Hi Jessica, thanks for joining me.
I see your background out of college was in computer science, which makes sense with founding a hot Silicon Valley startup.
But, what I don't know is how you decided to go with an accounting startup? What kind of experience did you have with accounting?
Originally, I just had a pretty basic knowledge of accounting from running other businesses. What I did know very well is that doing your own accounting as a business owner sucks and I wanted to take that off their plate – it’s a real pain point I wanted to solve.
Funny thing is that by almost going out of business in 2012/2013, it forced me to do my homework. In order to re-think inDinero’s comeback strategy, I studied for the IRS Agent test like my life depended on it and I passed. Maybe it was something I should have done back in 2010, but now I’m in a far better position to make the choices and changes to best serve our clients.
Wow, an enrolled IRS agent. (I find that more fascinating than I probably should.) So is that a different path than pursuing a CPA since you don't have the accounting background?
Are the tax preparers you provide generally CPAs? Are they even accountants, or, like yourself, do they have different backgrounds?
There are plenty of similarities, the main difference however is that CPAs are licensed state by state whereas IRS agents are unlimited in their client representation rights and they must specialize in taxation by default. Bottom line, this was and still is the best way for me to most intimately understand accounting and taxes so I could make the decisions to best help clients and grow inDinero. It’s like passing the Bar to help get your Mom out of a speeding ticket she didn’t deserve; while it may be aggressive to some, it’s the most effective thing to do.
inDinero is all about blowing clients away with service and value versus them using a traditional CPA or hiring their own accounting staff. To make that happen from the time we meet a client to the time they hand over their entire back office to us, we have a variety of client service pros depending on what stage their in. Some of our folks are CFO-level, others are Enrolled Agents, some are CPAs and some don’t truly have an accounting background – but everyone lives to over-service our clients – to make sure we do about 3-4 times what they’d get otherwise (strategy and implementation) for about half the price. Our next big priority is to automate-away any busy work related to accounting, taxes and payroll. By cutting the fat and innovating our processes and software – we’re again putting live custom service first and not doing mindless “paperwork” that anyone can grind away at for X dollars an hour.
So how does it work?
When I sign up for inDinero for my company am I met with a nifty bookkeeping dashboard that pulls in data from credit card statements, receipts, etc. or do I actually get set up with a real, live person?
It seems like this would be a significant tension to balance - when I think of tech making our lives easier, it's generally through greater software and less direct human interaction, yet when people are dealing with their finances they want to deal with a real, live person. How do you satisfy both?
Its important to understand inDinero isn’t just a software company. Way before a startup or small business owner “signs up” for inDinero, we’ve already had important strategy talks to make sure we’re both a great fit for one another. Next, we’re meticulous and thorough on-boarding clients with personalized discussions. If anyone’s ever dumped their accounting junk drawer into a bag and brought it to their CPA – inDinero does that virtually, over the phone and through linking electronic accounts so that a client’s accounting, tax and payroll efforts starts to become fully automated and simplified and strategic – for good. This is when our software kicks in for the client; now they’ll start to see P&L; dashboards, cash run rates and expenses and be able to easily monitor the most important back office info to help grow the business faster or make quick decisions to help save their business now that they actually know what’s going on.
Being able to provide unlimited, flat-fee accounting services as a software is what’s going to make us a household name over the next 10-20 years. We’d argue that our accounting services as a software will make CPAs, as we know them today, obsolete in the next 5-10 years. If accountants aren’t innovating away busy work like inDinero does and instead providing far more strategy rather than paper pushing; they’ll go the way of the Dodo bird and become extinct.
Woah. Them's be fightin' words.
Alright, last question on the business model, then I'd love to ask you a couple more on entrepreneurship, since you've had quite an experience building inDinero.
I'd argue there is still a significant value to the "traditional" accounting firm, especially those that have a strong local base, or when it comes to specialization in specific niches or industries. How do you, at inDinero, account for those elements and provide for your clients?
I’d agree, there’s plenty of quality firms out there doing great work and pushing the strategy envelope for clients. At inDinero, we know our customer up and down. Our clients typically have around 0-100 employees, they are fast growing companies – that’s our sweet spot and we nail it for them. Where we see accountants and firms becoming obsolete are the “Intuit liaisons,” or a “QuickBooks interpreter.” It will no longer be ok to simply fill in the boxes for an hourly fee – the market will more and more understand that by outsourcing to a team of experts, that charge based on your revenue, that will be the best way to compete as a startup or small business.
Also important is that we’ve completely re-written accounting software so that we’re constantly automating-away busy work and breathing innovation into the archaic world of accounting and taxes. First, this saves our internal team tons of time doing the work in the background and second, it provides a super easy to use client facing mobile software. Once we get a client on-board, the business owner doesn’t have to have a sit down with us (or their former hourly CPA) to see where things are so they can be more intimate with their accounting, expenses, payroll, taxes and cash horizons and burn rates.
What can I say, no one expects you to have a crystal ball? (Where’s the smiley face emoji?) Well, one of the things I did not do was shut down the original business completely and start all over. Even though that could have been a bit more tidy or simpler, that’s just not who I am. So really, I scaled down to the point of laying everyone off and moving in with my folks. Bootstrapping for me was to gather up Whole Foods points so I could save on food funding. Simply put, I think that my original investors believed in me and my leadership skills and decision making abilities. However, I did some very fast, tactical maneuvers to right the ship. I immediately learned everything there was to know about accounting and taxes and began surveying past and future clients like there was no tomorrow. I found out that across the board, small business owners detested dealing with accounting and wanted all of these related services of tax and payroll done for them as well. So we did them one better; we said we’ll do it all for them and we’ll charge them based on where they are as a company, based on their revenue.
So the solution was there, but it took scrounging up money in my couch cushions, borrowed from family so that we could launch again and start solving bigger problems for clients. By proving the new model, we were able to start making some money and now we started getting the attention of new investors. This time around I was a savvy old veteran at this game, so I applied what I call pseudo-bootstrapping. This meant raising multiple channels of funding; angel, credit debt and crowdsourcing via Angle.co, and being stingy with it. I won’t ever grow faster than 12 months of cash reserves and I keep the P&L; and revenue numbers duct taped to my wrist – those numbers never lie!
That's awesome and a really great approach. At ReplyAll we've also found that it's a great balance to finance based on need, and working within constraints improves the decision making process.
Alright, thanks so much for joining me this week! I really enjoyed learning more about you & inDinero.