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Business Technology, HR, and Embracing Entrepreneurship with Former Paychex CFO

Senior advisor to the CEO, Efrain Rivera
Senior advisor to the CEO, Efrain Rivera



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Efrain Rivera (0:00:00 to 0:00:28)

But the reality is that starting with respect is 80% of the battle. If I understand where you're coming from, I don't make assumptions about why something occurred or didn't occur. And I also understand what is it that makes you tick. And if I can show you respect and I understand what motivates you and makes you tick, I'm on the path to a very good relationship with you.


Announcer (0:00:28 to 0:00:47)

Welcome to Paychex THRIVE, a Business Podcast where you'll hear timely insights to help you navigate marketplace dynamics and propel your business forward. Here's your host, Gene Marks.


Gene Marks (00:00:47 to 00:01:15]

Hey, everybody, it's Gene Marks. And welcome back to another episode of the Paychex THRIVE podcast. This is actually a very special episode because I have with me Efrain Rivera. Efrain is now currently the senior advisor to the CEO of Paychex. But formally, and this is a few weeks before we started recording this, Efrain was the senior vice president and chief financial officer of Paychex. So, first of all, Efrain, thank you very much for having this conversation with me.


Efrain Rivera (00:01:15 to 00:01:19)

Thank you, Gene. It's a pleasure and a privilege and an honor to be here.


Gene Marks (00:01:19 to 00:01:48)

So, I have to ask one major question comes to my mind. I have spoken with a number of people at Paychex that I am interviewing you today, and everyone loves you and everyone ... there has been this common theme. A few people have called you iconic here at Paychex, and a few people have actually called you the most interesting man at Paychex. So, my first question is, why are they calling you that?


Efrain Rivera: (00:01:49 to 00:01:54)

So, I would say the iconic part is probably age more than anything else.


Gene Marks (00:01:54 to 00:01:56)

Nobody's calling me iconic.


Efrain Rivera (00:01:56 to 00:02:26)

Yeah, look, first of all, we were just talking, Gene. Paychex is a unique company and a unique culture, and I think it is a supportive place, and I think a place with a lot of generous people. So, I've been here for now 12 and a half years, and I think those comments reflect the generosity of the people who made them less about me, more about them.


Gene Marks (00:02:26 to 00:03:12)

A very diplomatic answer. I do think they do reflect you as well. You seem to have a lot of respect here and have been around the block a little bit, which is good. And that's what we're going to talk about. When we were talking about me interviewing you for this podcast, I was excited to do it.


First of all, I am an accountant like you, in a way. Any chance I have the opportunity to interview a chief financial officer of a large, publicly held company, I know that there are plenty of things that I can learn. I know our audience are going to learn, as well. So, let me start off with this. First of all, so you're now an advisor. So, you're sort of on that golden road to retirement as it is. Tell me about your background. Like, how did you arrive at Paychex?


Efrain Rivera (00:03:12 to 00:04:57)

Yeah, so I guess going way back, I started my career as a lawyer, actually, and did some work for the Department of Justice in commercial litigation. I enjoyed that and did well at it and realized that that was not where I was going to end up my career. So, I made a pivot after about four or five years and went back, got an MBA and started my career in business. So, I was about 30 or so and started again. And I just had a sense that that was the better path for me.


So, I went back, got an MBA in finance, and started a career at another company, a healthcare company, and rose the ranks there, through the ranks there from the ground up to become the chief financial officer of that company over 20 years. I helped take that company private and then took a little bit of time in academia, and then was fortunate almost 13 years ago to get an invitation to join Paychex as the chief financial officer. And now I've gone full circle and in the process of transitioning to retirement. It's been a remarkable ride during that period of time where really the birth of what we would call the modern human capital management industry began and flourished.


Gene Marks (00:04:57 to 00:05:05)

You mentioned about you got an MBA and it was a number of years ago, but what are your thoughts on MBAs today? Do you think they're worthwhile?


Efrain Rivera (00:05:05 to 00:05:53)

I think MBAs can be worthwhile, and I liken it this way, Gene. An MBA gives you a set of options that you don't have if you don't study that material now, you can acquire that knowledge in other ways. So, I'm not saying you can't, but I think you need to understand the material that's taught in most leading MBA programs because it's the bread and butter of the way business is run, and especially in the more advanced concepts around accounting and finance. It's language that you need to understand, and it's material that you need to have at least some understanding of in order to run at least larger enterprises.


