Join host Aaron Burnett as he sits down with Shahar Plinner, founder of Formations, to talk about the rush of following your instincts, the loneliness he once experienced as an entrepreneur, and the courageous decisions that unlocked his success.
Note, this podcast features real entrepreneurs sharing real challenges and solutions. No pitches, no sales - just honest conversations about the moments that shape successful businesses.
EArly life and Family Background in Israel
Shahar Plinner: So I'm Israeli. I grew up in that neighborhood of the Middle East, born to a middle-class family. Actually, on the way here, I was thinking about how to introduce my story. I said, Hey, I grew up in an entrepreneurial home. My dad had his own business.
And then when I started thinking about the word entrepreneur, I said, actually, my dad was not an entrepreneur. He actually replaced his day job. He was working in an insurance company. He just replaced his day job with an office that he owns.
It didn't feel like the definition of what I believe an entrepreneur is, and there's probably more than one definition. He was working every day from 8:00 AM in the morning to 8:00 PM at night. He was working Saturdays. He had zero flexibility. He didn't take any vacations.
We didn't have a boat or a vacation home. Our vacations were almost planned based on school or based on some seasonality. While my parents had a nice portfolio of real estate at the end, it's mainly where my mom made the decisions. He was a little bit not against it, but he was not in favor.
So when I thought about how to describe the home that I grew up in, it wasn't entrepreneurial. Even when I have two older brothers and when they came to the decision at the end of their high school and college, he advised them to study law because you need an occupation. Go be an attorney, go be an accountant.
I'm the youngest out of three, so I was a little bit more free spirit, got a lot of freedom from my parents. There was a big age gap between my brothers and myself—11 years. So I grew up almost by myself. I was very independent.
When I told my parents I'm going to study business school, my dad was like, business is not an occupation. So when I started thinking about the conversation today, it came to me that while my dad was self-employed, he was working for himself, he had the ability to control his work-life balance. It was never balanced.
Till today, he is 85, in good health. What keeps him young is being around the grandkids and going to work. This is what still keeps him super energized—trying to solve those complicated insurance cases and bringing his 65 years of expertise.
But in a way, it never felt entrepreneurial. There was never a pursuit of another business opportunity. There was never trying to improve the business. The business, since I know the business, was very flat. Never grew in the number of employees. Revenue was the same. So it was funny to come into that realization on the way here from Kirkland to Ballard.
Discovering Personal Independence and Career Direction
Aaron Burnett: Did you know that you wanted to be an entrepreneur even as you went to business school?
Shahar Plinner: I knew that I am not employable. I don't have a story that I recently became entrepreneurial. I didn't have a lemonade stand out of my home. I was always independent, always working from a really young age, whether it was in the local pizza store. I started just as a counter front to sell pizza. It took them a couple of months to understand that I can control the entire operation end to end, and the owners disappeared. They just took off after a couple of months, and it was mine in a way, at the age of 16. I was opening and closing, and it became my hub for everybody to come. It was a super successful operation.
But I knew that I would want to work for myself. I knew that I'm curious enough to discover what my capabilities are, what I'm good at. There was a discussion about what your genius is, which came a little bit later into my career to understand what I'm really great at doing, or what's my purpose in that world.
But in a way, it was not a conventional entrepreneurial journey. It came almost as a way of how life led me to make some decisions that led me to who I am.
Aaron Burnett: What led you to who you are today?
Shahar Plinner: I think one decision was that I don't want to be part of the family business. This was really obvious as a family-owned business. You've been pulled into the business whether you want or not. You hear the discussion about the business all day long. It can be at dinner on Friday. It can be how you tell the story of the family. It can be the involvement of everybody—my brothers, my mom, my dad.
And as I grew up and started making my own beliefs and decisions, I knew that my time at the family-owned business was temporary. I just needed the right timing to let that go. And that timing came around March of 2005.
There are a couple of events. One, as an Israeli, you serve in the Army. I served three years in a combat unit between 1995 to 1998. After that, you are on reserve. So you spend probably between four to six weeks in reserve doing different tasks. Usually, as you get older, you're less and less in the combat area. You're more support, more in some civil tasks.
