A Lee Shull, Jr., knew it was coming. As vice president of investor relations with Rockwell Corp., he had dodged two out-of-state moves as the company gradually pulled its business out of Pittsburgh for other parts of the country.
He knew his function was next, and in early 1998, the company decided to move the investor relations department to California.
Shull knew he would stay in Pittsburgh, perhaps picking up another investor relations executive position, one with the same glitz and perks that Rockwell was known for. As he says, “My life was built around my relationship with my family and friends, so why would I have moved? For money and power, which is nice, but do I want to risk emotionally scarring my children?”
What this high-flying corporate executive didn’t know — or even contemplate — was that he would find himself, in a sense, back in the accounting arena he had consciously turned away from years before, and with a bug that he previously had avoided like the plague: the entrepreneurial bug.
Shull had spent the last 17 years living the corporate life at Rockwell — and enjoying it. Now he was left with what he describes as a healthy severance package, a desire to take a break, “and 10 years worth of honey-dos” from his wife.
By the time he completed his self-imposed sabbatical, however, a group of entrepreneurs from California had talked him into giving up his investor relations dreams and becoming both a shareholder and a leader in growing a start-up division of accounting giant Deloitte & Touche.
The goal was clear and simple: Designated shareholders would pool their money to buy the division, called Resources Connection, from Deloitte & Touche, and spin it off into a new, privately owned company.
Shull’s role, should he accept it, was to become an entrepreneur, invest in the company and launch operation in Pittsburgh. Not exactly the career path Shull, now 47, planned to take, he acknowledges, and he definitely didn’t plan to go back into the accounting business, where he’d started his career in 1975.
As he notes, “It would be a tremendous step backwards in pay.” Still, he took the entrepreneurial leap and bought in.
“I always wanted to be my own boss and have control of my own work life,” Shull says.
The business
The young firm, with headquarters in Santa Ana, Calif., bills itself as an “alternative professional services” firm, says Stephen Giusto, executive vice president of corporate development and CFO of Resources Connection. “Alternative” refers to the employees, all accounting professionals with an average of 17 years experience, at least in the Pittsburgh office.
But instead of doing accounting work for one company full time, or even for an accounting firm, employees are contracted out on a project basis to clients. Employees can choose the number of hours they work and which projects they want, and they get paid by the hour. When they don’t work, they don’t get paid.
“It’s for people who want to take more control of their work lives,” Shull says. “We offer work-life balance and flexibility.”
In Pittsburgh, Shull has about 30 people on the payroll. He says 77 percent are CPAs, almost half have MBA degrees and 70 percent have public accounting experience. Companywide, the firm employs upwards of 1,200 people in 31 offices.
Customers pay between $50 and $100 an hour to use the firm’s accounting professionals for special projects or even to serve as interim CFO or controller. Most assignments are temporary.
But don’t ever call Resources Connection a temporary agency.
“When I hear people call us a temp firm, it gives me the chills,” Shull says. “We are not a temp firm.”
The firm’s concept, he says, stems from a practice at most large accounting firms where they lend staff to a client for auditing, tax returns or system implementation, among other tasks. It’s a practice he says firms don’t mind during the slow seasons, but would rather not offer during the busy times, when they need all of their accounting professionals in-house.
Financing
Shull launched the Pittsburgh operation with the full support of Deloitte & Touche, including office space. That all changed last April, when the accounting firm quietly put together a deal with at least 35 directors of the Resources Connection practice, including Shull, and venture capital firm Evercore Capital Partners.
Shull won’t release specific figures, but says the directors were given the opportunity to buy in at $10 a share for common stock and $22 a share for convertible debentures, with a minimum investment of $10,000.
He says he invested substantially more than the minimum. The venture capital firm reportedly owns about 55 percent of the company, which was purchased for “tens of millions of dollars.”
Sales and marketing strategy
Until the spinoff last spring, the firm nationally relied largely on referrals from accounting professionals at Deloitte & Touche. But while both Shull and Giusto say the firms continues a healthy relationship, they acknowledge they are marketing to other firms with ongoing short-term staffing needs.
The sales and marketing strategy includes pre-screening cold calling, periodic mailers to at least 1,000 names rented from Dun & Bradstreet and lots of one-on-one networking, Shull says.
However, he doesn’t plan to do much advertising locally.
Sales to date
Shull won’t discuss specifics, but says his goal by May is to have 40 full-time-equivalent employees billing out 1,600 hours a week. He expects annual revenue this year to climb to $2 million.
The Pittsburgh operation broke even last September, he adds.
Biggest challenges
Shull is still working through the transition of breaking off from Deloitte & Touche and is in the process of securing office space outside the confines of Deloitte’s PPG Place offices. His challenge, he says, will be to maintain a good relationship with the firm and its employees while seeking work from other firms.
“Now there’s a mixed reaction” from Deloitte employees as a result of the quiet sale, Shull says. “Now I have to rebuild those relationships.”
Meanwhile, he has to overcome the notion of being another temp agency.
“We have to get past that temp agency mentality,” Shull says. “But the concept of bringing on an interim controller is not common here.”
How to reach: Lee Shull, Jr., (412) 338-7295 or [email protected]
Daniel Bates ([email protected]) is editor of SBN.
