Groco Crunches Numbers for VCs
April 3, 2009

When a business has been successful since 1964, investing in a far-reaching media campaign may seem like an unnecessary risk. But for Alan Olsen, managing partner of Fremont-based accounting firm Greenstein, Rogoff, Olsen & Co., it was a risk that paid off.

Olsen became the managing partner of the firm, colloquially known as Groco, in 2003 after Barry Rogoff, then managing partner, had a heart attack and passed away, and the other founding partner, Morey Greenstein, decided to take a smaller management role. Olsen took over an already-vibrant practice that specialized in venture capital clients. But he embarked on a media campaign that started with revamping the company’s web site to offer loads of free accounting advice. That technology upgrade cost the firm $250,000. In 2006, the firm’s revenue was $4.5 million. By 2008, it had grown 47 percent to $6.6 million.

But even before the media campaign, Olsen seems to have had a winning formula. The firm has long cultivated relationships in the venture capital community, carving out its niche far from the accounts that are taken up by the so-called “Big Four” — PricewaterhouseCoopers, Deloitte, Ernst & Young and KPMG. Olsen said the firm has 3,500 clients ranging from very small and simple tax returns to multinational corporations. He said that where the Big Four concentrates on auditing a large company, he targets the CEO or VCs that helped back the company in the first place.

So why did he embark on an ambitious media plan?

“My philosophy is you either grow or you die, but you can’t stand still in a changing world,” Olsen said. “At that time, I was 43 years old, I wanted to grow. I still have a big career ahead of me. I have seven children and I had to figure out some way to pay for college. It was an easy decision.”

After revamping the company’s web site and getting Groco’s name out there by offering free advice, he developed an ad campaign that included TV and radio spots, as well as newspaper advertising.

He also expanded the service to include more entrepreneurs — who often need help navigating venture capital.

Ramesh Manian is one of those clients. He’s a serial entrepreneur working on a stealth company, and he’s been a Groco client since soon after he met Olsen in 2001. He originally hired him for his now-defunct company eSelf, when Groco wasn’t concentrating on entrepreneurs. But he said that the people at the helm of small companies don’t have the experience they need to not only navigate the world of funding, but also create a business plan that makes their companies attractive.

“When you’re an entrepreneur, you have two big problems. You have the daily challenges of the company, and you’re very new to the concept of VC money and creating equity relationships,” he said.

Manian said that Groco now has a suite of services for entrepreneurs, especially for getting funding — valuation services, for example.

Olsen credits part of Groco’s success to the way the firm is run: It has a CEO model, like a corporation, rather than being run by a committee of partners. The firm also opted for a closed compensation system — where partners don’t know how much others earn.

Olsen said that this model, while contrary to the norm for accounting firms, allows the partners to worry about doing their own jobs. But the downside is that the buck stops with him. He has to make the management decisions that would have otherwise been sent to a committee.

“There’s full accountability at the top,” he said. “If something doesn’t go right, people will look to Alan. It’s a two-edged sword.”

But so far, things have gone right. Olsen has been aggressively building the practice, even during the recession. He’s hired 12 people since Jan. 1, bringing the firm’s total to 52 employees, with five partners. He says that the firm will weather the recession well. He estimates that revenue will grow by about 25 percent this year.

Snapshot:

Greenstein, Rogoff, Olsen & Co. LLC
What it does: Accounting firm for venture capitalists and entrepreneurs.
Key executive: Alan Olsen, managing partner.
Location: Fremont.
2008 revenue: $6.6 million.
2007 revenue: $5.66 million.
2006 revenue: $4.5 million.
Three-year growth: 47 percent.
Employees: 52, five partners.
Website: groco.com
Key to success: Embarking on an aggressive media strategy, and expanding to include entrepreneur services.
Future plans: Growing through acquisitions.