And in March of 2005, I was assigned for about four weeks just to spend time with my unit. It was a fun time, but you have a lot of time to think. I think this is the time that I realized that's it. I was sad. I was physically and mentally not in shape. I started having some severe migraines, and my behavior was abnormal.
My wife today—we've been a long time together—she noticed that I'm not happy. And there was a discussion about what else is possible.
And I think the "what else is possible" was first to get the courage to stand in front of your boss, which is also your dad. Even now, when I'm thinking about it, you need a lot of courage, but you need the energy to come and stand in front of someone and tell him, by the way, the business that you built your entire life, and the things that you maybe thought that the next generation will take from you, is just not for me. And I'm not sure what I'm going to do next, but I just know that today is my last day.
But what I appreciate about my dad is that he has a way how to separate—I think when you are in the business, it's very hard. But the second that I let him know that it's my last day, I think over a second, he turned off the boss hat and became my dad. While I think he was upset from a business perspective, I think he was proud to the fact that someone can stand strong in front of him and say, by the way, this is not for me. I'm not sure what's next, but I know that this is the end of that chapter.
From Insurance to Taxes - Finding His Calling
Shahar Plinner: It was a great time, by the way. It was May of 2005. It was wedding season for all of our friends. It's the age everybody's getting married. Some of our friends already have a first kid, so everybody's around. May to July before summer is heavy in Israel—it's really hot and humid. May to July is really nice. Everybody's on the beach having some fun. It was a great time to reenergize.
And actually, out of the blue came an opportunity to interview for an Israeli guy who moved to the US, lived in Bethesda, Maryland, and had 12 tax practices in the US. And his theme was I'm building a tax practice around Israelis in the US. So I'm going into hubs where there are a lot of Israelis who have relocated.
That was the end of 2000, mid-2005. I didn't know anything about the US tax system, nor did I have experience speaking in English. While you study English from second grade all the way to the end of high school, it's not really practical English. My wife worked in a tech company once she graduated, so it was emails and communication and stuff that you need to exercise your English. I never had to speak casual English.
There was an immediate click for me with that specific person, and it was a click for me with the US tax system. It was funny—you speak about embracing your genius and understanding what you are good at. And I'm one of those weird Israeli guys from a small city outside Tel Aviv who can see the US tax system. I can just see all the metrics, and it became pretty obvious that this is my next journey.
I became more and more passionate about understanding the code, but also understanding how to loop all the code—how to understand how to connect a few things together that will allow someone to save money.
And I think the interesting part that I look back on between taxes and the insurance business is that both of them, you serve. I'm a servant at the end of the day. I'm a service provider. I enjoy the human connection. I enjoy leading people into some greatness or allowing them to unlock some complex situation.
In insurance, the business that we've been in was loss adjusters. So usually it comes through when the policy is breached—you have theft, you have a flood, you have a burglary, you had a fire. You need to actually sue the insurance company to get some money back. And as the adjuster, you're always the bad guy, always, because you're in between the insurance company and the customer. The insurance company never wants to pay. Everybody's trying to manipulate the insurance company. The policy is limited to what you can pay back, and you're always being blamed for being the bad guy.
In taxes, you're the good guy. You are between the government, the IRS, and we're always saying that, fortunately, the IRS doesn't have a marketing department, so it depends on us—the individuals who understand—to share the message. And the message is usually a positive message. It's about how we can make you unlock some interesting financial concepts that, at the end of the day, will help you to save more money or keep more money in your pocket.
So actually, when you understand the concept of being a tax expert and how the system works, you become the good guy. You become a very interesting persona to speak to because most people don't even understand taxation. So you go into a room and you start networking and you start saying, what do you do? Everybody wants to understand the secrets of the IRS, almost like a magician. So this was a great position to be in. And I felt that moving from being the bad guy in an industry that I really cannot connect to, into being the good guy in an industry that is super complicated and people almost by default have to interact with, it's a great natural move.
Aaron Burnett: So you landed this job. Did you stay in Israel, or was that what brought you to the US?
Shahar Plinner: This is what brought me to the US. Oral and I had been dating since 1999. So we'd been dating about six years before that transition, and we knew that for us to move as a couple to the US, we needed to get married.
All right, so let's arrange a wedding. We knew that we'd have to land in the US in November, December, maybe January, because we're heading to tax season. So we arranged a beautiful wedding, September 2005. I got married. It was also an opportunity to see everybody and, in a way, say goodbye.
