The Accounting Podcast

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David Barrett: [00:00:05] Being a public company only affects you as much as you let it. And so our commitment is to long term shareholder growth. I'm going after that trillion dollar number, not this number, and not that 50% more than this number or whatever it is. We don't want incremental growth. We see an opportunity to go for something huge and we're taking it.

Blake Oliver: [00:00:29] Hello and welcome to a special episode of The Cloud Accounting Podcast. I'm Blake Oliver.

David Leary: [00:00:34] And I'm David Leary.

Blake Oliver: [00:00:35] And we are here with David Barrett, the founder and CEO of Expensify. David, welcome to the show.

David Barrett: [00:00:42] What's up?

David Leary: [00:00:43] This is David's first appearance, right? We've been doing this for. Really? I think so.

David Barrett: [00:00:49] Well, maybe. Oh, it's been a while. It's been a while.

Blake Oliver: [00:00:52] Well, yeah. We got to see you recently at Expensive Con three. David, I don't think we properly thanked you for bringing us out here. You and the Expensify team. Thank you very much for bringing us out to Italy and showing us a great time. It was a blast. Yeah.

David Barrett: [00:01:07] Well, thanks so much for coming. I mean, that was pretty It went off without a hitch, and I think it was pretty epic.

Blake Oliver: [00:01:12] It was. And the whole time we were, like, terrified that it would rain because, like, did you have any backup plans? I mean, that was that there were a lot of outdoor events. And we got we got so fortunate that that the weather was good.

David Barrett: [00:01:27] We live left on the edge. Suinin's backup plans.

Blake Oliver: [00:01:32] I have to ask because we were kind of doing like informal polls the whole time, you know, how much did that event cost? I'm an accountant. I have to know enough. So we're not we're not we're not going to get an answer from you on that one. Nope. All right.

David Leary: [00:01:48] And my guess is I know there are apps that are running between 500,000 to $1 million a month on Facebook and Google ads. Right. So they're spending anywhere from 6 to $12 million a year and have nothing to show for it, kind of in a way. And so I'm like, even if you spent $6 million, the people are going to talk about this forever. And somebody mentioned to me, they're like, Oh, yeah, it's one of the that's, oh, you were expensive. And that's one of the top conferences. I'm like, It's not top conferences. It's like top life timeline events. Like it gets it's it's not you don't compare it to conferences. You compare it to major life milestones in your life. Well, I think.

David Barrett: [00:02:26] I think that you're right, though, in that it's so easy to dump astronomical amounts of money into traditional advertising. And it's kind of like no one got fired for buying IBM. It's like no one got fired for spending money in AdWords. It just it's like you spent more in your VCs are like, Fuck, yeah, You know, why did you spend even more at an even lower ROI? Or There's actually no positive ROI. It's like, why didn't you actually just, like, lose even more money on each customer? And that's called success in a traditional sort of like VC backed Silicon Valley world. And I think that our approach is very different. We acknowledge that, like performance advertising by and large just doesn't work. It's very hard to work at scale. And so I think the most effective marketing is by investing in relationships and those relationships, especially in the accounting industry, because it's like even a small bookkeeping firm is basically has the, the potential footprint of like an enterprise client if you could get all their clients on board. And so we think that every accountant is an incredibly valuable relationship to have that is almost impossible to overinvest in. And so I think that, yes, if if we're making a choice between like, you know, AdWords versus expensive, can we go expensive gun Now in reality, we're a profitable company.

David Barrett: [00:03:34] We don't need to make that trade off. So we can just do both. But I would say events like Expensive Con or maybe I don't know if you're familiar with our San Francisco Lounge as well, where basically, like we open up our office to anyone can come in, any expensive subscriber can come in and get basically unlimited free coffee and cocktails with an amazing view of San Francisco. And it's packed day in and day out. And the way that we view it is it's basically like a 20, like an opening, a conference booth every single day. So we can either spend ten times more than that to have five minute conversation with someone on the Expo floor, or we get to spend all day with them in our lounge and actually have like an incredible brand experience. And so I think it's about recognizing what you're actually trying to do. It's not about the specific ROI of a particular transaction. It's about investing in a relationship that's going to produce compounding events for years and years to come.

David Leary: [00:04:27] So let's rewind a little bit. So I remember the first time we started interacting and working with you was 2008, early 2009, and at that time I was still at Intuit. Just I didn't think I was on the developer team. It was still like working on View My Paycheck and we shared a presentation or whatever. It's at G-Accon or whatever, and but that's when Concur launched, Concur Breeze. And I remember being at that conference with you and you and another Expensify employee, and that was it. At the conference. There was no booth, there was no bar.

David Barrett: [00:04:55] And Ryan, I bet.

David Leary: [00:04:56] Yeah. And they rolled in with leather jackets. All these were like third party marketers. They weren't even employees of the company. And they rolled a motorcycle in like a branded remember West Coast? I remember, like, they roll all that in and I remember you just going off on a tirade. These people are so dumb. They're just wasting money. They're not even they aren't even sending their employees to actually talk to their customers and learn about them and find we'll just go drink on their free booze that they have and they're throwing it's just over the top of event. And then since then, you've done expense. G-accon won a Super Bowl ad expensive con too expensive con three right. Like can you what why is it your you're doing these over-the-top things that's just like rolling in the motorcycle but you're doing it differently.

