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Expenses-R-Us: An interview with David Barrett, co-founder at Expensify

We really like Expensify and thought we’d share a recent interview we had with David Barrett, their co-founder and expensing extraordinaire. Here’s what he had to say…

VM: Just to get readers familiar with Expensify, what’s your elevator pitch? What does Expensify offer that others don’t?

DB: Expensify does “expense reports that don’t suck!’  We do that by importing your expenses and your receipts straight from your credit card (so no typing or pockets stuffed with paper), submitting expense reports through email, and reimbursing everything online using QuickBooks and Direct Deposit.  I’d say Expensify is different in that we manage the full end-to-end problem (not just mobile, not just web, not just QuickBooks), but do it at a price and with a design that accommodates small businesses.

VM: Expensify is a highly specialized app that focuses on a core set of functionalities instead of everything and the kitchen sink. How intentional is that?

DB: Very intentional.  We’ve actually been very surprised that our requirements haven’t spiraled out of control given what a broad set of customers we serve.  For example, we have the same exact product serving everybody from individuals managing household expenses, contractors invoicing clients, Etsy merchants tracking their costs of materials, very small businesses under 10 employees, small businesses between 10-100, and medium-sized businesses up to 1000 employees.  That’s an enormous range, but thankfully the requirements are largely the same across the board.  Not to say we’re perfect for everyone (10-100 is definitely our sweet spot), and we’re always looking for ways to make the product “scale” automatically (eg, hiding features that aren’t relevant to you, until they are).  But we’ve been very pleasantly surprised just how tight we’ve been able to keep the product without sacrificing broad swathes of users.

VM: What’s your take on the “best of breed” vs “complete solution” debate as SaaS and cloud applications mature?

DB: Again, thankfully, for a space like ours the two options are surprisingly similar.   Indeed, we find people often start in one place and expand into others.  We have contractors who start using us to invoice clients, but then get hired full time and continue using us for expense reporting.  Or employees using us for expense reports who also privately use us for personal finance tracking.  (And if they leave the company, keep using us after they go.)  My thought is that we can intelligently show/hide features to make the “complete solution” feel exactly like it were built exclusively as the “best of breed” for your precise requirements, even as your requirements grow and shrink.

VM: Where do you see Expensify in the emerging platform world of things like Salesforce or Google Apps?

DB: For our space the Intuit Workplace is the most interesting marketplace — sorta like the Google Apps Marketplace but built into QuickBooks.  That said, none of these marketplaces are adequate by themselves.  They bring a very qualified set of leads at a very acceptable cost, but the volume just isn’t there, in any of them, to seriously move the needle.  (Yet.)  So I think any cloud hosted app should plan on standing largely on their own feet and have a customer acquisition strategy that doesn’t depend on marketplaces (but is able to leverage them when available).

VM: How do you approach Expensify’s UI? What are the design and aesthetic influences?

DB: The credit for our UI largely goes to our designer, Michelle Rajunov.  And it just so happens you can read her thoughts on the subject here.

VM: How do you see accounting software changing over the next decade? Where are we going?

DB: As they say, predictions are hard to make, especially about the future.  But I’d personally bet on Intuit holding on to the core accountants and bookkeepers for the forseable future.  They need to get their desktop users to migrate to the cloud, but they’re clearly focused on doing just that and making serious strides toward that end.  Accounting is a really hard job with a thousand-year heritage — Intuit spent a long time sinking their roots into the field and I expect they’ll continue to bear fruit for a long time to come.  That said, I think there’s a large contingent of “business lite” users who don’t really need the full QuickBooks solution (eg, don’t really need a true “accountant” per se) who are going to upgrade from Excel (or paper-and-calculator) to anything from simple mobile apps to integrated web applications like Expensify.  Reading back over that I realize I didn’t actually say anything insightful there.  In short: when real dollars are at stake, decisions are made slowly and commitments kept for a longer period of time.  Operating in this space is like revving up a giant flywheel.  It takes time, but once there’s no stopping you.

VM: How prevalent are security concerns among your clientele? How do you mitigate those concerns?

DB: Honestly people aren’t concerned enough about it, but we take it seriously anyway. The only “real” security standard in the financial space is the PCI-DSS — the “Payment Card Industry Data Security Standard”. This was developed by Visa and MasterCard, and is mandated by them in order to accept credit card payments online.  It’s an incredibly intense security standard involving multiple layers of encryption, data access controls, logging and auditing requirements.  Most companies don’t do it because it’s just way too hard.  Expensify is PCI compliant, and you can read more about Expensify’s approach to security here.

VM: You’ve taken a “bottom up” approach to marketing, wherein employees use the app, co-employees notice, and the company becomes a client. How successful has that been? What lessons have you learned?

DB: It’s been super successful.  In fact, I’d say it’s the not-so-secret-sauce as to why we’re growing as fast as we are (and why we’ll continue to for a long time).  But it’s a mixed bag.  If you can get it working, it’s awesome.  But once someone is already doing it in your space it’s very, very hard to unseat them because word of mouth has a sort of “winner takes all” dynamic: people talk about the top choice, and maybe one alternative, but there isn’t much room for third place in the global conversation.  Furthermore, it’s not all roses for those who have it working for them.  Yes, it’s a great wind at your back, but like the wind, you don’t control it — you just ride it as best you can, but you can’t just double your “word of mouth” budget and see double the results.  The upshot is when this is your strategy, all you can do is focus on having the best possible product and encourage your users to share that with the world.

VM: Expensify recently received $5.7 million in venture capital funding. Has that changed things around the office? How has it affected your team, the mission, the company in general?

DB: Well, I just signed a lease on a swank new office today.  But in general, it hasn’t changed much.  We don’t spend anything on advertising, have a super-tiny team of really awesome people, and it’s basically business as usual.  That said, having this oversized war chest gives us the freedom to think a bit bigger than we would otherwise, and we’ll be pulling some interesting rabbits out of our hat as a result.  The real challenge is just hiring people fast enough to take advantage of the enormous opportunity before us.  With that in mind, know any great junior engineers looking for a job?

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Chris Bliss works at VM Associates, an end-user consultancy for businesses looking to move to the cloud from pre-existing legacy systems.