Why the founder of Dallas-based Embark offered his employees $10,000 to quit
Embark founder Paul Allen wanted to make sure each of his 300-plus employees were completely on board with his plans for the rapidly growing Dallas-based financial consultancy.
So he offered each of them $10,000 to find jobs elsewhere if they weren’t.
“The last 24 months in our country and our world have been so divisive in nature,” Allen said. “I don’t know of a good organization that has accomplished a ton when its team members are not pulling in the same direction.
“We wanted to make sure everyone was.”
Only four took the money and ran.
“It was really a recommitment of vows or whatever metaphor you want to make,” Allen said. “The $10,000 offer at the end was so that people wouldn’t just write this off as executive corporate-speak to get them to stay here.”
It was an odd incentive at a time when many employers are scrambling to shore up staff like never before. But then Allen isn’t one to take the pro forma path.
“I’m a vision caster and disrupter,” said Allen, who’s about to turn 43. “Over the past 20 years, I’ve seen so many companies where their goal was to use and burn out as many of their employees as possible. However you want to say it, we’re the exact opposite of that.
“We’re more of a tech firm than an accounting firm,” Allen said. “We’re more weirdo entrepreneurs. That’s kind of our vibe.”
“We” is a singular “he.”
“About 99% of the company isn’t like me,” Allen said. “I have to surround myself with logic-based, risk-averse people to balance out my high risk-tolerance and total feelings-based approach.”
His official title is founder and CVO — chief vision officer — and de facto CEO.
A year ago, Clancy Fossum was the CEO, but he’s now chief execution officer.
“We change titles here a lot,” said Fossum, 42, who joined a cash-strapped Embark in 2016, when it had 10 employees. “I’ve been COO, CEO, now I’m CXO. But my role has always been to lead our consultants. It’s just a whole lot more consultants than it used to be.”
In four of the past five years, Embark has posted triple-digit revenue gains.
The only time it tapped on the brakes was in COVID 2020.
Last year, Embark was back to autobahn mode with revenues more than doubling to $47.4 million and 200-plus added to its full-time headcount.
Allen has never taken an ownership distribution, but he is contemplating his own IPO in the next few years.
He’s been hit up by strategic buyers and private equity companies, but says he hasn’t found the right dance partner. “Until we do, we’re going to continue to grow organically.”
By Allen’s calculations, Embark will close out 2022 with $100 million in sales and 500 to 600 employees at about a dozen locations spread out in eight or nine states. Offices are all in co-working leased space, including its headquarters in Common Desk-Deep Ellum.
These aren’t stretch goals by any means, Allen contends.
He’s banking on strengthening Embark’s core financial accounting services, while expanding offshoots that help companies go public, make mergers and acquisitions, transform financial structures and better mine data analytics.
Three weeks ago, Allen treated employees to another surprise: Everyone was getting a 25% to 50% raise.
“Paul will tell you he’s not an accountant, but he understands what we do and how we do it as well as anybody,” Fossum said “He’s a true entrepreneur willing to put whatever it takes on the line to see if it works. I’m more of a conservative accountant that grew up in the Big Four and is used to that more conservative thinking.
“My role as a practitioner along with his aggressiveness, sales background and entrepreneurial spirit have helped us grow the way we’ve grown.”
‘Too dumb to quit’
Allen grew up in Choctaw, Okla. His mom was a third-grade teacher; his dad, a school superintendent and a principal.
He went to Oklahoma State University just up the road on an academic scholarship intent on getting a degree in industrial engineering. He switched to finance the second semester of his sophomore year.
“I cared more about the humans who would use the systems than how many pound-forces I could push a liquid through a pipe,” he recalled. “So I said, ‘What about finance?’ I always knew my engineering classes would transfer into finance but they wouldn’t transfer the other way.”
He also went to OSU to play basketball, dreaming of making the Cowboys’ traveling varsity squad as a 6′2″, 175-pound walk-on guard.
Allen was passed over twice, relegated to being a “super scrub,” meaning he warmed the bench and stood in as a practice dummy who never got to suit up or play.
In a horrible twist of fate, both players who got walk-on slots instead of him were killed along with all eight others aboard a team plane that crashed into the Colorado mountains on its way back to Stillwater.
“Needless to say, my parents are thankful that I’m a ‘failure’ and never lived my dream of officially being on the OSU team,” Allen said.
He stuck around the team until his senior year before giving up the ghost.
“I’m pretty stubborn,” Allen said. “That’s what separates a successful entrepreneur. We’re just too dumb to quit.”
Lone Star certified
Allen can officially call himself a Texan, having lived half of his life in Dallas — starting as a financial auditor at Ernst & Young the week of 9/11.
In less than two years at EY, he realized that being a practicing public accountant would never float his boat. He hasn’t been one since.