David Barrett: [00:05:38] Oh, they're very different. Like we roll in a Tesla and give it away to someone. They just roll in a motorcycle and then rolled it up like, you know, if they were giving away cool breezer like leather jackets. Sure. Then maybe that starts getting cool. They just had some people wearing leather jackets who left. And so they're investing in sort of a big brand moment of just basically just like, look at us, how cool we are. And then by our approach is, no, we're going to invest in making your life awesome. So, um, so no, I think that's actually quite a big difference in the strategies there.

Blake Oliver: [00:06:11] So you also have a very different strategy with your product, a very nontraditional strategy. And at the conference you got up on stage and the first thing you said was, if I may paraphrase, we're rebuilding, we're recreating expensify Like this is we're making a brand new expensify It's called the New Expensify. And it comes from the, I think, guiding principle that you said every payment is a conversation. Yeah. Can you speak to the meaning of that when you say every payment? Is a conversation. What does that have to do with like expense reports and spend management?

David Barrett: [00:06:48] Yeah, exactly. And so it's like there's this whole pitch that goes behind this. Well, I'll try to summarize it then. It's like if you add up all of the customers of all of our competition across the entire world, it add up to like maybe 300,000 businesses in the world. But there's 300 million businesses in the world. There's like 27 million businesses in United States alone. And so whatever the entire industry is doing is clearly missing the mark. Somehow, over the course of like 30 years, the sum of everyone's effort has only captured 0.1% of the global opportunity. So clearly, the current business model is broken or at least only works in a tiny, tiny corner of the market. And so we're trying to say, how do you go after the other untapped 99.9% of the global opportunity? It's got to look a little different. But if you could do it, let's say that you could get 300 million businesses like let's say you could get a billion people onto a common platform. That would be a hell of a business. That'd be like the next trillion dollar business right there. And that's like what we're gunning for. No one else is even trying to do that. They're just basically saying, I want to get my my bite of the 0.1%. And we're saying, no, we want to take all of the remainder. And so it's a very different vision. And I'd say about that vision can only be approached with a different business model. And if you say, well, what are all the other platforms that have got to a billion users, how many of them got to a billion users through an enterprise sales model? Like, did someone call you up and say like, Hey, I think you should try Instagram.

David Barrett: [00:08:12] Instagram is the finest, you know, and pitch you on it. No, it's just not how it works. Like TikTok all these others out there, the only way you get to a billion users is by satisfying a use case that happens every single day and would say like even the biggest expense. Reporter They're not doing expenses every single day and but they are doing something. They're doing a lot of collaboration. And so when we sort of step back and say, well, what, what is an expense report, at the end of the day, it's basically a very structured way to to request a reimbursement. It's a structured chat system in a way. You can say like, let's say you weren't using expense reporting system, which again, almost no one does in the grand scheme of things. You'd have to just go talk to someone. You'd be like, Hey, Blake, you owe me 50 bucks. And then and I'd either say that out loud or I'd text it to you or email it to you or slack it to you or something like that. But that's that is real. World expense reports is actually a conversation. And the tools like us are just a structured conversation tool. And so if we say, well, you know, in fact every form of payment is a conversation between two or more people, if you go to a food truck and say like, Hey, I want a taco, you're basically saying, I want a taco and I'm willing to pay this much money for you and you negotiate there in real time.

David Barrett: [00:09:23] And that's a credit card does that facilitates that transaction in a very sort of clean way. But it's a conversation that's happening. And so we view it as everything in our platform, everything in the financial industry is some sort of conversation around money. And so if you strip away all of that expensive is a conversational chat tool, but it's built around a different kind of conversation. It's not like Slack, which is for unstructured product discussions that just kind of linger on forever. It's basically think of it in terms of a structured or transactional chat system where it's like, I want to accomplish something specific, I want to talk about it until it's done, and then after it's done, it has a clear ending point. And then all of that is retained and categorized neatly for later reference. It's a transactional chat system and that's basically what we're building our entire rebuilding our entire product around, because that is true not just for expense reports, it's true for invoices, bill payments, it's true for a corporate travel, it's true for like requesting money from your company is really the same as requesting money from your roommate or like settling up with your friends. It's all money. It's all the same conversation with some nuances around that. And so our new design is about capturing the inherent similarity of all payments flows across all of these into a single common tool that can do them all better than any of the specific tools could have ever done them.

Blake Oliver: [00:10:39] So this is a when you say conversational chat like. Two. Two. Give a picture to our listeners. We're talking like imagine Slack and instead of just chatting about, say, an expense that you need to have, like you actually can request reimbursement, you can send money, you've connected payment rails inside of the new expensify so that, you know, at this point that's what we're going to be able to do is request and send money. But it goes beyond that as well.

David Barrett: [00:11:11] I mean, yeah, I think that slack is a good comparison, but it's actually Slack is not that widely used. It's widely used in the sense that enterprises use it, but like not 300 million businesses. And so I think if you're going to talk on a billion user scale, you need to be talking about SMS, maybe iMessage, maybe WhatsApp. That's where we are. Comparison towards Slack is actually kind of a power level tool. We think more in terms of WhatsApp is like the gold standard is the best, sort of like broad set, so expensive new expensive feels like WhatsApp had a love child with Venmo or like or basically, what.

Blake Oliver: [00:11:43] About WeChat in China? Right, The super app.

