Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well. Expensive
Speaker 1: as the payment apps it works with businesses and individuals
Speaker 1: to make it easier to manage expenses bills. It reported
Speaker 1: earnings yesterday, revenue coming in at thirty seven point four
Speaker 1: million dollars. It's an increase of seventy two point six
Speaker 1: percent from the same time last year. The net loss
Speaker 1: was six point three million dollars. That was compared to
Speaker 1: six point nine million for the same period last year.
Speaker 1: The company those saying this was due to an ip
Speaker 1: O related bonus expense of more than twenty six million
Speaker 1: dollars that impacted a net loss and adjusted ebit. Joining
Speaker 1: us now is David Barrett, the founder and CEO of Expensivefy.
Speaker 1: He joins us on the phone from San Francisco. David,
Speaker 1: how are you doing great? Thanks? Hey, So, I want
Speaker 1: to talk a little bit about what the journey to
Speaker 1: becoming a public company has been like for you and
Speaker 1: also what it's been like just over the last month.
Speaker 1: Is you've watched your company shares look move a lot
Speaker 1: higher and also move a lot lower. We should say
Speaker 1: that shares are higher to the tune of about thirty
Speaker 1: percent since the company I p O though about off
Speaker 1: of highs reached in late November. So actually, I have
Speaker 1: no idea. I didn't look at the share price since
Speaker 1: I left the studio. Really wait, wait, hold on the
Speaker 1: first thing we did. You didn't check the share price.
Speaker 1: You even checked the share price since when? Since we
Speaker 1: left the studio and I p O day Uh wow
Speaker 1: the uh. We set up a rule internally saying it's like, look,
Speaker 1: it's a spoiler, like we're here for the long haul.
Speaker 1: We're not here to make just results like next you know, tomorrow,
Speaker 1: next quarter wherever it is. Everyone in the company has
Speaker 1: focused on very long term results and so no, I
Speaker 1: only pay attention to the value recruiting over the very
Speaker 1: long term. That's so interesting because I talked to someone
Speaker 1: like Michael Dell, who has been you know, in public
Speaker 1: markets for for decades um and he writes in his
Speaker 1: recent book that it's like, you know, compared to kind
Speaker 1: of a report card. Uh and and talked a lot
Speaker 1: about the anxiety that it brings when you know investors
Speaker 1: don't believe in you. Yeah, I mean, i'd say, but
Speaker 1: investors aren't my customer. I would say, like, you buying
Speaker 1: my shares doesn't actually make the company any more money.
Speaker 1: Every one's focus needs to be on how do we
Speaker 1: build product, how do we get that product in the
Speaker 1: hands of customers, and how do we generate very long
Speaker 1: term cash flow. Everything else is just an instruction. I
Speaker 1: think that's a really refreshing perspective. I mean, we spend
Speaker 1: so much time talking about the market here, but like
Speaker 1: you said, investors aren't necessarily your your customers. But I
Speaker 1: do want to talk a little bit more about the
Speaker 1: I p O. Because you founded expensivefy in two thousand eight,
Speaker 1: you didn't go public until Uh why was Why was
Speaker 1: now the right time? Well, it just really came down
Speaker 1: to we wanted to provide liquidity to our early shareholders.
Speaker 1: I mean, like, we're a profitable company. We didn't need
Speaker 1: any money. We have all the resources we need to
Speaker 1: keep growing. But as you have investors in with like
Speaker 1: a you know, ten year LP requirements and they're like
Speaker 1: eleven years in, at some point they're like, look, it's
Speaker 1: not my money, need to give it back. And so
Speaker 1: we actually did leveraged buyouts of early investors. We took
Speaker 1: on debt because Republic are profitable company and bought out
Speaker 1: early vcs. But that only works for so long. At
Speaker 1: some point we're like, look, there's no future where we
Speaker 1: can keep buying out everyone through LEVERAGETEP, like, we just
Speaker 1: have to go public eventually. So once it was no longer,
Speaker 1: uh and if but a when that, they came down
Speaker 1: to why not today, Like it's better to be growing
Speaker 1: in a public company that growing as a private company.