Gene Marks (00:05:54 to 00:06:16)

You mentioned that you joined Paychex 12 or 13 years ago. That's like a lifetime in this world in HR. And when you joined it, I'm guessing, and correct me if I'm wrong, that Paychex was still like a payroll company, and it is not a payroll company like that anymore. Tell me about the changes that you saw?


Efrain Rivera (00:06:16 to 00:06:56)

Yeah, absolutely. It really has been a dramatic transformation. And I think the CEO then, Marty Mucci, had the vision that the industry was going to move towards technology solutions, less focused on pure service. So, when I came in, it was more delivery of service and some technology. And I think the foresight, the fundamental insight was that it was going to move to technology. There was a movement to the cloud. There was an understanding that these systems would be run in the cloud rather than on premises.


Gene Marks (00:06:56 to 00:06:57)



Efrain Rivera (00:06:57 to 00:07:31)

And that that was the way that the service was going to be delivered. It was going to be a mixture of human interaction and technology, what came to be known as technology-enabled service. And if you didn't do that, and if you didn't make the investments to permit you to function in that way, it was going to be really tough. Some people didn't. Some companies didn't make it. Other companies did very well. But that's when that transition started to occur.


Gene Marks (00:07:31 to 00:07:45)

Did you find it difficult? I mean, you're in the CFO role, but obviously we're a big part of the operation of the company. Did you find it difficult at the time, dragging your customers into this new cloud-based world?


Efrain Rivera (00:07:45 to 00:08:51)

Yeah. So, that's interesting. We had an advantage that other companies did not have. So, we had thousands of service providers that could help our clients through that transition. So, at first, it was understanding what we provided from a technology standpoint. Then it was selling them, in many respects, on the new features and functionalities that were suddenly available to them. And then it was guiding them through the process of understanding that they could do a lot of this stuff themselves, and that actually they could bring to the systems that they were interacting with new ideas, using what was there to customize, in important respects, the service and the delivery of the product that was required for their business. So, they had an infinite amount of new possibilities in terms of what they needed for their business, whether small or large, that didn't exist before.


Gene Marks (00:08:51 to 00:09:28)

From a financial perspective, you were convinced at some point that moving your community over to the cloud would be the right thing to do, not only just for Paychex, but for them, as well. But at some point, at the very, very beginning, you probably had to figure that out for yourself. And for companies like yours that are facing big changes, big fundamental changes in their business, take me back to that time when you were making that change and how you got your arms around changing the business model of the company. What did you do?


Efrain Rivera (00:09:28 to 00:10:05)

Yeah, so that process had started as I was coming into the business and fundamentally what it meant, Gene, and I think this is true whether you're a small company or a large company; it meant embracing the fact that technology would do what people did in the past. But in order for you to be able to embrace that change, you needed to invest in the technology upfront. So, that's the big challenge. Do you take the step of saying, there's a number of things that I currently do one way that can be done in another way?


Gene Marks (00:10:05)



Efrain Rivera (00:10:05 to 00:10:37)

It's going to require an investment. If I invest, I can see beyond the current situation to a point where I can do it more efficiently, more effectively, more rapidly, and I can service my customer better.


Gene Marks (00:10:20)



Efrain Rivera (00:10:21 to 00:10:59)

I think that that process had started, and I give great credit to our head of technology. Just talking with him, I gave great credit to our former CEO, who understood that. But at some point, you come to that point, the point where you make a decision to make the investment ... thinking and believing that it's going to pay off. Every business faces that issue around, how do I become more effective, more efficient. Sometimes it requires a bit of a leap of faith that you're going to get a payback, but you have to do it.


Gene Marks (00:11:00 to 00:11:44)

You talk about that leap of faith. I mean, I was telling you before we started, like, my company sells customer relationship management software. I go into some small and mid-sized businesses, they'll buy $100,000 piece of machinery without a blink of the eye because they know they can turn it around and start generating products with margin to pay for it. But I asked them to spend $10,000 on a piece of technology, and they hem and they haw for months or years. So, you have a financial background, you're almost paid to be risk averse.


You're supposed to be the person that says, these are the reasons why we shouldn't be doing this. Were you that person at the time of this fundamental change, and how were you persuaded to say, yeah, okay, this would be the right investment?


Efrain Rivera (00:11:44 to 00:12:01)

Yeah, Gene, that's an interesting point. So, I think there's a perception that people who evaluate products, services or look at it from a cost containment perspective or from a cost.