David Barrett: [00:11:46] I think WeChat is an amazing comparable and I think that one way you can think about it is we're trying to build the American WeChat on WeChat. We want to be the sort of like, you know, the WeChat for the rest of the world is a super app concept because I think they've demonstrated you don't need 500 apps to do all these specific things that are like overlapping. Most of you need one app that's able to doing 500 use cases. And so I think we're doing it honestly. The only competitor out there that I actually think is even trying is insane as it sounds, is Elon Musk and Twitter.

David Leary: [00:12:20] I made that. I was going to ask you this. Yeah, that's good that you brought it up.

Blake Oliver: [00:12:23] Yeah. Because he he renamed the Twitter parent company to X, which was his original vision, I think. I don't know the whole story, but PayPal, right, for PayPal was like a payments super app kind of thing. Yeah.

David Barrett: [00:12:38] I mean I think that's what he's been aiming for for a long time. And let's be honest, he's got a pretty good track record and so it might be Psycho, but at the same time, like the Rockets do fly and that's pretty cool. Yeah. And so I think that but, but I think it's important to recognize that it's not going to be concur like concur. They're not even trying like absolutely no one in their company is trying to take over a billion users. It's just not even part of the roadmap.

Blake Oliver: [00:13:02] Right. Well, but I mean, okay, so let's look at this cynically or just like from Expensify now has what, $100 million in recurring revenue or more than that 160 or so?

David Barrett: [00:13:14] Something like that.

Blake Oliver: [00:13:15] Yeah. Yeah. So, I mean, you could just like continue to improve the existing Expensify app, you know, make marginal improvements, add some features to get bigger customers and just rake in the dough for years and years, decades potentially, because once people get on something that works, they generally don't move off of it. Right? So, you know, why not? Why why create a new expensify and put all this effort into, you know, getting that 3 billion users or whatever you want to get?

David Barrett: [00:13:47] Why not that you increased it to three was more modest, only going for one. But hey, you know what? I like the vision.

David Leary: [00:13:53] Maybe another way to phrase that. Before you answer that, Dave, the way I look at it is like you've done a startup, you've proven it successful, you've taken the company public, You're a similar age as me. You know, we're getting pushing the 50 somewhere, right? Right. And 28 And it's like to start over. Like you're kind of building a brand new startup again, a new product from scratch, and it's conceptually different from anything else out there.

David Barrett: [00:14:17] Yeah, you got it. That's exactly right. But like what? Like, what's the alternative? Like, just go fishing. What do like to fish? You could do.

Blake Oliver: [00:14:25] Some really good fishing.

David Barrett: [00:14:26] I guess, But like, you know, I think that. And the way I view it is and I've been saying this for a long time, if you expense everything we've done to date and rather we run expense like a pre-revenue startup, it just happens to be that this pre-revenue startup brings in like $160 million and like generates a whole bunch of like positive cash flow and all this kind of stuff. Just because the design can't help but mint money. Like, it's just that's just this is what it does. And I would say, but we haven't really what we have today was never actually the vision, kind of like Elon Musk. It's like, you know, PayPal, all sort of stuff was never actually his vision. It's just kind of is you build something, you learn, you throw it away, you kind of move on sort of thing. And I think in engineering terms, there's this idea of if you don't know how to do something, what you do is you do it and then you throw it away and then do it for real. And so I view that as like with Expensify, everything we've done to date, it's like, look, we might be the best expense reporting system out there. That's cool, but that doesn't mean we're the best expense reporting system. That could be. It just happens to be the best one that's available right now. I think in the process of doing this, we're like, okay, okay, now I get how this works.

David Barrett: [00:15:27] I see how the accounting works and all the payments rails and the money transmission licensing and SaaStr Compliance and Pisa and all this other junk. It's like, okay, we got this. Like now we know kind of how to do all the basics. Now let's do it for real. And I think that this vision is what's interesting about New Expensify and I'd be curious for your thoughts on this. One of the challenges. Is it so simple? It just doesn't seem real. It's basically like we've been we've been programed to think that accounting has to be so difficult. It has to have so much jargon and so much complication and everything. You have to have 50 tools. You need to connect your same bank account and same system to 50 different tools. Configure your employees in every one differently. Configure you have to do so much work, and that's just what it feels like it has to be. And so when a new expensify comes out, we're like, No, you just connect once and then, Oh, you want to get money from someone? Yeah, you click request money like the word invoice expense report. Bill didn't even appear in the product. It's just if you want money, you request it. If you request it from your company and an expense report. If you're requesting from a client, it's an invoice that the accountants care about that you probably don't, though.

Blake Oliver: [00:16:34] Well, and I would have said, sorry, David, but I got to ask this follow up. I would have said like, this is crazy, maybe six months ago. But we just saw the rollout of ChatGPT and now it seems like everything's going to be a conversation. And you've been working on this for I mean.

David Barrett: [00:16:53] That's exactly what like ChatGPT is just a better execution upon what I would say like concierge is basically is our chat system. It's our AI based chat system we've been working on for years. Right? And I think ChatGPT is great in that it knows everything about nothing, basically just kind of knows the general like, Wow, this is the general zeitgeist of humanity, but it's not very good at anything specific, which is hilarious. Like the Singularity is going very different than the science fiction predicted. It's basically like it's good for creative stuff but sucks with math, it's like, that's bizarre. And so I think that ChatGPT is great at like general conversations. But then we had our team basically step in whenever things get like real hard. And so the combination of something like, you know, AI generative, generative AI chat systems on the front end that can escalate to humans in the back end for when things get really difficult. I think that's the dream and that's what we've built. We've been basically looking forward to this for a long time. This this idea of payments or conversation is not a new idea. This is this was the original idea. It just took us 15 years to get to here to execute on it.

