655: Expensify 450k Customers Paying $9/mo for Expense Reports that Don't Suck with CEO David Barrett

David Barrett. He started programming at the early age of 6 and has been inspired to become an expense reporter ever since. He attended the University of Michigan where he worked in a virtual reality lab before moving to Texas to write a 3D graphic engine for the industry. Then, he moved to California to join a name that is probably familiar to many of you, Travis Kalanick, in building a peer-to-peer file transport technology called, Red Swoosh, which was acquired by Akamai in 2007. In 2008, David left that company to start Expensify—where he is today—and he's trying to figure out the world's frustrations, one expense report at a time.

Famous Five:

• Favorite Book? – The Innovator's Dilemma
• What CEO do you follow? – Travis Kalanick
• Favorite online tool? — G Suite
• How many hours of sleep do you get?— 6-8
• If you could let your 20-year old self, know one thing, what would it be? – "I wish I had dropped out of college"

Time Stamped Show Notes:

• 01:13 – Nathan introduces David to the show
• 02:36 – David was working on a debit/credit card idea and the banks weren't happy with it
• 02:50 – Expensify is the corporate card for the masses
• 03:08 – David got into the space when there was so much room for disruption and pain points
• 03:40 – Travis' first company is called Scour, which is an early file sharing network that got sued
  • 04:06 – When David got into Red Swoosh, Travis was the only guy there
  • 04:48 – David thinks that Travis is very articulate in communicating his vision
  • 05:12 – David had equity from Red Swoosh
  • 05:31 – Red Swoosh didn't have a big exit
• 06:14 – Expensify charges $9 per active user per month
  • 06:20 – Expensify is a mobile app—you take a picture of your receipts and the app will read all the details on the receipt, automatically
  • 06:29 – The information will then be categorized, sent to your account, and you'll get reimbursed the next day
• 07:10 – The company is only paying the active users
• 07:29 – Expensify's price points are $5 and $9
• 07:40 – David started Expensify's idea after Red Swoosh's acquisition
• 07:56 – David left Akamai in 2008, then he worked on Expensify
• 08:00 – Expensify's official launch is 2008
• 08:05 – Expensify's team size is around 110
• 08:18 – Expensify has raised capital
  • 08:27 – Expensify has raised a total of $25M
  • 08:36 – Expensify has been a break even business for a long time
  • 08:39 – "We grow primarily through revenue"
  • 08:52 – The vast majority of Expensify's growth is through self-finance
• 09:54 – The business itself is breaking even, but they're always raising and experimenting on big experiments
• 10:31 – There are about 25K companies who use Expensify
• 11:03 – There are millions of individuals who use Expensify, too
• 11:32 – 10% of Expensify's user base are paying customers
  • 10:43 – 10% of 4.5M are paying customers
• 12:12 – "Churn is complicated"
  • 12:33 – Expensify has a net negative revenue churn
• 13:05 – Expensify doesn't advertise and they have 100% organic traffic
• 13:37 – Expensify had a few fundraising rounds
  • 13:41 – In 2008, they had their first $1M round
  • 13:43 – They did a few more in a couple of years
• 14:25 – David doesn't talk with investors and hasn't talked with them in years
• 15:27 – Expensify is something totally different from Salesforce
• 15:53 – Expensify doesn't have salespeople
• 16:16 – Expensify's primary revenue generator is their support team who follow up on deployments
• 16:43 – Pricing has been difficult and Expensify is still working on it
  • 16:53 – Expensify was originally free and customers didn't understand why
  • 17:18 – David thought they needed a reasonable price point
  • 17:31 – After choosing a price point, people became more comfortable and trusting
  • 17:51 – Expensify's competitors followed their pricing
  • 18:37 – Expensify's focus is on mastering the dynamics
  • 19:06 – David thinks that, realistically, their pricing should be much higher
  • 19:34 – David is planning on increasing their pricing
  • 19:52 – "Because we don't need the money, we're focused on something else"
  • 19:58 – "Maintaining an incredibly low price right now for the industry actually helps keep the competition out"
• 20:29 – People find Expensify through word-of-mouth
  • 20:51 – "All of our emphasis is on building a product in a brand that generates an incredibly strong word-of-mouth"
  • 21:34 – 99% of Expensify's traffic is people searching for us
• 21:40 – The Famous Five

3 Key Points:

1. Adding a paid option to your product can actually make your customers more confident in your product.
2. Word-of-mouth is one of the best and cheapest ways to grow your traffic and client base, but your business has to be valuable for people.
3. A college degree is NOT the only road to success.

Resources Mentioned:

• The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
• Organifi – The juice was Nathan's life saver during his trip in Southeast Asia
• Klipfolio – Track your business performance across all departments for FREE
• Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
• Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
• Audible– Nathan uses Audible when he's driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
• Freshbooks – Nathan doesn't waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW

Show Notes provided by Mallard Creatives