Empowering Self-Employed Businesses with an AI-powered Financial Management Solution

Embedded Partners

In the current business environment, technology is constantly transforming the way we conduct business. It is important to comprehend the symbiotic relationship between artificial intelligence and human interaction and the significance of a comprehensive financial management solution for self-employed individuals. Formations‘ co-founders and CPO & CEO Uri Bar-Joseph and Shahar Plinner discuss this topic and share their entrepreneurial journey.

Their discussion highlights how they’ve harnessed technology to empower the self-employed while maintaining the essential human touch that distinguishes their service.

Podcast Takeaways:

  • The inception of Formations and Shahar’s collaboration with Uri.
  • Formations’ focus on the self-employed market and its challenges.
  • How the COVID-19 pandemic unexpectedly supported their business model.
  • Integrating AI to enhance customer engagement while maintaining personal interaction.
  • The advantages of embedding fintech in Formations.
  • Insights into the service model, emphasizing a non-DIY approach tailored for the self-employed.
  • Handling complex tax issues with a mix of automation and expert advice.
  • Introduction to “MAX,” an AI tax and accounting assistant with public access.
  • The security of data with MAX, despite its public availability.
  • Reflections on Formations’ organic growth and the role of human interaction.

Listen to the full podcast.

Formations: Financial Management For The Self-Employed

In this episode of The SMB Tech Innovators Podcast, host Brian Busch interviews Shahar Plinner and Uri Bar-Joseph, the co-founders of Formations. Formations is an AI-empowered financial platform designed to assist self-employed people in making smarter financial decisions. Throughout the podcast, Shahar and Uri share insights into their backgrounds, the inception of Formations, and their unique approach to revolutionizing financial management for the self-employed.

Image alt text: “I don’t know if we have the power to cancel tax season. But we can make it a non-event — that’s what we’re trying to bring to our customers.” - Uri Bar-Joseph

A Human-Centric Approach to Financial Solutions

Uri starts by highlighting the importance of human interaction in financial services. He emphasizes that while AI enables scalability, customers still seek genuine conversations with experts when navigating complex financial matters. This belief in combining AI capabilities with human expertise forms the foundation of Formations’ approach. In his view, while AI streamlines processes and enhances accessibility, it cannot replace human experts’ invaluable insights and empathy.

By acknowledging the inherent complexities of financial matters, Uri underscores recognizing the symbiotic relationship between AI and human expertise. Rather than viewing AI as a replacement for human interaction, Formations leverages it as a complementary tool to empower financial experts and enhance customer experiences. This integration ensures that customers benefit from the efficiency of AI-driven processes while still receiving the personalized attention and guidance they desire.

The Genesis of Formations: From Chance Encounters to Entrepreneurial Partnership

Shahar and Uri recount their serendipitous meeting at Costco over two decades ago. This encounter led to a long-standing friendship that eventually evolved into a successful business partnership. Drawing from their diverse backgrounds in tax, accounting, and tech marketing, Shahar and Uri merged their expertise to address the challenges self-employed individuals face.

As the landscape of financial technology evolved, with QuickBooks Online and banking as a service becoming commonplace alongside the emergence of fintech APIs, we recognized the opportunity to start Formations. Combining these diverse tools into a cohesive orchestration layer, we aimed to address the needs of the self-employed—a segment often overlooked despite its size. Our belief in the potential of this demographic stems from its significant impact on the workforce yet its lack of access to resources like CPAs, CFOs, and accountants. By creating a user-friendly platform that demonstrates tangible financial benefits, we sought to empower self-employed individuals to make informed decisions about their finances. Understanding the importance of immediate results in a segment that prioritizes efficiency, we aimed to cater to the “Cookie Monsters” of the self-employed world, offering solutions that keep more of their hard-earned money in their pockets and ultimately drive engagement.

“We have a unique chart of accounts, balance sheets, and how we recognize income and expenses. In every aspect of our solution, we made a clear decision.” - Shahar Plinner

Understanding the Self-Employed Market: A Tale of Passion and Innovation

Shahar started his journey in financial management with a deep interest in taxation and a strong dedication to innovation. He understood the unique challenges that self-employed people face and realized the urgent need for a solution to simplify financial processes and maximize tax benefits. This realization inspired him to create a platform that provides efficient and impactful financial tools to empower individuals. He aims to help self-employed individuals manage their finances easily and efficiently.

Amidst the rapid evolution of digital technologies and the emergence of the gig economy, Shahar’s vision for Formations resonates with the evolving landscape of self-employment. By harnessing cutting-edge technologies and staying abreast of shifting market dynamics, he and his team have positioned Formations as a trailblazer in financial management for the self-employed. Their commitment to innovation and user-centric design reflects a profound understanding of the unique requirements of self-employed professionals in navigating their financial journeys.