David Leary: [00:17:55] Yeah, I remember 15 years ago you were talking about how you wanted to destroy the system and like, is this a step to that, right? Where you can move money around and maybe bypass these entirely?

David Barrett: [00:18:07] I don't know. I think like I'd probably come around to say like, ach isn't as bad. I mean, it does a job. There's a reasons for it and it's gotten much faster the same day ACH and things like this and the clawbacks of like, you know, it's complicated. Money transmission is super fucking complicated. I don't know if I appreciated that as much 15 years ago as I do right now. I think that things could be improved, but things aren't as bad as they seem. Or if they are bad, there's a reason behind it. Yeah.

David Leary: [00:18:29] So one thing I found entertaining at Expensive con is you bring 100 accountants, you know, some are CFOs of companies, some are virtual CFOs. Their heads of accounting cast divisions at accounting firms. You know, they have problems with their clients and you show them new expensify and and a lot of them couldn't grasp it. It was almost like too much like you said, it's too easy or it's just now like, I feel like Blake and I were nerds and we drink beers with you and we talk about this like what things could be in the future. And they were so hung up over like, approvals. And I'm like, But the approvals are already there because you already had a conversation that said, Can I fix the oven? And Blake said yes. Like there is no approval. Like the whole concept is just exploded and like their brains just couldn't. And it's not they couldn't handle it. It's just they're just not ready for this. It was too much. And so what was your strategy in showing this to everybody?

David Barrett: [00:19:20] Well, yeah, guess I would say that is a challenge. And it's basically it's a very different way of viewing these traditional problems. And you got to start somewhere. And we just don't expect everyone to get it on day one. And that's fine. Like we're not forcing anyone over to this new design or like all this work. We like the old stuff. Great. Keep using the old stuff, but the new stuff's going to be even better. And so I think you're going to see over the course of the next year, whatever, that we're making the new expensify just more and more attractive. We're making it easier to adopt and we're going to show more and more like, for example, a new expensify You're going to be like, you can do expense level conversations. Can't do that. No expense. It's not. It's just not designed to do the new one is. So if you want to like comment on specific expenses, you go to the new Expensify for that. If you want to have like, you know, reactions to things and like a more social approach there or like you want to have the conversation before the expense, well that happens. A new Expensify Well, the old Expensify is just, you know, a traditional expense reporting system. I feel like we're going to lure people over bit by.

Blake Oliver: [00:20:14] Bit, and this is going to be something where people have to experience it to really grasp it. I mean, the old expensify, the classic, classic expensify was also classic.

David Barrett: [00:20:23] That's right.

Blake Oliver: [00:20:24] That old. Yes. Expensify classic is one of those things, too, where, you know, people who had never done a digital online expense report and scanned receipts and had them magically attached to credit card transactions, they had to see it to actually experience it. And I feel like this is going to be one of those things where you're going to have a conversation about an expense and then it's going to get auto approved because the system. Them saw the implicit, implied or explicit approval in the chat and then the reimbursement just happens.

David Barrett: [00:20:52] Yeah. And I think that you guys you get it. And I think that's and this is inevitable just like we like you're called The Cloud Accounting Podcast. But like, remember, the cloud was terrifying for a long time. Remember how many conversations are like, is the cloud safe? Is it secure or whatever? Now, those conversations still happen, but not very much anymore. And I think it takes time for this to bake in because, like, it's it's a very important field. It's a field that has a lot of, you know, tradition behind it. And that tradition has been refined over the course of a very long time. And so we shouldn't expect it to change, and that's fine, but I think we can. But it's also I think it's shown it's open to change. And I think that's if you can show a better path, it's not going to happen fast, but it will happen.

Blake Oliver: [00:21:30] So you're building a startup inside of a public company. Now. It seems like that might be challenging because public markets do not like experimentation. They want what they want steady, predictable earnings. They want you to just to do what you're good at and do it quarter after every 12 weeks.

David Leary: [00:21:49] Yeah, every 12 weeks. Yeah.

Blake Oliver: [00:21:50] And it seems like the market just punishes you brutally for this, you know, with the stock price and, and like how does that how does that feel? I mean you got to pay attention to it, right? Or like, what about the employees? You know, it must be tough.

David Barrett: [00:22:08] Sure. So I'd say so. The very first thing we said when going public IPO night was, okay, first rule of being public. We never talk about being public. And so like, I actually don't look at share price at all. We don't talk like it's one of the rules is you just don't talk about share price. You don't celebrate when it goes up. You don't lament when it goes down because we give information to the market literally four times a year and that's it. And the market price goes changes a thousand times a second. It clearly has nothing to do with us. It's almost entirely driven by factors that have nothing to do with us. And so I'd say we can't control. Like if you're going to hang your hat on a bunch of like microscopic decisions that we just couldn't even involve in, like, that's the bad strategy for living. And this comes back to like why we went public in the first place when the first the most common questions we got is basically like, okay, so you're growing. You're. You're profitable. You've got a ton of money in your balance sheet. Like, why? Like, why are you going public? And it's just to basically create liquidity for investors because like, we work for shareholders.

