with the sincere intent of listening to and strategically applying that feedback, keeping all stakeholders apprised along the way. For Paro, we have two sets of customers — our experts and the companies — so it’s especially important to consider feedback from all parties to improve our services. People are often afraid to ask for feedback because they fear it will confirm something they don’t want to hear or that what they’re doing is wrong. If a customer sees that you’re implementing feedback and making a change to align with their needs, you’ll have a customer for life. It’s a delicate balance of creating alignment across stakeholders, even if it means you’re wrong; but ultimately, you need to serve customers by openly obtaining and implementing their feedback.

If a fellow business leader would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?

Choosing between bootstrapping and looking for VC capital is a highly personal decision. One consideration is to weigh where the pressure is coming from — whether it’s internal or external — there can be pros and cons to both. External investment means you have to serve external investors, while bootstrapping means you can do things more at your own pace. One of the pros of external investment is you get the capital and, oftentimes, if you pick the right investor, they can help and guide you along the path to growth. The con is that sometimes that means more rapid growth than you’re expecting and a lot of change in a short period of time. That change, however, can also quickly lead to successful business, or it can lead to failure based on readiness. There’s a lot of variability that’s outside of your control with VC capital and the market and investor expectations can easily shift.

With bootstrapping, on the other hand, you hold the purse strings and have more control over the capital to build equity. There’s also the element with bootstrapping of “do we have the money to do A, B, and C if we’re the ones putting up the money?” So it’s more of a personal, internal pressure you face. Ultimately, it’s a decision that comes down to personal preference.

What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?

For the majority of companies, ‘value’ is measured on EBITDA — ultimately, how much money is coming out of the business. Looking at comparable multiples across industries, a business owner can get an idea of how much their company is ‘worth,’ although the beauty is in the eye of the beholder! In order to get an optimal evaluation/valuation of a business, leaders need to think through a few elements — 1) how accurate is our recordkeeping and can we stand by our metrics, which ultimately allows an investor to stand by the valuation; 2) how consistent are these figures — will there be seasonal swings, or peaks and valleys — how can you showcase the upside of a business rather than highlighting the downside; 3) what comparables can you align your business with in order to achieve the best valuation possible — if a similar business to yours has been acquired/invested in, how can you translate that multiple into a similar multiple or valuation for your business.

What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?

When faced with this predicament, founders should first consider whether WHAT they’re going to market with is not resonating as much as it once was or if it’s a matter of HOW they’re going to market. Those are very different approaches. If it’s WHAT, then the founder and business may need to think of a different product offering, different pricing, a different method, or a different value proposition. However, if it’s HOW, there are different avenues. Is it relationship-driven, partner focused, event focused, or more search engine focused? You may need to reconsider the methodology. You know what you’re selling, what your business is, and what you’ve developed, but are you getting it to the right customers? These questions need to be asked and answered before you can decide how to boost growth and restart the engine. From there, you can set the right strategy and build the path back to building up that growth engine.

What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?

It’s never too early to start thinking and being considerate about finance and accounting. One of the greatest mistakes businesses make is to say they’ll figure out the finance and accounting piece later as they get bigger. The more foresight you can have in terms of making good decisions with financial clarity, the better your decision-making process is going to be. We’ve seen companies time and again not get that right, especially among smaller, more nascent organizations. It’s important to make finance and accounting a priority early on to properly manage finances and forecast cash flow to ensure long-term success.

Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry?

The most important things one should know to succeed in the modern finance industry are:

1. Things are changing, so make sure you’re a part of the change. If you don’t think innovatively, you’ll get lost. As a broader example within tech innovation, I was recently watching the ‘Blackberry’ movie and it was amazing to relive the ‘stagnant’ ways of Blackberry versus the innovative and ‘upstart’ iPhone. It goes to show, if you don’t innovate, you will die!
2. Explore all avenues, particularly for companies getting started early on. Many companies have had to pivot from where they started. Being successful requires you to be flexible and try new things. For example, Paro initially started as a back-office solution for small businesses. Flash forward seven years and we are now an AI-driven marketplace pioneering work in the white-collar freelance space!
3. Embrace some uncomfortable and unfamiliar innovations and technology, such as AI, block chain, etc. Be hopefully optimistic about the capabilities of these technologies to ride the wave while still understanding that, more often than not, there’s still going to be a human element involved. While there may be some skepticism, embrace the newness so you don’t miss out.
4. Finance is on the top of people’s minds more than ever with the state of the economy, interest rates, inflation, and so forth. People will be even more conscious of finance moving forward, so there will be an interest and a captive audience for both businesses and individuals for a long period of time.
5. The modern finance system is broken. Things have always been done a certain way, but there has to be a different, more effective way for us to be operating within this system. It’s important to think creatively to solve problems and explore different ways to work within the system to fix it. The more people who can do that, the more opportunity there is to succeed and thrive in the modern financial industry. For instance, blockchain is completely changing the way that individuals and companies interact — especially considering the system is an old system.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

Finance and accounting firms face severe capacity challenges due to a shrinking pipeline of qualified talent and fewer candidates entering the industry, creating a sense of burnout among those still in the finance workforce. To solve this challenge, understanding new ways to manage capacity is key to succeeding in the modern world of finance. By introducing alternative staffing methods and thoughtfully shifting culture, firms can bolster their teams, reduce burnout, better address client demands, and efficiently grow their business. To overcome the capacity challenge and mitigate burnout, I would recommend:

• Leveraging fractional talent to fill the gap created by the accountant shortage and offer the right (and immediate) subject matter expertise and industry knowledge
• Utilizing non-technical skill set matches by hiring data professionals, administrative workers, and other business people to manage workflow and profitability to diversify how your firm tackles work
• Learning what works and what doesn’t when it comes to retaining staff and building a better firm culture

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

My movement would be simple: It’s always important to treat people how they want to be treated. We’re all in this together and everyone’s doing their best. We never know what others are going through, so we should strive to be respectful and give people the benefit of the doubt to generate more good in the world.

How can our readers further follow your work online?

Readers can feel free to reach out to me directly through LinkedIn and see more about the work we’re doing on www.paro.ai.

This was very inspiring. Thank you so much for joining us!

About The Interviewer: Jason Hartman is the Founder and CEO of Empowered Investor. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. Empowered Investor helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Through Jason’s podcasts, educational events, referrals, mentoring and software to track your investments, investors can easily locate, finance and purchase properties in these exceptional markets with confidence and peace of mind.

Starting with very little, Jason, while still in college at the age of 19, embarked on a career in real estate. While brokering properties for clients, he was investing in his own portfolio along the way. Through creativity, persistence and hard work, he earned a number of prestigious industry awards and became a young multi-millionaire. Jason purchased a California real estate brokerage firm that was later acquired by Coldwell Banker. He combined his dedication and business talents to become a successful entrepreneur, public speaker, author, and media personality. Over the years he developed his Complete Solution for Real Estate Investors™ where his innovative firm educates and assists investors in acquiring prudent investments nationwide for their portfolio. Jason’s sought after educational events, speaking engagements, and his popular “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 189 countries worldwide.

While running his successful real estate and media businesses, Jason also believes that giving back to the community plays an important role in building strong personal relationships. He established The Jason Hartman Foundation in 2005 to provide financial literacy education to young adults providing the all-important real world skills not taught in school which are the key to the financial stability and success of future generations. We’re in a global monetary crisis caused by decades of misguided policies and the cycle of financial dependence has to be broken, literacy and self-reliance are a good start. Visit JasonHartman.com for free materials and resources.