Gene Marks (00:12:03 to 00:12:04)

Save Money. Yeah, right.


Efrain Rivera (00:12:04 to 00:13:22)

My perspective always a little bit different. And I would turn it around a bit. I always thought that every dollar that a company generates is an opportunity to make a calculated risk about where that dollar is placed. And I think the better you become at doing that, the more successful you become in business. So, every dollar that you're generating, the bottom line, you have a choice. You can either not reinvest it. That's an option, of course. Or you can make a calculated decision about where to reinvest that dollar. And will it produce a return?


Not every dollar will, but many will. If you've thought through what your end goal is, and I think the best organizations, the best companies, the best businesses; you go in, and there's always something a little bit different about the way they're doing it now versus the way they did it six months ago. I think that's a good example of taking a calculated risk about where you invest your next reinvest your next dollar to produce the next dollar of return. I think good businesses figure out how to do that. Not always easy.


Gene Marks (00:13:22 to 00:13:26)

And there's a big difference between taking a calculated risk and gambling.


Efrain Rivera (00:13:26 to 00:13:27)



Gene Marks (00:13:27 to 00:13:31)

And how did you come to terms with that risk at the time?


Efrain Rivera (00:13:31 to 00:14:32)

Yeah, so I think that's really at the heart of how you make good decisions. You have to have enough information to be able at least to frame a set of outcomes that you feel comfortable with. If you don't have any of that information and you're simply thinking or wishing that you'll get a certain return, you're more in the realm of gambling. If you have a set of outcomes that you think can occur and you have some basis for that, and you don't always have perfect information. You're taught that in business school, there's no such thing as perfect information, but at least you can frame a set of outcomes around what this dollar for remodeling will produce, or this dollar of technology will produce, and you can think your way to an outcome, then you're in the realm of taking a calculated risk. Then you decide whether you can afford to do it and whether you want to do it.


Gene Marks (00:14:32 to 00:14:55)

Is that the way that you've always sort of made your decisions? I think it's Jeff Bezos who has this attitude of like at Amazon, most decisions, not the giant, giant ones, but most of them are made on 80% - for him - if you have 80% of that information, that's enough. Are you the same, do you feel the same way, or are you more conservative?


Efrain Rivera (00:14:55 to 00:15:20)

No. Look, it's flattering to say, 'I think like Jeff Bezos', but I think that's a good rule. Maybe you don't always get to 80%, but you get 75. And what's interesting, Gene, is the more of those decisions you make, you start to understand where the 25% didn't work.


Gene Marks (15:20)



Efrain Rivera (15:20 to 16:09)

Then you get better at making the kinds of decisions that are those 75% to 80% decisions and you get better at doing them. I think that taking calculated risks, especially for smaller businesses, where it's really significant, that extra dollar may mean a lot, getting better at making those decisions.


Whether you add another product, whether you expand something, you add another service. That becomes really important, because I think that's what takes companies from five employees to 10 employees to 20 employees to 50 employees and beyond. I think the businesses that do that have gotten better at making those kinds of decisions.


Gene Marks (00:16:09 to 00:16:41)

Have you made any decisions where it was more of a leap of faith than not in your business career? And one thing strikes out in my mind. I oftentimes meet with clients who, for example, they want to hire this great employee, and this employee is going to cost them $120,000 and they really can't afford it, but they think if this guy works out or this woman works out, they'll pay for themselves 10 times over. But it goes against what you just said. It's really a leap of faith. Have you ever had to make decisions like that?


Efrain Rivera (00:16:41 to 00:18:03)

It's funny that you use that example, Gene. So, when I think about the question you just asked, I frequently think about people. And inevitably, where it didn't go right, I didn't do enough homework on the person. My philosophy during my business career is that it's important to hire correctly, but also develop people correctly. And what that means is to invest the time in developing people correctly.


Where I've made mistakes is when I've assumed that someone is capable of doing something, maybe because I saw something in them, but didn't investigate it sufficiently, and found that they actually couldn't do what I thought they could do. And it ended up being a difficult situation. So, I would say around people, it's a much harder set of conversations than it is about specific business decisions. The reason is you can put pencil to paper and figure out what your downside is and then decide whether you want to make the decision. With people, it's a little bit more difficult, and I think there it pays to do your homework.


Gene Marks (00:18:03 to 00:18:06)

So, what have you learned about hiring people over the years?