David Barrett: [00:23:06] And so it's like we just have to like, we can't just be private forever. Got to give that money back somehow. And so I think that we went public in order to create liquidity, but that didn't have to change our vision of the future. Being a public company only affects you as much as you let it. And so our commitment is to long term shareholder growth. I'm going after that trillion dollar number, not this number and not and that 50% more than this number or whatever it is. We don't want incremental growth. We see an opportunity to go for something huge and we're taking it. But also we have to I think that like everyone else out there who's not, they're just there's Walking Dead. They don't even know it because something if it's not us, it's X or it's someone, it's going to come along and execute this vision and it's going to wipe everyone else out. And they're just trying to, like, you know, sell their shares until they can get out and get it. That's proven Silicon Valley strategy. But we're trying to do something different.

Blake Oliver: [00:23:58] And you also did a nontraditional listing. You did a direct listing, is that right?

David Barrett: [00:24:03] No, actually, we ended up doing a traditional price round, but we did do it in some unusual ways. And we have a share class structure that commits employees to the long term. And so basically for our management team, over half their shares are in this locked up sort of format, which requires ten or even 50 months of notice before you can sell, because we're trying to say if you want to participate in the long term decision making of the company, we need confidence that you are focused on the long term results of the company. And so really we're not like we've been very clear from we're not optimizing for the next quarter, we're optimizing for the next decade. And those are very different strategies.

Blake Oliver: [00:24:40] And you also set up the voting structure such that you don't have to worry about like a hostile takeover or shareholders, you know, like revolting and forcing you to do what you don't want to do, right? Yeah.

David Barrett: [00:24:52] But I would say we also did that in unusual way rather than having like a traditional high voting share structure that just makes me into a dictator. Uh, we built this model that actually is called a voting trust. The three, basically the people with the three employees have the most shares have one vote each. And so I have the most shares, but I only have one third of the voting trust. And so the consequence of all of this is we're a high voting company, but I can be fired, but only by my own employees. And so we're it's not a dictatorship. It's more of a Senate. And I think that's because good people don't want to work for a dictatorship. They want to participate in something and have a real voice. And so we've created a company that gives our employees that voice, which is why they've stuck around for so long.

Blake Oliver: [00:25:32] I don't know if the Senate is the best analogy, though, because they did murder Caesar.

David Barrett: [00:25:37] Well, you know, but he was trying to be a dictator. That's why.

Blake Oliver: [00:25:40] That's allegedly. Right. The debate.

David Barrett: [00:25:44] The debate. They wrote the news. They Yeah, the.

Blake Oliver: [00:25:45] Debate that will continue for thousands of years. Um, I just finished watching that show, Rome on HBO like I'd never watched it before.

David Barrett: [00:25:52] Amazing. So well done.

Blake Oliver: [00:25:53] Really enjoyed it. I wish they had kept it going a little longer. I felt like they'd tied it up too quickly at the end. You know, Roman.

David Barrett: [00:25:58] Empire is like thousands of years of history. Can't you just spend a little bit more?

Blake Oliver: [00:26:01] Yeah. You can't just stop with Octavian when he's like 25 or something, right? Like, anyway, it's over. Yeah, I guess Pax Romana was not interesting enough, so. So one thing we didn't talk about yet was the coming functionality. What you're going to add two new expensify beyond just conversational chat and expense reimbursements, there was something that you previewed at the conference called Tasks. Or is that the right term? Tasks? Tasks? Yeah. How does that work?

David Barrett: [00:26:30] Yeah, sure. Think think tasks again. It's one of those things that sounds so simple that's like hard to get excited by, but I actually think it's like the most groundbreaking change. And I think it's because one, if we say all payments are conversations and but they're transactional conversations, they're conversations to achieve some specific goal that is done, which is a different kind of conversation than Slack. But there are lots of other transactional conversations which are not slack. Like for example, like can you upload this document or can you just answer this question? Like I'm trying to close the books for you clients and I need answers from you on a reliable schedule and you're not giving them to me. So today the best practice is you email them and they ignore you, you email them, maybe you text them, and then eventually you just throw something on their calendar for a zoom call. And then you go through this giant list of questions and everyone's like, Fuck. And I was like, waiting around. Like, This is a huge waste of time. And so everyone hates the current model, but it's just kind of the best that exists. Our approach is to take sort of issue management, like you say, in the same sense that with Expensify you can request money from anywhere in the world. Just type in an email address or phone number. You can request money from them and then we'll sort out the accounting treatment behind the scenes. Likewise, we use that same kind of universal platform to say you can ask anyone in the world to do anything and then we will track it in a tracked fashion. And then you can say, basically, here's the outstanding tasks, here's here's who's waiting on you to do this particular thing. And then basically manage not just your expense reports, but all of your basically tasks for accounting.

David Barrett: [00:27:57] On a close basis. And then best of all, wrap all those up to recur automatically on a monthly basis. And so you say, hey, all your recurring monthly close questions, just program them in. We will ask them from the same people every single month. We'll tell you what the Gantt chart, basically the status of them. And then so likewise, from a firm perspective, it's about baking in the knowledge of each client into the client configuration. If a new client account needs a step into a client, they don't they don't need to talk to the old one to figure out what's going on. It's all there. It's already in the tasks and it's already running automatically. So it's about trying to use recurring tasks to allow accountants to automate their firms and automate basically the recurring clothes and things like this for the firms. And so, yes, it's about using a platform that allows you to scale up the number of clients that each accountant can manage while also improving the consistency of that and reducing the training for each. So think this is why I think tasks are the most interesting because going back to the question of, yeah, even like the most common business traveler, they're not submitting so reports every single day, but they're doing something every single day. And so if you can capture the conversations and basically add structure to the non-financial aspects of their day as well, I think you can we can offer so much more value to our customers. And by giving them so many more tools and doing it for nine bucks a month. And so it's basically a huge basket of functionality for like the cheapest possible prices.

