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Block | 2021 The Future 50 | Fortune

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Jeff Jones shares his advice for "main street" tax payers.

Tax tips from H&R Block CEO

Leadership

Jeff. So great to see you again to talk about H and R. Block. You know, people know your company and they think of it as the place to go to at tax time. But actually H and R. Block has been going through a big transformation. How would you describe the business today? Oh my gosh! Well, first of all we're achieving a level of results that we haven't in decades. So the company has incredible momentum right now. And if I just take a step back, I mean it's really been a few things. Number one is a complete cultural transfusion and just thinking about all the things we need to do different. We've also restored growth to our core business. And then importantly we've diversified to move into financial products and small business services. So when you put all that together, there's no question a new H. And R Block has emerged. So it sounds like you're trying to change the perception of H. And R. Block that it's more than a seasonal tax business for main street America. So what are some of the things that your customers can do today that they couldn't do a few years ago? Well they can get tax prep in entirely new ways they can do banking through our product called spruce. Small business owners can do taxes and bookkeeping and payroll. So the company is completely modernized and we're doing way more than taxes and it sounds like this transformation is paying off your earnings are so strong. Your stock in 2022 was up 55%. What's next? I mean what more do you want to do to keep up this momentum? Well I think the most important thing for us to remember is transformation is never over. So the best companies are always thinking about what's next. And for us that continues to be this blending of great human expertise with artificial intelligence, machine learning and technology and adding more services as we say, serve more customers more ways. Do you have like artificial intelligence capabilities and machine learning now or is this something that you're going to be adding on? Those capabilities are fully embedded into our tax business Today it helps our tax professionals offer better advice. It makes the process more personalized and faster. So those capabilities are alive and well today block your business is so crowded with so many fintech companies that have a lot of new technology, a digital capabilities. How do you compete with them? And then how do you compete with a company like intuit that like H and R. Block services, small businesses and is well known for its popular products like Quickbooks and TurboTax. That's right. I mean one of the things I've learned Susie in my career is that technology a lot of times gets the credit and the fanfare. But at the end of the day we are in a relationship business and we are fundamentally grounded in human relationships. And so We've had 80,000 tax professionals who have been with us on average for 10 years and so they come to work every day to serve their clients. Technology helps that, but it's a human relationship. Well you have also a big real estate footprint, thousands of H and R. Block offices all around the country. Do they work for or against you? Because right now people are used to doing business remotely and also doing business over zoom. They work as a choice. And so the customer today can get fully virtual remote capabilities and never go to an office if they choose to go to an office, we have them around the country, But from a financial perspective they are all leased locations and so they don't weigh on our balance sheet like-owned real estate might for other companies. It gives us a lot of great flexibility. Well, we've got to talk about tax day April 18 this year. G give our viewers some advice on what are some of the most important things that they should be doing right now? Well, so tax tips are inherently so personal. But if I just think about broad advice we give to customers. First of all, this is the first year post pandemic. We expect that there could be a lot of surprises for people. Tax refunds being lower stimulus payments have have expired and so we tell people file early, do not expect last year's result and give yourself time to plan in case you get a surprise outcome. Where do taxpayers go wrong? I mean what are the most common mistakes that you see year after year that people make? I'm always surprised how many people still file a paper return. There are about 8% of all tax filers that mail paper to the i. r. s. You should never do that. You can e. File, I'm surprised how many people when they have a life change don't change their W. Four. They get to make a choice. Do you want more in your paycheck or more in your refund? That's all in your control. What about refunds? The I. R. S. Is way behind. In fact years behind in processing refunds. What do people have to do to get their money? So it's important understand that for most americans. That's not true. Those are very special cases where the I. R. S. Is still behind. So if you're a main street american today and you know you have a refund coming. The most important thing you can do is to file early to get in the queue because they process those first in first out. We also offer products a block like spruce where when you deposit your refund on the spruce you can get it up to five days early. So there are things you can do to get your money faster. One thing that's worrying many people this year is recession. What's your read on the economy and the business environment recession or not. I think that we are in a recession. I think we're seeing the customer struggle. We're seeing inflation rates be where they are, but I don't have any indication that this is going to be a long protracted recession. Well, what are you telling your customers, what should they be doing? Especially the small businesses and individuals who are strapped for cash as you just mentioned, what should they be doing to prepare for a tough year ahead? I know this will sound like a selfish answer, but we advise them so much to get expert help. When you're a small business owner, you don't have to do it all. Yourself. Focus on running your business and rely on somebody else to help you think through your financials in your tax planning strategy and what are you doing at H and R block to prepare yourself? We think about cost management to make sure that we're well positioned in case things turn further south. But again, When I sit here today thinking about early 20, we're very well positioned. We're growing. Again, we generate a lot of free cash flow. We deploy capital well, and so um, you know, I like where we are with some uncertain times. Let's talk a little bit about you, Jeff, there was a revolving door of Ceo at your company before you became the boss five years ago and you told me that boldness and speed have been the key to your success at transforming H and R. Block. What do you mean by that? What are you doing differently as a leader? The key to success in today's world is speed. And so we learned that that was a fear of decision making, A fear of risk and failure. And so focusing on culture, teaching people how to assess risk, Teaching people how to make decisions have really been key to us going faster and that speed is turning into results. I know there were a lot of skeptics when you came in as Ceo, here's another Ceo coming in and saying we're going to make a lot of changes. What did you have to do again? Thinking as a leader to win over your employees and to get them motivated. I think one of the things we did at the beginning was a very simple idea that I just called, what are we going to cherish and what are we going to change? I knew that things would have to be different because the results needed to be different. But I think it can be so easy to say everything before you was broken. I'm the new person. It's all going to be different moving forward. And what I tried to recognize was there are great things about block. We needed to cherish the focus on relationships on professional service on the customer centric city. But I also knew that we had to be more experimental. We had to take more risk. We had to go faster. And so that early message about cherish and change really set the cultural tone that today is alive and well and again, really helping us drive great results. So I understand that you've agreed to continue in the ceo job for another five years. What do you want to accomplish? What do you want people to be saying about H. And R. Block five years from now? This journey is not done. And I think as a leader, it's one of the most important things is to celebrate all we've accomplished and be incredibly restless about what lies ahead. We'll never finish transformation. And so for me, when I leave here at some point in the future, I want people to absolutely understand that block is back. It's better than ever. And it's a big bold company that you never imagined.