Allen spent five-plus years as a financial and accounting recruiting manager for staffing firm Robert Half International before launching Elevate Holdings, an athletic and life-skill training upstart that evaporated in 2010.
That was also the year he married Lexie after a whirlwind romance.
“I had no income, no job, $80-grand of credit card debt from my previous entrepreneurial venture,” he recalled. “So I must have been decent in sales to have been able to convince her to marry me.”
His solo practice that first year brought in $100,000 — which he thought was simply awesome.
Living in the in-laws attic
Allen knows what it’s like to be laughed out of banks and snubbed by investors.
He’s self-funded the company without bringing in outside private equity.
As a result, he’s endured his share of growing pains.
In late 2015, Allen moved his wife and their two young kids into his in-laws’ unused upper space so that he could renovate and sell his East Dallas house to pump money into the company.
By early 2016, Embark was on the verge of bankruptcy — not because business was flagging, but because it was on an undercapitalized upswing.
“I’m waking up at 3 a.m. with nosebleeds and migraines trying to figure out how to make payroll,” he said. “I’m not the Paul Allen who started Microsoft with Bill Gates, so we had very finite funds as we grew.
“Without Lexie and our family support during the up-downs, left-rights and sideways, none of this happens. Twelve years in, and my paycheck parents finally think that I have a real job.”
What’s with the name?
Allen named the company Embark even when it was just he and a telephone.
“I view our personal and professional lives as a long iterative adventure, filled with twists and turns and storms and sun, laughter and tears,” Allen said. “We’re all ‘embarking’ on this journey so I thought it an appropriate name.”
Most of his consultants are fresh in their careers — 22 to 33 years old with a couple of years at a Big Four — Deloitte, EY, PwC and KPMG — on their resumes.
Embark typically pays between $75,000 and $95,000 for first-level accountants, he said. Top non-leadership executives made between $250,000 and a half-million last year.
According to industry stats, both pay scales are well above averages for CPAs at national firms with similar experience.
Embark offers unlimited vacation, pays all health care premiums for employees and their families, and writes blank checks for whatever latest-and-greatest personal technology that employees want.
“There’s a huge difference between thinking, ‘I’ve got to go to work today,’ and ‘I get to go to work today,’” he said. “If we can get our people to make that mental shift, our clients will feel that difference.”
The pandemic made Baby Boomer clients rethink the mentality employees and consultants have to plant their butts in the office, he said.
“With enough coffee and high-speed internet, our team can get things done anywhere. But this is not the place where you’re going to work in your sweatpants at your house all day, every day. If you work here, you’re saying, ‘I want to be around energetic, intelligent, creative people.’ "
A case in point
Last April, Southlake-based Solo Brands Inc. hired Embark to orchestrate the financial intricacies involved in rapid-fire acquisitions of outdoor lifestyle brands ahead of its October IPO.
In five months, the direct-to-consumer retailer added Oru Kayak, paddleboard-maker ISLE and Chubbies Shorts (think athletic and swim shorts) to its popular Solo Stove brand of outdoor fire pits.
The IPO raised nearly $220 million for the private equity owners — the high end of pre-offering expectations.
“Embark’s ability to flex and scale to our needs was instrumental to our recent IPO success, particularly with several pre-IPO acquisitions involved,” said Samuel Simmons, Solo’s chief financial officer. “Throughout the process, Embark’s teams exhibited levels of specialized expertise and hospitality that are both rare and elite.”
Embark continues to provide public company reporting while Solo ramps up its internal accounting and finance team, said Jason Larkin, Dallas market president who led the Solo project for Embark.
“The most fun part of working with Solo is the relationships we developed,” Larkin said. “Being in New York City to celebrate Solo Brands’ listing in October was a truly unique experience.”
‘Leaps and bounds’ better
None of the departees wanted to share their exit reasons.
But Allen said they all had good ones.
A guy in Salt Lake went to work with a buddy at a firm that’s setting up an IPO. A woman in Dallas was offered her dream job and took it. A woman in Tulsa is using the money to stay home with her kids. A guy wanted to turn his full-time attention to his real estate startup.
“I talked with each of them. I encouraged them,” Allen said. “They’re going to do great things. It’s awesome.”
Abby Sesker, manager of financial advisory services in Dallas, never considered taking the offer — not even for a moment. But it did give her pause to reflect about why she didn’t.
She joined Embark three and a half years ago as one of its first 60 employees, She’s been promoted twice. “I’ve seen a lot of change,” Sesker said. “Paul has a lot of ideas and he’s passionate about them. He thinks them through and about the impact on his people.”
“The culture at Embark is leaps and bounds above when it comes to caring for their people and work/life integration,” said the 27-year-old, who previously worked in the corporate accounting world. “That in itself is worth more than $10,000.”
To read the original article by Cheryl Hall from the Dallas Morning News, click here.