Efrain Rivera (00:18:07 to 00:18:18)

I would say the number one thing that I've heard is you hire for attitude and a little bit less for aptitude.


Gene Marks (00:18:19 to 00:18:44)

I have to interrupt you. I was just talking about this. I was at a conference, and I was talking to some guy who owns a windows business, and he was saying to me that exact same thing. He looks for that server in the restaurant who has that great ... remembers the order or with the great. Right. You can't teach somebody that, can you no.


Efrain Rivera (00:18:44 to 00:19:20)

And it's funny you say that, because every once in a while, I'll run into someone and I'll think, that person would be a phenomenal employee to hire. If I was hiring, I'd hire them. And what I've done more now is I let them know that. So, I will say to them, you know what? I want you to understand something, that I interact with a lot of people; You are really, really great. What's amazing about that? Try it. You will see a smile from ear to ear. People beam because they don't get that feedback. And I do think that that's really, really important.


Gene Marks (00:19:20 to 00:19:40)

I think the impact of saying something like that, too, particularly like a younger person that you see at the mall or at a restaurant or whatever, the confidence boost that it gives them. And I think it's important also that you say, I'm the chief financial officer at a large company, and I just wanted you to know that you really are the kind of person that I would hire.


Efrain Rivera (00:19:42 to 00:19:43)

I do that occasionally.


Gene Marks (19:42 to 19:43)

It's life changing.


Efrain Rivera (19:43 to 19:48)

It is pretty amazing. It's great.


Gene Marks (00:19:49 to 00:19:57)

So, you can't teach people attitude. Can that compensate? Can attitude compensate for most? Do you find when you're looking?


Efrain Rivera (00:19:57 to 00:20:11)

There are certain technical disciplines where attitude is not going to substitute. If you need someone who's got deep technical expertise in IT, attitude isn't going to be enough.


Gene Marks (00:20:12)



Efrain Rivera (00:20:12 to 00:20:33)

But I would say in many areas it is. And if you've got two people, one a little bit stronger on the technical side, one a little less strong on that side, but one with a much more superior attitude than the other, I would lean towards that person.


Gene Marks (00:20:34 to 00:20:39)

When you interview people, tell me some of the things that you look for.


Efrain Rivera (00:20:40 to 00:20:53)

So, in some ways, Gene, the conversation we're having now is similar to the way I interview people. I love to start with people telling me their story.


Gene Marks (00:20:53 to 00:20:54)



Efrain Rivera (00:20:55 to 00:21:40)

I just think someone telling you your story is a great way to know who they are and what motivates them in the context that you're asking them about. And every person on the face of the earth has a unique story. And when you have that conversation with someone and you start by asking; tell me about yourself? I think that's the most powerful question you can ask a person. You're not asking them a question about a specific fact. You're asking them about themselves. And you find people almost inevitably open up. You get a sense of who they are. Now, sometimes they don't want to open up. That tells you something that you need to know, too. [gene] Sure.


Gene Marks (00:21:41 to 00:21:46)

Sure. What do you do to motivate your team? And you've had plenty of teams over there.


Efrain Rivera (00:21:46 to 00:22:24)

Yes. There's a lot of discussion now about diversity, equity, and inclusion in the workforce. And I think the most powerful thing that you can do with an employee or with a colleague is to start from a place of respect. If you show people respect, and I will not say that I've been 100% perfect during my career. Hardly.


Efrain Rivera (00:22:20 to 00:22:24)

I'm sure you can find some people who would agree that that's the case.


Gene Marks (00:22:24 to 00:22:30)

I go back to, you're iconic. You're the most interesting man at Paychex. So, I'm going to have to dig pretty deep.


Efrain Rivera (00:22:31 to 00:22:44)

But the reality is that starting with respect is 80% of the battle. If I understand where you're coming from, I don't make assumptions about why something occurred or didn't occur.


Gene Marks (00:22:44)



Efrain Rivera (00:22:44 to 00:23:16)

And I also understand what is it that makes you tick. And if I can show you respect and I understand what motivates you and makes you tick, I'm on the path to a very good relationship with you. And I find that sometimes that's a very simple concept, especially in the world of work and as a manager, that people forget. They get very task-oriented and they forget about the people portion of the equation.


Gene Marks (00:23:16 to 00:23:32)

Yeah. Sometimes it's a challenge with people only because you're absolutely right. You want to hear their story. You want to have a relationship with people. But then again, there's a line that you don't want to cross. You don't want to be inappropriate, you don't want to get too personal. And that's just an issue that, as managers, we have to deal with.