We never knew that the journey would take us 20 years later to still be here in Seattle, a family of three kids and a couple of businesses behind us. But back then, it was a journey. It was let's go—nothing to lose. We are a young couple, no kids. Let's pack a couple of suitcases and let's move to the US.
The decision to move to Seattle was—while there were multiple branches around the US: New York, Chicago, Colorado, Silicon Valley, San Diego, LA—there was that small office that they just purchased in Seattle early 2005. The decision that led us to land here was that I have family in Bellevue—I have an aunt and a couple of cousins that I never met. I met them probably once when they came to visit Israel 40 years ago, when I was a young kid. And then I was curious about how that will be, landing in a foreign lan,d but having maybe the support of the family.
That turned out to be probably one of the best decisions. I'm not sure who was happier—us, Oral and I, knowing that there is immediate family that can help us to understand more of the area and understand overall the US culture and how to be embedded here, or they've been so excited about there is immediate family for the first time, actually living next door.
So it was a pretty quick decision. A quick turnaround—six months from the introduction to the world of taxation. We landed in November of 2005 in Bethesda, Maryland. This is where the headquarters were. Quick arrangement of social security, understanding where you land, just to get a little bit of an overview of the company, and that's it. The ticket to Kirkland, Washington. And let's discover, let's see what's going on. Let's start that journey. There was very little known at the time. It was marching into an experience that you have no clue what you're going to land on.
Early Years Building GPL Tax & Accounting
Aaron Burnett: How long did you work for this company?
Shahar Plinner: So I worked for them from 2006 all the way to 2009. I had to rearrange myself in the US, and the individual who actually was the angel that helped me with my immigration, all of my paperwork, Davis Bay, turned out to be also an EO member. Five years later, he was the one who introduced me to the EO chapter. He was just waiting for me to grow my own business to the million-dollar mark and qualify, and he was checking on me every once in a while.
He helped me with the visa, with transferring the visa into the entity, and then helped us to get into the green card process, and then to the citizenship decision. He was checking on us every once in a while. And the second that I confirmed with him was that the consulting business, GPL that we built, just crossed the million dollars, he said, all right, you're ready. Go meet the board. And that was early 2014. So now I'm getting into my 11, 12 years in EO, which feels almost like it was yesterday.
Discovering EO and Finding His Community
Aaron Burnett: And were you aware of EO during the previous years? Did you know that there was this invitation waiting if you crossed the million-dollar threshold, that you might hear more about EO, and you might be invited in?
Shahar Plinner: Nope. When you ask me today, what's EO for me? I think it's that missing part back then that was so missing for me back then. The first five years of running, incorporating GPL Tax and Accounting, we started the journey around November, December of 2009, and we ended up selling the business in August of 2022. But the first five years, until I got to know EO, it was very obvious that I was missing a major part of my entrepreneurial journey.
And only when I literally met my first forum—Forum 7, still Forum 7—it's the first time, literally in the first meeting that I had some level of relief because I knew I found my people. And this was something that I was missing so much at the beginning of the journey. Someone that we can share experiences with. Someone who can tell me that I don't need to explore everything by myself. I also believe that there are no shortcuts. And the journey that I had to do by myself led to the point that I was ready for that EO experience.
Aaron Burnett: You came to EO because you felt lonely as an entrepreneur. What has EO given you?
Shahar Plinner: Tax and accounting is a very compelling offering. So while you're not allowed to solicit or do business within EO, you're allowed to tell people what you do. By nature, it just attracts some traction from small, medium businesses that were so curious to understand what their tax position is and how to unlock their level of complexity. So even by not soliciting business out of EO, I probably got 10x, 15x, 20x a year return on my dues. It was not the intention, but it was a nice byproduct. Some growth out of the EO chapter. So this came pretty naturally. Friendships that work with me till today. People who became really good friends, families that became family friends, both in the US and outside the US.
As an international, my practice was specialized in international tax, so all of the nuances that require people to assess foreign operations to report in the US. EO is a global organization, so it allowed me to reach out to people outside the U,S everywhere that we've been doing business.
