Today on The Startup Chat, Steli and Hiten talk about how to hire service providers for your startup.

Choosing the right service provider to work with for your startup can be quite challenging, especially if you haven’t worked with one in the past. You may be lucky and get it right the first time, but it’s highly likely that you’ll go through a couple before finding the perfect match. 

In today’s episode of the show, what it’s like working with service providers, tips to help you choose the right service provider, why you should do background checks when choosing a service provider and much more.

Time Stamped Show Notes:

00:00 About today’s topic

00:38 Why this topic was chosen.

03:30 Steli previous experience with working with service providers.

05:12 How you never know what you’re going to get with a service provider.

07:08 Why a service provider should always know more about their specialty than you do.

07:35 Tips to help you choose the right service provider.

08:02 A case when hiring a service provider went bad.

08:26 How you can negotiate your bill with a service provider.

09:38 Why you should do background checks when choosing a service provider.

3 Key Points:

  • Most firms will do the minimum required work for your startup.
  • You never know what you’re going to get with a service provider.
  • A service provider should always know more about their specialty than you do.


Steli Efti: Hello everybody, this is Steli Efti.


Hiten Shah: And this is Hiten Shah.


Steli Efti: And today on the Startup Chat we’re going to talk about hiring service providers for startups. And when Hiten Shah proposed this as a subject to me, Steli Efti, I was like, get out of my way, Hiten, I need to introduce this topic.


Hiten Shah: That’s right.


Steli Efti: Right. Because it’s not often that I actually get angry or pissed at things, but this is one of those topics. I think just a couple of days ago we had. I was on a sailing boat with a bunch of entrepreneurs through the beautiful Spanish Mediterranean Sea, and this topic came up.


Hiten Shah: Wow.


Steli Efti: The topic of the value of a great lawyer, accountant, bookkeeper, to you, as an entrepreneur. And it was a big disparity between kind of super early founders, that are doing their first thing ever and started a year ago, and founders that sold their, I don’t know, sixth company and have been doing this for 20 years. There was a big kind of range of experience on the sailing trip. And so, it was so fun to see kind of the differences in responses. When you first start out, I don’t know if it was different for you, Hiten, because you’re way, way ahead of your time, in terms of wisdom and good looks. But for me, when I started my first business, and when I think about the kind of my friends that were starting their businesses, I always thought, oh, I’m going to be a business owner, and then, I’m going to go and find a lawyer. And if the lawyer works in a large law firm, reputable, I’m going to pay that person a lot of money, and then that person’s going to be kind of my genius side kick ninja of the law, and be constantly supplying me with tips and tricks and hacks and the best way to optimize the law to put myself and my business in the best position possible. And if I go to an accountant or bookkeeper, that person is going to give me all these pieces of advice on how to manage my cashflow and money and how to create expenses or add expenses and how to optimize to pay the least amount of taxes legally required for my business, to use that money in ways that fuel growth, rather. I thought that these people would be incredibly smart, incredibly experienced, but on top of all of that, really working hard, constantly creatively thinking of solutions and opportunities for me and my business. And the reality couldn’t be further from that truth. The reality is, in my mind and from my experience, nothing like that. So I’ll share what my reality has been, and then I’m dying to share your reality, but in my experience and the experienced that I’ve witnessed with other founders and companies, most service firms, and let’s just take three common examples, law firms, accountants, tax bookkeepers, that kind of stuff. Most firms, they will do the minimum required work, the minimum required thinking, and they will do only the safest, most boiler plate, most typical average things, to provide your service with as little risk for them, as little time for them, at least time from the kind of the most experienced, most creative people, because a lot of services firms, they’re are built like these pyramid schemes, where the senior partners, they bring in the clients, but they really don’t do any of the work, and they push all the work down to the super junior new employees that do a lot of boiler plate work to make the kind of margin and the business model work for these types of businesses. But you almost never get somebody that is creative. You almost never get like proactivity, where somebody pings you and tells you here’s opportunities to save money or to make more money or things to think ahead of. It’s always you have to ping them and go, what about this, or what about that? They always go, well, let me look into it. And then they come back to you with the most boilerplate thing you could have figured out on your own. And when you find the one in a million super creative, super proactive person in this space, these people are probably very hard to get to. But if you find somebody like that, you want to hold onto them for dear life. But they are more rare than a unicorn, like they almost never exist. And it’s something that inexperienced founders don’t know, so they rely way too much on these service providers. They’re too naive when it comes to these service providers, and they think, well, now that I have an accountant, I can just lean back and never worry about this, because I’m always fully optimized and I always in very good hands. And that may be true, but more often than not, it’s actually not the truth. Slash, end of rant.