Efrain Rivera (00:23:32 to 00:23:48)

There's a balancing act there, and some people don't want you to get too up close and personal, and you have to respect that. That's why I say, come from a place of respect. Understand what motivates the person. You'll get off on the right foot.


Gene Marks (00:23:48 to 00:24:00)

All right, let's pivot a little bit. You didn't mention the company, but I can mention it. You were with almost 20 years at Bausch and Lomb. Correct? And you were in charge of the treasury, correct?


Efrain Rivera (00:24:00 to 00:24:02)

Treasury. And then eventually the CFO.


Gene Marks (00:24:02 to 00:24:35)

And eventually the CFO. So, let's talk about treasury and managing money and get a little bit more practical. For those of us running businesses, you and I are speaking right now. It's very late in 2023. Interest rates are as high as they've been in the past 2030 years. Finally, people can put money in accounts and actually get a return on their money from interest. If you were running a business and you had excess cash right now, give us some advice on what you would do with it.


Efrain Rivera (00:24:35 to 00:24:40)

So, I think you need to distinguish two parts of that question. To the extent that the cash was required for short-term purposes, it's very clear, as you said, that we're in a great place from the standpoint of short-term interest rates. And I would say that's next six to nine months. Certainly, it looks like that's what we're dealing with. There's lots of very safe instruments in which to put your cash as a business.


Government funds, government money market funds. Money market funds actually are paying rates that are actually attractive. That's a great place to put excess funds in your business. This, if you have a little bit longer time frame, actually, bonds, certainly intermediate term bonds also look pretty attractive. So, locking in for longer makes a lot of sense in this environment.


(00:25:40 to 00:26:11)

Who knows when the Fed is going to start to adjust its thinking on what the rate of interest rates should be? But it looks like, at least for the intermediate term, they want to keep rates higher. If you have excess funds and you don't need them short term, it's a good time to start thinking about maybe putting them in intermediate-term funds and making sure that they're good credit quality, but locking in those rates for longer.


Gene Marks (00:26:11 to 00:26:13)

Do you have any thoughts on certificates of deposit?


Efrain Rivera (00:26:13 to 00:26:51)

CDs are a positive way to also lock in your money. What I would say on CDs is, the reason I said intermediate term funds is you've got better liquidity on some of those intermediate-term funds than CDs, which lock you in for a specific term. Not a bad idea, if you don't need it to lock it up, that's fine. And banks are paying, at least when I open the paper now, you see rates that are in excess of 5%. It's hard to go wrong. It depends on your access to the cash and when you need it.


Gene Marks (00:26:52 to 00:27:11)

Earlier this year, there was some concern over the banking system. Some banks got into financial trouble from some decisions that they made that didn't turn out the right way. You're at Paychex and even at Bausch and Lomb. I mean, you're managing a large amount of money. How do you manage that risk?


Efrain Rivera (00:27:11 to 00:27:52)

Yeah, so that's a very good question. And I think most companies, larger companies, face the same issue, and frankly, some medium sized companies face the small businesses also same issue. Right. So, I do think that it's important to pay attention to the credit rating of the banks that you deal with, especially if you have funds deposited in those banks. You have FDIC protection to a certain extent, but it's not sometimes all of the money that you might have deposited with the bank.


(00:27:52 to 00:28:18)

I think that there are commercial services that give you a sense of, or publish the credit ratings of the banks that you deal with. And I think that it's important to keep an eye out on what's happening with those banks. You're right. Earlier in the year, there was concern about mid-tier banks, and many of them deal with small- and medium-sized businesses. So that was creating a bit of a credit crunch.


(00:28:19 to 00:28:28)

It seems like that's abated a bit, but it's always a good idea to think about the bank that you're doing business with and pay attention to their credit rating.


Gene Marks (00:28:28 to 00:28:39)

And do you have any aversion, and do you, at Paychex, or did you at Bausch and Lomb, do you spread the money around different banks? There used to be a time where you were only loyal to one bank, and it seems like that's sort of a thing of the past.


Efrain Rivera (00:28:39 to 00:28:52)

No, I think you have to diversify. One of the things that as a finance professional, you understand like a bedrock principle, is that diversification in general is good.