When we opened our first office in Sri Lanka, I had the ability to speak to some EO Sri Lanka attorneys, accountants, and business owners to understand a little bit more of the culture. It's funny, I have a large organization operating in Sri Lanka. I've never been there yet, so potentially this year. But getting someone who can help me understand what's going on was really helpful.
EO in Israel was a big one. It's a young chapter that just started shortly after I joined EO here. It was fascinating to speak about it with my entrepreneur Israeli friends and bring them into the EO chapter, and see them growing and getting the values that I'm getting.
I was involved in EO Accelerator, and it was amazing to go to the basics of cash day and strategy day and be a student of the journey, but also lead four amazing ladies. Three of them graduated and became EO members. So just to see—it's almost like kids that you see them growing and taking their business from two, three hundred thousand into crossing the million and allowing them to join the chapter.
But I'm part of my EO accounting group, that I have 30 other CEOs of accounting firms, EO members around the nation, that we speak about our industry and get a little bit more into their mindset.
And three, four years ago, I joined EO SaaS. As I moved from GPL as a consulting business, I was fascinated to try more of the venture-backed world, the product world, just more of the tech environment. So I took myself into the EO SaaS—it's a SaaS forum. We have seven, eight hundred entrepreneurs that specialize in that business operation, which is very different than running a professional services operation.
Aaron Burnett: When you connect with other EO members, particularly around the world, what unites them? Do you find that there's a common perspective, a common approach, or do you find a lot of diversity in approach?
Shahar Plinner: While I find diversity, and I enjoy the diversity, when you use the EO code name, it's unbelievable how the door opens faster. I can reach out to someone on LinkedIn or I can have a cold outreach or someone makes a warm introduction to an entrepreneur, and it takes maybe a second for the warmup or the verification or the check. I check you, you check me. And when you wave your EO card, all of that pre-engagement almost disappears over a second. And you can immediately go into a very meaningful relationship. You don't need to explain yourself too much. Almost like EO is doing the work to filter and to qualify the individuals. Once you are in the organization, you take for granted that if you are talking to another EO member, we share the same ethical values, we share some of the identity of why EO is such a big deal. Then I think the diversity comes, then each one of us brings something unique as an individual to the table.
But the EO card is amazing. Sometimes now it's on my LinkedIn account and I'm using it more freely, but before it was hidden, and it was hard to get to someon,e and then you pull the card and then boom. Why didn't you say so before? So it's what has changed? Nothing is the same here. But I think that card is just a super powerful one.
The Genesis of Formations
Aaron Burnett: So you started Formations in 2022?
Shahar Plinner: No, we started actually in 2020. So we are a COVID baby. We are March of 2020.
So around February of 2019, I'd been experimenting with Balanced Monkey. Balanced Monkey was the first name of Formations. The idea is that monkeys can balance financials for the self-employed. It's just super fun, super easy, and simple financial profile. Once we went into the venture world and started raising money, investors didn't like the monkey-money relationship. So we had to go through a rebranding exercise.
But around February of 2019, I'd been experimenting for about three years with the idea of cloud accounting, cloud computing, banking as a service. FinTech started to become a thing, and we started connecting just simple—what happens if I'm connecting my LLC to a separate banking, filing as an S corp, do bookkeeping live, providing financial statements, potentially add some benefit or retirement plan, and let's see if it resonates with some service providers. And it was a big deal. It was exciting to share the message. And the message was very clear to understand for that specific segment.
Three years later, by February of 2019, I had enough courage to wrap my concept, went to the Bay Area. And keep in mind that in GPL, the segment that we took care of was tech companies—we did their bookkeeping, their tax, their HR. So I had about 150 founders, CEOs that I could run some ideas by. So I picked a couple that I really trust their mindset or their thought leadership, and they said, hey, you need to go and see that specific person in the Bay Area. I will give you some confirmation. And I got the confirmation. I got the confirmation that we have a great idea.
I think what's funny also about that story is that it's a VC of one person. Today, he controls probably three to four billion under assets. He's the one decision maker, which means if he likes you, he'll write you a hundred-million-dollar check. It's not just seed fund money of a hundred thousand dollars or angel money. This is a VC of one person. We actually liked each other. And then his comment was, while you built a really successful business and you're trying to exit as a service provider, the world of product is something really different. And I only invest in serial entrepreneurs, so come back with your second venture. But for that one, I will pass.