Speaker 1: If you're just growing the same all the same, I'd
Speaker 1: rather have the look good or than not. So we
Speaker 1: just decided, look, there's really no reason to wait, let's
Speaker 1: just do it right now. I would imagine that over
Speaker 1: the last thirteen years you've gotten some serious offers to
Speaker 1: be acquired that could have been a different path. Yeah,
Speaker 1: but that's not very fun. And listen, what I would
Speaker 1: do is to start all over and couldn't entirely new company,
Speaker 1: Like that's that sounds like a huge fan the ass
Speaker 1: would much rather just like I worked so hard to
Speaker 1: build this company, to hire this team. I don't want
Speaker 1: to start over and like have thirteen more years of
Speaker 1: effort to get back to where I am right now,
Speaker 1: we're just barely getting started here. So does it feel
Speaker 1: any different being a public company than you were private
Speaker 1: company for more than a dozen years. It feels great,
Speaker 1: I would say. I think that the big challenge for
Speaker 1: our company has always hasn't the courage to believe in ourselves,
Speaker 1: like overcoming this idea, the imposters, you know, dilemma. And
Speaker 1: I think like, now we're a legit, multi million dollar
Speaker 1: public company and you know, with employees and offices all
Speaker 1: over the world, like at some point we have to
Speaker 1: accept maybe we do new a thing or two. And
Speaker 1: I think that the confidence has given employees to just
Speaker 1: really believe in ourselves and believe in our product vision
Speaker 1: has been really helpful. And so we're coming back with you.
Speaker 1: We have just about thirty seconds though, but this was
Speaker 1: your first earnings report as a public company. It seems
Speaker 1: like what got a lot of headlines was the launch
Speaker 1: of your your Free Plan. Yeah, and so it's basically
Speaker 1: when we started a card first, we were targeting just
Speaker 1: cross shilling to existing customers. The new free plan is
Speaker 1: targeting entirely new class of customers. They have very very
Speaker 1: simplified requirements. And then so yes, it's a opening up
Speaker 1: the market even further. Hey, David, we're gonna come back
Speaker 1: with you, So sit tight. We're gonna do some news
Speaker 1: and we're back in just a few minutes. We're talking
Speaker 1: to David Barrett, the founder and CEO of Expensive I.
Speaker 1: He's joining us on the phone from San Francisco, Katie.
Speaker 1: When we come back, we're gonna have a good bit
Speaker 1: of time with him. We gotta talk blockchain. Oh my gosh,
Speaker 1: I need to talk about the blockchain. We only did
Speaker 1: one block on it. Yeah, I know so far, so
Speaker 1: we have an extra block to do later in just
Speaker 1: a few minutes. Once again, David Barrett, the founder and
Speaker 1: CEO of Expensive I, joining us on the phone from
Speaker 1: San Francisco. Still with us is David Barrett. He is
Speaker 1: the founder and chief executive officer of Expensive Fied. He
Speaker 1: joins us on the phone from San Francisco. And David,
Speaker 1: I was looking at your bio and there's a line
Speaker 1: in there that caught my eye that you created expensive
Speaker 1: fies blockchain powered database a year before Satoshi's white paper
Speaker 1: on bitcoin. There's so many people who can say that.
Speaker 1: Tell me, why were you looking at the blockchain all
Speaker 1: the way back in two thousand seven, two eight, Yeah,
Speaker 1: well it wasn't called that then. That name was invented later,
Speaker 1: I guess. But it's basically I was starting off this company.
Speaker 1: I needed to build a database that could replicate an
Speaker 1: incredibly high volume and security, and I just I was
Speaker 1: an individual engineer with you know, my background been I've
Speaker 1: been a programmer since I was six, like you know,
Speaker 1: distributed systems from my thing for a very long time,
Speaker 1: and had a problem I need to solve. None of
Speaker 1: the databases at the time offered what I needed. I
Speaker 1: couldn't afford oracles because I was just a random dude.
Speaker 1: Because I'm like, it's good, I can just build us myself.
