SaaS: How Ignoring CAC Works for <$100m ARR Expensify

David Barrett

In Episode #844, Nathan interviews David Barrett. He started programming at the early age of 6 and has been aspiring to become an expense report magnate ever since. He attended the University of Michigan where he worked in a virtual reality lab before moving to Texas to render 3D graphics engines for the video game industry. Next, he moved to California to join Travis of Uber in building a peer-to-peer file transfer technology called Red Swoosh, which was acquired by Akamai in 2007. In 2008, David left that company to start Expensify and has since been relieving the world’s frustration one expense report at a time.

Famous Five:

  • Favorite Book? – Good to Great
  • What CEO do you follow? – Elon Musk
  • Favorite online tool? — Google Docs
  • How many hours of sleep do you get?— 8
  • If you could let your 20-year old self, know one thing, what would it be? – “It is possible for everyone else around you to be wrong and for you to be right”

Time Stamped Show Notes:

  • 01:46 – Nathan introduces David to the show
  • 02:38 – Expense reports have been overlooked
  • 02:56 – David took the opportunity that will take care of expense reports
  • 03:18 – Expense report is synonymous with any business
  • 03:52 – David shares how his eagerness to help the homeless led him to create an expense report reimbursement app
  • 05:09 – David was in Episode 655 of The Top
  • 05:16 – Expensify isn’t looking to raise another round at the moment as they just raised $25M
  • 05:23 – Expensify is currently profitable and not burning capital
  • 05:27 – Team size is 120
  • 05:33 – Expensify was founded in 2008
  • 06:04 – Expensify currently has 42K customers
  • 06:21 – Expensify also has millions of free users
  • 06:49 – Pricing has a free account which offers 10 receipts a month and a paid account starts at $9 per active user
    • 07:15 – Enterprise plans also start at $9
  • 08:21 – ARR is still under $100M
  • 09:44 – The expansion is the bulk of Expensify’s revenue growth
  • 10:40 – Expensify has a $5 plan for a group
  • 11:10 – Revenue retention is over 100% annually
    • 11:24 – Every 3 years, a customer pays 500% more
  • 12:55 – The most effective strategy to acquire customers is to hand their product to the individual employees and promote it within their own companies
    • 14:14 – David shares how the payment shifts from the employee’s personal card to the company’s expenses
    • 16:16 – The target is to share to at least one other person
  • 16:35 – Expensify doesn’t have any paid channels
    • 16:40 – They do lots of conferences which is more for establishing brand leadership
    • 17:25 – They spend a single digit million, annually, for their conference
    • 17:32 – Their conference is ExpensiCon
    • 18:00 – Only 100 selected people can join
  • 19:35 – David believes that the cost of sales doesn’t equate to the cost of customer acquisition
    • 21:38 – The most important decisions are not quantifiable
  • 22:40 – David won’t sell Expensify for $300M
  • 16:10 – The Famous Five

3 Key Points:

  1. Getting your own clients to refer you is the best way to grow your customer base.
  2. The most important decisions for your company are sometimes not quantifiable.
  3. Focus on the best possible brand or product you can offer.

Resources Mentioned:

  • Simplero – The easiest way to launch your own membership course like the big influencers do but at 1/10th the cost.
  • 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
  • GetLatka – Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
  • Klipfolio – Track your business performance across all departments for FREE
  • Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • 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
  • Show Notes provided by Mallard Creatives