Gene Marks (00:28:52)



Efrain Rivera (00:28:52 to 00:29:25)

And so I think when it comes to banks, the same thing applies at Bausch and Lomb and also at Paychex,  we deal with a variety of banks now at our size, mostly the larger money center banks and most of the names that everyone knows. But I think the same thing would apply if you're a small- or medium-sized business and you have excess funds that you need to either invest or you're dealing with a need to have multiple banks make sure to diversify.


Gene Marks (00:29:26 to 00:30:17)

Great. Efrain, the economy obviously has been relatively strong when we looked at GDP and unemployment. Yet there are a lot of business owners that continue to struggle. Small business optimism is still at low levels, according to the NFIB.


There was a report in The New York Times just a week or two ago about how many economists got things wrong over the past few years about inflation and whether there's going to be a recession. Look, you've been in this game for a while. How much stock do you, this is a multipart question: How much stock do you put into the economist? What do you watch for in the economy so that you can go to your boss and say, 'I'm getting the feeling things are going to take a downturn and we might want to take some action.'  What do you do?


Efrain Rivera (00:30:17 to 00:31:23)

That's an interesting point, Gene. So, I would distinguish between two things. What you're hearing from Wall Street and what you're hearing on Main Street. And I do think that the best balance comes from listening to both. There's an expression, don't fight the Fed.


If you're in an environment where interest rates are ratcheting up, you need to pay attention to that. That can have the potential impact of slowing the economy. But on the other hand, if you look at Main Street and you look around your town and you see that business is actually doing very well. In some ways for you, that's a more important indicator than what you're hearing coming from Wall Street. So I think you need to balance both of those. Economists are notoriously wrong sometimes. I would say it's very difficult to call precisely when something is going to sharply turn right or left.


Efrain Rivera (00:31:23 to 00:31:56)

I do think you need to pay attention to it. Some of that stuff can't be ignored. What the Fed does has an impact on the economy. On the other hand, what's going on on Main Street, what you're seeing, the activity that's occurring, also counts for a lot. And I think that over the last two to three years, you've seen that there's been a lot of discussion around small- and medium-sized businesses struggling during this environment. Actually, they've done quite well because there was a lot of demand pent up and consumers continue to spend.


Gene Marks (00:31:57 to 00:31:59)

Do you think now is a good time to start up a business?


Efrain Rivera (00:32:01 to 00:32:29)

You know, Gene, I'll answer that in this way. No, of course, it depends. Right. One of the interesting things that was an outcome of the pandemic was, in 2020, we all know the world kind of came to a halt there in March, April of 2020. And I remember we were together in a room trying to figure out what was going on.


Gene Marks (00:32:30 to 00:32:33)

As soon as the NBA shut down, that was the end of the world.


Efrain Rivera (00:32:33 to 00:33:28)

That's right. What was surprising was that in that summer, that summer of 2020, we saw some of the greatest growth in entrepreneurship that we've seen in the country's history. And we were kind of looking at each other, wondering why. There's probably many academic papers and books that could be written on the subject, but the reality was that here's a situation where you would think people would be completely risk averse and not start business, yet they were starting it at levels that we hadn't seen in a while. I think the great thing about the economy is there's always an opportunity for a great idea. So, I would say this time, just like any other time, is a great time to start a business, if you have a great idea. If you have a great idea now, no time better than the current one.


Gene Marks (00:33:28 to 00:33:41)

Well, let me ask you. Well, you're semi-retiring, you're the advisor. Ultimately, you'll be retired and let's just say you start getting itchy and you're like, I wouldn't mind starting up my own business. What would you start up?


Efrain Rivera (00:33:42 to 00:33:45)

So, I actually have thought about this.


Gene Marks (00:33:45 to 00:33:52)

I think every person I meet that works for companies has thought about this because it's always, what's life on the other side?


Efrain Rivera (00:33:52 to 00:34:21)

Right. So, I'm invested in a number of businesses, including at least one small business. I would like to start a small investment firm that invests in other businesses with entrepreneurs that have good ideas. So, that's where I'll put some focus and I'll be very selective.


Gene Marks (34:16)



Efrain Rivera (34:16 to 34:21)

 I want to see the good idea, but I'm very interested in that.


Gene Marks (00:34:21 to 00:34:33)

What would make you invest in one of those companies? Do you have much experience doing that before you have a lot of experience working with small businesses. So, what would attract you to invest?


Efrain Rivera (00:34:33 to 00:34:43)

So, I've had a lot of experience evaluating companies, meeting with entrepreneurs, acquiring companies.


Gene Marks (00:34:44 to 00:34:47)

This is because through Paychex, for example, you guys have made investments, you have bought companies.