But I can tell you that the guy who was here before you is one of the most talented CTOs in the Bay Area, but his idea is shit. So while I will invest in him, because he is a serial CTO, I would never invest in his idea. But if your idea and him come together, something beautiful can be created.
And immediately I remember I was in a cafe in Palo Alto, and then I went down the stairs. He was sitting on the second floor, and before I got into my Uber, I got an email introduction. And Oren, the VC guy, said, hey, Shahar, meet Ron. Ron is one of the most talented CTOs. Ron, meet Shahar. I think this is the idea that you need to go after.
I called Ron out of the blue. I don't know him. We started a meeting for the following day. We met for about four hours. I flew back home from Silicon Valley to Seattle. When I landed, I already had a six-page product marketing and some framework of what Formations is. He already processed my idea—the Balanced Monkey idea—and put it in something that I could not describe better in a six-pager.
We started dancing together. It was a pretty interesting dynamic. I was fascinated with the technology world. But then, five months later, he got a proposal that he could not refuse. He became a CTO of a startup that went to IPO.
But the relationship was there. That's it. It's a friendship for life. So we stayed in touch. Six years later, he is one of our advisors and consultants. He meets with Uri, my co-founder, and myself every Friday. We probably speak three, four times during the week. And then we have a two-on-one every Friday to close the week. So Ron was a huge supporter of that venture.
But for me it was—that's it. As an entrepreneur, that was my shiny object. I could not turn off that six-page document, the fact that one of the most respectful VCs in the Bay Area said he can sign off on the idea. I could not turn off the fact that now I have one of the most talented CTOs in my corner. And for me, it was just what's the right timing now to depart from a business that had been my whole life.
The Creative Process and Building the Vision
And it took me all the way until probably July, August of 2019, until I basically rearranged the practice, brought in a CEO, a couple of directors, let my second in command take over. But that's it. I took a small space from Peter Chi, another EO member, ThinkSpace in Redmond. I took a room probably smaller than this room. I always had this crazy idea to put all of these sticky notes on the wall. So first thing, I went to Office Depot and purchased tons of sticky notes, and I just put sticky notes all over the wall. I purchased some markers, and I said, all right, now it looks like a room of an entrepreneur. I purchased a small whiteboard on wheels that I can move around. And there was one chair, and this is where I spent my entire summer of 2019. Literally every day I was going into this empty office and slowly started filling out the sticky notes. I don't know if you noticed when you came in—a rolling whiteboard with sticky notes.
So when I envisioned the world of creation of the ideation and the idea, it felt like a scene from a movie. So I said, let me try to bring some of my dreams. I replaced my dress shirt with a t-shirt. I replaced my dress shoes with flip-flops. It was summer in Seattle—shorts. I replaced the walls with sticky notes, and I started downloading everything from that six-page idea into something way more meaningful. And then, piece by piece, started bringing everything together.
I think the changing point for me was the summer we went back to Tel Aviv. I already had in my mind who do I want to be my number two. And I think that one of the lessons that I learned is that the integrator, that operator, that number two, the one that will actually put your vision into work papers, is probably the most important function. For that visionary, someone who can wave with his hands, can speak clearly—not all the time clearly—and then have someone who is a little bit more process-oriented that can process all of that and then download that into something that we can share with other people.
Uri, my co-founder today, is a good friend, a family friend. He moved to Seattle around 2007. His wife grew up in Mercer Island, so she went on vacation in Israel and recruited him. He came and they got married, and he was here. But we took very different paths. While we're family friends, and our kids now are the same age and everybody's one big kumbaya, big family, he went more into the startup world, into marketing and operations for a few marketing automation and SEO companies—the early industry in Seattle. So he got way more into the startup world and I was always curious about him. And I know that he was always curious about me because I was the crazy entrepreneur having his own business coming with all of those stories. Sky's the limit. Whatever you want—office in Tel Aviv, office in Sri Lanka, office in the Bay Area. The team grew every year 30, 40 percent. So there was always the interest to work together.
So Uri was involved in the Balanced Monkey story. But not until I had all of my vision together. I couldn't speak about it in a smart way. And then in August of 2019, when we went back to Israel, we sat on the beach. And I literally remember then I downloaded on him, hey, this is what's going on, and I really want you to come and be my number two. Took him five seconds to say yes.