Blake Oliver: [00:29:27] So one of our livestream viewers said people are scared of transitioning to new software. There are many organizations still on desktop because implementation was a nightmare at the start and the interface is still very different. So I guess this leads to the question, even if you build new expensify, how do you get people to switch? It's been a how long? David How long has QuickBooks Online been around and how long.

David Leary: [00:29:54] Desktop people will be on for another 50 years. And then I see Expensify classic and I was like, Oh, they got Dave has a new problem. He's going to have people on Expensify Classic for the next 25 years. Yeah.

Blake Oliver: [00:30:03] So how do you deal with that?

David Barrett: [00:30:05] I think it's a fair question. And so first off, when it comes to desktop, that's why we support QuickBooks Desktop. It's just like, you know, we still have, you know, market leading support and we will for as long as people want it. And so that's cool. I think that migrating people over, yeah, it's a real challenge. But the main concern that people have with the two Shvo challenge is that the functionality is just not there. And so it's not like just about I think if you show people a different and better way to accomplish their same requirements, people are willing to do it. It takes training and cajoling and time and patience and all that, But but they'll do it. The main problem with is it's just not as feature rich, it's cubed. And so the people who are on cubed, it's not just like like the interface better or something like this, it's basically like it does my job in Shvo doesn't. And so it's kind of it's not quite the same thing. So I think that the main way that we do this is to make sure that New Expensify is a total superset of Expensify and for anything that's not that, that we keep that old functionality around basically as long as people need it. And so now I don't dispute that it's going to be a challenge, but I think our approach is to do to lure people more with honey than vinegar is to say we can offer the same exact functionality, but we can do it in a way that is so much better and you're in control. As to the timeline as to how fast you switch over.

David Leary: [00:31:20] So one thing you've done differently is obviously you have, what, 140 employees like. You're super, super efficient and now you're building this new product. And I step back and I'm like, Oh, you have all this cash in the bank, you probably should hire. He's going to have to build a team of 1000 engineers and layers of management to build this product, and you're not doing it that way. Can you talk about like the systems you've built in place and how you're because you're using, for lack of a better term, open source developers or the the what do you call that? That's not the right name either. But I'll let you kind of explain to me explain to me how you're building this with the relationship with the engineers and what processes you guys have had to create from scratch to do this?

David Barrett: [00:31:58] Yeah, I would say so. Our 140 full time employees, their primary job is to be creative journalists. And so whether they're an engineer or on the sales side or support or even our own accounting team, everyone's job first and foremost, is to automate their jobs away as to figure out basically because even our accounting team, if we're doing like Sox compliance, we get a ton of customers doing Sox compliance. We think what sucks about Sox compliance, how can we make it better? And so using our task system for Sox compliance is so much better than what the other tools that everyone else uses and so forth. And so our core team is about the creative hub and the challenge is it doesn't need to be bigger. Like we're 140 people right now. We're 140 people last year, 140 people the year before. Like basically our hiring and our attrition has hit their kind of replacement levels, if you will. We just kind of stay here and that's fine. It's great. It's kind of like a A balsamic where basically it's like it's just reducing and getting better and better. And this core people we have are more and more efficient every single year. And like we look back at ourselves a year ago, we're like, we're such idiots. Why don't we do it that way? This is so better. And and so we're just this same group of people is able to produce more and more just by through better processes and wisdom and all this kind of stuff. Now, so the core creative team is a stable size, but as you've mentioned, when something can be condensed down to a project that just needs to be implemented, then you can hand it off to someone else. And that's where actually you need the massive scale. That's why New Expensify is made entirely in open source. And so as such, the it's not just to we get the random casual contributor that makes a change, but most importantly is it enables us to hire like a thousand engineers from around the world to work on 24/7 basis.

Blake Oliver: [00:33:37] I need to understand this better. When you say the entire new expensify is open source, can I go like look at the code? I mean, I wouldn't know what I'm looking at, but could I do that?

David Barrett: [00:33:45] Yeah, it's actually, it's interesting. It's probably no one's really picked up on this, but it's, I think we're like the only SaaS business that has an actual official client that's open source. Like there's lots of like, Twitter has an API that there's like other Twitter clients you can use, but the Twitter client itself is closed source. I think we're the only real SaaS business at scale that has an actual open source client, the official one. And so yes, thousands of developers are contributing on it.

Blake Oliver: [00:34:11] So like. But isn't there a risk there somebody could just fork your client and make their own new expensify and copy you and like, guess, good.

David Barrett: [00:34:19] Good luck, guys. I mean, like. But like, why? Like, doing that doesn't make it better. So, like, cool, Now you've got your, you know, Blake's expensify with zero users, and so it's like, okay, fine, have fun. But like, that's not the code is not the important part. It's the community that's the important part. And that's the thing that you can't you can't steal, right?

Blake Oliver: [00:34:36] Yeah. If you clone Twitter. Well, people have tried.

David Barrett: [00:34:40] Yeah, Yeah, exactly. It's like to Mastodon community.

David Leary: [00:34:42] We're halfway there. Blake. We could just go fork the code now.