Speaker 1: So explain what it means to people who might not
Speaker 1: be familiar that it's blockchain powered. Well, basically, blockchain is
Speaker 1: a replication technology, and what that means is if it
Speaker 1: allows you to have multiple copies of the same data
Speaker 1: in multiple locations and cryptographically guaranteed that they're exactly the same.
Speaker 1: And so blocking under the hood is really just a
Speaker 1: method of ensuring data integrity across multiple location. Now there's
Speaker 1: a ton of two different kinds of blockchains. There's the
Speaker 1: public blockchains like Bitcoin and things like this. We use
Speaker 1: a private blockchain, meaning it operates only on our own servers,
Speaker 1: but we get all the same cryptographic guarantees that the
Speaker 1: replication that's happening and incredibly hyperflorma. So so somebody could say, well,
Speaker 1: how is that necessarily different from the cloud? Um, well,
Speaker 1: I would say the difference is so we buy our
Speaker 1: own hardware. Like there's this weird myth that somehow Amazon
Speaker 1: is cheap and fast and efficient. None of that is true, Like,
Speaker 1: we buy a hardware that you are so much more
Speaker 1: powerful than anything you can get in the cloud, and
Speaker 1: it's literally like a tense of the cost um. And
Speaker 1: so I would say, no, we we operate our own hardware. Uh,
Speaker 1: and we use blockchain to replicate the databases between our
Speaker 1: own servers. When did you start using the term blockchain
Speaker 1: in your press materials? Uh? We didn't even really think
Speaker 1: about blockchain for a very long time until I think
Speaker 1: we're just like like, wow, you know, we should do
Speaker 1: something with with bitcoin because people seem nuts for this thing,
Speaker 1: and we're like, well, wait a second, we didn't. Didn't
Speaker 1: we invent bitcoin? Blockchain? Uh? If I if I were that,
Speaker 1: I would not be talking to you today. No offense,
Speaker 1: No offense, taken, don't worry. Okay, yeah, but no, no,
Speaker 1: I think that for us, we view blockchain is as
Speaker 1: a important solution to that particular problem, which was back
Speaker 1: end replication of very sensitive and important data at high volume.
Speaker 1: And so it's it's cool that. I mean, it feels
Speaker 1: like blockchain is such a buzzword that's thrown around, but
Speaker 1: it seems like expensive. I Again, you could argue you
Speaker 1: coined it, but I'm curious, do you think that when
Speaker 1: you look across the competitive landscape, do you see your
Speaker 1: competitors also sort of realizing the benefit that this type
Speaker 1: of technology holds. Not really? And I would say, like fundamentally,
Speaker 1: what makes expensive by different than everyone else, isn't I
Speaker 1: guess We've got the best corporate card, our best expense reports,
Speaker 1: all that kind of stuff, But most importantly, we have
Speaker 1: a completely different business model than everyone else. Everyone else
Speaker 1: basically has a very siloed uh sales model where you
Speaker 1: sell a customer top down, and that customer is an island.
Speaker 1: It only talks within itself, and so everyone has a
Speaker 1: very simple database because you only need a database as
Speaker 1: big as your biggest customer, and your biggest customer has
Speaker 1: you know, several thousands of employees like that fits in
Speaker 1: a small data base. It's actually very easy. We have
Speaker 1: a completely different design. We have a single gigantic database
Speaker 1: that is replicated in multiple locations that stores all of
Speaker 1: our customers, which means our design is much more like
Speaker 1: a Facebook or linked in that it would be like
Speaker 1: a salesforce to concur because any two users and the
Speaker 1: Insensibi platform can talk to each other just like a
Speaker 1: social network, and so we're built to capture essentially all
Speaker 1: of the billions of financial conversations. They happen not just
Speaker 1: inside of companies, but between companies and between employees in
Speaker 1: their um in their personal lives. And so we're bringing
Speaker 1: all these financial conversations onto a single global platform. And
Speaker 1: that's a completely different technology stack than anything else out there.