Efrain Rivera (00:34:48 to 00:34:49]

… and then personally, too.


Gene Marks (00:34:49 to 00:34:50)

Yeah. Okay.


Efrain Rivera (00:34:50 to 00:35:10)

I think it's always a combination of two things. The one is a good idea. And if you've got good experience in a particular area and, you know, a certain domain, you know what's a good idea, you know what could resonate in the market, but that's not enough.


Gene Marks (00:35:10 to 00:35:17)

So, you said there are two things, but just before you go on to the second thing, does it have to be a new idea to be a good idea?


Efrain Rivera (00:35:17 to 00:35:19)

No, it just has to be a better idea.


Gene Marks (00:35:19 to 00:35:20)

Better idea.


Efrain Rivera (00:35:20 to 00:35:26)

A better idea. And I think some of the best ideas are just better ideas than the ones that exist.


Gene Marks (00:35:26 to 00:35:32)

Yeah. They take an existing businesses and they say, we could be doing that same thing, but we could be doing it absolutely better.


Efrain Rivera (00:35:32 to 00:35:37)

Absolutely. And the second thing is, who is the person driving it?


Gene Marks (00:35:37)



Efrain Rivera (00:35:38 to 00:36:07)

Does that person have a passion and interest? Are they a good steward of the idea and are they someone that you can have confidence will execute the idea? That doesn't guarantee success, by the way. I want to make sure to say that great ideas fail all the time, but I think that there's a great term in the law that I use quite a bit, which is necessary and sufficient conditions.


Gene Marks (00:36:07)



Efrain Rivera (00:36:07 to 00:36:21)

Those are sufficient conditions. You need those to make it work. They're not necessary. You can have a great idea, great entrepreneur, doesn't necessarily work, but you need those to really make it a very good idea that can resonate.


Gene Marks (00:36:21 to 00:36:44)

How do you get around the issue where you have an entrepreneur that's starting up a business and most of them are good at one – I mean, no offense, - you're great on the financial side. I don't know how great a salesperson you would be or even a CEO of a large company. How do you handle that if you're meeting a potential investee?


Efrain Rivera (00:36:44 to 00:36:57)

So, you have to understand, get a sense of what the person is good at and whether they can be good working with others who can be complementary to their skills.


Gene Marks (00:36:57 to 00:36:57)



Efrain Rivera (00:36:57 to 00:37:26)

I think it's really underrated. Some people have the ability to surround themselves with people who complement their skills and they have low ego requirements. And if you can do that and you can attract those kinds of people, you can be successful even if you don't have all of the skills. No one is a jack of all trades. You always have one thing that you're better at than other things. But can you attract other people who've got complementary skills? That's a skill in itself.


Gene Marks (00:37:26 to 00:37:43)

This goes back to even our conversation about hiring people, right? About having that right attitude and the right way to approach a problem. In no case, no time during this whole conversation about startups or what you would invest in, have you even mentioned financials and why?


Efrain Rivera (00:37:45 to 00:38:38)

In some ways, because it's implicit. If you're going to make an investment versus making a gamble, you have done some work around what the level of dollars or level of investment you're going to make. You never make more of an investment than you can stand to lose. That's part of the way investing works. And, so, there's an assumption that you have calculated the risk that you're willing to take.


That's a baseline assumption. Then the issue is, can you find the good idea and can you find the good person? But you've done your homework before that to say this level of investment makes sense. I'm actually going through that in one of the businesses that I'm involved.


Gene Marks (00:38:38 to 00:38:40)

That you're thinking of investing.


Efrain Rivera (00:38:40)



Gene Marks (00:38:41 to 00:38:45)

And you don't have to give away details, but is this an existing business?


Efrain Rivera (00:38:45)

It is.


Gene Marks (00:38:46 to 39:07)

Because that was leading me to the next question. So, if you are evaluating an existing business that you are thinking of investing in, and they show you their financial statements or even their tax returns, as somebody who's been doing this for a number of years, what are you looking for in a financial statement? What tells you that it's strong or weak or neither?


Efrain Rivera (00:39:07 to 00:39:26)

Well, you look at the progression of revenue in the business. That's one thing. You look at what the progression of revenue could be with additional marketing, for example, additional sales investment. But could it scale to more than it is now? That'll determine how much you want to invest.