Karen and Uri went back to Israel for a couple of years to see if this is a path that they want to pursue. Israel is not an easy country to relocate to or to live in. The weather, the political climate, the roughness of the people. So for Karen, it was a great opportunity to say actually, this is a great time for you to go back.
In a way, Oral, my wife, and I ambushed Uri because everybody started talking around him about how this is a great time to come back. And Shahar, if you push hard enough about this business opportunity, it'll be successful.
So there was the discussion around it, and then at the beginning, it was not easy because it took them a while to arrange the move back. And then March of 2020, COVID hit, and everything was closed. So in a way, at the beginning of September, he was in the US. October, I came back to Tel Aviv. November, he came to the US. December I went to Tel Aviv, and then January, it was the last time that he came to the US. February I went to Tel Aviv and I came back home February 28th. I landed at SeaTac and that's it. The following day, the skies closed. And then March 1st, we signed our first lease agreement. We moved into a new office.
Congratulations, Formations has a new office in Kirkland, and it's COVID. A new empty office. Empty office of one. So I continued to go to the office and then as we started growing, people started showing up. Uri moved with the family around July or August—they moved permanently back to the US.
And this is where things started kicking off for us. COVID was interesting times. The main segment that Formations decided to go after was real estate agents. The promise of Formations was that I wanted to stay in tax, I wanted to stay in tax and accounting. I wanted to create some experience, which I call today liberation and correction.
The liberation was that I had to get away from customers. I couldn't do it anymore. At the peak of GPL, we had close to 3,000 customers. I knew them all. They knew me. Everybody wanted me. There's so much of me that you can share when 3,000 people want you during tax season. It's just a lot. So I needed that buffer. How can I hide behind either a better operation or by the product, so I have to free myself from being attached to so many customers.
And then the correction is that I felt that there were so many mistakes building my first business that I was fortunate to get a second chance to build something way more innovative, way more profitable, and maybe with a different business structure.
So the entire Formations operation was built over a niche of almost like an ICP—ideal customer profile—of very defined, successful real estate agents. But then COVID happened—March of 2020. There's no real estate that can be sold. Everybody's home, nothing is moving. But looking back, real estate was one of the industries that bounced back probably the fastest. They started doing showings over Zoom, over Teams, and they started closing deals remotely and they found ways to bring the industry back.
And for us to gain customers, we did a lot of education and awareness, so it was lunch and learns. So I had to go to real estate offices—Windermere or Compass or eXp or Berkshire Hathaway. And now that everybody moved to Zoom, we discovered email to webinar. So now I can share a message to 2,000 real estate agents, which I'm not geographically bound to any. I'm not restricted, and then get 200, 300, 400 real estate agents to hear my message about why a real estate agent needs to be an S-Corp, how do you take those lemons and make lemonade. Email to webinar is what helped Formations take off.
Formations Today - Current State of the Business
Aaron Burnett: Tell me about Formations today.
Shahar Plinner: Formations today is a SaaS vertical, still a venture-backed startup that solves for the back-office tax and accounting needs for what we call the business of one—full-time self-employed, one of the largest segments of the workforce, 50.5 million full-time self-employed. So we're going after the career-driven, self-employed—basically, usually individuals who are great at selling something. Real estate, insurance, financial advisor, plumber, electrician, fractional CFO, CMO, CTO who want to work for themselves. Do not have a need to grow a large operation, don't want to hire more employees over time.
What they basically do is they just increase either their pricing or their value proposition so they can make more out of the same hours or the same pool. Same in real estate. You start with selling houses for $450,000, and once you gain more traction, you can sell homes for a million dollars, two million. So in a way, it's the same work, but then instead of getting a commission of $12,000, you're getting a commission of $40,000. So, as you continue to grow as a professional, you sometimes forget to update your back-office operation. You forget that now you've outgrown your existing structure.
Maybe a sole prop is no longer enough, and you need to move into a single-member LLC. Maybe a single-member LLC is not enough. Maybe it's time to explore S corp. What is an S-corp? How do I operate it? What is the 401k? How do I pay my kids? How do I budget? What can I expense, what can I not? There is a lot of awareness and education that is missing.
