Interview - Nate Frischknecht

Financial Reporting
Technical Accounting
143

Today’s guest is Nate Frischknecht. Nate lives in Salt Lake City and is currently the Senior Manager of Financial Reporting and Technical Accounting at Venafi. Hope you enjoy!

Thanks for joining us! Tell us about your background.

Happy to be here. I am a native of Utah and went to BYU. Their accounting program is really solid. I knew I wanted to go the business route. I took a couple accounting classes my freshman year and kind of took to it. I had actually taken some accounting classes in high school, so maybe that had already set me in that direction. I did the integrated bachelor’s and MAcc program. I graduated and took the CPA exams before I started at EY. I would highly recommend doing that to anyone going down that path, just get the exam out of the way before you start in public accounting.

You started at EY right after college?

Yeah I was in the assurance practice in Denver. I actually worked in public accounting three different times, EY twice and Deloitte once. All three in assurance. The first time I was at EY I was there around 2.5 years, until I was a first year Senior. I left to go to a little startup gas exploration company in the Salt Lake City area. It was definitely a career risk, I did that for a little less than a year. The company didn’t pan out. Funds dry up pretty quickly when you think you’re going to discover something and you don’t. So the venture failed, but I had a lot of really good learning about business and starting a company.

Talk about learning in big companies versus small ones.

At EY, I had really good experience with Fortune 500 clients and several large private clients. There I saw processes that are very clean and established. I transitioned from that to a company with 10 employees where I was the entire accounting and finance function. I had to create the processes, which was challenging but I got to implement things the way I wanted to. I got to do it from the ground up. I had to do a lot of research on my own, we didn’t have the resources that a big four company has. I was also really involved in the geology side of things, which is totally outside of my wheelhouse. Also got involved in the contract side of things. Oil and gas is really complicated contractually. Getting a handle on that took me way out of finance and accounting. Working in a small company you get much more exposure to the business itself, the mechanics of what’s going on operationally. At times the finance or accounting department doesn’t fully understand the business rationale behind some decisions. So it was great experience to get to see those decisions in real time. Because it was such a small business I didn’t have to wait a month to figure out the accounting, it was all happening at once.

So in hindsight, are you glad you took the risk?

It was definitely something that built my experience and shaped how I wanted the rest of my career to pan out. And it taught me a little bit more about risk taking and probably made me a little more cautious for several years after that. But at the same time, I'm really happy I did it because an environment like that is a different learning experience. So I think in general, I'm happy that I went down that path. Towards the end of my time there, I went to the COO/CFO (who was making payroll out of his own pocket) and asked how much longer he was going to fund the company. He said “if nothing changes, three months and we’re gonna call it”. So I started looking around and saw that Deloitte was hiring. I had some connections there so I decided to jump back into public. I had kind of felt that I had shortchanged myself by leaving as a first year senior, and thought this was a great opportunity to go back and get a little more experience. I had 2.5 years at EY and less than a year at a startup, and the opportunities that I wanted were just not coming along. I was at Deloitte for a little over a year, I burned out pretty quickly. I had a brutal busy season and afterwards was still working 60-70 hours a week. I had a young child at the time and felt like I was missing out on him growing up. Someone in my network called me about going to EnergySolutions, they were looking for someone to help with reporting, which interested me. So I decided to make a jump and explore something new down the financial reporting and technical accounting path that I wanted to be on. EnergySolutions was publicly traded when I started but while I was there a private equity firm took them private. That was an interesting experience. A new CEO came in and started changing things pretty rapidly. New leadership comes in and wants to see results pretty quickly. They wanted to see changes to match their vision of the company. They felt being publicly traded was a drag on the company, particularly SOX requirements. During the [going-private] transaction, I worked a lot on valuation and due diligence which was really interesting. People think that going private after being public and there’s not as big of a reporting requirement. I would strongly disagree with that. It’s just a different type of reporting. Now instead of doing quarterly financials out to the market, you’re doing monthly financials to an investor group that is more honed in on what the company does. They’re more detailed in their questions and have a desire for more detailed information on the company. So I think the reporting requirements shift rather than get reduced. But we were able to eliminate a lot of processes as we went private. The company ended up doing several rounds of layoffs and other cost saving efforts. Looking back, I got bored after we got used to a routine of monthly reporting. So I think you can burn out at a job like I did at Deloitte, or you can get bored and you need to find a balance between the two.

Totally agree with needing a balance between being bored and burning out. Personally, I think being bored is worse. I never would've guessed that before I was really bored at a job. So what did you do after EnergySolutions?

I did consulting for a company called The Siegfried Group in Denver. That was a really good experience, I really enjoyed the time there. I ended up spending most of my time doing contract review. I don't think people grasp if you're doing a GL accounting job, how much of the technical accounting and is driven by contractual arrangements. So I was establishing policies and determining how contracts translate to accounting. My role was to make their processes more efficient. And I ended up doing that in a significantly smaller amount of time than we anticipated.
So the curse of doing a good job - you get more work or there's nothing left to do (particularly when it’s a consulting role). Effectively, I worked myself out of a job. So I was looking for a safe place to land and EY happened to be hiring in Salt Lake. I thought it would be a good chance to get some broader industry experience (other than energy). I wasn’t thinking it would be long term but I ended up being there for another four years.

Right, you went up to Senior Manager. Can you talk about the different levels?