Valued at roughly $150 billion, stablecoins primarily serve as a safe haven from volatility in crypto markets.

What are stablecoins?

Fortune_Crypto

the most famous Cryptocurrency courses Bitcoin millions of people own Bitcoin today. It's a new form of money. It's used around the globe and I think that's very remarkable. Its market cap has been above a trillion dollars. And then there's another species of Cryptocurrency called stable coins whose job it is to basically replicate or imitate major currencies like the US dollar or the british stable coins are crypto tokens whose values are pegged to a fiat currency or really I guess it could be to any other price. The most common type of stable coin is one that is pegged to the US dollar. The main use for stable coins right now is for people protecting themselves against volatility. That's really what stable coins offer to people on chain. It's just the ability to get out more or less without having to go into a coin base and go all the way into a bank of accounting. There's just a lot less friction that's involved when you have everything on chain and sort of protect people from volatility. So I want to convert Bitcoin $2 and I want to put it back into my bank account and it's gonna incur a delay. And so if I want to go back and trade again I may not have my funds available when I need so stable coins really emerged at the interface between more traditional finance and banking and crypto and the solution to this kind of prop grew tremendously as defi became more of an interesting and developed space in crypto defy that's another word you hear bandied about in crypto sphere a lot. It's short for decentralized finance. It's basically, you know, replacing bankers and brokerages and middlemen with smart contracts so that, you know, you're out there trading and there's no central clearinghouse, there's no person overseeing your just interacting. If you want to build any sort of advanced financial contracts on top of a Cryptocurrency, well, you need to often refer to a stable reference asset, but imagine a simple loan where I loan from your to you in Bitcoin, depending on the price moves, you either owe me a lot more or a lot less than what we agreed to. So if you want to enter into a loan agreement is extremely useful to have a stable unit of reference, like the dollar.

Tether and USDC make up 75% of the value of all stablecoins.

Why reserve-backed stablecoins are the most popular form of this cryptocurrency

Reserve-backed stablecoins explained

of the three main categories of stable coins. The one that is maybe the most kind of logical would be commonly called reserve backed stable coins. They have an amount in the bank that corresponds to the amount of stable coins that they've issued. So the total value of stable coins right now I believe is roughly 150 billion. And that's largely made up between us dc and tether. I think U. S. D. C. And tether make up about 75% of that number. So You know a little more than 100 million. When we created tether we did so because my partners and I were trying to trade crypto and there were always times probably at least once a week when I would get nervous about the market and I would love to go into a safe harbor that was non volatile. The only way to do that was to take the crypto. I had converted all into Bitcoin. Take the Bitcoin and transfer it to one of the few exchanges that had access to banking and then trade my Bitcoin for dollars and have those dollars wired to my bank account. And by the time that happened it took about five days and I wanted to get back in. So our thinking was what if we were in a crypto that was tokenized dollars, they can interact with crypto and you don't have to now cash out and go through all of those troubles getting that done. Now people always say tether has some controversy because of its lack of transparency around uh its holdings. I'm no longer associated with tether. I would like tether the operators of it to be more transparent to do more frequent audits. And yet people still use it. It's the most traded crypto on earth.

Collateral-backed coins like Dai, are more decentralized than reserve-backed stabelcoins.

The draw of collateral-backed stablecoins

the next category that is widely used is one that is collateral backed. And so that means that it may not be backed by U. S. Dollar or U. S. Dollar equivalent but it's backed by some other crypto acid and is over collateralized. So for instance it might be backed at a ratio of 150% Meaning that the collateral you put up would have to be 150% of the dollar that you want to take out in the stable coins. And if the value of your collateral falls below that ratio then you would have to top up in order to retain the stable coins that you took out. And these kinds of stable coins tend to be more decentralized. They can be managed by smart con and they also are somewhat safe in the same way that reserved back ones are but they can have volatility at times. For instance like black swan events right? When the pandemic began, there was definitely some pandemonium in the world of these types of stable coins because obviously the value of the collateral had dropped precipitously

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