Blake Oliver: [00:34:45] Yeah, that's right. That's right. Um, so open source you've got, you've got contract developers. You can put out a job, you can have somebody contribute code. You don't have to go out and hire an army of very expensive software engineers. Oh yeah.

David Barrett: [00:34:58] And so what's cool about that is so we actually so we've so many developers, so many more than we actually need. They're just it's, it's weird, actually. They're fighting over these jobs in the tuna. They've made it create custom scripts such that basically when we post a new job, we'll get like a dozen applications within like a millisecond. And other developers are like, That's unfair. We're like, I don't know, it seems pretty good to us. And so our constraint is not basically the execution capability of like fixing bugs or whatever it is. The constraint is the product management of like, how does this work? Because it's actually it's so much harder to make something simple than it is to make something complicated. And so we had to think very hard about the patterns to make sure they work in a sort of consistent fashion. And there's this great phrase I really love. It's basically like, you know, even with nine women, you can't make a baby in one month. And so basically some things just take time. If you want to do something, it's just it's just important to take the time to do it right. And so we're building something that is a really difficult, sophisticated tool that requires a lot of careful preparation. And 140 people that we have are all participating all day on how do we make the best possible tool. And then once we've distilled it down to like, okay, and therefore build this particular feature, by that time, like all the hard decisions have been made and it's just basically find something to implement it. Not to say that things can't go still wrong after that, but the hardest decisions are already made before that started.

David Leary: [00:36:20] So you've built a process to capture the requirements, a process, the post, a process to review the code before it's checked back in. And that's where you focus the energy on not hiring and putting layers of management.

David Barrett: [00:36:32] Yeah, exactly. And I think. Because again, you don't you don't need ten times the creativity to have a business, ten times the size you need to have the ability to execute on your your core strategy on ten x the scale. But the execution basically can be scaled out through contractors and the creativity can be sort of contained and centralized.

Blake Oliver: [00:36:53] And it seems like getting bigger often slows you down. And we saw that with Twitter like Elon to to mention that again, right? Elon fired 80% of the people that worked at Twitter. And the company is still running, which is kind of astonishing. People didn't think it was possible. But what does that say? What does that say about scale?

David Barrett: [00:37:15] I mean, I think that we've seen this again and again everywhere I've worked like, you know, prior to Expensify, it's basically like 80%, like 20% of people do all the value in 80%. I'll just show up to, you know, collect a paycheck. And I think that's that's the common case. And I think it's because most companies are based in a hierarchy and there are so many places to hide in the hierarchy when at expensify, like we don't have any managers and our compensation is determined by vote. And so everyone in the company votes on everyone else's compensation. So we have a tool and it's basically like, who do you think should be paid more? Blake Oliver @DavidLeary pick left or right. And then you basically do this 7000 times each, and then you've ranked everyone against everyone else in the company and then everyone in the company does that. And you got this very large data set of basically, here's what everyone thinks. Everyone else should be paid. So do you filter it, condense it down the power curve sort of thing, and then you get basically like, okay, here's how compensation works by algorithm. And so it's very hard, hard to hide inexpensive fun because there's everyone's looking at everyone else and everyone's basically trying to hold everyone else's feet to the fire in a constructive and positive way. But because we're such a small group of people, we're very in tune with what everyone's doing.

Blake Oliver: [00:38:26] So, David, I want to close out, I should say Leary. I want to close out with a question about support. Unless you have anything else.

David Leary: [00:38:35] Yeah, we'll do support and then I do have a kind of a more inspirational question or challenge for Dave after that.

Blake Oliver: [00:38:41] So we'll do our last two. I'll go first. So. This ties in to that whole discussion of how many employees Expensify has and, you know, scale. One of the biggest barriers to adoption of Expensify that I heard in years past from accountants was the support that there wasn't as much hand-holding. You just couldn't get the support you needed as a firm to to roll this out to clients. But you have made some big changes and those were announced at Expensive Con. Can you tell us how support is changing for accountants? Yeah.

David Barrett: [00:39:17] Yeah. I'd say if you're going to sort of dial back the path of support and expense of five companies growing, number of customers going up, number of sort of support engagements are going up quickly. But we're still a very small company and we're giving very like white glove personal experience to customers and to accountants and things like this. And it just wasn't it was becoming very, very difficult to scale, like from a hiring perspective and training perspective and so forth, because everyone in our company is a creative, a creative journalist, but there's no one, the 140 employees, no one is on a commission. No one basically has like quotas or KPIs. That's a very high trust collaborative environment which works up to a certain scale. If you want to scale beyond that, you have to go to like, you know, how do you have quotas, commissions, KPIs and things like this. And it just it's kind of a management problem. And so we actually had this very difficult decision. Do we keep. Do we change the entire corporate culture to support basically a large in-house team of sales and support agents? Or can we find a way to do that through contractors just like we've done for the developers? And so we pulled back and it was very, very controversial in the organization because it's basically it's like, wow, we're giving really high end support and there's a lot of relationships built and like, but we just can't scale it out, pulled back, dialed in to basically lean heavily into our concierge to give. We took it from like two day response times to two minute response times for every single support conversation.