Yeah, as a senior you're starting to get a grasp on the whole company. I guess it depends on the size of the client, but in my case I was seeing all of the accounts. Still really in the weeds, doing a detailed review of everything. Also overseeing the day to day operation of the audit and getting staff going on things. As manager, you really start to focus on managing the relationship with the client. Talking the client through the big issues that come up. Also, there’s a lot more managing up to the senior manager and partner - directing their time to where they need to focus and where the real issues are. So I feel like you get a lot more of the whole picture. You’re interfacing with the executives at the firm and with everybody at the client. There’s more opportunity for networking and relationship building. Also, you’re not going out to the same client everyday. At any given time, I had two to four different teams working different engagements. You have to develop soft skills as manager. I think senior manager just magnifies everything at the manager level. I think the change from senior to manager is so much more significant than from manager to senior manager.

Did you ever consider trying to stick it out until you made partner?

Yeah, partner track did cross my mind and was something that I was moderately interested in. But as a manager, you start being involved in PCAOB inspections and other internal inspections. I saw how stressful those are for partners and how the regulatory environment drives so much of what is done on an audit. “Why do we do these procedures? Well, because if we get inspected we have to show to X, Y, or Z”. I think there's a lot of energy and time that's just totally wasted there. There's a lot of risk there as well. And so I looked at the amount of risk I’d be taking on and couldn’t justify it. Also there were so many senior managers in our office and a very limited number of partner slots to compete for. I knew I wasn’t passionate enough about it compared to the other senior managers. So once I figured that out I looked around and there’s a lot of very rapidly growing software companies in Salt Lake. Technology is one of the industries that I was attracted to because of the potential to grow. So I looked at Venafi, my current employer, and thought it would be somewhere I could settle and grow with the company.

In your opinion, is there a best time to make the jump from public to industry?

I think the best time is really dependent on where you want to end up. We hear in public accounting the elevator analogy - the longer you stay there, the more floors you go up. It’s not true. I don't know that leaving as a senior manager got me any different job than I would have gotten leaving as manager. Because I had been there long enough. I think I left a little prematurely as a first year senior. But at the same time, some of the most successful people I’ve seen have realized very quickly that the path they were on didn’t lead to where they wanted to go. And they got out and shifted to what they wanted to do. I’ve seen people leave as a second year staff and go to operational or managerial accounting roles or FP&A roles that have been a much better fit for them. These days, if you want to be a CFO it seems like you have to have worked in M&A, valuation or FP&A. So I see the path from public accounting, if you’re going to go to the C-suite, it’s going to be the chief accounting officer more often than the CFO. The longer you’re in public accounting, the more you’re locked into that path. So the sooner someone figures out which path they want to be on, the better. So they can know why they’re spending time in public and when or why they need to get out. I think that’s much more critical than telling everyone to stay until manager, which is the line you get from all of the firms.

Any advice on how someone in public can figure out which path they want to take?

You have this great opportunity in public accounting to rotate through clients. You can get to know a lot of different people in a lot of different roles. Which role do you click with and then how do you get there. Ask people about their experiences. You have access to these people - you’re not just auditing them, you should network with them. Let them teach you their lessons. That’s one of the huge benefits to public accounting, if you don’t take advantage of that you’re missing the boat.

What about advice for students who are still in college?

Yeah, in my mind the junior year of an accounting program is a critical decision making time. Do you want to do a master’s program because of the state requirements to get a CPA? That’s the first critical decision that someone in an accounting program needs to make. If you’re not passionate about accounting at the end of your junior year, that’s the time to figure out if you want to do something else. Because if you’re disinterested, there’s no point in doing a master’s. Maybe that’s a good juncture to pursue an MBA or a different type of master’s. So you really have to learn a lot from your junior year before you have to apply to the next program.

Can you talk generally about your experience in public versus industry.

Yeah, I have this really strange circumstance where I jumped back and forth so I’ve been able to contrast a lot better. Lifestyle is significantly better in industry. There’s definitely a reduction in hours, but I don’t know if it’s as good as some people think. The other nice thing with industry is that you get to focus on one company and a set of people within that company. So you get to build stronger relationships. Whereas in public, you get a lot of different touch points in a lot of different areas. But when you’re flying at 10,000 feet as a senior manager, you’re not necessarily understanding everything that’s going on. So in industry, you can really get into the company and get a really strong understanding everything.

What are your long term career goals?

I think I’ll either continue with this financial reporting and technical accounting path, grab some M&A experience, and then move towards a CFO role. Or start my own technical accounting consulting practice. So kind of a split path right now. I think what I’m doing could lead me to either, so I’m going to move along this path until I have to make a decision one way or another.

What are some of the most important things that you've learned about business?

I think that people interactions trump basically everything. They're so important. It doesn't matter how smart you are. I mean, you have to be intelligent. But if you've missed out on the soft skills, the interpersonal skills, you're going to get passed on for opportunities. Business runs on relationships.
Another thing is that a lot of business decisions that are made at the top are misunderstood. I think that people would learn a lot by stepping back and evaluating the underlying reasons for decisions made by executives. You have to look at what the executives are seeing and how they’re trying to drive the success of the business. If you can do that, if you see the business from the perspective of the executives, then I think a lot of good things can happen in your career.

If you could go back in time, would you still study accounting?

Probably for undergrad, and then I would go and get an MBA. I would have done the business operations side from the beginning. Knowing what I know now, it’s hard to be an accountant and become a CFO. So my end goal is still the same, but I think the pathway to CFO is a little bit of accounting and quite a bit more on the operational side.

Other than what you studied, what’s one thing you’d do differently early in your career?

I probably would have done a couple of things differently. I would have stayed a little longer at EY the first time and then not gone back to public accounting after that. Just done it all at once and then once I transitioned to industry, stayed in industry. The other thing I would have done is within public accounting, I would’ve asked to do a rotation to another practice. I really regret not doing that. Within the big firms there are a lot of opportunities to get different experiences. I probably would have done a rotation in valuation. I think just a one year rotation would have really broadened my ability to do other things.

How can people connect with you?

Happy to connect on LinkedIn.