Formations: A Utility for the Self-Employed

Drawing from their extensive backgrounds in tax, accounting, and tech marketing, Shahar and Uri envisioned a platform that transcends traditional financial management paradigms. Recognizing the inherent reluctance of many self-employed individuals to navigate complex accounting and tax matters, Formations prioritizes user experience by simplifying these processes. The platform streamlines administrative tasks and fosters user involvement through strategic AI integration, empowering individuals to take control of their financial affairs confidently. This approach reflects Formations’ commitment to bridging the gap between technological innovation and user-centric design, ultimately redefining the financial management landscape for the self-employed.

“There are things you cannot commoditize. Formations’ philosophy is we can automate 90-95% of the journey. We want to make sure there’s an added value.” - Shahar Plinner

Balancing Automation and User Participation

Shahar’s emphasis on balancing automation and user engagement highlights Formations’ commitment to providing a comprehensive financial management solution. Taking cues from the podcast, Shahar explains the platform’s strategic approach to automation, which aims to simplify mundane tasks while promoting user understanding. This strategy aligns with Formations’ philosophy of empowering self-employed individuals by equipping them with tools that streamline their workload and enhance their financial knowledge.

By seamlessly integrating automation features with opportunities for user participation, Formations seeks to establish a symbiotic relationship between technology and human expertise. By enabling users to understand the reasoning behind automated actions, the platform fosters a sense of empowerment and confidence among self-employed professionals, ultimately leading to long-term financial success.

Navigating Partner Dynamics: Build vs. Buy vs. Partner

Formations’ strategic approach to partner dynamics reflects a deliberate effort to optimize the integration of embedded fintech features within its platform. Shahar and Uri discuss the considerations behind build, buy, and partner decisions, emphasizing the importance of aligning with partners who share their vision of empowering self-employed individuals. They highlight the key attributes of successful embedded partners, focusing on collaborative innovation and a shared commitment to customer-centric solutions.

The Formations’ “partner” strategy entails forming strategic alliances with external entities, such as fintech firms or industry incumbents, to co-create innovative solutions tailored to the needs of self-employed individuals. This collaborative approach fosters knowledge exchange, accelerates innovation, and expands Formations’ reach by tapping into the partner’s existing customer base. Successful partnerships hinge on shared values, mutual trust, and a shared commitment to delivering customer-centric solutions that address the evolving needs of the self-employed market segment.

Leveraging Strategic Partnerships for Enhanced Customer Experience

In business formation and financial management, Shahar Plinner and Uri Bar-Joseph, co-founders of Formations, have forged a path driven by strategic decision-making and customer-centric innovation. Their journey sheds light on the power of collaboration, the evolution of AI, and the significance of human interaction in a tech-enabled landscape.

Formations prioritizes efficiency and customization in its approach. Instead of creating new solutions from scratch, it seamlessly integrates existing ones into its platform. This means it works with providers like Bezee and Gusto Embedded to add specialized features such as incorporation recommendations and payroll optimization. By doing so, Formations can focus on what it does best—developing a unique user experience that sets it apart.

The Rise of MAX: Transforming Customer Interactions with AI

The introduction of MAX represents a pivotal advancement in Formations’ commitment to enhancing customer engagement through AI-powered solutions. Unlike conventional AI tools, MAX stands out for its conversational approach, which is finely tuned to align with Formations’ unique playbook. This strategic blend of AI capabilities and human expertise enables MAX to deliver personalized insights and recommendations tailored to each user’s financial needs and circumstances. By leveraging MAX’s capabilities, users can navigate the intricacies of financial management with greater ease and confidence, ultimately empowering them to make informed decisions and optimize their outcomes.

Democratizing Access: Making AI Available to All

Formations’ commitment to accessibility extends to MAX, which is available to the public. By offering access to their playbook, Formations ensures that users receive valuable insights without compromising data security. This inclusive approach aligns with their mission to empower businesses of all sizes, fostering a culture of learning and growth.

“Your own run rate is as important as your business’s financial run rate. This is going to be a 7-10 year journey; make sure you’re ready.” - Uri Bar-Joseph

As Formations continues to innovate and expand its reach, Shahar and Uri offer invaluable insights for aspiring founders. Their journey underscores the significance of strategic foresight, customer-centricity, and authentic collaboration. By embracing these principles, entrepreneurs can navigate the complexities of business ownership with clarity and confidence, paving the way for enduring success.

Listen to Pioneering change in self-employment taxes with Uri Bar-Joseph and Shahar Plinner and connect with Uri and Shahar on LinkedIn.

Brian Busch Brian is currently Head of Marketing at Gusto Embedded; the only payroll API with 10 years of experience and actionable data behind it. Before joining Gusto, Brian held leadership positions at Cloud Elements, Kapost, and Captricity. He holds a BS in finance and a BA in philosophy from Boston College and an MBA from the Cal Berkeley Haas School of Business.
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