We fill that niche of awareness. We start by bringing a lot of easy content to consume. Something else that's been working with me for many years is my accent—it's an area of fear, uncertainty, doubt for me. I don't have a European, polished accent that I'm so jealous of. And also, my vocabulary is limited. While I'm trying to sound sophisticated, at the end of the day, English is my second language. I'm only speaking English for the last 20 years. But it serves as an advantage because now I can share a very complicated idea—taxes—in very simple words.
So I think this was my message to my team. My message was how do we democratize that entire operation to a segment that doesn't have the patience, nor the time to learn, or the appetite to become an expert? But how do we bring enough of that content that will make them think or stop and rethink, or learn and unlearn because we all bring some biases that we saw from family, from parents, about relationship with money, relationship with taxes. So people have a messed-up relationship with money. And you carry those messed-up relationships with money as a kid, as an adult, as part of your marriage, as part of your partnership. Now your wife or significant other is coming with her messed-up relationship with money, and it becomes a cluster of what's the best way to manage money. And now, when you add the tax aspect to that, there is a lot of uncertainty—what you can do, what you cannot do.
We're always saying that financial distress is one type of distress that can cause sickness and can cause so much mental issues. And because the fear, I'm going to lose my home. I'm going to lose my kids, I'm going to lose my car, I'm going to lose my retirement. I'm ashamed, I'm embarrassed. Everybody around me is so successful. I'm the one who cannot pull the trigger on how to make money. So the idea was, how do we make people feel really comfortable around the subject? So they're willing to adopt and learn and bring some changes into their life.
Aaron Burnett: And so you provide very clear education to demystify finance and tax, and then you're delivering back-office services to support solo entrepreneurs. And s,o how many clients do you have today?
Shahar Plinner: So right now we're serving close to 1,200 customers. Ninety percent of them still in the real estate market. We expanded a little bit more the services around real estate, so we're serving real estate agents, and now we're serving real estate teams and brokerages, solutions to real estate investors.
People who invest in long-term, short-term Airbnb became a thing. How do you deal with short-term rental? How do you deal with 2008, the subprime? And tons of foreclosures, and people are losing basically their housing. How do you make money out of that? Tons of distressed debt, but now there's a new industry—the wholesale and the distressed property, and buying assets out of the banks, do some fix and flip became a thing. So how do you respond to that? It's very different than buy and hold. Tax treatment versus short-term versus flip or construction or investment.
So we became an expert on that because we know that real estate agents feel really comfortable putting their retirement in some rental management instead of money in the market. Because I can buy and sell properties all day long. I can identify a property that can be a great investment opportunity.
So we increased our footprint and then started providing cost segregation, which is a way to accelerate depreciation on a rental property, 1031 exchanges, and things that basically real estate agents need. So it became almost like a full service.
But in a nutshell, what we also discovered is that the financials of self-employed is the same regardless of your industry, which means I can put in front of you a P&L and a balance sheet of a self-employed—if it's a financial advisor, if it's a fractional CMO, if it's a real estate agent or marketing consultant, you won't know who is who. Because 90 percent of it is very similar. We can automate that 90 percent of the journey, so you don't need to waste time dealing with your bookkeeper separate from your CPA, separate from your financial advisor, separate from someone who manages your operation. We can definitely incorporate everything under one roof, and because we built tthe echnology, we can give it at a very affordable price.
We can bring on top of the awareness, the execution, and I think what's missing or what we identified as missing in what we call the old world, or the CPA—you can find great accountants out there, then you can go, and they will be more than just the form filler. They will give you advice—Shahar, with your kids and with your wife and with your assets and with whatever you have, we advise you to do 1, 2, 3, and 4, 5, 6. By the way, good luck and we'll see you either next quarter and let me know if there's anything I can do for you. And you go out, and you thought that you got it, and then you just lost it because it's a new language. And you're not sure where to start. And we found out that people are missing out for the lack of execution.