Hiten Shah: Love the rant. I think it’s a very legit, relevant rant. Here’s the thing, you never know what you’re going to get with a service provider. And usually the best way to know is if someone you know recommends them. And that’s been my experience with service providers, in general. That being said, the folks I work with on legal, I’ve been working with them for about, I want to say 13 years, or some number like that, some really high amount of years. A dozen years. And I won’t work with anyone else on legal. We have other firms we work with every now and then, but the core firm we work with is one, and we’ve built up a trust over that amount of time. We’ve recommended lots of people to them as well because of that. And it’s something where I actually called, I think, 10 or 20 law firms, and I met this person at a law firm, who actually took my call. So a lot of these law firms wouldn’t take my call, because I was down in LA, and they didn’t really care for me I guess. And this lady took my call and she is no longer a lawyer. Or a practicing lawyer. She’s still a lawyer. And because of her, I went over… I mean, it was like a big law firm she worked at, worked with them, then she moved to a smaller law firm, stuck with them, and stuck with her and then she left the firm and I stayed with the firm, because I kind of built a relationship and that’s the firm I’ve been with. And they’ve changed names a couple times and things like that. But I stayed with them. And that is rare, like you said, and I can’t tell you, hey, this is my process for finding great service providers of any kind, legal, accounting, bookkeeping, taxes, any of those kinds of service providers where there’s an information asymmetry as they call it, which basically means they’re always going to know more or they should always know more about their specialty than you do. And usually anyone on your team, until you’re at a scale where you hire those people internally, for example, or you want to hire them internally. So this service provider thing is really interesting because we usually are going to go buy recommendations, and it’s like one of those where I wish I could tell you, hey one process is go talk to 10 people, which I think you should do anyway. Go talk to at least three to five if not 10 people, when you’re looking to hire service providers, and go figure out who you want to use, and who you like, and whether their answers to your questions are good, in terms of your business, their pricing is your right pricing that you think. But always go for recommendations. That’s what people say. That’s like what usually leads to success when it comes to service providers, because you know if someone else is having good experience, it’s more likely that you will as well. So that’s really important. I actually had a recent story on legal, where it went bad. This person thought that the person that they were using was great until they saw the bill. Because a lot of startups get deferred payment for legal bills. And then they saw the bill, and they’re calling me, this is a company I’ve invested in, they’re like, hey, what do I do about this? I’m like, you don’t have much of a choice, because you agreed to this. You can definitely negotiate it. That’s the other thing about some of these professionals, like legal, where you can negotiate it, you really can. And so, he negotiated, but he’s probably not going to use this firm again. And I knew it, because some of the paperwork they were sending to me when we were raising the money, I’m like, hey, that’s extra paperwork. That doesn’t need to be sent. I haven’t signed one of these papers, this kind of paper, in years, and I already knew that was a red flag in my mind. It wasn’t a yellow flag. It was a red flag. I was like, these folks aren’t professional when it comes to… They don’t know what they’re doing when they’re helping you raise money. This is an easy thing to do. This is boilerplate paperwork. They’re making it more complicated. Right?


Steli Efti: Yeah.


Hiten Shah: And the founder has always had excuses of why. Oh, our raise is a little complicated, and this. And I’m like, yeah, yeah, dude, just listen, this is not right. Right? And still, he got a referral. And he just went with the first referral he got. So, that’s a couple examples from my experience and even recently, this literally happened weeks ago, a couple of weeks ago. And I can’t believe it’s still happening. It’s 2019.


Steli Efti: Yeah. Ask for referrals. Go and get background checks or backdoor referrals. Try to find any kind of company that has worked with this service provider, even if they don’t put you in touch with them directly, and just ping them and say, hey, I’ve seen, or I heard that you work with X, Y, Z. We’re considering working with that person. I actually just did this yesterday, funny enough.


Hiten Shah: Nice.


Steli Efti: I just went on somebody, some consultant, I went on his website, I saw a logo I recognized, I know the fonder. So I picked the phone up. I’m like, hey, I just saw on the site that you work with this person. Any experience, good, bad or ugly? Can you tell me anything about it? And I’ve had this once before where somebody didn’t even answer me, and then I just followed up and said, hey, you’re probably busy. I’ll make it easy for you. It’s either choice one, two or three, just respond with a number. And one was like, this person’s so great. I would work with them all the time. Second one was like, it was fine for some people this is going to be great. For some it won’t. And number three’s I’d rather not say. And then the person replied with three, and that was it. That’s all I needed to hear.


Hiten Shah: That’s all it takes.


Steli Efti: That’s all I needed to hear. So make sure that you do your homework before you start engaging with the service provider. And in some cases, like when it comes to a service provider in the kind of accounting and bookkeeping space, we actually have a recommendation for you. We can give you a direct recommendation, and this is the recommendation to our first sponsor ever. We’ve been doing this podcast for over four years. We’ve had hundreds of companies reach out and want to partner with us, want to sponsor the Startup Chat. And we have said no hundreds and hundreds of times, four and a half years into this podcast. This is the first company we’ve said yes to. So just to give you a sense of how much we stand behind this company. The company’s called Pilot. So if you go to chat, you can get 20% off of Pilot Core for six months. And pilot does bookkeeping in the background, so you can focus 100% on making your business succeed, making your startup grow. You don’t have to worry about any of that. So if you don’t have a good bookkeeper that’s already recommended to you that you’ve already established a relationship with, Hiten and I have a bookkeeping company that we want to refer you to, that we want to recommend you to, and we want to, on top of it, give you a good deal so you save some money on top of that. 20% off if you go to Make sure to check it out for sure.


Hiten Shah: Before we go, I want to say why this matters. Even all these tips about service providers. Why it matters is they’ve taken care of this problem for you. It’s their job, not as an individual bookkeeping service or a bookkeeper. It’s their job as a organization, as a business, as a company to specialize in providing the best bookkeeping services for you, and make it so you don’t even have to worry about who’s doing the bookkeeping. Pilot is doing the bookkeeping. And their job is to find the best bookkeepers for you. They don’t outsource the work. They do use a computer, so automation, to do the kinds of work computers should do on that stuff. And then they use actual bookkeepers to verify, look and make the changes that need to happen that a human needs to do. And they do it all for you. And so that’s basically your bookkeeping and accounting. It’s a service. And they also even have the tax add on that you can get as well, to help with your taxes. So you’re going to one place and taking care of it. And the final thing I’ll say is, my favorite think about it is, they just work with your existing QuickBooks online account and they’re doing all the work in there and getting it done for you. So despite all our feedback, if you want bookkeeping and accounting solved for you, go to and you’re going to get that solved for you, plus it’s backed by our reputation. So if you have any issues with them, or even any praise, please let us know.


Steli Efti: There you go,,, That’s it from us for this episode. We will hear you very soon.


Hiten Shah: See you.