Speaker 1: So our technology is not just for you know, kind
Speaker 1: of just to be fun or neat. It's there to
Speaker 1: support this radically different business model because we aim to
Speaker 1: link a billion people through their financial conversations, just like
Speaker 1: Instagram links billion people by talking about photography. How do
Speaker 1: you get there? How are you able to get to
Speaker 1: that number? Well, that's a great question, because you can't
Speaker 1: get there through a traditional sales model like use this,
Speaker 1: aren't enough sales people to call a billion people and saying, Hi,
Speaker 1: have you considered expensive by Uh? The only way you
Speaker 1: can get to a billion user platform is through viral
Speaker 1: and word of mouth because like you didn't do you know,
Speaker 1: talk to a salesperson to decide to adopt Facebook. You
Speaker 1: just adopted because all your friends did. They told you
Speaker 1: that's how people learn about expensive lies. Yeah, but you
Speaker 1: need the company you work for to adopt it, right, Yeah,
Speaker 1: but it starts at the individual employee. Most companies of
Speaker 1: our competition has to convince the CFO. We don't even try.
Speaker 1: We say, hey, any individual employee the Hasteler expension boards
Speaker 1: can down to the after free sign up their company
Speaker 1: and give it a shot. Again it's free, and then
Speaker 1: we just onboard the company before the boss even knows.
Speaker 1: So we call it our bottom up adoption model. Every
Speaker 1: employee can pull us into the company, which is different
Speaker 1: than our competition who can only talk to the top down.
Speaker 1: And just for context, you guys have got quite a
Speaker 1: way to go to get to a billion users. You
Speaker 1: are saying that more than ten million people are using
Speaker 1: expensive fies free features right now. Indeed, more grab No,
Speaker 1: you go ahead, I can say more companies. He was
Speaker 1: expensive fied than any of the platform and so I
Speaker 1: think there's a reason for that, and we did it
Speaker 1: basically through this viral word of mouth model. And so
Speaker 1: that's I think the key to our historical growth and
Speaker 1: absolutely keep to our future growth. And even I do
Speaker 1: want to get your thoughts on the pandemic because expensive
Speaker 1: fy you founded it thirteen years ago. The past almost
Speaker 1: two years have been in a pandemic when it feels
Speaker 1: like everything has I know, as if we needed a reminder,
Speaker 1: but I am curious you know how that has, you know, affected,
Speaker 1: expensifies business, how you're thinking about the path forward, especially
Speaker 1: as we start to see cases unfortunately rise again across
Speaker 1: the country. Yeah. I think that was certainly very daunting
Speaker 1: when it happens, because we assumed we had a lot
Speaker 1: of exposure to business travel or of a certain kind.
Speaker 1: And I think it certainly, you know, it took a ding.
Speaker 1: I mean, it wasn't. Pandemic is not the banner of
Speaker 1: conditions for like, you know, fantastic year. But I think
Speaker 1: what we found is a business travel is different than
Speaker 1: people realize. We typically could think of like George Clooney
Speaker 1: up in the air, like you know, coastal travel. Most
Speaker 1: business travel is actually someone driving across town, like driving
Speaker 1: to Toledo, buying some materials at the home depot and
Speaker 1: then doing a job like that's business travel for like
Speaker 1: a huge fraction of people. And so I think that
Speaker 1: the there's a lot of focus on what the virus does.
Speaker 1: But the virus isn't our customer. People are our customers,
Speaker 1: and people actually their behavior doesn't move as quickly as
Speaker 1: the virus itself. Even like omicron, it hasn't changed really
Speaker 1: what people do. People are still traveling, people are still
Speaker 1: going into the office, People are doing a lot of things,
Speaker 1: like even in San Francisco here, um they may just
Speaker 1: major masked mandate in California except for San Francisco, where
Speaker 1: there's no change. Well, look, you know, we've had a
Speaker 1: big change in New York City in recent days. We
Speaker 1: hope that it doesn't end up happening in San Francisco certainly.
Speaker 1: David Barrett, thank you so much for joining us. You've
Speaker 1: got to come back. We had a great time chatting
Speaker 1: with you. That's David Barrett, the founder and CEO of Expensify.
Speaker 1: Just went public last month. It's been thirteen years in
Speaker 1: the making. He joined us on the phone from San Francisco,