it was clear that Expensify was a special company operating in a large, albeit challenging, market: expense software for the mid-market and SMBs. As part of our CxO coverage, we had segmented the landscape for SaaS solutions that were enabling CFOs and financial leaders to improve their expense management processes. We learned that the category had both established incumbents and well-financed upstarts. We also knew that selling to the lower-end of the market was notoriously difficult, as smaller customers have a higher propensity to churn. So, when we began to dig in with the Expensify management team and saw the company’s metrics, we quickly realized that the management team was on to something.
In late 2017...
Since then, the platform has grown to become the market leading pre-accounting platform for CFOs of all shapes and sizes, eventually making its public market debut in 2021. Being along for the ride has been a true privilege, but witnessing the “why” and “how” has been most inspiring.
One of the first exceptional attributes we noticed about Expensify was that it was profitable and growing (a rare combination, even in those times). The business also had cohort retention that made us question the old “trees don’t grow to the sky” adage – all the while, spending virtually nothing on sales or marketing.
Those metrics were even more impressive given that the company’s focus was squarely on the small-medium business (SMB) market. Not even Concur, which was founded in 1993, went public in 1998, and was acquired by SAP in 2014 for $8B, had cracked the code of selling expense management software into the SMB and mid-market (RIP Concur Breeze). In fact, 70% of SMBs still used Excel, pen and paper, or a homegrown system to manage expenses in 2016.
How was CEO David Barrett building what so many others had tried, but failed, to accomplish? Metrics are outputs; what were the inputs that were leading to the creation of a category-defining company?
David started Expensify in 2008 with a singular goal of building the world’s best suite of products for SMBs to manage their back-office. Even in the early days, the vision was to offer credit cards, payroll, and invoicing alongside expense management software, all in one human-centric UI. But David and the team were deliberate in how they grew. It was imperative that Expensify be an enduring company that was built to last forever, so the company invested first in perfecting a bottoms-up, inherently viral business model that promotes friction-free account expansion (i.e. PLG, but before PLG was a thing). Only once that competitive moat was trenched, with a large base of customers who consistently spent more on the platform year after year and also acted as a marketing engine for the company, did Expensify expand beyond its core expense management product and begin to offer complementary products such as payroll and invoicing.
We believe that relentless focus is what has enabled Expensify to become the market leading expense management provider to SMBs and the mid-market; it’s what we find so awe-inspiring; and it’s how we know that, 15 years since Expensify’s founding, the team is just getting started.