David Barrett: [00:40:40] We built a bunch of stuff. We built all this like, you know, figured out how to outsource this very complicated thing at a global 24/7 scale, cost effective fashion. Then we scaled up to now our support, like for, you know, we talk to concierge is like it is incredibly fast response times the the best end user support that you're going to get in the industry bar none. Then we took the same approach towards account managers. Basically it's like, okay, now we're going to give basically every single customer a dedicated account manager to figure out how that works and how do we scale. That was actually a huge exercise and we said, okay, we'll do the same thing with accounting partners and basically go back to a lot of those relationships that we kind of let wither on the vine honestly and recognize like, Hey, you know what? We had a lot of soul searching to do and but now we're back and we're able to actually support and scale with you in a way that we just couldn't have done before. I think expensive con to a high degree is about trying to show our commitment to the industry and that commitment has never wavered. We just weren't able to execute on that commitment basically with our previous structure. And now we can and that's going to scale forward. And so now the dream is, you know, when you onboard a client with Expensify, it'll be immediately paired with a guide or with an onboarding specialist that will sit down with your clients and do basically anything you want them to do.

David Barrett: [00:41:54] Like they're just your person to tell what to do. Do you want them to go in and give them? If you have instructions, it's like you want to set up any of your clients in this particular way. Cool. Like, we'll just tell us what to do and we'll do it because obviously we're motivated. Like we get paid after the activity, not before the activity. And so we have a strong vested interest in getting everyone set up correctly. So we'll just expand your firm with our talent and then after they're set up, we'll migrate them to an account manager to hold on to them forever. And so you should only be doing high end, high value accounting decisions. You should not be doing basically a daily check ins and reminders and nagging and repetitive configurations like that's our job, let us do that for you. And so I'd say this approach is we want to be and I think that we safely are actually have the best partner and client and accounting support in the industry, bar none for the largest range of customers because we don't cut off and only talk to enterprise customers. Like we'll talk to your small business clients, which most, you know, most firms have primarily small business clients and that's our bread and butter. So I think that there was a path to get to where we are right now, and it was a bumpy path, but I think it's a path that's basically behind us and we definitely have the best accounting and client support in the industry and we intend to keep it that way.

David Leary: [00:43:12] So maybe I can close on this a little bit. So obviously on our podcast, our listeners know there's an accountant shortage and you even slightly referenced it a little bit in your opening keynote expense account. And so my wife's in the education system, She's a high school counselor. And so it's a topic at our house as well. Like, you know, how do we get people at the high school level, eighth graders, freshmen, interested in possibly pursuing accounting as a career. And then you had George Clooney on stage at Expensive Con. You and George had a conversation and he was mentioning one of the things he was doing where there. His foundation is helping small businesses of some type. I don't remember any of the details, but what evolved from that was like, Hey, can Expensify like, help? Get more make make accounting more cool so more kids try to do accounting. And I was thinking about it a lot and I told my wife, if any company can do it, it's going to be expensive. Con because you have a vested interest because every eighth grader eventually is going to have to file an expense report. So you could go and you could pursue this on the long right. And even if you don't, even if you're not successful, you give them to become accountants. You still get a victory out of this. So I'm just throwing that out there. Could you help solve the talent shortage?

David Barrett: [00:44:22] Well, I think actually part of it is about emphasizing the important value of the industry and get away from sort of like the mundane compliance aspects, like no one's in this industry because like, I fucking love compliance. They're there because it's like, no, I love to like, help people succeed. And I think we need to get more focused on that. But also maybe add the cool factor. I thought George was I thought that was really fun experience to kind of talk with him. And I thought he has a lot of really insightful things to say in his foundation, in particular, how his foundation was using forensic accounting to track down basically like dictators and the finances and then getting like how, you know, Switzerland or America or anyone like the Treasury Department is willing to shut down financials and dictators, but someone has to show them that it's their money in the first place. And so I would love to figure out a way like, you know, in the law industry, pro bono law like representation is very common. Like every big firm has it in the accounting industry. Why doesn't every accounting firm have a pro bono forensic accounting organization that collectively is dividing and conquering basically all of the world's dictators and then tracking down all of the financial flows? That would be fucking cool if you could join a firm. And it's like, Oh, actually. And you know, 10% of your time is tracking down dictators like, okay, I'm going to take that job. That sounds like a much more satisfying job and it doesn't. So I think it's using the skills that you have and using the tools that you have to make a better impact upon the world. And also just make your job way more fun.

David Leary: [00:45:50] Or scale that out to high school kids like mean.

David Barrett: [00:45:53] Yeah, it's like it's like he's like, there's two options for saving the world. One, join the military or two, become an accountant. They're about the same. You know, one is a little safer. That's great.

Blake Oliver: [00:46:04] I love I love what George Clooney said on stage. He said, you know, we tried shaming dictators and it doesn't work. But when we cut off their funding, that works. That changes behavior, right? Yeah. So and I.

David Barrett: [00:46:15] Think this is what comes back to it's like we talked about we want to make an environment for a transactional conversations that affect things in the real world. It's not like a social network where you just show up and like shoot the shit and kind of talk for a while and like nothing happens in the real world, money changes hands. Like, if you want to impact the real world, it's expensive. People have to, like, spend their money and go out into the world and do stuff. And so I think that if you want to impact the world in a positive way in your personal life and your community and your business, or even on the other side of the globe tracking down, you know, Sudanese dictators or whatever it might be, I feel like accounting is actually a big part of that. And I think that we need to make people more focused on the positive impact of the industry and less distracted by the compliance bullshit.

Blake Oliver: [00:47:03] That's a great way to end it. David Barrett of Expensify, it's been a pleasure speaking with you today.

David Barrett: [00:47:08] Thanks. Well, always a pleasure.