Efrain Rivera (00:39:26 to 00:39:51)

And then you look at what we call in finance or in economics, what's the marginal return on the next dollar invested? Put another way, if I put a dollar in today, and the business is functioning the way I want it, how much profit does it generate? Because that's something that you need to understand around the business. [gene] because otherwise you.


Gene Marks (00:39:51 to 00:39:53)

Could put the money in a money market account.


Efrain Rivera (00:39:53 to 00:39:59)

Yes, that's right. You're competing against actually putting your money in a bank account. Now, that's more complicated.


Gene Marks (00:39:59 to 00:40:09)

Yeah. Because the interest rate return makes it a harder decision. What kind of an investor would you be? Are you involved in my business or you stand off, or what could I expect from you?


Efrain Rivera (00:40:09 to 00:40:29)

I'm somewhere between let you do what you do, because that's part of the evaluation that I had around whether you could do it and being supportive so that I can bring some value to the decisions that you make. If I have to run the business, it's my business. It's probably not an investable idea.


Gene Marks (00:40:29 to 00:40:51)

Okay, I got you. Let's bring this back around to where we started, which is Paychex, and your career here at Paychex. And you were here during a transformative time for the company moving to the cloud and changing their entire technology infrastructure for doing that. And the thoughts that were involved. Where does Paychex go from here?


Gene Marks (00:40:51 to 00:40:58)

Where does the HR, an HR leader like this company, what do you expect this company to look like 10 years from now?


Efrain Rivera (00:40:58 to 00:41:40)

Yeah, I would say, Gene, when we started 12 years ago, we were much more payroll, HCM-centric. And when I say payroll, HCM-centric, more on the payroll than the HCM. I think we've been on a journey of transformation that has led us from payroll to HCM to more HR dominant. I would say that when I look at what small- and medium-sized businesses, what they ask us about and where they derive value from the services we provide, it's really around HR.


Gene Marks (41:41)

Yes, it is.


Efrain Rivera (41:41 to 42:43)

And I think that the technology that is coming into play, things like AI, generative AI, has an opportunity to transform the kinds of services that we deliver to small- and medium-sized businesses. And that set of questions, that set of opportunities that is created by that technology, is significant. So, I see Paychex in the next 10 years being very, very HR-centric, providing high-level expertise and advisory services to our clients. And I see us being an essential partner with those clients to help them do the things that they need to move their business forward. So, I see a lot of technology, a lot of AI. I see a lot of advisory services helping our clients to succeed. So, helping the three-person client become a five-person client, become a 20-person client, becoming 100-person client.


Gene Marks (00:42:43 to 00:43:12)

And, Efrain, as you start your journey on the next 50 years of retirement, how do you expect the world to be? The economy itself, obviously, there's challenges. There are wars going on around. There's always. And you know what I mean? Come on. You're at an age like me. Like, you've seen a lot of this stuff before, and we've only lived for an instant on earth, let alone civilizations before us. What's your overall outlook about the world?


Efrain Rivera (00:43:12 to 00:44:29)

Yeah, I'm an optimist. I think that what's unusual about the country that we live in is that for all the challenges that we face through our history, we found solutions to the challenges that face us. And we've faced much greater challenges than the ones that we face now. I think as long as people are given the freedom, the ability to form and to shape their own destiny and to succeed on their terms, I think we're going to be fine. We'll find solutions to problems that we don't know, don't know exist right now.


And I think that we'll do it in pretty remarkable ways. I think there's lots of great things coming in the future that right now are a little bit hard to understand. At the beginning of the 1900, who could have imagined that 1900 to 2000 would be what it was? I think we're in a similar point now, especially with respect to technology. I'm not a person who believes that technology will solve all problems. I think human beings plus technology will solve a lot of problems.


Gene Marks (00:44:30 to 00:44:46)

Efrain Rivera is now the senior advisor to the CEO at Paychex. He was formerly the senior vice president and chief financial officer of the company, and he will always be the most interesting man at Paychex, according to many of the people that have worked with him. Efrain, thank you very much for joining me.


Efrain Rivera (00:44:47 to 00:44:48)

Thank you, Gene. It was a real pleasure.


Gene Marks (00:44:48 to 00:45:23)

Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR, payroll, benefits, or insurance services, see how paychecks can help, visit the Resource Hub at That's WORX.


Paychex can help manage those complexities while you focus on all the ways you want your business to thrive. I'm your host, Gene Marks, and thanks for joining us. Till next time, take care.


Announcer (00:45:25 to 00:45:31)

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