So what Formations is trying to do is also to close that gap, meaning, hey, I need you next week to have a 401k. This is the one thing that I need you to do because you have enough cash flow that we need to put that $23,000, $23,500 this year into the 401k. And by the way, agreed? Great. Can I do it for you? Great, and now I'm doing it for you. So now I'm contacting my 401k TPA, the third-party administrator, and I'm connecting with your financial institution, Fidelity. And three days later, there's $23,500 inside your retirement account because I can connect everything from FinTech between your banking to your payroll to your financial institution. Everything can speak today, and I think this is the power of Formations—the ability to integrate your back office in a click of a button. So everything will be seamless. You don't need to waste time on commodity or execution.
EO's Impact in Crisis Resolution
Aaron Burnett: Can you think of a time when EO has really delivered for you, either in a moment of triumph or in a moment of crisis?
Shahar Plinner: So, two weeks ag,o I brought a problem into my forum. We started a small business operation to test the concept if we can deliver the same value just for high net worth individuals on the 1040 side, more on the personal tax, and have a business partner out of New York. And then we'd been running the operation over a handshake for the last couple of years just to see if there's anything meaningful out of that. After a couple of years, when we saw that there is some business operation, we stopped for a second and we said, all right, it's time to put things a little bit more formally.
And then he went back into some discussion that we had two years ago that was just a dream, and I reflected on the reality, and there was a difference. There was a gap between what we felt equal and amicable to set that operating agreement between us. And literally, I walked for three weeks confused, depressed. You could feel it. I felt that there's something here not fair, and my emotions were all over the place. The emotions were like, I don't care anymore. You can take the business. Let me just walk away, I have enough on my plate. Let me take off. All the way to, hell no. This is like a 50-50 operation. This is—I came a little stronger, but the emotions were moving all day long, and I decided to bring that business problem to forum.
And it was a quick, light round of discussion with forum. After 30 minutes or less, in a way, I got it all resolved. It was amazing. It was three weeks of constant frustration that came to an end with my forum mates sharing experiences. Maybe going a little bit more into the tough discussion, which is fine. If it's all open and you are ready to get some advice from forum or what would I do walking in your shoes or what would you do if you were me. I got that solved. I felt really well. It was immediately like a relief. And then it allowed me, literally the following day to reconnect with my business partner and get into an immediate agreement that satisfied both of us.
I don't think there's a small thing in the life of an entrepreneur. I think everything—you should never overindex on stuff because we see so much and we experiment and experience so much, but at the end of the day, those things that you're stuck with, that you cannot move on, EO is almost like a valve of relief of pressure.
Aaron Burnett: You've collected friends throughout your life. And you have close family. Why were you able to resolve this issue in a forum in a way that you couldn't resolve it with someone else who is close to you?
Shahar Plinner: There's no one in my world that can solve such problems, in my opinion, than my people. This is a problem for my people.
This is a problem that—I'm sharing everything with Oral, with my wife, and she can be—she's very reasonable, and she's showing me some blind spots. But still, she could not get to that resolution. Most of my friends—if they are W2 employees or people that are not involved in business operations, their experience,s based on my past experience, none of that is actually can be related to the solution that I need.
And I don't know, I've been in EO so long in a way, I know what type of problems EO can help me solve, what type of problem. Sometimes my kids will allow me—because I'm running some ideas on an eight-year-old that doesn't have too much biases or filters, or I'm running it on a 16-year-old or 15-year-old that has their own beliefs in the world today.
But I knew when I had the feeling that I'm carrying that frustration and unsolvable business problem for so long. I was confident that forum will help me solve it. I was shocked if the forum could not help me solve it.
Aaron Burnett: What do you want people to know about you?
Shahar Plinner: I'm not giving up easily. I'm pretty stubborn. Once I believe in something, I have tons of fear and anxiety that I'm dealing with on a daily basis. That family is number one, although even my family knows that everything about family is around EO. So if there was a trip, we leave after forum and we'll come back before the next one. Even my eight-year-old knows that there's something called EO, and it's a magical something that makes Daddy happy.
That I am a very proud Israeli, which is not always easy. After October 7th, I stopped defending or needing to justify anything about Israel. Something changed about me. It was an existential fear of us as Israelis, as Jews in general, that as long as I can contribute, I'll stay in EO as long as I can provide value to the members and to the people around me. EO will be part of my life, and I will continue to solicit everybody to be part of it.
Aaron Burnett: It's been a great conversation. Thank you for doing this.
Shahar Plinner: Appreciate it. Thank you so much for having me.